Why Encourage Students to Take on Crippling Debt in Pursuit of Degrees That Don't Even Provide the Earning Potential to Pay it Off?

We're creating an uber-debt ridden population in order to support an uber-wealthy class and maintain the largest economic inequality in our nation's history, and we're doing it through our higher-educational system.  How? We're graduating students leveraged to the hilt, who either can't get a job, or if they're lucky enough to find employment, make just enough to pay off their debt. In other words, they are indentured servants, who can't save or build for their futures, who cannot become entrepreneurs, who, in a nutshell, cannot serve broader society because they must follow the almighty dollar first and foremost. Moreover, this albatross of debt impacts on the ability to start families, because, as we know, children are expensive!

This is not just a problem for young people. Many parents take out parent plus loans to support their kids. Some have to go back to college to change careers and take out loans when they're in their 40's and 50's, especially now when jobs are scarce. They can look forward to having their social security garnished.

“About twice as many Social Security recipients are not receiving all of their Social Security payments this year because they have unpaid federal student loans, according to a report by SmartMoney.com.

According to a 1996 law, the federal government has the authority to withhold portions of Social Security payments if defaulted debt is owed to the government, including federal student loans.

“It’s quite extraordinary because normally Social Security benefits can’t be touched by creditors,” said Deanne Loonin, a staff attorney with the National Consumer Law Center.

From January through August 6 of this year, the government reduced the size of about 115,000 retirees’ Social Security checks, almost double the department’s enforcement in 2011, according to data from the Treasury Department. In 2007, there were 60,000 cases and in 2000, there were only six cases.

Yet, not going to college is not an option for many young people. In fact, too many parents/teachers/friends insist that getting the "best education" at the "best schools" no matter what the cost, is absolutely necessary to that young person's future. The problem is most--parents/teachers/friends and students, alike-- do not consider the long-term consequences of accumulating life-long debt.. They do not consider that student loans cannot be discharged in bankruptcy. Instead, our young people are given a rosy prognosis when choosing schools and told not to worry about the future with easy to qualify for loans.

Universities are now corporatized. The parasitic corporate model of inflated infrastructure and bureaucracy that rewards elite executives with enormous salaries and squeezes everyone else, making them jump through endless bureaucratic hoops. Between the ever-increasing growth of administrative expenditures--huge amounts devoted to funding unnecessary administrative positions--and government subsidized institutions, colleges and universities have no incentive to reduce cost.

“U.S. universities employed more than 230,000 administrators in 2009, up 60 percent from 1993, or 10 times the rate of growth of the tenured faculty, those with permanent positions and job security, according to U.S. Education Department data.

Spending on administration has been rising faster than funds for instruction and research at 198 leading U.S. research universities, concluded a 2010 study by Jay Greene, an education professor at the University of Arkansas."

There is about $1.2 trillion in student loans outstanding with all but 15% of that owned or guaranteed by the government. The chart below shows the student loan amount held directly by the federal government., rising at about $110 billion per year.

“The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.”

Learning to live below one's means and gaining the ability to distinguish between "needs" and "wants" might be the only way out.

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The Next Bubble Burst: Student Debt?

Private lenders have preyed upon unsuspecting young people desiring to further their education for years. Of course, they have intentionally targeted those coming from poor socio-economic backgrounds. What else is new?

Well, now that the student debt bubble has accumulated over $1 trillion in student loan debt, starting July 1, Federal Pell Grants are set to be cut for hundreds of thousands of students across the US. Whats more, the Senate "blocked President Obama’s student loan interest-rate reduction plan and also shot down a GOP proposal, leaving the chamber without a solution and little more than a month to go before rates are scheduled to double".

The reforms will save $11 billion over 10 years, according to reports. Students will lose the $5,550-a-year grants in order to find the savings.

"The loss of Pell Grants could put college out of reach" for many students with fiscal hardships, the newspaper reported.

Under old rules, students who had taken at least six units of college courses but who did not have a diploma were eligible for the loans. The new rule eliminates the Pell Grants as well as other subsidized loans for the students, known as "ability-to-benefit" students.

Here's the thing. We're told the government can't find a way to pay for extending student loan rates, yet, we're not told that the government earns more money on these student loans than they pay out!  Meanwhile, half of all college graduates are either unemployed or underemployed.  And unlike a mortgage, one cannot walk away from one's student loan debt, even if one can't walk, can't talk...in other words,  in a coma, as student loan debt cannot be expunged, nor forgiven.

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Is College Becoming a Very Expensive Dead-End?

The average annual cost of attending a private college in America today is $27,293.00, and of course, that does not include the cost of room and board, or textbooks, which has tripled over the past decade (with almost no resale value). So, at the end of four years, the student is left, facing a very dismal job market, and $109,172, in debt - that is, if he doesn't buy any books and he lives at home.

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Digitized US Foreign Policy Decisions.

The University of Wisconsin Digital Collections Center, is the official documentary historical record of major U.S. foreign policy decisions that have been declassified and edited for publication. They provide quality digital resources from its academic libraries to UW faculty, staff and students, citizens of the state, and scholars at large. The series is produced by the State Department’s Office of the Historian and printed volumes are available from the Government Printing Office.

Related:
Office of the Historian
The Government Printing Office

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