Student Loan Debt Trap


Banking Honor?
Banking Honor?

Student Loan Debt Trap

Commentary: Helping alleviate the student debt trap | McClatchy

Andrew Ross, a New York University professor of social and cultural analysis and an advocate of student debt relief, spoke on the subject at Duke this month. In an interview, Ross said he sees the effect of debt on his students. “A lot of my students fall asleep, and not all of them because of my boring lectures, but because they are working two or three jobs,” he said.

Their struggle will continue after college, Ross said, despite a degree from one of the nation’s most expensive institutions. “This generation faces a predicament where their future is foreclosed,” he said. “They’ve taken on debt to prepare themselves for employment, and the employment is not there.”

At a time of bailouts for Wall Street banks and extensive corporate welfare through tax breaks, it’s wrong that we now accept heavy student debt as inevitable and inescapable. (Federal law prohibits, except in rare cases, private or federal student loans from being discharged in bankruptcy court.)

Commentary: Helping alleviate the student debt trap | McClatchy


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Law School Can Work

img165Law School Can Work

Political Animal – Why Law School Doesn’t Work Anymore

The supply of lawyers has made the quality of a legal jobs dramatically worse. Graduates of lower-tier law schools often now toil in contract positions as document reviewers, “who sit in horrible little basement rooms. They are performing mindless work in Dickensian conditions, stuck in there” explains one law professor with whom Stevens spoke. These jobs are dead-end ones, with no potential for career advancement; they merely pay the bills. And the bills are really high. The average student loan burden of new law school graduates is $125,000.

I’ve written about this problem before but I admit that when I’ve addressed this I’ve probably focused too much on the education debt part of this, and the way law schools keep churning out more lawyers despite knowing that the career prospects for most of them aren’t very good.

One thing I’ve missed is how actual law firms operate in this system. I assumed that the problem was simply that many of these lawyers couldn’t get jobs. What Harper emphasizes is that the supply of lawyers means even graduates of good law schools who have jobs at the top firms aren’t doing as well.

Political Animal – Why Law School Doesn’t Work Anymore

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Zach from comments on a previous post.

The post commented on was Student Loan Debt a Lifetime Burden for Middle Class but Major Money Maker for Goldman Sachs.

Here’s Zack!

While the student loan problem needs to be addressed in some way, I don’t think giving student loans dischargeability in bankruptcy is the right way. I think bankruptcy courts should be able to modify student loans, but not completely whipe them out. Whiping out student loans would lead to just a lot of abuse. All of us would pay in the way of higher interest rates and fewer students would qualify for loans. I could get a full education without paying a cent knowing I can just declare bankruptcy and by the time I would have paid off my student loans (10 years), the bankruptcy would be off my credit report by then.

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Student Loan Debt a Lifetime Burden for Middle Class but Major Money Maker for Goldman Sachs

Kids today still screwed – Student Loan Debt –

Just in case anyone decided to “scam” themselves some free higher education by going to college and then declaring bankruptcy, Congress decided in 1998 to make sure that student loan debt had no statute of limitations and could not be discharged except in the event of extreme (and effectively unprovable) hardship. Then tuition began skyrocketing, players like Goldman Sachs got into the student lending business, and middle-class job opportunities for people without college degrees disappeared. The result, naturally, has been extremely profitable for certain people (Lally Weymouth) and basically awful for everyone else in America. Now, Eric Pianin is in Lally Weymouth’s Washington Post saying that student loan debt might be “the next debt bomb.

Kids today still screwed – Student Loan Debt –

My poor students are getting battered by an economy where there are few jobs in a nation where last year’s college graduates owed an average of $24,000 in student loans.

Other nations do not place the burden of higher education on the students. It is a matter of public expenditure. The United States has long been the leader in college graduates worldwide and no we are fourth. I see no prospect of that getting better but only worse. Education is not a commodity. It is a public good necessary for a successful society.

We can do better than this. We are a better people than this.

James Pilant

Bachmann Criticizes Obama’s Student Loan Plan – From the Wires –

Obama is changing the rules governing student loans to make them easier to pay. Bachman does not like it.

Like her right-wing brethren, Bachman has a fetish for a thing called “personal responsibility.” I put it in quotes because what she means by the phrase is different than an actual English interpretation of it. Let’s quote from the article:

“There is a morality in keeping our financial promises, and I don’t think we should push that off onto the taxpayer,” she said. “The individual needs to repay and be responsible for repaying their student loan debt.”

 Bachmann Criticizes Obama’s Student Loan Plan – From the Wires –

In English, personal responsibility means that individuals have a responsibility for their obligations. But Bachman only means the little people, those individuals with mortgages, student loans and credit card debts. She is merciless in her desire to have every last dime extracted from these individuals.

But she is less enthusiastic about investment banks, American corporations’ overseas operations, or any legal accountability for the economic catastrophe of the Wall Street Crash of 2007 and it subsequent bailout (at a 100% of the value of the toxic assets). How long could I go on about the incredible lack of responsibility by much of our corporate and ruling class?

So, personal responsibility is only applicable to certain people.

Let me make a guess as to how the little people, those with personal responsibility, as opposed to those without are divided. It’s purely driven by the size of their campaign contributions and the number of lobbyists they field.

It is not surprising that Bachman is unable to manage any criticism of a student loan system that among other problems happily pays out money for valueless degrees by unaccredited institutions. It is not surprising that imposing twenty and thirty years of debt on America’s young is not a problem in her eyes. It is not surprising that the pain of ten of millions of Americans who live day to day one step above financial insolvency while American* corporations horde their money and enjoy record profits does not strike her as a serious problem.

James Pilant

*I sometimes wonder just how American they are. Corporate fidelity to the moral standards of a patriot seem questionable at best. Many business thinkers deny that corporation have any responsibility toward the nations whose laws and military protect them.

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Rain On The Parade: Class of 2011, Most Indebted Ever (via iRok Fashion)

And it’s raining hard. The decision made over time to place almost all the financing of education on the backs of the students is contrary to the practice in much of the world. It has had terrible consequences. College graduates are no longer able to make a wide variety of decisions as to what jobs to take, they must take the most profitable or profitable enough to stay even with their debts.

It forces students to choose the most profitable fields of endeavor and imposes horrifying penalties on those that make the wrong vocational choices. If you chose correctional officer as a career over the last two decades you scored, good job prospects, low but steady pay and a good package of benefits (if you avoided working for a private corrections company). But if you chose journalism you are probably eeking out a living as some minor paper shuffling prole. In that case, your debt load is crushing and is never going to go away.

You see, in a very real way, going for a higher education is gambling. There are no guaranteed professions or majors. History, economics and technology can shift winners and losers dramatically in a very few years. You can take many times more financial damage from a wrong choice in a college career than you can in a dozen gambling binge visits to Vegas.

But get this, when do people get to decide this critical decision? Usually when they have the least experience and knowledge – just out of high school.

I would be curious as to what the psychological effects of that kind of debt are over time. This is not just any kind of debt, creditors have power with this kind of debt they have with no other money owed.

They have counseling sessions to warn you about the consequences of student debt, that’s almost nothing compared to what’s needed. What is needed is an explanation of the risks being taken. Students should be told that double majors in different fields will significantly improve their chances of survival in a changing economy. They need to be told that income varies widely not by ability but by geography. It is much easier to pay off student loans with a salary earned on the coast. The more you move toward the center of the United States, the lower your income and the more a burden student loans will be. When I read the estimates of what college graduates will make based on national estimates, I just laugh. The job might have a starting salary of $44,000. Yeah, right. That’s about 65k to 70k in a state like New York and 24k in Kansas or Oklahoma.

We can do this better, but as usual the great intellects of the beltway will scream, “personal responsibility” over and over again. You see, the phrase, personal responsibility, means that no matter how deliberately misinformed, how unfair the deal, how distorted the situation, how manipulated a body of citizens are, it is irrelevant.

There is another word, we use in this country. It seems to have fallen out of favor. It’s called fairness. That means that we have to take into consideration the circumstances of the decision that led to the contract.

That means that when a college prints up thousands of pretty pamphlets selling their very expensive program in broadcast journalism so that you can become a television anchor, a job where there are only a few thousand jobs in the entire nation, we as a society get to ask some tough questions. Questions like “How much are you making selling this program?” “Were these students properly advised?” – that is, were they informed of the job prospects? Is there any data, any data at all, about successful employment out of the program?

Adherence to contracts is important, but so is fairness.

James Pilant

Rain On The Parade: Class of 2011, Most Indebted Ever So when I’m not looking at fashion or music related crap on the internet (and out in the world)…I brush up on my current events. Especially if it pertains to my living conditions in the years to come. I came across an interesting article about the debt for college grads this year (2011). Although the article basically goes on to say that going to college and collecting the student loan debt is ultimately worth it, it does still suck a big one. … Read More

via iRok Fashion

Student Loan Debt – 830 Billion Dollars

Anya Kamenetz writes in a new column available online that student loan debt could be similar to the mortgage bubble. Student loans total about 830 million dollars. That’s larger than all the credit card debt in the United States. Nontraditional student are often hardest hit. I quote Ms. Kamenetz –

From where I’m sitting, the buildup of the national student loan balance looks like a massive betrayal of trust. People have been told for decades that this is “good” debt. In fact it’s really, really bad debt. Increasingly, high unmanageable debt burdens are falling on those least prepared to deal with the stresses and costs of college: the so called “nontraditional” adult, working-class student who is more and more likely to attend for-profit colleges that cost an average of around $14,000. And 40% and higher of these students are defaulting.

If, as a nation, we are going to increase our graduation rate, we will have to find different ways of financing. The current system with nontraditional students defaulting at a 40% rate is neither sustainable nor in any way effective.

In an article on the ABC World News site, they outline the grim statistics of U.S. graduate rates, 12th in the world.

Nationwide, 40.4 percent of 25- to 34-year-olds held such degrees in 2007, falling far short of Canada’s 55.8 percent, as well as South Korea and Russia, both of which had 55.5 percent rates, according to statistics from the College Board.

I firmly believe our current method of student borrowing is a drag on the graduation rate. It’s a drag on the decision to go to college. There are some people that believe owing a half million dollars for a medical degree is not a good investment.

If college graduation rates are a good measure of national success then why do we discourage people from going to college in the first place? As a policy it is a good idea for only the well-off to go to school?

Right now, someone is reading this article and saying, “They can work while going to school, I did, look at me. I did it on my own.” Or some other method of self help. The statistics are clear, self help is not effective. The more we rely on it, the fewer graduates we are going to get. As citizens in common, as members of a human community we have duties to one another and helping people get ahead by means of an education is one of those responsibilities.

Should the United States which was first in college graduation rates ten year ago decide to abandon its position as a successful nation, a good formula is to have a system where educational endeavor is tied to large debt loads.

Tell me the name of another nation any where on earth that finances college attendance by loans of the size and weight we have here. Borrowing for an education is not something I am opposed to, but education should be financed by a wide variety of methods, so that student loan debts are manageable and limited in size.

James Pilant

Student Loan Debt, A Crisis?

Student Loan Debt, A Crisis?

Rod Dreher writes about student loans and prudent educational expenditures. (He doesn’t think loans are a good idea.)

At the time I read his musing there were more than forty comments. You should give those a look, very perceptive comments, not what I find on many web sites. (I am most fortunate with the comments on mine.)

I am less than impressed by the student loan system in the United States.

(I was going to write this great big article talking about all the problems and incredible stupidity in paying for education this way and then, I thought about it. We can’t stop banks from gambling on $600,000,000,000 of derivatives. [World GNP is about 60 trillion] They can destroy our way of life, our entire economy, and the rest of the worlds leaving only subsistence farming. We can’t do that. What chance is there to protect students just out of high school from banking predators? There isn’t any. They are sheep. They live only to be sheared. They have no protectors, no legislators, no federal agency, and no public concern. What point is there is me telling you how foolish this is? I can’t think of any.)