Recent Items

Colleges as Merchants of Debt

Posted on by

Student loan debt slavery is even worse than you probably thought. The Grey Lady tonight has a long, informative story, “A Generation Hobbled by the Soaring Cost of College“, that early on presents the stunning tidbit that 94% of the recipients of bachelor’s degrees borrowed in order to pay for it. The Times doesn’t report what average debt levels are in this cohort, but the average across all borrowers, per the New York Fed, is $23,000. Remember, this total includes graduates who have have been paying down debt, meaning they’ve amortized principal and almost certainly had borrowed less on average to complete school.

Contrast this “certain to be higher on average than $23,000″ for new graduates with their earning power, or more accurately, lack thereof. The Times article also mentions a Rutgers survey which seems to have some sample bias or underreporting of borrowing (of 2006-2011 graduates, only 55% of the respondents said they had borrowed to help fund college, and the median reported debt level was $20,000). The 2009-2011 graduates’ income averaged $27,000. In addition, only half said that their job required a college degree.

This juxtaposition confirms that colleges, like the financial services industry, have become increasingly extractive: whatever financial benefits accrue to getting an undergraduate education, they are more and more captured by the schools, though their ability to persuade students to go into hock to get a degree. And like late housing bubble borrowers, more are defaulting early on, meaning the loans were badly underwritten (ie, many should probably have never been made because it the odds of default were high):

Nearly one in 10 borrowers who started repayment in 2009 defaulted within two years, the latest data available — about double the rate in 2005.

The Times focuses on colleges in Ohio, in many ways the ground zero of the student debt bubble because tuitions and borrowing levels are high relative to other states. One factor is arguably not the schools’ fault: Ohio started earlier and has gone farther in cutting support for higher education. But even so, the story, in its understated way, depicts clear predatory behavior: students told by colleges not to worry about the costs, to see education as an investment (with nary a thought as to whether the kid wants to major in something that has a snowball’s chance in hell of leading to a decent paying job). Even worse, not only do schools deliberately avoid telling students what debt service costs will be, they even avoid language that reminds the college candidate that he is taking on a potential millstone:

College marketing firms encourage school officials to focus on the value of the education rather than the cost. For example, an article on the cover of Enrollment Management, a newsletter aimed at college admissions officials, urged writers of admissions materials to “avoid bad words like ‘cost,’ ‘pay’ (try ‘and you get all this for…’), ‘contract’ and ‘buy’ in your piece and avoid the conflicting feelings they generate.”…

The financial aid award letters to newly admitted students can also be a minefield for students and parents sorting through the true costs of a school. Some are written in a manner that suggests the student is getting a great deal, by blurring the line between grants and loans or not making clear how much the student may have to pay or borrow.

The story includes the usual cast of recent graduates up to their eyeballs in debt, describing their own particular version of naivete and overoptimism that got them in that mess. It does not get into the thorny terrain of why costs have escalated and whether any of these increases have improved the quality of education. It does highlight the exploitative practices of for-profit colleges, but makes clear that the not-for-profits have nothing to be proud of.

Now of course, there are well endowed, elite schools who do give some students sizable scholarships. But for the students who aren’t from affluent families and are shrewd enough to be wary of big debt loads, it puts more of a premium on making the cut. Other accounts have discussed how nightmarishly competitive high school has become. It isn’t hard to imagine that kids who don’t use Adderall are at a serious disadvantage. Saying “let them get scholarships” is hardly an adequate answer to a bigger social problem, that of underinvestment in education (both faltering secondary school education and out-of-control college bills). Remember, the US is the only advanced economy to show falling levels of educational attainment.

One of the distressing threads in the article was elected officials and even students arguing that it was completely reasonable to expect students to carry most of the freight of their education. I wonder if any of the ones over, say, 35 giving that view would be anywhere near as comfortable as they are now if that had been required of them. You can see the open, casual rendering of one of the obligations of society, that of educating the young.

I’ve never understood when (once in a while) someone (clearly young) shows up in comments and rails against Social Security and Medicare because of the burden it imposes on him. Now I get it. The student debt issue is deepening social fractures. If young people are asked to stand on their own, and given only unpalatable choices (forego a college degree, the entrance ticket to middle class life, or accept debt slavery at a tender age), no wonder they adopt a “devil take the hindmost” attitude. I hope some of these people who so cavalierly argue for loading up the next generation with debt realize that the young may not want to take care of them either, and they are far more at risk. The outcome of cutting social safety nets to the elderly ultimately means that old people will die faster.

Print Friendly
Twitter79DiggReddit1StumbleUpon0Facebook187LinkedIn8Google+10bufferEmail

200 comments

  1. Tertium Squid

    The whole situation is a dog’s breakfast, but this vexes me more than anything else:

    “students told by colleges not to worry about the costs, to see education as an investment (with nary a thought as to whether the kid wants to major in something that has a snowball’s chance in hell of leading to a decent paying job).”

    What is education for anymore?

    Students have to endure a little bit of learning to set themselves up for a lifetime of earning. I would have it the other way round. Then the “investment” is in one’s self and in the direction of one’s own choosing, rather than accepting the pre-cast molding that turns a human into a cog in a money making machine.

    But we are not a society of learners anymore. This is very very bad.

    1. Patrick

      Any fool knows that the purpose of education is to pump out 10 business majors for each corporate job opening. Then, the corporations should have the luxury of taking the best of those ten candidates.

      It’s the bank’s duty to decide which of these 10 should get the loan.

      Duh.

      1. wmartin46

        > Any fool knows that the purpose of education is to pump
        > out 10 business majors for each corporate job opening.

        In many colleges, the largest number of graduates is produced by the “education departments”. The percentage can be as high as 20%. The number of business degrees doesn’t come close.

        1. Patrick

          Obviously our colleges are failing us. As it stands, there are only 2 candidates for every job.

          1. nonclassical

            Patrick,

            coming from one who has taught in “other western democracy”, might I point out the following-

            1) U.S. universities derive most $$$ on research-so stated last year by ivy league administrator-”If we didn’t have to teach students we’d be more profitable”…

            2) U.S. has no intention of “fully educated workforce”, as do “other western democracy who educate ALL who desire, to 4 year university or vocational equivalent degrees. Those “other western democracies” intend to create TAXPAYERS for a lifetime of government payback. U.S. intends cheap labor force-disposable.

            3) Number of U.S. grads from 4 year university or vocational equivalent? under
            20%. Only around 50% who enter, graduate. Most never enter. 19% of 9th graders in secondary level earn 2 year AA degree.

            4) Other western democracy graduates around 70% from either 4 year university or vocational equivalent.

            5) After 8th grade middle-school level, “other western democracy” students forego further learning in areas not of competence-focusing down to 3 “strengths”. After 10th grade, down to 2. If one is vocational, last 2 years are out on internship…

        2. Tertium Squid

          Lots of teachers are dedicated and passionate. God bless them for doing something they love and trying really hard at it.

          But not all of them.

          What bothers me is the idea that earning potential is the deciding factor in choosing what to study – whether education, business, law or anything else. Then the innate value of the field and the interests of the student are disregarded.

          1. Patrick

            It’s not the deciding factor of what to study, it’s the deciding factor for who to lend money to.

            When considering bank loans for education, there happens to be no inherent value in education. The only value is the value the market puts on it.

          2. nonclassical

            ..some of us walked university bookstore aisles deciding what books we wanted to read-chose classes based upon-found excellent professor, stayed with…

        3. William

          Business and Education typically attract the more mediocre students. Academic demands are not that great. I once did some consulting for a large GMAC office, and they were all dumb as rocks. Shallow, very shallow, thinkers. Sheep types. Very convenient for the sociopaths in upper management.

          1. trevor

            Maybe if you study human resources. Accounting and finance degrees are demanding too. Most business schools have entrance averages above 90%. It depends on where you study I guess. Personally id say arts degrees attract the mediocre students as they have weak entry requirements and easier fluff courses. Tests straight memorization and just writing papers.

          2. Robert

            When you argue that bussiness attracts dumb people it implies to some extent that the terms of the discourse of the system of education are accurate. Schools market themselves by appealing to the lowest instincts like the urge to be better than everybody else and the quest to become exploiter rather than exploited. The terms of the discourse within academia try to portrey these as positive things by using terms like “excel” or “leadership” or by appealing to the ego with the word “smart” instead of “self-promoting.”

          3. nonclassical

            Trevor, University of Washington “Art History” is one of most difficult discipline.

            If you are describing “liberal arts”=Philosophy, Lit, Poly-Sci, Soc, Anthro, etc,
            you will find these discipline teach HOW to think.

            We live on small lake-our neighbors recently (both in education) described their kids as science-math majors. Fine and well, I noted-”Is your home paid for?”

            They were taken aback, but stated the negative-I asked if they know what has happened to cause economic destruction…again, negative…

            I was able (Poly-Sci-Philosophy-Lit-Ed) to explain what had happened, when we knew it was coming (9 years ago-by watching bushit deregulatory legislation-Enron) and therefore our priority was to pay off home-which it is.

          4. skippy

            Placid minds are a field too plow.

            Skippy… Finance…. is probaly the most blinkered view point the univerce has known.

    2. rd

      Two major parts of the problem are not even getting discussed:

      1. The concept of 4-year degree or bust; and
      2. The need for a 4-year degree to go into law, medicine etc.

      I live in NYS. The community colleges are excellent. A 2-year degree from these will provide all that most people would need for a successful career in many areas at very low cost. However, society has decided to look down its nose at people who have not achieved the pinnacle of a 4-year degree – much of the student loan debt comes from attempting to reach this summit.

      Why do law, medicine and other fields generally require a 4-year degree in unrelated fields in order to apply? Why not set rigorous requirements for a two-year program at a community college or university and then accept applicants with good marks and entrance exams at the end of that process. This would likely cut the typical debt burden of many of these professions by $50k or more. Europe doesn’t require 7 years of education to become a lawyer or doctor. Canada subsidizes undergrad and grad work, so that US levels of student debt are unheard of.

      I am a professional engineer. I did four years of university to get a B.Sc. and then a 1-year professional Master of Engineering degree. It was a grueling program with 30%-40% drop-out rate by the end of the second year and about a 50% overall graduation rate. But you found out very early if you were cut out for it or not – many were gone by the end of the first year. Most of the drop outs went into other schools at the university with a decent potential for graduating on-time in 4 years.

      BTW, social workers generally require a M.Sw. in order to practice clinically. So they need 6 years or more of schooling in order to qualify for a $35k/year job. These types of requirements, common is social work, education etc. are insane except at subsidized educational institutions.

      1. reslez

        Where I live in the Midwest US, social workers earn 80k/year. There are related jobs in the same field that start around 30k, they require less education and experience.

        1. David

          They earn $80K per year??

          That’s way too high. It means their government departments have really gotten fat and bloated. Time for some austerity.

          Same for teachers. Important jobs but way overpaid vs. the general wage level. We need to get the problem of government-employee unions under control. They are comfortable while everyone else suffers.

          1. Francois T

            “That’s way too high.”

            Why is that? Because you say so? You the arbitrager of what a MSW ought to earn?

  2. EB

    Politicians have been buying off older voters for decades. The state of Florida has decided presidential elections due to pandering to senior citizens. The entire social security system is a way to pay off older voters. The system is untenable as it cannot last forever. We cannot subsidize older citizens to the extent we have.

    In addition, inflation has helped older demographics. The bailout of Wall St. disproportionally helped older people with large retirement acounts.

    These people are largely oblivious to the benefits they have received. A lifetime of positive reinforcement has led them to believe all is well and that they deserve to reap the rewards. But they had opportunities the younger generations did not. They went to college when there were other jobs in manufacturing at steel mills or other factories that could compete with college. The point is that they were lucky to be alive in the boom cycle of our economy. Now that we are in a bust for many people they cannot get ahead even if it is not their fault.

    Now our country manufactures little. This will have to change unless we become more socialist and just provide a minimum quality of life to all people.

      1. Patrick

        But he’s right, SS will go bust in about 100 years if no one pays anything into it before then. We must cut it now while we’re ahead!

          1. Patrick

            Tut tut. Steal is such a strong word.

            I prefer the term “invest”, as in “let’s invest it on Wall Street.”

    1. mad as hell.

      A subsidy is not defined as something a person invests into for 40-45 years.

      Why don’t you stick some of your weekly earnings into Bank of America for the next few decades. Let us know what you would call it if you don’t get your investment back in 2052.

      Bet it ain’t subsidy.

      1. Patrick

        No it’s an entitlement. And I resent this culture of entitlement.

        Just because you leave your money in a bank for them to loan out as they see fit shouldn’t mean you are entitled to receive it back. Just saying.

        1. Kim

          Avoiding all responsibility to the rest of society is no way to live. Unfortunately, many subscribe to this anti-social behavior.

          1. Patrick

            In the interests of fairness, it’s less than .1% who subscribe. Most of them have renounced citizenship for tax avoidance purposes. So technically speaking they have no duty to your society.

          2. damian

            over 160 million people will be murdered by neglect in the next 50 years – we are on the road to perdition

        2. Carla

          Patrick, banks do not loan out the money you have on deposit with them. When they make a loan, they create entirely new money (with the stroke of computer key, digital money).

          That “money” is destroyed as the principal is paid back. However, the Interest has to come from somewhere, and it comes basically from the debtor’s hide. Fractional reserve lending is not sustainable. Look it up.

          1. skippy

            Actually fractional reserve lending * is * mathematically achievable… you just need a derivitive multiverse bridge into another timeline[s.

            Skippy… let that bake in…

          2. David

            I’d guess it is sustainable if the rate of creation of high-powered money or exceeds the rate of interest times the money multiplier i.e. rate of creation of new debt.

            You need the money multiplier there because the same dollar can get lent, then relent, etc. That underlying dollar will only inflate once, and you need to make enough extra cash to pay all that back.

            If things get out of sync and the economy has to contract, then the central bank has to hurry and catch up to the needed amount of cash in circulation. That’s quantitative easing.

            But in all this I am assuming all consumers are the same — that their personal economics expand and contract as the overall economy does. That is clearly not the case, despite attempts to “spread the wealth” — in this context it should mean spreading around the M0 physical cash so that people can pay off their debts in the contracting economy.

            I hate to say it but as I write this, I begin to think that Obama’s economic policies make sense for our times. I hate to say it, because our current system is despicable in so many ways, and certain people are being entrenched at the top as this all happens, so that often I would rather see things go to zero and start over.

            The cost of college in this country is a moral evil. To tell people you’ll provide the “training they need” at a private college and land them in a special kind of debt from which there is no relief — it’s morally very hard to defend.

    2. JTFaraday

      “they had opportunities the younger generations did not.”

      I agree with this to a certain extent, but it is not just a generational issue, it is more so a generation and class issue. Talking about trade over on the other thread:

      “The crowd of negotiators and corporate representatives applauded, and “Haversall” continued: “I’d like to personally thank the negotiators for their relentless efforts. The TPP agreement is shaping up to be a fantastic way for us to maximize profits, regardless of what the public of this nation—or any other nation—thinks is right.”

      I could see a fair portion of upper middle class baby boomers with sizeable 401K plans being entirely comfortable with this kind of attitude.

      This is why the unproductive prophets of neoliberalism are permitted to grind down the private sector economy in ever widening circles–albeit with fewer beneficiaries with each turn. This is also why the upper middle class is now the D-Party’s only popular constituency.

      But I suspect that those who have been on the receiving end of deindustrialization may be a little more skeptical at this point. Unfortunately, to the extent that skepticism meets with lowered incomes, it perhaps manifests in reduced support for public services like education while fueling the careers of the Pete Petersons and the Scott Walkers and the Chris Christies, while the problem compounds at every level.

      So, at the end of the day I have to be in favor of broader analysis and not just scapegoat old people. New college grads are not the only ones who have been shafted.

      1. Susan the other

        We have always operated with short term economic analysis and no long term thoughtful policies. We just pass hit and miss regulations and hope they solve a problem. We never put two problems together and get synergy back. This is an opportunity to do so. We need one policy that addresses Young and Old. And beyond.

        We have demographics only because we want to ensure a base of consumers to keep the country going. So we divide up into children, teens, young adults (college students), a middle-age demographic – that spans from 30 to 60+, retirees 60 – death (which includes everyone whose brains have gone haywire and whose wheels have fallen off).

        A consumer base is fine if it works. When it comes to Young v. Old consumption is less than the long years of mid life. If Y v. O are combined they match up pretty closely in consumer power. 30 years of productive mid life for each person is offset by their own 10 years of young adulthood of school and first jobs combined with maybe 20 years of old age. So what should the social pact be in a new long era of declining population?

        The problem lies in the base of the analysis. Not consumerism, but what we consume. And everybody knows it; or what we demand, both are synonymous with the economy which provides for all of us. But what will replace all those consumer goods? We can no longer produce all that unnecessary crap because we are destroying the planet. Ever think about all the trash just one hospital generates? And hospitals are considered essential.

        We should not pit young against old. Social Security and Medicare are good programs, they should be kept and enhanced: We need social security and medicare for the young. Include them in these programs along with the old. The social security we offer them should be a free education in exchange for 2 years of apprentice work at a set wage that includes board and room; after that we need a system that does not let them fall through the cracks and wind up on the street with no job in sight. We need a system that provides jobs.

        Enter the clean-up of the planet. It is our biggest problem. But it can drive our economy and the economy the rest of the world. And in so doing change our mindset from being last century’s consumers to this century’s consumers.

      2. LucyLulu

        New college grads are not the only ones who have been shafted.

        Yes. There are quite a few old people out there right now who saw there retirement ‘savings’ go up in smoke with the crash of the housing bubble. They had planned to downsize to the cute little condo but now they can’t give that big home away. The average SS benefit is a little over $1000/month. They have little to no 401K, having sunk all spare money from their diminishing wages into their home. The average amount I read is $125,000. At today’s interest rate, how much annual income is that if invested conservatively? Maybe $4000/yr? Health care expenses keep rising. And they hear the government debating deficits, unsustainable benefit amounts and worry that what they are getting now will be slashed.

        That isn’t taking into account those late 50-somethings professionals who are now working as Walmart greeters, having found their careers prematurely terminated. Mom and Dad aren’t around anymore to move back into their basement, and struggling to earn a living in your later years is far harder than when they had that youthful optimism of better times to come to hang onto back in their 20′s. This certainly isn’t what they envisioned or planned for.

        I DO have sympathy for younger people and feel bad about the world they’ve been left. My children are both 20-somethings, and I truly would like to see the next generation do better than we did. Everybody I know feels the same. Nobody intentionally planned for this outcome. It does bother me though when I hear young people whining about being “screwed” by older people and having it so much harder. I get the feeling they think we started out comfortable with cushy jobs. Personally, I had my lean years in my 20′s, before and during early marriage, another period of high unemployment, along with outrageous inflation, living on eggs and peanut butter and rice and in a roach infested apt. Granted I had no student loans, tuition was dirt cheap in Florida (and still is, and now they even have Bright Futures scholarships I would have qualified for, with free tuition, so it isn’t only seniors being catered to), but it didn’t seem bad when I was young. Being poor AND elderly would terrify me.

        1. chitown2020

          They blew up the entire country and screwed everybody. We are ALL victims of massive, unsustainable bankster debt fraud thanks to the traitor politicians. They are all greedy jerks. There is no monetary “fix” for what they did. Their debt is too massive…therefore they must rescind or we will sue …..WE THE PEOPLE -V- THE FEDERAL RESERVE BANK…

        2. X

          You didn’t have student loans. Which means you were essentially at $0.00, rather than -$23,000. The kids today just want to start at $0.00. Yea?

          Gain some further perspective

          1. LucyLulu

            I DO get that. I’m not denying that student debt is a very real problem. If I had the power, I’d wipe it out. I’m just saying that seniors are paying a price, albeit a different one, too. They aren’t “screwing the kids” so they can live their lives of luxury. It’s not an either-or situation. Granted, there are some Tea Party types who have that attitude but they aren’t the people you generally find reading and posting on this forum, and when they do, you’ll notice they get slammed by the regulars. In other words, you’re preaching to the choir.

            Are YOU equally able to have some perspective about those who rely on the SS they were promised as a result of their payments of 12% of their income for the last 30 years, and who are too late in their working lives to make new plans? Enough surplus was paid in to generate a $2.6 trillion surplus to accomodate the babyboomer’s retirement. That Congress had decided to invest the surplus in government debt requiring repayment in order to fund tax cuts for the wealthy was not disclosed to the public, who were told by Reagan that the increase in payroll taxes would solve the sustainability issues beginning when babyboomers retired.

          2. X

            Why are they relying on SS when THEY SHOULD HAVE BEEN SAVING?

            I pay into SS as a 27 year old, but I have no plan on relying on it. I consider it money already lost.

          3. CaitlinO

            X – can’t tell how long you’ve been around listening to government spokespeople but Social Security WAS touted as savings for decades. As were our corporate pensions which we negotiated for in lieu of wages and which were roundly stolen in the LBO decade. As were our 401k plans into which we invested 10% of our income, above and beyond the other two, and which is periodically raided by Wall Street busts.

            As a mid-rage boomer I can’t begin to tell you how much savings I’ve done which I will never ever see. My government has broken every contract made with me while I have always kept up my side.

        3. Phil in Kansas City

          I was a freshman at the University of Kansas in 1974. My tuition was $128.00/semester, books $50.00 or so, and student activity fee was about $30.00. A shared dorm room with a 20 meal per week plan was $900.00 for the academic year. I was able to pay for my first year of college by pumping gas (those were the days!) and doing light mechanical repairs at a service station. I earned the magnificent sum of $3.50/hr, (plus some tips), which was about two-and-a-half times the minimum wage then. In 12 weeks of full-time work with overtime, I had college paid for, plus about $400.00 extra for expenses, which was augmented by a weekly check from my parents–usually $10.00. I lived well enough.

          If a young person were to try to replicate this plan of mine today, they’d need to find a job paying $19.00/hr, with some tips on the side, and a guarentee of eight hours of overtime at $28.50/hr. Were this possible, and if they saved everything they made, they still would still be significantly short of meeting the anticipated expenses of a year’s worth of college at my alma mater.

          In retrospect, my generation had it good. This generation will not do as well as me and my cohorts. Instead of investing monthly in their 20′s to build wealth, either in home equity or in financial markets, they have to take that money and pay off student loans. The deck is stacked against them. Some few, through luck and individual pluck, will do well, but I think the majority are caught betwixt the devil and the deep blue sea. So I do feel sorry for young folks today.

          But I also question my cohort’s desire to see their kids go to college. A BA or BS no longer offers a high probability of landing a great job, or even a good job, much less a secure job or career. It hasn’t for some time now. We need plumbers as well as philosophy majors. I also question why so many occupations require a college degree as an entry requirement. Police officer, insurance adjuster, mortician? The whole purpose of education has been seriously distorted by imposing a business model on higher education. Some parts of life just need to be outside the reach of capitalism.

          1. Abelenkpe

            “A BA or BS no longer offers a high probability of landing a great job, or even a good job, ”

            Maybe it would if we’d stop offshoring and outsourcing. Btw, I have two BIL’s who are plumbers. They aren’t doing well finacially either. They never will either until we figure out how to grow the economy from the ground up.

    3. wunsacon

      >> The bailout of Wall St. disproportionally helped older people with large retirement acounts.

      …who will pass down any remainder to their kids.

      In other words, the bailouts of Wall St. primarily and disproportionately helped the wealthy.

      1. Patrick

        It didn’t hurt the people with large retirement accounts and prevented them from being hurt, but most of it went to various Wall Street money handlers both foreign and domestic and secondarily as kickbacks to politicians.

    4. William

      A great example of what happens when young people are not taught to think critically–of their own ideas, not just those of others. There is so much that is illogical about that response it would take quite awhile to unravel it all.

    5. Mark Roest

      I suggest you do the math, using Occupy Wall Street! figures, on the current distribution of wealth, and on military spending. You will find that we could all have a high standard of living if we reinstated the progressive taxes we had in the 1970s, and had not repealed the separation of banks and investment houses, and had bet on renewable energy instead of putting our money into military domination to control oil, for most of the last century. And if we organized the economy properly in other ways, we would have a clean environment and only minor global warming, to boot! You are allowing yourself to be stampeded by the right wing Koch brothers and their cronies, who fund multiple so-called think tanks to propagandize against Social Security and all other social safety net programs. They would rather see the income distribution look like the Dark Ages. Try following KPFA.org on the web, or listening to other Pacifica Network stations, to learn more about the class system you live under.

    6. chitown2020

      Or maybe the FDIC should shut down the FED and put them in FDIC receivership and collect the peoples stolen wealth from the fraudsters and cut all of us a big fat check and return all of our stolen property along with Nationwide loan recissions. Liberty and Justice for all.

  3. Quibbles

    College isn’t necessarily the following: “the entrance ticket to middle class life” Also, why would the kid bitch about ss and medicare unless his dorm has Fux News on most of the time?
    He should know that pathetic corporate jobs come and go and pensions no longer exist, and with the other standard retirement plan he pays into, he’s going to need all the retirement money he can get to avoid living on cat food. I would think he’d be pro both programs unless he’s been brainwashed by insidious kleptocrats. It’s worth reminding ‘Muricans that Kollege is free in other countries, that’s right – an equally quality education can be had for free.

    1. Patrick

      Why is it that seniors don’t like living on cat food?
      They should be thankful that there is plentiful cat food for them to eat.

      1. tom allen

        Darn seniors, eating cat food off the public trough. Why don’t they get a job? We are the 53%!

    1. Mark P.

      Yeah, it’s noteworthy that Pritchard-Evans – no liberal or progressive — nevertheless sees the writing on the wall.

      The real TINA: debts that cannot be paid won’t be.

      1. F. Beard

        The real TINA: debts that cannot be paid won’t be. Mark P.

        Steve Keen’s “A Modern Jubilee” would allow them to be paid off.

        A more detailed comment is in moderation for some inexplicable reason.

    2. F. Beard

      “In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee.

      Creditors are not going to like that.” AEP

      A universal and equal bailout of the entire population (see Steve Keen’s “A Modern Jubilee”) would fix everyone from the bottom up, including creditors, in nominal terms. And if further credit-creation was banned then the bailout could be metered so that no one suffered in real terms either.

      What are we waiting for? How much more pain-free is even possible?

    1. J B

      Your first paragraph of your comment is concise, cogent and spot-on. So elegant and dense some might not appreciate it. Well said!

  4. Middle Seaman

    Not for profit universities need a lot of financial support unless their tuition is huge. State colleges support is low and decreasing. Most of the resources available today go either to the military or the very rich.

    Students targeting SS is run of the mill whenever resources become scarce. In reality SS pays what retirees put into it. Complaining and demanding is expected but the solution is higher support for colleges. This can happen if the educated public starts voting for candidates that promise to cut the military and increase support for colleges.

    1. Patrick

      Which candidates are those?

      Bear in mind that you are only allowed to vote for one of the two identical establishment parties who would never go along with your plan.

      And don’t even think of revolting and voting for a third party, or should I say second party? You don’t want to vote for a loser do you? If you do, we’ve got the electoral college and dibold voting machines to protect us.

      1. nonclassical

        –diEbold, and Sequoia is even worse:

        http://www.wired.com/threatlevel/2008/07/ny-50-percent-o/
        http://www.youtube.com/watch?v=6ClrHPShljM
        https://freedom-to-tinker.com/blog/felten/evidence-new-jersey-election-discrepancies/
        http://crapomatic.blogspot.com/2006/02/one-hundred-thousand-alleged-florida.html
        http://www.votetrustusa.org/index.php?option=com_content&task=view&id=974&Itemid=162
        http://www.commoncause.org/atf/cf/%7Bfb3c17e2-cdd1-4df6-92be-bd4429893665%7D/MASTERLISTOFMACHINEFAILURES.PDF

        ..but then hey, Scott Walker recall vote will be on Sequoia…

  5. CB

    I went to Rutgers Camden late 90s thru early 2000s. They had(have?) a wonderful system for borrowing money. It went per semester, was a $25 flat fee whatever the borrowed amount, had to be paid back thru the semester and off by the end of the semester. So, you knew exactly how much a month it was going to cost for a semester, could only borrow for the semester, and couldn’t get another loan if the past semester wasn’t paid off. You just couldn’t get that far into the debt bag, and there wasn’t really an interest rate. I tried to get as much for my $25 as I could, but I was working part time and I knew my limits. I was older and it was my second time around in college, no illusions.

    I loved that system, but I don’t know if Rutgers still has it. I’ve asked about it at other schools and Rutgers appears to be unique.

    Our one percent governor and his Assembly allies, including some very prominent South Jersey Democrats, are trying to throw Rutgers Camden students, with relatively low student debt levels, into the eager arms of Rowan University so they can become more than twice as indebted: twenty something thousand versus fifty something thousand. My question is for whose benefit? Because someone(s) getting a deal out of this.

    1. JTFaraday

      Per the Chronicle of Higher Ed:

      “Opponents charged that the plan was meant to be a political payoff to a power broker in southern New Jersey, George E. Norcross, an insurance magnate and chairman of the Cooper Health System, a Camden institution that will be a partner with Rowan’s new medical college when it opens this summer. A merger with Rutgers-Camden would bolster the research and revenue potential for the new medical college and alleviate the debt burden of Rowan, proponents of the merger said.

      Opponents feared that the loss of the Rutgers name would lead to the loss of prominent faculty members and potential students.”

      http://chronicle.com/article/Rutgers-Board-May-Have-Dealt/131809/

  6. rotter

    “And like late housing bubble borrowers, more are defaulting early on, meaning the loans were badly underwritten (ie, many should probably have never been made because it the odds of default were high): ”

    I’ll agree they shouldnt have been made. They should never have to be made. Ronnie Ray-Gunz gutted the pell grant program – turned it into an extractive rent seeking loan program, and school costs have probably gone up 10 times since then..while students go into debt slavery, colleges build football and basketball stadiums to get more of the TV-sports money racket, all paid for by the US taxpyer – the same debt slaves who went into hock to get a job…while the rentiers use their staggering wealth to keep the political system bought, ensuring thier share of the cost only goes down and never up..quite a fine racket.

    1. Colin K

      10 times since Reagan is optimistic.

      A semester at UT-Austin was about $500 in the early 2000s. It eclipsed $5000 around 2009 or 2010. That was in one decade. Since the ’80s…

    2. chitown2020

      Poorly underwritten my foot. They were BAD QUALITY LOANS…meant to fail. They were liars loans meaning….. the loan terms were UNSUSTAINABLE.. They did not disclose this to people….they hid it. The American people fund everything and pay for these loans at the ORIGINATION…These loans are all fraudulently induced so the FED can collect usury on money they don’t even lend. Its all a scam..It is the same scam with mortgages, cars and credit cards. They don’t lend us any money….we lend to them..It is called social engineering …

      1. lidia

        chitown, if you haven’t, you should seek out Thomas Greco to read. He puts the credit situation you describe in very succinct words (paraphrasing from memory):

        We give banks our credit for free, and then they lend it back to us at interest.

        He calls for us to take back the “credit commons” by establishing competing currencies and peer-lending schemes. His book is called “The End of Money and the Future of Civilization.”

      2. JTFaraday

        “the loan terms were UNSUSTAINABLE.. They did not disclose this to people….they hid it.”

        Actually, it is more accurate to say that they DIDN’T hide it. For the past 10+ years they preached not just higher education but elite higher education and ratcheted up the competition for spots based specifically on the idea that career opportunities were only going to be open to people who got the right credentials.

        Education as economic cure-all has been the lynch pin supporting the neoliberal decimation of the US domestic labor market since deindustrialization ramped up in the 1980s.

        Now that doesn’t work so well either. But for the past 10 years, they have certainly been broadcasting and shouting from the rooftops all over suburbia that your kids are going to have to get red in tooth and claw in order to make it.

        So here we are.

        1. Hazy Afternoon

          Robert Reich echoed corporations in their claim that unemployment is caused primarily by lack of education or training. It remains the best way to say “we don’t need you for this job”.
          It is still used as a justification for wealth disparity. Outsourcing, increasing lack of access to the academic brass ring itself, and limited opportunities or gurantees after what is a huge investment, bring needed scrutiny to failed policy and stunning dishonesty from neoliberals.

          1. JTFaraday

            Actually, I *despise* the steadily declining house organ of the D-Party and am eagerly look forward to its impending demise– one can hope!– but they did manage to run 2 pretty decent articles by Lawrence Mishel on education in 2007 and 2011:

            “Schools as Scapegoats” (for our crap economy)
            http://prospect.org/article/schools-scapegoats

            “The overselling of Education” (as economic cure-all)
            http://prospect.org/article/overselling-education-0

            What I like about these articles is that they highlight the way neoliberals both lean on education as the solution to everyone’s economic travails and then turn around and blame education (and teachers and dumb students) for their own economic policy shortcomings.

      3. chitown2020

        JT….I believe that it was Bill Black who said 1 in 5 of the loans given were Liars Loans and the banks are who put the word liar in the liars loans. They were debt bombs. These were not loans given to people for homes they could not afford. Max Keiser reported that those were only 20% of the loans….not enough risk to crash the World economy…..It was the poor quality of the loans that made the loans weapons of financial mass destruction. There is no monetary fix. An attorney told me over a year ago….don’t sign or agree to anything because the banks debt is unsustainable. It can never be repaid. Thank God for honest attorneys…! The reason the debt is unsustainable is they oversold interests in the notes and mortgages hundreds of times per note and mortgage..I uncovered that in my commercial property refi serious TILA and RESPA violations…they gave us no HUD 1, no notice of right to cancel, no interest rate or
        loan terms and that it was an Arm loan..we did not know this…the pay off date for the loan was to be July 2013…”Deception is evaluated from the perspective of an unsophisticated consumer.”

        1. chitown2020

          I want to add my story is a lot more complicated than that. The reason our loan failed was Wells Fargo pulled our small biz credit line after they purchased Wachovia. That shut down our biz of 25 years and we were never late on a payment…ever. We managed to rent out the property but then out of no where..Cook County doubled the property taxes and raised the mortgage payment..$2000.00 per month. We could not swing that…that put both our commercial property and our home in foreclosure…none of this happened to us by chance. They did this to millions of small biz owners. You cant run a business in this country without credit and they KNOW IT.. If you saw the movie TBTF on HBO there is a scene where Imelt is crying to Paulson without credit GE would go under. That is what should have happened. We The People, who funded and paid for everything … were MADE THE SCAPEGOATS and the VICTIMS of THEIR MASSIVE UNSUSTAINABLE DEBT FRAUD….

          1. chitown2020

            They set us up and they detonated the bombs and it was intentional. THE PROOF…..CREDIT DEFAULT SWAP INSURANCE……They have my commercial property mortgage recorded at $1.6 million….the original mortgage amount was $450,000.00.

          2. chitown2020

            What Obama described as reckless, not criminal, is an example of the same method they used to pull this off….Criminal deception.

          3. LeonovaBalletRusse

            But chitown, don’t you see? The 1% need the Lebensraum for their DNA in perpetuity: land, improvements, potable water, mineral rights, etc.

            Michael Hudson is the expert on Master Class land grabs by such tricks as you describe, which is why NY State still has a law on the books to prevent the inheritance of the Earth by “sharpies” (law since 18th century). Michael Hudson understands property and the schemes used to take it away from citizens by hook and crook.

        2. JTFaraday

          You must be on the wrong thread. Here we’re talking about hefty education loans, some as big as your average mortgage in Pennsyltucky, taken out because students and parents were being systematically schooled in the competitive neoliberal economy.

          Not only were they warned, but the warning was the sales pitch.

          1. chitown2020

            The same principal applies to all loans…they may be detonated a bit differently but, make no mistake….they will be denonated. They want us to beg them to save us…..screw them. They are ALL unsecured debts because we fund these loans…..NO JOBS…NOT ENOUGH INCOME BECAUSE OF MASSIVE BANK FRAUD…..???? THEY CAN EAT IT ALL..AND I HOPE THAT THEY ALL CHOKE AND DIE ON THEIR OWN FRAUD EXCRIMENT…

          2. chitown2020

            The warning was their sales pitch…? Well here’s the truth….THEY ARE ALL UNSECURED DEBTS…and there is no legal or monetary “fix” for $1.2 quadrillion dollars in DERIVATIVES FRAUD…THEREFORE….THEY CAN EAT IT..!

          3. chitown2020

            Why don’t we all GOOGLE the words…WE THE PEOPLE WANT OUR MONEY BACK FROM ALL OF YOU CROOKS…! If we do that expect they may pull out the big fat laser and call it solar flares.

  7. CaitlinO

    “The outcome of cutting social safety nets to the elderly ultimately means that old people will die faster. ”

    I thought that was the plan. Any one over 55 is treated by business as just another useless mouth. Reducing average lifespan down to 50 or so and letting infant mortality continue to increase will depopulate the country at a decent clip leaving millions of empty acres for estate building by the remaining elite.

    And, of course, education has been underfunded. The stupid are much easier to control.

    1. F. Beard

      Woe to those who add house to house and join field to field, until there is no more room, so that you have to live alone in the midst of the land!

      In my ears the Lord of hosts has sworn, “Surely, many houses shall become desolate, even great and fine ones, without occupants.” Isaiah 5:8-9 New American Standard Bible (NASB)

    2. Patrick

      I keep telling the elderly to vote for Democrats or Republicans (doesn’t make any difference), and you know what CatilinO? They listen. Every election, they come out in droves to shorten their lives.

    3. LeonovaBalletRusse

      C, like Hitler, they intend to eliminate the “surplus population” ASAP.

    1. chitown2020

      The latest news report on the Chase scandal is the SEC is going to investigate. Hmmm…..I think London is a wee bit out of their legal jurisdiction and the electronic bank is completely unregulated. So, in other words, no one is going to do anything about this. Rinse, wash, repeat until the crooks clean us out and we are bankrupt because of all of their fraud. Beware of their gold backed dollar and their World Tax “fix” for their fraud. It will be global tyranny and debt slavery for mankind. Same with the fascist healthcare plan. It will be the microchip mark of the beast for the 99%.

    2. LeonovaBalletRusse

      excellent radio show. too many ads, but Bill Black at his wittiest best.

  8. Jose L Campos

    First was Defense, then Health Care, now it is Education. Besides these there is the immense amount of money spent on enterprises like guessing the origin of the universe. Then there is the biologic enterprise. We are beguiled with the idea of finding cures through genetic manipulation. It does not pan out but what the heck, researches publish papers, go to meetings, are promoted, enjoy the good life.
    All these are extractive enterprises but since extraction needs a mine where the golden vein may be and such golden vein does not exist the governement creates the deficit.
    On a personal note I’ll say I have a grand daughter to whom I gave funds for her education. She has graduated, she still has her account intact because she obtained funds from the university from foundations from the state. She must be smart.
    Let’s face reality. Our debts will never be paid because they can’t be, because actually they do not exist. The movement of money is the lubricant of the state. And the state is a pyramid of power. The poweful impose what they can and the weak endure what they must.

    1. Senate Infighting

      First was Defense? Obama works for Lockheed too, he’s been across the world trying to push our most profitable (for now) product. Constant wars and heavy military spending helped Rome fall, why not let the herd continue over the cliff? They don’t seem to care about history, confirming the unique combination of degradation and idiocy necessary for a spectacular collapse.

    2. Kiste

      Huh? A demented anti-science rant that has nothing to do with the issues discussed in the article? Science and research is an “extractive business”?

      Yes, please, let’s defund science and research so more can be spent on “defense”. That will make the world a better place, I’m sure.

      1. Jose L Campos

        I have outlined the extractive mechanisms that developed in the USA after WWII. First it was defense, then medical care then, education. These three are ongoing together. They respond to existential fears. I added the suction of public funds by researchers and scientists because that suction has a clear economic effect. The value of science has nothing to do with the argument though I think that many of the ” potentially helpful discoveries for this or that” is a mechanism for the extraction of funds.
        That extraction has an effect on the population at large.
        The debilitating effect of those mechanisms on the USA is becoming clearer and clearer.

  9. billwilson

    The higher education system is broken.

    Kids now pay more for a degree that is worth less. It used to be that a degree could set you up for a lifetime of employment. Now, with rapid change the degree has a much shorter shelf life – and therefore should cost actually less. TVs used to be expensive, but lasted for 20 years. Now they are cheaper and last for maybe 3 or 4 until the next version comes out and makes yours obsolete. The same thing is happening in education (obsolete faster) … except the costs for some reason keep going up.

    Add in that the quality of the programs is questionable (with large classes and an emphasis on quantity over quality – heck my son passed two of his classes last term only because of Khan Academy – a free version of how education may come to be) and you have to ask why exactly does any rational person go to college for most programs.

    The range of possible solutions is wide.
    1. Have students work for at least 1 year before college – to make them better prepared and to have a bit of money to start with.
    2. Make co-op programs more widespread (work 4 months/work 4 months). Yes the degree takes a bit longer but the debt load is reduced.
    3. Only allow schools to charge students for the education component of their costs (about 1/3 of total costs). Funding for research, sports etc. should not be paid for by students)
    4. Cut loan access (by limiting the maximum that can be borrowed). Only be reducing the number of students will schools maybe start to compete on price.
    5. Encourage the development of public distance education (kind of the Khan Academy approach but expanded to duplicate complete programs). The costs of development are relatively low compared to the costs of funding higher education as it is now.

    1. Kaplan Liberty Universtiry

      6. Shut down 300+ overseas military bases
      7. Provide excellent education..for free.

    2. or

      8. Educate them instead of training them so they wind up with critical thinking and inductive logic, then they go right out and topple the regime

    3. lidia

      Sports is a grotesque resource sink. I was just reading about a really small town in VT which decided to raise its property taxes several cents to fund a new school gym and basketball court (the old BB court wasn’t “regulation size”). For this they went into debt for a mere million or two…

    4. Jim Haygood

      ‘It isn’t hard to imagine that kids who don’t use Adderall are at a serious disadvantage.’ — Yves Smith

      9. Supplement academic revenue by peddling performance-enhancing drugs to students through University Health Services.

      Leave school with a 4.0 GPA, a debt habit, and a monkey on your back.

      Hey, it’s just biz …

  10. Ben S

    Yes Yves, you rock. Keep pummeling the schools. Get the law schools too. They destroy the live of almost half of grads. Get them all. Let no swindler go unexposed.

  11. Ep3

    Yves, I am 35 and have student loan debt. I made the mistake of forgoing college right after high school. This probably cost me 15-17k due to the rise in college costs. I attempted to work and go to school for an employer who helped pay for education. But I felt that with my money making 5% and loans costing 2.5%, that it was better to borrow and pay the interest with interest. And as I got closer to finishing, I felt my time to the employer (factory) was a waste of my time and that I should just quit and finish up quickly.
    One thing I have seen is that loans not only pay for education, but they also pay for room and board, and not just at the dorms, but off campus apartments. Another thing I have seen amongst people my age is that they attempt to go back to school with no goal of a degree. They talk of their “300 level socio-economic-anthropormorphic class” and I think “what sort of job do u need a class like that for?”. It’s as if some do not look around and identify jobs that are attainable in the local economy. I mean, dolphin marine biologist is not something a person in their late 30s with children living in Michigan would easily find work in. To me, I had a well paying middle class job but the goal was to move up from that immediately. I took some pay/benefit cuts but it was for short periods of time. A person not right out of high school would not have the advantages to suffer such income interruptions. And yves, we are assuming all these young people have parents that support them.
    You also do not mention all the ways student loans offer forebearance. Especially for the person who never graduates. This is loans and interest on top of loans and interest. I guess the only solution to all of this is to repeal the statute that says that a person’s debts die when they do. That way, survivors and estates of dead people with student loans would still have to pay back those monies. That would teach people to be more responsible. And finally, it’s things like the high cost of college to become a doctor that keep poor people from becoming surgeons. It’s not fair to a privileged white kid from manhattan to have to attend the same school as a black kid from Detroit. That white kid is special; the black kid is not. By making college unaffordable for that black kid, it keeps that white kid from becoming “contaminated”. (yves, heavy sarcasm!)

    1. Patrick

      guess the only solution to all of this is to repeal the statute that says that a person’s debts die when they do. That way, survivors and estates of dead people with student loans would still have to pay back those monies.

      That’s a very nice thought, but I fear that people might not have survivors just to spite the banks. Better to put them in prison and force them to work for three cents an hour, and put their relatives in prison as well like England used to not too long ago.

  12. Amateur Socialist

    Thomas Frank’s op-ed in the June Harper’s covers this very well and includes the shabby history of price fixing among elite universities in the late 80s. GHW Bush got his DOJ involved and managed to settle the case with the notable exception of MIT which fought on until convicted of price fixing in 92.

    From his op-ed:

    “Massive indebtedness changes a person, maybe even more than college education does, and it’s reasonable to suspect that the politicos who have allowed the tuition disaster to take its course know this. To saddle young people with enormous, inescapable debt – total student debt is now more than one trillion dollars – is ultimately to transform them into profit-maximizing machines. I mean, working as a schoolteacher or an editorial assistant at a publishing house isn’t going to help you chip away at that forty grand you owe. You can’t get out of it by bankruptcy, either. And our political leaders, lost in a fantasy of punitive individualism, certainly won’t propose the bailout measures they could take to rescue the young from the crushing burden….”

    Read the whole thing (if you can – online access only provided to subscribers sorry) as they say.

  13. Crazy Horse

    Guess what happens when a society allows education and health care to operate as businesses whose only creed is profit maximization?

    While there are many theoretical solutions at a societal level as simple as returning to pre-Bush standards for bankruptcy, as an individual captive of the debt slavery system there is a more immediate path of escape. Emigrate to a country like Colombia or Chile that has better long term prospects than the USA, and renounce your citizenship in the dying Empire.

    1. Gil Gamesh

      And that’s why they are called public goods. The Chicago Tribune today features on page one a huge photo of a very small and soonto-be very wealthy man, Mayor Emmanuel. This once and future investment banker has rahmmed through the Chicago Infrastructure Trust, which will enable city assets, goods and services to be privatized. Rents and interest, debt and overhead: that’s all our vaunted, smug, rich, sociopathic elites want, and it’s all they know how to do.

      Off with their heads.

    2. Aquifer

      Hmmm, i get the “let’s just run away” sentiment, but, as they say, wherever you go, there you are. Running away becomes a habit – the problem is there are really no places to run to anymore, if there ever were. Sooner or later you have to curl up in a ball or take a stand. And what of those who cannot run? TS?

      To my way of thinking we made this mess in terms of the economic and social paradigms we have adopted and the figures we have chosen to “lead” us (and by “we”, i don’t mean indigenous folk, but those who “conquered”) and we must fix it by adopting and choosing others ….

      1. Gil Gamesh

        The USA is beyond redemption. We bear the seeds of our destruction, and are unwilling to do anything about it. Anything.

        1. chitown2020

          Well Gil, let me tell you…. that is the result of the real criminals, the FED banks, being allowed to force the American people to pay for $1.2 quadrillion dollars in derivatives debt fraud that they created from our signatures. Because they did not disclose what their true intentions were in regards to the mortgages and notes they were allowed to create $700 trillion dollars in collateral mortgage fraud with our signatures. Now you tell me why these FED criminals aren’t in prison and the FED has not been put into FDIC RECEIVERSHIP…? Why are the GSE’S being allowed to funnel BILLIONS OF DOLLARS in taxpayer money out of the TREASURY DEPT WHEN THE AMERICAN PEOPLE FUNDED THE LOANS AT THE ORIGINATION…? WHY IS THE FED BEING ALLOWED TO COLLECT TRILLIONS OF DOLLARS PER MONTH IN MORTGAGE MONEY WHEN THEY NEVER LENT ANYONE ANY MONEY AND THEY WERE THE BORROWERS…? Why are the GSE’S BEING ALLOWED TO FRAUDCLOSE ON THE AMERICAN PEOPLE WHEN THEY LENT OUT THE PEOPLES MONEY…? BECAUSE WE ARE BEING SCAMMED OUT OF EXISTENCE …THATS WHY.

  14. Mcmike

    We are a canibalizing economy. We are consuming everything of value, our infrastucture, social cohesion, trust, and expectations.

    This is coupled with right wing deconstruction tantrums, which are tearing down everything that does not feed their needy narcististic hole, which is to say everything, in a infantile rage

  15. briansays

    the student loans unspoken purpose is to keep college professors employed teaching courses that provide little marketable skills

    those are unionized positions part of the democratic base

    educational industrial complex

      1. F. Beard

        The bankers’ union for sure – the government enforced/backed money monopoly for private debts, the banking system.

        1. Lidia

          Exactly. No one complains about the US Chamber of Commerce being a union of corporations, or ALEC being a union of corporations.

    1. Patrick

      It doesn’t matter if the marketable skills are little or big just as long as they’re marketable.

      As for unions, the teachers unions will be broken up and teaching will go back to being a minimum wage job as it should be. Business is king. Never forget that.

      1. Gil Gamesh

        OK you are sarcastic. Or not. College professors are not unionized, so WTF: not relevant to the post. Indeed, many colleges and universities ruthlessly exploit their adjunct and TA staffs. The tenure system in public universities is not unionism.
        One sign of the rank decay of our society is the mass belief that the primary, if not sole, purpose of a college education is to train little Jane and Johnny to work in a cubicle for a FIRE firm. How reductionist, how pathetic. Small wonder the US is going down the tubes.

        1. Patrick

          College professors are not unionized, so WTF: not relevant to the post.

          But some of them are tenured and can’t be fired at will by businessmen. This is a terrible situation that must be rectified immediately.

          Indeed, many colleges and universities ruthlessly exploit their adjunct and TA staffs.

          Good for them! That’s the true spirit of the university.

          The tenure system in public universities is not unionism.

          See my comment above.

          One sign of the rank decay of our society is the mass belief that the primary, if not sole, purpose of a college education is to train little Jane and Johnny to work in a cubicle for a FIRE firm.

          You’re just sore because you couldn’t get a job a cubicle worker. Maybe if you majored in finance at Harvard like you were supposed to, you could be living the dream.

          How reductionist, how pathetic.

          Words like that could only be spoken by a liberal arts major.

    2. Bridget

      To keep college professors employed in cushy part time jobs at full time wages, to employ multitudes of directors of this or that useless program, to keep students living in a style to which earlier generations were unaccustomed….and then, of course, the athletic facilities and all the rest. Education is sort of a sideline at many of today’s institutions of higher education. And student loans are the enablers of the whole sorry system.

    3. wunsacon

      >> teaching courses that provide little marketable skills

      I disagree with the notion that the only education should be vocational school. We should learn about ourselves (incl. philosophy and history) and not just how we can make a better transistor.

      Incidentally, if you’re going to blame the “curriculum”, you could start with sports programs and partying.

      Lastly, “the value of an education in a liberal arts college is not the learning of many facts, but the training of the mind to think something that cannot be learned from textbooks.”

      - Einstein

      Nevertheless, I agree that “overpaid staff” is *one (smaller) part* of the problem.

      1. Lidia

        The real growth is not so much in faculty or faculty wages, but in administration personnel and wages, as well as excessive physical plant including food courts, dorms, football stadiums and enough athletic stuff to host a modern Olympics.

        I remember being told that HBS tore up all of its lawns each year and re-sodded them so they were always picture-perfect.

    4. JTFaraday

      Most unionized college instructors make about $3,000 to 5,000 per course, no benefits.

      At some private schools, that means they need a class size of 1 to 1.5 students.

      There may be some things that need to said about college instruction, but I think what briansays about it defines brian as a troll.

  16. Aquifer

    The driving of the wedge between the generations is an important point to make – being in the age group whose benefits won’t, ostensibly, be cut because we get them and we vote, i make it a point to say to the younger generation a)i am sorry that we boomers dropped the ball, we were given these safety net programs by our parents’ generation in response to a clear understanding of what happens to folks who don’t have them, and we have failed to protect them for the next generations b) if they don’t join in the effort to protect them, those programs will be lost and they, through painful experience, will have to rebuild them again c) there is nothing “inevitable” about the loss of these programs – it was a political decision to form them and their fate is likewise a political decision d) the reason i feel so passionately about the potential of the political process is not so much for my sake, i am an old fart and won’t be around all that much longer, but for theirs – they deserve to have the same commitment made to them as past generations made to us.

    Methinks the big bond that needs to be strengthened, if not actually forged, is not so much across “class” lines, but across generational ones – us old folk need to commit to sending the yung-uns out into the world with a good education and no debt (and of course a decent planet) – if not out of devotion, at least out of the practical consideration that they are our future, and the younger folk to commit to allowing the oldsters some comfort and security – if not out of devotion, at least out of the understanding that our fate prefigures theirs …

    That is why i keep coming back to the politics of our time and a fierce support of the positions of folks like Jill Stein of the Greens – we need them very much, and we can get them if we choose to do so …

  17. Gil Gamesh

    There is very little that isn’t rotten here. Screwing our young is one of Americans’ favorite pastimes, on par with incinerating Asians and lecturing the rest of the world on human rights. Why, collectively, do we hate our kids so much?

    Our rulers and landlords are relentless in devising and executing divide and rule strategies that allow so few to dominate so many, to the latter’s eventual ruin. Shredding social safety nets is one of their best: a twofer. Not only will cutting social spending increase our ruthless plutocrats’ share of revenue and income, but the atomization of Americans who must sell their labor makes it that much easier to pick us off….fish in a barrel.

    1. X

      Ah its good that you mention divide and rule, and Asians. Read “Confessions of an Economic Hitman” and see how Western Banks went about convincing Asians to take absurd loans at high interest rates, with the promise of fabulous future earnings.

      Then look at the American college system, whose propaganda is oh so similar.

      Karma.

    1. Aquifer

      But Ben, why should one have to risk life, limb or sanity to get a decent education in this, or any, for that matter, country?

      1. Red Sauce Joint

        Ironically, Universities and private think tanks live on defense contracts too – perhaps joining the Army was/is just another way of saying, “if I can’t beat ‘em, I’ll just join ‘em and try to survive, if I make it, I can be less in debt and educated.” This method is also called ‘social security, the more dangerous way.’

  18. Steve Bradley

    I went to college in the 1960′s; it was a state college (San Diego State); at the time, I paid $50 per semester for my privilege, plus textbooks. I know I could not go today. It would be financially impossible. However, my college career provided the gateway into graduate school, into a profession, and into a life of being able to earn and care for my family. These are values that society must regain. It’s interesting to me that the cost of government keeps going up, but the services provided to the people who actually use them keep going down. I am puzzled by this, since it’s clear to anyone who’s older than 50 that the government takes an ever-larger share of the total GDP, yet provides less to the people who bear the cost. As far as Social Security is concerned, yes, I have it now. As a senior, I well remember when we were all told (multiple times) that the money for Social Security was “ours;” that we “paid in;” that the “benefits” were directly connected to the “contributions.” Evidently the true realities were hidden from us at the time, and only have become evident in later years. Now we are told that this is an “entitlement,” and paid for by currently working folk.
    Why is it that government grows, services decline, and those who paid in advance for those services now discover that NOTHING was paid for?? The money was just wasted.

    1. Jeff King

      I woke up one morning, turned on the radio, and heard the same thing. After years of hard work and Chrisitian living, I have now heard that the hand out of social security is simply a vast ponzi scheme from the Federal Government. No wonder today’s college kids are furious with the debt and a Government that will not stop spending on socialism. I pay my debts, I work hard, no American should expect welfare or handouts, if you can’t pay for school – don’t go!

      1. chitown2020

        Jeff King……Who do you think are getting hand outs here??? That is one hell of a statement considering the FED owes the American people GAGILLIONS of dollars. I bet that you believe the usury they are collecting on the money they never lent on these fraudulently induced loans is going to the save the children fund? Or to feed and shelter the poor and the homeless that they created? No….we are all paying for this massive bank fraud….including the food stamps that Chase doles out to the peasants they helped create. Ask yourself this….why would a FED OWNED BANK….CHASE BANK BE COLLECTING PROPERTY TAX MONEY…? What gives CHASE the LEGAL AUTHORITY to collect property tax money….??? How about this one….Why is the servicer who claims to have purchased my loan telling me to send payments to CHASE BANK…? I never signed a loan agreement with CHASE FREAKING BANK..! The FED is cleaning this country out collecting money they never lent. I have news for you…the FED is sending ALL OF US to the bread lines…hope you like soup.

      2. Roman Berry

        I have now heard that the hand out of social security is simply a vast ponzi scheme from the Federal Government…

        Don’t believe everything you hear…even if it coincides with the political dogma you want to believe. Social Security is not a Ponzi scheme. Never was.

    2. Aquifer

      Steve,

      The first version you heard was the correct one – SS was set up and funded as a retirement insurance policy, paid for by those insured, not an “entitlement” except in the sense that one is entitled to get what one has paid for. The new version is that put out there by TPTB to convince folks to abandon the system so one will turn to WS to “invest” for the future. Of course they don’t tell you that the future you are investing in is WS’, not yours, but hey, small detail.

      Dean Baker has done a lot on this as has Dale Coberly on Angry Bear.

      Words matter and they are chosen to influence perception – the fact that this “revisioning” of SS has been so wildly successful is cause for pause

      - Pete Peterson picked a peck of peoples pockets, if Pete Peterson picked a peck of people’s pockets, how many people’s pockets could Pete Peterson pick? A whole lot it seems ….

      1. Warren Celli

        Just another deceptive meme…

        How do I divide thee? Let me count the ways.
        I divide thee to the depths of color of skin.
        I divide thee to the depths of age.
        I divide thee to the choice of employment.
        I divide thee to the preference of one’s sex.
        I divide thee to one’s gender.
        I divide thee to one’s religious beliefs.
        I divide thee in oh so many ways.
        I divide thee to control you.
        I divide thee to herd thin you.
        I divide thee to deflect from my evil.
        I divide thee freely, as men strive to deceive;
        I divide thee purely, as you praise my deceptions with your attention.
        I divide thee with a divisiveness unending.
        And, if the God in you so choose,
        I shall but divide thee better after death.

        Deception is the strongest political force on the planet.

        1. skippy

          I divide thee…. b[u]y… the tactile anesthesia… one incurs… having been raped with impunity…. from birth… too pleasure their betters.

          Some – grow – too love their master touch…eh!

          Do you eat snails?

          http://www.youtube.com/watch?v=NJ0VSmkebwk

          Skippy… Were really not here… I crash better than anyone I know…

  19. Tom Monroe

    Very well said. If we had any functioning justice system left in this country, our jail cells would swell with student deadbeats. It’s as simple as this, you paid for classes and some books with your loans, but then you went to Old Navy and bought clothes, and also went to buy lunch with the same school loans during the semester. Fraud! Where is the FBI?! Arrest the students!

  20. Joe Rebholz

    Our systems are way too complicated. Nobody can understand them. We keep piling on complexity on top of complexity. We require that each individual must pay for any good or service that benefits her or him in any way and we give no consideration to benefits that accrue to all of us by having more educated people. So we keep increasing the costs of education that individuals must pay and decrease public support. We are racing to the bottom backwards.

    People should be paid to educate themselves in a direct way as for any job. To educate oneself is work. It’s hard work for some. It is easy and pleasurable for many. In all cases though it takes time and effort that could be spent doing other things. It is like any other job — some benefits directly for the individual, great benefits for everyone else in the nation and the world. Clearly all of society benefits (or could benefit) from having more educated people.

    Or should we require each baby, at birth, to automatically take out a loan to pay its parents (and others) for raising it, such loan to be paid back over its lifetime?

    As humanity progresses (Yes, there is or could be progress) human activities will involve less production of physical goods and more generation of services. We could very soon take care of all humans’ physical needs. More and better knowledge could make this occur faster. And what are “services”? These are informational, less tangible than physical goods. They are arts, sports, leisure, individual development activities, all the good enjoyable, pleasurable activities, interpersonal, communicative activities that most of us seek outside of work.

    The faster we can get more knowledge through science and the faster we can get more and more educated people the sooner we can solve the world’s physical limited resources problems, the faster we can reduce or eliminate barbaric wars and physical violence.

    Our present system is very inefficient. We waste huge numbers of people by keeping them poor, unemployed, and uneducated — undeveloped from the fully functioning productive, contributing people they could be. We are racing downhill, going backwards from where we could be going.

    1. F. Beard

      Or should we require each baby, at birth, to automatically take out a loan to pay its parents (and others) for raising it, such loan to be paid back over its lifetime? Joe Rebholz

      Here for this third time I am ready to come to you, and I will not be a burden to you; for I do not seek what is yours, but you; for children are not responsible to save up for their parents, but parents for their children. 2 Corinthians 12:14

      1. F. Beard

        Also:

        Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law. Romans 13:8 New American Standard Bible (NASB)

      2. chitown2020

        Our babies are being born into the massive unsustainable debt of the FED banksters…They must be held accountable for the OVERSOLD INTERESTS IN FINANCIAL INSTRUMENTS that they created ……they are financial weapons of mass destruction…..and they are hidden in MERS… disguised as PERFORMING LOANS and. also disguised as MORTGAGES SOLD TO THE PUBLIC…….They spread their bad debt around to other banks….THE PROOF IS IN YOUR PUBLIC RECORDINGS…..I found my home mortgage was FRAUDULENTLY TRANSFERRED to the PUBLIC BY CHICAGO TITLE AND TRUST in 2007… This fraudulent transfer occurred one year before the STOCK MARKET CRASHED……HSBC now holds the BAD PAPER……..

        1. chitown2020

          Maybe we should all pay a visit to the FED…birth certificate bonds in hand and DEMAND PAYMENT….!

          1. Johnny Barrington

            Ivent, let’s set sail on Lake Michigan. Fish and beer. What are they going to do – foreclose on a row boat?

          2. chitown2020

            That would give them an excuse to send the Coast Guard gunboats out to shoot us. Rahm would o.k. the order to shoot the deadbeat rowboat thieves. They don’t give a ratsass about the rowboat, it is us they want to kill. Like the latest plan by the bankster thieves is to bulldoze the homes with the deadbeat homeowners inside. They don’t care about the homes or the money because it is a Hitler Plan. Sure the insurance money incentivizes the killing but, for the psychpaths who are behind this, it is really about murdering us. They want fraudulently induced debt slavery for the 99%…..or die.

    2. LucyLulu

      Joe Rebholz wrote: “Or should we require each baby, at birth, to automatically take out a loan to pay its parents (and others) for raising it, such loan to be paid back over its lifetime?”

      Did the House leak its 2014 budget plan?

    3. JTFaraday

      “human activities will involve less production of physical goods and more generation of services. We could very soon take care of all humans’ physical needs. More and better knowledge could make this occur faster.

      And what are “services”? These are informational, less tangible than physical goods. They are arts, sports, leisure, individual development activities, all the good enjoyable, pleasurable activities, interpersonal, communicative activities that most of us seek outside of work.”

      Oh they are, are they? And who is going to clean the toilets?

      It once occurred to me that we could be fair, educate everyone, and get stuff done that needs doing by having all academics take their turn cleaning the public toilets.

      At the time, I think I was reading this, around about page 64 or so:

      http://www.tannerlectures.utah.edu/lectures/documents/Fraser98.pdf

      To date, I have a notably unsuccessful record.

      1. Joe Rebholz

        “And who is going to clean the toilets?”

        I clean my own, sometimes. More generally it will be some time before so many have supereducated themselves that there is nobody left who would take a job cleaning toilets, collecting garbage, or other such supposedly uninteresting or disgusting jobs.

        Actually I once had a summer job collecting garbage. My coworkers were interesting and sometimes people threw away good stuff. I retrieved and enjoyed reading “The Diary of Samuel Pepys”.

  21. javagold

    its never ever been , what you know, but who you know……so why would anyone pay for what you know ???

    1. Lidia

      Why do you think Harvard is so expensive? People want to pay for access to that club, not because its education is so superior. One look at Larry Summers can tell you that.

      1. David

        Harvard is not more expensive than many third-rate private colleges. Maybe cheaper because those admitted will get enough financial aid including grants to allow them to attend fairly comfortably. Harvard has the money to do this.

        If you get into Harvard or another very good school, go. If you’re going to major in a monetizable field like engineering and have a reasonable chance of making it to graduation, go to any school that accepts you. If you are a more typical student who won’t like or couldn t expect to succeed in a monetizable field and only get into a not-so-good school — like most people — maybe it’s best not to go, or go to community college for 2 years and then reassess.

  22. Kim Kaufman

    Richard Wolf, the socialist economist, made the point on a radio show the other day that it was strategically stupid of the .01% in that there is now a very large group of people who are young, single, energetic, educated, in debt with few job prospects and pissed off.

    1. Joe Rebholz

      Yes, they will likely make good revolutionaries. AS the system eats itself — and there are many ways it is doing this — it is promoting a revolution or at least it’s own colapse. The present system has many destructive feedback loops — from the Minsky dynamics of booms and busts to student debts decreasing education to the rich getting richer and the poor poorer to ever increasing “growth”. In the real world destructive feedback spirals must crash.

      1. Kim Kaufman

        I agree with you, Joe. That’s the point Richard Wolf was making. The .01% should be afraid of what they’re creating. But they appear to be too busy counting their ill gotten gains to read history books. It often ends badly for them.

        1. Hazy Afternoon

          Why? It’s a growth opportunity – jails, cheap prison labor, surveillance, Homelund Security, NDAA (with the Stalin provisions), TSA, Patriot Act, CISPA, ACTA, protect ip act — a declining empire turns parasite in predictable ways for there is huge money in “security”. One ‘tell’ was the Banksters knew full well people were going to be explosively angry after they have their houses and jobs stolen from them – voila! — more money for police, security and public safety, with special legislation designed to defeat public dissent.

    2. neo-realist

      Sorry to come off as cynical, but unlike our young firebrands of the 60′s, I have a feeling many of these young, single, pissed and energetic people will retreat inward to the opiates of gaming, texting, facebook, twitter, and google plus. They see the OWS people getting beat to a pulp, so why risk the same fate. At least as long as their parents and other relatives still have their homes.

    3. CaitlinO

      Long-term, survival-oriented strategic thinking has not, historically, been a forte of the .01%.

      Cf. Louis XVI, Tsar Nicolas, Puyi

  23. Capo Regime

    How about those proprietary colleges? Interestingly they have defenders among those who inordinately value a credential. For a lot of jobs in D.C. you need college degree–any degree actually and there is no association with skills and the degree–its is actually in large part and even in students minds about getting literally a piece of paper. The “proprietary” schools around here take students in at 250-350 per credit hour plus fees( need 120 to graduate), teach then with adjuncts getting paid 1500 for course (no benefits no nada) and its often on line or the “on ground” takes places at B+ A- office parks in the suburbs with low cost per square foot. Many of the students are low income and minority or veterans–open admissions and low graduation rates Tough to get an solid expose on these and the fact that the WAshington Post owns the Kaplan “University” has created a strong lobby for these exploitative and shady operations..

    1. David

      You just said that for $30-40,000 , some of which will be covered by Pell Grants, these schools sell students degrees that will enable some to score real jobs in DC.

      Doesn’t seem like the worst scam ever. People doing the hiring have a pretty good idea that the schools are open-admission. Most of the degrees granted are pretty career oriented. It’s a way for those disadvantaged by income, culture or low academic ability to have a chance at those jobs.

      A bigger scam seems to me to be law school for $200,000 — which I think none is covered by Pell Grant. We for sure don’t need so many lawyers, so for 90% of students (i.e. all but the top 10% of schools as a reasonable approximation, since the rankings of law schools are very strict and very important) this is hard to see as career-oriented.

  24. Capo Regime

    AS all of your know–the term “average” is quite deceptive. You do know that on average all humans on average have one testicle.

      1. David

        Not in China!

        So in China on the average, they have more balls than we do in the States!

  25. BondsOfSteel

    What the heck happened to all those 529 plans? Were they not supposted to solve the problem of college affordablity?

    Maybe what we’re seeing is yet another failure of the right wing tax revolution. Instead of going tax benefits to the few, we should be supporting civilization.

  26. LucyLulu

    Yves wrote: “But even so, the story, in its understated way, depicts clear predatory behavior: students told by colleges not to worry about the costs, to see education as an investment (with nary a thought as to whether the kid wants to major in something that has a snowball’s chance in hell of leading to a decent paying job).”

    These are also young kids who have little to no significant experience with money. They haven’t even had to pay down a credit card yet they take on tens of thousands of debt. They have no concept of the value of money and how much sacrifice is involved to pay back loans. My youngest daughter will graduate in two years (with a pharmD, and living with her dad to save money, but still) with over $100,000 in debt, as she will no longer accept help with tuition (and Pell doesn’t cover grad school, so it’s at 7%). I don’t think she’s unusual in her attitude when she says, “It’s no big deal, mom. I’m not worried about it. I’ll be making lots of money after I graduate.” Referring to it as ‘naievete’ is an understatement.

  27. LucyLulu

    A topic I’ve never seen addressed anywhere is what is the net loss/gain to the government of extending student loans.

    Everyone recalls that two or three years that Obama began having the government directly make the college loans, rather than underwriting the losses while allowing banks to collect the profits. One point for Obama. So, the government is making loans at 3.4%, and about twice that, or 6.8% for those attending grad school. Currently, the government is paying 2.5% on the money it has to borrow. That means there is a built-in spread to make profits. Of course there are losses on defaults and forebearances, administrative expenses, that must be applied against any gross profits. An interesting question is what the final figures for the US Treasury looks like? Are we subsidizing student loans at all (and if so, how much), or is Timmeh profiting off them? No doubt that even if a subsidy is involved, the numbers are trivial. And how do these numbers compare to the offsets being asked for, in health care funding, to extend student loans at 3.4%?

    1. LucyLulu

      One final tidbit on the “trust fund” from policy briefing issued by US Treasury (2008) on social security reform proposals. There is no trust fund:

      “While there is considerable reason to believe that the current Social Security surplus does not represent true pre-funding, future reforms could usefully include mechanisms aimed at ensuring that true pre-funding occurs

      http://www.treasury.gov/resource-center/economic-policy/ss-medicare/Documents/ss_issuebrief_no.3.pdf

      Details on how to ensure that “true prefunding” would occur in future found in following brief:

      http://www.treasury.gov/resource-center/economic-policy/ss-medicare/Documents/ss_issuebrief_no.4.pdf

  28. run75441

    Hi Yves:

    Has any one looked to who makes the most student loans?

    - Sallie Mae
    - Wells fargo
    - Discover
    - NelNet
    - JPMorgan Chase

    “Harit Talwar, the company’s (Discover) Vice President for US Cards, said of student lending at a conference in May, ‘We really like this business. In the U.S., as you know, education costs are increasing much faster than income. And therefore, students need funding for tuition fees.’”

    There is no reason to frequent these private loan originators other than the push by College Financial and Student Aid Departments who may and have benefited from the alliance with them rather than work through the US Department of Education “Direct Loans” for parental and student loans. The comments from schools the US Department of Education is too difficult to worrk with for students is out weighed by this alliance which in the past has been found to have problems such as vacations and other benefits.

    - Student Loan Scandals http://education.newamerica.net/special_report_student_loan_scandal

    - Rethinking the Middleman http://www.newamerica.net/files/nafmigration/Rethinking_the_Middleman_24pp_PDF.pdf

    If anything, I would recommend going to Department of Education Direct Loans for student and parent loans. Students can still consolidate loans there even after the schools have pushed them into private originators. The real issue is the interest rate charged to parents and students for loans which was capped at 3.5% for students and 8% for parents (such a deal). Congress hs dragged their feet once again to retain the 3.5% cap and will allow it to double as Mitch believes the Dems should not tax the 1 percenters.

    There is a way to go beyond forbearance and get loan forgiveness now which did not exist previous to Obama’s administration. If a student can not get a job, he still has to fill out a form yearly claiming they have had no income (this can come after the 3 year economic hardship claim – which there is no interest accrual) and indeed there is interest accrual. However, after 25 years the loan can be forgiven by the Department of Education. It is not the best solution and it is tedious; but, it is asolution which did not exist in the past. The same solution holds true if the student has little income and they can only pay a portion.

    There is harsh retribution if nothing is done and they will go to the extent of garnishing your Social Security.

    1. chitown2020

      Aren’t they supposed to have a bank charter to defraud the U.S. TREASURY DEPT? How do credit card companies get away with it? Because they are all owned by the FED banks. Proxies. The crooks. The real deception is that they lend money. They don’t..they are MONEY CHANGERS..PRETENDER LENDERS….they are fraudulent debt creators. They all have a direct pipeline to the U.S. TREASURY DEPT. and the peoples money. The FED have hijacked the U.S. TREASURY DEPT. and the peoples money by secrets, lies, and deception in order to defraud US under the guise of money lending.

  29. Externality

    From Huffington Post:

    Number Of PhD Recipients Using Food Stamps Surged During Recession: Report

    [...]

    The number of PhD recipients on food stamps and other forms of welfare more than tripled between 2007 and 2010 to 33,655, according to an Urban Institute analysis cited by the Chronicle of Higher Education. The number of master’s degree holders on food stamps and other forms of welfare nearly tripled during that same time period to 293,029, according to the same analysis.

    http://www.huffingtonpost.com/2012/05/07/food-stamps-phd-recipients-2007-2010_n_1495353.html

    “The Ph.D. Now Comes With Food Stamps”
    https://chronicle.com/article/From-Graduate-School-to/131795/
    (scroll to chart at bottom of article)

  30. chitown2020

    They aren’t hiring people in Illinois because they have bad credit…!!!! I believe it is going to take a nationwide lawsuit against the FEDERAL RESERVE CROOKS to stop this insanity. These hypocrites are the criminals who are the debtors to WE THE PEOPLE….These crooks caused this mess and they are getting richer from it while using fascist tactics to destroy US.

  31. Conscience of a Conservative

    Adolescent students don’t have the experience required to say no to costly education that won’t lead to a good job. Senior citizens often lack similar judgment for different reasons. And because the laws remove any possibility for ever getting out of student debt those lending the money have no reason to exercise any standard of care when extending those credits. And now we have a generation of elderly and those in their twenties , thirties and beyond who are prevented from forming households or purchasing a home due to their burdens.

    I know we say education is a good thing, but just like housing the way the gov’t goes about extending it’s availability does more harm than good.

  32. X

    To Yves Smith

    “I’ve never understood when (once in a while) someone (clearly young) shows up in comments and rails against Social Security and Medicare because of the burden it imposes on him. Now I get it.”

    It took you this long to get it? Unbelievable. Don’t you study economic trends? Tuition went up at a higher rate than even housing prices, from the 80′s to late 00′s.

    The bubble should have been obvious for years to anyone studying it.

    1. Lord Gregory Dimon

      What burden does it impose, or better, how are the three even related? …….Now I get it!

    2. Yves Smith Post author

      Get over yourself.

      I’ve been writing about the student loan bubble for a while. What was news to me was the NY Fed stat that 94% of 2011 grads were carrying meaningful debt loads. Prior reporting presented it as : 1. Terrible in for profit schoolsl; 2. Meaningful but not pervasive among other higher ed students and most important

      The other key bit of information in the NY Times account was the attitude that students should suck it up and bear all these costs themselves. The last part, the attitude among officials (as in the lack of any interest in fixing the problem) was the real eye opener. And the post made clear that that was what bugged me. The real issue is social values, or the lack thereof.

      1. ChrisPacific

        I think it demonstrates that the US government does not think of an educated workforce as a strategic asset of national importance – or at least not enough to make an investment in it.

        I have argued elsewhere in comments that this is a deliberate policy aimed at perpetuating the political machine. I do think that’s true to at least some extent, but there may also be an element of “free market economics gone wild” thinking at work (i.e., Keynes’ comment about unwitting slaves of a defunct economist).

  33. Lawyers

    insidethelawschoolscam.blogspot.com

    Great website showing how Law School is ruining tens, possibly hundreds, of thousands of Americans

  34. econ

    It is ironic that Quebec (Canada) university students have been on “strike” against tuition fees for nearly 2 months while paying the lowest tuition fees in Canada. However the tuition fees were a catalyst to engage the neo-liberal state’s social-cultural-economic direction that benefits the 10% exclusively. Of course the state blames the several socialist operatives in the strike as those who resist reality of the economy. Max Keiser refer.

  35. chitown2020

    The proof the BANKSTERS knew the were selling crap and the investors knew they were investing in CRAP…THEY ALL BOUGHT CREDIT DEFAULT SWAP INSURANCE…..If the investments were advertised As AAA…..they SHOULD NOT HAVE BEEN ALLOWED TO INSURE THOSE INVESTMENTS….THAT IS THE REASON YOU INVEST IN AAA RATED SECURITIES…..Just like ALTA -A and subprime loans CANNOT BE INSURED WITH COMMERCIAL GUARANTIES…..BUT THEY DID IT BECAUSE THE QUALITY OF THE LOANS WERE MASKED……AIG…THE CEO’S OF THE BIG BANKS AND THE INVESTORS WHO BOUGHT CREDIT DEFAULT INSURANCE ON AAA RATED SECURITIES SHOULD ALL BE IN PRISON FOR INSURANCE FRAUD…!!

  36. chitown2020

    The CREDIT DEFAULT SWAP INSURANCE FRAUD IS EXPOSED IN THE MOVIE INSIDE JOB..THEY HAD INSURANCE….AND THEY GOT BAILED OUT..! THAT IS ABSOLUTE FELONY TREASON…!

  37. Geoff

    The Master Plan for Higher Education was developed for California in about 1960. http://ucfuture.universityofcalifornia.edu/documents/ca_masterplan_summary.pdf
    Among other great features, Plan reaffirmed California’s prior commitment to the principle of tuition-free education to residents of the State. However, the 1960 Master Plan did
    establish the principle that students (as well as faculty and staff) should pay fees for auxiliary costs like dormitories, parking, and recreational facilities rather than the State.

    That, of course, was pissed on by governors starting with Ronald Reagan, who worried that a well educated proletariat would be difficult to control. Now we have the Orwellian titled, “Student Success Task Force” promoted by the likes of the Lumina Foundation and the Gates Foundation to cut off open access to the community colleges. ALEC has been busy formulating new legislation to deny higher education to Californians who don’t dig the debt peonage so much.

    1. ChrisPacific

      That, of course, was pissed on by governors starting with Ronald Reagan, who worried that a well educated proletariat would be difficult to control.

      Bingo.

      The level of political discourse in the US, especially the mainstream media, is terrible. Decisions are made based on soundbites, personality contests, and marketing campaigns. That of course plays into the hands of lobbyists, who operate on the principle that anything can be sold to the voting public given the right spin in the media and enough marketing dollars.

      Educated voters ask awkward questions. They apply critical analysis to policy proposals. They do independent research. If they are being lied to or deceived, they are more likely to find out, and likely to tell others about it if they do.

      The way the US system currently works, it is in the interests of the powers that be to have an uneducated electorate. That’s why there isn’t more public investment in education. An unfortunate side effect is that the workforce becomes less competitive, but the corporations and the 1% can bring people in from countries that do invest in educating their workers, or just outsource.

      1. Aaron

        I think this happens with states too.
        For example, in Texas why spend more on education when you can hire someone from a state like California.

  38. Amateur Socialist

    “Everything our parents said was good is bad. Sun, milk, red meat, college…”

    -Woody Allen, Annie Hall

  39. Marianne Jones

    I’m late to this party, but it boggles my mind that the state has determined that youth lack sufficient responsibility and decision-making skills to buy alcohol before the 21st birthday, and on the other hand appears to encourage crushing indebtedness by 17 to 20 year olds. I personally entered college as a 17 year old minor, so I’m fairly certain that some portion of the overall debt is incurred by those of a similar situation.

    If indeed youth are lacking responsibility, there is clearly some willful blindness on the part of our leaders towards youth educational debt. If 18 year olds are indeed fully responsible citizens, then why the prohibition on alcohol before 21?

    1. Lidia

      Beats me, Marianne. It’s the same mentality that says a 12-year-old is too immature to be able to choose an an abortion, but is mature enough to start raising a family.

  40. David

    The only real problem is the result of bankruptcy reform. College loan debt should be subject to bankruptcy the same as any other debt. Then the market would work right, and basketweaving majors at Podunk For-profit U. would have the right amount of trouble getting a loan. The market would send them the right signal.

    The problem there was that maybe not enough money was lent — the strategy of taking a lot of college loans, then going BK right after graduating and starting fresh, was too good. But it’s the bank’s problem if they lend too much money also. There should not be an option of chaining people to unforgivable debt, because that breaks fundamental principles (e.g. jubilee) that are very important and that make for a humane society.

  41. Francois T

    The US has to decide if they want to stay competitive in the global marketplace of the 21th century, where human capital and knowledge will be more crucial than ever before.

    Hence, expecting students to start in life with a crushing debt load is pure stupidity.

    Now, the Indians and the Chinese will be more than happy to keep churning high numbers of debt-free engineers, scientists and researchers. Yes, they’ll come here for post-grad studies and research, but thanks to the total clusterfuck that is the US immigration system, a lot of them will go back to their country of origin to start new industries, like it is happening already.

    Meanwhile, tera-bitches like Congresswoman Virginia Foxx will berate students who dare to complain that 50K of debt is too much while she benefited from a subsidized tuition costing 87.50$ per annum.

    1. Lidia

      “The US” decides nothing anymore. It’s all working out the way the corporations and banks want it to. The outsourcing has gone from the shop floor to the boardroom.

      What was an empire is now just a colony, except that most residents haven’t noticed the switcheroo.

  42. Kunst

    The goal is to suck as much money as possible out of ordinary people for the benefit of those who manipulate the levers of financial power. Nothing is free, in fact everything costs at least what it’s worth, preferably more. A college education is worth $1 million more than not having it, then the universities and the predatory lenders figure that’s all, or almost all, their money. Why wouldn’t you , why shouldn’t you, pay $900,000 for $1,000,000 worth of increased wealth? Oh, the million isn’t guaranteed? Whose problem is that? You can’t win if you don’t play, so load up that debt, gamble that you’ll be able to make enough extra to pay it off, and if not, you are totally screwed — debt collectors, permanent peonage, and no risk to the lenders. At least real leaches have some medical value. This is our economic system. The rentiers continually look for ways to suck anyone productive into a debt relationship so that they will ultimately collect a share, large or not, of everyone’s productivity. They aren’t leaches, they are tapeworms, parasites, viruses. Nice work if you can get it, and you can get it by leveraging your wealth to set the rules of the game. Off with their heads!

  43. ep3

    yves, i just thought this. what happens in situations like this? Think of the Big 3, public schools, gov’ts. When costs and prices seem to be out of control, the attacks then begin on the employees. Is this just a prerequisite to the bringing down of professor/college employee wages? Because I know even administrative persons at colleges are well paid, thru pay and compensation. Recall that a few months ago, grad students were striking and seeking judicial “help” because they were being classified as contract labor and yet are teaching classes, thus testing and fulfilling the definition of an employee. Yet the courts determined them to be contract labor, and they did not have the right to strike.
    So what’s the next step? Well, some sort of tuition/student loan reform. This would result in cutting the schools’ source of funds. As long as the loans are flowing, the schools can continue to pay well and build fancy buildings. We have already seen cuts at the state levels. And we know at the federal level, research programs on stupid things like the origin of the universe and the mating habits of bumblebees (sarcasm!) are always seen as wastes of money. And professors are often liberal voting. So kill votes and kill their wages.
    So consider the squeeze on, i think. Tho i don’t expect it to happen as fast as the public schools.

Comments are closed.