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Education The Almighty Buck Politics

US Student Loans Exceed $1 Trillion 917

Posted by timothy
from the incentives-and-disincentives dept.
sycodon writes "Politico reports that student loan debt now exceeds one trillion dollars, an amount that should impress even Dr. Evil. Politico further reports that this is one of the more concrete issues driving the OWS protests and provides some enlightening examples of their particular gripes."
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US Student Loans Exceed $1 Trillion

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  • by elrous0 (869638) * on Thursday October 20, 2011 @09:33AM (#37773424)

    Just wait until you see what happens if THIS group starts going en masse into default. At least with houses, there is some collateral there. What are you going to foreclose on when little Johnny goes into default on his $100,000 loan debt because he can't find a job? You going to foreclose on and resell his worthless degree?

    And, sadly, this is only going to get worse. Tuition has been going through the roof at universities in the U.S., even as wages for the jobs post-grads get afterwards have remained stagnant. The wages of parents and post-grads have stayed the same, but they're having to fork out more and more for tuition--driving them to even more debt. So it's hardly surprising to find out that student loan debt has increased over 63% in just ten years.

    So what do you think the end result is if this trend continues? Either large segments of the population are going to have to give up on college or they're going to have to put themselves in a position where default is almost an inevitability. I guess that could actually have one positive effect. It could finally dispel the idea that everyone can or should go to college (or that a college degree should be considered a prerequisite for any white collar job).

    And, BTW, you know who pays when someone defaults? The U.S. government foots the bill, since these loans are federally guaranteed. So Uncle Sam gets to fund the bailout on that one too, just like he did with the banks and domestic car industry.

    • by scubamage (727538) on Thursday October 20, 2011 @09:42AM (#37773520)
      Since 1970, minimum wage has on average gone up about 300%. College tuition has gone up 994% (from 1200 a year at a public university to shy of 12000 a year). The cost of purchasing a home has gone up over 900% as well. Let's also not forget that every dollar is worth less, and when factoring in inflation and the consumer price index, minimum wage earners are making a good deal less than they did in 1970. Factor in that in the same timespan uneducated labor jobs have dropped by close to 70% in the US. So, people have no choice but to go to college, even the people who really shouldn't go, lest they live in poverty. They get no scholarships because they "just barely" managed to get in. They get a degree, and then can't find work. Working your way through school is now impossible with a minimum wage job, since, you're looking at 35 hours a week at minimum wage to be able to afford only tuition - that doesn't include books or board. In 1970, people were looking at 14 hours a week to be able to pay for school. This math also points out that its idiotic when baby boomers say, "people should work through college, that's what I did" because times are completely different. And as parent said, things are only going to get worse.
      • by dintech (998802) on Thursday October 20, 2011 @09:59AM (#37773790)

        There has been a 50% population increase in the US since 1970 and there aren't 50% more good universities, good jobs and houses. Supply and demand is doubly destructive. More cheap labour means wages don't have to rise as fast. Increase population means higher demands on available housing, pushing up prices and cost of living generally. Universities aren't immune to charging more for their product either. We now also have more women in work than in 1970, increasing competition in the job market.

        This doesn't account for 900% but accounts for some of it maybe.

        • by Rich0 (548339) on Thursday October 20, 2011 @01:08PM (#37778092) Homepage

          This doesn't account for 900% but accounts for some of it maybe.

          You might be surprised. When you have a limited pool of something that can't expand, and more demand than supply, prices can go up almost exponentially.

          If you drive on a congested highway to work you might notice on a school holiday or delay that the time to commute changes dramatically. And yet, the change might have only taken 10% of the cars off the road. Basically a road can handle so many cars per minute and once you start hitting that level the queuing becomes massive.

          Look at home prices - when an area runs out of land for new homes the existing home values start going up dramatically. Gas prices are similar - when those hedge funds collapsed and stopped trading oil futures prices crashed - it isn't like people stopped driving their cars much or anything.

          In the case of a university consumers have very little flexibility - if they want an accredited education then there are only so many places to go and new options open up infrequently. Demand exceeds supply, and so prices can rise almost freely. Really the only constraint are limits on student borrowing. If next year the US government announced that students could borrow up to $1M/year in student loans you'd see tuitions skyrocket.

        • by Solandri (704621) on Thursday October 20, 2011 @03:49PM (#37781778)
          The problem is that student loans are a demand-side distortion of the market. By providing student loans, you actually encourage the price of tuition to rise by increasing the amount people are willing/able to pay. That is why tuition has been far outstripping the rate of inflation. Normally prices are kept in check by how much an individual is able to afford at this moment in time. But loans allow one to time-shift money from the future into the present, thus providing a great amount of money in the present, but in exchange for decades if not a lifetime of debt. Most people are very bad at making decisions regarding this types of trade-off between money now vs. future debt (witness the number of people who continually carry a balance on their credit cards). Schools are exploiting this weakness in human rationality to run up the cost of tuition, and cheap student loans just exacerbate it.

          Education needs to be subsidized with supply-side distortions. Take the money currently provided as unrestricted student loans (leave the low-income assistance), and dump it into public universities. That should help lower the tuition at public unis, making them affordable to people who otherwise couldn't attend without student loans, while also exerting downward competitive price pressure on private universities and colleges. Normally I (as a fiscal conservative) wouldn't be for this - you're subsidizing a public "corporation" which competes directly with private corporations (universities and colleges). But the decades of student loans has so distorted the market that the private schools are swimming in money (which forces public universities to offer higher salaries to compete, thus raising their costs as well), and there's a lot of fat which needs to be trimmed to revert the college/graduate education market back to normal.
      • by uigrad_2000 (398500) on Thursday October 20, 2011 @09:59AM (#37773802) Homepage Journal

        Working your way through school is now impossible with a minimum wage job, since, you're looking at 35 hours a week at minimum wage to be able to afford only tuition - that doesn't include books or board.

        After my freshman year of college, which was stupidly at a private college, I took a year off, and worked 65 hours a week at 3 jobs (paper routes in the morning, lab rat stuff during the day, package handling 2nd shift). I paid down as much as I could in a year, and then went back to school.

        It's hard, but not impossible to pay your way through school today. It's not as fun as the lives of most college students, but it can certainly be done.

        • And I don't just mean straight money. Housing? Washing? Mom bringing food? Old washing machine?

          Mind you, as a European your story is proof that it can't be done. Do I really want my doctor to do 12 years over his story (6 years study, 6 years working for each study year)? Seems a bit wasteful.

          But Hey, I am from Holland, the country whose economy isn't down the drain. What do know.

      • by LehiNephi (695428) on Thursday October 20, 2011 @10:05AM (#37773912) Journal
        Sure, houses are more expensive now than they were 40 years ago. They're also bigger (2700 sq ft today vs 1400 sq ft in 1970 [infoplease.com]) and better-made, with more features. The cost of building the same house today that was the average 40 years ago hasn't changed nearly that amount. In addition, minimum wage makes for an absolutely useless measure of average household income. The ratio of median home price to median income (a much more useful statistic) has roughly doubled in the last 30 years, and if you ignore the housing bubble, the ratio increased from 3:1 to about 4:1. That hardly constitutes a tripling of housing price/income ratio; in fact, it means that price per square foot has dropped.

        I worked through college. My parents paid for my transportation to and from school and for phone calls home, but other than that, I was on my own. I'm now 30, and have a very good paying job (I'm in the top 20% income-wise). It's possible, but you gotta 1) choose the right school, 2) choose a useful major, and 3) work your tail off, all which requirements are increasingly ignored. It's also worth pointing out that the perception of a college education has created (in my opinion) a bit of a bubble. Just like the housing bubble, people are investing ridiculous sums of money into something which doesn't have near that amount of value. You can point the blame in any number of directions--at parents for pushing kids into college when the kid isn't made out for it, at the kids for choosing majors which provide no marketable skills, at colleges for helping perpetuate the perception that a college education is necessary to lead a comfortable life (and who can blame them, from a marketing perspective?), or at the government for artificially inflating demand by guaranteeing loans a ridiculously low interest rates.

        There are still LOTS of good-paying, non-college-degree-requiring jobs out there. The trades particularly are (and have been for some time) suffering from a shortage. Plumbers, electricians, welders, and the like. A good welder with his own equipment can make a very nice living.
        • by scubamage (727538)
          All of my numbers are based on this document [census.gov] from the Census bureau. Average cost when you were in college was a little under $7000 a year, excluding room and board (you're 30, so I'm assuming you started school in 1998-1999). With room and board you'd be looking at an average of $12,000. Today (well in 2007, which was 4 years ago) you're looking at an average of 11034 without room and board, and 19232 with. What's scary is they went up consistently by about 300$ a semester through the first part of the 200
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      When it comes to greed, the Universities make the Wall Street banksters look like Buddhist monks in comparison.

      • by tmosley (996283)
        This is not flamebait. I work in a university setting (but for a private company, thank God). I have seen these people build brand new sparkling building after brand new sparkling building while their students can't find work anywhere. PhDs in the hard sciences are working for less than $25K a year. I have people with masters degrees in hard sciences applying for entry level technician work. And on top of all the building, their administrative budgets are ballooning like crazy. First we had a presiden
    • you cant just walk away from a student loan like you can a house.

      You have to declare bankrupcy & be able to show 'undue hardship'.

      This of course turns the students into indentured servants to the banks or government, but let's not worry about the young. After all, we all know it is the baby boomers who really matter

      • you cant just walk away from a student loan like you can a house.

        You have to declare bankrupcy & be able to show 'undue hardship'.

        This of course turns the students into indentured servants to the banks or government, but let's not worry about the young. After all, we all know it is the baby boomers who really matter

        Err... bankruptcy does not eliminates one's student loan debts. You can't bankrupt your way out of it, even if you prove 'undue hardship' (as it is typically understood). The only way to get out is if - God forbids - you get permanently disabled or some other horrific event of that magnitude.

        • by CRCulver (715279) <crculver@christopherculver.com> on Thursday October 20, 2011 @10:16AM (#37774122) Homepage

          The only way to get out is if - God forbids - you get permanently disabled or some other horrific event of that magnitude.

          Or just move abroad. Debt is linked to your US social security number, which no one outside the US will ever ask you for. I've met a great deal of Americans who moved to Europe or Asia and then decided to walk away from tens of thousands of dollars of debt, and I recently read an article (can't find the link, sorry) that now there's a rising trend of moving abroad to teach English just to escape creditors.

        • by Chrisq (894406)

          you cant just walk away from a student loan like you can a house.

          You have to declare bankrupcy & be able to show 'undue hardship'.

          This of course turns the students into indentured servants to the banks or government, but let's not worry about the young. After all, we all know it is the baby boomers who really matter

          Err... bankruptcy does not eliminates one's student loan debts. You can't bankrupt your way out of it, even if you prove 'undue hardship' (as it is typically understood). The only way to get out is if - God forbids - you get permanently disabled or some other horrific event of that magnitude.

          Not according to CNN [cnn.com]

          "There's a mythology that private student loans can't be discharged. But sometimes they can and should," says Kantrowitz.

          To get your student loans discharged, you must file an undue hardship petition. To qualify, you have to satisfy three conditions: First, you must not be able to repay your student loan and also maintain a minimal standard of living based on your income and your expenses. Second, your situation must likely persist for a significant portion of the repayment period of the loan. Finally, you must have made good faith efforts to repay the loans.

      • by EllisDees (268037) on Thursday October 20, 2011 @09:55AM (#37773716)

        >You have to declare bankrupcy & be able to show 'undue hardship'.

        Nope, student loans aren't even dischargable in bankruptcy. You are stuck with them for life.

        • They can be discharged on death. You are stuck with them for life.

          What happens when it seems like suicide is the ONLY way out of the debt/joblessness situation? Wonder if the families where Jr. commits suicide because of his/her debt/joblessness would get the word out if this was the reason they took their own life? Will shame keep this buried? I would hope that with more and more suicides the government/corporations would be shamed to do something to prevent this for future generations.

    • by JBMcB (73720) on Thursday October 20, 2011 @09:45AM (#37773560)

      You can't default on student loans, they never go away. The fed will garnish your wages forever until they are paid off.

      • by elrous0 (869638) *

        You can't DISMISS student loans (through bankruptcy). You can MOST DEFINITELY default on them. And how are you going to garnish wages if someone is unemployed (or even severely underemployed)?

        • by chill (34294)

          And how are you going to garnish wages if someone is unemployed (or even severely underemployed)?

          Patience, grasshopper, patience. Eventually, even if it is 20 years down the road, the vast majority will get a job. At that time, the garnishments will apply. Remember, when you enter the mainstream workforce you pay income tax and there is social security withholding. The government knows when you have enough for them to tap you on your shoulder and put its hand deeper in your pocket.

      • by Shadow99_1 (86250)

        Which is even worse if the person is on minimum wage, as it could easily force them to stop working (since they may not be able to survive on the garnished minimum wage amount). The government may find it far more interesting with large numbers of young workers who default, can't pay, are garnished, and then stop working entirely.

    • Just wait until you see what happens if THIS group starts going en masse into default. At least with houses, there is some collateral there. What are you going to foreclose on when little Johnny goes into default on his $100,000 loan debt because he can't find a job? You going to foreclose on and resell his worthless degree?

      With that said (and something that should be said more often), even with rising costs in education, one should only get over $60K in student loans if you get a degree in medicine or law or STEM degree (in particular from a private university.) If you have $40K or more in student loans with only a B.A. degree in History from a public university, there is something fundamentally fucked up with you - that Mac laptop wasn't something you really, really needed, for example. Or you really, really, really didn't n

      • by scubamage (727538) on Thursday October 20, 2011 @09:56AM (#37773738)
        Coming from your background, that's fine. Here's my story: my dad worked at Merck, and was earning well over 100k a year. I was told that my student loans wouldn't be a worry, and thanks to being a mediocre student in high school combined with his earnings, I didn't get much financial aide (not for want of talant, but because I was frequently sick and missed a lot of school). My parents wanted me to go to a highly ranked local private college for my CS degree. I didn't want to go, but they refused to sign my financial aide papers (FAFSA) if I didn't go where they wanted. I applied early admission, which barrs me from applying elsewhere. A quarter way through my junior year, my father has a series of heart attacks, is diagnosed with cancer and lyme disease. My mother is diagnosed with uterine cancer. Neither one lasted long. All of their money? Gone in an instant from medical bills. His pension? Merck decided to fire him after due to frequent illness thanks to the cancer, so it was lost. My situation? Newly graduated with over $100,000 in student debt thanks to interest rates peaking at 8%. Now, this is all my fault, I knew that money was racking up, but honestly it never clicked. Pair that with an utter lack of money management skills being taught in my school or by my parents, and it was a recipe for disaster. It was something I never knew I needed to know, or even thought to learn about it. Not everyone has something "seriously wrong with them" and that sort of world view will get you branded as shallow and ignorant. Some people honestly get screwed by student loans.
        • by chill (34294)

          Actually, it isn't all your fault. Most rests on your parents, for forcing you into the potentially (and eventually) untenable situation.

          I know it isn't nice to speak ill of the dead, and that they meant well, but the fact remains they essentially forced you into that situation.

          Part of the problem is our culture that places such a high value on brand-name education. It has been my experience that the majority of the "education" received depends on the student much more so than the school or teacher. Going t

        • by nomadic (141991)
          "Merck decided to fire him after due to frequent illness thanks to the cancer, so it was lost."

          Once a pension benefit is vested it can't be lost. If Merck was playing around with that they were violating the law. Sorry to hear about your loan trouble, I am in slightly better shape (far more loans, but good job) but even while I can pay them they are a huge (though I can't benefit from IBR for most of them, like recent graduates can).
        • by luis_a_espinal (1810296) on Thursday October 20, 2011 @03:27PM (#37781360) Homepage

          Coming from your background, that's fine. Here's my story: my dad worked at Merck, and was earning well over 100k a year. I was told that my student loans wouldn't be a worry, and thanks to being a mediocre student in high school combined with his earnings, I didn't get much financial aide (not for want of talant, but because I was frequently sick and missed a lot of school). My parents wanted me to go to a highly ranked local private college for my CS degree. I didn't want to go, but they refused to sign my financial aide papers (FAFSA) if I didn't go where they wanted. I applied early admission, which barrs me from applying elsewhere. A quarter way through my junior year, my father has a series of heart attacks, is diagnosed with cancer and lyme disease. My mother is diagnosed with uterine cancer. Neither one lasted long. All of their money? Gone in an instant from medical bills. His pension? Merck decided to fire him after due to frequent illness thanks to the cancer, so it was lost. My situation? Newly graduated with over $100,000 in student debt thanks to interest rates peaking at 8%. Now, this is all my fault, I knew that money was racking up, but honestly it never clicked. Pair that with an utter lack of money management skills being taught in my school or by my parents, and it was a recipe for disaster. It was something I never knew I needed to know, or even thought to learn about it.

          I'm sorry to hear about your parents' illness, but sorry to break it up to you. They were fucking stupid and they fucked you up. They projected their own ideals of life into you in a manner that only served to indulge their shallow, narrow-minded (and I dare say arrogant) world view (a particular trait in our culture which is what is putting us in the fucked up place we are right now). Their interests, their pushing their agenda on you, that never represented your best interests. I'm sure they loved you dearly, but love is not enough. I mean, what kind of parent would refuse to sign FAFSA papers for his children just because his children do not want to go to a private university?

          I mean, think about it. In that aspect, they fucked up in their parental duties, they played God, and as a result, they have loaded your life with $100K in debt that cannot ever be defaulted by the normal venues of bankruptcy. Sorry pal, I am not the one risking being branded as shallow and ignorant.

          And speaking of world views...

          Not everyone has something "seriously wrong with them" and that sort of world view will get you branded as shallow and ignorant.

          I'm sure that in your college education you were exposed to the concept of reading comprehension, and reading skills in general. This is what I wrote. Tell me how the "something fundamentally fucked up with you" passage applies to you (who went to a private university for a STEM degree):

          one should only get over $60K in student loans if you get a degree in medicine or law or STEM degree (in particular from a private university.) If you have $40K or more in student loans with only a B.A. degree in History from a public university, there is something fundamentally fucked up with you.

          So. Read.

          Some people honestly get screwed by student loans.

          No. People do not get screwed by students loans. People screw themselves with the decisions they make with them (or in your case, your parents screwed you up with them.) Your case does not represent a general case, and doesn't even represent the general case described in my description of things, so I don't what sort of mechanisms you are using when extracting meaning from written passages.

          Having said that, I have to say I sympathize with you. I do not know your situation (I also went through a terrible period of disproportionate personal debt - private credit debt - due to a lack of sound money skills.) But, unless you are facing health issues, or you are already married

    • by Oxford_Comma_Lover (1679530) on Thursday October 20, 2011 @09:57AM (#37773770)

      You can't go into default in the normal sense. Most student loans can't be discharged in bankruptcy.

      They can be discharged on death. Because unemployed angsty grads never have problems with suicide, Congress wanted to incentivize it. (Not really, that's just a side-effect. It really is to not burden the family of someone who dies.)

      There are, however, really great loan forgiveness programs and loan repayment programs. It varies a little based on your exact loan, but generally, the current loans (which will change slightly next year, possibly) allow (1) income-adjusted repayment, where you repay the government based on your income and get the balance forgiven at the end of 30 years, regardless of how much you still owe, and (2) repayment for public service, where you get your student loans discharged after ten years of government service or not-for-profit work requiring the use of your degree.

      Amazingly, I believe the Government accounts for these MASSIVE loan forgiveness expenditures in the budget by calling them budget-neutral and completely ignoring them.

      They are great programs in several ways, which may be why they want to make them look good and not really account for them (they don't want to make programs which make public service work possible and which make college and graduate educations possible go away because of political pressures from the rich, who pay the most taxes and so would have the most interest in cutting those programs). Ultimately, of course, it is ridiculous to say they don't cost anything.

    • by ArcherB (796902)

      So what do you think the end result is if this trend continues? Either large segments of the population are going to have to give up on college or they're going to have to put themselves in a position where default is almost an inevitability. I guess that could actually have one positive effect. It could finally dispel the idea that everyone can or should go to college (or that a college degree should be considered a prerequisite for any white collar job).

      Or they could join the military. Do two years and your schooling is paid for. Even if you are not a fighter, every branch has openings for cooks and truck drivers. Yeah, the military sux, but it's no worse than trying to wash dishes to pay for college and the benefits are SOOOO much better.

      Just wait until you see what happens if THIS group starts going en masse into default. At least with houses, there is some collateral there. What are you going to foreclose on when little Johnny goes into default on his $100,000 loan debt because he can't find a job? You going to foreclose on and resell his worthless degree?

      Well, they can still take your house if you don't pay your student loans, or at least put a lien on it. They can also garnish your wages, so no matter what crappy job you get, they will make sure it pays less. Your o

  • non-profit? (Score:5, Insightful)

    by cashman73 (855518) on Thursday October 20, 2011 @09:40AM (#37773506) Journal
    Anyone that still believes that America's colleges and universities are "non-profit" institutions, should think again at this. For two of the most obvious examples, I cite you the "Bowl Championship Series" and most college sports in general (namely football and basketball), as well as the fact that student dormitories and student unions have largely been turned into country clubs, with just about every one of them having a Starbucks (heck, that's in the library now, too), and having such amenities as rock climbing walls, gyms with workout equipment that rival Gold's Gym, and many schools are giving every student their own iPad these days. Plus, when most schools in Division I pay their football or basketball coach twenty times the salary of the average professor, and four times the salary of the university president, you know something's fouled up,. . .
    • And at most universities, both housing and sports are a COMPLETELY SEPARATE ENTITY!.. You look at how much the football team brings in.. Did you forget about how much it costs to send the womens Rowing team to their events? Or building and maintaining a stadium to hold 70,000 people?

    • Anyone that still believes that America's colleges and universities are "non-profit" institutions, should think again at this. For two of the most obvious examples, I cite you the "Bowl Championship Series" and most college sports in general (namely football and basketball), as well as the fact that student dormitories and student unions have largely been turned into country clubs, with just about every one of them having a Starbucks (heck, that's in the library now, too), and having such amenities as rock climbing walls, gyms with workout equipment that rival Gold's Gym, and many schools are giving every student their own iPad these days. Plus, when most schools in Division I pay their football or basketball coach twenty times the salary of the average professor, and four times the salary of the university president, you know something's fouled up,. . .

      When the school has TV ads, non-profit goes out the window as far as I'm concerned. At the school I attend as a grad student, things have changed remarkably in the past few years. Massive construction projects and renovations, loft-style dorms, the same gym with rock climbing wall you speak of, and countless new student clubs and services including concerts from popular bands every weekend. If it weren't for scholarships and fellowships, I wouldn't be here.

  • There are plenty of students who majored in very reasonable and marketable courses of study and came out with a mountain of debt and dramatically worse job prospects than what were available when they began their studies. These people have a very real complaint.

    However there are also people out there who went to college and majored in drama, or comparative literature, or film studies, or any of a number of other fields that have very marginal job prospects even in a good economy. They are carrying debt because they took a foolish risk with 4 years of their lives. Of course, some of them may have been poorly informed by their college with regards to what they could do with their degree. Others didn't give a damn and set off determined to "study what I want" or whatever. This latter group dug their own hole and I don't have a lot of sympathy for them.

    In short, if you majored in engineering and then couldn't find a job after the economy went down the toilet while you were in school working your ass off, I feel for you. But if you spent four years in a field with ordinarily terrible job prospects and now you are shocked that you have no job prospects, I don't have much sympathy for you as you took a great opportunity and managed to squander it.

    However, those who excel at taking great opportunities and squandering them may yet have a future in American politics.
  • by fermion (181285) on Thursday October 20, 2011 @09:54AM (#37773690) Homepage Journal
    There are a couple things here that clearly indicate that banks are committing fraud.

    First, there is usury. Student loans are unsecured, but federally backed. There is very low risk to the bank. Yet interest rates charged tend to reflect that of high risk loans. Further, while payments are deferred, interest isn't. Not all of this is fully disclosed to the borrower. For instance, do all students know that they are payig interest rates comparable to normal loans, yet with normal loans a borrower can default on a loan. With student loans the must must be paid back, and garnishment of wages and other restrictions on one's livelihood are very easy. Unlike most loans, which are regularly renegotiated, the student loan, with exorbitant interest given the level of risk, is not.

    Then there is collusion in the defrauding of the american public. Much of the loan money goes to private distance Universities. These Universities are well known for having very high default rates, and are well known for being victims of straw men loans. In any other financial process, the banks would conduct due diligence to minimize exposure. However, as this is a way to transfer taxpayer money to private banks, there is almost no due diligence. The money is handed out. Banks know or should know the forms are fraudulent. There was one reported case of many forms asking for money to the same address. However, as there is no real risk, and it free money for the bank, no such diligence is performed and banks happily take tax payer money. Unfortunately, all risk and blame is placed on the university and student. While this is appropriate, more blame must be placed on the people who are fundamentally profiting from the fraud. The bankers.

    • For instance, do all students know that they are payig interest rates comparable to normal loans, yet with normal loans a borrower can default on a loan.

      You will never find a 14 year, collateral-less loan that banks will give to a jobless 18 year old student, at any interest rate, they simply don't exist, and for good reason. The government backing is the only thing that makes such remarkably low rates possible, and the default-less nature is the only thing that makes the government guarantee possible.

  • by advid.net (595837) <slashdot@nOSPAM.advid.net> on Thursday October 20, 2011 @10:08AM (#37773992) Journal
    A must-see documentary about student loans [inflation.us] :

    NIA today officially released the most comprehensive documentary ever produced about higher education in the U.S. NIA's hour-long documentary called 'College Conspiracy' exposes the facts and truth about America's college education system. 'College Conspiracy [inflation.us]' was produced over a six-month period by NIA's team of expert Austrian economists with the help of thousands of NIA members who contributed their ideas and personal stories for the film. NIA believes the U.S. college education system is a scam that turns vulnerable young Americans into debt slaves for life.

    It also remind us:

    After the burst of the Real Estate bubble, student loans are now the easiest loan to receive in the U.S., and total student loan debts now exceed credit card debts.

    It was written May 16, 2011 ...

    • by jwhitener (198343) on Thursday October 20, 2011 @07:20PM (#37785144)

      I'd never heard of NIA. I went to their site and read the 'about' section.

      I got a bit suspicious when I saw this: "Our food inflation report was featured on FOX News by Glenn Beck, who called NIA a "very credible" organization." I don't consider Glenn Beck very credible.

      Googling NIA lead me to this: National Inflation Association co-founder admits NIA is a FRAUD! [youtube.com]

      And a ton of other articles basically saying that NIA is a scare scam to pump and dump gold/silver. Now it could very well be true that total student loans exceed pricey credit card debts, but does that 'fact' actually mean anything? More students than ever are going to school, largely because unskilled labor jobs are drying up. So its no surprise that there are more loans.

      I'd rather build a business that had an educated population to hire from and live in a community that voted intelligently than cut back on federal loans.

  • by Joe_Dragon (2206452) on Thursday October 20, 2011 @10:22AM (#37774234)

    the high costs as well.

    Like forced meal plans that cost a LOT for meal times that do not always fit in with class times for any from sub par to good cafeteria food. Some places even forced cash cards that time out so you are in a use or lose it so some people buy a ton of candy just to drain the cash from the card before it times out and is lost.

    Also room and board with (room mates) can cost more more then renting a apartment on your own. Can take the same room mate rent apartment and pay less.

    Now a dorm may have stuff like high speed networking but that may be part of added tech fee on top of the room and board costs. Now most dorms have some kind of cable system but that can be a old analog only system like you see in hotels, a system with some channels but you have to buy the cable box, to like some apartment where a cable system like Comcast gives you basic / starter is part of rent and you can add on any pack that you want.

    Now in a apartment you can get full digital cable or satellite tv and get the tv that you want and not be stuck with what the dorm has.

  • by PolygamousRanchKid (1290638) on Thursday October 20, 2011 @10:24AM (#37774276)

    Debtors are "it" and have to tag the debt on non-debtors. Banks fail? Well, people who save money can pay more taxes have to bail them out. People with lot's of debt get tax breaks, and don't have any money anyway. So anyone with visible money ends up paying for those in debt.

    So my advice is, dig yourself as deep into debt as the silly financial system helps you to. You will never have to pay for it. Someone with no debt will.

    As the economist John Maynard Keynes said, "If I owe the bank 100 pounds, I have a problem. If I owe the bank 100,000 pounds, the bank has a problem."

    Oh, and for US students with too much loan debt, that would be deducted from your paycheck? Flee the country, for the off-world colonies.

  • by Joe_Dragon (2206452) on Thursday October 20, 2011 @10:36AM (#37774532)

    To many required classes and fillers classes are pushing the 4 year degrees out to 5 years.

    Due to classes filling up, classes only being offered only at some times and the high number of credits needed a 4 year degree used to be 120 credits and now Colleges want more for the 4 year degree. Also the X credits to be a full time student should also be cut down or have some kind of fill in that force people to take stuff like art history.

    Now some filler is ok but other times it's a waste that can be better spent and there are ways to make it better like say cut back on some of the math classes or make some of them no logger required, let people take some side classes in other ares with not having to meet all the prerequisites for that class, on the job training, work study, and so on.

  • by geoffrobinson (109879) on Thursday October 20, 2011 @10:39AM (#37774568) Homepage

    The government helps students take on loans -> colleges increase tuition because students can afford more thanks to the loans -> there is societal and economic pressure to help people go to college -> the government helps students take on loans ...

    The three sectors that increased much faster than inflation (housing, health care, higher ed) all have their cost subsidized by government. Is this a coincidence?

    And this is the relative size of the higher education bubble: http://www.di.net/blog/wp-content/uploads/2011/06/tuition-housing-cpi1.jpg [di.net]

  • by Joe_Dragon (2206452) on Thursday October 20, 2011 @10:53AM (#37774844)

    As the PHD system needs work

    http://www.nature.com/news/2011/110420/full/472261a.html [nature.com]

    MBA? that is a masters but do you realty want a work place there the basic jobs needs Business Administration skills?

  • by kent.dickey (685796) on Thursday October 20, 2011 @11:04AM (#37775054)

    First, Felix Salmon says USA Today's numbers are wrong, and student loans are around $600 billion: http://blogs.reuters.com/felix-salmon/2011/10/19/fact-and-fiction-about-student-loans/ [reuters.com]. But it still is a big number.

    Here's the current system: if someone with a pulse wants to go to a for-profit school, he will get in. He will pay high tuition, almost all covered by student loans. He gets a worthless degree and cannot get a job. But federal student loans cannot be discharged in bankruptcy, so his life is now ruined.

    There's some blame to go to the student, he should have known better. But chances are this is a young kid, and his first exposure to the adult world is a recruiter telling him he's smart, he's going places, he just needs to graduate college, preferably this really expensive for-profit school. He's been preyed upon as well. And this used to be considered fraud, preying on vulnerable people. If a guy went around to old ladies selling them useless junk, we used to toss him in jail. I'm not sure why our attitudes have changed.

    I think federal student loans need a major overhaul--right now, it's a huge giveaway to the banks and for-profit schools with students as victims. Limit federal loans to for-profit institutions to 50% of non-profit tuition (it can go higher based on merit), and force for-profit schools to be accredited every year. Just somehow change the incentive system to reduce the number of non-qualified kids funneled into expensive and useless programs. Change the law so that student loan defaults impact the school they went to: say, reduce loans in the future, with no more student loans to that school if the default rate tops 15% (or whatever number makes sense).

    This is another bubble, and the popping of it will be another huge blow to the economy.

    Also, kids need to told loudly: getting a degree from a school not competitive in the field is not worth anything more than going to your closest state school. Expensive schools that aren't competitive to get in are just a place for rich kids to go get drunk. Don't take out loans to go to those schools!

  • by MarkvW (1037596) on Thursday October 20, 2011 @11:18AM (#37775348)

    dent loan debt is nondischargeable in bankruptcy unless the debtor can meet a very high burden of proving hardship.

    It's no wonder that lenders lend insane amounts, when they can hound their borrowers for years and years.

    No way is this in the long term interest of business, but since when has business ever cared about the long term. They buy their congressmen and this is what they get.

    Same thing for the goddamn mortgage industry. Banks get super-protection for their residential mortgages in bankruptcy, so they can write stupid mortgages without fear that the mortgage will be modified in a Chapter 13. This is a contributor to all the stupid loans.

    Then business sells us on the idea that it's all the debtor's fault. That's the stupidest thing of all. Sure it's the debtor's fault. When the moron takes the stupid home loan or the stupid mortgage, he has only himself to blame. But business interests want us to think: Fuck him. He can sort his own sorry shit out. And we're morons if we agree with that. If our stupid ass neighbor goes down with a bad mortgage--our property values suffer, our banks suffer, and we all suffer. We're all interdependent. Looking out for other people is looking out for ourselves. The frontier ethic doesn't work anymore when we're jammed together in cities.

    Enough of a rant. Now I'll get flamed by the small government people who would rather be governed by banks than by elected representatives.

    • by sjames (1099)

      In the case of the home loans, I would say the people who got trapped were more naive than stupid. Brokers and bankers who are supposed to have a deep understanding of finance kept assuring them that the debt load they were taking on was perfectly manageable, and that the needed refi was just a matter of filing the papers. With the zillions of documents in dense legalese and all the figures flying about, the buyers were "blinded with science".

      What the buyers didn't know was that the mortgage business chang

  • by blind biker (1066130) on Thursday October 20, 2011 @11:38AM (#37775698) Journal

    Make all education free for all. That's what Finland is doing, and it works brilliantly: the scientific output of this small (by population numbers) country is extremely high, as well as the effects of it on industry.

    Now the UK has introduced tuition fees that are, in most cases, about GBP 9000/year. Many universities in The Netherlands (where education is free for all, as well) are now marketing all-English language master programmes to UK students that cannot afford the tuition fees. That will cause an influx of people who will, by studying in The Netherlands, contribute to the science in that country, and most likely stay as PhD students, contributing even more.

    By the way, in addition to free education for all, the US should really introduce single payer, too. A system where children (as well as adults) are left without health insurance should alarm you.

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