The real student-loan scandal
Charlie Harper, writing at Peach Pundit, notes the worrisome parallels between the college-loan situation and the housing-loan bubble just before it burst a few years ago:
“Virtually anyone that applied got a loan. There was no consideration given to how the loan would be repaid. No calculations for repayment ability were required. Most borrowers overestimated the value of their purchase and underestimated the income that would be available in the future to retire the debt. The government subsidized an unlimited amount of borrowing, and then the problem was so large that when an alarm was sounded, too many people were invested in the status quo that the system could not be changed until it was too late.”
There’s a lot of truth to that. Outstanding student loan debt hit an estimated $1 trillion this week. And according to the most recent numbers available, more and more students are defaulting on those loans. The annual default rate has risen from 6.7 percent in 2007 to 8.8 percent in 2009, and today, three years later, it’s undoubtedly higher still. In this economy, it can’t be easy coming out of college with a degree and $60,000 or $100,000 in debt.
However, it’s important to point out that college graduates with large debt aren’t really the problem. The larger problem is the predatory for-profit schools that have popped up around the country to try to separate students from their college-loan money and in the process deliver little in the way of useful education.
The industry is large and growing rapidly. During the 2008-2009 academic year, those schools collected $4.3 billion in Pell grants and $20 billion in federal loans. That’s more than double the amount that they received as recently as 2005.
More importantly, the default rates on those loans are very high and rising.
In 2009, just 5.2 percent of students who had attended four-year public schools such as Georgia State or the University of Georgia defaulted on their loans. Just 4.5 percent of those who had attended non-profit private colleges defaulted.
However, the default rate among those attending four-year for-profit proprietary schools was 15.4 percent. Between 2007 and 2009, the number of students from for-profit proprietary schools who defaulted on their loans increased by 65 percent.
(It’s important to note that some for-profit schools do a good job for their students and have a relatively low default rate. If you have questions, the U.S. Department of Education maintains a database that allows you to check the default rate for each institution.)
Why are the default rates among for-profit schools generally so high? As the schools point out, part of it can be explained by the fact they serve non-traditional students. That’s a valid point. But in far too many cases, those students don’t get the education or the degree that they pay for and end up tens of thousands of dollars in debt to the taxpayer without the means to repay it.
The Education Trust, a Washington think tank specializing in higher-ed issues, released a report in November 2010 noting that just 22 percent of full-time students who began a four-year program at for-profit schools actually got a degree within six years. And while some schools do better, some do much much worse.
To many of these schools, the guaranteed federal loan programs are simply a cash cow to be milked. They exist solely because of taxpayers’ money. So in an effort to bring at least some rationality to the industry, the federal government instituted the so-called “90-10″ rule. Colleges are allowed to collect no more than 90 percent of their revenue from federal sources, leaving 10 percent to be generated through actual tuition payments and other private sources.
It’s a good rule. But what did the proprietary schools do in response? In many cases, they created their own, private in-house student loan programs to provide that missing 10 percent. According to a 2011 study by the National Consumer Law Center, the schools finance those loans to their own students knowing full well that many will never be repaid. And they don’t care:
“As documented in this report, the default rates on most institutional loans are shockingly high. The schools seem to view these loans more as “loss leaders” to keep the federal dollars flowing… Schools make unaffordable loans as a way of filling up the 10% category with vapor revenues derived from loans that will never be repaid.”
(The NCLC also points out the great discrepancy in executive pay at for-profit colleges, noting that “the chairman and CEO of the for-profit education company Strayer Education was paid $41.9 million in 2009, 26 times the compensation of the highest-paid president of a traditional university.)
Again, it’s important to stress that these colleges are not surviving in the private marketplace on private money. They are preying on federal dollars funneled through their students. Nonetheless, the issue has become caught up in the ideological warfare in Congress. The Republican-led House has generally taken the position that trying to reduce abuse of federal student-loan programs by proprietary schools amounts to government regulation of private enterprise.
In addition, the proprietary-school industry spent some $6 million in lobbying in 2010 alone. It has also been active on the campaign finance front. According to the Minneapolis Star-Tribune the industry contributed more than $100,000 in 2010 alone to U.S. Rep. John Kline, R-Minn., chairman of the House Education Committee.
Most of the media attention on this issue has focused on the plight of middle-class kids. Politicians, including President Obama, are also playing to that demographic for votes. But in return for their debt, those students are at least getting good educations from good schools. They at least have a fighting chance to turn that education into a career that will allow them to repay that debt.
But millions of others who are largely invisible to the rest of us are being played for suckers, with Uncle Sam as a silent financier in the scam.
– Jay Bookman
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354 comments Add your comment
Union
April 26th, 2012
4:35 pm
im glad adam knew what it was for.. since the nobel committee didnt seem to quite grasp it..
“The prize’s vagueness helps. In his speech, Norwegian Nobel Committee Chairman Thorbjorn Jagland gave only abstract justification for picking Obama. “We are not awarding the prize for what may happen in the future, but for what he has done in the previous year,” he said. “We would hope this will enhance what he is trying to do.” The committee’s statement wasn’t much more specific, alluding only to his “vision of and work for a world without nuclear weapons.”
In his speech, Obama used this vagueness to his advantage. If the Nobel committee wasn’t going to explain the award, then Obama would: “I will accept this award as a call to action,” he said, “a call for all nations to confront the common challenges of the 21st century.”
Union
April 26th, 2012
4:37 pm
the actual scandal is this… the govt loaning money without any rhyme or reason on how its going to get repaid.. sort of like the postal service bailout… lets keep that union happy..
JamVet - Stay ignorant, my friends...
April 26th, 2012
4:38 pm
The Nobel Peace Prize for 2009
The Norwegian Nobel Committee has decided that the Nobel Peace Prize for 2009 is to be awarded to President Barack Obama for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to Obama’s vision of and work for a world without nuclear weapons.
Obama has as President created a new climate in international politics. Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play. Dialogue and negotiations are preferred as instruments for resolving even the most difficult international conflicts. The vision of a world free from nuclear arms has powerfully stimulated disarmament and arms control negotiations. Thanks to Obama’s initiative, the USA is now playing a more constructive role in meeting the great climatic challenges the world is confronting. Democracy and human rights are to be strengthened.
Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world’s population.
For 108 years, the Norwegian Nobel Committee has sought to stimulate precisely that international policy and those attitudes for which Obama is now the world’s leading spokesman. The Committee endorses Obama’s appeal that “Now is the time for all of us to take our share of responsibility for a global response to global challenges.”
Oslo, October 9, 2009
http://www.nobelprize.org/nobel_prizes/peace/laureates/2009/press.html
Maybe i missed it but can someone show where there is any mention of Iraq???
(ir)Rational
April 26th, 2012
4:52 pm
Time to head home. Y’all have a good evening.
Quick
April 26th, 2012
4:54 pm
Who is selling student loan-backed derivatives?
TaxPayer
April 26th, 2012
5:03 pm
Who is selling student loan-backed derivatives?
Sounds like the perfect business for AIG, given their government backing.
Eric
April 26th, 2012
5:08 pm
Jay, thank you for bringing all this to the forefront. I was aware of the increasing debt through private universities, etc. But I am in a state of shock over the lobbying contributions!
A few years ago, I had considered signing up for a medical coding program at Everest Institute. But their career placement service was woefully inadequate. They would not reveal which graduate obtained which jobs (or not), leading me to be very suspicious of taking on $15k debt. If you’re going to take that much money for a degree, you had better provide assurance that a decent job will be forthcoming.
Mary Elizabeth
April 26th, 2012
5:11 pm
JamVet, 4:38 pm
Thank you for your post regarding the reasons President Obama was awarded the Nobel Peace Prize in 2009, as stated by the Nobel Committee, itself.
“None are so blind as those who will not see.”
JamVet - Stay ignorant, my friends...
April 26th, 2012
5:22 pm
Thanks, ME.
You rock.
Time for some tunes to get ready for Greg Lake later this evening.
Sublime 12 string sweetness…
http://www.youtube.com/watch?v=yoxHGxQw9ws&feature=related
Mary Elizabeth
April 26th, 2012
5:24 pm
You rock, too, JamVet!
Keep your voice loud and clear. And, enjoy your evening.
Normal Free, plain and simple
April 26th, 2012
5:30 pm
(ir)Rational
I only watch Quidditch…does that count?
Doggone/GA
April 26th, 2012
5:31 pm
” sort of like the postal service bailout… lets keep that union happy..”
You DO realize, DON’T YOU, that the postal service is a government function mandated by the Constitution?
TaxPayer
April 26th, 2012
5:36 pm
You DO realize, DON’T YOU, that the postal service is a government function mandated by the Constitution?
And it’s high time they returned to the form that our founding fathers envisioned. Horse back delivery may be slow but it is much better for the environment. And just think of the number of jobs it will create.
Jay
April 26th, 2012
5:58 pm
Sheets
F. Sinkwich
April 26th, 2012
5:58 pm
“Disgraced ex-Brooklyn state Sen. Carl Kruger was sentenced today to 7 years in prison for receiving $500,000 in bribes — much of which he funneled to his live-in gynecologist boyfriend.”
I read this whole 21 paragraph article twice but couldn’t find out which political party this criminal belonged to.
Can anybody help me here?
godless heathen
April 26th, 2012
6:01 pm
“Thank you for your post regarding the reasons President Obama was awarded the Nobel Peace Prize in 2009″
As weak as they are.
JamVet - Stay ignorant, my friends...
April 26th, 2012
6:02 pm
heathen, LOL. Take it up with those funky Norwegians…
A sweet voice, some great guitar playing and a kick ass band backing him up. This could be kinda fun.
I’m not sure but I think he’s gonna cover this early monster, already covered by the Who and these guys…
http://www.youtube.com/watch?v=K__-YQpjC8s
Brosephus™
April 26th, 2012
6:05 pm
Saw this earlier and I’m surprised nobody jumped on it, especially JamVet…
As a tie in to the thread about the effect of austerity in the UK, there’s an example much closer.
While Wisconsin Gov, Scott Walker (R) fights to keep his job in a recall election scheduled for June, he is being forced to confront a harsh reality in his state: It lost more jobs during the past 12 months than any other state in the United States.
Wisconsin lost 23,900 jobs between March 2011 and March 2012, according to data released Tuesday by the US Bureau of Labor Statistics. The state’s lead in job losses is significantly greater than the rest of the 50 states: No other state lost more than 3,500 jobs.
The majority of the losses in Wisconsin, 17,800, were in the public sector. However, the state lost more private-sector jobs, 6,100, than any other state. The only other states to report private-sector job losses in the same time period (instead of private-sector gains) were Mississippi and Rhode Island.
http://www.csmonitor.com/USA/Elections/Governors/2012/0425/Wisconsin-posts-biggest-US-job-loss-as-Gov.-Scott-Walker-fights-for-his-job
I guess that when you cut those government jobs, it DOES have an effect on everything else around it. Also, before the Walker appologists jump in, the 23k number is only that low because Wisconsin added about 13K jobs between Jan and March 2012. The one question that I have about that article is this part here…
“There are a lot of other indicators that we see that show the governor’s policies are working,” Reggie Newson, secretary of the Wisconsin Department of Workforce Development, told the Associated Press. Compared with a year ago, unemployment rates are lower throughout the state except in three counties, Mr. Newson also noted in a statement.
You have a net loss of 23k jobs, yet your unemployment rates are lower except for 3 counties?? That either means that those three counties have unemployment percentages off the charts, many people quit looking for jobs (as the conservatives always like to count those guys), or people lost jobs and left the state. Either way, that doesn’t appear to show that Walker’s agenda is working as promised. That is, unless the true motive was to make people pack and leave Wisconsin.
F. Sinkwich
April 26th, 2012
6:08 pm
GSA, SS, TSA. Only the densest among us don’t believe O’bozo’s government isn’t out of control. Beyond that, his henchmen at the EPA are out the destroy America:
“Confirming what many in the industry long suspected, a video surfaced Wednesday in which Al Armendariz, an official at the Environmental Protection Agency, promotes the idea of crucifying oil companies.”
This is beyond disgusting. This A-hole should be fired immediately.
But he’s an O’bozo appointee. He’ll skate.
pogo
April 26th, 2012
6:14 pm
Education in this country has turned into a business. This was proven by a report on the literacy rate in the USA Today in 2009 that stated that 1 in every 7 adults in the US cannot even read a sentence, much less a book. I would shudder to see what the literacy rate is today three years later. We have spent billions upon billions of taxpayer dollars on public education and unfortunately, in large part it seems to have been wasted. The villains here are aplenty. They are the college’s that want to make huge tuition profits to build more buildings and hire more teachers and offer more programs to bolster their popularity to suck in more public taxpayer money. They are the public primary schools which have become nothing more than job mills for teachers whose primary motive is to increase their own ratings in order for them to get a bigger salary and a bigger retirement, not the education of their students. It is the parents of students who expect the schools do everything for their children including feeding them, babysitting them, and teaching them. I could blame the liberals for this. But I won’t. It would be like shooting fish in a barrel. The main thing that is wrong with education in this country is that too many of us have decided that we want the public educational system (whether it be through student loans or student daycare) to provide what we ourselves are just not willing to do. America has become terribly lazy and lazy people are dangerous. Education has become a business that is not concerned with the education of this nations children. Oh no, it’s priority is the almighty dollar.
Susan Muntzing
April 26th, 2012
6:16 pm
Thank you for spelling this out. The Grady College and Career Connection does not support For-profit schools for all the reasons mentioned. Copies of your column will be available for Grady students and their parents.
Dems_R_Idiots
April 26th, 2012
6:19 pm
“…it can’t be easy coming out of college with a degree and $60,000 or $100,000 in debt.”
Then try studying something “difficult.” We are hiring engineers.
Robert
April 26th, 2012
6:57 pm
Your article starts off well but then lays the blame on the for profits….this act suggests that railing against for profits was your true purpose. All higher education suffers from the same problems (useless degrees and overpricing). The for-profits are the worst of the lot but eliminating them will by no means solve the problem.
Additionally, the “real student loan scandal” is the one that most people do not talk about. This scandal is centered around the fact that there are no BK protections on all student loans, no statute of limitations, no truth in lending requirements, no refinancing after consolidation. All the while, this debt is sold to young people as “good debt.” Their insidious nature is hidden. If you want to rid the system of inflation and bad schools, society should restore BK protections. The money would dry up, ad just like the housing market, prices would come down. Try writing an article on that subject. Bet you make national news.
Don Abernethy
April 26th, 2012
7:17 pm
Wow! This subject created a lot of comments. If the economy had enough jobs to hire all the college graduates would that solve the student loan problem? Anyone know where we can get a government that can create jobs?? I think everyone in the Senate,House , and White House should lose their jobs.
Boris Badnoff
April 26th, 2012
7:24 pm
Considering how rotten the job market is for college grads these days
http://www.nytimes.com/2011/05/19/business/economy/19grads.html
the best way to avoid a student loan is not to go to college in the first place. Or get a scholarship. A fellow I knew was unemployed for 6 years because if he got a job his sons would lose their college scholarships. The guy who mows my grass is a college grad.
The only people who need college are medical doctors and health care professionals. If you major in Early Renaissance Sketching or Homo Eroticism in Classical Literature your job is going to be styling Jay Bookman’s hair.
Swallow your pride and lean how to be a plumber or an electrician. As The Wizard of Oz told the Scarecrow: you don’t need a brain, you need a diploma. At which point the Scarecrow misstated Pythagoras’ theorem.
DawgDad
April 26th, 2012
7:43 pm
Yes, Jay, now let’s enable the Federal Govenment to play fast and loose with our HEALTH CARE. Nuts.
This is what happens when the socialists try to engineer outcomes (in this case people getting educated); there are serious unintended consequences. Take away the USG money and the sharks will disappear. No, that’s too easy. Let’s throw away a few more billion now to bail out the “victims” of their own stupidity.
weetamoe
April 26th, 2012
8:05 pm
The US Dept of Labor reports unemployment nears record highs. Another *unexpected * snag for Jay Carney to dismiss. Just demand that those DeVry kids be given a scholarship to Harvard Law School. The school that gave Obama a degree should do no less for the kids who did not enjoy the the privileges he did.
Oscar
April 26th, 2012
8:06 pm
ris Badnoff
April 26th, 2012
7:24 pm
_
Jay has a stylist?
Progressive Humanist
April 26th, 2012
8:17 pm
I was lucky. My folks were able to afford to pay for UGA in the late 80’s and early 90’s when tuition was less than $1000 per quarter, and I worked part time all the way through. The HOPE teacher’s scholarship paid for my master’s. Then I took some money out of retirement and took about 20k in loans for my PhD. Now I owe about 18k, which I can handle pretty easily at $250/month, even on a lowly asst prof salary. But that’s not a realistic scenario for most students today when the cost of college has more than tripled from when I started. And I had a stable 40+ hour a week 45k job most of the time I was in grad school- another option that most college kids don’t have. The debt young adults are saddled with will continue to cripple our economy. Once they get out I’d rather have them spend what money they do make on goods, which will stimulate business, rather than exorbitant interest rates.
Dan
April 26th, 2012
9:07 pm
What horse squeeze, first of all anyone who thinks Georgia or Penn State isn’t a “for profit” school is a moron. The problem, as with the housing bubble, is governmental interference and support of loans to whomever applies. Not only does that create bad investment instruments it drives up prices. The entire problem can be traced to over regulation not greed. Simple economics 101, just mind boggling how easily people want to believe the party line
Josh
April 26th, 2012
9:16 pm
The problem is the federal loans. Do a real underwriting process. How likely is the student to pay the loan back? Do they have the grades and SAT scores to get through school. Will their job pay enough for the loan? Yes, this means that not many liberal arts majors will get loans – as it should be.
Union
April 26th, 2012
10:18 pm
Doggone/GA
April 26th, 2012
5:31 pm
” sort of like the postal service bailout… lets keep that union happy..”
You DO realize, DON’T YOU, that the postal service is a government function mandated by the Constitution?
sure.. what moron though thinks this was in the framers minds?
SIOUX CITY — As many as 40 union employees at the U.S. Postal Service distribution and processing facility in Sioux City — which closes permanently Friday — could get paid for the next 3 1/2 years without working a day.
That’s to the tune of $1.72 million, not including benefits, for the 3 1/2 years if they all stay on, thanks to the four-year postal workers’ union contract signed in May.
Richard Watkins, spokesman for the U.S. Postal Service Kansas City District, which includes Sioux City, said that some of the 100 employees from the Sioux City processing center have already taken jobs elsewhere within the postal service. Watkins said all workers, including the approximately 40 now on “standby” status, will have to eventually take another job with the postal service before their contracts expire in 2015.
Until they accept new assignments, however, those workers could be asked to report to the downtown Sioux City Post Office each day. There, they would sit in a room until they’re called on to do something. That could include filling in at a small-town post office or on a carrier route.
ken
April 27th, 2012
12:52 am
Good Jay. If students would take that $100,000 plus interest and put it in a good mutual fund they would be futher ahead in 30 yrs.
Hunger Games
April 27th, 2012
1:30 am
Student loans as an investment package to be sold? Absolutely. In the early ’90s I worked for Chase packaging the student loans they originated for sale to other institutions. I was tasked with making sure all of the documentation and paperwork was present. That’s when I learned that a new doctor with outrageous medical school loans could get a forbearance because he had recently bought a jet ski and couldn’t afford his payments.
Logic
April 27th, 2012
7:50 am
It appears the problem is really dumb students attending private schools taking huge loans for study programs that offer little in the way of salary when and if they graduate.
Is the problem the private schools or stupid students?
bob
April 27th, 2012
8:12 am
the country only needs a limited number of hairdressers, back crackers and medical billing workers
JB
April 27th, 2012
8:38 am
” Never let a good crisis go to waste”……
1. Forgive student loans…( with tax payer money of course)………….Good for votes.
2. Bring up often the next few days of revenge possibilities from Bin Liden followers for the Seal team killing him, for the President to get some “reminder” headlines out of that…..The guy is a piece of work.
OBIWAN
April 27th, 2012
8:46 am
Funny how there was no mention of the “public” colleges paying professors over $300,000 and work less than 40 hours a month….but that has nothing to do with the high cost of education, right libs?….
JB
April 27th, 2012
8:57 am
I wonder if all these college kids showing up to cheer for Obama know that the rich, greedy 1 percent types don’t have any jobs for them. They will be working 2 $8 jobs grossing $400 a week living with their parents. That’s change yo can believe in.
Oblama
April 27th, 2012
9:01 am
B.C. – The student loan bubble is happening under Oblama and Pelosi’s LACK of watch. Nancy Pelosi is an assault on women and her botox job is a serious eye sore. Can’t San Fran do better than Nancy Pelosi? Seriously? She should be on the Comedy Channel.
Oblama
April 27th, 2012
9:03 am
Jay – The average student loan is around $25,000 TO $27,000 – NOT $80,000 to $100,000 unless they are staying in a fancy apartment next to the Tech crime ridden campus.
Mother and Teacher
April 27th, 2012
9:03 am
My daughter graduated from a private (expensive) university with a double-major, a minor, and only $20,000 of student loan debt. How? Her father and I did not depend on others to finance her education — we began saving for her college education the day she was born. She applied herself in high school and earned good grades so she was able to get scholarships as well as financial aid to supplement our savings. Her’s is not an unusual story.
The horror stories of college debt, as Mr. Bookman points out, are largely connected with for-profit colleges (such as University of Phoenix, etc.). These places have been shown to tell prospective students that they will earn far more money than they were borrowing. For example, one student who was pursuing a certificate/license in barbering (not even a degree) was told that, as a barber, he could earn $60,000 a year easily.
Many for-profits are also know for admitting anyone with a heartbeat — regardless of intellectual ability or the lack of. It is no skin off the for-profits nose if the majority of their students fail or drop out and are left with huge debts. Why should this surprise us? They say it themselves when they call themselves “for-profit!”
If we are foolish enough to allow government money to subsidize their businesses, we are no smarter than that barber student who thinks he’s going to make $60,000 a year cutting hair.
Oblama
April 27th, 2012
9:07 am
Teacher’s labor unions demanding huge pay increases, etc. is the primary reason for the cost of education going up. College teachers and administrators salaries have tripled in the last 15 years.
Just Wow.
April 27th, 2012
9:24 am
“it’s important to point out that college graduates with large debt aren’t really the problem.”- No, this is totally the problem. They are the ones in debt. If you refuse to hold the students that applied for the loans responsible,then we must assume they are not capable of making such decisions and do it for them based on their ability to pay back the money. That would solve HOPE issues if we start choosing who can get the money though. You may be on to something.
nomoobama
April 27th, 2012
9:29 am
I took out approx $10k in student loans for grad school. The interest rates are very reasonable, abt 2-3 percent. I am paying them off. I do not want Obama to bail me out, nor should any other true american who borrows money. I dont harbor any ill towards my loan holders as they are in a business and are making money off me borrowing from them. Thats capitalism and its great! If you dont like that, be glad you have freedom…to move elsewhere!
GT forever
April 27th, 2012
9:43 am
Our entire educational system, and I use the term loosely, needs to be overhauled as well as the requirements for entrance into college. If you cannot add or subtract simple fractions,if you cannot write a coherent sentence, if you do not understand simple relationships, if you do not have a fundamental understanding of economics, if you do not have a simple understanding of our political system and our history and that of the world,, there is a problem. Educators, students, parents, etc,need to accept responsibilty for these shortcomings and to work together to address them, Just because student GPAs are increasing as well as the number of degrees held does not mean that students are more knowledgeable then higher gas prices translate into a better product.
williebkind
April 27th, 2012
9:53 am
“Now is the time for all of us to take our share of responsibility for a global response to global challenges.”
Yeah that is putting America in its place. That is why he got the prize.
williebkind
April 27th, 2012
9:55 am
Yepper, all that education and no skills! It is going to be tough making a salary to pay back school loans in 10yrs.
Progressive Humanist
April 27th, 2012
11:28 am
@ Oblama @ 9:07,
College teachers’ salaries have tripled over the past 15 years? So in 1997 college professors were making $20k per year? Really? Just once it would be nice if you knew what you were talking about before you started spouting off. Typical right wing tomfoolery.
Banks’ Secret Weapon in Student Loan Fight: Mom – Smartmoney.com (blog) | Lending Student Loan
April 27th, 2012
11:30 am
[...] Atlantic$ 1 Trillion Student Loan Debt = Staffing Problems for N…The Nonprofit QuarterlyAtlanta Journal Constitution (blog) -U.S. News & World Report -San Francisco Chronicle (blog)all 220 news [...]
Progressive Humanist
April 27th, 2012
11:39 am
OBIWAN @ 8:46: “Funny how there was no mention of the “public” colleges paying professors over $300,000 and work less than 40 hours a month….but that has nothing to do with the high cost of education, right libs?….”
You’re delusional if you think college professors at public universities make $300k a year (or that they work 40 hours a month; try 40 hours a week). At most public colleges professors start out at $55k to 65k, even at top flight research universities. A tenured professor with administrative duties and many publications may make $100k. Business and law professors make a little more, but unless they’re administrators are unlikely to break $150k. You think that’s too much for someone with a PhD who is likely among the nation’s leaders in expertise in their field? The only professors who make $300k are the ones at medical colleges, but hey, they’re professors AND medical doctors who do things like perform heart surgery and brain surgery and show others how to do it. Overpaid, right?
Stooge.
MrLiberty
April 27th, 2012
1:08 pm
No, the real scandal is how completely ignorant both the media and the general public can be regarding the affects of fiat money and Federal Reserve-created credit on the economy and the cost of products and services it impacts. This despite the fact that wonderful sites like Mises(dot)org exist with vast amounts of free literature, all from great economists in the Austrian tradition exist all over the web.
Let’s review for the ignorant: when there is a fixed money supply (fixed to gold, silver, or some other market decided standard, there is a fixed amount of money in circulation. In order for money to be made available for lending (where banks are supposed to make their money), there must be savings. Banks encourage savings by paying interest on the money that they will in turn be lending out (for interest – thus their profits). The less money being saved, the higher the interest rate will go. The more money being saved, the lower. When nobody is saving, the higher cost of money (interest) sends a signal to manufacturers and even regular folks looking to borrow for education, etc. that since nobody is saving, there will not be money available in the future for the purchase of their products, etc. or even around to employ them. These higher costs then generate spending on more short term projects, etc. Lower interest rates signal just the opposite.
When the Fed steps in and prints money out of thin air, creates credit out of thin air, etc. the market signal mechanism is totally destroyed. Lower interest rates encourage more borrowing and wreckless borrowing on things that there will be no future money around to buy. The greater amount of “fake” money in circulation inherently drives of prices as the cost to borrow is now lower meaning that long term loans for things like housing and college are now cheaper than they should be if the market were in charge rather than the Fed. The same holds true for colleges and universities. If they had to rely on just what people saved and easy money was not available, they would be forced to lower their costs in order to get customers. Instead, the cheap government money means that they no longer have to cut costs, can raise prices, and the consumer sees an unnaturally low cost for the loans they now take out.
Yes, the housing bubble is the SAME as the college loan bubble and it has the SAME source – the criminal Federal Reserve.
Sadly the media and everyone else is either too ignorant, too owned by the banking cartels, too beholden to the banking cartels or something to ever get the obvious solution to the problem – END THE FED.
R Tidmore
April 27th, 2012
8:26 pm
Let’s see here. One trillion in student debt. ” For Profit” colleges are accountable for roughly $25 billion of the total. So, the remaining $975,000,000,000 is owed to “not for profit” schools. And “for profit” schools are the problem??? Looks like the author has been reading and possibly plaglarizing Democratic PR materials or maybe he came to this conclusion on his own. If it is the latter, suggest he return to his college of choice and take Math 101 again. Also, a course on wisdom and perspective would probably be in order as well. He might even qualify for student loans from Uncle Sam!!!
Trying to Shed Student Debt – Wall Street Journal | Lending Student Loan
April 28th, 2012
3:57 am
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