The Student Loan Crisis: The Future of America is at Stake

The student loan crisis is a real thing. We can all sit here as conservatives, libertarians, & classical liberals & balk at the fiscal failings of 18-year-olds with no life experience or we can accept the fact that much of this crisis was manufactured for the bottom line of university administrators. People are starting to go to jail for unpaid student loans. Some of these are extremely egregious amounts. We are creating a debtor's prison system. Why is that bad? This:

ACLU.org

Nearly two centuries ago, the United States formally abolished the incarceration of people who failed to pay off debts. Yet, recent years have witnessed the rise of modern-day debtors' prisons—the arrest and jailing of poor people for failure to pay legal debts they can never hope to afford, through criminal justice procedures that violate their most basic rights.

Debtor's prisons were one major contribution to the revolutionary spirit that led to the American revolution. Today, this same system is creating socialists. While a revolution in the spirit of individual liberty is good, a revolution for an all-powerful state economy & the subjugation of the individual and suppression his/her natural rights to the majority-mob, will only lead to a different kind of prison. A cognitive one similar to the cognitive censoriousness of the former Soviet Union. So keep making fun of the losers...You'll laugh & chide & demean the people WE TOLD they HAD to have a degree in order to succeed right into the waiting arms of authoritarian communists. Laugh at the gender studies degree, castigate those seeking education in the liberal arts instead of #STEM...

...While you chide 18-year-olds who are only LEGALLY adults and have not actually DEVELOPED (physically or mentally) into one for making bad financial decisions, remember who created this system and what it is actually doing. Nearly every instance of systemic degradation in the US government is responded to with an attack on the people for daring to assume the right to know what their representatives are doing. For example:

Some of us attacked Edward Snowden for doing the right thing in an impossible situation. I don't remember every instance in which I have spoken or written on Snowden, I seem to remember being critical of him and what he did. I regret ever taking that position today.

The result of the Snowden incident, however, was the establishment of an even more entrenched spy network and the burning of the Constitution as a matter of ceremony. For as many eyes as Snowden opened; the chiding, balking, and refusal to listen has only made what he's immolated his entire life to reveal a mere footnote in our historical record. A huge chunk of this was our fault. Our uncritical view of reality, our "someone else will do it" attitude, and our modern aggregated political philosophy of enabling our own intellectual laziness is truly shameful. I do not escape this criticism & neither will you.

We did this as a consequence of the Great Recession as well. No one went to jail, the American taxpayer became destitute until just recently as recompense for our willingness to bail out corporations. We received a higher tax burden, depressed wages, few good-paying jobs, and a whole lot of generational anger and resentment. I, and several others at the time took the position that these people protesting at Occupy Wall St. were just malcontents who were angry that no one else was paying their way. I regret ever taking that position and further regret my deep ignorance and malleability to such stupendous lies.

We could have averted a generational crisis that created the Millennial generation, their anger, their resentment, the feeling of hopelessness and the nihilism that has become a hallmark of Millennials as a result of our indifference to the damage being inflicted. I'm an older Millennial, having turned 35 last month. I should have known better then. My only excuse was my own immaturity and even a normalcy bias.

I don't have that luxury anymore and neither do any of you. This crisis is huge. While I FIRMLY believe in the consequences of one's actions and often speak to the responsibility of individuals, "buyer beware" is NOT how you run a country, how you maintain a prosperous society or educate those who make up that society. We robbed millions of Millennials of their own potential with the heavy burden of debt and a depressed economy because our parents used our childhood homes as casino chips. Because lawmakers, university administrators, and the opportunistic "academics" making 100k a year to teach courses on degrees that pay 20% of that per year in return, but whose cost will pay the professors salary many times over, have decided that the American student is a cash cow. If that cash cow stops producing milk, there is now a debtor's prison for them.

Economics is downstream of education. If we don't fix this we will lose the largest generation in American history to socialist dictatorship, economic squalor, and the deep nihilism that results from those two things.

Just for once, let's fix this problem before it gets bigger than we can handle.

a reply to: projectvxn

We never should have monetized education.
However and for whatever reasons.

College is NOT for everyone. That needs to be told.

We need better colleges, universities, trade schools....
And the education system is in disrepair....what are people even learning anymore? From Grade One to Advanced Degrees.

Thanks for posting!!!

I agree, this is becoming indentured servitude.
Young people are constantly being encouraged to seek higher education in order to find a job as an adult. To that end this ''industry'' has sprung up over the last few decades to take advantage of that market, young people seeking to better themselves. Not to help them in that goal but to sucker them into borrowing. Predatory education

It's not just young people. I was told by a former employer that I would get a substantial raise to the industry average for my field if I would get a degree. I hired in long before they became "necessary" to get a job in that field. Anyway, I went into serious debt, got the degree, got the raise and got laid off two months later. Now I'm stuck with a debt I will never be able to pay off (due to not having that high paying job anymore) based on a verbal promise from a bad former employer. I was suckered into it and I am the only one that will be paying for it.

a reply to: projectvxn

Firt of all, nobody is going to jail for unpaid debts, except in the case of dead beat parents, not paying child support, and even then it is rare.

If I am wrong, please post some examples, and not ACLU hand wringing.

Second of all, lets create some lists of the schools that took the money, and failed to graduate the students. They knowingly accepted non qualified applicants because it was gaurenteed $. Let them pay it back.

Third of all, let that be a lesson that they can learm from, and therefore teach their children. Free # isn't free.

Who the hell thought this was a good idea, that institutions were in charge of handing out gauranteed student loans, without any oversight (not that the government is competent to provide oversight). What could go wrong??????

If these young adults are not responsible, how about their parents?

Why were degrees being handed out like cheap condoms, with no real job market for the skills (or lack thereof) that they were purportedly getting?

No, I realize sometimes bad things happen to good ppl, but that's not how I see this situation. You make your bed, you live with it.

I paid for my education, and that of my offspring. Don't ask me, as a tax payer, to pay for someone else's education, after the fact.

out of curiosity how does it work?

In the UK tuition fees are capped (I think its around £10K) on top of that you can borrow for living costs, you pay it back but only once you hit a certain annual salary and even then they only take 9%. Even with that some courses are basically free and there are lots of funding options that can mean a student might never have to pay a penny for their fees. The whole thing is quite complicated and I honestly don't understand it fully myself despite having been to uni twice.

So how does the US System work?

originally posted by: OtherSideOfTheCoin
out of curiosity how does it work?

In the UK tuition fees are capped (I think its around £10K) on top of that you can borrow for living costs, you pay it back but only once you hit a certain annual salary and even then they only take 9%. Even with that some courses are basically free and there are lots of funding options that can mean a student might never have to pay a penny for their fees. The whole thing is quite complicated and I honestly don't understand it fully myself despite having been to uni twice.

So how does the US System work?

They're basically standard loans with varying interest rates depending on where you get the loan. You can get private or federally guaranteed loans. There are some grants available but unless you are very low income, a minority, a veteran or disabled you can forget about those. I searched for two years and never found any I qualified for.

So you can get payments based on your income (which is a joke), but in my case they want half as much as my house payment which I cannot afford. We drive eighteen year old cars with no car payment because we can't afford that either. It's seriously screwed up, from the initial college/university cost to the funding and interest rates.

originally posted by: OtherSideOfTheCoin


So how does the US System work?

It doesn't.

a reply to: HalWesten

That, to someone from my side of the pond is nuts.

originally posted by: Mach2
a reply to: projectvxn

Firt of all, nobody is going to jail for unpaid debts, except in the case of dead beat parents, not paying child support, and even then it is rare.

If I am wrong, please post some examples, and not ACLU hand wringing.

Second of all, lets create some lists of the schools that took the money, and failed to graduate the students. They knowingly accepted non qualified applicants because it was gaurenteed $. Let them pay it back.

Third of all, let that be a lesson that they can learm from, and therefore teach their children. Free # isn't free.

Who the hell thought this was a good idea, that institutions were in charge of handing out gauranteed student loans, without any oversight (not that the government is competent to provide oversight). What could go wrong??????

If these young adults are not responsible, how about their parents?

Why were degrees being handed out like cheap condoms, with no real job market for the skills (or lack thereof) that they were purportedly getting?

No, I realize sometimes bad things happen to good ppl, but that's not how I see this situation. You make your bed, you live with it.

I paid for my education, and that of my offspring. Don't ask me, as a tax payer, to pay for someone else's education, after the fact.

I agree with you 100%. Society needs to learn from its collective mistakes. We all allowed this to happen with our votes, and our day-to-day acts of irresponsibility. Hard times will come, a generation will learn and become stronger, and time will move on.

I hope everyone stops to think about what wiser decisions they could have made on a day-to-day basis, not to shame yourself, but to focus on not repeating conscious mistakes.

Its a painful process at times, but its better than the alternative.

Instead of these corporations putting politicians in their pockets and promising that the GOVERNMENT will pay for this, which really means ALL tax payers will pay for this...Why don't any of these power players just go for a jubilee? I am sure it can be worked out in some manner.

Erase debts and then continue on the new ones and the fees collected so far. Right?

Well wrong, because it seems that without a giant influx of money alot of financial types can't "buy grandsissy the stable of pony's" that they promised.

Which in turn is a fall of moral judgement in total.

And it is why there are always cycles of destruction.

No?

a reply to: Mach2

Firt of all, nobody is going to jail for unpaid debts, except in the case of dead beat parents, not paying child support, and even then it is rare.

Washington Post

It’s not uncommon for federal agents to get involved in the collection of past due student debt. The U.S. Department of Education hands over old cases of delinquent debt to the Justice Department after trying to recoup the money through private collection agencies, wage garnishment or withholding tax refunds. Justice typically files a lawsuit, using third-party attorneys to handle such cases.

Thousands of people across the country are summoned to appear in court over defaulted federal student debt, according to the Marshals Service. In Houston alone, marshals say about 1,500 people have been identified for not appearing in court to address their outstanding federal student loans, resulting in arrest warrants.

But this isn't even the biggest worry. As I said in my post, economics is downstream of education. The vast majority of outstanding student loans are effectively unpayable because of compound interest on those loans. The federal government's insistence on guaranteeing those loans and taking ownership of them has made boards of regents and administrators take riskier and riskier accounts.

Why the hell would a lender or a school allow a student to take $100,000 in loans for a course they know will never net an acceptable ROI that would enable reliable repayment? That should absolutely be illegal. I am not one of those people that considers an 18-year-old to be an adult capable of making the same rational decisions I make at the age of 35. This is not a fair standard rooted in developmental reality and as a consequence of education(We also don't teach financial literacy, which I believe should be part of the curriculum)it is merely a legal standard.

I paid for my education, and that of my offspring. Don't ask me, as a tax payer, to pay for someone else's education, after the fact.

Clearly not. I believe the tax-payer has endured enough. If you had read the OP more carefully you might have picked up on that. I want people to identify the fact that there is a problem.

I have not proposed a Bernie Sanders approach to this.

It is clear you didn't actually read the OP, but what the hell, why let a relevant block of text get in the way of righteous indignation?

a reply to: projectvxn

Yup, it is the next bubble to burst.

Of course, this is yet another result of leftist meddling in markets. The student loan crisis is entirely government created as they took over the student loan market.

You have Universities free to charge as much tuition as possible because government is providing loans with ZERO UNDERWRITING of borrowers. 50% of students attending colleges / universities probably shouldn't even be there in the first place.

In a real free market, no private bank / creditor would give loans of this magnitude without some underwriting of ability to repay that loan.

It is insane that you have people graduating with bullsh*t degrees like Masters in social work having $200,000 in student loans for a job at best might pay $60k/yr. WTF?

Reminds me of the story of the Ants and the Grasshopper. Here is free-spending Grasshopper at a party school barely breaking a sweat for a degree in English--easy stuff, and then it comes time to pay for the piper and it's EVERYBODY ELSE'S FAULT! because "poor"grasshopper finally hits the real world and realizes English degrees are worthless. You don't see the folks with degrees in Engineering worrying about paying back their loans because they were smart enough to study something that actually has value in the workplace. I have no sympathy for clueless kids who did this or their idiot parents who let them.

Why the hell would a lender or a school allow a student to take $100,000 in loans for a course they know will never net an acceptable ROI that would enable reliable repayment? That should absolutely be illegal. I am not one of those people that considers an 18-year-old to be an adult capable of making the same rational decisions I make at the age of 35. This is not a fair standard rooted in developmental reality and as a consequence of education(We also don't teach financial literacy, which I believe should be part of the curriculum)it is merely a legal standard

a reply to: projectvxn

I agree... which is why 18 year olds (other than military) should not be able to vote either. If you can't make a rational financial decision regarding your education, then you have no business voting...

We can't have it both ways. Either you are an adult or you aren't.

If I were dictator for a day, I'd make high schools offer intensive personal finance starting in 9th or 10th grade. Start teaching these kids some real world skills. They need to understand banking, credit, investments, etc. EVERYONE should understand this stuff.

a reply to: Edumakated

Precisely.

Most of my OP called out the leftists who clearly benefit from the status quo in this system. Nothing these people are doing would be acceptable without a government backstop.

The taxpayers are already on the hook. We need to change this system or it will take out a huge chunk of our prosperity with it when it goes.

a reply to: Edumakated


There might be a reasonable discussion to have within that context. We absolutely can't have it both ways.

But we can also take a consumer protection approach too without changing long-standing rules of political process access.

We can also educate kids in high school, as part of the curriculum, in financial responsibility and best practices.

Education like healthcare is big business. It's capitalism...you got a problem with that?

Education is no more about teaching real world solutions than healthcare is about healthcare.

originally posted by: projectvxn
a reply to: Edumakated

Precisely.

Most of my OP called out the leftists who clearly benefit from the status quo in this system. Nothing these people are doing would be acceptable without a government backstop.

The taxpayers are already on the hook. We need to change this system or it will take out a huge chunk of our prosperity with it when it goes.

The problem is if you turnoff the spigot, the same people crying about all the student loan debt will then start crying about "lack of opportunity" to attend schools....

They can't connect dots. Tuition inflation is rampant because they've made it possible for every Tom, Dick, and Harry to attend college with debt. The only way cost will fall is to remove the financing.

It is a simple supply & demand with a third party payor problem. You have demand for seats at Universities outstripping supply. The demand is so high that the consumer simply can't make a rational purchase decision. Combine that with the unlimited financing available, the tuition rises to unsustainable levels.

The universities don't care because the aren't on the hook for the debt.. their tuition gets paid regardless so they can jack up costs every year with no consequence.

A simple solution is to make universities underwrite the student loan but then also be responsible for a portion of the debt.... say 10% of the balance. So if the student defaults on say $100k in loans, the university has to cover at least $10k of that loss back to the government.

Under this plan, the university is now evaluating each student, their major, and the odds that the student will not only graudate but be able to pay back the loan. If they do a poor job at this, then the University is the one suffering the consequences of default. This forces the university to not only contain costs but also not hand out loans like candy.

originally posted by: olaru12
Education like healthcare is big business. It's capitalism...you got a problem with that?

Education is no more about teaching real world solutions than healthcare is about healthcare.

Neither of those are free markets. Their problems are entirely the result of progressive policies...