Guest Post: Risk And The Indentured Servitude Of Student Loans
Submitted by Charles Hugh Smith from Of Two Minds
Risk And The Indentured Servitude Of Student Loans
Students stuck with gargantuan loans for life are bound in a bank-dominated "improvement" of indentured servitude.
Yesterday (Risk is Necessary for Adaptation, Innovation and Success) I discussed the inevitable failure of systems in which risk has been transferred from those who reap the gain to others. In the case of student loans, the risk has been transferred to students who enter decades of indentured servitude.
Indentured servitude has a long history in the U.S.; many immigrants accepted servitude of between two and seven years in exchange for passage to the New World. Orphans were indentured out of orphanages to the age of 21--potentially a much longer servitude. Indeed, the labor of anyone on the public dole could be auctioned off:
From Wilma A. Dunaway's Online Archive:
By the time of the Revolutionary War, indentured servitude had been a common practice in the United States for 150 years.
Following British laws established during the colonial period, post-Revolutionary public authorities indentured the labor of those who were likely to fall upon the public dole. Appalachian county governments bound out indigent adults and children whose families could no longer care for them. The age, gender, and racial trends are clearly documented in early records of Appalachian poor houses, for women and orphans represented more than two-thirds of the individuals whose labor was auctioned off by county governments.
Isaac Miller of Anderson County, Tennessee, advertised in 1819 for the return of Margaret Hutcheson who had been bound to him by the county poor house. Obviously, the seventeen-year-old girl had tried the patience of her master, for he offered only "a reward of 6 1/4 cents to the person who w[ould] deliver her to [him]," caustically adding, "but I will not thank any person for doing so."
When an orphan was bound out by the county poor house, the child was legally tied to the master until the age of eighteen or twenty-one.
Orphans were often bound to tradesmen or farmers until age 21, and indigent adults were typically bound for three to seven years. However, there is no way to document how many laborers were bound out by their own families. When parents indentured their own children, it was for "a usual term of seven years if a girl, or five if a boy."
Let us consider the modern form of indentured servitude, student loans, which now exceed a staggering $1 Trillion: "It's Going To Create A Generation Of Wage Slavery" (Zero Hedge), or perhaps more accurately, indentured servitude, because the debt cannot be dismissed via bankruptcy.
Student loans outstanding will exceed $1 trillion this year (USA Today):
Lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can't be shed in bankruptcy.
The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.
"Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children," says Mark Kantrowitz, publisher of FinAid.org.
"It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.
The University of Phoenix, the nation's largest, got 88% of its revenue from federal programs last year, most of it from student loans.
In effect, students get A Mortgage with Every College Graduation (Dr. Housing Bubble, via Jed H.) with one key difference: there is no way to get out from underneath the student loans.
This is the perfection of indentured servitude. How many students pay off their $100,000 loans in a mere seven years? Modern banks and corporate "higher education" diploma mills have improved the old system of indentured servitude, extending the servitude from seven years to decades.
The key dynamic here is the transference of risk from the lenders, who stand to reap immense profits from these loans, to the students. This transference is enforced of course not by the banks but by their partner, the Savior State, which obliterated the right to bankruptcy for students while guaranteeing profits to the banks via Sallie Mae, another guarantor of private profits backstopped by taxpayers.
The feedback between risk and return has been severed. Lenders can extend massive loans to marginal students attending for-profit colleges, knowing their losses will be backstopped while the gains are theirs to keep, and the debt-serf students are indentured for life.
Imagine if risk were connected to gain. Maybe lenders would be a bit more careful about which students they deemed worthy credit risks; perhaps they would begin differentiating between low-market-value liberal arts degrees from hard-science degrees.
Maybe they'd start considering the students' incomes while in university. Maybe they'd recognize differences in risk between for-profit diploma mills protected by the rapacious, captured-by-corporations Savior State and state universities.
There can be no "fix" to our decline until risk is bound once again to return and gain. If risk is transferred to others, you're left with some type of indentured servitude and financial tyranny in service of the banks and their Savior State toadies.
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Obama will rescue them. Probably by offering government jobs to pay off the loan.
where most law degreed liberal arts majors get jobs nowadays anyway.
In some dysfunctional countries, quarter of the graduates got a job with the university they graduated from!
Talk about a ponzi scheme.....
Look at how much "private" non-profit universities donate to political candidates and promote slave research labor on H1B (PhDs in STEM for $35,000 which is less than a truck driver's wage). Time to tax universities and cut off government subsidies.
The pay, when considering student loan forgiveness and other perks (e.g. health insurance), can be much higher with .gov... aside from the whole "no responsibility" thing (certainly a good perk).
competition is for suckers!
private workers are like gladiators who get a "prize" if they manage to kill each other only to live to fight another day.
public workers are spectators in a gladiator match....they don't get the glory of victory, but have the security of enjoying the competition without having to participate in such a brutal cutthroat activity.
elites are the ones making the bets on a gladiator
and wall st. workers are the bookies
there is the loyalty oldmoney folks writing the rules of the game at the very top
and of course immigrants and foreign laborers are slave class where they do real productive work but can't afford to pay to see the gladiators.
Wow, what a comparison. Disturbing and hard to deny. No one wants to admit where they stand.
So wehat happens if they don't pay? The banks will bankrupt them? Evidently not, so don't pay.
Set up a trust and have the trustee buy your next house, car clothes and everything else. Set up a company and contract for income through that, take a company credit card, it doesn't even need to be a domestic company; there may be no tax benefits but so what? You don't even need to use a professional trustee.
Give the State and the lender the middle finger and go forth, as they say.
When there's no way out, stop looking...
When there's no way to pay, stop trying. Bankruptcy doesn't matter overseas, go figure...
really. widen your horizons.
In what way?
A series of perfect metaphors. Now pardon me while I grab my armor and sword.
No they don't get jobs. Haven't you read anything about the job market for lawyers? It's terrible.
No one's getting jobs now. Wake the fuck up.
This is not news to ZH readers, but student loans are just another racket that funnels money to the banksters and academia so they can pay off the politicians who will protect the racket. It's no wonder TOTUS nationalized the student loan program. Look at Obamas top election contributions. When you apply for a student loan, you get inducted into the banking system, not just for student loans but for credit cards, debit cards, the whole shebang...
2008 Presidential Election: http://www.opensecrets.org/pres08/contriball.php?cycle=2008
Barack Obama
University of California $1,648,685
Goldman Sachs $1,013,091
Harvard University $878,164
Microsoft Corp $852,167
Google Inc $814,540
JPMorgan Chase & Co $808,799
Citigroup Inc $736,771
Time Warner $624,618
Sidley Austin LLP $600,298
Stanford University $595,716
WilmerHale LLP $550,668
Columbia University $547,852
Skadden, Arps et al $543,539
UBS AG $532,674
IBM Corp $532,372
General Electric $529,855
US Government $513,308
Morgan Stanley $512,232
Latham & Watkins $503,295
*Groups in bold also cited in the Sanders Report on conflicts of interest at the Federal Reserve: http://sanders.senate.gov/imo/media/doc/101911%20-%20THE%20SANDERS%20REPORT%20ON%20THE%20GAO%20AUDIT%20ON%20MAJOR%20CONFLICTS%20OF%20INTEREST%20AT%20THE%20FEDERAL%20RESERVE.pdf
What a shock! Govt. sponsors something and private enterprise angles in to make a profit. Can't be!!!!
Well, that is as good an excuse as any not to pay back your student loans!
"They tricked me, see, I really shouldnt have gone to college, cant do nuthin with the education they gave me, so fuck the lenders, Im not payin!"
Paying your mortgage is optional in America. Why not add student loan repayment to the list.
Thanks to thieving bankers, corrupt politicians and half brained parasites America is toast.
So it is morally wrong to exit from a contract like a mortgage? Are you one of these people that equates killing with murder? Might as well equate speaking with lying (I know that is true for you here, but it isn't all the time).
whose morals? yours?
Were the home buyers immoral for buying more house than they could afford? Or for not understanding what they were signing? Or for using taxpayer money (via FNMA) to subsidize their home purchase?
You pays your money, you takes your chances
What the heck, the bank gets the house if they did their job correctly and the person doesn't pay. If that ends up screwing the bank because it took part in fraud on a massive scale so the value of the house was fraudulent, screw the bank. The person has every right to walk away! There is nothing immoral about that. You are an idiot!
and if the bank bargained for recourse debt, what then?
Since when is enforcing a debt immoral?
The key point is that it's NOT DISCHARGEABLE.
Do you know the difference between "recourse" debt and "nondischargeable" debt? Holy shit...
no one - including the students - has to pay back on any bank loan of any kind - the banks are there to be taken down - they have committed massive fraud - the houses in many cases are worthless and the upkeep and taxes horrendous - if the banks dont want the properties screw them - if enough students just say: hell no we wont pay - they have millions of people to go after - impossible task - civil disobedience is the answer to tyranny - bring on the chaos
Most of these student loans will never get payed back and they should be counted in the national debt along with all of the other off balance sheet debt which much of won't be payed back, which would have put the US over the 100% debt / GDP long ago.
TheSilverJournal.com
In the "student" loans racket, the students are a simply a transfer vehicle for the gubbmint to subsidize university administrators & teachers.
+1.
Transactionism at its purest.
The moonies have figure that one out long time ago. They own a univerisity in the east coast. They have revenue raising operations in eastern soviet bloc where poor people are prime for religious brainwashing. How do you transfer money from Russia into US without IRS detecting?
You have one of your brainwashed deciples in Russia go to church owned college in US. This person is poor so they can't afford it, so you give them a "scholarship" from church branch in Russia. This person takes the money into US and "pays" church owned school a tuition. Church owned school transfers the money back into church banks. Tada!......you have transferred $30,000/year legally! multiply that for 100 "scholarships" and easily a $3M/year money laundering scheme per country.
By the way moonies paid big bribe to ivy league school so their kids can get in. And they own majority of fish suppliers to top sushi places.
Church checking account is just a non-profit tax-exempt bank account for the moonies business just like the MORMONS who is about to get their chosen one become president of the USA.
Don't cry for the students. They made their choice freely. They could have gotten a useful degree or planned to learn a trade. Instead, many took the "easy" money to party for a few more years instead of growing up.
To those who whine "they were duped" -- they knew better. Deep down everyone knows a degree in culinary arts, fashion merchandising or art history ain't gonna pay off the loan.
Student loans: The new subprime.
Hyperinflation: like the soon-to-be USD, a college degree is a worthless, $200,000 piece of paper.
One of the older students in my class has college age children herself. She said that she was required to co-sign her childrens' student loans and put herself into debt bondage forever.
I suspect that the final act will be to make student loan debt inheritable, and thus ensure the slavery of future generations. Hope you liked that degree in underwater basketweaving, as your grandchildren will be sold into slavery to pay for it!
Wasn't student loan fix in the health care bill, and didn't Obama fix it a few weeks ago; pay not over 10% of annual income (whether $5,00 or $500K) for 20 years, then they're finished? I'm sure we read that article.
If not, go to grad school on Sallie then don't collect a paycheck.
Dizzyfingers,
You mean income based repayment? I think you can get the balance forgiven at the end of 20 years. Of course, the forgiven debt is treated as income by the IRS. Go IBR, get a tax bill!
And that will be a hell of a tax bill, too! If you "paid off" $4,000 a year (10% of your income at the average wage) on a $100,000 loan at 8%, in twenty years or so you are gonna owe about $150,000. So, with a tax bill now at about 39% of that, you would still owe Uncle Sugar almost $60,000! Thus, you might have written off $90,000, but you still end up paying $80k ($4k x 20 years) plus $60k (and interest) to the IRS. Thus, your debt still covers the loan principle and decent interest.
And to think, you end up paying $140k plus for a loan that cost the entity nothing!
And that will be a hell of a tax bill, too! If you "paid off" $4,000 a year (10% of your income at the average wage) on a $100,000 loan at 8%, in twenty years or so you are gonna owe about $150,000. So, with a tax bill now at about 39% of that, you would still owe Uncle Sugar almost $60,000! Thus, you might have written off $90,000, but you still end up paying $80k ($4k x 20 years) plus $60k (and interest) to the IRS. Thus, your debt still covers the loan principle and decent interest.
And to think, you end up paying $140k plus for a loan that cost the entity nothing!
Most of the student loans can't be paid, and won't be paid.
The income and the savings are just not there.
Relax. Its just another mechanism to compel them to be productive citizens of the Empire.
Everyone will be off the hook when the dollar goes to zero.
Yep, paying off a $100,000 student loan will be easy when bread costs $100,000 a loaf.
When bread costs $100,000 a loaf, student debt will disappear.
Yes...just send your loaf to the Student Loan Administration. Come to think of it, I think I'll send 'em a loaf now.
LOL
Yes, pinch one off and Fedex for morning delivery please.
I don't have a loan. So send 'em an extra loaf for me.
When bread costs $100,000 a loaf, student debt will disappear.
Sadly, it won't.
The whores in DC will just reset loan values, ex post facto.
The laws will be passed and the banksters protected, in the name of all that is holy.
Problem is many student loans have variable rates. Uh-oh!
Except many of the student loans have variable interest rates. Killer.
Tyler, would you please tag this post with "student loans." I like to keep all these posts at my fingertips to send to younger generations believing that student loans are "no big deal." Thanks.
In case it doesn't get tagged, you might just have to remember "Sallie Mae" as well.
I've found Gary North to be an invaluable source on this topic. Although, since he writes a lot of stuff from a hardcore Christian perspective, some people might not be receptive to his ideas (even though they are still applicable, as his focus on debt slavery and wasted time (as compared to an apprenticeship where you learn while you get paid))
Here's one of his articles over at LewRockwell.com
http://www.lewrockwell.com/north/north988.html
Amen, we have a winner. I live in the glorious peoples demoKratic republic of Chapel Hill, home of the UNC. If one goes to Whole Foods during the day, one would think they are attending a reunion of the "3.SS-Panzer Division Totenkoph" for all the BMWs and Mercedes in the parking lot with profs buying "organic junk" at triple the price of Harris Teeters. You got it mayhem_korner, the left elites that care so much for the downtrodden feeding at the governments trough.
Hey that's not fair, those SS troopers actually had to work for a living.
you are uninformed. Go read up what certified organic means.
Me personally, i am not as hip as you. I personally dont like to eat stuff grown from my neighbors toilet
If you prefer farmers using human sewage (http://www.sludgefacts.org) on farm fields, then please, by all means, continue to ignore labels. Go read up on HR254 - Sewage Sludge Notification(http://www.opencongress.org/bill/112-h254/show) and EPA Title 40, Section 503 - Land application of sewage sludge(http://yosemite.epa.gov/r10/water.nsf/NPDES+Permits/Sewage+S825/$FILE/503-032007.pdf). Its real, its happening, and u dont have a clue.
I think it is directly related to all the MRSA in meat, and ECOLI in raw cookie dough.
Enjoy the stomach craps, that, of course, is if u survive.
Its amazing what your government doesnt tell u, no?
Soylent Green next.
I think its ironic you bring this up given your avatar. He had a bit about being proud to eat food off of the floor and only washing his hands after a number two.
not sure Whole Foods is not a hypocrite in this arena as they continue to refuse to label the food they sell that is genetically modified. I am the first one to fear modern industrial food but Whole Foods could be more consistent
Youre both a bit off and overstating things here.
Getting certified organic isnt a bad thing and it does prevent chemical and sewer sludge usage, but not being certified hardly means it is grown with sewer waste which is not common practice though it does happen. As it stands, organic certification is set up to benefit the very large farms (generally using illegals) with its 20 page application and $600 annual fee that pushes small farmers out of the market.
On the flip side, organic certification does require that you use animal waste if you want any hope of growing with sufficient yield to make it financially viable. Be clear that you are eating food grown the majority of the time in untreated cow, horse, and chicken shit/piss as opposed to treated and processed human shit/piss.
No matter which way you go, there is excrement involved. Nitrogen doesnt magically appear, and while using crop rotation and nitrogen fixing green manure in the winter can help it comes down to shit or chemicals- and since you cant use chemical fertilizers and get certified organically it comes down to animal crap and urine.
In the end, its a pick your poison.
There's a great lecture by Eliot Coleman on Youtube reviewing the french winter gardening methods of the early twentieth century using horse manure, compost, and crop covers
nitrogen can be produced through plant compost methods but B12 is hard to come by without animal waste
Yeah Mayhem Corner has it right. I have a friend from college who went the "academic route." Funny enough his girlfriend right after college at the time was in a program at UNC. He still hasn't finished his PHD in something completely esoteric and unproductive. Meanwhile his wife (different woman) got a tenure track position teaching liberal arts at an Ivy League. Her sole income supports them, there brand new custom built house and the one year old.
Every academic paper I have ever read from either of them was essentially non understandable overly complicated and useless theories about culture. Their intellectual snobbery knows no bounds. I understand making sure that there is a population that can read and right and think critically but in the liberal arts the uselessness has really been taken to a ridiculous level. And they seem smug or proud of it.
Meanwhile almost everything my friend posts on facebook is liberal drivel. I mean I understand compassion and good intentions but its completely thoughtless socialism without ever taking into consideration the other viewpoint. I mean these two always talk about unions and such and the protests of students at CAL being beaten down etc. But I am sitting here thinking do you not see how you are part of this problem? I mean tuitions are going up to pay for your overly inflated compensation schemes of you and your colleagues? Will you be willing to forgoe a percentage of your salary or pension or contribute more for your health benefits so that you're students don't have to be enslaved? Don't get me wrong i am not a fan of thoughtless conservatives that only act in their self interest as well. But some of the things that the right say are true ( certainly not all or even most). And yes some of what the left says is true. BUt we need practical solutions here and a collective outlook if we want to survive not blind self interest.
The hyprocrisy of both the left and right knows no bounds.
Student loans need to be reformed so that the banks bear some risk. If that were the case there would be some market pressure on tuitions if you had a harder time getting a loan for your worthless degree in underwater basket weaving than say engineering, primary school education, or accounting. Nevermind the University of Phoenix's of the world? I mean why in the f&*k should the department of education insure loans for their proven worthless degrees? ??????
And as others have stated this will have a negative effect on the economy and the housing market specifically. Hey Baby Boomers, who will be there to buy your appreciated big expensive home? Unless our POS congress sells VISA's to Chinese who is going to have the credit and liquidity to buy your houses at close to their value? I mean the nominal price may end up being huge with the effects of inflation but in real terms it won't be much if an entire generation is up to their eyeballs in debt and dying young from all the stress in their lives. I mean all that money paid in student loan payments is money that can't be saved for a downpayment.
Anyone with any "equity" in their house should cash out NOW - There won't be any homebuyers 3-5 years from now (free squatting sure beats paying!!!), certainly not over indebted 19-26 year olds as boomer try to sell their 5,000 sq' house that costs $900 bux a month to heat or cool.
The practical solution you seek is enlightened self-interest, as there is nothing practical about collective outlook, because collectives, being abstractions, are blind.
It is only the enlightened individual who recognizes their own complicity in society's problems, and thus changes their own behavior in an effort to counter it.
Collectives meanwhile, are filled with individuals who believe they have the answer for others, and seek power to enforce their will upon them in hopes of rendering positive change. These people have no need, let alone the ability to critique their own views, as that can only undermine their faith in their mission (a bedrock of their existence).
It doesn't take much of an analyst to discern the differences between these two strategies, and their odds of success. But in this age of belief in the omnipotent government, individuals feel powerless to promote positive change, and are chastised for not joining in on the herd activities of minding your neighbor's business.
All in all, collectives are merely agents of externalization, where "introspection" occurs only when imaging how others might think/behave, and as such is a main driver of cognitive dissonance (or perhaps it's the other way around).
Very well said, sir.
I haven't got a f***ing clue what you are talking about. Can you tell me in less than five words what your degree is in?
Let's think about this for a minute:
China - education is cheap and on average similar quality to the US. People come out with salary expectations around 20% of equivalent US graduate without massive loan burdens
India - education is cheap and on average similar quality to the US. People come out with salary expectations around 15% of equivalent US graduate without massive loan burdens
So:
1) why doesn't it make sense to outsource again?
2) how can US population improve education level relative to BRIC countries without falling into a chasm of debt
Just curious. Where did you get the data that China and Indian schools are on average similar quality to the US?
After being a student at a prominent Chinese university, i completely disagree based on my small sample size.
You have clearly never been to China. I, on the other hand, went to Beijing University for my Masters degree, the "Harvard" of China. The quotation marks are purposeful. I'll just leave it at that. "Similar quality" is about as similar as taco bell beefmix vs prime ribeye. However, my Masters degree cost me 15k USD, versus say, 80k+ over here? Fun times. Cost of living was dirt cheap, too.
Don't know anything about India, except don't drink the water.
I went to grad school for EE at UC Santa Barbara with a lot of Chinese and Indian grad students. Granted it was EE, but the feedback I got was that the average Chinese/Indian student got as good an education in EE/CE/CS as the average US student at a much lower price-tag.
Disclaimer: small sample size. Sorry for not stating before.
And that's only China and India - we haven't taken into account Eastern Europe/Russia and Latin America yet.
Which basically means - there's a pool of university-educated people around the world, who on average are probably as qualified as the average American university BS/BA holder, but who are willing to work at somewhere around 15 - 40% of the average American university graduate's starting salary. And these people don't start their careers with the same level of debt.
This should be a scary thought for all Americans.
Schools should have to co-sign any student loans their students take out.
Nope. Same problem with toxic mortgages... no individual skin in the game... school administrators sign the school's name, take big paychecks, and find something else when it blows up (if necessary).
It's worth a try
The cost of a secondary education is greatly inflated due to Government intervention just as medical is and despite its current malaise housing also.
Pull the Government out of those industries and prices would fall back to where they should be.
The really smart ones will find the weapon that solves the nondischargeability problem: a passport.
Sounds like Risk-Free Rate is now the student loan rate. Time to update CAPM
"Time to update CAPM" - Time to update the map of Chicago we've been using so long to find our way around NYC.
The key dynamic here is the transference of risk from the lenders, who stand to reap immense profits from these loans, to the students. This transference is enforced of course not by the banks but by their partner, the Savior State, which obliterated the right to bankruptcy for students while guaranteeing profits to the banks via Sallie Mae, another guarantor of private profits backstopped by taxpayers.
Well, you can't say that the government learned nothing from the failure of Operation: Home Ownership Expansion.
No dropping the keys in the mailbox this time...
Why did the banks want all those healthy educated young people as their enemies? Critical Mass Bitchez.
A critical mass easily distracted by Apple's latest gadgets.
they will grow up and the will remember and feel stupid, and they will get angry.
Social isolation, warned of by Herrenstein and Murray in "The Bell Curve".
The children of people who live in midtown Manhattan and other similar venues don't need student loans. The parents never encounter middle class people who do, except perhaps the secretarial and clerical help who don't really matter.
Humans tend to worry only about making enemies of those who matter within their social circle or work environment. A large segment of those who live in midtown Manhattan and similar venues despise the American middle class, hate the idea of their children achieving upward mobility and do everything in their power to prevent it.
Student loan servitude is not just about bank profits. It also is driven by the prejudice driven social engineering goals of our elite.
WTF are you talking about? You obviously don't live in Midtown Manhattan and haven't spoken to people who do. Most of the people who live in Midtown Manhattan are middle class; it's just that their middle class lifestyles cost more than the middle class lifestyles in other areas.
Neither of you appear to have ever lived in Manhattan. Nobody lives in mid-town Manhattan ... its a place where you work. Yeah, there are apartments in what some would call mid-town Manhattan, and people live there, but those people don't count. If you live in Manhattan, you either live UWS, UES or Tribecca. Nothing else counts and you would be embarrassed to admit you live anywhere but one of those three locales, and even then some members of even those tribes harbor guilt at not living in another of the locales.
I was proudly a member of the UES tribe ... there is no life below 72d Street. I once walked to the western edge of Central Park and wondered how anyone could choose to be UWS. I had a ton of student loans because that was my ticket to the 1%
As in many countries that have perpetuated the College education myth, the US will be forced to legislate education requirements for professions. In Taiwan for example, realtors and travel agents as well as insurance agents must all have a College degree. The government will basically relegate uneducated and high school-only americans to the 'untouchable' level. I would not be surprised if the Congress makes it mandatory to have a College degree to own a small business or take out an SBA loan.
We do that to a certain extent for some professions already. In order to get licensure, you must have a certain degree of education or training. Just another form of gov control and gov revenue enhancement. What blows me away, I sat in on a meeting with some gov regulatory folks a few months ago (was there for other unrelated reg issues that affect my biz) who are already passing rules to be implemented for child care providers. They want them to start getting college degrees. For Pre-k and under child care providers! Most child care providers are not college educated, the only way for many low income, low education women to make a living. WTF!! They literally want to start controlling a child's education and health from birth. Can't be too long before RFID's will be implanted at birth at the hospital. BTW, look how well these college educated teachers are doing in our public schools. Never have the teachers been so "educated" and never have our public schools been so bad. This will fix everything you see.
Yup, it's one big con.
Case in point, it wasn't took long ago that all you had to do was pass the bar exam to become a lawyer... now you need a degree also... there is literally no purpose for the education requirement other than return favors for lobbying... nada. The lawyers of today are not better than the lawyers of yesteryear...
Actually, there are still ways to become a lawyer without getting a law degree from an accredited school, but they are not well-known. For example, in new york state, you only need 1 year of law school:
http://www.nybarexam.org/Rules/Rules.htm#520.4
520.4 Study of Law in Law Office
(a) General. An applicant may qualify to take the New York State bar examination by submitting to the New York State Board of Law Examiners satisfactory proof:
(1) that applicant commenced the study of law after applicant's 18th birthday; and
(2) that applicant successfully completed at least one academic year as a matriculated student in a full-time program or the equivalent in a part-time program at an approved law school and at the conclusion thereof was eligible to continue in that school's degree program; and
(3) that the applicant thereafter studied law in a law office or offices located within New York State under the supervision of one or more attorneys admitted to practice law in New York State, for such a period of time as, together with the credit allowed pursuant to this section for attendance in an approved law school, shall aggregate four years.
(b) Employment and Instruction Requirements. An applicant studying law in a law office or offices within New York State must be actually and continuously employed during the required period as a regular law clerk and student in a law office, under the direction and subject to the supervision of one or more attorneys admitted to practice law in New York State, and must be actually engaged in the practical work of such law office during normal business hours. In addition, the applicant must receive instruction from said attorney or attorneys in those subjects which are customarily taught in approved law schools.
...
I'm virtually certain that's the exception and not the rule.
Of course, when I was getting my law degree, they changed the CPA education requirements, making it easier to get a license... I didn't even get to practice any before they had more entrants flowing...
In the end, it's only licensees (the entrenched) that clamor for higher barriers to entry...
Schools should carry the note on their own books and package the receivables for a liquidity advance. This would tie the incentives of the school with those of the student and force schools to think twice about how many to admit and at what price.
I believe one of my student loans, the perkins loan, is serviced by the school. Perhaps they could all work this way. . . the school advances the student tuition and sells the loan to Uncle Sam, who now owns the student mortgage business (which is serviced by Great Lakes and Nelnet).
If you want to fix the game, then you cannot unpervert incentives until the infrastructure/tenured costs of universities are decreased... it's the same bet as the euro bet... if we win, we win big... if we lose, the world will have gone to shit anyway and we won't care.
In bailout nation, schools do not fail. The next step will be direct injections into schools, rather than letting people off the hook for the debt (think bank bailouts in relation to mortage debt).
Don't bail out schools, don't bail out borrowers, don't bail out lenders. Stop the insanity. No government involvement in lending money to students or schools. Stop!
Yep... but you'll have to figure out how to narrow the wealth gap before pulling the plug... much different ballgame afterward.
How much should the wealth gap be narrowed?? How even is the distribution supposed to be? If we don't know the target distribution, how are we ever going to get there? Pull the government plug now.
Practically speaking, there may be no alternative... however, I'm not remotely convinced that we'll be better able to right any wrongs or change trajectory to somewhere decent after the plug is pulled. Beggars can't be choosers. It may be semantics given everyone is already a beggar, but it's just that the appearances would be a little different.
Further, virtually all political goodwill at the present exists and rests upon the examination, investigation, and prosecution of financial crimes. Without tapping into this, any upstart or attempted rebuilding will not work... not in the "us" concept anyway. The functions to tap this goodwill are going to be diminished upon plug pulling.
Unfortunately, most students in loan debt seek the government as the solution to these problems. To be able to declare bankrupsy on these loans would put a lot of these problems to rest.
there MUST be some coordinated global effort to foment universal hatred of Government and distrust of central planning.
i see no other explanation for recent history -
Unfortunately, most students in loan debt seek the government as the solution to these problems. To be able to declare bankrupsy on these loans would put a lot of these problems to rest.