This page has been archived and commenting is disabled.

Guest Post: Risk And The Indentured Servitude Of Student Loans

Tyler Durden's picture





 

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.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 12/22/2011 - 14:40 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Obama will rescue them. Probably by offering government jobs to pay off the loan.

Thu, 12/22/2011 - 14:45 | Link to Comment AldousHuxley
AldousHuxley's picture

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.

Thu, 12/22/2011 - 15:52 | Link to Comment MachoMan
MachoMan's picture

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).

Thu, 12/22/2011 - 16:05 | Link to Comment AldousHuxley
AldousHuxley's picture

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.

Thu, 12/22/2011 - 16:11 | Link to Comment tarsubil
tarsubil's picture

Wow, what a comparison. Disturbing and hard to deny. No one wants to admit where they stand.

Thu, 12/22/2011 - 22:53 | Link to Comment Harlequin001
Harlequin001's picture

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...

Thu, 12/22/2011 - 23:32 | Link to Comment jeff montanye
jeff montanye's picture

really.  widen your horizons.

Fri, 12/23/2011 - 03:39 | Link to Comment Harlequin001
Harlequin001's picture

In what way?

Fri, 12/23/2011 - 11:05 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

A series of perfect metaphors.  Now pardon me while I grab my armor and sword. 

Thu, 12/22/2011 - 18:33 | Link to Comment halflink123
halflink123's picture

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.

Thu, 12/22/2011 - 15:44 | Link to Comment Henry Chinaski
Henry Chinaski's picture

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

 

Thu, 12/22/2011 - 16:01 | Link to Comment LasVegasDave
LasVegasDave's picture

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.

Thu, 12/22/2011 - 16:08 | Link to Comment tarsubil
tarsubil's picture

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).

Thu, 12/22/2011 - 16:23 | Link to Comment LasVegasDave
LasVegasDave's picture

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

Thu, 12/22/2011 - 16:25 | Link to Comment tarsubil
tarsubil's picture

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!

Thu, 12/22/2011 - 17:58 | Link to Comment LasVegasDave
LasVegasDave's picture

and if the bank bargained for recourse debt, what then?

Since when is enforcing a debt immoral?

Thu, 12/22/2011 - 18:35 | Link to Comment halflink123
halflink123's picture

The key point is that it's NOT DISCHARGEABLE.

Do you know the difference between "recourse" debt and "nondischargeable" debt? Holy shit...

Thu, 12/22/2011 - 17:37 | Link to Comment Omen IV
Omen IV's picture

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

  

Thu, 12/22/2011 - 16:21 | Link to Comment TheSilverJournal
TheSilverJournal's picture

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

Thu, 12/22/2011 - 14:39 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

In the "student" loans racket, the students are a simply a transfer vehicle for the gubbmint to subsidize university administrators & teachers.

Thu, 12/22/2011 - 14:41 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

+1.

Transactionism at its purest.

Thu, 12/22/2011 - 15:14 | Link to Comment AldousHuxley
AldousHuxley's picture

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.

Thu, 12/22/2011 - 21:01 | Link to Comment mkkby
mkkby's picture

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.

Thu, 12/22/2011 - 14:43 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Student loans: The new subprime.

Thu, 12/22/2011 - 14:50 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Hyperinflation: like the soon-to-be USD, a college degree is a worthless, $200,000 piece of paper.

Fri, 12/23/2011 - 11:00 | Link to Comment Tangurena
Tangurena's picture

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!

Thu, 12/22/2011 - 14:43 | Link to Comment dizzyfingers
dizzyfingers's picture

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. 

Thu, 12/22/2011 - 15:12 | Link to Comment Hohum
Hohum's picture

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!

Thu, 12/22/2011 - 15:29 | Link to Comment Peterpaul
Peterpaul's picture

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!

Thu, 12/22/2011 - 15:29 | Link to Comment Peterpaul
Peterpaul's picture

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!

Thu, 12/22/2011 - 16:00 | Link to Comment ebworthen
ebworthen's picture

Most of the student loans can't be paid, and won't be paid.

The income and the savings are just not there.

Thu, 12/22/2011 - 16:27 | Link to Comment rbg81
rbg81's picture

Relax.  Its just another mechanism to compel them to be productive citizens of the Empire.

Thu, 12/22/2011 - 14:45 | Link to Comment SilverIsKing
SilverIsKing's picture

Everyone will be off the hook when the dollar goes to zero.

Thu, 12/22/2011 - 14:52 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Yep, paying off a $100,000 student loan will be easy when bread costs $100,000 a loaf.

Thu, 12/22/2011 - 14:53 | Link to Comment SilverIsKing
SilverIsKing's picture

When bread costs $100,000 a loaf, student debt will disappear.

Thu, 12/22/2011 - 15:01 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Yes...just send your loaf to the Student Loan Administration.  Come to think of it, I think I'll send 'em a loaf now.

Thu, 12/22/2011 - 15:18 | Link to Comment SilverIsKing
SilverIsKing's picture

LOL

Yes, pinch one off and Fedex for morning delivery please.

Thu, 12/22/2011 - 15:36 | Link to Comment James-Morrison
James-Morrison's picture

I don't have a loan.  So send 'em an extra loaf for me.

Thu, 12/22/2011 - 16:01 | Link to Comment CH1
CH1's picture

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.

Thu, 12/22/2011 - 15:36 | Link to Comment Hohum
Hohum's picture

Problem is many student loans have variable rates.  Uh-oh!

Thu, 12/22/2011 - 15:21 | Link to Comment Catullus
Catullus's picture

Except many of the student loans have variable interest rates. Killer.

Thu, 12/22/2011 - 14:45 | Link to Comment Yardstick of Ci...
Yardstick of Civilization's picture

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.

Thu, 12/22/2011 - 18:06 | Link to Comment NotApplicable
NotApplicable's picture

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

Thu, 12/22/2011 - 14:48 | Link to Comment nodhannum
nodhannum's picture

 

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.

 

Thu, 12/22/2011 - 14:55 | Link to Comment ffart
ffart's picture

Hey that's not fair, those SS troopers actually had to work for a living.

Thu, 12/22/2011 - 15:34 | Link to Comment daveeemc2
daveeemc2's picture

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?

Thu, 12/22/2011 - 16:01 | Link to Comment ebworthen
ebworthen's picture

Soylent Green next.

Thu, 12/22/2011 - 16:30 | Link to Comment Rearranging Dec...
Rearranging Deckchairs's picture

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.

Thu, 12/22/2011 - 17:16 | Link to Comment DaveyJones
DaveyJones's picture

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

Thu, 12/22/2011 - 18:34 | Link to Comment Lednbrass
Lednbrass's picture

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.

Thu, 12/22/2011 - 19:27 | Link to Comment DaveyJones
DaveyJones's picture

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

Thu, 12/22/2011 - 16:28 | Link to Comment Rearranging Dec...
Rearranging Deckchairs's picture

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.

 

 

 

 

Thu, 12/22/2011 - 17:50 | Link to Comment Almost Solvent
Almost Solvent's picture

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.

Thu, 12/22/2011 - 18:21 | Link to Comment NotApplicable
NotApplicable's picture

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).

Thu, 12/22/2011 - 19:12 | Link to Comment AustriAnnie
AustriAnnie's picture

Very well said, sir.

Thu, 12/22/2011 - 20:56 | Link to Comment smiler03
smiler03's picture

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?

Thu, 12/22/2011 - 14:50 | Link to Comment ucsbcanuck
ucsbcanuck's picture

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

 

Thu, 12/22/2011 - 15:05 | Link to Comment Lokpol
Lokpol's picture

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.

Thu, 12/22/2011 - 15:07 | Link to Comment jiggerjuice
jiggerjuice's picture

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.

Thu, 12/22/2011 - 15:15 | Link to Comment ucsbcanuck
ucsbcanuck's picture

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.

Thu, 12/22/2011 - 17:04 | Link to Comment ucsbcanuck
ucsbcanuck's picture

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. 

 

Thu, 12/22/2011 - 14:53 | Link to Comment sangell
sangell's picture

Schools should have to co-sign any student loans their students take out.

Thu, 12/22/2011 - 16:04 | Link to Comment MachoMan
MachoMan's picture

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).

Thu, 12/22/2011 - 16:19 | Link to Comment LaLiLuLeLo
LaLiLuLeLo's picture

It's worth a try

Thu, 12/22/2011 - 14:54 | Link to Comment gridlocked
gridlocked's picture

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.

Thu, 12/22/2011 - 14:54 | Link to Comment flacorps
flacorps's picture

The really smart ones will find the weapon that solves the nondischargeability problem: a passport.

Thu, 12/22/2011 - 14:55 | Link to Comment i love cholas
i love cholas's picture

Sounds like Risk-Free Rate is now the student loan rate. Time to update CAPM

Thu, 12/22/2011 - 16:43 | Link to Comment ucsbcanuck
ucsbcanuck's picture

"Time to update CAPM" - Time to update the map of Chicago we've been using so long to find our way around NYC.

Thu, 12/22/2011 - 14:57 | Link to Comment Mercury
Mercury's picture

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...

Thu, 12/22/2011 - 14:57 | Link to Comment q99x2
q99x2's picture

Why did the banks want all those healthy educated young people as their enemies? Critical Mass Bitchez.

Thu, 12/22/2011 - 14:59 | Link to Comment i love cholas
i love cholas's picture

A critical mass easily distracted by Apple's latest gadgets.

Thu, 12/22/2011 - 16:37 | Link to Comment margaris
margaris's picture

they will grow up and the will remember and feel stupid, and they will get angry.

Thu, 12/22/2011 - 15:23 | Link to Comment MrPalladium
MrPalladium's picture

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.

Thu, 12/22/2011 - 16:14 | Link to Comment Thisson
Thisson's picture

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.

Fri, 12/23/2011 - 04:49 | Link to Comment The Alarmist
The Alarmist's picture

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%

Thu, 12/22/2011 - 15:11 | Link to Comment automato
automato's picture

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.

Thu, 12/22/2011 - 15:29 | Link to Comment Kali
Kali's picture

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.

Thu, 12/22/2011 - 16:04 | Link to Comment CH1
CH1's picture

Yup, it's one big con.

Thu, 12/22/2011 - 16:08 | Link to Comment MachoMan
MachoMan's picture

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...

Thu, 12/22/2011 - 16:21 | Link to Comment Thisson
Thisson's picture

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.

...

 

 

Thu, 12/22/2011 - 16:32 | Link to Comment MachoMan
MachoMan's picture

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...

Thu, 12/22/2011 - 15:16 | Link to Comment Maroon Phoenix
Maroon Phoenix's picture

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).

Thu, 12/22/2011 - 16:14 | Link to Comment MachoMan
MachoMan's picture

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).

Thu, 12/22/2011 - 16:38 | Link to Comment Bob Sacamano
Bob Sacamano's picture

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!

Thu, 12/22/2011 - 17:30 | Link to Comment MachoMan
MachoMan's picture

Yep...  but you'll have to figure out how to narrow the wealth gap before pulling the plug...  much different ballgame afterward.

Thu, 12/22/2011 - 19:22 | Link to Comment Bob Sacamano
Bob Sacamano's picture

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.

Sun, 12/25/2011 - 12:49 | Link to Comment MachoMan
MachoMan's picture

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. 

Thu, 12/22/2011 - 15:21 | Link to Comment Mister Rumbles
Mister Rumbles's picture

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.

Thu, 12/22/2011 - 15:21 | Link to Comment Madcow
Madcow's picture

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 -

Thu, 12/22/2011 - 15:21 | Link to Comment Mister Rumbles
Mister Rumbles's picture

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.

Thu, 12/22/2011 - 16:23 | Link to Comment Thisson
Thisson's picture

A fair solution would be that you can declare bankruptcy, but then you forfeit the degree....

Thu, 12/22/2011 - 15:22 | Link to Comment Peter K
Peter K's picture

Stupid shits took degrees in English Lit and Womens Studies and now they figured out that they can't get a job. Well no shit Sherlocks. So instead of blaming their own f**ked up selves, they blame everyone else. F'n losers:)

Thu, 12/22/2011 - 15:44 | Link to Comment junkyardjack
junkyardjack's picture

I remember in college a friend of mine at the time was studying romantic languages, I always wondered what the hell are you going to do with that?

Thu, 12/22/2011 - 17:21 | Link to Comment DaveyJones
DaveyJones's picture

swoon somebody rich

Thu, 12/22/2011 - 17:22 | Link to Comment ucsbcanuck
ucsbcanuck's picture

Didn't a certain Meredith Whitney study English at Brown?

Fri, 12/23/2011 - 14:53 | Link to Comment fmouse
fmouse's picture

Junkyardjack, the term is "romance languages" and refers to languages derived from the historic language of the Roman empire, Latin. This includes modern French, Italian, Spanish and several others. Wanna get a job as a European sales rep for an American company?  You sure better be able to speak at least one or two, hopefully several romance languages.  If you don't, then the job will probably go to someone who can.

Thu, 12/22/2011 - 15:58 | Link to Comment Cathartes Aura
Cathartes Aura's picture

watch teevee much?  repeat the meme. . .

Thu, 12/22/2011 - 17:03 | Link to Comment Cathartes Aura
Cathartes Aura's picture

ahh fuck it, while I'm here collecting junks. . .

the "women's studies" meme so commonly used here as shorthand for "stupid wimmins" is something the majority of you have zero knowledge of as a discipline, it's just easy to type & get a brofist for. . .

ponder that the majority of college courses concentrate on the perpetuation of the LIES of history, what "they" want you to believe IS history - history is mostly taught as wars, who invaded who, memorise the dates & the redrawn "national" boundaries, etc. - very few history courses will touch on the humans, just the invasions. . . by taking a "womans" history class that same time period will focus mainly on the civilisations, and not through a leather-elbow-patched jacket of the privileged perspective, but an alternative point of view, one that actually includes females, and how they've been historically excluded, from education, government, the economy, etc.

as an example: the "anthropology" course taught by an east coast money-family academic, who was hired to undermine the New Guinea peoples so as to make access to their RESOURCES (mining) justifiable. . . he's swanning around with his "working vacation" pictures of the "noble savages" thinking he's entertaining his students, when in fact many are horrified at his neo-colonial justifications of theft. . . pics of the "drunken tribes" and their "primitive appearances & rituals" were met with resistance, because the people enrolled in that class were not brainwashed to perceive the colonising & appropriation of resources as a benevolent act - taking the candy from the feeble because they had no idea how to "use" it, making light about the POISONING of their rivers & streams & primary water sources, yadda yadda. . .

while not EVERY women's study program is useful, and while "engineering, math & science" are the holy grails of getting good monies, just remember - in the past 10 years, "economics" was another worshiped "discipline" co-opted by the sociopaths that own "history" - and "science" is yet another area these freaks can pull in big bank & kudos, on behalf of the "elites" - look into the eyes of this genius, and see who he's working for (amrkn MIC) and realise just how IMPORTANT he is to the system, and WHY:

http://www.independent.co.uk/news/science/alarm-as-dutch-lab-creates-hig...

I'd rather have a fucking fine arts degree, y'know?

Thu, 12/22/2011 - 17:56 | Link to Comment Almost Solvent
Almost Solvent's picture

Reminds me of those useless flaps of skin surrounding the vagina, what's that called, oh yea, the woman.

Thu, 12/22/2011 - 19:57 | Link to Comment Cathartes Aura
Cathartes Aura's picture

fine, well thought out reply sir - stick to penii.

Thu, 12/22/2011 - 15:32 | Link to Comment HungrySeagull
HungrySeagull's picture

It is a much better and fulfilling life to be a Truck Driver and enjoy the world than to labor in a counting house for a degree that is worthless.

Been there done that. Both ways.

There is a time coming when those who are on varible rates will be eaten alive. We are on a fixed rate, but could care less over that payment which will effectively require more than both of our remaining lifetimes to repay.

We are essentially bankrupt as long this system remains in place.

Quietly over the years you can see that the college campus buying property and adding new buildings requiring a greater volume of student loan to remain solvent.

Thu, 12/22/2011 - 15:24 | Link to Comment Dr. Engali
Dr. Engali's picture

All that debt and they don't get an education that is worth a damn,so there is no real job prospect for them to even begin paying it off. It is a sinister system that is for sure.

Thu, 12/22/2011 - 15:26 | Link to Comment adr
adr's picture

I left college with $20k in loans. Been paying for 12 years and still owe $10k. My sister in law just graduated with $100k in loans to pay back. She is paying $1000 a month and will still need 25 years to pay her loan back. She might get a $40k a year job if she's lucky so after taxes almost half her earnings will go just to her student loan payment for most of her adult like. WHERE DO I SIGN UP FOR THAT. Of course she is hoping Obama's student loan law goed in effect so she can reduce her payment. HEY I GOT AN IDEA. How about we just draw out student loans to a term of 100 years, you'll pay like $100 a month and your balance at the end of the term will transfer to your kids! FUCKIN BRILLIANT!!!

Thu, 12/22/2011 - 15:38 | Link to Comment HungrySeagull
HungrySeagull's picture

It takes a thousand dollars to keep a team of two truck drivers fit and strong enough to run revenue three times to ten times gross that much.

Employers run credit checks and hire those who have no debt as they will be more stable related to HR when it comes to annoyaning garnishments and collection actions.

Again, the college path is not worth the paper it's written on. As was the 401k's instead of PM's and other tangible actions towards assets.

There should be something like 5 million that will have zero income going into next year when Congress fails to reconcile the current bill.

The entire system should be scrapped.

If the employer wants a employee to have a degree, then they should pay to have that person acquire it during the course of employment.

That alone will free up man power for the increasing numbers of temp one off jobs that does not require a HR to keep running.

Thu, 12/22/2011 - 15:41 | Link to Comment junkyardjack
junkyardjack's picture

I graduated with $40K in student debt, got a job on Wall Street, paid it off in 2 years. Winning!

Thu, 12/22/2011 - 16:03 | Link to Comment HungrySeagull
HungrySeagull's picture

They make trades bigger than that chump change each hour where you are.

Fri, 12/23/2011 - 01:03 | Link to Comment Don Keot
Don Keot's picture

I don't even think it is qualifies as a number for rounding.

Thu, 12/22/2011 - 16:25 | Link to Comment drivenZ
drivenZ's picture

agreed, to an extent. Not saying everyone can do this, but if you're borrowing 100k you better be in a major for the $, you better be busting your ass working every summer, and part time during the year. Maybe the kids are immature and have poor guidance but this is like a 10 minute conversation max…

What’s your major?

What’s the average starting salary?   

Subtract taxes and living expenses...

Your disposable income after college will be $XX

It will take you X number of years to pay off your debt.

 

And that’s it. not difficult. Don’t have the money? Go to a state school, go to community college for 2 years then transfer.  I agree on average it’s tough nowadays but 100k+ in debt is NOT necessary. It's not a vaction and shouldnt be treated like one. 

Thu, 12/22/2011 - 16:39 | Link to Comment drivenZ
drivenZ's picture

just as a caveat to this, if you come out of school with 30-40k in debt it shouldnt take you a lifetime to pay off if you're single. Even if you're making 30-35k which any sort of specialized degree should be able to pull down, you should be able to pay down 10k/yr atleast. If you can't your spending too much on other crap. 

Thu, 12/22/2011 - 17:23 | Link to Comment ucsbcanuck
ucsbcanuck's picture

Depends on where you're living. 30 - 35k will get you far in the MidWest. Good luck in Cal.

Fri, 12/23/2011 - 01:10 | Link to Comment Don Keot
Don Keot's picture

I saw a guy that ran a student travel website and stated that more students than ever were going to Europe for Christmas vacation as they had a $5 to $10 thousand travel allowance.  What am I missing?  Is that part of the student loan program? WTF?

Thu, 12/22/2011 - 15:27 | Link to Comment Catullus
Catullus's picture

Great article. I disagree a lot with this writes, but I keep coming back for more.

For most kids, you can make a better rate of return paying these things off faster than "investing" in your 401k. In fact, that could be a good idea! Let a 401k contribution go to paying off your student loan. That way some of your employer match can go to paying it off.

Wall Street would never allow that though. Paying off debt is just balance sheet contraction anyway for them.

Thu, 12/22/2011 - 15:41 | Link to Comment HungrySeagull
HungrySeagull's picture

We had captured a good match.

We did cash out and ate the penalty just to GTFO out of the 401 k.

The employer has ceased the match practice because it costs them too much money.

Thu, 12/22/2011 - 15:31 | Link to Comment cleverlemming
cleverlemming's picture

There's a lot more to this issue.

1. SLABS (Student Loan Asset-Backed Securities). See http://www.utne.com/Politics/Price-Of-Postsecondary-Education-Most-Indeb...

2. Student loans are a tool of social control. After the turmoil of the late sixties and early seventies, campuses nationwide made a concerted effort to thwart future protest movements. Their ongoing efforts included limiting large, open gathering spaces; burying telephone exchanges and computer centers; and installing surveillance technology. But what happens when students leave the campus to gather elsewhere, as was the case in France in 1968? Students are educated, articulate, passionate, and therefore an ongoing threat to the established social order.

The ultimate solution is to remove the "walkabout" that students traditionally enjoyed, which was the year or two they took off from school, either during their studies or between graduation and work. Student loans effectively accomplish this, transforming free radicals into indentured workers. The out of control increases in the cost of tuition also discourage self-discovery and radicalization. Few students take out loans in pursuit of undeclared majors. Instead, they're much more likely to, prudently, choose the field of study that they think will allow them to pay back their debts.

Thu, 12/22/2011 - 18:33 | Link to Comment NotApplicable
NotApplicable's picture

Sadly, there's plenty of idiots who took on $100k+ in debt in order to get a Women's Studies degree (or something equally as non-marketable). I learned this when I started looking at the "I am the 99%" blog.

Thu, 12/22/2011 - 15:31 | Link to Comment NumberNone
NumberNone's picture

So basically the universities have become extensions of the US government.  The loans are given to the students like feed to a calf about to be slaughtered...this 'free' money is then passed to the universities allowing them to inflate tuition and overpay professors...the loans are backed by the printing presses of the US government but technically the students are indebted to them for the rest of their lives, no bankruptcy escape hatch.  Nice.

No wonder our universities are bastions of pro-government.  No wonder any threat of government spending cuts is vehemently met by the stupid brain-washed students listening to their professors telling them how bad it's going to hurt them, when in effect its the professors most at risk.  No wonder the universities that once protested government wars and government sponsored actitivities now sit quietly watching these events unfold.  They've been bought off.  Fuck them.

Thu, 12/22/2011 - 17:32 | Link to Comment DaveyJones
DaveyJones's picture

well said and, as you hinted, the universities, like the government, are also now multinational corporate industrial whores hooked on the money given to them to produce "objective" research on everything from GMOs to war. The only educator left, for now, is the internet, and here we are 

Thu, 12/22/2011 - 15:37 | Link to Comment Alex Kintner
Alex Kintner's picture

Not to mention that any job done with a computer or phone is being offshored and unavailable to US workers. That means most will graduate with a $100K loan and go off to stock shelves at MalWart.

Thu, 12/22/2011 - 15:46 | Link to Comment HungrySeagull
HungrySeagull's picture

Been there for years.

I started off in Engines. Now shiploads of engines are all alike, none particularly special coming in from overseas because it's cheaper to pay Be Fat 1 dollar/day with room and anti suicide board.

Want to build an engine? First learn Metal and Foundry. The old ways are still availible in the dusty old books. The knowledge is out there.

 

But who needs any of that when you can pop a slab of metal into a CNC machine and wait a few days to have a precise and perfect machined engine? /sarc

Thu, 12/22/2011 - 17:37 | Link to Comment DaveyJones
DaveyJones's picture

my favorite example still is about a decade old. Seems the city of Des Moines had a job assistance program that helped connect the local unemployed with jobs in the area. It didn't take long for folks to figure out the calls were outsourced to India

Thu, 12/22/2011 - 15:47 | Link to Comment Hyper Entropy
Hyper Entropy's picture

I just paid off $114,000 in student debt in 5 years. I have a Master's in structural engineering and design bridges. I made it work. I feel sorry for those who can't get the returns for their degree becacuse if you can't you're a slave wage motherfucker for life.

Getting yourself out of a hard situation like I was in demands serious commitment and persistence. Otherwise, just roll over and die because that's your only option.

 

Thu, 12/22/2011 - 15:48 | Link to Comment HungrySeagull
HungrySeagull's picture

Congrats!

It is much cheaper to recognize the futlity of your College effort as the University stuff required courses not relevant to your work in bridge design.

Thu, 12/22/2011 - 15:51 | Link to Comment Ensane
Ensane's picture

I also finished up college and managed to pull it off with very minimal loans. However the other option, much like morgatges is to simply ignore the loan if its critically impacting a person and go on a cash only life style that a small but most likely growing % will do. It's harder to find under the table work, but with costs increasing I have no doubt it will be a growing market in the coming decade.

Thu, 12/22/2011 - 16:06 | Link to Comment HungrySeagull
HungrySeagull's picture

Seasonal construction such as Paving.

You are essentially told to collect large amounts of unemployment during winter. The only job you have then is not get sick or fat.

 

I remember one landowner who needed a road now through the woods. It was the rain time. That landowner was told that the gravel alone will double the cost.

 

The owner told us to do it anyway. Finally one load of gravel disappeared into the quivering mud too much. Truck and all.

 

We left it all. It was cheaper to get another dump truck and back to work rather than expend large amounts of labor and money getting it out.

Thu, 12/22/2011 - 15:47 | Link to Comment swani
swani's picture

For those who are angry with the Students for taking these loans, this is a different issue. 

My issue is as a tax payer who feels like I am being forced to subsidize an out of control industry full of gambling addicts, sociopaths, career criminals, and some good people of course, but those seem to be in the minority. 

The Student Loan Bubble is exactly like the Subprime Mortage Bubble and the Sovereign Debt Bubble.

Th tax payer's are guaranteeing the loans to these TBTF banks who we all know, are the biggest recepients of welfare in the country. We know, and they know, that with the unemployment a high as it is, in the double digits among young people, a large percentage of students will not be able to pay for these loans, so the government will have to pay the banks 100 cents on the dollar on these. 

Yet, by law, the students will still be on the hook and not allowed to include these loans in a bankruptcy, so the banks will be paid twice, and, by doing this, be allowed to count these unpaid loans as assets on their books. 

So the question is, why are we subsidizing the banks? If the taxpayers are paying for this anyway, why not just pay for this directly to the students? This would stimulate the economy more. We should do that, or not do it at all.

Unfortunately, the TBTF banks are the biggest contributors to both political parties and they pay them to legislate the raping of the tax payers, so that they can continue to profit risk free from every risky loan that they make, no matter how risky. 

Can you blame them for creating these rackets of tax payer cash extraction? I mean it's immoral, but it's a pretty lucrative business model.

 

 

 

 

Thu, 12/22/2011 - 15:50 | Link to Comment HungrySeagull
HungrySeagull's picture

Yes there are gamers and little hackers at the college. The availible raw fiber connection to the net with gigabit service is just too tempting.

 

The last time the State Governor sent a tour group through to evaluate the expenditure of funds into State Loans found students playing tetris and other computer games in actual class on laptops.

Those Laptops have since been banned.

Thu, 12/22/2011 - 16:23 | Link to Comment Apocalicious
Apocalicious's picture

That is the perfect metaphor. The banks are the mafia, and the regulators/legislators are corrupt cops on the take.

Thu, 12/22/2011 - 15:56 | Link to Comment ebworthen
ebworthen's picture

The most inflated commodity of the past 50 years.

Higher Education has become Higher Affirmation.

Most Universities are Diploma Mills.

Degrees to nowhere; the snake oil salesman of the 21st century.

The education industry is often a state/federal game, propped by billions and billions of dollars of grants on studies that do nothing productive run by overpaid ideologues churning out what usually amounts to theological tomes of conjecture that gather dust.

The incentive for putting students into debt is to prop the income structure of the State universites; it is almost completely disconnected from any price or market controls or outcome based inputs. 

Thu, 12/22/2011 - 16:09 | Link to Comment HungrySeagull
HungrySeagull's picture

Been in a ER for a boo boo?

The Blues are the RN's who signed 15,000 dollars and under contract to the hospital.

The pinks are the LPN's who signed half that much to take orders from RN's all day and herd muntinous LPN's

The LPNs are the ones in flower and they don't require a college degree to know if you are going to make it or not. The two things loom large in thier work. Quitting time and paycheck.

 

By the way your boo boo just cost you 5000 dollars. ER, Doctor, Medicines, supplies, lab work, lab supplies, etc etc etc etc etc etc.

 

How long can it be before you must go back to work against your doctor's orders to repay the collections?

Thu, 12/22/2011 - 16:13 | Link to Comment Dr. Engali
Dr. Engali's picture

It amazes me the attitude of a lot of the students that come out of these universities. They feel like they are entitled to a large salary just because they have a diploma in ceramics. Then when they don't get that high paying job they blame the system -Not that there isn't plenty wrong with the system- But maybe they should have taken a look at what they were majoring in before taking on all those loans. And quite frankly their parents and the university should have said "what the fuck to you expect to do with that major"? " How do you expect to make money with a shitty degree  like that"?

Thu, 12/22/2011 - 16:26 | Link to Comment ebworthen
ebworthen's picture

Yes, and people shouldn't buy many used cars either.

Kids and their Parents are sold the degree program with promises of great career opportunities and salaries.

A lot of the kids Parents never went to college, and they go to an event or University and believe what they are told.  After all, it is the UINVERSITY, the COLLEGE, the PROFESSORS.  Surely, they woudn't mislead them, just like their DOCTOR or LAWYER or the nice POLICEMAN.

How many times have you heard "A college degree makes the biggest income difference over your life of any investment"?  Ad infinitum from every "expert" and economist in and out of academia.

On the other side of the coin are companies and corporations that don't want to spend one red cent to do any training whatsoever.

Then, you have trade schools and applied learning appreticeship schools looked down upon, funding pulled, shut down, or rabidly pursuing the four year degree only BS, MS, PhD gravy train.

It is sub-prime all over again.  "You'll do great", "You can make that payment", etcetera, etcetera.

Thu, 12/22/2011 - 16:31 | Link to Comment Dr. Engali
Dr. Engali's picture

I agree with you on the sub prime issue but the problem is there is no default possible to clear the system.

Thu, 12/22/2011 - 16:31 | Link to Comment Thisson
Thisson's picture

The students are right to feel entitled.  This is a capitalist system and they are just realizing now that they have been screwed due to their reliance on the price signals the market was sending them.

In other words, in a capitalist system, one can expect that if a degree is priced at $X, and people are paying $X for it, then it has a value of $X.  They are finding out that the value of their degree is significantly less than $X!

Thu, 12/22/2011 - 16:40 | Link to Comment Dr. Engali
Dr. Engali's picture

In a  capitalist system ,free from government distortions,the true value of diploma would have been found in quick order. When they learn that their friends can't get a job with the shitty major they declared they will be a little less prone to follow the same suit.

I can guarantee you if there was a default mechanism then a lot of these shitty degrees would't get financed.

Thu, 12/22/2011 - 16:27 | Link to Comment Bob Sacamano
Bob Sacamano's picture

But there IS a way to get out from under student loans. 

A. Don't take out a student loan. OR

B. Don't take out a student loan you can't easily pay back (i.e., a very small student loan - maybe even working your way through college, maybe going to a junior college for two years and then a less expensive state university, maybe your parents making huge "sacrifices" (like no cable tv!!) for their own children).   

And please spare the, "I didn't know what I was doing or signing" defense or the "I thought there would be a good job waiting for me despite my wholly unmarketable degree in art, gender studies, sociology, etc etc on top of my mediocre GPA"

I know -- expectations of being personally responsible are so barbaric.  We need more entitled victims to bail out.

Thu, 12/22/2011 - 16:47 | Link to Comment Dr.Vannostrand
Dr.Vannostrand's picture

1st Comment, been lurking about a year, signed up couple of weeks ago.

With you 100% Bob (still working @ the Condom Factory?). Worked my ass off while attending school, took the small loan, lived in an old fraternity house ($200/month), and even took a semester off so I could work full-time and not take another loan.

I graduated @ 23, just turned 30, loans will be paid off in January. Car paid off, renting, no other debt; damn its going to feel good.

Big thanks to Tyler and all the commenters (even you Robo, lets go get a drink & check out some ass @ The Jet Strip next to LAX), you all have helped me more than you know.

Thu, 12/22/2011 - 16:50 | Link to Comment Dr. Engali
Dr. Engali's picture

Welcome to fight club.

Thu, 12/22/2011 - 17:27 | Link to Comment ucsbcanuck
ucsbcanuck's picture

Well done! You're miles ahead of the curve!

Thu, 12/22/2011 - 17:56 | Link to Comment Note to self
Note to self's picture

Yeah but how are you going to pay for the years of Clap treatment you need after a hot night at the Jet strip?

Thu, 12/22/2011 - 18:06 | Link to Comment Dr.Vannostrand
Dr.Vannostrand's picture

Silver of course, its antimicrobial, and its got electrolytes! Just have to find some more since I lost mine while surfing.

Thu, 12/22/2011 - 23:28 | Link to Comment Bob Sacamano
Bob Sacamano's picture

My good friend Martin -- Hearty congrats on figuring out how to get through life without insisting someone else take care of you.  Also, well done on the debt free living.  Just a couple hundred million more people like us in the US and maybe the government would not be the focal point of everything.

Thu, 12/22/2011 - 23:17 | Link to Comment Cathartes Aura
Cathartes Aura's picture

and another repeat of the

wholly unmarketable degree in art, gender studies, sociology

verbiage.

if by "marketable" you mean "hire me!" then yes, those degrees may not earn one the privilege of being an "employee" - but once upon a time people sought educations in order to be well-informed on subjects that were of value to them, irrespective of how much they'd get paid by others. . .

of course, now that "educations" with paper documents are so expensive, one must become a employee in order to pay back their debt - but I can assure you, I know many, many people who have those degrees and earned millions in their 20's & 30's - "artists, musicians, creative folk" - all who used their "educations" not to get credentialed as an employee, but to creatively live their lives in fields they were drawn to, fields they loved.

I'm one of them.  not everyone wants to be "employed."

Fri, 12/23/2011 - 11:09 | Link to Comment ucsbcanuck
ucsbcanuck's picture

You've got the right idea - your degree to you was a way of improving yourself. Unfortunately there's a lot of people who got those degrees thinking "jobs are coming my way".

Listen - you want a job after going to university? Here's a hint - take something that will land you in a job. You know: engineering, computer science, law, medicine, business, nursing etc.

Fri, 12/23/2011 - 14:24 | Link to Comment Cathartes Aura
Cathartes Aura's picture

I'd rather say that my time spent at university was for education, which yes, can be about "improvement" - but it was mostly about learning, expanding the mind I brought with me. . . I believe this is what a "university education" was traditionally about / for.

I guess the point I'm making here is that some people can use their time at university to enrich their minds, which can also free them up to be creative in their life choices, rather than earn a "credential" that "qualifies" them to be hired by a business person.  not everyone wants this path, to be a worker bee for others to profit (sometimes hugely) from - a good education prepares you to think for yourself, outside the system and from within it too - but hopefully it allows you to think about the world around you, how it works, how it works against you, how to work around the edges and not be so used by "systems" that you end up burned out and bitter.

some people earning their degrees choose what they think will earn them big money so they can "play" on their weekends /vacations, or "retire early" with lots of good stuffs. . . some use the knowledge they've gained to live a more integrated life, with less "toys" - and more peace of mind, because their "degrees" taught them more about how the systems work and why, and who benefits. . . that knowledge was & is priceless, to me.

Fri, 12/23/2011 - 19:02 | Link to Comment Bob Sacamano
Bob Sacamano's picture

The marketable value of a liberal arts education has been on the decline for some time.  Doesn't mean you should not get one -- just be prepared for a career path and/or wage scale you might not like - so protesting about such suggests not enough classes in Economics.  It's understood some liberal arts majors go on to be very materially successful -- but for the majority of folks, am guessing it will be a tougher slog.

Getting a more narrow, more technical degree that has more market value may be the better way to go for many.  Doing so in no way prevents one from a life long learning of the liberal arts.   Everyone can pursue technical knowledge and be well rounded. It does not have to be either / or.  But not recognizing what the market wants and will pay comes with a pretty big price.  

Sat, 12/24/2011 - 19:46 | Link to Comment Cathartes Aura
Cathartes Aura's picture

what is the "market value" of a liberated mind?

not much I'm afraid, as "the market" prefers to be believed in, and that implies limitations that some minds would rather not adopt.  education nowadays mimics employment - it's all "show up timely, perform, get rewarded or censured" - the credentials mostly mean one has memorised the duties that need to be performed to get paid - in almost every field, it's about playing by the rules taught, and "creative thinking" is mostly frowned upon.

(for the record, my "career" happened without being degreed, and was based solely on my enthusiam & talents for the role(s) I played. . . the "education came long after, and was eclectic in nature only because I am.)

Sun, 12/25/2011 - 15:39 | Link to Comment ucsbcanuck
ucsbcanuck's picture

I don't think you get Bob's point Cathartes - Bob is saying that e.g. if you do engineering - guess what - you're more likely to find a job, which brings in some pretty good income right away and helps you pay off your loans etc.

That doesn't and shouldn't stop you from learning and thinking critically all your life. 

A "liberated mind" always has market value - because the "market" itself is made up of billions of human beings. A liberated mind is able to see that the "market" may very well be open to possibilities tomorrow that it wasn't open to today, precisely because it is liberated and unfettered.

So use your narrow degree to build up your financial strength or reduce your financial vulnerability, but keep learning and thinking so that your mind is always open.

Thu, 12/22/2011 - 16:50 | Link to Comment Oliver Jones
Oliver Jones's picture

It will be an issue, right up until the moment the Chinese take over our industries* - and show us how bloody foolish we've all been.

* The ones that they haven't already taken over, obviously...

Thu, 12/22/2011 - 17:12 | Link to Comment navy62802
navy62802's picture

Screw them. Let it continue. People must pay for their own bad decisions ... God knows everyone else does. If a person or that person's parents decide that indentured servitude for life is a fair price for a college education, them let them have it. All it does is thin the competition in the job market and make it easier for me to get a job. If people are too dumb to realize they're being taken advantage of, then perhaps they deserve the misery. My only fear (well-founded in my opinion), is that taxpayers like myself will end up paying for the bad decisions of these people at some point in the future.

Thu, 12/22/2011 - 17:29 | Link to Comment Ostapuk Ivano
Ostapuk Ivano's picture

There is no way that these loans for the most part will ever get paid back. Even if your doing above the minumum of monthly payments it can take forever (never) to pay back. I swear Sallie Mae "churns"  my account in attempts to collect more interest. Maybe the Department of Education will start knocking on doors with guns?

Do NOT follow this link or you will be banned from the site!