Student Loans - The Gateway Drug To Debt Slavery

[jtuck004]

Funny to be writing this in a place where, I think, most people wouldn't take for their education,
even if it led to their being somewhat grumpy after a while. ;) Congratulations :toast:

But it has become something else. We need more trained (and educated) people to compete with billions of people in a globalized society yet student loans, as of this report, were at $829 billion and rising. Is it a scam? Are we getting value from a system that allowed Al Lord and Tim Fitzpatrick to take home $400 million in profits from Sallie Mae (see the graphic below)? That would have paid $12,000 toward community college tution for 33,334 students. Maybe even some English classes for the editor of this graphic <G>. (You'll see). And it is costing us in Human Capital.

Soon it will overtake Total U.S. revolving debt (98 percent of which is made up of credit card debt): $852.6 billion, as of March 2010

According to the site below the harshest collection methods are reserved for student loans. Miss a few payments and you can
be subject to

Wage garnishment without a court order
Suspension of State Professional Licenses
Garnishment of social security/disability income
Withholding IRS tax refunds

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[Land Shark]

1. Today it was announced on CNN that student loans now exceed credit card debt. nt

[handmade34]

2. I am debt free... except

for the ever increasing student loans I have... makes me sad

[Quantess]

8. Yes, me too.

[Warpy]

3. It's now pretty much insane to go for a 4 year liberal arts degree

if you have to incur debt to do it. A better bet is a 2 year degree that will allow you to get a job. Once the debt and servicing it are taken out of the equation, the loss in lifetime wages isn't that enormous, especially when that 2 year degree is in something very practical and necessary and impossible to offshore.

[exboyfil]

10. Our public colleges are starting to recognize this fact

(the payback for liberal arts degrees) and that is why business and engineering majors get to pay about 25% more (about $2K) per year when they are juniors and seniors. The justification used is that it costs more to education these majors. Do you mean that a senior engineer costs more than a senior Physics, Chemistry, or Computer Scientce major to educate? I don't think so. I am not sure that argument would apply to music majors or any other major that requires extensive professional/student interaction. Engineering professors get paid alot, but by staffing recitation section with relatively cheap Teaching Assistants - I am not sure it is that much more expensive than English for example. How many English essasys can a $80K English professor grade? Engineering is relatively easy to grade in comparison.

The other reason that they gave early on but quickly dropped is that these majors get paid more so they can afford more in tuition. I guess I have a real problem with that reasoning. Those high earners will be called upon to pay a whole lot more in taxes, and most of them will work in private industry with far fewer opportunities for loan forgiveness etc. Do we really want to dissuade our best and brightest from pursuing engineering (I guess I am more agnostic on business)? Do you think private employers know something when they aggressively pursue engineering majors? Could it be that their profits and even company survivability are tied to this skill set? Maybe it is just inertia and companies should be hiring more liberal arts majors to design the next generation of products and assist in their production.

I would like to get opinions on differential tuition - is it a good idea? Should public tuition be based entirely on earning potential, tied to the actual cost of education, or some combination of factors?

[TheMadMonk]

18. An engineering department needs to keep and maintain just about every...

...piece of industrial and civil test equipment known to man; a wide range of motors, transmissions, devices and doohickeys; multiple workshops, preferably with as much duplicate equipment as possible; and materials.

Engineering and all its myriad disciplines would be the most expensive of all departments to fund, if you're going to provide an advanced degree. Even moreso if collaborating with other departments to do cutting edge research.

Business? I'd say it's the demand. The price simply reflects what the market can bear.

Pesonally I say let pricing reflect future anticipated need. And allow for forgiving or discounting if the student "serves" in a high need catagory for a period of time, ie. rural doctor.

[leveymg]

4. I would gladly pay higher taxes if higher ed and health care were part of the deal.

Of course, that requires cost containment for both, which means lower top salaries for MDs and university Presidents. More than anything, CEOs of big companies should get massive wage cuts - they shouldn't be making more than ten times the average worker.

[Lil Missy]

5. And then to end up with a minimum pay job, 30 hours a week with no health insurance.

[Skink]

6. those hundred thou a month personal bankruptcies add up.

as a cashier I can tell you it's now cash before credit. A stark change in this last year.

[exboyfil]

7. I think the recent legislation is a disaster

Not to say the system before was right. Now after a pretty low threshold it does not matter how much you borrow. If you go to work in public service, your payback in only 10 years is based on your income and has nothing to do with how much you borrow. If you are greedy enough to work for a private company the same rule is about 20 years???

If you go on for a doctorate or a couple of masters degrees, you can borrow nearly $100K from Federal loans (the type that uses the 10 year payback).

[Rochester]

9. And you can't even get rid of it as a last resort through bankruptcy any more

thanks to rule changes approved by W. So even if it doesn't work out, the suffocating debts will continue to follow people to their graves.
There was an article in the newspaper a while back about how too many people were going to college and finding not enough jobs when they finished. I'm inclined to agree with it.
Besides being an enticing trap for unwary teenagers to stumble into, these loans contribute (by increasing demand) to the ever-increasing tuitions, putting them out of reach for a lot of people who don't take the sucker loans. We need to bring back our factories so that the poorly educated can have decent jobs with a living wage and dignity. That will take the pressure off of so many people to go to college, reducing demand and bringing down prices for those who do go. Then, the people who do still go to college are doing so because they want to, or they are interested in a job that requires it, not because they feel they have no other ways of getting a decent job.
Student loans are a gigantic scam. Ted Rall said it best: Ban them outright!

[exboyfil]

11. You also have a significant minority on this board

who feel everyone is entitled to a four year opportunity to pursue a liberal arts degree (opportunity to grow intellectually). I caught heat about it with my view that you must know what you are doing before going to college unless you are independently wealthy (a dilettante). For many (including myself) college was the one shot to escape the glass forming factory or even worse job. I chose engineering. I have always loved History, and I would have loved to major in it, but I had to put food on the table so to speak.

My daughters have no illusions about their majors. When they go to college, it will be for vocational reasons and not to be a dilettante. They understand that their economic security rides on this decision. While I don't have a narrow thought that they have to major in engineering, medicine, business, or nursing; I do believe that need to have a firm understanding as to what their four years and $80K is going to do for them.

A colleague has a daughter who is in her third major now. She keeps switching and extending the time to graduation. She is smart and talented, but it is a source of frustration for my colleague. I am not sure about the financial arrangements, but I would never carry my daughters like this.

Even in the more progressive countries in Europe they classify individuals by whether they will go to college or not early in their academic careers. They don't expect, and they know, that they cannot carry every citizen as a dilettante.

[Rochester]

13. Agreed, it would help if people made it count...

...knowing that "recreational education" can always be pursued outside the college environment, at one's own pace and without paying anything. Libraries and museums and such are there for a reason! Self-education on my own terms and timing is what I've done - I have not attended even one day of college.

[exboyfil]

14. Except for lab time

you can obtain the equivalent of a B.S. in Engineering from all the courses that are on the web currently. The problem is that you need to be credentialed (ie get the degree). They won't let you sit for the Fundamentals of Engineering examination without a degree. Same can be said for the Bar Exam. While an exam does not test everyting, it can get pretty close in Engineering (effectively except for labs all engineering is is a series of examinations) - with the appropriate prep work a smart person could pass any of these tests without attending a day of classes. I would think the same thing wuld apply to the Bar Exam. Obviously, medicine is very different and I would feel uncomfortable when someone learning online that particular skill.

In the future companies may decide to get their engineers from other sources. I would think our company (a tractor manufacturer) would love someone who farmed while going to school online (even to the point of only taking proctored tests demonstrating engineering knowledge). Many undergraduate engineers never even get their hands dirty in the lab understanding how things are put together and how they work. For engineers it is best to combine the theory with practical applications. I felt my undergraduate labs were insufficient for this reason. I think colleges have made improvements since then. I was recently at my old school discussing job possibilties with M.S. grads, and I was impressed with what they were involved in.

[Odin2005]

12. This is why I refuse to take out student loans.

Even if I have to save up the money for every course I take.

[JCMach1]

15. Funny, we have only seen the bad examples posted...

I make more than most engineers, and I could not have gotten my liberal arts degrees without students loans. I have been driven around by a lot of people driving taxis (not to offend in drivers) with those 'practical' degrees.

And frankly, if my mom or dad had forced into one of those practical routes, I would not have stood for it. Most likely I would have dropped out. My talents lay elsewhere and my parents understood that. I intend to do the same for my daughters... i.e. nurture their talents and let them make the decisions about their future.

I agree with the OP that it is a kind of debt slavery, which brings-up the need for a comprehensive overhaul of the grant system in light of spiraling higher education costs because of decades of neglect by mainly state governments. You know there is a problem when it is almost cheaper to go to a private university. When I was applying for universities, private schools were 3-5x the cost of public... closer to 10x if you wanted Ivy League or equivalent.

Originally, students loans largely were a middle-class proposition. Poor kids like me had most of our university paid by grants and/or scholarships with an occasional (and relatively small student loan component). I finished my BA with about the price of a new car to pay for. As time has gone by, the loan component has gone up exponentially as education costs have gone up.

Instead of bashing liberal arts degrees, why don't we re-think the whole damn system of paying for higher education.

[jtuck004]

16. I think we are losing the liberal arts in a quest for survival, and it will

be to our detriment.

I agree with your last statement very much. Maybe the feds could open schools to teach english, math, business, economics, other humanities, and leave more technical courses at a junior college, or the second two years of the 4 year school which students could figure out another way to pay for.

Or just do away with tuition all together for engineering, math, and economics degrees, with a strong English (mostly grammar and communication skills, not so much language) - figure out the costs and offer those to all comers. They could go elsewhere for coursework in more technical or 4 year schools that would lead toward work in subjects not taught so much in 2 year schools.

[JCMach1]

17. What we don't want to do is in our quest to change we lose what is fundamentally American about

higher ed in our country.

I don't see student in the Middle-East at least jonesing to go to school in India, Germany, Japan, or even so much Britain. By a large margin they would prefer an American curriculum education.

I put it to you that the only thing wrong with American higher ed is a funding system that makes sense.

We have so destroyed public education, higher ed in the US may be the only thing propping-up the educational system, period!

We need to set-aside the Republican notion of education as an extension of consumerism (what is good for corporations) and act in the public interest (what is good for the American people).

That doesn't mean that we can't get innovative. How about a Federally funded National Open University (NOU) that operates entirely on the new technologies available and is free to every HS student who makes above a 2.5GPA, completes HS, and whose family makes under 100K per year? Why technology? It is so much cheaper than bricks and mortar. Obviously some majors would require bricks and mortar, but why can't those engineers go online to get their math and physics and then transfer to a physical school? Hell, endow the university straight away... open it up to folks like Buffet and Gates. Hell even fund it with a miniscule media or bandwidth tax.

[mike_c]

19. wish I could rec your linked graphic ten thousand times....

Excellent summary of the situation I'm mired in. I'm planning for homelessness in retirement as a result-- I've paid on student loans for my entire career, and will still owe tens of thousands when I retire. The only hope for folks like me is that Elizabeth Warren will get us some protections.

[Smashcut]

20. That is EXACTLY what this is. I am part of an entire generation of slaves to debt

I am 28 years old and $180,000+ in debt after undergrad and grad school. That's not to mention thousands in medical debt because I had emergency surgery while in grad school and could not afford health insurance. I left grad school to find there were no jobs that would pay anything near what I needed to service my debt, and despite best efforts to pay fell into default on several loans. I'm now having to deal with a sleazy collection agency and hoping that an application to consolidate my loans w/ the federal government (and get some kind of income-based repayment program) to avoid garnishment of my wages, which would probably result in me losing my job. The collection agency is making out like a bandit, since federal law permitted them to add 18.5 percent (!) to the amount owed on my debt for their "services." It just gets worse and worse.

Not to mention, I'm applying for a professional license (the REASON I incurred all this debt!) which may be denied or delayed as a result of my student loans and medical debts.

AND, even if I get back in good standing, I will be paying for DECADES unless I get some amazing job in the future that pays enough to make larger payments on the principal. Trouble is, it looks like the days of those jobs being available is over. I will be a slave to this debt for a long, long time.

I talked to my stepdad about this situation the other day, who remembers going to medical school a little over a generation ago. Sure, he went to a state school, but remembers paying a little under $1000 for a semester, and even less than that if he did a certain number of pro bono hours. Luckily, in college I had a merit scholarship. In grad school, it cost me over $50,000/yr in tuition and living expenses. I don't think my parents' generation can even understand the degree to which their kids are on the hook for money they can't pay to get the kind of education we were told we should pursue.

Nowadays, whenever I hear a friend saying they're thinking of going back to school because the job market is terrible, I sound the alarm. It's a total scam, and the whole paradigm of "more degrees = more success" has become a trap that only helps banks who have leveraged our futures.