The Sunday NYTimes did a story on the plight of a White middle-class student who amassed a student debt of $100,000 to get a liberal arts degree from top-flight NYU. She is now living with that decision, compared to her earning capacity, and it looks grim. What the story doesn’t talk about is how minorities, with a graduation rate of nearly two-thirds that of Whites (here) (half for black men), get saddled with similar debt and no degree. That’s grim, with a side of criminal on the part of those who are suppose to be helping these kids get an education.The article (here) describes how schools are in the ‘business’ of enrolling students, but not telling them that they will spend a near-lifetime repaying loans, similar to the way their parents paid off the 30-year home mortgage. Private banks have been too happy to step in and provide what amounts to ‘no-doc’ variable-rate loans to kids, to fill the gap of what the schools, with any conscience or financial sense, could not do. As long as the government or parents guarantee the loans everybody’s happy – but then judgment day arrives.
When you are facing 10-15 years of student loan payments that look like rent payments, the cost of a good education doesn’t look so good. Forget bankruptcy, since that loop-hole was closed a long time ago on student loans. With a growing college-educated, but yet hourly-waged, workforce, paying off this debt seems nearly impossible.
US education is in a rat-race for wearing the best brand, even when that brand is just flat-out over-priced and a bad deal. Expect it all to crash eventually. There will come a time of ‘adjustment’, where schools, government, and banks are forced to return to operating budgets and loan amounts that match what students can reasonably repay. Expect that on the way there, schools will close or shrink, banks will write down bad loans, government will rescue and make rules – and the people will complain and sober to the truth.
James C. Collier
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Technorati Tags: The Student Debt Train Wreck, Financial Aid, Student Loans, Bankruptcy, Acting Black, Acting White
yes there was a yahoo article on this too. Let me see if I can find it for you sir.
ReplyDeleteupdate...i cant but this one young man has 150000 in school loan debt for law school and was let go from an internship job making about 3000 a week! now hes gonna move back with his parents and sell movies and dvds online...just a shame.
I don't know if it's fair to blame the schools (and banks) for trying to help people get an education, er, I mean profit. I mean, isn't this what you do in America? Isn't that why you go to school, to learn how to make more money?
ReplyDeleteBlaming the banks for making loans that people take freely and of sound mind is the same as blaming McDonalds for America being fat and blaming the liquor companies for you (figuratively) being a lush.
At some point people need to take responsibility. Where are the parents to tell these kids: "This is a bad, bad idea?"
Atitude, at what point should public policy step between people and those banking entities, whose quest for profit destabilizes our economy?
ReplyDelete"Atitude, at what point should public policy step between people and those banking entities, whose quest for profit destabilizes our economy?"
ReplyDeleteBefore the government starts trying to fix this problem, they should stop causing it.
At some point people need to take responsibility. Where are the parents to tell these kids: "This is a bad, bad idea?"
ReplyDeleteSometimes just not present. I went to a private school for my associates and my parents are not in my life. So I had no one to ask as do a LOT of kids. I ended up spending too much for a medicore school with a loan that has unknown interest.I mean what are you suppossed to do if you want to go to school? the gov't should mandate these places at least give an interest percentage on the loan before they make the kids sign.