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xchrom

(108,903 posts)
Mon Dec 3, 2012, 08:14 AM Dec 2012

College Used to Be the American Dream -- Now It's the American Nightmare

http://www.alternet.org/economy/college-used-be-american-dream-now-its-american-nightmare



Now that student loans are undeniably in bubble territory, the officialdom is starting to wake up and take notice. Evidence that students were taking on so much debt as a group that it was undermining their ability to be Good American Consumers wasn’t enough. A recent New York Fed study found that 94% of recent graduates had borrowed to help pay for their education, and average debt levels among student borrowers is $23,000. Remember, that average includes seasoned borrowers, who presumably borrowed less and also in many cases reduced the principal amount of their loans, so the average amount borrowed by recent grads is certain to be higher. Student debt is senior to all other consumer debt; unlike, say, credit card balances, Social Security payments can be garnished to pay delinquencies. As a result, it has contributed to the fall in the homeownership rate, since many young people who want to buy a house can’t because their level of student debt prevents them from getting a mortgage.

But despite some pious noises about the burden that student loans place on young Americans, there’s been no willingness in the officialdom to do much about it. But that may finally be changing. The latest Federal Reserve data is grim.

Student loan delinquencies are getting into nosebleed territory. The Wall Street Journal, citing New York Fed data, tells us that student debt outstanding increased 4.6% in the last quarter . Repeat: in the last quarter. Annualized, that’s a 19.7% rate of increase* during a period when other consumer borrowings were on the decline. And this growth is taking place while borrower distress is becoming acute. 11% of the loans were 90+ days delinquent, up from 8.9% at the close of last quarter. The underlying credit picture is certain to be worse, since many borrowers aren’t even required to service loans (as in they are still in school or have gotten a postponement, which is available to the unemployed for a short period). And it was the only type of consumer debt to show rising delinquency rates.
34 replies = new reply since forum marked as read
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College Used to Be the American Dream -- Now It's the American Nightmare (Original Post) xchrom Dec 2012 OP
k/r marmar Dec 2012 #1
Is there another way? Democracyinkind Dec 2012 #2
+1 nt Live and Learn Dec 2012 #3
You have hit the nail directly on the head. American education is conceived as a profit-making.... Raster Dec 2012 #4
I agree. Wall street has plugged into this system with the government underwriting geckosfeet Dec 2012 #5
Education is no longer a public service duhneece Dec 2012 #6
Yes, you got it Mass Dec 2012 #12
I wouldn't have a college education if it weren't for the fact of my double citizenship. Democracyinkind Dec 2012 #17
I saw a facebook post a few weeks ago. CrispyQ Dec 2012 #26
My daughter went to the UK for her masters as well. Same thing - MUCH cheaper riderinthestorm Dec 2012 #24
Or a place to gouge students fora new world class workout gym uponit7771 Dec 2012 #22
We bailed out the too big to fail banksters and gave them trillion$ in bonuses dotymed Dec 2012 #7
Yeah, but it won't happen. GatorLarry Dec 2012 #8
Fucking Richie Rich! lonestarnot Dec 2012 #9
Amen. woo me with science Dec 2012 #10
And no one will ever be even charged for the mortgage/foreclosure debacle. They have no Dustlawyer Dec 2012 #11
Started under Reagan. grahamhgreen Dec 2012 #13
Yes, and also on the state level central scrutinizer Dec 2012 #29
High tuition costs and low grants Mass Dec 2012 #14
Where does that come from? former-republican Dec 2012 #18
More like ridiculous facilities upgrades. MadrasT Dec 2012 #34
All higher learning institutions should be run on non profit former-republican Dec 2012 #15
We need more scholarships available for those who decide to go into engineering, science, math, JaneyVee Dec 2012 #16
No , we need to contain costs former-republican Dec 2012 #19
That too. But still, containing costs doesn't guarantee that best & brightest can afford to attend. JaneyVee Dec 2012 #20
Our kids going college has reached the point of absurdity like health care in this former-republican Dec 2012 #21
Aren't they mostly state run? dkf Dec 2012 #28
State funding of public sulphurdunn Dec 2012 #23
State funds that used to go public colleges was diverted to medicaid JPZenger Dec 2012 #25
I think you will find sulphurdunn Dec 2012 #31
Must be the bank's/wall street's fault right? dkf Dec 2012 #27
This message was self-deleted by its author marmar Dec 2012 #30
Several public universities are being pro-active central scrutinizer Dec 2012 #32
I paid $100/semester in the late 1970's...In California TheProgressive Dec 2012 #33

Democracyinkind

(4,015 posts)
2. Is there another way?
Mon Dec 3, 2012, 08:31 AM
Dec 2012

My whole education at my University cost me roughly 6'000 dollars. That is BA, MA; PhD.

It's possible. Then again, the University I attended (in Europe) didn't conceive of itself as a for profit corporation, but rather as a public service. I suspect that is the relevant difference here.

Raster

(20,998 posts)
4. You have hit the nail directly on the head. American education is conceived as a profit-making....
Mon Dec 3, 2012, 08:37 AM
Dec 2012

...enterprise. While (generally) the European countries and their educations systems are a natural extension of public service.

geckosfeet

(9,644 posts)
5. I agree. Wall street has plugged into this system with the government underwriting
Mon Dec 3, 2012, 08:43 AM
Dec 2012

loans to servicers with ridiculous terms that would be illegal or rejected in most other markets.

It's just another case of the lenders (the rich) leeching off of the federal tax dollar lode.

duhneece

(4,118 posts)
6. Education is no longer a public service
Mon Dec 3, 2012, 08:49 AM
Dec 2012

It became a for-profit enterprise. We quit having those who made the most off of the infrastructure they made their money from have to pass it on, in the form of taxes.

Mass

(27,315 posts)
12. Yes, you got it
Mon Dec 3, 2012, 10:49 AM
Dec 2012

My son went for a graduate program in Europe, because his costs were 5 times less than he would have to pay for an American school. And, as he has double citizenship, he even got a grant because of his low income and ends up having to pay for nothing without loans, vs a $30,000 loan a year here in the US.

Democracyinkind

(4,015 posts)
17. I wouldn't have a college education if it weren't for the fact of my double citizenship.
Mon Dec 3, 2012, 10:55 AM
Dec 2012

Imagine how many bright, promising kids haven't gotten the same chance by sheer luck of birth. It's saddening.

CrispyQ

(36,518 posts)
26. I saw a facebook post a few weeks ago.
Mon Dec 3, 2012, 11:43 AM
Dec 2012

It had a graphic of a cancer cell & the words, "What if the cure to cancer is inside the head of someone who can't afford an education?"

The everything-for-profit model has got to stop.

 

riderinthestorm

(23,272 posts)
24. My daughter went to the UK for her masters as well. Same thing - MUCH cheaper
Mon Dec 3, 2012, 11:31 AM
Dec 2012

and in her field, the top school in her field so she got the best education as well.

dotymed

(5,610 posts)
7. We bailed out the too big to fail banksters and gave them trillion$ in bonuses
Mon Dec 3, 2012, 09:02 AM
Dec 2012

for wrecking our economy. The least we can do is forgive student loans and make future education reasonable. Capitalism (unregulated) has totally destroyed our country, all for the sake of a few hundred elites.

GatorLarry

(55 posts)
8. Yeah, but it won't happen.
Mon Dec 3, 2012, 10:32 AM
Dec 2012

Wall Street has bought and paid for the Congress and Senate and so all laws that pass will benefit them and screw the un-represented students with outstanding loans.

woo me with science

(32,139 posts)
10. Amen.
Mon Dec 3, 2012, 10:37 AM
Dec 2012

Keep saying this, until the entire nation is saying it together. There are more of us than there are of them.

Dustlawyer

(10,497 posts)
11. And no one will ever be even charged for the mortgage/foreclosure debacle. They have no
Mon Dec 3, 2012, 10:42 AM
Dec 2012

disincentive to ever stop ripping us off. Eric "weak sauce" Holder comes from Wall Street so you know he won't do anything. BP gets off Scott free b/c they paid off the administration. We are the only ones that laws apply to.

central scrutinizer

(11,662 posts)
29. Yes, and also on the state level
Mon Dec 3, 2012, 12:25 PM
Dec 2012

The whole disinvestment in our future has been widespread. Reagan at the federal level, state anti-tax initiatives like the one pioneered in California by Howard Jarvis, other state legislatures cutting investment in public universities. Horribly short-sighted. If you don't invest in the future just so you can treat yourself to a couple of extra toys right now, you will pay a much higher cost down the road. We have also seen this in deferred maintenance for vital infrastructure as well. Everything has been sacrificed on the altar of "lower taxes - it is my money".

Mass

(27,315 posts)
14. High tuition costs and low grants
Mon Dec 3, 2012, 10:52 AM
Dec 2012

make it virtually impossible for people to attend schools (including private schools) without incurring high loans. Frankly, the cost of American Universities is way too high, including for lower tier ones.

 

former-republican

(2,163 posts)
18. Where does that come from?
Mon Dec 3, 2012, 10:56 AM
Dec 2012

Sports , some professors earning over $200,000 a year

Coaches making salaries that rival pro teams coaches

MadrasT

(7,237 posts)
34. More like ridiculous facilities upgrades.
Mon Dec 3, 2012, 12:50 PM
Dec 2012

When I went to college in the 80s my dorm room had cinder block walls and one bathroom for the whole floor.

They made colleges like resorts now. Kids don't need the kind of luxury accommodations colleges are providing now. They need educations.

 

JaneyVee

(19,877 posts)
16. We need more scholarships available for those who decide to go into engineering, science, math,
Mon Dec 3, 2012, 10:54 AM
Dec 2012

business, environmental studies.

 

former-republican

(2,163 posts)
21. Our kids going college has reached the point of absurdity like health care in this
Mon Dec 3, 2012, 11:05 AM
Dec 2012

country.

Call me radical but I would like to see a take over of all higher learning intuitions.

 

sulphurdunn

(6,891 posts)
23. State funding of public
Mon Dec 3, 2012, 11:28 AM
Dec 2012

universities has been on the decline for years. Parasitic corporations get to lend the difference or front phony online universities with public money. States can divert educational funds as tax "incentives" to business. It's a win-win for states, banks and corporations desiring to turn the university into for profit training centers, and they will not stop sucking until they are burned off.

JPZenger

(6,819 posts)
25. State funds that used to go public colleges was diverted to medicaid
Mon Dec 3, 2012, 11:33 AM
Dec 2012

It is all tied together. If you look at trends in state spending throughout the country over the last couple decades, the money that used to go to state public universities was diverted to pay for increased medicaid/medical assistance expenses of the states. We need cost control of both colleges and health care in order to make the system work.

 

sulphurdunn

(6,891 posts)
31. I think you will find
Mon Dec 3, 2012, 12:36 PM
Dec 2012

that to be true in states unwilling to collect enough revenue to fund their public sectors. They need worry less about cost and more about revenue. California comes to mind. A good place to start would be a Constitutional amendment forbidding states to pass any laws that restrict their power to levy taxes.

 

dkf

(37,305 posts)
27. Must be the bank's/wall street's fault right?
Mon Dec 3, 2012, 11:50 AM
Dec 2012

I'm glad they took student loans away from the banks so now we can see that these bubbles happen without accusing others of fraud.

Are students going to be demanding jubilees from the evil, greedy and corrupt government now?

Response to dkf (Reply #27)

central scrutinizer

(11,662 posts)
32. Several public universities are being pro-active
Mon Dec 3, 2012, 12:38 PM
Dec 2012

I believe the University of North Carolina was the first, but several other large public universities, like University of Oregon, have programs that guarantee that all tuition and fees for low-income in-state students will be covered without loans. I am most familiar with the Oregon one - the Financial Aid office reviews all in-state applicants and their FAFSAs (Free Application for Federal Student Aid). If a student meets the criteria, he or she is offered a package that covers 4 years worth of tuition and fees guarantees, as long as the student remains in academic good standing (at least 12 credits per quarter with a cumulative GPA of at least 2.00). They count up the Pell Grant, any other scholarships or grants the student may have earned and if there is still a gap, it is covered by the program. It does not cover room and board or other expenses so the student or his or her family is still likely to have to borrow. The rationale is that the student would have to eat and have a place to stay whether he or she was in college or not.

 

TheProgressive

(1,656 posts)
33. I paid $100/semester in the late 1970's...In California
Mon Dec 3, 2012, 12:38 PM
Dec 2012

First I went to Junior college to save money and got an AA degree. It was less expensive
to get your general course requirements at JC than a 4-year college (room and board).

Then I went to California State University and got my degree in Computer Science. I paid
$100 per semester, plus books, and room and board. I paid my own way (worked and saved money).

This was when California used tax money to pay for the CA State University system.

The payback? I graduated and worked for employers in CA and then elsewhere, contributing to
Social Security and federal taxes and was a productive member of society - just like millions
of other graduates over the years. And, as a bonus, I started a small and profitable business.

My point: education is the foundation for our democracy and economic progress. It is an investment
in our country. Once again, America should provide 'free' education k thru BA/BS, even masters and doctorates.

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