Corrupt Colleges, Student Debt (The Nation)

Corrupt Colleges, Student Debt
Nicholas von Hoffman


Concerned by stories about Third World nations weighed down with debt? You might go to the family room window and look next door at your neighbor's house, where there are two kids in college. The chances are good that those young people are as much into debt-indenture hell as AIDS-riddled Africa.

America is turning out millions of college graduates groaning under the burden of paying off college loans carrying interest rates of anywhere from 9 to 20 percent. There are lower-interest federal loans available, but the private-sector loan industry has lobbied through limits on how much a college student can borrow and the limits are much, much less than tuition, books and living costs.

Many of this spring's college graduates can look forward to having to start repaying their student loans at upwards of $1,000 a month. So much for the dream of graduating and working for a modest salary in teaching, social work, health, the environment or the arts.

Kristin Hough is a Benedictine University graduate with a DePaul University master's in public-service management and public policy and $60,000 in student loans, on which she must pay $535 a month--assuming they do not raise the interest rates on her again. "My heart's in social-service work, but I know I have to pay off these loans.... I'm just praying that I will earn a decent enough salary to make the payments," she is quoted as saying in the Chronicle of Higher Education. Instead of working in the public-service field, for which she borrowed the money and spent the time, energy and enthusiasm to train, Hough, who is 25, is working as an assistant property manager.

The result, in the words of one executive in the college loan field, is that "we are creating a generation of students who are leaving college with long-term debt that is similar in size to a mortgage, only there is no house." And when will there be a house for these college graduates under their present financial circumstances? Is it possible that we may have a generation of college-educated people arriving on the adult scene, half of whom will never be able to afford a home of their own?

Total private-sector student loan debt is estimated to be about $20 billion and growing. It is more than the external debt of the Ivory Coast. Many of these young people are in this situation because they have been betrayed by administrators in their own colleges and universities. The betrayers are the student aid officers who took bribes from loan companies to steer young people just out of high school into signing up for the high-interest, high-profit loans. ......(more)

The complete piece is at: http://www.thenation.com/doc/20070702/howl

will only be fully understood decades from now, and it's going to be grim.
x(

You're better off financially going to school in, say, Germany or France than you would here in the US. Over there, the government subsidizes the education of the students as a form of public investment, an investment in their future.

Exactly....But not in sink or swim America. :mad:

Or you can get a break on public school tuition.

:(

But really, there are alternatives. No one is forcing students to go to expensive schools.


"The chances are good that those young people are as much into debt-indenture hell as AIDS-riddled Africa. "

Give me a break.

Even state colleges are outrageously expensive, with tuition rates going up on almost a yearly basis. As a student you can figure that you're going to end up spending at least 50,000 for an undergrad degree at any decent state college, more if you're going to a private college, much, much more if you're going to a high end university like Harvard, MIT etc. And that's just for tuition. Factor in room and board, books, living expenses, and yeah, I can see how you can quickly walk out with an undergrad degree and a hundred thousand dollar debt.

This isn't about middle class kids whining about the price of going to Harvard, this is all students being crushed by the funds it takes to any sort of reputable college or university.

Sure, there are alternatives, but not everybody can, or wants to take advantage of them. Enlist in the military to get the tuition money? Gee, isn't that convient right now. Nor can everybody get scholarships. The already horrid funding mechanism that we had for college twenty years ago has been privatized, shredded, and remolded into a form that doesn't encourage education so much as it does debt servitude for the rest of your life. Pell grants, that old standby, are quickly going away. Meanwhile low interest state or national student loans are being increasingly privatized, thus jacking up the rates. And more and more parents simply cannot afford to send the kids to college, leaving them to the tender mercies of the loan market:eyes:

Sorry, but I suggest that you do a bit more research on this. It isn't the college tuition system that you encountered twenty five years ago. It has become cutthroat and nasty, and yes, designed to keep students in debt servitude for a major part of the their working lives. And just wait until you have to pay the bill for grad degrees, which are becoming increasingly mandatory in many fields.

Students are feeling the squeeze, both from rising tuitions, rising interest rates, and very few alternatives to funding their education. That is the reality, no matter where you're going to school at.

As a college professor, I understand the desire to go to colleges of reputation but if you can't afford it than go to a college without the reputation but still get a decent education. Most of the great college professors have already written down their best ideas and published them in textbooks, scholarly books, essays, and journal articles. They can be read and discussed anywhere.

Or work along the way and take longer to get through college.

Or take out student loans because the college is worth it, the degree is worth it, and/or the career is worth it, but don't whine about getting what you want.

Let me substitute the phrase "any sort of reputable college or university" with the word "accredited". Does that give you a better idea of the crisis of college tuition? Get the idea here? I'm not speaking of reputable in terms of Harvard or Yale, I'm speaking of reputable as in terms of University of Missouri, or better yet, Missouri State University. IE, yes they're accredited, but they are not outstanding in many, if any areas. Yet they are still expensive to go to.

And yes, books can be read and absorbed, however, being a college prof yourself you should know, books are not an adequate substitute for in person lectures, interaction, mentoring, etc.

And yes, one can work along the way, but as you point out, it takes longer to get through college. But working along the way has its own drawbacks. Years of working mind numbing, body wrecking menial jobs that have low pay and no benefits. Delays on getting that house, children, and saving for your retirement. A lifetime loss of earnings, and when you finally do get that degree, you are far, far behind on the career curve, a prospect that can and does change that degree you get.

Oh, and another thing that you should factor in, especially if you're a prof at a private college. This shortfall in funding is going to lead directly to a shortfall in your earnings at some point in the relatively near future. Since all colleges, especially private ones, depend heavily on the generosity of their graduates, this tuition crisis can and will have a direct impact on your future earnings. The people who are graduating now with heavy debt burdens will have that much less money to donate back to their college, your college. Such money shortfalls will mean less earnings for you, and possibly even your job. Same deal if a person works their way through school. Sure, there is no debt involved here, but these grads have other priorities, such as the delayed home and children. Again, less money for education institutions.

And frankly, it is getting to the point where at least certain degrees aren't worth it, and more are becoming that way all the time. Teaching for instance, a degree that generally requires more in the way of education than most other degrees. Yet when the graduate gets out, they are not only faced with a debt of $75,000-$100,000, but they are supposed to pay that back with one of the lowest paying professional jobs out there. Thus the question becomes "is it worth it?" Many are answering, either by economic force or by choice, No. Thus we're starting to face teacher shortages. The same could be said of many other degrees in areas like social work, etc. And please don't spout the Adam Smith bullshit that the market will correct this by raising teacher pay, etc. First of all, such thinking does a huge disservice to the students in the short run, and in the long run, that invisible hand will be slapped away time and again by the taxpaying, and voting public.

Sorry friend, but your cavalier attitude towards this simply shows that you have absolutely no clue as to the magnitude of this problem. This isn't the same ol' trick of funding college education of back in the day. This is a much more private loan, no grant, pay through the nose tuition plan than what you experienced. And with college tuitions rising at rates well above inflation, the problem is only being compounded. And you really should do some research in this area, for like I said earlier, this can and will have a direct impact on your own bottom line. Think about it.

I really wish that we could recommend single posts. You've hit the nail on the head.

>And you really should do some research in this area, for like I said earlier, this can and will have a direct impact on your own bottom line. Think about it.<

Don't most family members of those teaching at colleges and universities also get either free or significantly reduced tuition as well?

We're not paying for a college education, but we spent a few minutes standing in front of an investment firm a couple of weeks ago. They had posted tiny college pennants from schools around the country in their window with the dollar amount of ONE YEAR at those schools. Michigan State -- $45,000 a year?

We were shocked.

Julie

I fully appreciate the rising costs of a college education. I too have a large loan to repay, but it never occurred to me to blame the loan service or my school.

Students are making choices -- no one is holding guns to their heads saying take the loans (private or federal) and attend such and such school. If reputable means accredited, then most schools, even the cheapest state schools are accredited. If you want to go to a school where it costs 75K to graduate only to get a 30K job, well thats poor planning or incredible dedication. Either way, I just don't see it as the problem of the loan service or college.

Well, for all those reading this subthread, come to GA for a year, take 30 credits of college on your own, and then Hope Scholarship will pick up the remaining 90+ credits for free. At the state school where I teach, a year's tuition is under 3K and you'll learn a lot.

And at some point up the food chain of an interview, a real live human is going to take a look at two resumes, and differentiate between one whose writer went to Harvard and one who went to State. Which one do you think will get the job at that point?

Yes, the reputation of a college still does matter.

Increasingly, a person with the skills and the experience that doing the job well requires are bypassed by a checkbox in the resume scanner software in lieu of a less qualified person with the appropriate resume text.

Absent friends in the business, an engineer with 20 years of experience and no degree will lose out to an engineer with zero years of experience and a degree from Regent university every time.

If two applicants with zero experience are interviewed, the reputation of the educations may play a tie breaker role.

I suspect that few resume scanners have a sufficiently sophisticated back-end to weed out the diploma mills. If the database indicates that the applicant has a degree, the HR department's due diligence is complete - they don't really care where the diploma is from, nor what it was in.

20 years of experience and a buck will buy you a half-cup of coffee.

It's a game of numbers, with millions more college students, the grab for jobs will be even harder and going to the local, decent State university seems (and probably IS) less of a secure option for a job than the prestigious (yet expensive) private school.

You can still get your first job (if you're lucky to even get a job nowadays) just on the name of your school and your degree. With even less jobs, the pressure to get a degree from Harvard, Stanford, or NYU is extremely high.

quarter-million dollar debt to pay down. She wants to serve the medically underserved--that has always been her goal--but she is having to face the fact that she needs to earn big bucks to pay down that kind of debt and pay yearly malpractice insurance fees.

:)

:scared:

4-year college education. (I teach at a state university.) If they are certain they must have that 4-year degree, I counsel them to get college credits while still in junior high and high school (my daughter graduated from high school with 30 college credits!) and use community colleges and night courses or online courses to accumulate cheaper credits. I tell some they should skip liberal arts college degrees altogether. It is no longer true that a college degree makes it likely that you will get ahead. With so much debt and so few decent career prospects, and so much outsourcing of higher paid jobs to India and such, they are getting thoroughly screwed. For a student to accumulate $30,000-$40,000 in debt to go into, say, a $27,00/year teaching job (with a lifetime ceiling of about $50,000-$55,000/year) is simply insane.

I counseled one of my students to follow her heart and get training as an auto mechanic from a community college instead. She has since graduated and is making more money than I am. (They can't outsource her work, either!)

I told her that if she decides some day that she actually does want a 4-year liberal arts degree, she can pay for it with her significant earnings from her mechanics job rather than through loans, especially if she uses night courses, online courses, and community colleges to accumulate inexpensive credits before switching to a 4-year college. At the moment, though, she is delighted with her career and doesn't want a 4-year degree.

>She has since graduated and is making more money than I am. (They can't outsource her work, either!)<

We were a bit shocked at the hourly rate for auto mechanics. There's evidently such a shortage in the industry that the hourly rate will continue to spiral upwards as well.

Julie

It makes sense. My first two years at my university certainly weren't filled with courses that directly prepared me for my job. They were a hell of a lot of fun, and taking the broad spectrum of liberal arts classes was a mind-opening and wonderful experience, but was it really worth the many thousands of dollars?

fulfilling their distribution requirements is what they should have learned in high school, except that most of their public school years are spent in social or sports related activities, not in actual academic learning.

Use the community college for the first two years. The material is often equivalent to 4 year schools since it is the introductory level. I was amazed to see the quality of many of the instructors. I think profs are attracted to the real teaching opportunities available at CCs. It isn't a publish-or-perish environment and it often allows them to work outside the campus in their field.

Students are there because they want to be--they are trying to overcome problems with education encountered in the past, or are truly seeking to improve their lives. The variety of students is an education in itself!

If you make really good grades at a CC and are inducted into the honor society, you have an opportunity to receive 1/2 tuition $$$ for your junior and senior years from Phi Theta Kappa when you transfer.

Granted, MIT, Harvard, Carnegie-Mellon and other "top" universities will not accept CC credits. But, really good private colleges and state colleges will! (Later, you can try for one of the "great names" for grad school, right?)

YMMV, but it has worked really well for us and for lots of friends!

PS--Here is a secret to choosing faculty--go to the bookstore. Look at the books they are using; their choices tell you a lot about their approach to the subject!

credit. if there is a university that you particularly want to attend, but you have to go the cheap route at first, talk to the U anyway. some are happy not to have to find you a seat in english 101. they can still help you make the right course selections, and be ready when your 2 years are done.
community colleges are major bang for the buck. especially for student looking for marketable skills.

But transferring credit to a 4 year school is always tricky. The best thing to do is have a plan. For example, if you know the 4 year college or program you can make sure the CC courses are accepted. You can call the registrars office of the 4 years school.

and buy no books. That's out of pocket. Additionally, the more I work, the less money I can get in loans, because my "estimated contribution" is higher. That is, they basically assume that every dime you earned after taxes the year before could be used to pay for school. So much for rent and expenses, right?

And what is Federal Student Aid's solution? "Have you considered a private loan"?


Its bullshit. You work your ass off to get a degree (which at 12 hours a sememster you cannot possibly hope to finish on time) just so you can get a high enough paying job that will help you pay off your debt.

I am starting to wonder: What's the fucking point?

Shit, I might make a decent salary, but by the time I'm done with school and interest adds up, I'll be paying it off for years to come.

Maybe I am way too far left, but I don't think it is morally correct (hell, it should be illegal) for a select few companies to profit so immensely from what should be a basic and essential service. College loans, Health care, Natural Resources, etc...

I will graduate with about $100,000 in loans, and yes, I go to an expensive liberal arts college, but frankly I think it's worth it since my "career track" is journalism/politics/government and my school has an exceptional reputation. If you want to know school/major it's in my profile. Fortunately, my family still has a home in California worth more than enough to pay it down to a managable level. I'm taking 4-5 years off before considering grad school since graduate J-School likes work expierence.

There's not much interest apparently. Too many gadgets I guess.