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View Diary: Student Loans: a bubble waiting to burst (214 comments)

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  •  We ought not to be making loans to students (17+ / 0-)

    for higher education expenses in the first place. An educated citizenry serves the whole community. So, we should pay on the basis of whether a particular student is qualified to acquire the needed skills. Which, by the time they've already been schooled for twelve years should no longer be a crap shoot.
    That said, just cutting out the middlemen banks, which had no incentive to determine whether students or programs were qualified because, if ill-trained students failed and couldn't earn enough dollars to pay back the loans, the banks were able to collect both the amount of the loan and the interest accrued from the federal government. That is why, even before the Department of Education took over direct management of loans, the federal government was owed about $90 billion in 2007. That has now swelled to about $509 billion, which registers as a credit in our national accounts. The interest not being paid to banks, as well as a more careful consideration of whether the educational programs are worthwhile from the perspective of students, rather than serving as a lucrative enterprise for new-minted "educators," is bringing considerable distress to a host of local banksters and their country-club cronies. It is one of the main ACA (American Care Act) irritants that it shifted a guaranteed and reliable revenue stream from the banks to the federal government to pay for indigent health care. And, in all the kerfuffle over death panels and non-existent Medicare reductions, they couldn't even complain about the banks' losses when they happened.  Who was going to have sympathy for banks getting kicked off the gravy train? The poor banksters!
    Since the federal treasury actually produces the dollars it is doling out, the only reason for the charade involved in making loans and expecting them to be paid back by people (students) who may or may not get any benefit at all, is the maintenance do the illusion that Congress, which is tasked with managing the currency, has no obligation at all.
    The extent to which Congress has managed to evade and divest itself of its duties and obligations is truly impressive. What is not well understood is why they would do that. Why would a body give up the responsibilities of their official positions? The answer to that is really quite simple. Power without obligations is the authoritarian ideal. Our Congress, it seems is stuffed full of power-mavens and has been for some time. Moreover, power is a bi-partisan addiction. Sticking it to the voters has become a bi-partisan goal. Why? Because citizens governing is a threat to Congrssional rule.

    We organize governments to deliver services and prevent abuse.

    by hannah on Sun Dec 09, 2012 at 05:51:40 AM PST

    •  Thanks for this (19+ / 0-)

      Another view would be to consider that 20-25 years ago the States funded higher education at a much higher rate.  I have heard it was around 80% and now it's closer to 20%.  I can't confirm those numbers but if they are even close to true, that means that the burden of paying for a college education has been shifted from the collective of all of us, to the individual.  

      The next question to ask is; Where did all that money that was funding higher education go?

      Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

      by whoknu on Sun Dec 09, 2012 at 07:39:38 AM PST

      [ Parent ]

      •  Here is an article that lays it out (18+ / 0-)

        on funding the whole sordid story How the American University was killed in five easy steps

        First, you defund public higher education.

        Second, you deprofessionalize and impoverish the professors.

        Step #3: You move in a managerial/administrative class who take over governance of the university.

        Step Four: You move in corporate culture and corporate money.

        Step Five – Destroy the Students...

        Looks like we are at defcon 5 with so many students burdened with enormous debt, and the price out of reach for many others.  Then we have people telling us that higher education is not a good economic return.  Please don't buy into the lies.

        Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

        by whoknu on Sun Dec 09, 2012 at 07:53:41 AM PST

        [ Parent ]

      •  There is not a fixed quantity of money. (5+ / 0-)

        Money has served as a useful tool to deprive people of rights they are entitled to.
        It is my take that the long term response to the call for equality, which the proponents aimed to secure societal improvements, had the effect of leading opponents to conclude that, "if they want to be equal, let them be equally deprived." Sometimes I call it the swimming pool syndrome after the response to lifting race restrictions on access to public facilities was to either close the pools or hand them over to private entities not subject to the race-based prohibitions. The rush to private/religious education was a similar response, as was the gradual elimination of all street car and trolley lines across the South. The construction of private pools, like the acquisition of private automobiles, was considered an economic boon and it was all just a matter of money -- no segregationist sentiments to blame and certainly not prove. Even self-segregation in gated communities was just a rational response to the crime waves, for which the increasing rates of incarceration provided proof.

        Then too, segregation was always primarily maintained by the compliance of the majority with the social strictures. Any traitors in the majority, people who dared to deal equitably with those targeted for subordination, had to be severely punished.  So, for example, it wasn't necessary to exclude black academics from university campuses as long as the white faculty complied with directives not to invite any such people to the premises. The penalty for violating such a directive would, of course, be dismissal. So, liberalism was kept out. That the quality of the remaining faculty, people who are easy to intimidate, would likely be less was/is not a concern. That's what happens when power and social status are the top priority.

        In 2008, the American electorate had to be punished for voting wrong. They didn't learn and did wrong again. The question now is whether the love of the dollar will trump what some people call "honor" and American exceptionalism (some group always being shut out).

        We organize governments to deliver services and prevent abuse.

        by hannah on Sun Dec 09, 2012 at 08:03:07 AM PST

        [ Parent ]

        •  It all started a long time ago. (1+ / 0-)
          Recommended by:
          lotlizard

          http://en.wikipedia.org/...

          African Americans tend not to appreciate that they are not the only excluded group.

          We organize governments to deliver services and prevent abuse.

          by hannah on Sun Dec 09, 2012 at 08:08:05 AM PST

          [ Parent ]

        •  This is petty...... (1+ / 0-)
          Recommended by:
          hannah

          So, it marks Iowa State University as a progressive, ahead of the social norm, bucking the norm to have invited, educated, and employ George Washington Carver when they did.....  And they have buildings named for him on campus.

        •  Re (0+ / 0-)

          There is not a fixed amount of money, but there is a fixed amount of economic productivity. You cannot just magic more into existence.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Sun Dec 09, 2012 at 10:00:48 AM PST

          [ Parent ]

          •  People produce real goods and services by (1+ / 0-)
            Recommended by:
            nchristine

            transforming the natural resource base and developing their own talents. Whether those products are exchanged and traded for money is another matter. Some societies function without the use of money, but generally only on a small and intimate scale that tends not be be maximally efficient. If trade and exchange are to occur over greater distance and time, then currency is a prerequisite.  Which is probably why it has been in use over 5000 years.
            Now, one could argue that trade and exchange which is not mediated and reduced to symbols by using a currency (money) is not economic.  Indeed, some early Western economic theorists opined that work had to move out of the house (the domestic environment) to even be considered work. Women who committed to a lifetime of labor in the home were not considered to be working. Is that what prompted them to move out, too, and get some compensation for themselves instead of being dependent on the charitable instincts of some male? Who knows?
            But, whether labor is compensated with money should not define what you call economic productivity. The money that is being moved around in hedge funds and derivatives and insurance products contributes nothing of value to society at all. Its as if, instead of communicating ideas, words were just idiot utterances. Speech can have meaning, or not. Money can measure products, or not. We should not take the symbol for the thing represented or mistake the form for the function.
            What Wall Street is largely engaged in is a virtual or vicarious enterprise which we confuse with the real thing at our peril. Being obsessed with a figment of the imagination is not a good thing.

            We organize governments to deliver services and prevent abuse.

            by hannah on Sun Dec 09, 2012 at 11:46:07 AM PST

            [ Parent ]

          •  Except (0+ / 0-)

            by stealing it from outside of the system as with colonialism and imperialism, or increasing the expenditure of stored fossil-fuel "capital", or by increasing the amount of time extracted from workers for the same remuneration, or (genuinely) by real technical labor-saving innovations (those that substantive increase productivity by "working smart" rather than merely shift effort in one area such as agriculture into another such as building and distributing agricultural machinery).

            Now, whether "we" can, at this point in time, pull any more such increases out of our butts is a legitimate question.  There was a lot of "slack" work time in the 70's that has been appropriated back from workers who are now expected to WORK every single second on the clock; there was time outside of the work day for workers to go home and spend with their families; there was a mostly-intact climate that had not yet begun to show obvious signs of the damage caused by fossil fuels; there were still a few obscure small nations in out-of-the-way places to be imperialized and wrung dry.  We may well have reached the bottom of the barrel, however, and as for innovation, most of the "easy" ideas have probably already been stumbled upon.

      •  The sports complexes.... health insurance, (2+ / 0-)
        Recommended by:
        gjohnsit, Bronx59

        utilities, tax cuts for the rich and corps.  Taxes have not kept up with inflation, true inflation.

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