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Mon Dec 3, 2012, 07:14 AM

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 wasnít 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 canít 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, thereís 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, thatís 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 arenít 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.

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Arrow 34 replies Author Time Post
Reply College Used to Be the American Dream -- Now It's the American Nightmare (Original post)
xchrom Dec 2012 OP
marmar Dec 2012 #1
Democracyinkind Dec 2012 #2
Live and Learn Dec 2012 #3
Raster Dec 2012 #4
geckosfeet Dec 2012 #5
duhneece Dec 2012 #6
Mass Dec 2012 #12
Democracyinkind Dec 2012 #17
CrispyQ Dec 2012 #26
riderinthestorm Dec 2012 #24
uponit7771 Dec 2012 #22
dotymed Dec 2012 #7
GatorLarry Dec 2012 #8
lonestarnot Dec 2012 #9
woo me with science Dec 2012 #10
Dustlawyer Dec 2012 #11
grahamhgreen Dec 2012 #13
central scrutinizer Dec 2012 #29
Mass Dec 2012 #14
former-republican Dec 2012 #18
MadrasT Dec 2012 #34
former-republican Dec 2012 #15
JaneyVee Dec 2012 #16
former-republican Dec 2012 #19
JaneyVee Dec 2012 #20
former-republican Dec 2012 #21
dkf Dec 2012 #28
sulphurdunn Dec 2012 #23
JPZenger Dec 2012 #25
sulphurdunn Dec 2012 #31
dkf Dec 2012 #27
marmar Dec 2012 #30
central scrutinizer Dec 2012 #32
TheProgressive Dec 2012 #33

Response to xchrom (Original post)

Mon Dec 3, 2012, 07:19 AM

1. k/r

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Response to xchrom (Original post)

Mon Dec 3, 2012, 07:31 AM

2. Is there another way?

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.

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Response to Democracyinkind (Reply #2)

Mon Dec 3, 2012, 07:32 AM

3. +1 nt

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Response to Democracyinkind (Reply #2)

Mon Dec 3, 2012, 07:37 AM

4. You have hit the nail directly on the head. American education is conceived as a profit-making....

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

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Response to Democracyinkind (Reply #2)

Mon Dec 3, 2012, 07:43 AM

5. I agree. Wall street has plugged into this system with the government underwriting

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.

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Response to geckosfeet (Reply #5)

Mon Dec 3, 2012, 07:49 AM

6. Education is no longer a public service

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.

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Response to Democracyinkind (Reply #2)

Mon Dec 3, 2012, 09:49 AM

12. Yes, you got it

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.

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Response to Mass (Reply #12)

Mon Dec 3, 2012, 09:55 AM

17. I wouldn't have a college education if it weren't for the fact of my double citizenship.


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

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Response to Democracyinkind (Reply #17)

Mon Dec 3, 2012, 10:43 AM

26. I saw a facebook post a few weeks ago.

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.

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Response to Mass (Reply #12)

Mon Dec 3, 2012, 10:31 AM

24. My daughter went to the UK for her masters as well. Same thing - MUCH cheaper

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

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Response to Democracyinkind (Reply #2)

Mon Dec 3, 2012, 10:12 AM

22. Or a place to gouge students fora new world class workout gym

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Response to xchrom (Original post)

Mon Dec 3, 2012, 08:02 AM

7. We bailed out the too big to fail banksters and gave them trillion$ in bonuses

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.

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Response to dotymed (Reply #7)

Mon Dec 3, 2012, 09:32 AM

8. Yeah, but it won't happen.

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.

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Response to dotymed (Reply #7)

Mon Dec 3, 2012, 09:34 AM

9. Fucking Richie Rich!

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Response to dotymed (Reply #7)

Mon Dec 3, 2012, 09:37 AM

10. Amen.

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

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Response to xchrom (Original post)

Mon Dec 3, 2012, 09:42 AM

11. And no one will ever be even charged for the mortgage/foreclosure debacle. They have no

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.

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Response to xchrom (Original post)

Mon Dec 3, 2012, 09:51 AM

13. Started under Reagan.

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Response to grahamhgreen (Reply #13)

Mon Dec 3, 2012, 11:25 AM

29. Yes, and also on the state level

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".

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Response to xchrom (Original post)

Mon Dec 3, 2012, 09:52 AM

14. High tuition costs and low grants

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.

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Response to Mass (Reply #14)

Mon Dec 3, 2012, 09:56 AM

18. Where does that come from?

 

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

Coaches making salaries that rival pro teams coaches

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Response to former-republican (Reply #18)

Mon Dec 3, 2012, 11:50 AM

34. More like ridiculous facilities upgrades.

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.

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Response to xchrom (Original post)

Mon Dec 3, 2012, 09:53 AM

15. All higher learning institutions should be run on non profit

 

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Response to xchrom (Original post)

Mon Dec 3, 2012, 09:54 AM

16. We need more scholarships available for those who decide to go into engineering, science, math,

business, environmental studies.

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Response to JaneyVee (Reply #16)

Mon Dec 3, 2012, 09:57 AM

19. No , we need to contain costs

 

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Response to former-republican (Reply #19)

Mon Dec 3, 2012, 09:59 AM

20. That too. But still, containing costs doesn't guarantee that best & brightest can afford to attend.

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Response to JaneyVee (Reply #20)

Mon Dec 3, 2012, 10:05 AM

21. Our kids going college has reached the point of absurdity like health care in this

 

country.

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

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Response to former-republican (Reply #21)

Mon Dec 3, 2012, 10:53 AM

28. Aren't they mostly state run?

 

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Response to xchrom (Original post)

Mon Dec 3, 2012, 10:28 AM

23. State funding of public

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.

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Response to sulphurdunn (Reply #23)

Mon Dec 3, 2012, 10:33 AM

25. State funds that used to go public colleges was diverted to medicaid

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.

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Response to JPZenger (Reply #25)

Mon Dec 3, 2012, 11:36 AM

31. I think you will find

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.

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Response to xchrom (Original post)

Mon Dec 3, 2012, 10:50 AM

27. Must be the bank's/wall street's fault right?

 

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?

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Response to dkf (Reply #27)


Response to xchrom (Original post)

Mon Dec 3, 2012, 11:38 AM

32. Several public universities are being pro-active

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.

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Response to xchrom (Original post)

Mon Dec 3, 2012, 11:38 AM

33. I paid $100/semester in the late 1970's...In California

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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