student debt slavery

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Ellen Brown examines the plight of student debt slavery in a pair of articles. Part 1 observes that "Slavery by debt has continued to this day, and it is particularly evident in the plight of students:"

Graduates leave college with a diploma and a massive debt on their backs, averaging over $37,000 in 2016. The government's student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category behind only mortgage debt. Student debt has risen nearly 164% in 25 years, while median wages have increased only 1.6%.

Due to that disparity, it's no surprise that "nearly one-third of borrowers have made no headway in paying down their loans five years after leaving school, although many of these borrowers are not in default:"

They make payments month after month consisting only of interest, while they continue to owe the full amount they borrowed. This can mean a lifetime of tribute to the lenders, while the loan is never paid off, a classic form of debt peonage to the lender class.

What happens if they don't pay up on time? Many people can't, which is why "the default rate on student debt was over 11% at public colleges and was 15.5% at private for-profit colleges:"

Defaulted borrowers risk damaging their credit and their ability to borrow for such things as homes, cars, and furniture, reducing consumer demand and constraining economic growth. Massive defaults could also squeeze the federal budget, since taxpayers ultimately cover any unpaid loans.

"It hasn't always been this way," she reminds us:

Until the 1970s, tuition at many state colleges and universities was free or nearly free. Education was considered an obligation of the public sector, and costs were kept low.

In Part 2, Brown mentions an estimate that "the government spends $38 for every $1 it recovers from defaulted debt. The other $37 goes to the debt collectors." To this, she simply asks, "Why?"

Student borrowers are reporting widespread mishandling of accounts, unexplained exorbitant fees, and outright deception as they are bullied into default, tactics similar to those that homeowners faced in the foreclosure crisis.

The public banking movement is a partial solution, as is tuition-free higher education. Such efforts might prevent the problem from worsening, but what to do about the current situation?

We need to free our students from the system of debt slavery that has financialized education, turning it from an investment in human capital into a tool for exploiting the young for the benefit of private investors.

The Atlantic's Jeffrey Selingo mentions a related problem, the false promise of worker retraining, which he describes as "a classic chicken-or-egg dilemma:"

Employers don't want to expand or relocate without the availability of an already-skilled workforce. Workers who have been laid off through corporate downsizing or because their jobs were shipped to a foreign country don't want to dedicate the time and effort needed to go through retraining without the pledge of a sure-fire job with the same or a better paycheck. [...] As a result of the 2008 recession, the U.S. shed 1.6 million manufacturing jobs requiring just a high-school diploma; only 200,000 returned.

The fastest-growing jobs in the country require training and education beyond high school.

"For a few," writes Seligno, "a rejection of higher education might seem rational:"

After all, why would someone in his 50s who hasn't been in a classroom in decades dedicate a few years to train for a new job surrounded by people half his age and then start on the bottom rung of the career ladder? [...]

For many dislocated workers--or employees who were terminated and are unlikely to return to that job or even that industry--it's often easier to collect unemployment or other cash benefits that come along with training and then either remain jobless or patch together work that doesn't require learning a new skill or acquiring a college degree. But that's not a recipe for sustainable careers or even long-term work.

Something like a 21st-century GI Bill would do the trick, but we seem to lack the political will to make it happen.

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This page contains a single entry by cognitivedissident published on January 8, 2018 11:19 AM.

Sheriff Clarke's "classic" lie was the previous entry in this blog.

"If you thought 2017 was crazy..." is the next entry in this blog.

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