Students Now Indentured to the Banksters
By Thom Hartmann A...
Never in the history of the developed world has an entire generation had to go into debt just to get an education and a job. Until now. Back in January, 31-year-old Tony Muzzatti, who at the time owed around $60,000 in student loan debt to Sallie Mae and always made on-time payments, was told that he had to immediately make a payment of $10,000, or face asset seizures. That’s because his grandmother, who also happened to be his cosigner on the student loans, had just died.
Christopher Kibler was also told by Sallie Mae that he had to immediately pay back nearly $22,000 in student loan debts after his father, the cosigner on his loans, had passed away. Muzzatti and Kibler are just two of the many victims of what the Consumer Financial Protection Bureau refers to as “auto-defaults,” or when banks immediately say that private student loan debts are in default after the death or bankruptcy of a cosigner.
The “auto-default” practice is just one of the many ways that big banks and Wall Street executives are making billions of dollars off of an entire generation of struggling, debt-ridden Americans. Right now, there’s over $1.18 trillion in outstanding student debt in America. More than 40 million Americans hold student loan debt; which is "greater than the entire population of Canada, Poland, North Korea, Australia and more than 200 other countries"
And of those 40 million borrowers, around 7 million have defaulted on their debt. The average debt for a 25-year-old American student has risen a staggering 91 percent over the past decade, and the average college debt per person is over $23,000. An entire generation of Americans is completely screwed, and is unable to start a family, buy a house, and build the equity needed to retire down the road.
This is a morally criminal conspiracy that’s been going on for the past 33 years, ever since Ronald Reagan came to Washington, and it’s been a 3-step process. First, as governor of California, Reagan did away with that state’s free college education program, that let tens of thousands of Californians get an affordable and quality education. Others across the country followed his lead.
As soon as he came to Washington, Reagan continued his all-out assault on an affordable college education by slashing federal aid to higher education institutions across the country, including America’s land-grant colleges that had been providing affordable and quality education since they were first established by the Morrill Acts of 1862 and 1890.
When Reagan came in the office only about 20% of the cost of college was paid as tuition; the other 80% was paid by governments and endowments. Today the numbers are almost exactly reversed and instead of government picking up most of the cost of tuition it is the students themselves.
Next, Reagan laid the groundwork for the federal government to get involved in the student loan business. Thanks to Reagan's new ed policies, the federal government had an incentive to hand out loans to hundreds of thousands of students, because the interest on those loans would become revenue.
Finally, our backwards trade policies that have been in place for the past 33 years have also devastated America’s “lost generation.”
Believe it or not, there used to be a time in our country when you could graduate from high school, get a good paying blue-collar job, provide for your family, and save up for retirement. But thanks to decades of job-killing trade policies, that’s no longer the case. Now, in order to become a part of the middle-class, and to have any shot at living the American Dream, you have to go to college, strap yourself with tens of thousands of dollars of student loan debt, get a degree, and get a white-collar job.
The worst part of all of this is that we have done this to ourselves. We have shot ourselves in the foot, by listening to 33 years of failed Reaganomics, and by buying into the idea that education should be a commodity and something that banksters can get rich off of, and not part of the commons.
It’s time we own up to our mistakes, and start calling America’s student loan debt crisis what it really is: A massive, devastating, trillion dollar morally criminal conspiracy, committed by Wall Street banksters, libertarian billionaires , and Reaganomics devotees.
Fortunately, we can undo a lot of this damage, and lift an entire generation of Americans out of piles of debt. It starts by declaring a debt jubilee on all outstanding student loan debt in America, and wiping the slate clean. Relieve millions of Americans from their crippling debt, so they can invest in homes, start families, and build equity. And, we need to make a public college education free to every American who qualifies for it.
If we can afford to spend trillions of dollars fighting two unjust wars, we can certainly afford to give all eligible Americans an affordable and quality education at a fraction of that cost. And, finally, we should turn our back on 30 years of insane trade policies and bring good paying blue-collar jobs back home.
Let’s make sure that an entire generation never again has to go into debt just to get an education and a job.
Comments
#2
I only have my usual statement. Austerity never works. Please support increasing the deficit. Invest in America and build an economic machine to eat our debt. The major component of this economic machine is an educated workforce. Please quit worrying about the unpaid wars and the debt.
#3
We might do well to work on our limited concept of the "commons." An educated person, when produced by tax supported means, is more able to give additional value to the nation. A person, who is healthier, is both more productive and less costly to the nation that provides tax supported healthcare. That is, I think, just as much a part of the commons as our physical investments in roads, parks or fire departments. Remember, food stamps began with Truman when so many malnourished young men couldn't pass physical for the war effort.
#4
ckrob -- What do mean "we" white man (LOL). Thom always refers to our education as the key component of our infrastructure.
#5
I think Ray-gun's hostility towards higher ed, and higher ed students, had much to do with all that student rebellion during the 1960s and '70s, which left Ray-gun with a huge bug up his ass. I guess that dismantling affordable higher ed was his petty revenge against college students. - Aliceinwonderland
#6
I just taught a lesson about the 60s counterculture, college students, and Nixon's "silent majority". Having not lived through it myself, I get practically all of my information about it from books and movies. I always try to include a few youtube documentaries about whatever we're learning about in class. Every video I found, and our textbook, was quick to point out that, while the protesters and counter-culture types got a lot of press, they were a small percentage of the population.
I only bring this up because my own personal theory is that, while there may have been some political forces at work driving up the price of college for spite from that era, I believe a much bigger factor of the cost is supply and demand. Two generations of people - mine and the one after me - have always been taught that college is the only path to success. That increases demand. More women going to college increases demand. Pro-diversity programs increased demand. Legal immigrants on student visas increases demand.
And increased demand means higher prices. Even if it's something that is part of the "commons" or a necessity, like food and water. Even there, the prices go up with demand.
Not going to college was never presented as an option at my high school in the 90s. It was always treated like the next, inevitable step for everyone. You can see this trend if you look up how many high schools still offer things like wood working or auto shop classes. Very few do, because the focus is solidly on college prep.
Interesting side-note: Many high schools still offer home-ec style classes. Nowadays that class doubles as a babysitting/preschool area for children of the students. That, in turn, serves as a warning to the other girls in the class to not get pregnant, once they see how much work a child can be.
#7
Quote ChicagoMatt:And increased demand means higher prices. Even if it's something that is part of the "commons" or a necessity, like food and water. Even there, the prices go up with demand.
ChicagoMatt ~ So what? The price of war has gone up too. No one is arguing with your little formula. What we are insisting on is that the government cover at least 80%-90% of all educational expenses for anyone who academically qualifies for it--just like they used to before you were born. Obviously they have no problem raising taxes to cover their outrageous war campaigns. They should have no problem raising those taxes to cover education and healthcare as well. Certainly, education and healthcare expenditures trump war expenses. After all, if you can't afford to educate and care for the health of your own people, then what are you fighting to defend?
#8
Right on, Marc! Not that we were ever "threatened" in the first place. But any country as wealthy as this one, that can't educate and care for the health of its own people, is hardly worth defending. - AIW
#9
Chi Matt -- Your supply and demand would have more validity, if Reagan did not verbalize one of his motivations was because the students he educated only objected to the things he did.
I think you need to realize the correlation of the "silent majority" and the recent poll results that showed that only 17% of the people know that the republicans have control of the house.
#10
Matt, I think your "supply and demand" argument is inappropriate in the context of education. That's business language. Education is not a business, much as certain people would like us to think otherwise. - AIW
#11
Quote Aliceinwonderland:Matt, I think your "supply and demand" argument is inappropriate in the context of education. That's business language. Education is not a business, much as certain people would like us to think otherwise. - AIW
AIW ~ You never seize to amaze me. Keep this up and I will have to write you in as candidate for President 2016. Don't make me do it!!
Ok! Forget it!! It is done!!!
#12
Oh Marc, now don't make me blush!
#13
I agree with you about military spending, Marc. We should spend a whole lot less on the military. Let some other country be the world's police for awhile. Drop out of NATO, and let all of those Western European countries whose students have been running circles around ours have to sink a little more money into their militaries to defend themselves for a change.
Here comes the disagreement - any reduction in spending should coincide with a reduction in taxes. Saved a trillion in military spending? Give back a trillion proportionally to the tax payers.
And I've asked this question a few times, but I really can't find an answer, so I am hoping some of you know: When they give the cost of the wars in Afganistan and Iraq, does that include costs that would have happened even without the war? Like solider's salaries? They get paid with or without a war. I am just curious.
What we are insisting on is that the government cover at least 80%-90% of all educational expenses for anyone who academically qualifies for it--just like they used to before you were born.
Because of supply and demand, the qualifications for universities would be much higher now, since there are so many more people applying. Only the smartest of the smart would get in, baring some sort of expansion in university building.
Even the biggest optimist has to see that things aren't going to go back to the way they were "before I was born" 30-some years ago. At least not when it comes to higher education. Think of all of the things that were different between the baby boomer's generation and their parents. Their parents probably thought their ways were better too. But to the baby boomers, the thought of going back seemed silly.
#14
Quote ChicagoMatt:Here comes the disagreement - any reduction in spending should coincide with a reduction in taxes. Saved a trillion in military spending? Give back a trillion proportionally to the tax payers.
ChicagoMatt ~ No! Are you suggesting that if we can't spend the money on death that we would refund it to the taxpayer rather than spend it on education and healthcare? No! The answer is, No! Education and healthcare first, then defense and tax refunds! There is no other way.
Are you serious?
Quote ChicagoMatt:Even the biggest optimist has to see that things aren't going to go back to the way they were "before I was born" 30-some years ago. At least not when it comes to higher education.
ChicagoMatt ~ Nonsense! State your statistics to support such a contention. As Thom has stated quite clearly if it wasn't for the wars of George W. Bush, there would be more than enough money in the bucket to pay for the college education of every citizen of the US. Where do you get your statistics?
#15
DAM -- I disagree with both you and Matt. There is enough money now to pay for education and still waste it on wars. You guys must be reading that Rienhart-Rogoff economic report.
I wonder why I never get any response to high tax rates on the rich. When raygun lowered the top tax rate from 78% (or something like that) to 35% (or something like that), the high earners paid 2 to 3 times as much in taxes. Facts in economics seem to say if you have any linear thoughts about the economy you are probably wrong.
#16
Chuck, you never get any response to your proposals for higher taxes on the rich?! Well, let me break that statistic for you. I say, tax those bastards in the highest income brackets 80% or more. Then there's no incentive to "earn" billions anymore and... voila! No more billionaires! And then we can ALL just be "ordinary" citizens. Brilliant idea! - AIW
#17
AIW -- The fact that I never receive discussion on is "raise the top tax rate to 90% so the rich will pay less in taxes."
#18
Chuck, your last post has me totally confused. How can it be a "fact" that raising the top tax rate to 90% would result in rich folks paying "less" in taxes? You're not making sense. - AIW
#19
AIW -- You can't say I am not making sense. Those are based on the facts that when raygun lowered the top tax rate on the top earners, those top earners paid 2 to 3 times more in taxes. Larry Beinhart on alternet provides what he thinks are the reasons for this. He is much better at explaining it than anything I could say. However, that will not keep me from saying something. The high tax rate motivates the high earners to keep there money in their businesses. As it turns out, taxes may be better at behaviour modification than raising revenue.
#20
ChicagoMatt wrote:Even the biggest optimist has to see that things aren't going to go back to the way they were "before I was born" 30-some years ago. At least not when it comes to higher education.
ChicagoMatt ~ Nonsense! State your statistics to support such a contention. As Thom has stated quite clearly if it wasn't for the wars of George W. Bush, there would be more than enough money in the bucket to pay for the college education of every citizen of the US. Where do you get your statistics?
I'm stating an opinion that the college funding model isn't going back to a "government pays most of it" model. It's an opinion - no need for statistics. But I base my opinion on human nature. You have 30 years of people who had to pay for college mostly by themselves, and trillions of people in debt over it. Do you think they are going to support giving their future workforce competitors an almost-free ride in college? You wouldn't just have to wipe out the outstanding college loan debt, but also come up with some way to pay back those people who paid off their college loans already.
Or maybe I'm just in a bad mood at the moment, and that's why I think most people wouldn't go for that.
Also, assuming those wars didn't happen, and that money was saved, do you think it would have made its way into the higher education system? Maybe a little, but not much.
#21
Those are based on the facts that when raygun lowered the top tax rate on the top earners, those top earners paid 2 to 3 times more in taxes.
I've heard Rush say that a lot too - how lowering the tax rate actually increases the tax base. He never gives reasons for it, he just says that is what happened under Reagan. If I had to guess a reason, I'd bet it's psychological. Tax rate at 70%? Better hide my money. Tax rate at 30%? That sounds fair... So the money comes out of hiding, and tax revenues increase.
That's just my guess though.
And, since there's no where else to say this: What are they thinking moving Thom's show to Rush's time?!? I can't be the only one who would like to listen to both - the number one Conservative and the number one Progressive shows. I liked my lunches with Rush and afternoon drives with Thom. Was Ed Shultz that bad in that time slot?
#22
Chi Matt -- Very sneaky how Rush describes the increase in the tax base. There are at least two ways to describe the tax base increase. One way is that the number of people paying taxes increased. I would guess that is how Rush would want you to think the increase in the tax base occurred. The second way is the way I think it happened and incidentally agrees with your description. The second way to describe the tax base increase is that more income was exposed to the lower tax. I think the facts say that the top earners paid 2 to 3 times more in income taxes when the rate was lowered. I think that set of facts supports the second way. I think your description of coming out of hiding is accurate. Unfortunately the place it was hiding was in the infrastructure of the businesses of the top earners. At the lower tax rate they took it out of that hiding place and sent it to new hiding places e.g. Swiss bank accounts (Credit Suisse was just prosecuted for providing their secret hiding place) and the infamous Cayman Islands.
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They should make a law where loans will never exceed 1% interest (the banks and government will still make billions). For students who already have loans out, the 1% should be applied to their original principle and if the balance is less than what the borrower has paid the loan should be cleared. My loans are from 1996 at 9% interest.