Submitted by Charles Hugh Smith from Of Two Minds

Students: You Are Exploited Debt-Serfs

Students and parents, wake up: your only salvation lies in political engagement and action.



Of all the exploitative systems in the U.S., none is more rapacious than the Education Cartel. Like the proverbial frog that is unaware that it's being boiled because the water temperature rises so gradually, college students and their parents are unable to recall what higher education was like before students were herded into debt-serfdom.



Apologists for the Education Cartel like to blame Corporate America or the banks, but the reality is that the Federal and State governments and the employees of the Cartel are willing partners in the exploitation and fraud. How did we get to the boiling-water point where students are expected to take on $100,000 or more in debt to attend college--even a mediocre one?



Answer: immensely profitable Government-backed loans. If the Central State wasn't partnered with the Education Cartel, today's debt-serfdom would be impossible.



The partnership plays out on multiple levels. The San Francisco Chronicle recently reported that "Liberal" U.S. Representative Nancy Pelosi is fighting vigorously to defend the debt-serf-based empires of for-profit "colleges." Why? because these billion-dollar empires give her hundreds of thousands of dollars in campaign contributions (duh!).



("Conservatives" love for-profit "colleges" for the same reasons, of course.)



There is nothing remotely educational or liberal about an exploitative Cartel that provides no measurable value to its students while graduating 10% of them. As reported in The New Republic, when General Accounting Office (GAO) investigators posing as prospective students applied to 15 major for-profit "colleges," every one made misleading sales pitches.



The largest for-profit, the University of Phoenix, graduates less than 10% of its students within 10 years.



You may not get any useful skills or a meaningful diploma, but you will end up with $100,000 in debt that can never be written off. Loans imply risk: nobody forces a lender to take on the risk of lending money to a borrower. If the borrower ends up being unable to pay his debts and declares bankruptcy, the debt is wiped off the books and the lender loses the money that was at-risk.



Thanks to the Central State's partnership with the Education Cartel, student loans cannot be dismissed even in bankruptcy. This makes them unique in the world of credit and debt.



Banks lobbied the Central State for guaranteed, no-risk student loans, and the Government was pleased to oblige. The Status Quo fully supports colonizing the "home" population of vulnerable students and turning them into debt-serfs that banks can hound til death and beyond; they're much more pliable and less troublesome than foreign populations who might rebel against the Imperial lash. (This is drawn directly from the Survival+ critique.)



The Education Cartel has mastered the art of propaganda. You can read hundreds of media stories on the plight of K-12 education in the U.S., and the only salary numbers you will find are those for entry-level teachers--usually poverty-level wages below $30,000 in low-income states and in the mid-$30,000s in coastal states.



This careful pruning of published salaries naturally creates the impression that teachers everywhere are toiling away selflessly for poverty wages.



But this is not the case for senior teachers in high-wage states. Courtesy of correspondent Anthony T., here is a database of Illinois teachers salaries, compiled from data provided by the Illinois Board of Education (ISBE). Here are a few sample salaries:



Salary: $172,163

Position: High School Teacher

Full/Part Time: Fulltime

Percent Time Employed: 100%

Assignment: Physics (Grades 9-12 Only)

Years Teaching: 30.5

Degree: Master's



Salary: $163,526

Position: High School Teacher

Full/Part Time: Fulltime

Percent Time Employed: 100%

Assignment: Driver Education

Years Teaching: 32

Degree: Master's



For comparison's sake, this is twice the salary of an Associate Professor at one of the top public universities in the world, the University of California.



These high school teachers' salaries are more than triple the median household income in the U.S., which according to the Census Bureau is $49,777 annually.



This is not to suggest that all teachers are pulling in salaries in this range; the point is the Education Industry is extremely selective about which wages, pensions and benefits packages (for teachers and administrators) get publicity.



Apologists for the Education Cartel always compare these salaries with bloated CEO compensation. In other words, $170,000 a year and $120,000 a year pensions (not counting medical benefits) are "cheap" compared to $30 million pay packages.



Missing in this snapshot is the relative scale: there are about 5,000 CEOs of publicly traded companies which can support bloated CEO pay, while there are 22.5 million public sector employees, millions of employees in the Education Cartel and tens of thousands of bureaucrats, senior teachers, etc.



In other words: let's say we just expropriate ALL corporate profits for Central State spending. Corporations skimmed $1.6 trillion last year, record profits, and companies without GE's tax-avoidance Panzer divisions foolishly paid some $350 billion in corporate taxes, leaving $1.25 trillion to be expropriated.



Given the $1.6 trillion Federal deficit and the states' $150 billion deficits, that means taking every dollar of corporate profit would still leave us a $500 billion Government deficit. If we look at government expenses, we find that roughly 80% are personnel-related: salaries, benefits, pension costs, outside consultants, etc. Most of the Federal entitlement and Defense spending is also direct transfers to beneficiaries and employees.



One person's "waste" is another person's $150,000 a year salary and $100,000 pension.



Since the Federal government spends $3.8 trillion and state and local governments spend another $1.5 trillion, then we can estimate that the State (all government) accounts for $5.3 trillion, or 36% of the entire U.S. GDP.



The state of California currently spends $3.3 billion or 3.2% of its annual budget on the University of California system.



In other words, it's not that there's "no money for education"--it's that trillions of dollars are being squandered on other "priorities" like prisons, $1,000 per gallon fuel in Afghanistan, $170,000 a year "defense consultants," pension payments, etc. etc. etc. Public-sector toadie California Governor Jerry Brown is out whipping up support for his "increase taxes or else you all die" campaign by threatening students with higher tuition and fees--as if they haven't already been stripmined for years by skyrocketing fees: Brown warns of soaring UC costs in all-cuts budget.



In other words, if you don't give us more tax money, we're going to nail students--even though the UC system accounts for a meager 3% of the state's bloated expenses.



This is propagandistic thuggery at it's best/worst.

Meanwhile, The S.F. Chronicle published an article stating that 30% of K-12 spending had nothing to do with what goes on in the classroom--it's all educrat bureaucracy. On the university level, here is a chart illustrating the same trend in the UC system: administration headcount climbs regardless of any other conditions, as do administrative salaries:

Students, wake up: the reality is actual classroom education is not a spending priority, on any level. The priority is herding you into lifetime debt-serfdom. The state of California is whining that it's broke and can't support its public universities, yet the UC system absorbs a trivial 3.2% of its budget.



Where the state once subsidized about 2/3 the cost of its public university education, that has shriveled to 20% as tens of billions are funneled into bloated pensions and skyrocketing healthcare benefits for retirees and current workers.



As education costs outstrip inflation by leaps and bounds, who's looking at where the education funding is going? Those benefiting from the Education Cartel are like the nephews and nieces living in the alcoholic, abusive, rich relative's rotting mansion. They are silent about the abuse because their only goal is to get their share of the swag.



How many educators refuse to oil the debt-serf machinery? How many are willing to publicly broadcast the endless gaming, graft, fraud and grifting that plays out in the Education Cartel? How many speak truth to power as bloated administration costs crowd out classroom spending?



How many other public-sector employees are calling for cuts in the 97% of the state budget which isn't spent on the university system so more funding can be channeled to the top-tier education that everyone agrees is the future of our economy? How many voices are there in favor of slashing administrative headcount and costs back to 1996 levels so the funding could be redirected to classroom education?



Expecting the system to reform itself is a futile fantasy. Expecting tuition costs to double every few years and students to fill the gap with another trillion dollars in borrowed money is not just self-defeating for society, it is rapacious. Courtesy of the excellent dshort.com, here is a chart of inflation from 2000 to Q1 2011. In a low-inflation decade, tuition has more than doubled. This is the acme of unsustainability. Students loans are the only sector of credit which is expanding, and they now exceed $900 billion.

By all means, blame the rapacious banks for student loans, but please note the banks' partner is the enabling power and the enforcer: the Central State, and the Education Cartel which feeds off the rising costs and debt-serfdom of its "customers," the students.



Oh, and don't forget the mainstream media, that willing handmaiden to debt-serfdom. My oh my, the vaunted, self-glorifying Washington Post reaps most of its profit from its ownership of a for-profit diploma-mill, mostly funded by debt-serfdom and Central State swag: How Team Obama is Wreaking Havoc on The Washington Post.



Wake up, students and parents. It's time to become politically aware and politically active. You're not going to escape debt-serfdom passively accepting passage to the slaughterhouse. You'll have to demand radical changes of institutions and fiefdoms which "came to do good and stayed to do well," and demand an affordable education for the real world instead of a gatekeeper's worthless stamp of approval.



Related entries:



The Ratchet Effect: Fiefdom Bloat and Resistance to Declining Incomes (August 23, 2010)



The Irrationality of Public Teachers' Pay Scales (January 5, 2010)



It's Time to End the Student Loan Rip-Off (February 25, 2010)



The Lifecycle of Bureaucracy (December 2, 2010)



Inflation Is Rampant in Tuition, Healthcare and Property Taxes (December 1, 2010)