The Student Loan Debt System

Student loan debt is the latest economic crisis du jour. The standard pundit blames the students, and in some respects their vitriol has a semblance of validity.

Myself, I have yet to see students getting rich off of the system. I see students who have unexpected medical emergencies, family problems, and worst yet: administrations who callously tack on unexpected fees. Where does all the money to pay for this come from? Well, unless you have rich parents, student loans are probably the answer, and those student loan debts are just getting worse.

The bigger part of the story is not being told. That untold story is probably the most important piece for the general public to understand. Many of those in-the-know see the crisis as so deep-seeded that they believe a full repudiation of the debt is a necessary component of any overhaul to the higher education system.

When I think of arguments for student debt jubilee, I think of the necessity (supposed) of a college education. There is immense societal pressures put on people to get a higher education. Both political parties and their bureaucrats assert the necessity of a well-trained workforce to compete within the abusive global economic system. In order to do that we have to throw large numbers of highly skilled workers (i.e. worker bees) at the competition.

I talk often with professors who are upset with the current student aid system. I am told of “the old days” when student workers were paid damned good wages, tuition was relatively low, and student loan interest rates allowed students the ability to sock some extra cash away to be used for emergencies.

And guess what? Student loan default rate weren’t as bad then as they are now.

A great deal of research has shown that people used to be able to move upward in corporations and government, facilitated in part by internal educational programs. Anecdotally, a friend’s dad moved up to the higher ranks of the VA despite having no college degree, something my generation will probably never be permitted to do. Professional workplaces that used to hire from within have cut these education programs. These workplaces then require university credentials/degrees in order to land simple entry level jobs or move up one rung of the professional ladder. This then justifies keeping wages down while paying the upper level executives more (I mean, hey, the execs have an MBA, right?! Credentials!).

In other words professional workplaces have externalized their costs onto society. The barrier-to-entry (time lost at work, time spent hitting the books, and cost for tuition) for even low-skilled, low-paying jobs has increased.

Universities are playing this game too. Universities are paying their administrators loads of money while holding campus wages down. In a public forum, President Hogan of the University of Illinois stated without remorse that while it was difficult to keep staff wages down, he had to pay administration the best money possible to get the best talent possible; I guess that logic doesn’t carry over to support staff and professors. By the way, President Hogan makes over $620k a year for living in central Illinois, good work if you can get it.

Have a glance at the University of California system’s administrator pay packages. The statewide board of trustees has drastically cut educational programs in the humanities and raised tuition. How did the UC Administration cope? They got fat raises (read here and here).

Administrators also give out sweetheart contracts to their university-business inner circles. Just try to get a copy of your local university’s vendor contract and watch their reaction as they attempt to keep you from what is by all measures public information. Part of the reason universities were so reluctant to enter into fair trade certified buying programs for university apparel is the reluctance to open the books to the general public. Their desire to milk the system means more overhead for others to pay in the form of blood, sweat and tears.

Have no doubt about it, the student loan venders are making bank off of this downward spiral. These same lenders were the recipients of the $7 TRILLION + no-strings-attached bailout package from the Federal Reserve at the tail end of the Bush Jr. Administration. The same folks who bailed them out are the same folks who are under the weight of crushing student loan debt, yet do they get any benefits for keeping the filthy rich safely cloistered in the 1%?

One would think that with all the rhetoric used by university administrators extolling their service orientation toward the student populace that they would come out swinging on behalf of students with crippling debt. That is until one realizes that universities are now heavily reliant on their endowments. Guess who manages the endowment funds? That’s right, many of the same people who also divvy out student loans. You take away the student loan cash cow, and you severely hit the capacity of endowments to provide a bloated return on investment.

Administrators have the students in a vice, but big finance has university administrators in an even bigger vice.

Governments and businesses collude to further emphasize the necessity of a college education at these corrupted universities, then they turn around and gut their funding. These bloated universities then externalize their costs; instead of cutting administrative benefit packages, administrators increase tuition costs and pat themselves on the backs for these new revenue sources by giving themselves even more generous compensation. More overhead for other to pay. More student loan debt.

[If you want a taste of how university admins network, read this article about that dirtbag chancellor from UC Davis and her efforts to help limit liberty on campuses (and here). It becomes obvious that this is not a chain of random events, but a coordinated effort by internationally connected university administrators. Oh, and the Chancellor’s previous gig was also at the University of Illinois].

Long story short, the average person is heavily pressured into getting a hollow vocational degree at bloated costs from universities colluding with crony capitalists, trying to further inculcate creeping authoritarian principles into curriculums the world over. Furthermore, a “basic” higher education is not enough; now you need an advanced degree to compete with the glut of job applicants with high school diplomas and bachelors degrees.

The Europeans were much smarter. Many Europeans countries provide either low or no-cost tuition to enhance their consensus capitalist systems. It provided a remarkable illusion of fairness. But look at Denmark, where they have a large number of highly educated youth… the job market is glutted! The mindset of such a large group of people with a higher degree is that the last thing they want to do is settle for a lesser job, so you end up with a great deal of new social issues from a generation sold a false bill of goods but are as of yet unwilling to admit that reality.

As for me? I have significant student loan debt as well. I will continue to pay my debt, and I won’t actively stand out and picket to have my own debt waived (I have other issues that are more pressing, personally) But in my mind, these students have the higher ground in this debate, particularly considering the industrial bailouts we have seen over the last few decades given to people who were never truly in need (airlines, the banks, the car companies, etc.).

If the debt is ever waived, we will all be better off for it. And I will gladly accept jubilee and not feel one ounce of remorse for being coerced into this system of manufactured privilege.

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First Steps To Fixing The Student Loan Crisis By Cutting University Costs

Fundamental reworking of university boards of trustees from appointee-governed to user-governed systems.

Simple, accessible database of administrator compensation at all institutions of higher learning receiving public monies.

Public forums and user-governed committees overseeing hiring and compensation packages for non-departmental administrators.

Simple, accessible database of university contracts.

Public forums and user-governed committees overseeing university contract negotiations.

Reorienting university sports programs to serve as revenue generators for academics.

Convert university dorms and family housing to cooperatively-owned residential property.

Cross-posted at http://taylorkeith.tumblr.com/post/13738136643/the-student-loan-debt-system.