Schooling

Students Borrow More Than Ever for College by Anne Marie Chaker

"The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

The ripple effects for today's heavily indebted young people are becoming palpable. A growing body of research suggests that tough loan payments are affecting major life decisions by recent graduates, forcing them to put off traditional milestones—from buying a first home to even marriage and having children.

Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts."

I love how myopic Unitedstatesians blather on and on about non-issues, and avoid the solutions staring them in the face. For instance, ever considered why civilized countries don't have a problem with their young people being saddled with unconscionable amounts of debt for their irresponsible decision to get an education? Think about that one.

Moving on, while many reactionaries' brains flirt with exploding under the unfamiliar strain of original thought, the solution for now is to restore bankruptcy protections to student loans. This will make irresponsible lenders (who like their friends in the subprime mortgage industry sold their dud loans to be packaged into securities and sold to old people's pension funds) learn an important lesson about personal responsibility.

Meanwhile, the borrowers themselves will be chastened with the stigma of bankruptcy and bad credit for years to come - just like any small business owner would be if s/he borrowed money to finance a business expansion that turned sour.

Student debtors need to unite to lobby the government, just like their creditors have done with such amazing success, with Democrats and Republicans alike. Join Student Loan Justice or a similar organization, and let's bring this country's education policy one step away from the edge of total disaster.

PAUL TURKE REPLIED: "[R]eactionaries' brains flirt with exploding under unfamiliar strain of original thought . . ." Witty and nice prose. You should write a novel and pay back your own loans. As for original thoughts, don't be too haughty. The self-righteous whining and begging of intellectually pudgy academics hardly counts as such.

JOSEPHUS P. FRANKS: Shall I provide the address to which to send the advance check?

OMG, OMG, you just used an ad hominem attack!

I may be pudgy, but not intellectually so. Want to discuss the actual solution here, that is, adopting a system similar to those that keep students in civilized countries out of unpayable levels of debt?

RICK STAVELY REPLIED: Blah, blah, blah. Sell the book and the PAC to someone that agrees with you.

Where on the web site is the answer to "Who pays for it when the borrowers don't?" Can I skip paying my taxes and get that forgiven too?

JOSEPHUS P. FRANKS: (laughs) This is more entertaining than I thought it would be. Silly Rick, I don't want to pay for these loans through my taxes any more than I want to pay for them with my paycheck. I don't want you to pay them either. I want the investors in the private loan companies to pay through the loss of their foolish investment. Just like the fools who invested in Countrywide or Enron, I want Sallie Mae's investors to reap the fruit of their thoughtless decision.

Which is precisely what would happen if standard bankruptcy protections were returned to student loans (they were removed by Clinton in '98). The lenders who lent people $60k a year to attend NYU, Brown and the like would get a well-deserved dose of market discipline - as would the borrowers who would be forced into bankruptcy.

This is hardly a liberal/conservative issue. The two poles of this discussion are the rational on one end, and the uninformed on the other.

TOM HELLER REPLIED: "Can I skip paying my taxes and get that forgiven too?"

No, but you CAN declare bankruptcy.

Don't underestimate Josephus' intellectual firepower, Rick.

RICK STAVELY REPLIED: I see. What about the direct student loans the government wrote, or the federal guarantees attached to the student loans written by the banks? How do we deal with those?

JOSEPHUS P. FRANKS: I'd like to renege on the guarantees; because this system was so stupid to begin with I'd want to jettison it as quickly as possible. But our courts wouldn't like that idea too much.

Federal loans tend to be less problematic for borrowers due to the greater deferment/forbearance options, but for many these palliatives just don't work: the underlying problem is that it is pure insanity to saddle college graduates with tens of thousands of dollars in debt. We need to begin immediately a transition to a European higher education funding model. If you are smart enough, you can go to college, and taxpayers will foot the bill. (And happily - I want to live in a country with well-educated people, not so much in a country with lots of subsidized corn producers or military contractor-gougers.) Costs are kept down because the "buyer" in this transaction has all the power in the world. And if the citizenry dislikes how the "buyer" is acting, e.g., being too cheap or too profligate, the citizenry can elect a buyer more to its liking.

And for people who can't test into colleges, but really want to go - let them turn to the private sector for an education and funding. But caveat emptor will be in full effect.

RICK STAVELY REPLIED: O.K., I'll play along, but I have a few more questions:

(1) How exactly does that arragement solve the problems of people like those in this article, given that we agree the federal guarantees can't be ignored? Either the students or the taxpayers must deal with those existing balances, don't they?

(2) Given that we are in the U.S., not Europe or starting with a blank sheet of paper, how do you sell this program to all the parents with kids that are less than stellar students, but who must pay taxes to support state universities and "smarter kids" going to school, particularly those at the lower end of the income spectrum that will inevitably end up financing a "rich kid" going to college at no cost? (I see we agree that going to college is a privilege, not a right.)

(3) How will this strategy fit within the framework of affirmative action and other rules designed to base opportunities on the color of one's skin, age and / or gender rather than purely on ability and potential?

JOSEPHUS P. FRANKS: 1) First the mess must be cleaned up. Borrowers facing undue financial strain from their student loans should renegotiate their debt with their lenders, and be given some federal muscle to sway the banks. (The federal muscle needs to be present to avoid the same problems we've seen with mortgage renegotiation, where recalcitrant banks refuse to work with homeowners to reduce principal, interest and term to make the loan sustainable.) Taxpayers will have to foot some of the bill, but - excluding immigrants for whom this would be a real travesty - they comprised the citizenry that sat by and watched as our higher education system span out of control. So I have little pity for them. (I'd say "us", but I'm young. And have paid attention to this death spiral.)

2) Part and parcel of the European system is progressive taxation, and our adoption of a similar system should - must -retain this. So poor families will pay very little to educate rich kids, while rich families will pay proportionately much more to educate their and others' kids.
By the way, I think going to college is neither privilege (in the sense that word is normally used) nor right. It is something that can be (is possible to be) made available to everyone within our society, if we choose to make that a priority, and take collective action to see it through. I, personally, would want to see that happen, as education is a public good with wonderful, positive and multiplying externalities. But we'd probably have to cut back a bit on our $1 trillion a year military budget, and then we might be invaded and occupied by a Mexican-Cuban-Honduran alliance.

3) Affirmative action on the basis of "race" - I'm unaware of age or gender-based AA - is an attempt to make up for what are largely class disparities. Since "race" correlates pretty closely with class, it is used as a stand-in. But the college level is the wrong time to apply AA, except as a temporary expedient - where "affirmative action" is needed is at the level of wealth disparities that from birth underdevelop young minds.

CINDY FORD REPLIED: EU and UK Uni's are in trouble, they have been ratcheting up the student's portion of payment significantly in the last few years. Lots of backlash and lots of focus on what the students are actually paying for (ie what does the uni have to offer, esp considering the UK system where you teach yourself everything, talk to Prof 1x a month, and then sit for a big test).

JOSEPHUS P. FRANKS: Cindy, true they are in trouble by their own standards - but nothing compared to the tsunami hitting the U.S. The ratcheting up of tuition you mention is correct, but is caused by the triumph of neoliberal ideology in Europe. Given its spectacular failure, as implemented in the global economy over the past few decades, neoliberalism should be on its way out. Like Milton Friedman said, it takes a crisis to hit, and then we pull another economic ideology off the shelf of available ideas...

I'm not familiar with this criticism of the British system - I have friends whose experiences with it led them to think it's brilliant - but for every anecdotal criticism of the British system, I could give you two or three of the US system. I'd only be interested in aggregate data where system-wide comparisons are concerned.

TOM HELLER REPLIED: 2 thumbs up

RICK STAVELY REPLIED: But I would have to declare every year, wouldn't I? How long do you think that could go on?

I stand corrected... we don't agree on much.

First off, despite your earlier post (and laughter), you are now saying you DO want me to pay for some of the debt held by existing students. We'll just have to agree to disagree on that point because I don't want to pay for them.

Secondly, despite socialist / democratic party claims otherwise, we do have a progressive income tax system in this country now, where the top 5% of taxpayers pay 60% of the taxes and 50% of the people pay virtually no income taxes. Despite this progressive system, I think you are unrealistic if you think it would be politically acceptable in this country for kids from families making $100K or more to get a free pass unless they clealry earned it with scholarships because they are among the top of the top performers.

You should run your AA theory by Rev. Al Sharpton. I can hear him now...

As for the proposition overall, I simply do not agree that higher education funding by taxpayers is necessary or desirable in any way.

TOM HELLER REPLIED: Rick -

As to "the math" of 3:1 ratios of out-of-state to in-state tuition, I'd venture you won't find any hard substantiation behind that ratio (and it certainly won't be found in state or university budgets.) That ratio likely just came to pass in one state ("let's only charge our kids/families one-third of 'the cost') and other states emulated it. Politics demanded some differentiation -- and that's been the story ever since.

Besides, if there were truly 'science' behind tuition levels, you'd see far more differentiation in tuition depending on one's chosen major, not a student's in-state status. With flat-rate 'one-size-fits-all' tuitions, the business, engineering and pre-professional programs are likely subsidized by the art history and sociology programs. Shouldn't tuition levels roughly equilibrate the "ROIs" (relative values) of these different courses of study? Wouldn't that happen in a real market?

PAUL TURKE REPLIED: OMG, OMG, you've asserted twice that my country is uncivilized, an ad hominem attack. That aside, I'd like to hear your solution. As many in this forum have already stated, college costs have risen dramatically because of easy access to government sponsored student loans. If you've been in academia, as I have, you'll know that the number one product of universities is an ever growing administration. Administrators and their assistants and assistant's assistants, and so on, ad infinitum, feed off the loans to students which are, in effect, a tax on the rest of us. But, on the other hand, there are worse ways to waste tax dollars. So how do you civilized people solve the problem? Please don't tell me you make education free by having government pay for it, because there is no such thing as free--at least not when the service or good being provided requires someone else to work hard. So, as I see it, this discussion is all about shifting the cost to others, and in spite of the many self-serving and self-righteous rationalizations that I've read, above, the fairest and most honest system I can think of is one in which people take responsibility for themselves. You are right, though, liberty (and libertarianism) is a bit uncivilized--and we like it that way!

JOSEPHUS P. FRANKS: Thanks Paul, for providing an example of why I wrote the "OMG-ad hominem" bit. Because for some reason, right wingers seem incapable of using the term correctly. No, a slight against a country would not qualify as an ad hominem attack, which is an attack against an individual's character or personal trait meant to distract from the discussion of issues at hand. For instance, if I were to call you an "intellectually pudgy academic" right now, that would be an ad hominem attack.

By an extremely restrictive definition, nothing is "free" - even air isn't free, because it's composition is the result of millions of years of planetary evolution during which trillions of organisms paid its cost. Certainly free will is an illusion if you use a very strict definition for free will. But in normal, everyday usage, we consider our police services or our public schools to be free. We believe it when we buy one pizza or bottle of vitamins and get another for "free". Now if you wanted to use a very strict definition of free, as "without any cost whatsoever in any form", then neither our police, public schools, and buy-one-get-one-free deals would properly be considered "free". Likewise, if we use the everyday definition of "free", health care that is paid for on the basis of progressive taxation would be considered "free health care".

And the bit about "shifting the cost to others", in the health care context particularly, is absurd. Health care is all about shifting cost to a large number of people in order to reduce the risk of a massive cost borne by any one person. But here, as I get the closest I'll come to an ad hominem attack, I despair of ever convincing you. If you consider yourself a "libertarian", then you are essentially a poorly-read anarchist. Like anarchists, you dislike large concentrations of power, but unlike anarchists, you lack the intellectual consistency to dislike large concentrations of power when they are not draped with the flag of some nation or other.

That being said, I too wonder why administrators breed like rabbits in the U.S. system. Do you know various European systems well enough to explain how they do a better job at avoiding this fate?