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The College-Loan Scandal
Matt Taibbi writes in Rolling Stone about the economics behind college tuition. Interest rates get the headlines and the attention of politicians, but Taibbi says the real culprit is "appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008." He writes,
"For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts. ... Because the underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors. First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington. Next up is the government itself. While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young."
The more they try to make college "affordable" via loans, scholarships, etc. the more the colleges and universities will raise their prices until it is just barely affordable by all participants. They want to maximize their income -- as any business does. On the other hand, if we were to cut off student loans and scholarships you can bet that the prices would plummet and they'd stop building fancy buildings named after themselves. (Some universities have exercise areas that are reminiscent of spas and exclusive health resorts than a university.) It is amazing that our parents and grandparents were able to do things like send men to the moon without plush padded seating and nicely carpeted hallways at their universities. Even so, they could still afford to get an education.
The states have been cutting funding to higher education for years. Costs for running a university are only getting higher. Either the university cuts programs and services or raise tuition.
What year was this?
They have debt because tuition costs more than the jobs they can get pay. If you are paying $25k a year in tuition and are making 17k a year you will end up with debt.
State universities are being increasingly defunded by states who are facing budget difficulties. State universities are a nice to have for states but you can bet they'll try to defund them any chance they get. Worst of all states can dictate how much tuition state universities charge if they want state money and put a strangle hold on their staff and abilitiy to hire good professors and services for the university. The push has been towards privatization and eventual elimination of state schools thanks to state budget problems.
~~ Behold the flying cow with a rail gun! ~~
It was 2002 to 2007. And as a young white American male also with no family money, I worked multiple jobs and figured it out. No loans at all, no scholarships either until my senior year when I managed to land a research scholarship that required 15 hours/week of research with a professor. I missed out on a lot as a consequence, all those "college experiences" that others talked about like parties and such. It was the lifestyle I couldn't afford, not the tuition.
I think your suggestions are good, but I think it's wrong-headed to blame the students for 'not taking responsibility.
This is a systemic problem. We have a bunch of 18 year-olds with relatively little life experience, and we keep telling them that going to a good college will make them rich someday. We give them the impression that taking out massive amounts of student loan is a wise move. This message comes from parents and teachers and politicians and the media, and you can't blame a bunch of kids for believing it.
We need to take a good hard look at how we're treating education. Is college a place where kids can receive a good general education, or are they vocational schools? Are we promoting education for the good of our society, or do we think it's a privilege for rich people that should be denied to the poor because they haven't earned it? Is the purpose of college to educate our young adults, or to entertain them with frat parties and amateur minor-league sports teams?
Yes, it's all tax money. The difference is that, in Europe, taxes pay for public education, healthcare, infrastructure, and so on. In the US&A, taxes pay for a bloated military and a massive espionage apparatus.
Circumcision is child abuse.
Everyone here does seem quick to say "Oh just do an ROI calculation on college and don't take it for granted you should go" without recalling that for decades now we've pretty much shoved the idea that "if you don't go to college you're a complete shit and failure of a human being (what are you gonna do, flip burgers? Because people who flip burgers are subhuman shit after all)" down everyone's throats, and most people don't want to be thought of as complete shit.
To be fair, the minimum wage back then was the equivalent of about $9 an hour today. Plus you didn't have to have a degree to get a much higher-paying white-collar job, like you do now. In the early 70's my parents bought a house while working part-time office jobs and putting themselves through full-time gradute school and taking care of a small child. Try that trick now.
Wait...I forget. Which economic injustice were we complaining about here?
I did something similar: worked 30 hours a week, lived in cheap housing, took 6 years to graduate, but did so debt free. Having said that, I have mixed feelings about it. Yes I worked hard and sacrificed to make it work. I was lucky too though and had opportunities other people don't necessarily have:
1) I had a good quality state school I could attend.
2) My parents let me live at home until I could find a good/cheap housing solution.
3) My parents helped me out with classes my first year until I got established.
4) I had good jobs in high school and was able to build a savings.
5) I managed to get a civil service position at the University that provided me with some free credits every semester.
It seems to me that in today's world it may not be enough to be responsible and diligent. I'm not sure I could have done it had I not had the opportunities I had.
What state, and what was the tuition? Here in NYS (SUNY) 10 years ago the state paid 75% of the tuition and you paid 25%, now it's the other way around. My wife is looking at upgrading from her associate's to her bachelor's and it's $14k/yr for nursing.
At min wage of $7.25 (minus 6.2% FICA and 1.34% Medicare) you would have to work 2090 hours/year (40.2 hrs/wk w/ no vacation, holidays or sick time) just to pay the tuition. Then there are books, either a place to live or a way to get back and forth to school, etc. Working your way through school ain't what it used to be.
Completely true. I don't really care so much about the choice between "low taxes, few services" and "high taxes, many services", but what we have now is "moderate taxes, low services, giant military". That's far worse than the other two.