America's Student Loan Racket: Stiffer Debt Bondage Coming

Stephen Lendman

For growing numbers of American youths, higher education is increasingly out of reach. High tuition and fees make it unaffordable. So does a disturbing government/corporate partnership.

Millions of students need financial aid. They're exploited for profit. Providers are enriched. Higher education involves debt entrapment. 

Students graduate tens of thousands of dollars in debt. Some post-graduates face burdens up to $100,000. If unpaid after 30 years, it's multiples higher. If default or declare bankruptcy, it's unforgiven. Bondage is permanent until repaid. 

Loan providers thrive from defaults. Wages can be garnished. So can unemployment benefits, disability payments, tax refunds, as well as Social Security and other retirement benefits. 

A conspiratorial alliance of lenders, guarantors, servicers, and collection companies derive income from debt service and inflated collection fees. College marketing officers, state and federal legislators, and administration officials are complicit with them.

Principle, accrued interest, late payment and collection agency penalties create enormous burdens to repay. Private lenders are exempt from federal fair debt collection requirements. Federal loans have minimal safety net protection.

8 Reasons to Say NO to College

 

Bohemian Mom

You may already be wondering, “what parent in their right mind would not want their kids to go to college?” I half expect the Child Protective Services to beat down my door just for writing this. It was not that long ago that I myself would have shunned this article, and concluded that its author is an unfit parent.  But a measured look at the reasons why college may not be the best choice reveals another side of the story that most parents aren't usually exposed to.

I must state upfront that if our children desire a profession that requires college, of course we will encourage and support them to follow their dreams. However, they will definitely know the consequences versus the benefits.

First, let's examine the traditional path that was ingrained in all of us.

Do your homework. Get good grades. Go to a good college. Get a job. Work for 45-plus years to pay off all debts. Save for your kid's college and your retirement. Play by the rules. Success will be yours.

Sound familiar?
We've all heard this mantra from family, teachers, employers and the TV, as if it's the only path society provides for success. For many, as the economy worsens this myth gets echoed even more loudly. "We need more education to compete in a weaker job market," society says. But is it really true given the current economic situation?

I understand that for some people college will be a necessary step in pursuing their dreams. For instance, those who want to become certified doctors in the US must study at an American Medical Association approved university.

But first they should ask themselves "why" they want to be a doctor.

Is it to help people? To make a nice income? Is it for prestige among family and peers? Then, it may be wise to ponder if becoming a doctor is the best way to accomplish those goals. Certainly there must be other ways to help people, make good money, and gain respect from loved ones without accruing a quarter-million dollar debt before working life begins, right?

Either way, college may be necessary for some to achieve their dreams. But let’s be sure our children know that there are other paths, other innovative ways to attain their goals, and certainly other ways to spend 4-8 of the best years of their lives.

Here are eight reasons why college will not be encouraged in our household:

College is just not what it used to be
Wiki image

1. It is Obsolete
Why does a nursing student need four more years of English Lit or Algebra? Likewise, why would a business major have any need for Anatomy and Physiology? I know, I know, back to that whole college-is-teaching-kids-to-think argument. Or maybe the “well-rounded” school of thought? I don’t buy it. After 13 years of schooling prior to college, most subjects outside of a degree's focus seem to be a waste of time and money.

Additionally, the world is changing at lightening-fast speed, but the education system is still moving at a snail's pace. At the exponential rate of change in science and technology, by the time someone graduates from 4-6 years of college what they were forced to learn the first couple of years is most likely obsolete, requiring even more schooling.  What a racket!

What's more, with a smartphone and Internet, all of the world's knowledge is literally in the palm of our hand.  Incidentally, advanced knowledge is not confined to the brick-and-mortar walls of universities anymore.

2. Horrible Job Market
In this poor economic climate where America's job market has entered a prolonged drought, college graduates are no longer guaranteed a job.  In fact, only 53% of recent college graduates in the U.S. have full-time employment.  And even global youth unemployment has been labeled a "crisis".

According to the New York Times analysis of recent unemployment numbers:

Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is 'worth it' after all.

So, the myth that kids must attend college to get a job is proven false.  Kids today need more than the standard education to stand out in a crowded field of cookie-cutter graduates.

3. Prohibitive Cost
The cost of going to college versus the benefits make it a terrible investment.  Entrepreneur James Altucher breaks down the numbers quite accurately:

The average tuition cost is approximately $16,000 per year. Plus assume another $10,000 in living costs, books, etc. $26,000 in total for a complete cost of $104,000 in a 4 year period. Some people choose to go more expensive by going to a private college and some people choose to go a little cheaper by going public but this is an average. Also, a huge assumption is that its just for a 4 year period. According to the Department of Education, only 54% of undergraduates graduate within 6 years. So for the 46% that don’t graduate, or take 10 years to graduate, this is a horrible investment. But lets assume your children are in the brilliant first half who finish within six years (and hopefully within four). 

Is it worth it? First, let’s look at it completely from a monetary perspective. Over the course of a lifetime, according to CollegeBoard, a college graduate can be expected to earn $800,000 more than his counterpart that didn’t go to college. $800,000 is a big spread and it could potentially separate the haves from the have-nots. But who has and who doesn’t? 

If I took that $104,000 and I chose to invest it in a savings account that had interest income of 5% per year I’d end up with an extra $1.4 million dollars over a 50 year period. A full $600,000 more. That $600,000 is a lot of extra money an 18 year old could look forward to in her retirement. I also think the $800,000 quoted above is too high. Right now most motivated kids who have the interest and resources to go to college think it’s the only way to go if they want a good job. If those same kids decided to not go to college my guess is they would quickly close the gap on that $800,000 spread.

There is not much more to say.  It's is a bad investment for parents, and student loans seem financially irresponsible as a burden to place on our children before they start their professional life.

NPR/Getty image

4. Debt Serfdom
As the cost of living continues to outpace pay increases, it's difficult enough just to survive week to week, let alone get ahead financially.  When young people begin their adult lives saddled with hundreds of thousands of debt, it almost ensures that they will be locked into a lifetime of debt serfdom.  In other words, they'll be trapped into working whatever job they can find just to pay this obligation irregardless of their passions. Add on the pressure and manufactured prestige of "owning" a home, having a nice car, starting a family or dressing a certain way, and you have all the makings of wasting a life trying to pay for these things. I'm not sure this was part of the original American Dream, but, sadly, it is indisputably what it has become.  Surely, there are more fulfilling ways to spend our limited time on this planet than running on the same hamster wheel our entire lives.

5. Knowledge is Free
It's important to highlight the difference between school and knowledge. These things do not go hand in hand. Many people go to college and never achieve any useful knowledge, while many people who never attend school are some of the wisest and most successful people in the world.

In the 1700s, knowledge was limited to those with the resources to buy books, or those who could afford to send their kids to school (most stayed home to work the family trade).  Ben Franklin understood that in order to have a level playing field in society, everyone must have access to knowledge.  So he founded the first public library in America (which later became the University of Pennsylvania).  Now that the Internet acts as a global open-source library and is giving away knowledge, everyone has the ability to learn about what they're most interested in for free.

No need to waste money just to get a piece of paper saying you “officially have gained knowledge”. What is the goal; the piece of paper, or the actual knowledge?  If it is the knowledge, as I hope it should be, then college is not the most efficient way to reach that goal anymore.

6. Wasted Youth
To all those who said they had the time of their life in college, I ask, "Couldn't you get drunk and flirt with the opposite sex without college?" We likely had the time of our lives because we were young, healthy, carefree and it was the first time we were out of our parents' control.  College just happened to be the place where we lived this experience.  But it's a tall price to pay, since all of those factors don't change in the absence of college.

Furthermore, how many of you went to college purely out of obligation? My parents never gave me the option, even though, in retrospect, I wasn't mature enough to appreciate my overpriced education. So, I dropped (flunked) out. It wasn't until later in life when I knew what I wanted to be, that I began to appreciate school.  Then, I got straight A's in route to becoming a Registered Nurse.

In these most amazing years of life, transitioning from child to adult, imagine what could be experienced or achieved when you're not locked in a dorm out of obligation (See the countless alternatives to college in my final point).  Finally, college will always be there for your kids no matter when and if they decide to go.

7. Limited Life Choices
Many people that we meet say they're envious of our permanent travel lifestyle, but they feel too trapped by financial obligations to attempt an alternative lifestyle.  This is the result of the debt serfdom cycle explained earlier that begins with student loans. Because of the debts incurred while at college, and a host of other reasons, many young adults end up limiting their options in life. We are usually told the opposite, but once a student commits to a certain major they may feel obligated to only pursue that career even if it falls out of favor with them.  Most kids usually don't know what they want at 18 years old.

Life should be a collection of experiences, not a collection of shiny trinkets that mean nothing on our deathbeds.  If we seek a life outside of the proverbial box -- a life of travel, of passion, of adventure, of independence -- then societal pressures and college debt become a prison that locks us into a narrow range of experiences. Once we step out of the box and realize this, the floodgates of alternatives to the "normal" path open wide.

8. Countless Alternatives
This is the other side of the story that parents aren't supposed to see, or even contemplate for their kids.  First, it begins with wanting something for your child that's far more important than societal success -- happiness!  This can only be achieved if we allow our children to live their passions.  After all, this life is theirs for the making, and we view our job as a guide to help them follow their own path, not to dictate some societal fantasy.

Wiki image

Even our parents are still bitter that we gave up on the traditional definition of success to pursue an alternative lifestyle of homeschooling and extensive adventuring.  Our happiness seems to take a backseat in their mind compared to the anguish they feel about missing their grandkids, and our rejection of the dreams they had for us.  Although this has been somewhat painful, we're grateful to them for helping shape what we believe is important for our children.

So what alternatives are available instead of going to college?  First, they can take online courses through OpenCourseware or iTunes if they want to accrue college credits.  They can learn a skill by becoming an apprentice.  They can volunteer for a charity or even a big company to learn about how those organizations work.  They can travel by picking up odd jobs along the way (or obtaining ESL certificate to teach English abroad).  They can start a business, a nonprofit organization, or monetize a blog.  They can find a mentor or become a self-taught expert in whatever field that moves them.  They can create something beautiful; art, music, handmade crafts, write a book, or build something.  This list is endless, and they will gain great knowledge with each of these examples and more.

Finally, they can just get a part-time job and enjoy their carefree youth until they discover their passion. We must stop assuming that a "lack of direction" equals failure.  It doesn't; not if they're happy.  We get one go around in this life and it shouldn't be wasted doing something that others expect us to do.

At this point, our boys learn what interests them and is pertinent to their lives. We all learn better when we're inspired.  And we have great confidence in this approach to prepare them for life.  The universe has a funny way of giving people what they desire.  Sadly, most people are too busy complaining about their situation to even define what they want.

In conclusion, we teach our boys that they should do what they love. That happiness is far more important than any status symbol or paycheck, no matter what anyone thinks. No dream is too big to achieve. The college-job path is only one way to achieve certain goals among a host of other perhaps more rewarding experiences.

We'd love to hear your thoughts, questions, and criticisms.  Please leave comments below and we will answer them.

This article first appeared on Bohemian Travelers family travel blog.

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College is a waste of time

CNN Editor's note: Dale J. Stephens is a 19-year-old entrepreneur leading UnCollege, a social movement supporting self-directed higher education and building RadMatter, a platform to demonstrate talent. He is among the first recipients of the Thiel Fellowship, an initiative by venture capitalist and PayPal co-founder Peter Thiel that gives 20 entrepreneurs under 20 years old $100,000 to fund their projects.

UnCollege.org

Dale Stephens
CNN

I have been awarded a golden ticket to the heart of Silicon Valley: the Thiel Fellowship. The catch? For two years, I cannot be enrolled as a full-time student at an academic institution. For me, that's not an issue; I believe higher education is broken.

I left college two months ago because it rewards conformity rather than independence, competition rather than collaboration, regurgitation rather than learning and theory rather than application. Our creativity, innovation and curiosity are schooled out of us.

Failure is punished instead of seen as a learning opportunity. We think of college as a stepping-stone to success rather than a means to gain knowledge. College fails to empower us with the skills necessary to become productive members of today's global entrepreneurial economy.

College is expensive. The College Board Policy Center found that the cost of public university tuition is about 3.6 times higher today than it was 30 years ago, adjusted for inflation. In the book "Academically Adrift," sociology professors Richard Arum and Josipa Roksa say that 36% of college graduates showed no improvement in critical thinking, complex reasoning or writing after four years of college. Student loan debt in the United States, unforgivable in the case of bankruptcy, outpaced credit card debt in 2010 and will top $1 trillion in 2011.

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4 Reasons to Change the Way We View Education
A Journey to Unschooling

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The Next Bubble Is About to Burst: College Grads Face Dwindling Jobs and Mounting Loans

Today's graduates face miserable job prospects, and experts say the student loan crisis could be worse than the credit card or housing bubbles.

Sarah Jaffe
AlterNet

It's the beginning of summer: warmer weather, longer days, the end of the school year. And that means graduation for thousands of young people across the U.S.; graduation with more student debt than ever before, and into a job market that is anything but promising.

Young people between the ages of 16 and 24 face an unemployment rate nearly twice that of the rest of the population, according to data from the Economic Policy Institute. 2010's 18.4 percent rate for youth was the worst in the 60 years that economists have collected such data. ColorLines notes that in 2010, 8.4 percent of white college graduates were unemployed, 13.8 percent of Latino graduates, and a dismal 19 percent of black graduates.

College Conspiracy (full-length video)

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Bad Education: College Debt No Longer Economical

Wikimedia image

Malcolm Harris
N+1 Magazine

The Project On Student Debt estimates that the average college senior in 2009 graduated with $24,000 in outstanding loans. Last August, student loans surpassed credit cards as the nation’s single largest source of debt, edging ever closer to $1 trillion. Yet for all the moralizing about American consumer debt by both parties, no one dares call higher education a bad investment. The nearly axiomatic good of a university degree in American society has allowed a higher education bubble to expand to the point of bursting.

Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy,  then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants’ faith in the value of higher education has only increased, employers’ has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt.

Newly Graduated And Drowning In Six Figures Of Student Loan Debt

College Graduates Wikimedia Image

Amanda M. Fairbanks
Huffington Post

NEW YORK -- Hardly a day goes by where Ashley Angello doesn’t fret about her student loan debt.

Angello thinks about it at night, when packing tomorrow's lunch means a few saved dollars. And she worries about it the next morning when deciding what to wear to work, since she hasn’t been able to afford any new clothes since starting her job.

“I used to joke when I was in college that I’d be paying off these loans for the rest of my life,” says Angello, 22. She graduated nearly a year ago from Ithaca College, where she majored in communications. “Little did I realize that I actually will be.”

Angello is on the hook for about $120,000. With six-figures in debt, she has little choice but to save every little bit that trickles in. And still, it's a struggle.

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Agents Provocateurs Turn Tuition Protest Into Violent Melee

Kurt Nimmo
Infowars.com
November 11, 2010

Once again, dispatched agents provocateurs have turned a peaceful protest into a property-destroying circus sideshow.

“It was supposed to be a day of peaceful protest, with students exercising their democratic right to demonstrate against soaring university fees,” reports the Daily Mail. “But anarchists hijacked the event, setting off the most violent scenes of student unrest seen in Britain for decades. Militants from far-Left groups whipped up a mix of middle-class students and younger college and school pupils into a frenzy.”

Back in the day anarchists would have criticized the very idea of state-run universities and would have denounced the act of stealing money from one segment of society to pay the tuition of another. Now balaclava-clad anarchists are the vanguard of those resentful of the fact the free lunch is over and the state cannot afford to continue this educational boondoggle.

So called anarchists apparently no longer support the philosophy that the authority of the state has no place in conduct of human relations, including education. Anarchism today translates into mindless property destruction by dim-witted hooligans. It is used as justification by the state to attack “democratic” protesters and minimize their minor disagreements with the government and its institutions.

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Student tuition fee protests turn violent as Tory headquarters evacuated

The Telegraph
November 10, 2010

After initially being ejected from the lobby of Millbank by police and security staff, the protestors smashed their way in through windows.

Using sticks and chairs they destroyed CCTV cameras and broke windows from the inside of the office block. Employees had to be evacuated as masked youths rampaged through corridors and onto the roof.

Dozens of police officers stationed outside the entrance were overwhelmed as the crowd of thousands pelted them with rocks and bottles.

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Massive Protests in London: Coming to America Soon

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Why Did 17 Million Students Go to College?

Richard Vedder
Chronicle

Two sets of information were presented to me in the last 24 hours that have dramatically reinforced my feeling that diminishing returns have set in to investments in higher education, with increasing evidence suggesting that we are in one respect “overinvesting” in the field. First, following up on information provided by former student Douglas Himes at the Bureau of Labor Statistics (BLS), my sidekick Chris Matgouranis showed me the table reproduced below (And for more see this).

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

I have long been a proponent of Charles Murray’s thesis that an increasing number of people attending college do not have the cognitive abilities or other attributes usually necessary for success at higher levels of learning. As more and more try to attend colleges, either college degrees will be watered down (something already happening I suspect) or drop-out rates will rise.

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4 Reasons to Change the Way We View Education

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