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Going to College? Watch Out for Bush's Bandits
A scandal over privatization of student loans has all the hallmarks of this administration's worst habits
For those of us here with children of 17 or so, it's angst time: where does he or she go to college, and will they get a place?
More than a year before high school graduation, the first scouting visits have started to possible campuses, and the first serious worries surface about the Scholastic Aptitude Test. This is the dreaded SAT, the US equivalent of A-levels, whose points score is the basic determinant of whether you get in.
At the best of times, the passage from high school to college (what we call university) is one of the great transitions of life here - the point at which the coddled American childhood gives way to the competitive rigors of the real world. Maybe our schools are tougher, or our universities less demanding. But somehow in Britain it's just not as big a deal.
And that's only the start of it. Every day you read a scary article about a tidal wave of baby boomers' children heading for college. Will there be room for your own? Then there are those figures showing that any halfway decent college receives many times more applications than it has places: not wholly surprising, given that most students apply to three, four or five colleges.
It is all a pretty stressful business - and the last thing a student needs is the current grubby scandal involving student loans. If you do win a place, will you be tricked into paying over the odds for a loan to pay for it? Britain was in uproar when the Government raised tuition fees to up to £3,000, but college in the US is vastly more expensive. State universities are fairly cheap, with tuition around $10,000 (£5,000). But private colleges are another matter.
Tuition, board and lodging at Harvard will set you back $44,000 a year -$176,000 for a standard four-year course. Even a modest liberal arts college can cost over $30,000 annually. Not surprisingly, fewer children from poorer families are going to college, despite the array of scholarships and grants offered by most colleges. No less surprising, some two-thirds of students graduate with debts averaging $20,000.
Few would dispute the justice of repayable loans for college students. A bachelor's degree can mean $1m more lifetime earnings than a high school diploma. A 10-year or 15-year loan with subsidized interest rates is not an excessive burden. But the process should be as transparent, as honest and as good value as possible for the taxpayer who ultimately subsidizes the entire exercise.
This is a quintessentially Bush administration scandal, of revolving doors, jobs for the boys and rampant corporate welfare, all obscured by a torrent of Republican rhetoric about choice, competition and the universal superiority of the market.
What's happened is that the federal government has cut back on its direct student-loan program, and contracted much of the business to private companies. As might be predicted, these charge slightly more to students - even though the loans are guaranteed by the government - giving the firms, in effect, a license to print money.
In a way, the US student loan system resembles the over-layered health-care system here. Just as America rejects the single-payer health system embraced by other advanced countries, in the name of choice and a fictional "efficiency", so it privatizes student loans. But like the health insurers, the private lenders are in business to make a profit.
And as these middlemen prosper, college education costs grow faster than any other sector of the family budget (with the exception, of course, of health care). Thus inflation-adjusted student debt is up 60 per cent in a decade, and the US student loan business is now worth $85 billion. That kind of money makes people greedy.
In the past few months a host of grubby practices has come to light, largely thanks to the aggressive campaign of Andrew Cuomo, the New York state attorney general. Private lending companies have offered colleges and their officials perks and cash gifts in return for being granted "preferred lender" status. Government scrutiny has been minimal, as the revolving door spins and Education Department officials supposed to keep an eye on proceedings move to lucrative jobs with the loan companies.
For students, relief may be at hand. The Democrat-controlled Congress stirred itself last week to invite Mr Cuomo to deliver a blistering testimony on Capitol Hill. Some lenders and colleges have been named and shamed; the worst offenders may face prosecution. And, just maybe, going to college will be a marginally less stressful business.
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11 Comments so far
Show AllAs long as the goal is profit, these terrorists will continue to terrorize.
"What's happened is that the federal government has cut back on its direct student-loan program, and contracted much of the business to private companies. As might be predicted, these charge slightly more to students - even though the loans are guaranteed by the government - giving the firms, in effect, a license to print money."
Indeed, Mr. Cornwell! As Richard C. Cook, who spent 21 years at the U.S. Treasury has stated: "...our Constitution gave Congress authority over our monetary system. This authority had been compromised through the system of state-chartered banks before the Civil War; but with the National
Banking Acts of 1863-4 and the Federal Reserve Act of 1913, Congress largely ceded its powers over money to the "private" banking industry."
You can read the entire article at: http://www.globalresearch.ca/index.php?context=viewArticle&code=COO20070426&articleId=5494
It is well worth taking the time to read if you are concerned with the steady decline of this country for the middle class.
"Few would dispute the justice of repayable loans for college students. A bachelor's degree can mean $1m more lifetime earnings than a high school diploma."
I do dispute the "justice" of that! It is a burden to pay for what should be a free public resource, especially in today's world when the country is actually flooded with new graduates who aren't going to get good jobs or make any more than the other person stuck in retail jobs.
It would seem that the subjects of Ethics and Morality are not taught at the schools attended by the lice that now infest the head of our Government. Maybe a Community College is a better deal.
Not entirely sure where this British report got the stats, but college is much more expensive than he says. A single year at one of Ohio's state colleges is around $20,000, including tuition, room and board. And I dn't think academic angst is the major culprit for college jitters, is the immense amount of money that each student and family pays and risks. The constant threat of being ripped off by some fine print loophole and not being able to afford to take the right first step is what's got me worried. Apparently, Brits don't know the extent of how badly American capitalism effects people, financially or emotionally.
The real scandal is the loss of state and federal funding of higher education, making it unaffordable. In the late 1970's, a year at Virginia Tech for a atate resident - tuition, fees, room and board was $2100. I never had to take a loan, I easily covered it with savings from jobs. You saw a lot more working/farming class and african americans on campus (albeit still much less than their nearly 20% share of the state population) in those days.
But visit any State U. now and you will now find a distinctly affluent student population. This is the real tragedy.
And, sorry to say, but a whole lot of bachelor's degrees don't count for much in the career ladder anymore.
Aside from probably medicine, and possibly law, it is indeed worrisome. The teaching professions don't really afford much of a middle-class existence any more, given exorbitant cost of real estate relative to depressed teacher salaries. I'd have said that engineering is a safe bet, but the US is on the decline/off-shoring route there. Too many of our institutions are run by political hacks or landed gentry without much in the way of creativity either. It's run amok globalization. Get a degree in Computer Science while big companies like IBM are off-shoring left and right?
I'm the first person in my family to have attended and graduated from college -- and I may be the last also. Can't say I'd necessarily recommend it to my children, even if we could afford it. Unless we move to Europe or something...
Few would dispute the justice of repayable loans for college students. A bachelor's degree can mean $1m more lifetime earnings than a high school diploma.
Pure poppycock! If one took the trade school route (called an apprenticeship in the US) they would be paid for every minute over an 8 hour day or 40 hour week they worked. While those of us who went the college route get indentured servitude to the man who expects no less than 10 hour days 5 or 6 days a week. Then they say we get paid too much and want to ship our jobs overseas to make more money this quarter.
A million more over a lifetime? Who is Rupert kidding? Maybe he's right, if he is comparing value added intellectual labor (non-money changers) vs. non-skilled sales associate labor, but this is just not so for technical trades or law enforcement vs. teachers (who are degreed and ripped off). And the recent student loan scam is just another way the rich syphon off of the middle class. Yes, the rich want their deposit back and are taking it back every day through the ignorance, apathy and inattention of most Americans.
Surely the writer must be speaking of those investment bankers and money changers who take a cut off of every financial transaction, but don't add any real value to the conversion of resources to goods. Those people make obscene payroll checks every 2 weeks or twice a month. Making money off of money is parasitic, yet those are the only jobs where one can make $1M more over a lifetime than a any non-college route.
There, I said it.
I do dispute the "justice" of that! It is a burden to pay for what should be a free public resource, especially in today's world when the country is actually flooded with new graduates who aren't going to get good jobs or make any more than the other person stuck in retail jobs.
Now isn't that a mouthful!
Perhaps if the greed of the administrative staff as well as the faculty members of colleges in general were to be brought to heed towards a more logical and deserving wage, the cost of a college education would not be so high in the first place.
There is no reason what so ever that a college professor should make the kind of wages they do and most certainly that is true of administration wages as well. If these costs went towards a more realistic level, the costs of a college education would align more towards a possibility. Predatory lending is without a doubt a problem and an age old one at that. It should be addressed in a manner that is objective and without any question of favoritism. But college costs money only because faculty and administrative costs are completly out of control. That's just a fact. Money for this should not be picked from the pockets of taxpayer's pockets. The cost should be the responsibility of the student to pay it back.
No free rides.
I'm 17 so I'll be going to college soon. I realize that I will have to take out a loan for it. I also realize the advantages of privatization. If there were no governemnt run schools then the prices would be lower. I know that is a difficult concept for most people but think about it. The school will be run as a business; because of this the quality will improve and the cost will decrease. The reasoning is that colleges will have to compete for price and quality. The way that the system is now does not work. Once again, I realize that I will have to take out a loan. I'm fine with that. It is not up to the tax payers or the government to pay for me, it is up to me.