Graduates drowning in debt - the Seattle Times articles

<p>The amount of digital classroom lectures available for free on the web is pretty amazing. Not as much as I'd like and quality varies widely but I'm particularly amazed at the good stuff that it is out there. Put it together with a textbook from the library, open courseware quizzes and exams and you have a lot of learning available for the self-motivated.</p>

<p>I currently have about 200 GB of course materials downloaded from the web that I use myself and also use with our kids. I don't see why a university couldn't run a course using digital lectures, and a professor for questions and grading. I know of a professor that ran an online course for about 180 students during the summer. It was a high-quality course and I think that it was possible to teach so many students because of the advantages of the online format and materials.</p>

<p>I haven't seen colleges and universities use the online format to reduce costs though. My guess is that online courses are priced the same as in-person classes and that they may just provide a higher profit margin.</p>

<p>There are many students around the world that do make good use of the online resources at US universities. They have far fewer resource than parents and students over here and take advantage of whatever they can find. My indian coworker talks about the students back home that use the MIT Open CourseWare materials to learn ahead of what they have available in their schools.</p>

<p>So I think that the digital age can greatly improve learning and decrease costs. But it isn't being used in that way.</p>

<p>"Hindsight is 20-20.... but for every disaster story you tell about the rapacious lenders, there are dozens of happy, educated, and successful citizens out there grateful for their loans. I am one of them. I could have worked my way through grad school and taken god knows how many years to get my degree-- but I didn't, and it worked out fine."</p>

<p>One can get a lesson on rapacious lenders weekly at Saturday Night Live. I don't run into too many people defending lenders these days. Things may work out on loans if there's inflation. But if we do run into deflation, then those with loans will get killed.</p>

<p>Very nice sentiment, Jolynne. I will remind my kids and DH of that fact to encourage every one to feel better about the market!</p>

<p>And there are millions who cannot pay these loans due to enhancements, hidden fees and the removal of basic consumer rights applicable to other loan paradigms. And with the potential of deflation or other economic troubles those happy people who are currently paying these loans may not be able to do so. What then, massive foreclosures on peoples educations? </p>

<p>Solutions OK. </p>

<p>Restore the consumer protections which were written away as a result of sweetheart regulations benefiting a select and limited group of financiers. If need be take even the minimal approach that was recently advocated in Canada of allowing those with loans older than 9 years to renegotiate their loans (and other companies should be allowed to compete for this potential business which heretofore has been limited to a select few) Activities for collections by these companies which have violated general FTC guidelines need to be corrected. In order to do this FTC guidelines applicable to virtually all other forms of credit/collections would need to be restored onto student loans. If their collection activities have resulted in suicides, nervous breakdowns and related problems (and they have) company officials should be held liable for harassment, and if found guilty both criminal and civil penalties should be applied. </p>

<p>Loan reduction or forgiveness programs should be extended in a meaningful manner. Especially for those in community service professions such as education and medicine. For others loan forgiveness could be premised on other forms of public service. </p>

<p>Another possible solution would be to finally, put a cap on the fee enhancements and collections tricks which have benefited no one but these select companies. For example the 220% fee increases since 2001 applied by several of the largest companies. Investigations into these tactics would be appropriate, and if improprieties are found (and they will be) monies collected by such means would have to be refunded to both the government and student borrowers. And if other salient statutes have been violated both civil and criminal action should be taken. </p>

<p>And the massive over billings of the government by these select corporations will need, finally, to be stopped. We are not talking pocket change here-one over billing by just one company was over 500 million-which would have paid the first two years of tuition for every student in a state the size of Colorado. And recent exposes by sources including the "Chronicle" indicate that over billings of 1.2+ billion and more have been committed. Monies collected fraudulently will be fully paid back to the government and either used for properly funding students or for debt relief for those already adversely affected by this situation. If the aforementioned over billings can be established to have resulted from conspiracy or collusion between corporate agents and agents within the US government then RICO should be applied. And if convictions are resultant the parties involved should be subject to both criminal action and civil forfeiture. </p>

<p>The appointment of company shills into the policy making sections of the USDOE needs to be stopped. And those appointed who are found to have conflicts of interest need to be dismissed. </p>

<p>Further investigations into collusion between College officials and corporate lenders needs to be expanded. Just in my little circle I can name two institutions which are involved in questionable and unethical associations with these companies. Those found in violation of institutional ethics policies need to be dismissed after appropriate review. And if investigations reveal that state laws or federal statutes have been violated, both civil and criminal actions need to be considered. </p>

<p>Governmental funding for these companies needs to be curtailed. First because it obviously does no good as indicated by the massive inflow of funds earlier this year 'to ensure liquidity'. Second because accountability for these funds has been at best appalling.
US policy could be applied to taking those funds into direct student aid such as grants. </p>

<p>Any school receiving federal aid should be under more strict requirements for what is done with these funds. Any activity which does not benefit academic operations (either classroom or research) would not be funded by the federal government. Colleges would be required to specifically report on average expected time to attain given degrees and have good rationales if these are not met. Additionally college costs should be linked to an overall cost of living index and should costs grossly exceed those ratios colleges would have to make public reports as to the causes. </p>

<p>Of course none of these suggestions will ever happen as too much influence is being exerted in closed rooms. And many of these suggestions have already been voiced by experts who have credible credentials. But of course they don't sit in the closed rooms with the lobbyists making 'policy'. And too often those inside educational policy bodies or bodies overseeing the student loan industry...who have brought these problems into the light and suggested solutions have been driven from their postings or even forced to retire...look back at what generally happens to USDOE officials who do speak about these matters.</p>

<p>The other factor which is negating any attempts to resolve this issue is because we (as a nation) have created an economic monster. And all it needs do to stop reform is to utter how much of the economy it currently effects or controls...but since this same monster is massively over leveraged and is now demanding a potential bailout of some 600 billion...it would seem its fall will happen anyway. Perhaps better to take reform action, and soften that fall rather than continuing to pretend that saving a toxic system is somehow beneficial.</p>

<p>Incidentally BC Eagle,
The digital classes are often no cheaper than the traditional lecture format-at some schools these cost even more due to fee enhancements for access and etc. Although in certain cases these do not even have an on site instructor.
Many profs are reluctant to use this format for several reasons. One is that they worry the colleges will take their intellectual property and redistribute it without their presence or consent. Another is a justified concern that a digitally based class paradigm would soon be reduced to a canned curriculum sold by the textbook companies. (which has already happened in some cases). And some are reluctant to do these courses because of unfamiliarity with the technology, a truly felt belief that they can serve students better by more traditional means, or because their colleges have set up digital systems which simply do not work. </p>

<p>However what you are doing with downloading courses and having these available for your kids is exactly what Burke was advocating so long ago. So some light is shining throughout this somewhat depressing discourse...</p>

<p>How about those many folks that borrowed for college and never graduated? Shouldn't educational institutions refund their money? Seems only right to me. I'll bet most of these schools took their money knowing that the kids chances of graduation were slim. Didn't bother their consciences one whit. More money for them.</p>

<p>Danas you have brought out quite a dilemma. </p>

<p>In academe (especially state schools) it is all about numbers. As such faculty who'd do what could be the ethical action and advise certain students to find other career paths could find themselves also finding other career paths. </p>

<p>And yes it is quite common for schools (and not just diploma mills) to take students knowing that some are simply not suited to collegiate studies. The problem is, to do otherwise would be assumed to be anti-egalitarian. And many would consider attendance at college as a right, not necessarily a earned status. </p>

<p>And of course there are a thousand rationales colleges could offer to avoid any potential form of refund. One common rationalization is the 'life long learner' cliche so bandied about academia. At its best this implies a student will be encouraged to remain inquisitive and learned. At its worse it is an evasion insofar as it can be used to rationalize away any pragmatic applications for a given degree. Humanities are particularly prone to use this tack because too often many of these programs are so diffuse as to be virtually worthless. </p>

<p>Perhaps a better alternative would be to do as other countries have done. Tuition is nominal or even free, but one must establish that the capabilities to attend higher education are there before admission. For those who lack those particular tendencies, they can be directed into serious vocational technical programs. If they proved themselves there they could either remain in the trades, as respected craftsmen, or later be eligible for academic studies.</p>

<p>
[quote]
How about those many folks that borrowed for college and never graduated? Shouldn't educational institutions refund their money? Seems only right to me. I'll bet most of these schools took their money knowing that the kids chances of graduation were slim. Didn't bother their consciences one whit. More money for them.

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<p>????</p>

<p>Of course they shouldn't get their money back. You're paying for the courses each year, not the degree. You just get the degree if you successfully complete enough courses. If they couldn't cut it or decide they want to do something else, then they just need to cut their losses. </p>

<p>Imagine if you applied that philosophy elsewhere... </p>

<p>Whatever happened to people being held responsible for their own actions? This is part of the problem with the current crisis... people wanted to take some risk and when things didn't go well for them they want to throw their hands up and let someone else foot the bill for bailing them out.</p>

<p>What is happening in the market today is not what is drowning these students in debt. It is something that will affect students in the future. In fact, what may happen here is you may get fewer kids drowning in debt as lending is drying up. They are going to have to earn the money and save it for tuition instead of borrowing it the way things are going. Getting debt is a privilege.</p>

<p>
[quote]
One can get a lesson on rapacious lenders weekly at Saturday Night Live. I don't run into too many people defending lenders these days. Things may work out on loans if there's inflation. But if we do run into deflation, then those with loans will get killed.

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<p>Agree. Here is a link to what investment-scenarios for inflation vs deflation</p>

<p>Investment</a> Scenarios: Inflation vs Deflation ~ market folly</p>

<p>
[quote]
- Short Leverage: Regardless of environment, deleveraging should be a big theme playing out in the future. Short any companies that have anything to do with leverage. In deflation, leverage begins to unwind and as such currency plays can be found.
..............
- Avoid debt and raise cash

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<p>"Whatever happened to people being held responsible for their own actions? This is part of the problem with the current crisis... people wanted to take some risk and when things didn't go well for them they want to throw their hands up and let someone else foot the bill for bailing them out" </p>

<p>Rocketman08, The dilemma is of course ethical. The corporate education lenders have floated a proposal of some 600 billion for a bailout in addition to the earlier cash inflow for 'liquidity'.
The concern there is that the social and economic effect of their bailout will be considerably more than the aggregate effect of individuals having problems with these loans. </p>

<p>In part because these same companies have massively over leveraged into even more risky areas of the credit industry, including high risk credit cards and refinancing of home mortgages. </p>

<p>So at what point, if ever will the CEO's of these companies be held responsible for their actions? Massive bailouts using the commons money do not bode well for any indication they will ever show any responsibility. </p>

<p>And other corporate entities and CEO's can behave with some sense of consequences and social responsibility, Bill Gates would be a good example.</p>

<p>"They are going to have to earn the money and save it for tuition instead of borrowing it the way things are going. Getting debt is a privilege."</p>

<p>I think that's a good thing. People will borrow from relatives and friends so that the loan is more personal and local and there will be more community connections. Universities will have to lower prices or go out of business as the price-point shifts aided by demographics.</p>

<p>Maybe we'll even spend more on public schools so that they'll do a better job so that a college degree will not be as much of a requirement.</p>

<p>In the current investing environment, deflation vs inflation is the question. In the past, we let nature take its course which meant deflation and so you made investments accordingly. Today, we have the tools of hyperinflation and so there could be two polar results. Investing in such an environment is dangerous as in one case you win and in the other case you lose. The US Central bank generally sides with inflation. But it's a tossup right now. Deflation is winning out as the market is acting far faster than government intervention.</p>

<p>Atana, I have cousins in several European countries, each of whom would happily give up their free or nominal tuition for the US higher educational system. The European system is fantastic for children of the elite and the educated. It is a disaster for the children of tradesmen, small business owners, and all the other folks you seem so worried about.</p>

<p>If you have a bright, highly motivated kid who for whatever reason doesn't do well (enough) on a test adminstered on a sunny day in June when that kid is 12 years old... well bye-bye academic track. Your child could write like Faulkner or Jane Austen and be shoved into an auto repair track or hair styling program. I have a cousin decorating wedding cakes for a small commercial bakery who would have been in an engineering program at a top school in the US. (strong math skills, exceptional spatial relations and creativity, bombed the test so that's that. ) No do-overs in this country, especially if your parents aren't wealthy or influential (she'd have been the first to attend university but that's moot).</p>

<p>So that's your solution to predatory lending? We don't allow kids who are not Princeton material (or Princeton legacies) to attend college at all-- even if they risk flunking out? We drive out the first generation by sucking dry our educational system which is still the envy of the world?</p>

<p>Do you actually know any successful people out there who are paying off their loans? There are people all over America going into ridiculous debt for cars that depreciate as you drive them off the lot.... and you would deny them the opportunity to go into debt to accumulate human capital??? I know dozens of kids working in entry level jobs who have started paying off their loans. It means no ski trips over President's weekend and no week at Cancun over Xmas.... but kids who learn to make a budget, show up for work on time, have a couple of roommates, and take public transportation instead of making car payments can live a decent life even in DC, NY or Boston while making their payments every month.</p>

<p>Atana, I have cousins in several European countries, each of whom would happily give up their free or nominal tuition for the US higher educational system. The European system is fantastic for children of the elite and the educated. It is a disaster for the children of tradesmen, small business owners, and all the other folks you seem so worried about</p>

<p>Perhaps but the US system is a disaster for members of the working classes. Yes they can go to college, but and this cannot be emphasized strongly enough...the proportionate debt loads for the professions for which they train cannot be sustained for much longer. All we have is a hidden form of elitism which is premised upon economic exploitation. Especially insofar as the students of the working class cannot afford to hire attorneys to protect the few rights they still possess under the sweet heart regulations promulgated by the education lending cabal. </p>

<p>What we well see this winter will be a spate of suicides not dissimilar from what has already begun regarding the mortgage industry. And will the consequences of that be any more ethical than the European system? The only reason I began posting on this issue was the unfortunate amount of times I've had to talk students, colleagues, and associates away from the brink because of undue pressures from this 'industry'. They can apply pressures, given to them by our representatives, that even the police could not exert without being subject to charges. </p>

<p>Or is the simple fact that for this generation the proportionate debt for education will mean many will never own homes, invest in businesses or maintain a standard of living much better than a postmodern sharecropper.... "but kids who learn to make a budget, show up for work on time, have a couple of roommates, and take public transportation instead of making car payments can live a decent life even in DC, NY or Boston while making their payments every month." And if you extend the situation you allude to for a decade or more-exactly who benefits? Or is it O.K. as an accessory consequence to have massive profits for a non productive industry be a seminal aspect behind the failures of our general consumer economy? Goodbye Ford and GM welcome to the Empire of NNC and SMC. </p>

<p>Solutions...made that very clear on a preceding post so no need to repeat them. </p>

<p>"Do you actually know any successful people out there who are paying off their loans?"</p>

<p>And yes I do know people who are paying these off despite the excessive fees and oft abusive conduct of the lenders-including myself. At the same point the money they've spent to avoid being harassed by the edudebt people would have been better applied to the consumer economy, or to entrepreneurship. Listening to such as Dr. Warren the massive transference of wealth from the middle class to the debt economy (and those who promoted it) is one of the preeminent reasons for the loss of status for the American middle classes.</p>