<p>The irony is that an outstanding education should not be or need not be contingent on a ascending level of debt. Granted in the United States that seems to be the norm, but there are countries who have been fortunate not to model their higher education on our system.
And for those whom a investment in their education did work out well, even with the necessity of borrowing, good. However there are an increasing number of people whose educational investment, by circumstances well beyond their control, has been incredibly detrimental. Eventually this will be a factor in the decline of American higher education whether that is at flagship schools or the lesser institutions. We are close to that point because the escalating costs of education combined with a rigged loan system have made it obvious under dispassionate analysis that is is indeed becoming disadvantageous to attend college. Yes, college graduates still do make more money over a lifetime. But an increasing number are subject to such debt loads by a rigged system that the old equation is close to being irrelevant. That unfortunate assessment is already beginning as many current students have increasing and expressed doubts as to the validity of their educations versus the costs. And alas so have many of us who teach those students.
And when we cross that polluted Rubicon this country will have little left of its once admirable higher education system than memories. The people who would have become its professors or researchers will apply their efforts in other arenas or even other countries. And the students, will have to do the same. It could be that as a result one of the drivers for American economic success will be lost, and the beneficiaries will be those countries which have not allowed financial predators to be the defining force behind higher learning. And after its all over its likely those who've used higher education as a source for orgasmic profits will never ask themselves my god what have we done?</p>
<p>"Yes, this is absolutely true, there are many ways to finance your education, but unfortunately there are not always many ways to finance the education that you are qualified for. "Good" u's do not always allow part-time enrollment, and even when they do, you will still need to pay the same COA, you are merely spreading it over a longer period and delaying your degree for several years. It is obviously a cost-benefit analysis for each student."</p>
<p>In the old days, many companies provided tuition reimbursement (maybe related to tax breaks) for courses so you could get one or more degrees for free. My company offers that now and one guy I used to work with got his MBA from Babson gratis.</p>
<p>The one huge advantage is that you get your degree paid for tax-free.</p>
<p>BC Eagle-Well the company for which you work made a logical decision as have other companies elsewhere and in the past. By making it possible for their employees to enhance their education without sinking into a financial mire the company benefits and the employee benefits.
And some of the Ivy's have for their own reasons began to adopt related policies.
And overseas there have been several major countries who have applied similar logic to their systems of higher education.
It's interesting that our supposed leadership seems incapable of realizing such benefits. Or of realizing how economically and socially destructive our current system of edudebt has become. Could it be they are still in a rapturous state provided by the edudebt industry? And if they are why do we as a society tolerate such leadership?</p>
<p>The transfer of wealth from Main Street to Wall Street over the past decade is something that I ponder from time to time. For those that don't know what that means, it's the transfer of wealth from the goods producing and service sectors to the financial engineering sector.</p>
<p>Many high-school students are attracted to the area because of their potential for outsized compensation. But I think that they don't stop to think where that compensation comes from.</p>
<p>Main Street, on the other side of the ledger, often doesn't know what hit it and why they don't get to enjoy the fruits of their labors.</p>
<p>I like to read Henry Liu from the Asian Times about US Credit Bubble issues and the impact on the rest of the world. He doesn't write about student loans but sometimes provides interesting insights on world finance.</p>
<p>And ironically part of the transfer to the non producing sector has as one of its sizable components the finance/education industry.
To the extent that it is currently undermining the training of those who would be the ones who operate the production means for much of the goods producing economy. The people who'd be training for the trades will be increasingly kept away from post secondary vocational training by the haunting specter of debt. And that population knows very much what the travails of unfair debt means as they lack the affluence to buy protection from abusive creditors.
And one of the more appalling accessory developments arising from the moral infection of education by the financiers has been questionable online schools targeting populations in economically marginalized areas. I have seen several of these 'colleges' applications and in no way do they note there are other financial aid options beyond loans. And indicative of the moral swamp attendant to this development many of these applications specifically refer students to two of the largest student loan companies in the country. If these corporations were indeed as they claim providing a service to students and higher education their willing association with institutions of these kinds is indicative of deceit in their noble sounding proclamations. And from these associations it obvious that they will have their undeserved and ultimately socially destructive profits, no matter who they take them from or what immoral partners they embrace to attain that malevolent end.</p>
<p>JustAMomOf4, I didn't mean UMass. By "state college" I meant the non-universities, like _____ State College. UMass is pretty much the same price at Wesleyan because of my financial situation, and the state colleges are only like $3K cheaper and are extremely poor in the realms of education (there are a few exceptions in some of the departments, but not in my field). I would have gone to UMass if it was actually cheaper. </p>
<p>BCEagle91, I didn't get into Commonwealth because my rank wasn't in the top 10% because I attended private school and there was massive grade deflation in the honors classes (non-honors students were ranked above me). They told me they used weighted GPAs and that my GPA was high enough, and an admissions person told me that I would be accepted, but it didn't happen. They told me if I transfered that I could be in the Commonwealth College when I called this year, but I wouldn't get any more aid that last year.</p>
<p>I may have a weird situation, but I don't think it is as uncommon as people think. Most people from my HS are planning on take $40K+ in loans, and most parents don't know enough to advise against it.</p>
<p>"Most people from my HS are planning on take $40K+ in loans, and most parents don't know enough to advise against it." </p>
<p>And that's very disturbing insofar as the costs of college and the presumed necessity of these loans is now considered normal. Our society has created the incredibly abnormal situation that those who have aspirations are forced to consider any toll for it. Including being potentially bound into an economic hell. </p>
<p>And some parents would not know enough to advise or warn their children because the PR for this questionable industry is very pervasive and by no means truthful. For example there are some who do not know that such companies like SMC or NNC or their compatriots are not literally government entities. And the reason for this incorrect perception lies in part in the mode in which these organizations present their information. It's very common for them to use their ties to government as an actual implication that they are indeed governmental entities. For example I have spoken to students who have thought that SMC was a direct government loan program and who did not know it was a corporation. And in Colorado some colleges distribute brochures which are for a supposed 'non profit' student loan/debt counseling service which has very direct ties to NNC. And despite the NYS AG investigations there are schools which even vet even their scholarship applications through these corporations.
Although these financial cabals may have bought much of congress, have had their shills appointed to the department of education and will often use the arm of state government as as enforcers...they are not as yet the actual government. At least yet they're not actually occupying the halls of congress, the white house and state governments although it does seem to be getting harder to tell who actually is in power in those august halls. Especially in regards to higher education financing and policy.
Overall the public trusts the government as it functions in education because of the long standing and often beneficial systems such as the schools. And as a result will tend to also trust the colleges and their presumed agents. Even if these are private colleges they do carry some of the aire of that condition. And that is one of the reasons that many parents are not making proper inquiries into the student loan situation, they often assume that these loans are something they are not. And the SL industry, certain elements of academia, and some within government itself certainly have no interest in removing that very advantageous (for them) and pervasive disinformation.
Unfortunately this misuse of information will have long term effects as yet more public institutions have their credibility and trust undermined because they did allow themselves to be used so.</p>
<p>Fannie Mae and Freddie Mac are similar in that they are GSEs but the government backing is hazy. Ginnie Mae does have government backing.</p>
<p>But Fannie and Freddie are "too big to fail" and they would most likely get bailed out in a catastrophe. I haven't studied Sallie Mae enough to know whether or not they are too big to fail but I guess that's an incentive to get really huge for GSEs. When you are really, really big, you will get bailed out as the economy can't afford your failure.</p>
<p>Quite true, many of these companies have gotten too big to be allowed to fail. The obvious problem is the morally reprehensible manner in which they attained that end and how detrimental that end has been to society as a whole. No matter how profitable it was for them. The less obvious problem is that these companies have used their 30 pieces of silver to buy into more respectable arenas of finance and business. And so because of this enhanced presence they may not be subject to long overdue investigation. And although other financial entities have been allowed to fail the SL industries lobby power is such its unlikely they'd suffer that fate (or seemingly to even lose their massive government subsidies). Perhaps Professor Warren of Harvard and others have been quite correct in their assessments that certain SL companies have behaved similarly to another organization which had also used the tactic of moving controversial wealth into more respectable venues. At least the other organization has had a few entertaining Oscar award winning movies made about their abuses.
For Congress and state governments it will eventually come to the difficult decision of which form of potential economic ruin is preferable. If the large SL holdings crash, or even are placed on a proper leash, the financial brokers will panic. If something is not done to help the students and common populace who've been preyed upon by this industry.... That will be a substantial factor in wrecking an already shaken consumer economy.<br>
Not an easy choice as to chose the first might assist the financial sector but would damn the common. And to chose the latter would take courage, because any congressperson who does so, will be under threats from Wall Street. But if they chose not to, the inevitable result will be alienation from an resentful electorate attendant to a collapsing consumer economy.</p>
<p>i'm a high school senior who is gonna have to take out loans for next fall and these posts are really scary.. im going to pitt which is a state school so its only $12,000 a year tuition plus about $8,000 room and board. i got a lot through grants and financial aid but i still have to take out 5,000 in alternative loans each year.. are most people able to pay off a lot of their loans before they graduate? most loans say u can prepay so i was thinking of working during the summers and i have a work study for the school year. i too cant really understand why debts are so bad. i know it is obviously much better to graduate without them but it just isnt possible for me.</p>
<p>The average graduate has about $20K so that would place you somewhat ahead of the game if you can knock down most of the debt by working through college. It sounds like you are taking a loan for a semester, paying some of it down during the semester, taking a loan for the spring semester, paying some of it down and then paying more of it down during the summer. That doesn't sound too bad if you can make the numbers work reasonable well.</p>
<p>I would factor in other expenses that will come up if they aren't being paid for by either grants, your parents or other sources.</p>
<p>To understand the problems with loans, it's best to make out a budget with various loan amounts to see how debt can limit your options while you are in college or after you graduate. It may help to talk to adults to see if your budget amounts are realistic.</p>
<p>No, most people are not able to pay off their loans before they graduate. Most people don't even try. I think it's great that you'd do that, but be careful -- when you earn money during the summer, they then expect you to put a significant portion of it towards your next year's school tuition and expenses, not to pay off loans. Your plan will mean that each year, you get less financial aid (because of your income), and have to work more just to cover your expected contribution. </p>
<p>Your aid award isn't static. Every year it's reevaluated in light of the past year's earnings. If you earn more, you'll get less aid -- even if you took all your earnings and put it towards your loans.</p>
<p>Aly33a,
Although these have been substantially cut, dependent on your major might consider taking employment in fields which offer loan forgiveness. This won't help if you're taking out private loans but they are still relevant for the direct government loans which yet remain. And yes on the Fafsas increased income is not always to your advantage. But its often a rigged game in that regard.
As far as the fear aspect, quite understandable. I see it in students and professors, its immoral and ironic that higher education which was established as a system for providing hope for the future has been sullied so. But certain in the SL industry have used that very emotion as a very successful tactic in building their undeserved status. Fear of not being able to go to school, fear that if these interests are not given more government largess higher education will collapse, and they are infamous for using fear in the collections of debts. And given that many can no longer pay those debts, that fear is increasing. But one of the consequences of attaining undeserved rewards by fear is eventually people tire of the demon in the closet.
So, do not allow them to succeed in their propagation of that fear. Yes that aspect of their behavior has gone too far. Yes they are powerful financial entities, and yes they may hold some peoples future in their undeserved hands. But they have gone too far, and eventually there will be that point where they lose that power to provoke that fear.
You have a right to your education, and when you will achieve it. And that education is in itself a weapon against those who've tried to turn higher education into a financial brothel and students into paupers. There will be a point where those who have been troubled by this industry will find their voice. And when they do, millions in undeserved profits will not long hold back the tide of reform...
It's a matter of time, and of people finally speaking out.</p>
<p>a1y, why don't you just apply what you earn towards the tuition, for the next semester, instead of taking the loan and repaying it? You dont have to take all of the loan that you apply for, just what you need.</p>
<p>Atana,</p>
<p>Your points about the sorry state of financing a college education are well-taken. However, I am not clear about your ideas for changing the current environment. Aside from just not going to college, in practical terms, what could a student today do to avoid the prospect of high tuition costs and $20K in loans in order to obtain a good education?</p>
<p>Bay that's quite an issue, insofar as students generally do not have much direct access to the high level idiots who caused this mess.
However, there are perhaps some things which could be done by individual students. First would be to speak up, in a general sense such as this forum, newspaper op eds, or letters to those in power. Especially send well reasoned commentary to such as the members of regents boards, and elected officials who sit on education committees in government.
In a more specific sense within their colleges there may be some things students can do. One context where student activity would be very appropriate is in regards to fees, and supplemental charges. If it isn't something which relates to academic progress or is important to the community raise some comments. Another related concern would be building programs intended as marketing trophies rather than meant to serve educational uses. Another possible tactic would be to let other students know about some of the marketing tricks used by finance companies and if a given college is playing along with these, don't withhold comment to ones peers or within the community. Its a risk, but preferable to a lifetime of impossible debts. One of the reasons those tricks worked so detrimentally on so many of my generation is so few knew of them until it was too late.
In a more individual context, consider going to a college premised on a combination of the morality of its financial behavior (including the context of its relations with the loan companies) along with its academic reputation. If the tuitions too high, or they've gotten too close to the financiers, find another school. At that may not be the sacrifice it seems as some of our nations best schools are moving away from having high tuition and loans being the model.
And do some research, before going into a school. Outside of the official tours find and talk to students and ex-students about what has happened or is happening with their education and whether the costs were appropriate. To ask these kind of questions from tour docents or tour group students is a somewhat misdirected effort. Within academia its rare for a clear assessment to come out of such things as official tours or brochures. If you do run across a financial aid officer or professor who alludes to problems, or directly states them...listen and critically think about what they've said. They may do so out of genuine concern for academia and may be taking a fair risk to even mention those kind of problems.
In a more overall sense, however one choses to do so let the politicians know that the current situation is untenable. And study how other countries have developed and applied more equitable systems of higher education. Research the various consumer rights organizations who have made reasoned cases about the problems in academic financing, and finding those whose approach suits your philosophy-support or join them. One voice can speak about troubles, but voices united is when things do change.
In an overall sense probably the best manner to reform our ill system is to adopt the successful approaches that other countries have used. There are several countries which have higher education as good or better than the US which haven't sold their students to financiers. </p>
<p>Above all, speak up in a appropriate manner. For those who are, or will be students this issue is going to be the Rubicon for that generation...</p>
<p>To both AAT and the various responders, please avoid discussing other members (along with their expertise, attitudes, etc.) per our TOS, and focus on the facts.</p>
<p>Mostly, this issue boils down to the certainty of a high income for a sustained period after graduation. If the student is able to predict that kind of income, then a higher loan load may be OK. Grads of top law and B-schools with reasonable academic performance, for example, have a fair degree of certainty of landing a well-paying position. Undergrad school is certainly a different story - few undergrads score starting salaries of $80K, and such a path would be particularly hard to predict when the college decision is being made in the senior year of HS. A high percentage of college students change majors at least once during their undergrad years.</p>
<p>Unless you know you've got a great job waiting for you four years later (e.g., your parent owns the firm), I wouldn't assume that a high paying job will bail you out from a heavy undergrad debt load. In itself, a degree from a top school is no guarantee of high income.</p>
<p>Well that appears to sum up the dilemma. Under the current economy a degree from an elite institution (or more so from what could be considered lesser institutions) may no longer be the secure route to the assured high incomes which compensate for the costs of an education. So for advisers, students or their families knowing what to do is going to be very difficult. For many of us who do advise students the issue has become so complex that many, including myself, no longer know what to say in response to these issues. And that loss of surety is very disturbing in regards to the potential long term effect on academia as many do look to that system for answers.
As noted the AMA has had some concerns in that regard, to the extent of asking for more deferments and loan relief for their members. And their concerns are very indicative that what were once certainties are much more difficult to ascertain in the current environment.
And problems such as the ones noted by the AMA are likely one of the reasons institutions such as Stanford are looking at other means of approaching the matter of student financing. What they are doing is a major shift in influence and if it does work may be the next model for higher education funding.
But the state schools are going to have a more difficult time in finding other solutions to this problem as the cuts in state and federal direct support have made them more reliant on the more problematic modes of funding.</p>
<p>I think that the state schools would have to ration resources focusing more on grants and less on loans. I have a look at the five-year graduation rate at UMass Amherst and it's at 65% so there are many paying for five years of school and not finishing their degree. Wouldn't it be more efficient for everyone involved if students paid less and had a better shot at graduating? This would mean that fewer could be served by public education unless and until more funding were available. But even with the current system, a significant amount of public and private money is wasted.</p>
<p>Well the problem is that the ability to focus on grants has been substantially compromised since the start of the this century. And it has been a trend which has been developing well prior to that date. For example in 1975 the pell grant covered 84% of tuition costs, today these programs only cover 33% of tuition.
(Carter 2008). In general pell and like grant amounts have remained flat since 2001, and the recent increases were not substantial enough to counteract for the increased costs of college (about 40%) since 2001. And those increases were largely a political ploy to defuse criticism about education costs, loans and corporate welfare. In actuality the small pell grant increases were often attended by other cuts in education grants, some of which were targeted at vulnerable populations and institutions who lacked political muscle. For example overall grants to AIHEC schools were actually cut during this period.
At the same time monies which could have been applied to properly funding student and educational support grants were definitely directed elsewhere. For example "funding for the Family Education Loan Program, a program which subsidizes private student loan companies, more than doubled from $25 billion in 2001 to $51 billion in 2007." (Carter 2008)
The resources are there to focus more on grants and less on having those resources filtered through corporate pockets. But there is substantial lobby pressure to make sure that this does not happen. For example 30 senators voted against Con Res 83-177 which would have increased pell amounts by some 5.0 billion. In Con Res 83-3028 which would have increased grant amounts by 6 billion, the same 30 tried to obstruct that proposal. For Con Res 83 3408 which would have increased grant amounts 18 senators voted against many of whom voted the likewise on the other two proposals.
So yes the resources are there, as is evident by the 51 billion given to the FELP, and by such little tricks as Spellings not stopping the 250 million over billings of federal loan programs. But there is a substantial amount of insider pressure not to redirect these resources. For example in 2007 "officials with the loan industry and proprietary institutions have given, individually and through political-action committees, or PAC's, almost $1-million in campaign contributions to the 49 members of the House Committee on Education and the Workforce, according to Federal Election Commission records through the end of May." (Chronicle of Higher Education). To put that into perspective that was an average contribution of 20408.16 to each member of the House committee on education. And that's just one congressional/Senate committee dealing with education policy.
But if state colleges were properly funded and a suitable level of grants were available for students, yes college costs would come down. These would do so for several reasons. First as more direct aid were to become available those resources would not have been filtered through corporate pockets, and so overall more resources would be available. Second this approach would ensure financial responsibility on the part of colleges, they simply would not have the inflated amounts of money available from the loan situation. Nor would they have the pressures brought upon them to use that money.
The problem is that the current system is broken, and has been a yoke on the necks of the common people for too long. It will have to change, even if that change is coincidentally brought about by the cabals which have made billions off the whole mess. On June 5th in the Chronicle of Higher Education, Albert Lord as much admitted SMC is getting out of overall funding of students. His contention was SMC corporation was too generous. The chronicle (Paul Baskin) had another opinion "Sallie Mae was created by the federal government in 1972 as an agency charged with ensuring that college students would have access to a steady flow of money to finance their educations. Mr. Lord led the effort to convert Sallie Mae into a private corporation in 2004. After delivering to Mr. Lord and his fellow executives hundreds of millions of dollars in salary and stock benefits, Sallie Mae has seen its share value drop by more than 60 percent over the past year....Sallie Mae helped persuade Congress and the Bush administration last month to grant lenders new financial benefits for participating in the federally subsidized student-loan program. Yet Mr. Lord told the Journal that the federal program had not produced any profit growth for Sallie Mae for the past five years, and said it is not our principal business anymore. (Baskin 2008)
So yes, things will be changing and hopefully for the better. But given the powerful interests involved switching back to a grant based model for funding higher education is going to meet with substantial resistance. And if it does change good for future students. The dilemma will be protecting those who were the victims of these trends and had been students in the 90's and early 00's.</p>