Americas Student Loan RacketStephen Lendman, Contributor It explains a disturbing government/corporate partnership. Students are exploited for profit. Providers are enriched. For many, rising tuition and fees make higher education unaffordable. Others need large loans to attend. As a result, they become debt entrapped. Some face burdens up to $100,000 or higher. If unpaid after 30 years, its a $500,000 obligation. If one defaults or declares bankruptcy, its unforgiven. Bondage is permanent. Lenders thrive from defaults. Wages can be garnished. So can portions of 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. Education today grows more unaffordable. Many students are priced out and cant attend. Others become debt entrapped. Growing numbers remain there for life. A predatory system fleeces them. Principal, accrued interest, late payment and collection agency penalties create enormous burdens to repay. Around year-end 2011, student debt exceeded $1 trillion. Its staggering. It increases nearly $3,000 per second. It exceeds credit card and auto loan obligations. Its second only to outstanding mortgage debt. Its rising exponentially. A lost generation threatens. Its part of the grand scheme to transfer maximum wealth to Americas super-rich. Its been ongoing for decades. Under Obama, it has accelerated. On May 12, The New York Times addressed the issue. Titled A Generation Hobbled by the Soaring Cost of College, writers Andrew Martin and Andrew Lehren overall did a credible job worth reading. Ohio Northern Universitys Kelsey Griffith was mentioned. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter. Griffith knew college costs were high. She never imagined owing $900 a month after graduating. No one told me that, she said. Nearly every baccalaureate candidate borrows to attend. Most cant imagine a future unprecedented financial burden. Ninety-four percent of students who earn a bachelors degree borrow to pay for higher education up from 45 percent in 1993. According to Consumer Financial Protection Bureau deputy director Rajeev Date: If one is not thinking about where this is headed over the next two or three years, you are just completely missing the warning signs. He compares student loans to risky mortgages. Its extraordinary growth surprised many. Its roots, in fact, are deep. Its cast of characters includes college marketing officers, state and federal lawmakers, administration officials, and predatory lenders, guarantors, servicers, and collection companies. Loans are easy to get. Theyre tough to service. Theyre not forgiven. For many in todays job market, theyre impossible. Onerous debt escalates to greater amounts. A vicious circle entraps graduates and dropouts, many for life. Since crisis conditions erupted, states and cities nationwide slashed budgets. Education paid heavily. Adjusted for inflation, spending per college student reached a 25-year low. At the same time, tuition and fees keep rising exponentially. If current trends continue through 2016, the average cost of a public college (education) will have more than doubled in the last 15 years. Students and parents are unprepared. So-called experts claim not attending college is worse than graduating with debt. They, of course, have none to repay, and feel secure in well-paid jobs in an unfriendly environment for new grads. Obama let a bad situation fester. Last October, he offered pathetic relief. Repayment schedules were relaxed slightly. Only federal loans are affected. Students in default dont qualify. Moreover, for everyone who does, two or more fall behind in payments. A bad situation grows worse. At most for the few qualifiers, savings are miniscule. At most, theyre about one-half of 1% on interest. Nearly 10% of borrowers who began repayments in 2009 defaulted in two years. Its double the 2005 rate. Some worry about the student loan system replicating the housing crisis. Doing so would have enormous economic implications. Economists say the issue hangs over the (economy) like a dark cloud for a generation of college graduates and indebted dropouts. Major purchases are delayed or abandoned. At issue is repaying student debt forever, according Bowling Green State University dropout Chelsea Grove. She owes $70,000. Shes working three part-time jobs. Shes not going back. She cant afford it. Twenty-three-year old Chistina Hagan is an Ohio lawmaker. She also attends Malone University. Shell graduate shortly with over $65,000 in debt. Despite earning $60,000 a year, shell take a waitress job to service her $1,000 a month obligation. For her, it includes credit card debt. Nationwide from 2001 2011, state and local per student financing dropped 24%. Over the same period, state school tuition and fees rose 72%. Ohio State University gets 7% of its budget from Columbus. A decade ago it was 15%. In 1990, it was 25%. Decades earlier at some state universities, students attended free. Todays financial reality creates enormous burdens. At issue is handling costs and repayment obligations. Then its about finding decent jobs too few in number. Few understand what theyll face. Colleges recruit students aggressively. Financial aid is touted. Fine print language is a minefield to understand. Some are written in a manner that suggests the student is getting a great deal, by blurring the line between grants and loans or not making clear how much the student may have to pay or borrow. Whats portrayed as doable and normal, in fact, becomes onerous and unmanageable. Annual tuition increases arent factored in. Neither is inflation and high interest rates. College admissions staff dont explain. While there are standardized disclosure forms for buying a car or a house or even signing up for a credit card, no such thing exists for colleges. College costs are complex. Besides rising tuition and fees, a vast array of grants and loans and a financial-aid system that discounts tuition for most students (use hard to understand) opaque formulas. Moreover, colleges avoid discussing affordability issues and possible future debt obligations. Growing numbers are like Wanda McGill. She stopped opening her student loan bills. Shes not sure how much she owes but thinks its about $100,000. She cant service it. After exhausting her funds, she dropped out of DeVry Universitys Columbus branch. Now she earns $8.50 an hour. I was promised the world and was given a garbage dump to clean up, she said. Like my life was not already screwed up with welfare and all. Shes not alone. Epidemic conditions rage across America. An Occupy Student Debt protest joined other OWS campaigns. Its website What You Need To Know section says: We did what we were told to do and followed our dreams, but we are now trapped by what was meant to be an investment in our futures, not a noose. Obamas recent student loan reform has done nothing for those in default, or those of us with private (bank-backed) loans through Sallie Mae, Citibank, and so on. If we default, we cannot rent or buy homes, or even find jobs with the 60% of employers that check credit. Our professional licenses (i.e. nursing/teaching) can be revoked. And with the fees assigned to defaulted loans that double the amount owed, getting back on ones feet is nearly impossible. Not only would voluntarily defaulting do nothing to solve the underlying problem of out-of-control student loan debt, but defaulting can result in any number of detrimental outcomes, including, but not limited to the consequences listed above. Todays crisis spread from for-profit institutions to others. However, former ones represent the worst problem. Students complain theyre mislead. Lawsuits charge fraud, deception, doctoring attendance records, or offering near-worthless degrees. As a result, their students are twice as likely to default. Among baccalaureate candidates, only 22% succeed in six years. At non-profit private schools, its 65%, and at public ones its 55%. According to American Association of Collegiate Registrars and Admissions Officers associate executive director Barmak Nassirian: Mainstream higher ed can really self-righteously look at the big problem out there and say, The problem lies with the other guy. But there are all kinds of unfortunate practices in traditional higher education that are equally as problematic that are reaching the crisis point. Political Washington largely ignores the problem. Its done little to curb abuses. Action belies lip service. A sinkhole of trouble deepens. A lost generation threatens. Higher education today involves crushing debt burdens too onerous to repay. Rising poverty, unemployment, few job prospects, and a system sucking wealth to Americas super-rich makes todays crisis unmanageable. Education beyond secondary school once meant brighter futures. Today it ensures debt entrapment too demanding to repay. Neoliberal harshness polarized American society along class lines. It also affects Europe. In modern times, its harder than ever to cope. For growing numbers of deeply indebted students its impossible. Their dreams became no-escape nightmares. Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.His new book is titled How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. http://www.progressiveradionetwork.com/the-progressive-news-hour/ linkwithin_text=Related Articles: 