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Student loans crushing future for young people

crushing student loan debt

“Unlike other kinds of debt, student loans can be particularly hard to wriggle out of… ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.”

Some governments believe that the future of their country lies in a well educated healthy population. With this in mind they make post secondary education free (tax payer subsidized, remember) to all who wishing further education as long as they can pass the academic standards and complete the course in the allotted time frame.

Without the worries of incurring massive debits or mooning lighting in minimum wage jobs after hours to pay expenses, students can concentrate on their studies. Upon graduating, student who are loan free, will not be forced to find just any kind of work to keep the lending institutes off their back.

Starting into the work force with thousands of Dollars of debit is not conducive to the students mental health or a healthy nations, it is a form of economic slavery for the students and degeneration of a nations competitiveness.

While this sounds like a good idea — that is, having education tax payer subsidized fully or partially — you should look at the ultimate alternative and that is having tuition as low as possible. Why is it as high as it is now? Mostly because education has become a government monopoly represented by public service workers’ unions who refuse to negotiate with the prevailing market conditions. How could they? Unions and governments are monopolies of power. This is not a hit on unions, but it brings up a good point that many countries’ educational systems are constantly threatened with striking teachers and educators who should be considered “essential services” just like police who cannot strike.

Why not make publicly-funded educational institutions “essential service” workplaces where employees there cannot strike? This certainly would lower tuition costs for students as the unions would not be able to hold the state by the proverbial testes. In the same vein, why not make more market incentives in this sector of the economy and allow more privately (or public-private) institutions to open up and compete with other similar institutions? Take a look at these graphs showing how much tuition has increased throughout the years in the USA and other countries:

tuition since 1970s

Comparing public vs. private insitutions we see that the latter is often more expensive simply because it is attended by only select groups of people who can afford it while the others are forced to attend public institution which are afforded by tax payer money. What if more private colleges were allowed?

tuition increasing private vs public

The $555,000 Student-Loan Burden

As Default Rates on Borrowing for Higher Education Rise, Some Borrowers See No Way Out; ‘This Is Just Outrageous Now’

By MARY PILON Wall Street Journal

When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

“Maybe half of it was my fault because I didn’t look at the fine print,” Dr. Bisutti says. “But this is just outrageous now.”

To be sure, Dr. Bisutti’s case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble.

But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as “good debt,” because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility.

Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can’t make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.

You can read the full article from Wall Street Journal


  1. Maryellen Ustico Maryellen Ustico March 28, 2010

    People rejoice when banks from which they had taken the loans collapse and are placed under receivership for it gives them plenty of more time looking for the cash. That is when they realize that even financial crises have financial salvation.

  2. Låna Pengar Snabbt Låna Pengar Snabbt March 30, 2010

    Taking a loan for business purposes is very motivating. This is because the money ends up on an investment planning. The mistake most people do is take loans in order to spend, not knowing where the source repayment will come from.

  3. PubliusEsq PubliusEsq September 24, 2010

    Support the Franken/Dodd bill (Fairness for Struggling Students Act (S 3219)) and the house version (Private Student Loan Bankruptcy Fairness Act (HR 5043)) which will stop the discrimination against students and allow private student loans to once again be dischargeable in bankruptcy. HR 5043 has been voted out of subcommittee and is now in the House judiciary committee. S 3219 has also been voted out of subcommittee and is in the Senate judiciary committee. Call your Congressmen, Senators Franken and Dodd and members of the House and Senate judiciary committee to show your support. Time is of the essence.

    A good example of how the banks actually write legislation is the bankruptcy reform legislation of 2005. In the bill Congress produced, private student loans were no longer dischargeable in bankrupcty. The banks were able to write this bill because students have no organization or lobby paying favors to congressmen.

    I have seen it done with mine own eyes. The bank’s inside counsel draft the legislation and then pass it on to congressional staffers that they have quid pro quo relationships with, often the staffers and bank’s attorneys went to the same schools, and the bills are then introduced into committee in the form drafted by the banks.

    No national purpose was served by this legislation. In fact, the bill has served to cause many who tried to better themselves through higher education to wind up as indentured servants slaving away for banks. American’s families are impoverished and generations will live in poverty because the banks pay legislators lucrative rewards in the form of campaign contributions and high paying jobs.

    These private loans, because of little regulatory oversight, often become unpayable because the interest and fees increase to an amount larger than the original loans. The only reason former students are discriminated against in bankrupcy (other bank loans and even gambling debts are dischargeable) is because students have no lobby, and the corrupt political process favors the disproportinate influence of the banks which use the legislative process to do their own bidding.

    Americans should not have to live in indentured servitude because the economy cannot provide a job for them at a living wage, often because the banks and corporations use their undue influence in the political process to shape the economy for their own purposes, not for the good of the country.

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