At 59, Chris pleaded for a renegotiation. "My life expectancy is 15 more years. At this rate, you're not going to get very much...' Their response was, 'So?'"
One of the most draconian measures passed by Biden during his loathsome career as a lackey of the institutional creditor class was the amendment to Section 523 of the Bankruptcy Code making it virtually impossible to discharge student debt. The amendment not only put millions into a state of debt peonage, it fueled dramatic increases in tuition, the growth of for-profit colleges like "Trump University," and a burgeoning credit bubble now surpassing $1.6 trillion.
Not bad for a guy who had to cheat his way to a foot of the class finish in law school.
"The first duty of any senator from Delaware is to do the bidding of the banks and large corporations which use the tiny state as a drop box and legal sanctuary. Biden has never failed his masters in this primary task."
So true. This all goes back to Walter Wriston and Citibank during the late 70's interest rate and inflationary crisis caused by petrodollars. This led bankers to realize that if things did not change quickly, they would be out of business soon. So they decided to move their charters to Delaware and S Dakota (and export debt in those states). They were chosen because of the significantly higher state usury rate --- allowing banks to charge more interest on customers beyond the national rate set at 12%.
This set a showdown and in 1986 we had the Marquette decision (first Omaha vs Marquette National Bank) and this allowed large multinational banks to be domiciled in states that have preferential usury laws, export their interest rates from South Dakota or Delaware to any US state and escape prosecution. This saved banking at the time along with new fiscal policy aimed at taming inflation at all expense.
And the result was that all major players in the industry moved to Delaware or South Dakota for their charter --- and protected their profits from this one battle they won in the State of South Dakota. Biden just happened to be a bankers bagman.
The Marquette decision was 1978, and involved Nebraska, not South Dakota. The decision allowed the ability of a bank chartered in one state (Nebraska, in this case) to charge interest according to the rules of that state (18%) while issuing credit cards across state lines into other states (in this case, Minnesota, the plaintiff) where those interest rates had (before the decision) been able to prohibit the higher rates as usurious (the Minnesota state limit on legal interest was 12%.)
South Dakota features in the story because of its newfound post-Marquette decision popularity as a state holding the charter for credit card companies- S.D. had no interest rate cap at all! And neither did Delaware. Although both provisions have been modified since then- each state has a different set of provisions, often with various exceptions. It's frankly too complicated for me to figure out:
more info here https://wallethub.com/edu/cc/usury-laws/25568 (but the map in the link claiming to show state-by-state interest rate comparisons has been disabled, probably because the laws keep getting modified.)
Appreciate the correction here Mascot --- I was going back from memory from 2004 interview of Elizabeth Warren on Bill Moyers years ago and how she explained it. Not sure how I got 1986 and 1978 mixed up but I did.
Minnesota and Nebraska now makes sense to me as you mention since there were no usury laws in S Dakota a bordering state and Delaware at the time-- something Walter Wriston said in that interview clip played by Bill Moyers.
Nevertheless, the banking industry fought a battle in Nebraska from which to use in Delaware and South Dakota --- and became a way to evade federal usury laws at 12% (whether it was 36% or 18 %). This is ultimately my point about politicians and banking --- less to do with dates and names (that industry will always be on the lookout for favorable jurisdictions from which to game the system and current laws).
And that the unintended consequence of going off of the gold standard, taking on petrodollars and inflation, caused the banking industry to seek new state domiciles, incentivized new products like credit cards (which were previously very difficult to get because credit was tight), and allowed banks to circumvent the federal usury laws.
All of this could have been avoided with states and federal statutes that anything over 15% is prohibited. But instead, new markets and products were developed as an end round to many people's detriment.
Yes, you got the gist of it right, and brought up a history that I think is terribly important- especially for Americans. But it's a history few of them know.
I remember learning about usury in one of my social studies classes in high school- I think it was Economics (do public schools teach that subject any more?) The rule of thumb I learned (in 1970) was that any interest rate 10% or more was loan sharking! Flash forward to my receiving my first solicitation from a bank for an unsecured line of credit, in the early 1980s- $600 at 14.3%, I think it was, soon to be followed by invitations to obtain credit lines at even larger sums, at rates of interest more like 17% and 18%. And I am all like "What is going on here?" I don't think I got the first inkling of the exact details for at least another ten years.
It's also worth noting that the first invitations were sent by banks no longer in existence, that failed or had their assets sold in connection with the 1989 Savings & Loan crisis- the first bank bailout, one that not many people even know of or recall happening. I think my first card offer was Great American Bank.
More finance history that most Americans don't have a clear picture about: as you noted, until the 1980s, credit cards were issued very selectively, and almost never used for consumer purchases unless one applied for a store-connected card, like for Sears, or Macy's. Credit cards were mostly associated with business expenses. Diner's Club and American Express were two of the most well-known cards; as indicated from the issuers, the main use for the first one was for restaurant meals, and the second was for travel expenses- especially foreign travel, as a more convenient elite substitute for the more commonly used "travelers checks" (remember those? not sure they even exist any more.) And there were credit cards for buying gasoline, issued by the service station brands; those still exist.
But it was the 1978 Marquette decision- iirc, along with some related legislation passed in Congress shortly afterward, by the Democratic majorities during the Carter administration- that set the wheels in motion to turn credit card payment into an everyday feature of American consumer purchases, encouraging both increased consumption and consumer debt dependency. When it's "buy now, pay later, incrementally" (forever), that new regime has a way of camouflaging a lot of wage stagnancy (actually wage decline), because workers with modest incomes are given the ability to possess and use the trappings of middle-class living with no money down. Meanwhile, the money that they formerly would have put into a savings account instead goes to paying into their outstanding credit balance.
Great question. Biden, actually, is obligated to issue an executive order on day one as President ordering the Department of Education to stop opposing student loan borrowers in bankruptcy court. Elizabeth Warren pledged to do this, and Biden SAID he was adopting her bankruptcy plan (with this EO being the most important part OF her plan). So, this will be a good early test of whether or not Biden is a man of his word.
Problem with Warren's "plan" is that her observations and ideas are based on bankruptcy petitioners, which is a highly biased and odd sample of the population. She should be asking whether the bankruptcy code is working reasonable justice in regard to the population as a whole. But she's not a scientist or a careful thinker, so she just wails about hard cases she sees in bankruptcy court, and can't envision the consequences of the changes she suggests.
Agree student debt should be dischargeable, but only under certain conditions. If you allow people immediately to discharge student loans, obviously nobody will make student loans, since students typically have no assets to secure the debt, and the creditor is unprotected. You can repo a house or car, but not an education. So making it difficult to discharge student loans makes some sense. But you need to allow for hard cases. Disability, physical or mental, changes in job markets that diminish the value of a degree, and so on. So you might give Chris a break, since he is obviously mentally troubled, and not capable of using his degrees to advantage. But you would not give a break to a CS grad who decides to be a ski instructor. And you would not give anyone a break in less than five years from incurring the loan, since the value of the educational asset cannot be properly assessed in such a short period of time.
Student loans should be treated in precisely the same way as all other loans in bankruptcy court. There is NOTHING that distinguishes them for special treatement. All the evidence we have from when bankruptcy was the same for student loans shows that only about 0.3% were discharged that way. Restricting, and then eliminating (essentially) the protection was precisely what cause the leding system to explode, and now catastrophically fail. The Founders (who themselves were being abused under debt to British banks and merchants) called for uniform bankruptcy laws ahead of the power to raise an army and declare war for a very good reason. The student loan exception to their wisdom proves their wisdom. In spades.
Also, you ascribe bad faith to the borrowers very inappropriately. The evidence indicates the opposite, and in the presence of what (at least on paper) look like very attrative repayment programs, newly minted graduates are highly unlikely to choose this route.
But this is really a pointless conversation now. The lending system is a catastrophic failure at this point. The default rate even before this pandemic was going to be 75%, if not higher. This is 4 times higher than the default rate for sub-prime home mortgages. At this point, the only reasonable solution is to simply cancel the loans, end the lending system, and replace it with a far cheaper, fairer, more efficient, and lower priced model for funding higher education in this country. Returning bankruptcy protections now would only ensure the bankruptcies of 20+ million people. This would overwhelm the bankruptcy courts to the point of seizure. It is time to take this lending system to the bath, and drown it in the tub.
Very true. It is a workaround. There are two bills in the House and Senate right now, HR. 2648 and S.1414, which would cleanly repeal 11 USC 523(a)(8). The House bill has made it out of committee (with two republican votes, actually), but the Senate bill is stuck in Lindsey Grahams Judiciary committee, and ultimately Mitch McConnell, majority leader. They still have a few weeks to pass this. If they REALLY wanted to do the conservative thing, and demonstrate to the rabble that the "invisible hand" actually can work for the little guy from time to time ,they would pass the bill. But...I'm not holding my breath. Idiots. They should have passed this BEFORE the election and with the 44 million people who would have been greatly helpes, would have given the republican party a new lease. Absolute idiots.
True progressives are in favor of it. Most of the Democratic establishment is against it because they have the support of two powerful constituencies that like things the way they are: the lenders and the educational complex.
Student debt pays good returns and has much lower risk due to the indentured servitude built into the system. College administrators and faculty need to get paid and states no longer want to provide tax money, so student loans allow the problem to be punted to the student.
I heard about a small town in the Midwest (forgot what town or state, sorry) where the people working the phones knew full well how corrupt the student-loan industry was, but they said "we can't quit--the money's too good."
My sister taught at a private business college and needed the work, so she looked the other way. The final straw was when the homeless were being signed up for her online courses and told they didn’t need a computer, just a smartphone. She knew she couldn’t do her job that way. The college was raking in the money from loans that were dead ends for everyone except the owners.
I don't see any "true progressives" in politics being in favor of it. All I see is loan forgiveness and free college, neither of which are going to happen now or anytime soon.
Dick Durbin is the best guy in the Senate on this. He sponsored S.1414. In the House, people including Jerry Nadler and John Katko (republican) have championed HR. 2648. These two bills could be passed tomorrow, and the House bill has actually been passed out of committee. The Senate bill, however, requires Lindsey Graham to pass it out of the Judiciary committe, and Mitch McConnell to get it to a full vote. It could happen before the end of the year, but at this point that would be pretty astonishing. We are fighting for this nonetheless...
The -110 page Biden Harris plan very clearly states its priority RE higher education is 1) forgive tuition for students from “oppressed” groups with special emphasis on those who attended HBUs
2) tuition free attendance T HBUs
3) cancellation of $10k federal student loan debt for borrowers earning less than $125k(?) - I’m not clear as to whether that debt cancellation is then considered taxable income but that’s too far in the weeds for purpose of my comment here
I think one of the secret truths behind all of this is that the colleges are petrified at the thought of ending their $100 Billion/year cash cow. I think that behind the scenes, the liberal elite are opposed to returning bankruptcy to student loans. To date, I have yet to find even ONE example of a college President even mentioning "bankruptcy" and "student loans" in the same sentence! Disgusting. I could give many other examples of "progressive" groups pretending like they are for returning bankruptcy protections, while they actually sabotage efforts to return it. People like Deanne Loonin, and David Bergeron (CAP) come to mind.
Both sides serve in fealty to (global) private finance, hence their unwillingness to hurt the (largely) ill-gotten revenue streams flowing into the banking/finance industry. Trump was no different:
Anyone who hasn't picked up on a trend by now isn't paying attention. When Wall Street and the big banks (or automakers or Boeing) need bailouts, interest-free loans or loan forgiveness, the government and corporate media - Democrats and Republicans - bend over backward justify the need and to give them what they want as fast as possible. But if you're a little guy who pays a mortgage, credit card payment, college loans, etc. you're screwed. If you're lucky a journalist like Matt Taibbi will write about your case, or a newspaper might write a think piece about these ridiculous penalties and interest payments on occasion.
To those who cry and moan about student loan forgiveness - How loudly are you crying and moaning about immediate, interest free bailout money for corporations, banks and casinos like Goldman Sachs? We don't even get to see the details of these loans, yet the government and big banks who hold the student loan debt are allowed to pry into every aspect of your life, garnish your wages, deny the ability to declare bankruptcy, and abuse you over the phone on a daily basis. If you can't see by now that the rich (and corporations, banks, finance industry) are subject to one set of laws different from all the rest of us, then you're intentionally ignorant. Student loan debt in this country is managed and inflicted in the same manner that the Ferguson police department was shown to use minor traffic and other citations to ensure a steady stream of revenue and to ensure that the "principal" would never be paid off. It's a racket, no matter which way you look at it, and the only answer that makes sense is to avoid student loans completely until real reform has been enacted....but don't hold your breath. Neither Congress nor Biden nor Harris nor whatever Republican administration that succeeds them is going to do ANYTHING to help you. The government is completely captured by global private finance.
If we give up private equity does that mean I have to donate my personal retirement investments to the government? Do I put my house in a pool with other houses in case someone else needs it more?
There should be standards in Healthcare and Education. If you score extremely low on SATs should the government pay to send you to college to flunk out? Some states are phasing out SATs and Advanced Placement for mandatory remedial Social Studies. Is that a good trend?
"To those who cry and moan about student loan forgiveness - How loudly are you crying and moaning about immediate, interest free bailout money for corporations, banks and casinos like Goldman Sachs?"
There is the basis for a future article for Matt: How is it that we see these two from totally different moral lenses? How do the wealthy parasites get a free pass but the victims like "Chris" get the opposite?
Part of the reason might be because almost the only criticism of the big bail-outs comes from scruffy, disreputable protesters who are just unthinkingly anti-anything going.
To me it would make more sense to bail out the Chrises because their additional disposable income would almost all go into the economy where it would create jobs and tax revenue. Whereas bailouts for Wall Street go into tax havens, land, penthouses and resorts and shares.
You say "[h]ow loudly are you crying and moaning about immediate, interest free bailout money for...banks...like Goldman Sachs?"
To be clear, this never happened. Under the TARP program, Treasury bought $10B 6% senior cums and got warrant kickers. Goldman repaid all $10B. Plus $318MM of pref divs (which are not tax deductible, unlike true interest) and then paid $1.1B to buy back the warrants. The government achieved a 23% annualized return on the investment. If every student loan worked out like TARP, we wouldn't be having this conversation.
"To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
Wrong.
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. . .
The bailout ended up being much bigger than anyone expected, expanded far beyond TARP to include more obscure (and in some cases far larger) programs with names like TALF, TAF, PPIP and TLGP. What’s more, some parts of the bailout were designed to extend far into the future. Companies like AIG, GM and Citigroup, for instance, were given tens of billions of deferred tax assets – allowing them to carry losses from 2008 forward to offset future profits and keep future tax bills down. Official estimates of the bailout’s costs do not include such ongoing giveaways. “This is stuff that’s never going to appear on any report,” says [former bailout Inspector General Neil] Barofsky. . .
Even worse, the $700 billion in TARP loans ended up being dwarfed by more than $7.7 trillion in secret emergency lending that the Fed awarded to Wall Street – loans that were only disclosed to the public after Congress forced an extraordinary one-time audit of the Federal Reserve. The extent of this “secret bailout” didn’t come out until November 2011, when Bloomberg Markets, which went to court to win the right to publish the data, detailed how the country’s biggest firms secretly received trillions in near-free money throughout the crisis. . ."
Yes, formally the government made a pretty good profit on the TARP bailout money, if one ignores that it was intervention in an obscene gambling operation. Goldman and others were slated to be dinged pretty hard on their derivatives positions unless the government came along and shored up the system.
This was supposed to be a private risk taking operation, but instead the government rigged the odds in favor of the well-connected. Some ordinary homeowner facing foreclosure was not offered a workout plan to overcome his problems. I think that’s a big part of the gripe.
That was a ridiculously low interest rate giveaway for lending to bankrupt speculator during a crash. Small businesses with cash flow difficulties borrow at 500-1200% a year from "specialized" lenders, and even credit card borrowers are charged 20-30% per year.
«The government achieved a 23% annualized return on the investment.»
That only happened because the whole finance industry was bailed out by a few trillions "invested" by the Fed in buying toxic assets at way above market prices, and "lending" forever at 0%, plus enabling accounting fraud with accounting rule changes made instantly (plus enactment of the "too big to prosecute" doctrine).
The TARP loans and "returns" were not writeoffs only because the Treasury and the Fed bailed out the big finance corporations. It is possible to show any "return on investment" when the Fed balance sheet balloons by several trillions.
Given that Berkshire Hathaway invested $5B in Goldman pref shares junior to the Fed's at 10%, I think we can safely say your estimates are ludicrous.
You also state "That only happened because the whole finance industry was bailed out by a few trillions "invested" by the Fed in buying toxic assets at way above market prices..." What are you referring to? Please be specific.
Yep! It won’t do to just look at part of the equation. If I could use that type of accounting on my IRA, I could be declared the best investor in the world.
The financial system was brought to the brink of collapse by gambling on default of assets that the gamblers didn’t own. When their bets went wrong they were given free money to unwind their positions. They booked obscene profits on both sides of the trade, and they even loaded up on those distressed assets at the bottom knowing they’d be bailed out by their friend in government. The players then gave themselves bonuses to reward their great performance.
Agree. I'm astounded that people generally do not know this, and run around yammering about "Bailing out big corporations." In their defense, though, we did lose a little on the GM and Chrysler "bailouts," but overall, TARP was a great deal for the government https://projects.propublica.org/bailout/list
Thanks, Lara. I like the look of it. But whether it covers the way each side talks past the other, and how the "silent majority" let bank bailouts pass without comment, yet are quick to condemn the "Chrises" AND WHAT CAN BE DONE TO EXPOSE AND ACT ON THE EQUIVALENCES I shall find out - as I have ordered a copy.
The bailouts and the financial crisis in 2008 were covered in Griftopia. Also Matt wrote a series of excellent articles covering the events of 2008 while working at Rolling Stone. It was that series that made me start following Matt. Here's a link to The Great American Bubble Machine. I think it's the best piece he's ever written.
Indeed. Matt has written about the other bailouts extensively, but I agree an article looking at how/why the general public treats those bailouts as different or necessary compared to college loan debt forgiveness as something horrible. Of course the answer is the constant propaganda coming from the corporate and right-wing media and social media. If it's not direct proactive propaganda, it's just deciding not to report on something that might turn a sceptical eye toward the banks and corporations that own our government (and hence, us).
Public probably treats them differently because the "bailouts" were paid back and the government turned a nice profit on the deals. https://projects.propublica.org/bailout/list
The alleged paybacks and returns were entirely artificial, as the government donated or "loaned" at 0% "forever" (plus rules legalizing accounting fraud) the cash with which Wall Street made a show of paying something back to fool the gullibles.
Not true. With respect to the Wall Street bailout they did not pay back the quantitative easing, only part of the TARP program which is 800 billion out of 4 trillion. Another article from Forbes emerged stating that time expired by the time they got the TARP program together, so not even TARP saw a return.
It isn’t a binary choice though. I don’t want bailouts for anyone, personal or corporation. The corruption is too far gone. Just look at what they do to the first outsider President that questions the status quo. It is destroy at all costs no matter the permanent destruction to our institutions. Unless Trump remains in office we will never see another President fight the corruption.
Then why aren't you mustering the same amount of passion for why the Trump administration and Congress bailed out Boeing, Wall Street and the big banks....AGAIN.
I repeat: I agree that the government should stop guaranteeing student loans taken out through the private finance industry but I believe they should handle all student loans directly through a simpler system and with obvious means testing and other barriers to entry, not to mention reasonable $ caps (which are already in place for most federal student loans).
Trump's done NOTHING to fight any corruption other than perhaps the investigation he opened into how Obama was abusing FISA and the FBI to spy on his campaign. Other than that absolutely nothing to end corruption and in fact decided to extradite and prosecute Julian Assange when not even Obama had done so. I linked to Trump's campaign college loan plank and it was just more giveaways to the big banks. Biden will probably be no different, but don't operate under the illusion that Trump was a real "outsider" in any way other than he wasn't a connected insider in D.C. Yeah, they hated him and tried to destroy him, but he wasn't some reformer out to help average Americans. He was just another in a long line of presidents subservient to TPTB, which includes global private finance and the rentier class.
Why would you assume I am not as angry about corporate bailouts as personal bailouts? What am I supposed to do? List ever grievance I have in order to cite an opinion on the topic of the article? Strawman much?
My reply to you was off a bit. When I got the email it said someone else that I had already been talking to was replying to me, so I hit "reply" in the email thinking it was that person.
Still, there ARE NO PERSONAL bailouts, unless you're filthy rich. There ARE corporate and bank bailouts, galore. Which of these two different types of bailouts would help the real main street economy more? Banks and corporations (and the very rich) just stash away the money, send more jobs overseas and create sub-living wage jobs in the U.S. that the taxpayer often has to step in (see for example Wal Mart encourages its employees to get on welfare). When you put money back into the hands of people, including the subject of this article, that money aids the REAL economy by enabling them to spend it in ways that actually do create jobs and all that jazz.
Fun Fact: The U.S. federal government takes money from me every year. I have no effective say in where it goes. Some of it goes to bail out banks, some of it goes to aircraft carriers. If, hypothetically, I were to want it to go to schools or housing homeless people, too bad for me. I'm alleged to be able to effect change by "voting," yet the candidates for whom I am allowed to vote are defense industry and bank candidates.
That said, you obviously have a very skewed understanding of what Trump did while in office. Have you read Taibbi's writing on this kind of thing dating back to 2016? He's done a pretty good job of demonstrating that Trump isn't really the enemy of the corporate media or TPTB in Washington D.C. much less the same banksters and corporate rip-off artists that Obama bailed out before Trump did.
All I said was Trump was an outsider that questioned the status quo and was destroyed for it. You agreed with that. Why read into what I think Trump did or didn’t do with corporate bailouts? You seem to be arguing with yourself at this point. I think ALL bailouts are wrong and ANYONE that supports them is wrong.
And yes, forgiving personal student loans is a “personal bailout”.
Your words certainly implied that you consider Trump a corruption fighter. He’s a fraud and was enriching himself and his friends no less than any of his predecessors, probably way more.
Betsy Devos has blocked any reform of student loans and has even blocked canceling loans for colleges that were ripping off the students. Some reform of corruption!
I’m not arguing for Joe Biden or the rest of them, but why hang your hat on Trump? It severely weakens your argument and destroys your credibility.
I agree that government education loans should be handled similar to a VET loan.
How Boeing was rescued by the Fed, without a bailout
" by urging the Federal Reserve to take unprecedented steps to bolster credit markets, the Trump administration ended up helping the plane-maker more than any government handout could.
It allowed Boeing to raise $25 billion from private investors and withdraw its request for a government rescue, avoiding the restrictions that would have certainly been imposed."
You'd be the first to scream if your bank went bankrupt and kept your pay check because the public lost faith in your lending institution. Banks fund payroll.
«More than half of U.S. households have some investment in the stock market»
And the bottomost 90% of US households own less than 5% of it.
«You'd be the first to scream if your bank went bankrupt and kept your pay check because the public lost faith in your lending institution. Banks fund payroll.»
That is propaganda and so ridiculous: banks *handle* payroll. Solvent employers fund payroll, no bank funds the payroll of a bankrupt employer, they are into charity. Regardless bailing out banks does not mean bailing out bank executives and traders, and the payment handling functions of bankrupt banks could well be transferred to non bankrupt banks or to the Fed, with no inconvenience.
The official interest rate of the Fed for loans to banks was and is nearly 0%, and for several years the only source of interbank lending was the Fed, as every bank refused to lend to other banks, as they knew they were all bankrupt, and the Fed balance sheet, because of buying toxic assets at "political" prices as a slightly obfuscated way to donate cash to banks, swelled by several trillions, as Matt Taibbi and others have extensively documented.
What are you referring to? Please be specific. I happen to know rather a lot about the Fed's crisis-era interventions and don't recognize the programs you claim to be describing - which should give you pause. Are you preferring to the PDCF? Those aren't asset purchases at inflated prices. Those are loans that have to be paid back, collateralized by eligible securities. Did the Fed expand the list of eligible collateral in the credit crisis? Yes. Was that helpful to the banks? Of course. But you can't just misdescribe it as free cash injections to the banks, which is what a purchase of assets at above FMV would be.
Interesting comment and goes hand in hand with this whole notion of QE whose main function seems to be to juice asset markets and allow market participants (aka large finance houses) to clip the ticket as the funds go round and round between the Federal Reserve and the government.
Giving money directly to the plebs invokes some sort of evidence of moral hazard and the decay of individual responsibility. Giving it to the financial system, however, will stimulate the economy.
Rather than forgiving student debt, we should make it dischargeable in bankruptcy again. This would be appropriate for someone like Chris, who made his own mistakes, and give the lenders and service companies incentive to be reasonable. Going forward, something needs to be done to give the schools the incentive to keep costs, and thus borrowing, down. Perhaps they should be on the hook for a portion of any unpaid debt. As I recall, a few years ago, a study by the NY Fed found that for every additional dollar of student borrowing made available resulted in a $.70+ increase in tuition costs.
The reason these loans are unforgivable in bankruptcy started under Bush the younger. You had medical students running up two hundred thousand or more dollars of debt and then filing bankruptcy to get out from under it, this was a modus operandi. Unfortunately, a lot of smaller fish get caught in the net. But if we choose to pay off the debts there should be also a taking over of the cause, stop the growth of administrative debt, stop all the diversity debt and etc.
Actually this is incorrect. The reason bankruptcy taken away from student loans dates back to 1977, when the media was seeded with stories about students flocking from graduation to bankruptcy court. Initially a 5 year "waiting period" for discharge was introduced, which was then lengethened to 7 years, and this was increased to infinity in 1998. Interestingly, we now know that back when bankruptcy was the same for student loans as all other loans, only about 0.3% were discharged in bankruptcy. So...there was NEVER a valid rationale for retricting, and ultimately removing this constitutionally mandated protection. See https://repository.law.umich.edu/articles/710/
Doesn't much matter what percentage of loans were discharged, question is what proportion of the dollar value of outstanding loans was discharged. Looking at the percentage of loans discharged is something a dumbshit lawyer would do. Tells you nothing at all about the impact of discharge on the loan program, because it tells you nothing about the dollar value of loans discharged.
I take your point, but the percentage of student loan borrowers seeking discharge in bankruptcy- particularly for comparion purposes with other types of loans- is very useful.
Not really since other loans are often secured loans. This is just like social services. Want free Healthcare then close the borders. Want bankruptcy allowed for student loans then you have to let banks decide who they want to loan to not force them to loan to everyone
Also, you appear to be keen to imply that a THIRD OF ONE PERCENT of the borrowers seeking bankruptcy protections could somehow imperil the lending system, which is laughable.
It's not laughable at all. Median student loan debt is only $17,000, but average is $32,700, and 600,000 of the 45 million borrows owe more than 200k, which is 12 times the median. So of course, a small percentage of high-end borrowers filing bankruptcy can have a very big effect. Thinking the percentage of borrows who discharge debts in bankruptcy is a measure of the cost is, as I said, an assumption only dumbassed lawyers or politicians would make.
A LOT. I suspect at this late date, returning bankruptcy protections would probably ensure the bankruptcies of something like 20 Million or more people. This would overwhelm the bankruptcy courts to the point of seizure. That is why the loans must simply be cancelled. Good stimulus there, at least, instead of painful, depressing, and un-stimulative unwinding.
What other debt would you like to cancel? How about folks mortgages? Oh, and don’t think I would benefit, I wouldn’t but others might. Maybe you could foot the bill for everyone. Pony up.
There are no other lending systems that are catastrophically failed. Also, there are no other lending systems that can be cancelled by the President that won't require money to pay for itSo..only federally owned student loans.
Really? Median student loan debt is $17k. Most borrowers are not recent grads, have non-exempt assets, and would lose them in a bankruptcy case. Average is $32k, which is less than the average new car loan ($37k). Portraying this as a debt crisis is asinine. https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics
Nonsense you are ridiculous. The default rate for 2004 students was 40%. They were borrowing about $12,000 on average. Today, the average undergrad (and their families) are borrowing in excess of $40,000. 80% of ALL federal loan borrowers were either unable to make payments, or were paying but their loan balances were going up BEFORE the pandemic. It may not be a crisis to you, but it is absolutely a crisis for the 40+ million people who are headed for default. You quote Zack Friedman, amont the most shameless and unabashed DEFENDERS of this, the largest big-government lending scam in the history of the country. Shame on you.
Yeah this guy had a wife and got divorced all before paying off his school debt. Bet he bought a house and a car and other things as well. Probably took some vacations to Hawaii
actually I think it was Biden that made student debt not dischargeable in bankruptcy. Another of his accomplishments NOT for the people but the corporations/banksters. This is obscene...and so Amerikan and why the empire is crumbling faster and faster, circling the drain....
It was actually 4 medical students at the beginning. Not modus operandi at all. It is almost like being wrong in your analysis and your facts of the case are harming your ability to understand the issue.
Yes this seems like a better approach. The guy fucked up, he’s been paying the price, and the lender has absolutely zero incentive to work with him thanks to shitty legislation. They can legally drain his finances in perpetuity.
Yeah, extreme situations require extreme measures. Bankruptcy does seem appropriate for those hopeless cases. But if we excuse every regrettable choice, we’re going to create an entirely new set of problems. In bankruptcy the debtor feels a little pain. It pokes a finger in the eye. Leaves a mark. Pound of flesh.
But geez, “mistakes” hardly describes this guy’s personal shit show. If mistakes were an ecosystem, this guy‘s choices would be the weather.
The guy you’re trashing seems to have worked most of his life—including, in middle age, jobs that pay poverty wages. He’s paid $111,000 MORE than he borrowed, yet owes four times what he borrowed.
If you’re a sadist, there are dedicated channels on Pornhub and sports like MMA that might relieve some of that pressure. I’m not sure that smirking at the misery of 60-year-olds who are being victimized by banks is the coolest way to get your rocks off.
Some misery is bought and paid for with terrible decisions. Ask yourself how someone with a law degree was making such low wages? My lawyer is in bumfuck pa and charges me 500 an hour. There is always a shortage of defense attorneys to work for public defenders office and at least made 60k a year.
Are you fucking serious? Wagging your fingers at the borrowers- particularly someone who repaid HUNDREDS of thousands more than he borrowed, yet still owes HUNDREDS OF THOUSANDS MORE THAN HE BORROWED- of this lending system is entirely inappropriate. Please. This is not a bad borrower problem, the bad faith resides ENTIRELY on the lending system...what history will describe as the worst government lending scam in the history of our country. Give me a fucking break, guy.
I don't know what the general situation is, but the Chris story does not seem that predatory... Sounds like he basically decided to not make payments for a decade, very very seriously bad decision. Adjusting for inflation the amount he's paid isn't necessarily that crazy, and he did have the misfortune (or stupidity) of getting his loan in an extremely bad time for rates. As said elsewhere it's weird and probably nonsense that he can't just go bankrupt, but there's also major adult decisions this guy made that were awful and no one is that sympathetic to.
Nonsense, an entire industry of collection companies, guarantors, and others have sprung up that feast upon guys like Chris. If this were ANY other debt, he could have at least threatened bankruptcy, and gotten a fair and reasonable workout on the loan. Credit card companies, for example, routinely will forgiven interest settle on a fixed payment plan to recoup the principle, and be very happy with that. Last I checked, credit card companies are doing just fine, by the way. Since when have you ever repaid more than a HUNDRED THOUSAND DOLLARS more than you borrowed on anything other than a house, if ever?!! People like Chris aren't interested in sympathy, particularly yours. They are asking for JUSTICE, and they will get it, as the ENTIRE LENDING SYSTEM is now vanishing into a mist of illegitimacy. The default rate among all borrowers today is surely in excess of 75%, that is 4 times higher than the default rate of sub-prime home mortgages. It is catastrophically failed, and needs to be taken to the bath, and drown in the tub. It will cease to exist by popular rejection if nothing else. Whatever your opinion might be is irrelevant.
You said: "Since when have you ever repaid more than a HUNDRED THOUSAND DOLLARS more than you borrowed on anything other than a house, if ever?!!"
Really? Any time you borrow money for a lengthy duration this will be true. That's how compound interest works. If you borrow $100,000 for 20 years at 5% (compounded monthly), you will owe $270,000 at maturity. That is with no interim principal payments (I/O) but also no origination fees, penalties, default interest rates etc. The only reason this doesn't happen when you finance a car is because auto loans are typically 5 or 7 years. Reasonable people can argue about an optimal level of bankruptcy dischargeability for student loans, but let's not turn middle-school level math into some mysterious conspiracy.
Great. You claim to be reasonable. Let's be reasonable. By every REASONABLE metric or measure, this is a catastrophically failed lending system. The default rate for everyone with student loans right now is going to exceed 80%. That is 4 times higher than the sub-prime home mortgage default rate. It is now UN-reasonable to simply return bankruptcy protections, that will ensure the bankruptcies of more than 20 million people, perhaps far more That would overwhelm the bankruptcy courts to the point of seizure. We're throwing trillions in stimulus into the economy right now, including in the form of PPP loans that don't need to be repaid, and ALL of the stimulus measures add to the national debt. Given this, it is entire reasonable to cancel all federally owned student loans by executive order...in fact this is a far cheaper, easier, and perhaps more effective way to stimulate the economy where it is needed.
The only UNREASONABLE piece in this conversation is you attempting to defend and perpetuate the worst, largest, most unconstitutional big-government LENDING SCAM that this country, and the word (in fact) has ever witnessed. Good luck dying on that hill. I wouldn't, but hey, if you want go down that way...
Whoa whoa, no need to attack. I was openly admitting I don't know that much and just want to understand the system better. Matt's article pretty anecdotal, and I was having trouble seeing the systematic problem when Chis openly admits to putting his head in the sand for an indefinite number of years on something this important.
Seems like the lack of a bankruptcy option really is the root of this, and I'm fascinated by how that came to be. From your other answer, it seems like the "defaulting students problem" somehow got blown way out of proportion and legislated aggressively. But I'd like to know more.
Eddie, even the National Review is calling for the return of bankruptcy rights to student loans, along with an exit of the federal government from the lending program. This is another conservative institution who agrees with the need for the threat of bankruptcy to exist on hyperinflationary student loans. What might higher education look like with the government completely out of the lending business? Certainly prices would fall. https://www.nationalreview.com/2019/04/eliminate-federal-student-loans/
Consider what you are saying, you would garantee students free money to drink, fuck and hang out in college on loan money. Then leaving college having no assets and only debt, they could easily file bankruptcy and remove all debt.
I am okay with this if we go back to banks can decide who to loan to and the government doesn't basically back the debt. Of course if I was a bank I wouldn't do student loans for any degrees except engineers, doctors and finance. Also, as the bank I would like to repo the property I loaned the money for aka the degree. So if you went bankrupt after becoming a doctor you lose your license and the doctorate.
These "administrators" see a lot of incentive to partner with those who don't have student's interests at heart.
I hope these concerned taxpayers care about the number of lobbyists, and lobby money the Department of Education pays out to keep people lodged in an administrative state disastrous to the economy. Here are some items to fact check. Did the Department of Education sent lobbyists across the country and forty-four million dollars of lobby money from 1997 to the time John Boehner stepped down in October 2015? Did all that money go to those on the House Judiciary committee? How many lobby dollars have gone out since, and to whom?
No one seems mad at the true villains of this story and that is the colleges and universities themselves. These fraudsters have increased tuitions by over 1100% since 1978 as professor and administrator salaries and numbers have soared while dorms and student centers now resemble luxury resorts rather than the rather utilitarian facilities that worked previously. So long as the extortianate tuition could be laid off to the feds repayment was (and is) none of their concern.
Make the schools responsible for debt that goes unpaid and we will see much lower cost and better results as silly degrees with zero chance of repayment ( looking at you grievance studies) will become relics of the past!.
Don't get me started on the colleges. They have conveniently ran and hid from this debate. NEVER have I EVER heard a college President so much as discuss the absence of bankruptcy protections from student loans, for example. Yet, they are taking in $100 BILLION per year from this predatory lending system:
Also: The colleges have managed, over the past 15-or-so years, to build up massive SLUSH FUNDS, over and above their endowments. This is largely unreported stuff here, but the amounts they have stashed away is jaw dropping:
On a larger level cost of everything pretty much has far out paced income for the majority of people so people have come to accept mass debt and trickle down has become reverse gravity up for what wealth there is in this country. There is increasingly no way out for too many people and that is not a good situation. It doesn't have to be this way - it's a choice by those in power.
There’s an excellent book called Failing Law Schools by Brian Tamanaha that answers some of those questions. It’s pretty bleak.
I agree with everyone above that universities have largely become predatory institutions—or, in the case of schools like NYU, part-time predators and part-time real-estate speculators.
Law schools can be big profit centers that funnel cash to the rest of the university.
Law school is itself one of the biggest scams out there. It's an exorbitant fee and hazing experience to allow you entry and initiation into what can be, without guarantee, a lucrative career. You come out of 3 years of law school a lot poorer and barely of any use in the practice. The only thing that teaches you how to be a lawyer is practical experience, hopefully under the supervision/mentorship of experienced lawyers. Law school itself is a joke. It can give a good ROI, in pure terms of cash-in/cash-out, though the requirement to make the investment is an artificial barrier. But in terms of ROI on the 3 years spent there, you're getting fleeced. Those three glorious years do not put you three years ahead of someone who never went to law school. Maybe 6 months, if I'm being generous.
I'm intrigued with the fact that in some states, it's still possible to "read for the law", pass the bar exam and be certified as an attorney at law without attending law school, or by attending only a year or so, or by clerking and learning the law codes on the job, and then passing the exam. This was once a very common means of becoming a lawyer. https://en.wikipedia.org/wiki/Reading_law
According to the Wiki link, 12 US presidents did it that way, including Abraham Lincoln.
As did 12 Supreme Court Justices.
You probably have to be diligent and self-motivated. But you'll save a fortune. I think that once certified in one of the states permitting that method, it's possible to obtain a license to practice in most of the others.
More from the Wiki page: "As of 2014, California, Vermont, Virginia, and Washington permit students to take the state bar exam after reading law with the help of an attorney as an alternative to law school. New York, Maine, and Wyoming allow students to study in a law office together with some period of time in law school.[7]"
This is why I am aiming for a master's in accounting. Only 1 year of coursework. I know I can learn anything on the job the problem is employers have so many of us plebs to draw from they don't need a well trained work force. They can simply hire someone else rather than provide advancement for those they employ. The only thing the master's I am aiming for will grant me is entry to the jobs where I can actually learn the business of accounting. Credential inflation is a bitch, but hopefully the masters degree shows I can jump through their hoops and am worthy of a job and maybe even guidance and mentor-ship. I am so sick of being a middle aged college educated administrative assistant. What the hell did I do to deserve this? oh yeah I did what everyone told me to do and just got a degree. I come from a professional family of doctors, scientists, IT professionals, and attorney's hence it was always preordained that I would go to college, but that was the scope of the options that were presented to me: go to school, get any degree, and the jobs will be laid before you. all that need be done is to walk the path to prosperity. I went to college to avoid the mindless data entry work I do. FML
This is way off topic, but when a Florida law professor was gunned down by a hitman in his driveway, a lot of people at first thought it was because he had a blog where he was defending law schools against this criticism.
Are there any villains, though? We are all just pigeons pecking the button that makes the food come out. If I was a university president, I would have a massive endowment, a praetorian guard of administrators and define my job as one of having lunch with extremely wealthy people rather than attending to grubby student needs.
I, for one, vote for the lobbyists who keep getting the lenders the legislation they want, as the #1 villains, with the politicians who are in bed with the lenders and lobbyist as a close second.
Sigh...there are no private lenders. The government originates almost all student loans for higher ed. Even before 2010, when the government completely took over the education loan market, the private lenders just originated and serviced the loans. The government guaranteed the loans. Banks were not then, and are not now, the issue in the education finance market.
Don't get me started on the colleges. They have conveniently ran and hid from this debate. NEVER have I EVER heard a college President so much as discuss the absence of bankruptcy protections from student loans, for example. Yet, they are taking in $100 BILLION per year from this predatory lending system:
Also: The colleges have managed, over the past 15-or-so years, to build up massive SLUSH FUNDS, over and above their endowments. This is largely unreported stuff here, but the amounts they have stashed away is jaw dropping:
An interesting comment on one of these stories about the exploitation of adjuncts: someone said "I bet every one of those tenured profs (who pretend to wring their hands and perpetuate the system) can quote Marx."
I find the entire situation to be laughable. Why? Because all of these whiners borrowed money to get a college and advanced degrees. One would think they’d be smart enough to read the papers they were signing so that they’d understand what they were committing to. These people aren’t village idiots. They knew they were borrowing lots of money. Chris is 59 years ago. I came of age around the same time that he did. I borrowed money for college too. Those higher rates sound ridiculous now, but if you lived through those times, you will recall that the prime rate that banks charged their best customers (these were the days before LIBOR ruled) reached as high as 21%!!!! Heck, even the Federal government was PAYING more to borrow money for less than it loaned Chris and me - I recall buying Treasury bonds issued by the Fed yielding 14.625%!!!! Why did Reagan raise the rate on student loans? Because he was losing a fortune on the negative arbitrage, that’s why. And even after he raised the rates by 200 basis points, he was still losing a boatload.
Money doubles in 7 years if you borrow at 10%, in 10 years if you borrow at 7%.
So readers should keep in mind the tone of the times when Chris borrowed. Debt scared the daylights out of most sentient people. That may be hard for people to relate to or even believes in these many years of historically low interest rates.
But people with their eyes open back in those days did what they had to do to avoid or minimize the money they borrowed. I know that I did. I took a job to pay as much of my college and law school costs as possible. I didn’t get lazy and say, ah, screw it! and let the debt grow mindlessly as if I thought the whole thing was an unserious game that was rigged. Because it wasn’t. The disclosures were all in crystal clear black letters on white paper. With a crazy interest rate environment, I understood the risks were tall and I did my level best to avoid as much debt as possible even because it meant that every dollar in debt I avoided allowed me to avoid 9% a year in interest. If that’s not an incentive for people to get a job and keep their debt low, nothing is.
Yet there were plenty of unserious people in school with me who laughed at me for missing out on the college social life. No, I didn’t enjoy the Greek life, the first parties, the clubs and all that. I went to school, then to work, then studied, then sleep. I didn’t buy a house until I paid off my student loans 10 years after graduation. I did without until the debt was GONE.
And I’m getting tired of the deflection of attention to BIG CORPORATIONS and their bail outs. Sure they happen. But does that mean YOU can justify acting like a schmuck? Are YOU a systemically important entity? Maybe to yourself, but not to the country.
You want to say that you were gulled into taking stupid loans? What does it say about you, Mr. College Graduate? It reminds me of the old joke - did you go to school, stupid? yes and I came out the same way!
Yes, it is true that college costs way too much money. The average HS cost $11,000 a year per student in the US. Why does it cost $11,000 in the 12th grade but $40,000 and more for the 13th grade? Because people will pay it, and because of voting constituencies the government made it easier to borrow. Those constituencies are both the schools AND the borrowers.
But who put a gun to your head and said you MUST do this? Too many people think they should go to college are probably not suited for it. But it’s up to YOU to know your own limitations and to take a hard look at what you are getting yourself into.
At the end of the day, whether the colleges and universities charge too much or the government made the money easier to obtain, or the bankers misbehave in other areas, when YOU borrow money, its down to you to know what you’re getting in to. It’s quite a bit of irony not plead ignorance about loan terms entered into for an education intended to make you smarter.
Rick, my main problem with your thesis is that the the vast majority of students are minors when they sign the papers. Plain and simple this is a predatory system feeding on the naivety of our youth. Now you can rightly blame the parents somewhat, but the lower class has been spoon fed the lie that a college degree, not matter where it is from or what kind it is, is a ticket to the good life. That's just simply not true.
Also why don't we hold banks to the same standard? They *should* know better than to make so many questionable loans, it's their business to do so for crying out loud. Don't you think the banks guilty of making bad loans deserve to go bankrupt and have their shareholders eat the losses? Student debt should be made dischargeable under bankruptcy, and banks that make loans to people unable to pay should suffer losses for doing so.
“18 years old” is not a minor. It’s considered an adult who can sign and legally enter into binding contracts. We have an 18 year old son. We’ve saved for his college since he was born and will give him the gift of being able to start life post-college without debt. He also works his ass off doing any type of manual labor that pays. No coffee shop hours for him. It wasn’t easy but I’ve noticed one thing raising children through out this time. One of the problems with modern society is that we infantilize people in this age group (18-25) as if they are no more capable of dealing with life than a 5 year old. There’s no accountability and now instead of honoring debt obligations, everyone is clambering for debt-forgiveness. It’s a real mess out there and though I pity Chris in this article, he’s made some really poor choices through out his life.
Did you ever think maybe Chris lacked parental guidance? Poor kids often have disinterested or overworked parents. I was one. I made bad choices but didn’t exactly have great role models growing up. Also, at 18 I had no clue how money worked. I worked summers in tobacco making a little money to buy some clothes for school. I learned to drive whenI was 18 so basically had little social life other than church or reliance on friends or school activity buses. People need help.
To be clear, almost all student loans today are government originated and sold. Banks aren't pushing student loans on anyone. A small handful of PEL lenders like Sallie Mae exist almost exclusively to do the gap lending and almost all of those loans are parent co-signed.
Fuck. Simply telling a child, and at 18 I had no idea what I was doing and was absolutely a child, that all they need is a degree is god damn criminal. All I was ever told was go to college and get a degree. It doesn't matter what your degree is in. Forget the money and just focus on that advice. I am so fortunate to have no college debt and STILL I have no viable career. Writing all of those papers about NGOs, ISLM curves, global governance, political theory, and public policy did fuck all for me in the workforce where all I do is mindless administrative work. Is weed federally legal yet?
It's disingenuous to tell kids that people with college degrees make more than those who don't. Correlation does not imply causation and a piece of paper does not magically transform you. It also is wrong to treat all college degrees as equivalent, and degrees from different universities as equivalent. It is also a bad idea to forget economics and follow your passion unless you are born into wealth or have extraordinary talent. If following your passion won't pay the bills...well, that's what hobbies are for.
Since 2010 as part of the ACA the feds took over most origination. Before 2010 the majority of all student loans were from private institutions. Since 2010 less than 10% originate from private institutions. The majority of debt is now held by the federal govt. But the point stands that when the law was passed it was a giveaway to banks.
No, it wasn't. Under the FFELP system, private education lenders originated the loans, but the government guaranteed the loans and even subsidized the servicing and default collection costs.
Not so. The "vast majority" of college students are NOT 18 when entering college and signing loan papers. Further, virtually none are minors when signing for their second year or grad years.
While there are certainly some who are 17 when entering college, they do not by ANY stretch comprise a "vast majority" of Freshman.
The 24 hours between when they turn from 17 to 18 gives them enough worldly knowledge to assume massive amounts of debt, not not enough to purchase a beer? That's the hill you want to die on?
Obviously the hill YOU want to die on is the one where you defend, justify, and perpetuate what history will record as the most largest, most unconstitutional and nationally threatening GOVERNMENT LENDING SCAM this country...and in fact the WORLD has ever seen. Nice job. Take a bow. And please...accuse me of hyperbole. I dare you to.
It's not untrue. They can't even buy a beer. They have no life experience. They have no assets and no job. Are you going to argue that everything that's legal is also moral?
Your silence on the banks culpability is deafening. For the third time, why do the lenders need special legal protection?
Also, you neglected to answer the question about the banks. The banks absolutely know what they're doing. Why do they need to be protected from these predatory 18 year olds?
If these students aren’t smart enough to read a loan agreement, can we roll back all of the privileges and obligations we’ve moved from 21 to 18, please? No more drinking, buying tobacco, voting or enlisting in the military for them. They aren’t mature enough it seems,
I'm not sure what this has to do with holding banks liable for poorly performing loans, but sure, i'll address your questions:
1. On alcohol- Students can't drink until 21 in the US. Since you didn't know that the drinking age must be 18 in your country. Tell me, Rick, where are you from and why do you feel so strongly about student loans and bankruptcy laws that don't affect you? I find your motivations peculiar.
2.On smoking- I'm all for pushing tobacco back to age 21. It's a bad habit and a public health nightmare. Kids don't know what they're doing when they get hooked on tobacco. Studies have shown that those who pick up smoking at a young age have a much harder time quitting later. I'm glad we agree.
3. On voting- Younger kids mostly don't vote and i'm sure a healthy discussion could be had on that topic.
4. On enlisting- Enlisting fresh meat for the grinder into the forever wars is a privilege now is it? If it's such a privilege how come more elites don't enlist their children? That aside, even if you enlist you can always leave no questions asked during basic training. After you're on active duty, the army can discharge you if you cannot perform your duties due to physical or psychological reasons. You can also be discharged for other less honorable reasons, but the point is that you can get out. It's easier to quit the army on active duty than it is to discharge student loans. How sad is that?
Now that I answered your questions, how about you answer mine. Why can't the banks be held accountable for the bad loans they issue?
I disagree with every single one of your statements. Pushing the age of adulthood back to 21 didn’t make for more mature 21 year olds. It made for less mature 25,26,27 etc adults. The sooner people can take on real responsibility the better. This baby-ing of perfectly capable adults has to end.
It’s really interesting to see how much schadenfreude people can dish on the Internet and Rick here is quite a champ. The logic displayed is always so simplistic and vapid. “Look at me! I took out a loan around the same time you did and it all worked out! I’m smart! You dumb!” I did what you did and didn’t fuck up, so obviously it’s your fault.
I could go down the list of misfortunes Chris dealt with that weren’t really his fault again (though of course Rick would find a way to blame him for them anyway) and I could point out how Chris has admitted to making big mistakes. I could also point out how he has tried to make good despite his misfortunes and mistakes, including paying over double his loan amount while still owing over 3x the original amount. I could do all that, but that obviously won’t make a difference to Rick here, because he is a giant asshole.
Your righteous indignation fails you. IF the advocate (Matt Taibbi) for forgiving misfortune wants to use an anecdotal fairy tale of woe, then it is perfectly acceptable for the opponent to use an anecdotal fairy tale of success. Neither offer substantive information on the case and plan for which they argue.
Of course, useful and substantive information isn't really the goal in this kind of plea; fleecing the taxpayer is. And tugging at heartstrings by showcasing the hard luck of what may be an insignificant few is the favorite tactic of the swindler.
Nonsense. The "Taxpayer" (actually the Department of Education in lockstep with their crony, politially connected contractors) have been milking the borrowers for a King's ransom for decades under this unconstitutionally predatory lending and collection regime. Did you know that the Department of Education started booking profits of about $50 Billion per year starting around 2012? Did you know that some of these profits are used to fund controversial programs like Obamacare? No, you obviously did not. Did you know that the Department of Education has, astonishingly been making a PROFIT, NOT A LOSS on defaulted loans going back to 2004 and before, in the absence of bankruptcy protections, statutes of limitations, and other fundamental consumer protections? No you didn't. Did you know that the Department of Education fights TOOTH AND NAIL, behind the scenes, to keep bankruptcy AWAY from student loans? No. Why would you. This is now a CATASTROPHICALLY FAILED lending system. The "Taxpayers" have pushed this lending system to the point where we now are looking at t default rate of over 75%, perhaps WELL OVER 75%. This is about 4X the default rate of subprime home mortgages. This lending system is done, finished, toast, FAILED. You might not like that FACT, but that is your problem. The "taxpayers" created and perpetuated this lending scam, and now they, along with you and I, will be watching it vanish into a mist of illegitimacy. No one here is seeking your approval or you admonishment. Your opinion, frakly, is irrelevant. If you have thoughts about what the next higher education lending system should look like, great...let's hear it. All else you might have to say is just snarky insinuations, insults, and babble.
This is a great example why the Federal government should have stuck to its knitting, running the departments of State, Defense, Justice, Interior, etc. and stayed out of the transfer payments business. It creates ugkynkeviathans like this that satisfy no one - the takers want more of it and the makers want less of it amd that’s how it gets twisted into something horrific.
Yes, the default rates on student loans are higher than subprime mortgages. But that’s only because the 13th amendment prevents the government from repossessing the borrowers- the containers of the object of the debt, whereas secured lenders were able to take possession of the homes.
Taxpayers - true taxpayers - didn’t create this problem. Consumers of the product did and they did so with relish. They wanted subsidies and they got them. The aspect of the program that bites them on the ass now is that back when people were less grabby and demanding, the program was built based upon a quid pro quo - we won’t underwrite and price the loan based upon sound economic principles and thus, you can’t get out of it if you screw up or if life smacks you in the head.
Again, this is what you get when the central government, with an unlimited printing press colors outside the lines and expands into areas best left to state and local government.
Lol. "Consumers of the product", meaning the students, had NOTHING TO DO WITH THE CREATION OF THIS BIG GOVERNMENT LENDING SCAM. This was a creation of Sallie Mae, in concert with the Department of Education and the colleges....ALL OF WHOM are making out LIKE PALACE THIEVES. You clearloy need to learn something about this uniquely predatory, unconstitutional, nationally threatening lending system, buddy. We're probably at an 80%, if not higher default rate. THis is 40+ million real, live TAXPAYERS who are being conquered and enslaved to the great benefit of the government, and colleges, the lending swamp, and NO ONE ELSE. Why don't you read up a bit on this lending system before speaking about it?
Nonsense. You're facts are WRONG. The TRUE, LIFETIME default rate for 2004 students, we now know, is over 40%, and that class of borrowers was only borrowing around $12,000, where today the average undergrad (and their parents) are leaving school with over $40,000 in loans. You are putting up some transitory metric, probably lifted from highly inaccurate Fed data that means NOTHING. Also even the most generous calculation of average student debt is $1.6 Trillion/44 million is $37,000 per borrower, and again, that $1.6 Trillion does not count a tremendous amount of interest (interest on loans in default, for example), so the TRUE debt per borrower is closer to $44,000. Further more according to Mr. Wayne Johnson, who RAN the federal lending system under Trump, 80% of all federal loan borrowers were either uunable to pay (~65%), or were paying but their loan balances were going up (~15%). BEFORE THE PANDEMIC. Maybe you should stop the whole "google expert" ruse. It is not impressive, and not helpful whatsoever to discerning the truth about this catastrophically failed lending program.
You called this story an "anecdotal fairy tale of woe." So, this is a fiction? A lie? You come here because you think Taibbi is lacking in credibility and want to call him out on making shit up?
You think this is "the hard luck of what may be an insignficant few." 1/6 of all Americans are saddled with student loan debt. It's the second highest form of debt behind mortgage debt, higher than credit cards and auto loans.
People can't discharge this debt even if they have legitimate reasons for being unable to repay it, so obviously it's a low risk proposition to hand out student loans to whoever comes in for one.
I disagree. The more people eligible for a benefit, the more you enlarge the pool of people who are not part of the target audience. Look, for example, at the current deferral of all student loans. There are plenty of people out there who were paying and can afford to pay and feel that it’s free money not to pay. Just like the PPP loans that went out based upon payroll rather than based upon need.
You conflate having a student loan with not being able to repay a student loan. That is of course, a illogical. To suggest that 1/6th of all Americans share Chris's plight is comical.
Actually, the two are nearly synonymous. Wayne Johnson, who RAN the federal lending system under Trump, told me just before the pandemic that 80% of ALL BORROWERS were either unable to pay on their loans, or they were paying, but their loan balances were increasing. That was BEFORE the pandemic. We were headed to a default rate on these loans of over 75% before covid hit. This is now a catastrophically failed lendinng system. Time to take it to the bath, and drown it in the tub. It is vanishing into a mist of illegitimacy, and there is nothing that you or I can say or do to alter that fact. Inculcate that. Not quite so comical when you do. https://studentloanjustice.medium.com/the-conservative-case-for-cancelling-student-loans-9e085a168972
Perhaps Chris shouldn't have taken all that money in the first place and should have been content to love freely and count on the kindness of strangers who don't mind material wealth. But is it really fair to ask (force) those who do find happiness in wealth, to share what they slave all their lives for, with the evolved children of Aquarius who find peace love and understanding to be "what it's all about"? SOMEbody's gotta go to work to put food on the table and a roof over the heads of all those evolved souls.
I appreciate your thoughts, here, but this lending system is well beyond repair. The government will likely never see even $.20 on the dollar for the junk loans they are sitting on, by and large. It is far better to simply cancel the loans, and end the lending system at this point. Call it stimulus. I suspect that Trillions (not just the few hundred billion that is actual unpaid principal for the federal loan porfolio) have been thrown out to wealthy individuals in stimulus that did not deserve or need it. If 10-15% of student loan borrowers wind up with a benefit they don't necessarily need, it is by far and away worth it to have the other 30+ million people out from under the weight of this oppressive debt. Also ALL federal student loan borrowers are determined to be "financially needy" as a precondition for receiving the loans, so this is nothing like (for example) the 43,000 millionaires and billionaires who just received an average of $1.6 million in pandemic stimulus. See Change.Org/CancelStudentLoans
There is such a thing as emotional capital as opposed to economic capital. If you choose to follow your muse, work less hard, spend more time on to recreation, you are acquiring a form of capital that someone who takes on a nose to the grindstone approach. How you spend your is a form of capital allocation. Having made your decision to,follow your muse, etc, it’s pretty annoying to listen to whining about income and “inequality”
Chris was making $28,000 a year in the 21st century. If you purchase an undergraduate degree and a law degree and make considerably less than a full time nanny makes, your life has gone badly. There's nothing more to say here.
You comment betrays your ignorance on this topic. This is, and really was never a "bad borrower" question. We are looking at the slow motion evaporation of the worst big-government lending scam in the history of this country. The borrowers have not changed significantly since the 1970's. What has changed is the lending system, and the prices that the colleges now charge. When 80% of all borrowers were either unable to make payments, or were paying, but their loan balances were going up, this is a catastrophically failed lending system. You sitting on your perch, looking down your nose and wagging your judgemental fingers at the innocent victims of this vicious lending scam has absolutely zero value. Frankly, it is an embarassing thing for you.
Your comment betrays your ignorance on this topic. There was ALWAYS a “bad borrower” question. Of course there is a lending scam, but it is one played against the American taxpayer. Once the Feds got involved, they NEVER underwrote the loans. They never looked at the quality of the courses that the borrower was taking and whether it would lead to a degree that made the borrower employable. They never required a parental guarantee which not only would provide credit support, but would also provide some oversight regarding the courses and degrees the borrower would pursue. And on top of all that, they loaned at preferential interest rates relative to the quality of the credit - a deep discount. More of the welfare state. You’re sitting on your perch, looking at hard working people who played by the rules, took on debt and paid it or avoided it by working their way through school and you wag your judgements fingers at the innocent taxpayers who are already paying for a ton of handouts already and want to lay more on top of them has absolutely zero value. Frankly, your left wing gimme gimme gimme attitude is an embarrassing thing for you.
Okay, but: what kind of world do you want to live in?
One where worthless, stupid losers—people who aren’t as admirable as you—get crushed to further enrich the worst people and institutions on earth?
In other countries, college is free. Here, college is described to teenagers as basically essential if you want to be a full human being. The media, teachers, and one of our two political parties endlessly repeat the message that “college = success and no college = failure.” Obama has convinced the NPR crowd that that a college degree is a cure for poverty.
People who aren’t as excellent as you make mistakes when they’re young. They impulsively join the army. They let colleges and relatives talk them into getting degrees they can’t afford. They don’t read the fine print. Some of them deal drugs and end up serving time.
I get that it sucks to be so much stronger, smarter, and better than others, and never receive a prize or the recognition you’re due, but: how exactly do you gain from watching someone’s meager wages and retirement checks be garnished long after he’s paid back 220% of what he borrowed?
There is something known as the law of natural consequences. Touch fire, get burned. Make foolish financial decisions, lose money, incur large debts.
Someone pays 200% of what they borrowed, including penalties and loads of interest because they didn’t meet their lawful obligations that they freely assumed. That’s how things work. Anyone who has taken out a mortgage gets a disclosure by the bank under the Truth in Lending Laws. Many people are shocked by it because it has to disclose how much in interest and principal you will pay over the Logan’s term. Thus, for example, if he borrowed $100,000 at 7.5% when Rick was 29 years old (reasonable amounts and terms at then time) on 30 year terms, he’d have paid....wait for it...$240,000 over the term of his loan or 240% of what he borrowed.
Ah, yes, but you say Chris still owes a ton of money. Yes, perhaps because he didn’t take his debt seriously. He seems to have thought that he made a deal with his lender that somehow THEY were responsible for his ability to obtain employment sufficient to service the debt he freely incurred. As if they were responsible for his choice of what to major in, what school to go to, what jobs he’d take and where he’d live. He behaved as if his debt was optional - not paying it for periods of time, incurring large penalties and piled up interest that began to compound like topsy.
And yes, I was wise enough to take things seriously and responsible enough to do without things and experiences that allowed me to get out from under my debt. What would you do? Rescue every one who underperforms? Why should that be a cost that is borne by others? I guess we should eliminate all bad consequences in life. Why do they give out only one gold medal at the Olympics when maybe 30 people compete? Its not fair! Bwah Bwah Bwah!!!!
You would eliminate moral hazard in life. Consider a loan an “option” that will be repaid only if it works out for you.
Your post assumes that huge swathes of the population are losers who are gulled into making poor choices by misinformation. Can it be that so many Americans are that gullible and foolish?
And how do you measure success? I grew up poor, the son of immigrants. Many of my friends didn’t go to college - they became cops, fireman, grocery store workers. They live within their means and are not “losers”. They were serious minded people who understood that college was not for them and are mostly happy with their lives. Others did go to college and there is a spread of outcomes, from amazingly wealthy to unsuccessful. That’s how life works.
The question is how you define success. By money in the bank? He who dies with the most money wins? I know plenty of miserable people who have lots of bank. And why do you feel the need to define success levels in a comparative frame of reference? The happiest guy I know is a retired cop who never earned $100,000 in his life, who still works after retirement to pay his debts, loves his family and smiles all day long with his lot in life. He’s aligned his needs and his wants with his resources, has a happy family life and loves his job.
If you drink the Koo-laid offered by “THEM” it’s your own fault. Everyone in the world doesn’t have to pay for your mistakes.
And as to other countries providing educations without cost, don’t kid yourself. There is no such thing as FREE. Someone is paying the bill. You seem to just want something for nothing and are angry about the amount of coin in your pocket, relative to your appetite and how much others have achieved.
Rick has a lot of platitudes about morality and responsibility, but the truth is he is a sick and twisted individual that spews a lot of bullshit to justify being an asshole.
Chris: "Hey, I know I fucked up, but this is really difficult to deal with, can I get some help?"
Rick: "No! Fuck you! HA HA HA HA! Look at how stupid you are! You fucking dummy! You should have been smart like me, then you wouldn't be suffering!"
It's a pretty disgusting world where people have bought into this mentality that individuals fucking society over under the legal fiction of a corporation get to duck personal responsibility, but individuals getting fucked over by corporations need to eat shit and like it. People like Rick make it all the worse by actually taking pleasure in the misfortune of individuals and jeering right at them as if this is some game he has won and Chris has lost.
So perhaps you'll be sending Chris a check to help him out?
Name calling and ad hominem attacks are not really forms of debate. This is a comment section where people express opinions. Is it possible for you to disagree with Rick without implying he's an asshole filled with bullshit? Asking for a friend.
Rick's a big boy. I don't appreciate people attacking others here for language, frankly. That is a form of censorship, and in itself poisons free speech. I appreciate Harvey's choice of words. If we need the PC cops to come here and clean the place up, we'll call you.
Every last one of us is and has been a loser at one point or another, for short or interminable periods, struggled, been humbled by life, thought we couldn't get any lower, and yet still did. Many of us never recovered, many of us overcame. So it's not the lot in life you've been dealt that determines your worth or whether you're a winner or a loser. You're the one putting people in this categories and reserving your contempt for those who don't loudly take pride in and blame others for their losses.
Well that is your opinion and you're welcome to it. Obviously, others disagree with you as evidenced by their choice of words. It's called free speech, and I for one am ALL FOR IT. If you are insulted, offended, or hurt by the syntactical choices that others make while expressing themselves so much that you choose to comment on that rather than the substance of the debate, you only serve to distract and and confuse the debate. Notice how absolutely nothing in either my comment that I am typing RIGHT NOW has NOTHING to do with the subject matter? Yeah. You caused that. Knock it off. Stick to the topic.
Rick you're making a logical fallacy by implying since Chris made some stupendously bad choices everyone who took on student loans is guilty of the same. But 17 and 18 year old kids were fed propaganda about how they needed a college degree all the way through high school and were lied to by their guidance councilors and admissions staff. This was plain and simple wealth extraction from the younger generation to the older. The kids who naively signed themselves into nondischargeable debt that they cannot service deserve some compassion. The banks, who know better and lobbied for this exact situation, are the ones who deserve our ire.
I don't support completely forgiving the loans, but situation right now is unsustainable and unjust. At a minimum the following should be done:
1. Allow refinancing to a low interest rate. It's a compromise between doing nothing and forgiveness.
2. Allow discharging of student debt in bankruptcy.
3. Make it mandatory that when payments are set up a certain percentage goes towards the principal. Interest only payments should be illegal.
Nonsense. What, exactly, is NATURAL about a lending system from which every consumer protection (that exist for EVERY other loan) has been stripped, unbeknownst to the borrower, such that guys like Chris can see an $80,000 loan be artificially JACKED to a HALF MILLION DOLLARS OR MORE?!! LOL. There is nothing "natural" about this, you douche.
You’re out of control with your name calling and personal attacks. I recognize you have some preeminent knowledge and experience in this area. But for someone who wants to educate other people about an injustice, you sure are unjust in your general nastiness
Nonsense. I'm DONE with "up by your bootstraps" DOUCHES like what we see from the commenter above trying to lecture us on hard work, financial management, etc. This is not a problem that benefits WHATSOEVER from such comments. In fact, such comments only serve to kill the conversation that needs to be had about this unconstitutional lending SCAM that will go down as the largest not just in US History, but world history. We are at the point now where people fleeing the country and even KILLING THEMSELVES as result of this debt being inflicted upon the country, which is literally conquering and enslaving over 40 milliion people in this country, and threatens to ruin far more as long as assholes like this guy are allowed to interrupt this conversation with their nonsense. I don't appreciate you trying to assume the position of PC police here. Let this guy respond as he wants. Neither he, nor I need you stepping in the middle to call PC balls and strikes.
Nothing is free. Someone always pays. In this country, 45% or so pay nothing and more pay relatively little. So it’s easy for them to say I want more....
I agree. There are far too many people who lack the desire to provide for themselves. Too many people who have gotten too comfortable in the safety hammock of the nanny state.
That's true. College tuition is not "free". Germany for example, where my brother teaches, has very high taxes, few private colleges, and far fewer people going to college. This enables the government to subsidize higher education significantly. However, they also have a very strong apprenticeship program and people know that they can make a respected and good living in the trades. It's also a more equal society. People feel less pressure to take a huge gamble on a private college or some degree which they are ill-suited for in the hopes they can stop living paycheck to paycheck, or finally get decent healthcare via a better-paying job.
Good point to mention Germany. They have Hauptschule, Realschule and Gymnasium. Basically, you get sorted into a track based on what your academic abilities are. The Uni's also have limited space and there are decisions that we need X number of dentists, so let's put those in the pipeline. And of course, no student gets fleeced $40k to get an AA in culinary, there's an apprentice system in place.
There's plusses and minuses to this. Late bloomers would be out of luck or on their own to try and start something new. But I think that's a more realistic approach since you're not burdening those young people with debt. Most of Europe has low to no-cost education, and is friendly to non-Europeans going there to study. It's not free, but compared to America, it's a screaming bargain. You can get med school for like $10k a year for non-residents.
Good rundown of the times. I graduated in '78, just before the big pushes started to get everybody to go into hock for that parchment. I took out no debt because my folks made too much money and the system was not going to lend me anything. So I ended up doing it by myself- lived very simply- almost deprived in a sense.
But the system is predatory, or at least got increasingly so through the 80s. This is a classic case of the elites losing any connection to the citizens. I understand your questioning of just how educated a person really is if he doesn't pay attention to his world. You're right on that. But I do have a lot of trouble with a system that blatantly lures people into servitude. It's not what a sane, civil society does to its people.
But that seems to have become the American Way. And by the way, IMO college is currently more scam than not- the debt is only part of it. I won't be encouraging any of my 3 kids to go.
You do your 3 kids a tremendous, if not cruel disservice. Learning is one of the great joys in life. The 4+ years of college foster an open mind that sates the curious and discourages a mindless existence. It's not about the riches they may go on to make. It's about feeding the single greatest gift man has over the beasts of the field: knowledge.
I am not disagreeing with you in principle, but the idea one has to subject themselves to the current system to enjoy the discovery of new ideas and learning about the world is hugely mistaken. I AM disagreeing that 4+ years of college “fosters an open mind and discourages a mindless existence”. I live in an elite university town (Evanston, NU), and I am continually amazed at the extremely narrow intellectual and ideological bandwidth of the professoriat; I’ll spare you the examples. To think that the current university system holds a monopoly on learning about the world is a misguided perception.
I don't typically deal (or argue) in absolutes. In fact, the college experience DOES foster expanded learning and intellectual growth. It does not guarantee it, and a community college probably doesn't offer the same fostering as an Ivy League experience. Nor does a community college cost what an Ivy League school costs.
Sending your children out to experience the world and attend the fabled school of hard knocks is certainly an option. But you'll not convince me it's a better option for fostering intellectual endeavors and the joys that accompany them.
As for narrow minds and narrow perspectives, education is not always a cure, and I agree with you that often education can foster a narrower mind rising out of arrogance (I'm educated so I'm right).
I’m not trying to convince anyone of anything. I don’t believe the school of hard knocks is the smart way to pursue one’s life. I am saying that imagining a 4+ year degree at (an American) university is the way to enlightenment is an astoundingly small view of how to live in the world. Your observations about arrogance are spot on. I have actually had people debate me by saying “I went to Stanford” as the trump card in their argument. Here’s an idea.... I live a good chunk of my year in China, Wuhan to be exact. Spend a few grand, attend a Chinese university. You’ll learn more about the world than you’ve ever imagined.
I studied the politics of China while in college. I studied the politics of the USSR while I was in college. Both were fascinating, and prompted me to go to both China and the USSR. I likely would not have put either on my vacation bucket list had I not studied them in school first. In fact, had it not been for the opportunity presented to university students to study in the USSR, I likely never could have even gotten in to the country in the first place. Oppressive communist regimes don't really make hot tourist attractions, but the incredible history, culture, politics, and sociology of the countries that I learned about while in school led me to them and I was the richer for those experiences; experiences that help me today when looking at a lot of the problems in this country (most notably the demise of our free and independent press, lamented by both Taibbi and Greenwald here on substack).
I find it interesting that institutions of higher learning are so scorned by absolutists who look at the limitations of those institutions and argue them as absolute and therefore worthy of scorn, contempt and disparagement. Perfection being the enemy of good, I would never encourage my kids to avoid opportunities that, imperfections and shortcomings notwithstanding, provide an environment so fertile for intellectual rigor and growth. Opportunities, again, a key word in my position, are entirely what a person makes of them. And there are few places in the world offering more opportunities for everything from learning to make a bong out of an apple to pondering existentialism and that wondrous universe beneath one's thumbnail.
"I have never let schooling interfere with my education"- Mark Twain
Did you by any chance produce colored brochures for colleges to entice freshmen to attend and their parents to pay the bill?
The claim that college fosters an open mind is bullshit and just not true. At one time perhaps, but currently? No way.
The college route offers a very limited view of the world. Here's my experience: 4.5 years to get a degree in Range Management (grazing, soils, forage plants, animal husbandry). Right out of college got a job with the Forest Service in Nevada as a range rider and wild horse tech and occasional fence builder. What a life! Wasn't just a job or a lifestyle- it shaped me. 14 hrs/da in the saddle (got paid for 8, but I didn't care), 10 days on 4 off, on my own just me and the horse (or mule as the case may be- the source of my title in these comments). Did that for several years before going back into wildland fire where I made my career. And that career, being seasonal and all, allowed me to see the world. No college needed.
Only needed that degree to get that initial job, since then never really used it though I will admit to still having an interest in range. So there is that.
But, any given day on horseback or on the fireline grants me more adventure, excitement and learning than 4 yrs total of college ever thought of doing. In just one day! Get the perspective? It's out of all proportion.
Riches? Not from working, no. No debt either.
Think abut this: I could send my kid to school for language study. He takes 1 hr/day 3 days/week. At the end of 3 years he does ok. But put him in Peru- their Spanish is clear and beautiful- do a home stay and individual studies and he'll come out in 4 months speaking like a native, with incredible personal experiences. Conversely, what does he do in college after class- go drink beer or paint his face and go to a lousy football game? You're way over rating the college experience IMO.
oh yeah my vast knowledge afforded to me by my liberal arts political science degree sure gets me interviews at companies that want very specific skill sets and experience not someone "who can learn." My first professional job with my fancy university degree was working for Harris Teeter cleaning mop sinks with my bare hands for $8.50/hr. I value my degree greatly, but that doesn't pay my bills or give me the career growth I so desperately need to stave off rising healthcare, HOA dues, and food costs. I wish I had been told to become an electrician.
I'm sorry you've been unable to make the most of your college education. Perhaps it's your interpersonal skills that, as evidenced from your post, have failed you, not your education?
My fourth job was working 10 hour shifts on the manufacturing line where they packaged the medicines produced from the plasma donations for a whopping $12/hr. I went to college because I was told I would work at the factory without a degree, but I had to work my way UP to factory work. You can have your knowledge. It is worthless.
One of the most draconian measures passed by Biden during his loathsome career as a lackey of the institutional creditor class was the amendment to Section 523 of the Bankruptcy Code making it virtually impossible to discharge student debt. The amendment not only put millions into a state of debt peonage, it fueled dramatic increases in tuition, the growth of for-profit colleges like "Trump University," and a burgeoning credit bubble now surpassing $1.6 trillion.
Not bad for a guy who had to cheat his way to a foot of the class finish in law school.
Never forgot this old Alex Cockburn line:
"The first duty of any senator from Delaware is to do the bidding of the banks and large corporations which use the tiny state as a drop box and legal sanctuary. Biden has never failed his masters in this primary task."
Miss that dude. He could write his ass off.
So true. This all goes back to Walter Wriston and Citibank during the late 70's interest rate and inflationary crisis caused by petrodollars. This led bankers to realize that if things did not change quickly, they would be out of business soon. So they decided to move their charters to Delaware and S Dakota (and export debt in those states). They were chosen because of the significantly higher state usury rate --- allowing banks to charge more interest on customers beyond the national rate set at 12%.
This set a showdown and in 1986 we had the Marquette decision (first Omaha vs Marquette National Bank) and this allowed large multinational banks to be domiciled in states that have preferential usury laws, export their interest rates from South Dakota or Delaware to any US state and escape prosecution. This saved banking at the time along with new fiscal policy aimed at taming inflation at all expense.
And the result was that all major players in the industry moved to Delaware or South Dakota for their charter --- and protected their profits from this one battle they won in the State of South Dakota. Biden just happened to be a bankers bagman.
The Marquette decision was 1978, and involved Nebraska, not South Dakota. The decision allowed the ability of a bank chartered in one state (Nebraska, in this case) to charge interest according to the rules of that state (18%) while issuing credit cards across state lines into other states (in this case, Minnesota, the plaintiff) where those interest rates had (before the decision) been able to prohibit the higher rates as usurious (the Minnesota state limit on legal interest was 12%.)
https://www.creditcards.com/credit-card-news/marquette-interest-rate-usury-laws-credit-cards-1282/
South Dakota features in the story because of its newfound post-Marquette decision popularity as a state holding the charter for credit card companies- S.D. had no interest rate cap at all! And neither did Delaware. Although both provisions have been modified since then- each state has a different set of provisions, often with various exceptions. It's frankly too complicated for me to figure out:
https://www.upcounsel.com/lectl-state-interest-rates-and-usury-limits
https://www.bankrate.com/finance/credit-cards/credit-cards-trump-state-usury-law/
https://debtadvisorsus.com/credit-reports/state-usury-laws-maximum-legal-interest-rates/
more info here https://wallethub.com/edu/cc/usury-laws/25568 (but the map in the link claiming to show state-by-state interest rate comparisons has been disabled, probably because the laws keep getting modified.)
Appreciate the correction here Mascot --- I was going back from memory from 2004 interview of Elizabeth Warren on Bill Moyers years ago and how she explained it. Not sure how I got 1986 and 1978 mixed up but I did.
Minnesota and Nebraska now makes sense to me as you mention since there were no usury laws in S Dakota a bordering state and Delaware at the time-- something Walter Wriston said in that interview clip played by Bill Moyers.
Nevertheless, the banking industry fought a battle in Nebraska from which to use in Delaware and South Dakota --- and became a way to evade federal usury laws at 12% (whether it was 36% or 18 %). This is ultimately my point about politicians and banking --- less to do with dates and names (that industry will always be on the lookout for favorable jurisdictions from which to game the system and current laws).
And that the unintended consequence of going off of the gold standard, taking on petrodollars and inflation, caused the banking industry to seek new state domiciles, incentivized new products like credit cards (which were previously very difficult to get because credit was tight), and allowed banks to circumvent the federal usury laws.
All of this could have been avoided with states and federal statutes that anything over 15% is prohibited. But instead, new markets and products were developed as an end round to many people's detriment.
https://www.usdebtclock.org/
Yes, you got the gist of it right, and brought up a history that I think is terribly important- especially for Americans. But it's a history few of them know.
I remember learning about usury in one of my social studies classes in high school- I think it was Economics (do public schools teach that subject any more?) The rule of thumb I learned (in 1970) was that any interest rate 10% or more was loan sharking! Flash forward to my receiving my first solicitation from a bank for an unsecured line of credit, in the early 1980s- $600 at 14.3%, I think it was, soon to be followed by invitations to obtain credit lines at even larger sums, at rates of interest more like 17% and 18%. And I am all like "What is going on here?" I don't think I got the first inkling of the exact details for at least another ten years.
It's also worth noting that the first invitations were sent by banks no longer in existence, that failed or had their assets sold in connection with the 1989 Savings & Loan crisis- the first bank bailout, one that not many people even know of or recall happening. I think my first card offer was Great American Bank.
More finance history that most Americans don't have a clear picture about: as you noted, until the 1980s, credit cards were issued very selectively, and almost never used for consumer purchases unless one applied for a store-connected card, like for Sears, or Macy's. Credit cards were mostly associated with business expenses. Diner's Club and American Express were two of the most well-known cards; as indicated from the issuers, the main use for the first one was for restaurant meals, and the second was for travel expenses- especially foreign travel, as a more convenient elite substitute for the more commonly used "travelers checks" (remember those? not sure they even exist any more.) And there were credit cards for buying gasoline, issued by the service station brands; those still exist.
But it was the 1978 Marquette decision- iirc, along with some related legislation passed in Congress shortly afterward, by the Democratic majorities during the Carter administration- that set the wheels in motion to turn credit card payment into an everyday feature of American consumer purchases, encouraging both increased consumption and consumer debt dependency. When it's "buy now, pay later, incrementally" (forever), that new regime has a way of camouflaging a lot of wage stagnancy (actually wage decline), because workers with modest incomes are given the ability to possess and use the trappings of middle-class living with no money down. Meanwhile, the money that they formerly would have put into a savings account instead goes to paying into their outstanding credit balance.
And here we are now. https://drjkoch.org/Intro/Spring%202018/Domhoff.pdf
So where's all the progressive politicians tweeting about repealing that little bit of the Bankruptcy Code?
Great question. Biden, actually, is obligated to issue an executive order on day one as President ordering the Department of Education to stop opposing student loan borrowers in bankruptcy court. Elizabeth Warren pledged to do this, and Biden SAID he was adopting her bankruptcy plan (with this EO being the most important part OF her plan). So, this will be a good early test of whether or not Biden is a man of his word.
Problem with Warren's "plan" is that her observations and ideas are based on bankruptcy petitioners, which is a highly biased and odd sample of the population. She should be asking whether the bankruptcy code is working reasonable justice in regard to the population as a whole. But she's not a scientist or a careful thinker, so she just wails about hard cases she sees in bankruptcy court, and can't envision the consequences of the changes she suggests.
Agree student debt should be dischargeable, but only under certain conditions. If you allow people immediately to discharge student loans, obviously nobody will make student loans, since students typically have no assets to secure the debt, and the creditor is unprotected. You can repo a house or car, but not an education. So making it difficult to discharge student loans makes some sense. But you need to allow for hard cases. Disability, physical or mental, changes in job markets that diminish the value of a degree, and so on. So you might give Chris a break, since he is obviously mentally troubled, and not capable of using his degrees to advantage. But you would not give a break to a CS grad who decides to be a ski instructor. And you would not give anyone a break in less than five years from incurring the loan, since the value of the educational asset cannot be properly assessed in such a short period of time.
Student loans should be treated in precisely the same way as all other loans in bankruptcy court. There is NOTHING that distinguishes them for special treatement. All the evidence we have from when bankruptcy was the same for student loans shows that only about 0.3% were discharged that way. Restricting, and then eliminating (essentially) the protection was precisely what cause the leding system to explode, and now catastrophically fail. The Founders (who themselves were being abused under debt to British banks and merchants) called for uniform bankruptcy laws ahead of the power to raise an army and declare war for a very good reason. The student loan exception to their wisdom proves their wisdom. In spades.
Also, you ascribe bad faith to the borrowers very inappropriately. The evidence indicates the opposite, and in the presence of what (at least on paper) look like very attrative repayment programs, newly minted graduates are highly unlikely to choose this route.
But this is really a pointless conversation now. The lending system is a catastrophic failure at this point. The default rate even before this pandemic was going to be 75%, if not higher. This is 4 times higher than the default rate for sub-prime home mortgages. At this point, the only reasonable solution is to simply cancel the loans, end the lending system, and replace it with a far cheaper, fairer, more efficient, and lower priced model for funding higher education in this country. Returning bankruptcy protections now would only ensure the bankruptcies of 20+ million people. This would overwhelm the bankruptcy courts to the point of seizure. It is time to take this lending system to the bath, and drown it in the tub.
I agree. That’s why I voted for Warren instead of Biden on Super Tuesday. Not that it did much good.
Very true. It is a workaround. There are two bills in the House and Senate right now, HR. 2648 and S.1414, which would cleanly repeal 11 USC 523(a)(8). The House bill has made it out of committee (with two republican votes, actually), but the Senate bill is stuck in Lindsey Grahams Judiciary committee, and ultimately Mitch McConnell, majority leader. They still have a few weeks to pass this. If they REALLY wanted to do the conservative thing, and demonstrate to the rabble that the "invisible hand" actually can work for the little guy from time to time ,they would pass the bill. But...I'm not holding my breath. Idiots. They should have passed this BEFORE the election and with the 44 million people who would have been greatly helpes, would have given the republican party a new lease. Absolute idiots.
True progressives are in favor of it. Most of the Democratic establishment is against it because they have the support of two powerful constituencies that like things the way they are: the lenders and the educational complex.
Student debt pays good returns and has much lower risk due to the indentured servitude built into the system. College administrators and faculty need to get paid and states no longer want to provide tax money, so student loans allow the problem to be punted to the student.
Yep. Exactly right. Think Tanks like the Center for American Progress are particularly sinister and culpable on this:
https://thehill.com/blogs/congress-blog/education/241348-student-loans-and-the-presidential-race
I heard about a small town in the Midwest (forgot what town or state, sorry) where the people working the phones knew full well how corrupt the student-loan industry was, but they said "we can't quit--the money's too good."
My sister taught at a private business college and needed the work, so she looked the other way. The final straw was when the homeless were being signed up for her online courses and told they didn’t need a computer, just a smartphone. She knew she couldn’t do her job that way. The college was raking in the money from loans that were dead ends for everyone except the owners.
I don't see any "true progressives" in politics being in favor of it. All I see is loan forgiveness and free college, neither of which are going to happen now or anytime soon.
Dick Durbin is the best guy in the Senate on this. He sponsored S.1414. In the House, people including Jerry Nadler and John Katko (republican) have championed HR. 2648. These two bills could be passed tomorrow, and the House bill has actually been passed out of committee. The Senate bill, however, requires Lindsey Graham to pass it out of the Judiciary committe, and Mitch McConnell to get it to a full vote. It could happen before the end of the year, but at this point that would be pretty astonishing. We are fighting for this nonetheless...
The -110 page Biden Harris plan very clearly states its priority RE higher education is 1) forgive tuition for students from “oppressed” groups with special emphasis on those who attended HBUs
2) tuition free attendance T HBUs
3) cancellation of $10k federal student loan debt for borrowers earning less than $125k(?) - I’m not clear as to whether that debt cancellation is then considered taxable income but that’s too far in the weeds for purpose of my comment here
I think one of the secret truths behind all of this is that the colleges are petrified at the thought of ending their $100 Billion/year cash cow. I think that behind the scenes, the liberal elite are opposed to returning bankruptcy to student loans. To date, I have yet to find even ONE example of a college President even mentioning "bankruptcy" and "student loans" in the same sentence! Disgusting. I could give many other examples of "progressive" groups pretending like they are for returning bankruptcy protections, while they actually sabotage efforts to return it. People like Deanne Loonin, and David Bergeron (CAP) come to mind.
>Not bad for a guy who had to cheat his way to a foot of the class finish in law school.
Well it's not like he drafted the legislation himself.
Both sides serve in fealty to (global) private finance, hence their unwillingness to hurt the (largely) ill-gotten revenue streams flowing into the banking/finance industry. Trump was no different:
https://www.nerdwallet.com/article/loans/student-loans/donald-trump-student-loans
Anyone who hasn't picked up on a trend by now isn't paying attention. When Wall Street and the big banks (or automakers or Boeing) need bailouts, interest-free loans or loan forgiveness, the government and corporate media - Democrats and Republicans - bend over backward justify the need and to give them what they want as fast as possible. But if you're a little guy who pays a mortgage, credit card payment, college loans, etc. you're screwed. If you're lucky a journalist like Matt Taibbi will write about your case, or a newspaper might write a think piece about these ridiculous penalties and interest payments on occasion.
To those who cry and moan about student loan forgiveness - How loudly are you crying and moaning about immediate, interest free bailout money for corporations, banks and casinos like Goldman Sachs? We don't even get to see the details of these loans, yet the government and big banks who hold the student loan debt are allowed to pry into every aspect of your life, garnish your wages, deny the ability to declare bankruptcy, and abuse you over the phone on a daily basis. If you can't see by now that the rich (and corporations, banks, finance industry) are subject to one set of laws different from all the rest of us, then you're intentionally ignorant. Student loan debt in this country is managed and inflicted in the same manner that the Ferguson police department was shown to use minor traffic and other citations to ensure a steady stream of revenue and to ensure that the "principal" would never be paid off. It's a racket, no matter which way you look at it, and the only answer that makes sense is to avoid student loans completely until real reform has been enacted....but don't hold your breath. Neither Congress nor Biden nor Harris nor whatever Republican administration that succeeds them is going to do ANYTHING to help you. The government is completely captured by global private finance.
Yes to all of the above. Private equity is at the base of nearly every problem. Health care, education, you name it.
Yes, yes and yes.
If we give up private equity does that mean I have to donate my personal retirement investments to the government? Do I put my house in a pool with other houses in case someone else needs it more?
There should be standards in Healthcare and Education. If you score extremely low on SATs should the government pay to send you to college to flunk out? Some states are phasing out SATs and Advanced Placement for mandatory remedial Social Studies. Is that a good trend?
"To those who cry and moan about student loan forgiveness - How loudly are you crying and moaning about immediate, interest free bailout money for corporations, banks and casinos like Goldman Sachs?"
There is the basis for a future article for Matt: How is it that we see these two from totally different moral lenses? How do the wealthy parasites get a free pass but the victims like "Chris" get the opposite?
Part of the reason might be because almost the only criticism of the big bail-outs comes from scruffy, disreputable protesters who are just unthinkingly anti-anything going.
To me it would make more sense to bail out the Chrises because their additional disposable income would almost all go into the economy where it would create jobs and tax revenue. Whereas bailouts for Wall Street go into tax havens, land, penthouses and resorts and shares.
You say "[h]ow loudly are you crying and moaning about immediate, interest free bailout money for...banks...like Goldman Sachs?"
To be clear, this never happened. Under the TARP program, Treasury bought $10B 6% senior cums and got warrant kickers. Goldman repaid all $10B. Plus $318MM of pref divs (which are not tax deductible, unlike true interest) and then paid $1.1B to buy back the warrants. The government achieved a 23% annualized return on the investment. If every student loan worked out like TARP, we wouldn't be having this conversation.
"To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
Wrong.
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. . .
The bailout ended up being much bigger than anyone expected, expanded far beyond TARP to include more obscure (and in some cases far larger) programs with names like TALF, TAF, PPIP and TLGP. What’s more, some parts of the bailout were designed to extend far into the future. Companies like AIG, GM and Citigroup, for instance, were given tens of billions of deferred tax assets – allowing them to carry losses from 2008 forward to offset future profits and keep future tax bills down. Official estimates of the bailout’s costs do not include such ongoing giveaways. “This is stuff that’s never going to appear on any report,” says [former bailout Inspector General Neil] Barofsky. . .
Even worse, the $700 billion in TARP loans ended up being dwarfed by more than $7.7 trillion in secret emergency lending that the Fed awarded to Wall Street – loans that were only disclosed to the public after Congress forced an extraordinary one-time audit of the Federal Reserve. The extent of this “secret bailout” didn’t come out until November 2011, when Bloomberg Markets, which went to court to win the right to publish the data, detailed how the country’s biggest firms secretly received trillions in near-free money throughout the crisis. . ."
Secrets and Lies of the Bailout, by Matt Taibbi.
https://www.rollingstone.com/politics/politics-news/secrets-and-lies-of-the-bailout-113270/
Yes, formally the government made a pretty good profit on the TARP bailout money, if one ignores that it was intervention in an obscene gambling operation. Goldman and others were slated to be dinged pretty hard on their derivatives positions unless the government came along and shored up the system.
This was supposed to be a private risk taking operation, but instead the government rigged the odds in favor of the well-connected. Some ordinary homeowner facing foreclosure was not offered a workout plan to overcome his problems. I think that’s a big part of the gripe.
«6% senior»
That was a ridiculously low interest rate giveaway for lending to bankrupt speculator during a crash. Small businesses with cash flow difficulties borrow at 500-1200% a year from "specialized" lenders, and even credit card borrowers are charged 20-30% per year.
«The government achieved a 23% annualized return on the investment.»
That only happened because the whole finance industry was bailed out by a few trillions "invested" by the Fed in buying toxic assets at way above market prices, and "lending" forever at 0%, plus enabling accounting fraud with accounting rule changes made instantly (plus enactment of the "too big to prosecute" doctrine).
The TARP loans and "returns" were not writeoffs only because the Treasury and the Fed bailed out the big finance corporations. It is possible to show any "return on investment" when the Fed balance sheet balloons by several trillions.
Given that Berkshire Hathaway invested $5B in Goldman pref shares junior to the Fed's at 10%, I think we can safely say your estimates are ludicrous.
You also state "That only happened because the whole finance industry was bailed out by a few trillions "invested" by the Fed in buying toxic assets at way above market prices..." What are you referring to? Please be specific.
Yep! It won’t do to just look at part of the equation. If I could use that type of accounting on my IRA, I could be declared the best investor in the world.
The financial system was brought to the brink of collapse by gambling on default of assets that the gamblers didn’t own. When their bets went wrong they were given free money to unwind their positions. They booked obscene profits on both sides of the trade, and they even loaded up on those distressed assets at the bottom knowing they’d be bailed out by their friend in government. The players then gave themselves bonuses to reward their great performance.
You bet people are still angry about that.
Agree. I'm astounded that people generally do not know this, and run around yammering about "Bailing out big corporations." In their defense, though, we did lose a little on the GM and Chrysler "bailouts," but overall, TARP was a great deal for the government https://projects.propublica.org/bailout/list
https://www.marketwatch.com/story/some-ugly-truths-about-the-bank-bailouts-2015-01-29/
Matt already wrote a whole book about that :)
Which one?
The Divide: American Injustice in the Age of the Wealth Gap
Thanks, Lara. I like the look of it. But whether it covers the way each side talks past the other, and how the "silent majority" let bank bailouts pass without comment, yet are quick to condemn the "Chrises" AND WHAT CAN BE DONE TO EXPOSE AND ACT ON THE EQUIVALENCES I shall find out - as I have ordered a copy.
The bailouts and the financial crisis in 2008 were covered in Griftopia. Also Matt wrote a series of excellent articles covering the events of 2008 while working at Rolling Stone. It was that series that made me start following Matt. Here's a link to The Great American Bubble Machine. I think it's the best piece he's ever written.
https://www.rollingstone.com/politics/politics-news/the-great-american-bubble-machine-195229/
Indeed. Matt has written about the other bailouts extensively, but I agree an article looking at how/why the general public treats those bailouts as different or necessary compared to college loan debt forgiveness as something horrible. Of course the answer is the constant propaganda coming from the corporate and right-wing media and social media. If it's not direct proactive propaganda, it's just deciding not to report on something that might turn a sceptical eye toward the banks and corporations that own our government (and hence, us).
Public probably treats them differently because the "bailouts" were paid back and the government turned a nice profit on the deals. https://projects.propublica.org/bailout/list
The alleged paybacks and returns were entirely artificial, as the government donated or "loaned" at 0% "forever" (plus rules legalizing accounting fraud) the cash with which Wall Street made a show of paying something back to fool the gullibles.
Not true. With respect to the Wall Street bailout they did not pay back the quantitative easing, only part of the TARP program which is 800 billion out of 4 trillion. Another article from Forbes emerged stating that time expired by the time they got the TARP program together, so not even TARP saw a return.
It isn’t a binary choice though. I don’t want bailouts for anyone, personal or corporation. The corruption is too far gone. Just look at what they do to the first outsider President that questions the status quo. It is destroy at all costs no matter the permanent destruction to our institutions. Unless Trump remains in office we will never see another President fight the corruption.
Then why aren't you mustering the same amount of passion for why the Trump administration and Congress bailed out Boeing, Wall Street and the big banks....AGAIN.
I repeat: I agree that the government should stop guaranteeing student loans taken out through the private finance industry but I believe they should handle all student loans directly through a simpler system and with obvious means testing and other barriers to entry, not to mention reasonable $ caps (which are already in place for most federal student loans).
Trump's done NOTHING to fight any corruption other than perhaps the investigation he opened into how Obama was abusing FISA and the FBI to spy on his campaign. Other than that absolutely nothing to end corruption and in fact decided to extradite and prosecute Julian Assange when not even Obama had done so. I linked to Trump's campaign college loan plank and it was just more giveaways to the big banks. Biden will probably be no different, but don't operate under the illusion that Trump was a real "outsider" in any way other than he wasn't a connected insider in D.C. Yeah, they hated him and tried to destroy him, but he wasn't some reformer out to help average Americans. He was just another in a long line of presidents subservient to TPTB, which includes global private finance and the rentier class.
Why would you assume I am not as angry about corporate bailouts as personal bailouts? What am I supposed to do? List ever grievance I have in order to cite an opinion on the topic of the article? Strawman much?
My reply to you was off a bit. When I got the email it said someone else that I had already been talking to was replying to me, so I hit "reply" in the email thinking it was that person.
Still, there ARE NO PERSONAL bailouts, unless you're filthy rich. There ARE corporate and bank bailouts, galore. Which of these two different types of bailouts would help the real main street economy more? Banks and corporations (and the very rich) just stash away the money, send more jobs overseas and create sub-living wage jobs in the U.S. that the taxpayer often has to step in (see for example Wal Mart encourages its employees to get on welfare). When you put money back into the hands of people, including the subject of this article, that money aids the REAL economy by enabling them to spend it in ways that actually do create jobs and all that jazz.
Fun Fact: If you don’t take money from citizens you never have to give it back to them.
Fun Fact: The U.S. federal government takes money from me every year. I have no effective say in where it goes. Some of it goes to bail out banks, some of it goes to aircraft carriers. If, hypothetically, I were to want it to go to schools or housing homeless people, too bad for me. I'm alleged to be able to effect change by "voting," yet the candidates for whom I am allowed to vote are defense industry and bank candidates.
That said, you obviously have a very skewed understanding of what Trump did while in office. Have you read Taibbi's writing on this kind of thing dating back to 2016? He's done a pretty good job of demonstrating that Trump isn't really the enemy of the corporate media or TPTB in Washington D.C. much less the same banksters and corporate rip-off artists that Obama bailed out before Trump did.
All I said was Trump was an outsider that questioned the status quo and was destroyed for it. You agreed with that. Why read into what I think Trump did or didn’t do with corporate bailouts? You seem to be arguing with yourself at this point. I think ALL bailouts are wrong and ANYONE that supports them is wrong.
And yes, forgiving personal student loans is a “personal bailout”.
Your words certainly implied that you consider Trump a corruption fighter. He’s a fraud and was enriching himself and his friends no less than any of his predecessors, probably way more.
Betsy Devos has blocked any reform of student loans and has even blocked canceling loans for colleges that were ripping off the students. Some reform of corruption!
I’m not arguing for Joe Biden or the rest of them, but why hang your hat on Trump? It severely weakens your argument and destroys your credibility.
I agree that government education loans should be handled similar to a VET loan.
How Boeing was rescued by the Fed, without a bailout
" by urging the Federal Reserve to take unprecedented steps to bolster credit markets, the Trump administration ended up helping the plane-maker more than any government handout could.
It allowed Boeing to raise $25 billion from private investors and withdraw its request for a government rescue, avoiding the restrictions that would have certainly been imposed."
https://www.chicagotribune.com/coronavirus/ct-nw-coronavirus-boeing-fed-bailout-20200504-2has6gghmnfsnj5mvjjpaa6xye-story.html
More than half of U.S. households have some investment in the stock market
https://www.pewresearch.org/fact-tank/2020/03/25/more-than-half-of-u-s-households-have-some-investment-in-the-stock-market/
You'd be the first to scream if your bank went bankrupt and kept your pay check because the public lost faith in your lending institution. Banks fund payroll.
«More than half of U.S. households have some investment in the stock market»
And the bottomost 90% of US households own less than 5% of it.
«You'd be the first to scream if your bank went bankrupt and kept your pay check because the public lost faith in your lending institution. Banks fund payroll.»
That is propaganda and so ridiculous: banks *handle* payroll. Solvent employers fund payroll, no bank funds the payroll of a bankrupt employer, they are into charity. Regardless bailing out banks does not mean bailing out bank executives and traders, and the payment handling functions of bankrupt banks could well be transferred to non bankrupt banks or to the Fed, with no inconvenience.
Which bank got an interest free loan?
The official interest rate of the Fed for loans to banks was and is nearly 0%, and for several years the only source of interbank lending was the Fed, as every bank refused to lend to other banks, as they knew they were all bankrupt, and the Fed balance sheet, because of buying toxic assets at "political" prices as a slightly obfuscated way to donate cash to banks, swelled by several trillions, as Matt Taibbi and others have extensively documented.
What are you referring to? Please be specific. I happen to know rather a lot about the Fed's crisis-era interventions and don't recognize the programs you claim to be describing - which should give you pause. Are you preferring to the PDCF? Those aren't asset purchases at inflated prices. Those are loans that have to be paid back, collateralized by eligible securities. Did the Fed expand the list of eligible collateral in the credit crisis? Yes. Was that helpful to the banks? Of course. But you can't just misdescribe it as free cash injections to the banks, which is what a purchase of assets at above FMV would be.
Don't expect a reply from these jackasses.
Interesting comment and goes hand in hand with this whole notion of QE whose main function seems to be to juice asset markets and allow market participants (aka large finance houses) to clip the ticket as the funds go round and round between the Federal Reserve and the government.
Giving money directly to the plebs invokes some sort of evidence of moral hazard and the decay of individual responsibility. Giving it to the financial system, however, will stimulate the economy.
Rather than forgiving student debt, we should make it dischargeable in bankruptcy again. This would be appropriate for someone like Chris, who made his own mistakes, and give the lenders and service companies incentive to be reasonable. Going forward, something needs to be done to give the schools the incentive to keep costs, and thus borrowing, down. Perhaps they should be on the hook for a portion of any unpaid debt. As I recall, a few years ago, a study by the NY Fed found that for every additional dollar of student borrowing made available resulted in a $.70+ increase in tuition costs.
The reason these loans are unforgivable in bankruptcy started under Bush the younger. You had medical students running up two hundred thousand or more dollars of debt and then filing bankruptcy to get out from under it, this was a modus operandi. Unfortunately, a lot of smaller fish get caught in the net. But if we choose to pay off the debts there should be also a taking over of the cause, stop the growth of administrative debt, stop all the diversity debt and etc.
Actually this is incorrect. The reason bankruptcy taken away from student loans dates back to 1977, when the media was seeded with stories about students flocking from graduation to bankruptcy court. Initially a 5 year "waiting period" for discharge was introduced, which was then lengethened to 7 years, and this was increased to infinity in 1998. Interestingly, we now know that back when bankruptcy was the same for student loans as all other loans, only about 0.3% were discharged in bankruptcy. So...there was NEVER a valid rationale for retricting, and ultimately removing this constitutionally mandated protection. See https://repository.law.umich.edu/articles/710/
Doesn't much matter what percentage of loans were discharged, question is what proportion of the dollar value of outstanding loans was discharged. Looking at the percentage of loans discharged is something a dumbshit lawyer would do. Tells you nothing at all about the impact of discharge on the loan program, because it tells you nothing about the dollar value of loans discharged.
I take your point, but the percentage of student loan borrowers seeking discharge in bankruptcy- particularly for comparion purposes with other types of loans- is very useful.
Not really since other loans are often secured loans. This is just like social services. Want free Healthcare then close the borders. Want bankruptcy allowed for student loans then you have to let banks decide who they want to loan to not force them to loan to everyone
Also, you appear to be keen to imply that a THIRD OF ONE PERCENT of the borrowers seeking bankruptcy protections could somehow imperil the lending system, which is laughable.
It's not laughable at all. Median student loan debt is only $17,000, but average is $32,700, and 600,000 of the 45 million borrows owe more than 200k, which is 12 times the median. So of course, a small percentage of high-end borrowers filing bankruptcy can have a very big effect. Thinking the percentage of borrows who discharge debts in bankruptcy is a measure of the cost is, as I said, an assumption only dumbassed lawyers or politicians would make.
Very interesting. I wonder how much of the ”bubble" is just an accumulation of what would just be bankruptcies in loan other categories
A LOT. I suspect at this late date, returning bankruptcy protections would probably ensure the bankruptcies of something like 20 Million or more people. This would overwhelm the bankruptcy courts to the point of seizure. That is why the loans must simply be cancelled. Good stimulus there, at least, instead of painful, depressing, and un-stimulative unwinding.
What other debt would you like to cancel? How about folks mortgages? Oh, and don’t think I would benefit, I wouldn’t but others might. Maybe you could foot the bill for everyone. Pony up.
There are no other lending systems that are catastrophically failed. Also, there are no other lending systems that can be cancelled by the President that won't require money to pay for itSo..only federally owned student loans.
Really? Median student loan debt is $17k. Most borrowers are not recent grads, have non-exempt assets, and would lose them in a bankruptcy case. Average is $32k, which is less than the average new car loan ($37k). Portraying this as a debt crisis is asinine. https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics
Nonsense you are ridiculous. The default rate for 2004 students was 40%. They were borrowing about $12,000 on average. Today, the average undergrad (and their families) are borrowing in excess of $40,000. 80% of ALL federal loan borrowers were either unable to make payments, or were paying but their loan balances were going up BEFORE the pandemic. It may not be a crisis to you, but it is absolutely a crisis for the 40+ million people who are headed for default. You quote Zack Friedman, amont the most shameless and unabashed DEFENDERS of this, the largest big-government lending scam in the history of the country. Shame on you.
The other thing that should be stopped is "lifestyle" loans, whereby a student is able to achieve a lifestyle they never achieved at home.
Yeah this guy had a wife and got divorced all before paying off his school debt. Bet he bought a house and a car and other things as well. Probably took some vacations to Hawaii
actually I think it was Biden that made student debt not dischargeable in bankruptcy. Another of his accomplishments NOT for the people but the corporations/banksters. This is obscene...and so Amerikan and why the empire is crumbling faster and faster, circling the drain....
It was actually 4 medical students at the beginning. Not modus operandi at all. It is almost like being wrong in your analysis and your facts of the case are harming your ability to understand the issue.
I think it goes too far to say that was the reason. That certainly was occuring and was a justification.
Yes this seems like a better approach. The guy fucked up, he’s been paying the price, and the lender has absolutely zero incentive to work with him thanks to shitty legislation. They can legally drain his finances in perpetuity.
Yeah, extreme situations require extreme measures. Bankruptcy does seem appropriate for those hopeless cases. But if we excuse every regrettable choice, we’re going to create an entirely new set of problems. In bankruptcy the debtor feels a little pain. It pokes a finger in the eye. Leaves a mark. Pound of flesh.
But geez, “mistakes” hardly describes this guy’s personal shit show. If mistakes were an ecosystem, this guy‘s choices would be the weather.
This is a pretty strange comment.
The guy you’re trashing seems to have worked most of his life—including, in middle age, jobs that pay poverty wages. He’s paid $111,000 MORE than he borrowed, yet owes four times what he borrowed.
If you’re a sadist, there are dedicated channels on Pornhub and sports like MMA that might relieve some of that pressure. I’m not sure that smirking at the misery of 60-year-olds who are being victimized by banks is the coolest way to get your rocks off.
Some misery is bought and paid for with terrible decisions. Ask yourself how someone with a law degree was making such low wages? My lawyer is in bumfuck pa and charges me 500 an hour. There is always a shortage of defense attorneys to work for public defenders office and at least made 60k a year.
Are you fucking serious? Wagging your fingers at the borrowers- particularly someone who repaid HUNDREDS of thousands more than he borrowed, yet still owes HUNDREDS OF THOUSANDS MORE THAN HE BORROWED- of this lending system is entirely inappropriate. Please. This is not a bad borrower problem, the bad faith resides ENTIRELY on the lending system...what history will describe as the worst government lending scam in the history of our country. Give me a fucking break, guy.
I don't know what the general situation is, but the Chris story does not seem that predatory... Sounds like he basically decided to not make payments for a decade, very very seriously bad decision. Adjusting for inflation the amount he's paid isn't necessarily that crazy, and he did have the misfortune (or stupidity) of getting his loan in an extremely bad time for rates. As said elsewhere it's weird and probably nonsense that he can't just go bankrupt, but there's also major adult decisions this guy made that were awful and no one is that sympathetic to.
Nonsense, an entire industry of collection companies, guarantors, and others have sprung up that feast upon guys like Chris. If this were ANY other debt, he could have at least threatened bankruptcy, and gotten a fair and reasonable workout on the loan. Credit card companies, for example, routinely will forgiven interest settle on a fixed payment plan to recoup the principle, and be very happy with that. Last I checked, credit card companies are doing just fine, by the way. Since when have you ever repaid more than a HUNDRED THOUSAND DOLLARS more than you borrowed on anything other than a house, if ever?!! People like Chris aren't interested in sympathy, particularly yours. They are asking for JUSTICE, and they will get it, as the ENTIRE LENDING SYSTEM is now vanishing into a mist of illegitimacy. The default rate among all borrowers today is surely in excess of 75%, that is 4 times higher than the default rate of sub-prime home mortgages. It is catastrophically failed, and needs to be taken to the bath, and drown in the tub. It will cease to exist by popular rejection if nothing else. Whatever your opinion might be is irrelevant.
Dude, your replies are funny. Keep them up, everyone enjoys laughing at you.
Please explain. What precisely strikes you as humorous? Just saying it doesn't make it so.
troll. go away.
You said: "Since when have you ever repaid more than a HUNDRED THOUSAND DOLLARS more than you borrowed on anything other than a house, if ever?!!"
Really? Any time you borrow money for a lengthy duration this will be true. That's how compound interest works. If you borrow $100,000 for 20 years at 5% (compounded monthly), you will owe $270,000 at maturity. That is with no interim principal payments (I/O) but also no origination fees, penalties, default interest rates etc. The only reason this doesn't happen when you finance a car is because auto loans are typically 5 or 7 years. Reasonable people can argue about an optimal level of bankruptcy dischargeability for student loans, but let's not turn middle-school level math into some mysterious conspiracy.
Great. You claim to be reasonable. Let's be reasonable. By every REASONABLE metric or measure, this is a catastrophically failed lending system. The default rate for everyone with student loans right now is going to exceed 80%. That is 4 times higher than the sub-prime home mortgage default rate. It is now UN-reasonable to simply return bankruptcy protections, that will ensure the bankruptcies of more than 20 million people, perhaps far more That would overwhelm the bankruptcy courts to the point of seizure. We're throwing trillions in stimulus into the economy right now, including in the form of PPP loans that don't need to be repaid, and ALL of the stimulus measures add to the national debt. Given this, it is entire reasonable to cancel all federally owned student loans by executive order...in fact this is a far cheaper, easier, and perhaps more effective way to stimulate the economy where it is needed.
The only UNREASONABLE piece in this conversation is you attempting to defend and perpetuate the worst, largest, most unconstitutional big-government LENDING SCAM that this country, and the word (in fact) has ever witnessed. Good luck dying on that hill. I wouldn't, but hey, if you want go down that way...
Whoa whoa, no need to attack. I was openly admitting I don't know that much and just want to understand the system better. Matt's article pretty anecdotal, and I was having trouble seeing the systematic problem when Chis openly admits to putting his head in the sand for an indefinite number of years on something this important.
Seems like the lack of a bankruptcy option really is the root of this, and I'm fascinated by how that came to be. From your other answer, it seems like the "defaulting students problem" somehow got blown way out of proportion and legislated aggressively. But I'd like to know more.
Pretty good book here (IMHO) that describes the history of the problem: https://www.amazon.com/Student-Loan-Scam-Oppressive-History/dp/0807042315
Also, reading any of Matts previous articles on this topic give great explanations...
Eddie, even the National Review is calling for the return of bankruptcy rights to student loans, along with an exit of the federal government from the lending program. This is another conservative institution who agrees with the need for the threat of bankruptcy to exist on hyperinflationary student loans. What might higher education look like with the government completely out of the lending business? Certainly prices would fall. https://www.nationalreview.com/2019/04/eliminate-federal-student-loans/
Yes. That's how bankruptcy is supposed to work, I believe.
Maybe Old Scranton Joey can get something done now that he'll be in the White House.
We should all write him letters. Like ALL of us with student debt his buddies in banking and higher education fucked us with.
Garnished wages to "retirement".
Fuck this shit.
He was the guy who made it so that student loans couldn’t be forgiven via bankruptcy. I doubt he would help in any way.
! Whether or not Gropin Joe will be in the White House has been disputed.
Consider what you are saying, you would garantee students free money to drink, fuck and hang out in college on loan money. Then leaving college having no assets and only debt, they could easily file bankruptcy and remove all debt.
I am okay with this if we go back to banks can decide who to loan to and the government doesn't basically back the debt. Of course if I was a bank I wouldn't do student loans for any degrees except engineers, doctors and finance. Also, as the bank I would like to repo the property I loaned the money for aka the degree. So if you went bankrupt after becoming a doctor you lose your license and the doctorate.
These "administrators" see a lot of incentive to partner with those who don't have student's interests at heart.
I hope these concerned taxpayers care about the number of lobbyists, and lobby money the Department of Education pays out to keep people lodged in an administrative state disastrous to the economy. Here are some items to fact check. Did the Department of Education sent lobbyists across the country and forty-four million dollars of lobby money from 1997 to the time John Boehner stepped down in October 2015? Did all that money go to those on the House Judiciary committee? How many lobby dollars have gone out since, and to whom?
No one seems mad at the true villains of this story and that is the colleges and universities themselves. These fraudsters have increased tuitions by over 1100% since 1978 as professor and administrator salaries and numbers have soared while dorms and student centers now resemble luxury resorts rather than the rather utilitarian facilities that worked previously. So long as the extortianate tuition could be laid off to the feds repayment was (and is) none of their concern.
Make the schools responsible for debt that goes unpaid and we will see much lower cost and better results as silly degrees with zero chance of repayment ( looking at you grievance studies) will become relics of the past!.
Fantastic post that cuts right to the heart of the matter.
I think that's a big part of it. As an example - law school is absurdly expensive. Where does that money go?
Don't get me started on the colleges. They have conveniently ran and hid from this debate. NEVER have I EVER heard a college President so much as discuss the absence of bankruptcy protections from student loans, for example. Yet, they are taking in $100 BILLION per year from this predatory lending system:
https://www.insidehighered.com/views/2017/12/14/college-leaders-should-support-bankruptcy-protection-student-loans-opinion
Also: The colleges have managed, over the past 15-or-so years, to build up massive SLUSH FUNDS, over and above their endowments. This is largely unreported stuff here, but the amounts they have stashed away is jaw dropping:
https://angrybearblog.com/2016/09/uva-slushfund-just-the-tip-of-the-iceberg
On a larger level cost of everything pretty much has far out paced income for the majority of people so people have come to accept mass debt and trickle down has become reverse gravity up for what wealth there is in this country. There is increasingly no way out for too many people and that is not a good situation. It doesn't have to be this way - it's a choice by those in power.
There’s an excellent book called Failing Law Schools by Brian Tamanaha that answers some of those questions. It’s pretty bleak.
I agree with everyone above that universities have largely become predatory institutions—or, in the case of schools like NYU, part-time predators and part-time real-estate speculators.
Law schools can be big profit centers that funnel cash to the rest of the university.
Law school is itself one of the biggest scams out there. It's an exorbitant fee and hazing experience to allow you entry and initiation into what can be, without guarantee, a lucrative career. You come out of 3 years of law school a lot poorer and barely of any use in the practice. The only thing that teaches you how to be a lawyer is practical experience, hopefully under the supervision/mentorship of experienced lawyers. Law school itself is a joke. It can give a good ROI, in pure terms of cash-in/cash-out, though the requirement to make the investment is an artificial barrier. But in terms of ROI on the 3 years spent there, you're getting fleeced. Those three glorious years do not put you three years ahead of someone who never went to law school. Maybe 6 months, if I'm being generous.
I'm intrigued with the fact that in some states, it's still possible to "read for the law", pass the bar exam and be certified as an attorney at law without attending law school, or by attending only a year or so, or by clerking and learning the law codes on the job, and then passing the exam. This was once a very common means of becoming a lawyer. https://en.wikipedia.org/wiki/Reading_law
According to the Wiki link, 12 US presidents did it that way, including Abraham Lincoln.
As did 12 Supreme Court Justices.
You probably have to be diligent and self-motivated. But you'll save a fortune. I think that once certified in one of the states permitting that method, it's possible to obtain a license to practice in most of the others.
More from the Wiki page: "As of 2014, California, Vermont, Virginia, and Washington permit students to take the state bar exam after reading law with the help of an attorney as an alternative to law school. New York, Maine, and Wyoming allow students to study in a law office together with some period of time in law school.[7]"
One of my relatives sat for the Bar in Georgia. This was early in the 20th century and I am not even sure if he went to college let alone law school.
Law school in my experience is also geared to offer immediate success to those with the right background , right look and the right class.
This is why I am aiming for a master's in accounting. Only 1 year of coursework. I know I can learn anything on the job the problem is employers have so many of us plebs to draw from they don't need a well trained work force. They can simply hire someone else rather than provide advancement for those they employ. The only thing the master's I am aiming for will grant me is entry to the jobs where I can actually learn the business of accounting. Credential inflation is a bitch, but hopefully the masters degree shows I can jump through their hoops and am worthy of a job and maybe even guidance and mentor-ship. I am so sick of being a middle aged college educated administrative assistant. What the hell did I do to deserve this? oh yeah I did what everyone told me to do and just got a degree. I come from a professional family of doctors, scientists, IT professionals, and attorney's hence it was always preordained that I would go to college, but that was the scope of the options that were presented to me: go to school, get any degree, and the jobs will be laid before you. all that need be done is to walk the path to prosperity. I went to college to avoid the mindless data entry work I do. FML
This is way off topic, but when a Florida law professor was gunned down by a hitman in his driveway, a lot of people at first thought it was because he had a blog where he was defending law schools against this criticism.
Turned out it was over a custody dispute.
Country is way too angry right now...
Are there any villains, though? We are all just pigeons pecking the button that makes the food come out. If I was a university president, I would have a massive endowment, a praetorian guard of administrators and define my job as one of having lunch with extremely wealthy people rather than attending to grubby student needs.
I, for one, vote for the lobbyists who keep getting the lenders the legislation they want, as the #1 villains, with the politicians who are in bed with the lenders and lobbyist as a close second.
Sigh...there are no private lenders. The government originates almost all student loans for higher ed. Even before 2010, when the government completely took over the education loan market, the private lenders just originated and serviced the loans. The government guaranteed the loans. Banks were not then, and are not now, the issue in the education finance market.
Don't get me started on the colleges. They have conveniently ran and hid from this debate. NEVER have I EVER heard a college President so much as discuss the absence of bankruptcy protections from student loans, for example. Yet, they are taking in $100 BILLION per year from this predatory lending system:
https://www.insidehighered.com/views/2017/12/14/college-leaders-should-support-bankruptcy-protection-student-loans-opinion
Also: The colleges have managed, over the past 15-or-so years, to build up massive SLUSH FUNDS, over and above their endowments. This is largely unreported stuff here, but the amounts they have stashed away is jaw dropping:
https://angrybearblog.com/2016/09/uva-slushfund-just-the-tip-of-the-iceberg
These are multi-national corporations, doing what MNC's do.
Bingo.
An interesting comment on one of these stories about the exploitation of adjuncts: someone said "I bet every one of those tenured profs (who pretend to wring their hands and perpetuate the system) can quote Marx."
I find the entire situation to be laughable. Why? Because all of these whiners borrowed money to get a college and advanced degrees. One would think they’d be smart enough to read the papers they were signing so that they’d understand what they were committing to. These people aren’t village idiots. They knew they were borrowing lots of money. Chris is 59 years ago. I came of age around the same time that he did. I borrowed money for college too. Those higher rates sound ridiculous now, but if you lived through those times, you will recall that the prime rate that banks charged their best customers (these were the days before LIBOR ruled) reached as high as 21%!!!! Heck, even the Federal government was PAYING more to borrow money for less than it loaned Chris and me - I recall buying Treasury bonds issued by the Fed yielding 14.625%!!!! Why did Reagan raise the rate on student loans? Because he was losing a fortune on the negative arbitrage, that’s why. And even after he raised the rates by 200 basis points, he was still losing a boatload.
Money doubles in 7 years if you borrow at 10%, in 10 years if you borrow at 7%.
So readers should keep in mind the tone of the times when Chris borrowed. Debt scared the daylights out of most sentient people. That may be hard for people to relate to or even believes in these many years of historically low interest rates.
But people with their eyes open back in those days did what they had to do to avoid or minimize the money they borrowed. I know that I did. I took a job to pay as much of my college and law school costs as possible. I didn’t get lazy and say, ah, screw it! and let the debt grow mindlessly as if I thought the whole thing was an unserious game that was rigged. Because it wasn’t. The disclosures were all in crystal clear black letters on white paper. With a crazy interest rate environment, I understood the risks were tall and I did my level best to avoid as much debt as possible even because it meant that every dollar in debt I avoided allowed me to avoid 9% a year in interest. If that’s not an incentive for people to get a job and keep their debt low, nothing is.
Yet there were plenty of unserious people in school with me who laughed at me for missing out on the college social life. No, I didn’t enjoy the Greek life, the first parties, the clubs and all that. I went to school, then to work, then studied, then sleep. I didn’t buy a house until I paid off my student loans 10 years after graduation. I did without until the debt was GONE.
And I’m getting tired of the deflection of attention to BIG CORPORATIONS and their bail outs. Sure they happen. But does that mean YOU can justify acting like a schmuck? Are YOU a systemically important entity? Maybe to yourself, but not to the country.
You want to say that you were gulled into taking stupid loans? What does it say about you, Mr. College Graduate? It reminds me of the old joke - did you go to school, stupid? yes and I came out the same way!
Yes, it is true that college costs way too much money. The average HS cost $11,000 a year per student in the US. Why does it cost $11,000 in the 12th grade but $40,000 and more for the 13th grade? Because people will pay it, and because of voting constituencies the government made it easier to borrow. Those constituencies are both the schools AND the borrowers.
But who put a gun to your head and said you MUST do this? Too many people think they should go to college are probably not suited for it. But it’s up to YOU to know your own limitations and to take a hard look at what you are getting yourself into.
At the end of the day, whether the colleges and universities charge too much or the government made the money easier to obtain, or the bankers misbehave in other areas, when YOU borrow money, its down to you to know what you’re getting in to. It’s quite a bit of irony not plead ignorance about loan terms entered into for an education intended to make you smarter.
Rick, my main problem with your thesis is that the the vast majority of students are minors when they sign the papers. Plain and simple this is a predatory system feeding on the naivety of our youth. Now you can rightly blame the parents somewhat, but the lower class has been spoon fed the lie that a college degree, not matter where it is from or what kind it is, is a ticket to the good life. That's just simply not true.
Also why don't we hold banks to the same standard? They *should* know better than to make so many questionable loans, it's their business to do so for crying out loud. Don't you think the banks guilty of making bad loans deserve to go bankrupt and have their shareholders eat the losses? Student debt should be made dischargeable under bankruptcy, and banks that make loans to people unable to pay should suffer losses for doing so.
“18 years old” is not a minor. It’s considered an adult who can sign and legally enter into binding contracts. We have an 18 year old son. We’ve saved for his college since he was born and will give him the gift of being able to start life post-college without debt. He also works his ass off doing any type of manual labor that pays. No coffee shop hours for him. It wasn’t easy but I’ve noticed one thing raising children through out this time. One of the problems with modern society is that we infantilize people in this age group (18-25) as if they are no more capable of dealing with life than a 5 year old. There’s no accountability and now instead of honoring debt obligations, everyone is clambering for debt-forgiveness. It’s a real mess out there and though I pity Chris in this article, he’s made some really poor choices through out his life.
Did you ever think maybe Chris lacked parental guidance? Poor kids often have disinterested or overworked parents. I was one. I made bad choices but didn’t exactly have great role models growing up. Also, at 18 I had no clue how money worked. I worked summers in tobacco making a little money to buy some clothes for school. I learned to drive whenI was 18 so basically had little social life other than church or reliance on friends or school activity buses. People need help.
To be clear, almost all student loans today are government originated and sold. Banks aren't pushing student loans on anyone. A small handful of PEL lenders like Sallie Mae exist almost exclusively to do the gap lending and almost all of those loans are parent co-signed.
Um, not true. Someone has to guarantee those loans.
Fuck. Simply telling a child, and at 18 I had no idea what I was doing and was absolutely a child, that all they need is a degree is god damn criminal. All I was ever told was go to college and get a degree. It doesn't matter what your degree is in. Forget the money and just focus on that advice. I am so fortunate to have no college debt and STILL I have no viable career. Writing all of those papers about NGOs, ISLM curves, global governance, political theory, and public policy did fuck all for me in the workforce where all I do is mindless administrative work. Is weed federally legal yet?
It's disingenuous to tell kids that people with college degrees make more than those who don't. Correlation does not imply causation and a piece of paper does not magically transform you. It also is wrong to treat all college degrees as equivalent, and degrees from different universities as equivalent. It is also a bad idea to forget economics and follow your passion unless you are born into wealth or have extraordinary talent. If following your passion won't pay the bills...well, that's what hobbies are for.
"The banks" aren't making the loans. The federal government is. https://www.youtube.com/watch?v=TYo2SR8r1kU
Since 2010 as part of the ACA the feds took over most origination. Before 2010 the majority of all student loans were from private institutions. Since 2010 less than 10% originate from private institutions. The majority of debt is now held by the federal govt. But the point stands that when the law was passed it was a giveaway to banks.
No, it wasn't. Under the FFELP system, private education lenders originated the loans, but the government guaranteed the loans and even subsidized the servicing and default collection costs.
Not so. The "vast majority" of college students are NOT 18 when entering college and signing loan papers. Further, virtually none are minors when signing for their second year or grad years.
While there are certainly some who are 17 when entering college, they do not by ANY stretch comprise a "vast majority" of Freshman.
The 24 hours between when they turn from 17 to 18 gives them enough worldly knowledge to assume massive amounts of debt, not not enough to purchase a beer? That's the hill you want to die on?
Moot. Your statement was untrue. Are you really sure the hill YOU want to die on is one of hyperbole and untruths?
Obviously the hill YOU want to die on is the one where you defend, justify, and perpetuate what history will record as the most largest, most unconstitutional and nationally threatening GOVERNMENT LENDING SCAM this country...and in fact the WORLD has ever seen. Nice job. Take a bow. And please...accuse me of hyperbole. I dare you to.
It's not untrue. They can't even buy a beer. They have no life experience. They have no assets and no job. Are you going to argue that everything that's legal is also moral?
Your silence on the banks culpability is deafening. For the third time, why do the lenders need special legal protection?
Also, you neglected to answer the question about the banks. The banks absolutely know what they're doing. Why do they need to be protected from these predatory 18 year olds?
If these students aren’t smart enough to read a loan agreement, can we roll back all of the privileges and obligations we’ve moved from 21 to 18, please? No more drinking, buying tobacco, voting or enlisting in the military for them. They aren’t mature enough it seems,
I'm not sure what this has to do with holding banks liable for poorly performing loans, but sure, i'll address your questions:
1. On alcohol- Students can't drink until 21 in the US. Since you didn't know that the drinking age must be 18 in your country. Tell me, Rick, where are you from and why do you feel so strongly about student loans and bankruptcy laws that don't affect you? I find your motivations peculiar.
2.On smoking- I'm all for pushing tobacco back to age 21. It's a bad habit and a public health nightmare. Kids don't know what they're doing when they get hooked on tobacco. Studies have shown that those who pick up smoking at a young age have a much harder time quitting later. I'm glad we agree.
3. On voting- Younger kids mostly don't vote and i'm sure a healthy discussion could be had on that topic.
4. On enlisting- Enlisting fresh meat for the grinder into the forever wars is a privilege now is it? If it's such a privilege how come more elites don't enlist their children? That aside, even if you enlist you can always leave no questions asked during basic training. After you're on active duty, the army can discharge you if you cannot perform your duties due to physical or psychological reasons. You can also be discharged for other less honorable reasons, but the point is that you can get out. It's easier to quit the army on active duty than it is to discharge student loans. How sad is that?
Now that I answered your questions, how about you answer mine. Why can't the banks be held accountable for the bad loans they issue?
I disagree with every single one of your statements. Pushing the age of adulthood back to 21 didn’t make for more mature 21 year olds. It made for less mature 25,26,27 etc adults. The sooner people can take on real responsibility the better. This baby-ing of perfectly capable adults has to end.
It’s really interesting to see how much schadenfreude people can dish on the Internet and Rick here is quite a champ. The logic displayed is always so simplistic and vapid. “Look at me! I took out a loan around the same time you did and it all worked out! I’m smart! You dumb!” I did what you did and didn’t fuck up, so obviously it’s your fault.
I could go down the list of misfortunes Chris dealt with that weren’t really his fault again (though of course Rick would find a way to blame him for them anyway) and I could point out how Chris has admitted to making big mistakes. I could also point out how he has tried to make good despite his misfortunes and mistakes, including paying over double his loan amount while still owing over 3x the original amount. I could do all that, but that obviously won’t make a difference to Rick here, because he is a giant asshole.
Your righteous indignation fails you. IF the advocate (Matt Taibbi) for forgiving misfortune wants to use an anecdotal fairy tale of woe, then it is perfectly acceptable for the opponent to use an anecdotal fairy tale of success. Neither offer substantive information on the case and plan for which they argue.
Of course, useful and substantive information isn't really the goal in this kind of plea; fleecing the taxpayer is. And tugging at heartstrings by showcasing the hard luck of what may be an insignificant few is the favorite tactic of the swindler.
Nonsense. The "Taxpayer" (actually the Department of Education in lockstep with their crony, politially connected contractors) have been milking the borrowers for a King's ransom for decades under this unconstitutionally predatory lending and collection regime. Did you know that the Department of Education started booking profits of about $50 Billion per year starting around 2012? Did you know that some of these profits are used to fund controversial programs like Obamacare? No, you obviously did not. Did you know that the Department of Education has, astonishingly been making a PROFIT, NOT A LOSS on defaulted loans going back to 2004 and before, in the absence of bankruptcy protections, statutes of limitations, and other fundamental consumer protections? No you didn't. Did you know that the Department of Education fights TOOTH AND NAIL, behind the scenes, to keep bankruptcy AWAY from student loans? No. Why would you. This is now a CATASTROPHICALLY FAILED lending system. The "Taxpayers" have pushed this lending system to the point where we now are looking at t default rate of over 75%, perhaps WELL OVER 75%. This is about 4X the default rate of subprime home mortgages. This lending system is done, finished, toast, FAILED. You might not like that FACT, but that is your problem. The "taxpayers" created and perpetuated this lending scam, and now they, along with you and I, will be watching it vanish into a mist of illegitimacy. No one here is seeking your approval or you admonishment. Your opinion, frakly, is irrelevant. If you have thoughts about what the next higher education lending system should look like, great...let's hear it. All else you might have to say is just snarky insinuations, insults, and babble.
This is a great example why the Federal government should have stuck to its knitting, running the departments of State, Defense, Justice, Interior, etc. and stayed out of the transfer payments business. It creates ugkynkeviathans like this that satisfy no one - the takers want more of it and the makers want less of it amd that’s how it gets twisted into something horrific.
Yes, the default rates on student loans are higher than subprime mortgages. But that’s only because the 13th amendment prevents the government from repossessing the borrowers- the containers of the object of the debt, whereas secured lenders were able to take possession of the homes.
Taxpayers - true taxpayers - didn’t create this problem. Consumers of the product did and they did so with relish. They wanted subsidies and they got them. The aspect of the program that bites them on the ass now is that back when people were less grabby and demanding, the program was built based upon a quid pro quo - we won’t underwrite and price the loan based upon sound economic principles and thus, you can’t get out of it if you screw up or if life smacks you in the head.
Again, this is what you get when the central government, with an unlimited printing press colors outside the lines and expands into areas best left to state and local government.
Lol. "Consumers of the product", meaning the students, had NOTHING TO DO WITH THE CREATION OF THIS BIG GOVERNMENT LENDING SCAM. This was a creation of Sallie Mae, in concert with the Department of Education and the colleges....ALL OF WHOM are making out LIKE PALACE THIEVES. You clearloy need to learn something about this uniquely predatory, unconstitutional, nationally threatening lending system, buddy. We're probably at an 80%, if not higher default rate. THis is 40+ million real, live TAXPAYERS who are being conquered and enslaved to the great benefit of the government, and colleges, the lending swamp, and NO ONE ELSE. Why don't you read up a bit on this lending system before speaking about it?
https://studentloanjustice.medium.com/the-conservative-case-for-cancelling-student-loans-9e085a168972
You will save yourself a lot of embarassment, and even some culpability for the perpetuation of this cancer on the country.
Of course you're mistaken.
1) Student loan delinquency or default as of Q3 2019 is less than 11 percent, not "WELL OVER 75%"...
2) Student loans average only 33K... only slightly higher than a new entry level car
A tale told by an idiot, full of sound and fury and signifying nothing.
Get your facts straight son, then dust yourself off, step back to the plate, and take another swing.
Nonsense. You're facts are WRONG. The TRUE, LIFETIME default rate for 2004 students, we now know, is over 40%, and that class of borrowers was only borrowing around $12,000, where today the average undergrad (and their parents) are leaving school with over $40,000 in loans. You are putting up some transitory metric, probably lifted from highly inaccurate Fed data that means NOTHING. Also even the most generous calculation of average student debt is $1.6 Trillion/44 million is $37,000 per borrower, and again, that $1.6 Trillion does not count a tremendous amount of interest (interest on loans in default, for example), so the TRUE debt per borrower is closer to $44,000. Further more according to Mr. Wayne Johnson, who RAN the federal lending system under Trump, 80% of all federal loan borrowers were either uunable to pay (~65%), or were paying but their loan balances were going up (~15%). BEFORE THE PANDEMIC. Maybe you should stop the whole "google expert" ruse. It is not impressive, and not helpful whatsoever to discerning the truth about this catastrophically failed lending program.
*your*..."Your facts are wrong..." not *you're*
It appears your command of the language is as flimsy as your command of statistics, analysis and reality.
I can't say I'm surprised.
You called this story an "anecdotal fairy tale of woe." So, this is a fiction? A lie? You come here because you think Taibbi is lacking in credibility and want to call him out on making shit up?
You think this is "the hard luck of what may be an insignficant few." 1/6 of all Americans are saddled with student loan debt. It's the second highest form of debt behind mortgage debt, higher than credit cards and auto loans.
https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=389b051b281f
People can't discharge this debt even if they have legitimate reasons for being unable to repay it, so obviously it's a low risk proposition to hand out student loans to whoever comes in for one.
I disagree. The more people eligible for a benefit, the more you enlarge the pool of people who are not part of the target audience. Look, for example, at the current deferral of all student loans. There are plenty of people out there who were paying and can afford to pay and feel that it’s free money not to pay. Just like the PPP loans that went out based upon payroll rather than based upon need.
How is anecdotal a fiction or lie? Your not doing yourself any favors misrepresenting every argument.
*you're*..."you're not doing yourself any favors..."
Oh goody a pedant.
You conflate having a student loan with not being able to repay a student loan. That is of course, a illogical. To suggest that 1/6th of all Americans share Chris's plight is comical.
Actually, the two are nearly synonymous. Wayne Johnson, who RAN the federal lending system under Trump, told me just before the pandemic that 80% of ALL BORROWERS were either unable to pay on their loans, or they were paying, but their loan balances were increasing. That was BEFORE the pandemic. We were headed to a default rate on these loans of over 75% before covid hit. This is now a catastrophically failed lendinng system. Time to take it to the bath, and drown it in the tub. It is vanishing into a mist of illegitimacy, and there is nothing that you or I can say or do to alter that fact. Inculcate that. Not quite so comical when you do. https://studentloanjustice.medium.com/the-conservative-case-for-cancelling-student-loans-9e085a168972
LOL..citing your own lies...a whole new take on begging the question.
Perhaps Chris shouldn't have taken all that money in the first place and should have been content to love freely and count on the kindness of strangers who don't mind material wealth. But is it really fair to ask (force) those who do find happiness in wealth, to share what they slave all their lives for, with the evolved children of Aquarius who find peace love and understanding to be "what it's all about"? SOMEbody's gotta go to work to put food on the table and a roof over the heads of all those evolved souls.
I appreciate your thoughts, here, but this lending system is well beyond repair. The government will likely never see even $.20 on the dollar for the junk loans they are sitting on, by and large. It is far better to simply cancel the loans, and end the lending system at this point. Call it stimulus. I suspect that Trillions (not just the few hundred billion that is actual unpaid principal for the federal loan porfolio) have been thrown out to wealthy individuals in stimulus that did not deserve or need it. If 10-15% of student loan borrowers wind up with a benefit they don't necessarily need, it is by far and away worth it to have the other 30+ million people out from under the weight of this oppressive debt. Also ALL federal student loan borrowers are determined to be "financially needy" as a precondition for receiving the loans, so this is nothing like (for example) the 43,000 millionaires and billionaires who just received an average of $1.6 million in pandemic stimulus. See Change.Org/CancelStudentLoans
There is such a thing as emotional capital as opposed to economic capital. If you choose to follow your muse, work less hard, spend more time on to recreation, you are acquiring a form of capital that someone who takes on a nose to the grindstone approach. How you spend your is a form of capital allocation. Having made your decision to,follow your muse, etc, it’s pretty annoying to listen to whining about income and “inequality”
Chris was making $28,000 a year in the 21st century. If you purchase an undergraduate degree and a law degree and make considerably less than a full time nanny makes, your life has gone badly. There's nothing more to say here.
You comment betrays your ignorance on this topic. This is, and really was never a "bad borrower" question. We are looking at the slow motion evaporation of the worst big-government lending scam in the history of this country. The borrowers have not changed significantly since the 1970's. What has changed is the lending system, and the prices that the colleges now charge. When 80% of all borrowers were either unable to make payments, or were paying, but their loan balances were going up, this is a catastrophically failed lending system. You sitting on your perch, looking down your nose and wagging your judgemental fingers at the innocent victims of this vicious lending scam has absolutely zero value. Frankly, it is an embarassing thing for you.
Your comment betrays your ignorance on this topic. There was ALWAYS a “bad borrower” question. Of course there is a lending scam, but it is one played against the American taxpayer. Once the Feds got involved, they NEVER underwrote the loans. They never looked at the quality of the courses that the borrower was taking and whether it would lead to a degree that made the borrower employable. They never required a parental guarantee which not only would provide credit support, but would also provide some oversight regarding the courses and degrees the borrower would pursue. And on top of all that, they loaned at preferential interest rates relative to the quality of the credit - a deep discount. More of the welfare state. You’re sitting on your perch, looking at hard working people who played by the rules, took on debt and paid it or avoided it by working their way through school and you wag your judgements fingers at the innocent taxpayers who are already paying for a ton of handouts already and want to lay more on top of them has absolutely zero value. Frankly, your left wing gimme gimme gimme attitude is an embarrassing thing for you.
That’s true. I pay my office guy - who doesn’t even have a high school diploma - more than $28,000.
Okay, but: what kind of world do you want to live in?
One where worthless, stupid losers—people who aren’t as admirable as you—get crushed to further enrich the worst people and institutions on earth?
In other countries, college is free. Here, college is described to teenagers as basically essential if you want to be a full human being. The media, teachers, and one of our two political parties endlessly repeat the message that “college = success and no college = failure.” Obama has convinced the NPR crowd that that a college degree is a cure for poverty.
People who aren’t as excellent as you make mistakes when they’re young. They impulsively join the army. They let colleges and relatives talk them into getting degrees they can’t afford. They don’t read the fine print. Some of them deal drugs and end up serving time.
I get that it sucks to be so much stronger, smarter, and better than others, and never receive a prize or the recognition you’re due, but: how exactly do you gain from watching someone’s meager wages and retirement checks be garnished long after he’s paid back 220% of what he borrowed?
I have several issues with your post.
There is something known as the law of natural consequences. Touch fire, get burned. Make foolish financial decisions, lose money, incur large debts.
Someone pays 200% of what they borrowed, including penalties and loads of interest because they didn’t meet their lawful obligations that they freely assumed. That’s how things work. Anyone who has taken out a mortgage gets a disclosure by the bank under the Truth in Lending Laws. Many people are shocked by it because it has to disclose how much in interest and principal you will pay over the Logan’s term. Thus, for example, if he borrowed $100,000 at 7.5% when Rick was 29 years old (reasonable amounts and terms at then time) on 30 year terms, he’d have paid....wait for it...$240,000 over the term of his loan or 240% of what he borrowed.
Ah, yes, but you say Chris still owes a ton of money. Yes, perhaps because he didn’t take his debt seriously. He seems to have thought that he made a deal with his lender that somehow THEY were responsible for his ability to obtain employment sufficient to service the debt he freely incurred. As if they were responsible for his choice of what to major in, what school to go to, what jobs he’d take and where he’d live. He behaved as if his debt was optional - not paying it for periods of time, incurring large penalties and piled up interest that began to compound like topsy.
And yes, I was wise enough to take things seriously and responsible enough to do without things and experiences that allowed me to get out from under my debt. What would you do? Rescue every one who underperforms? Why should that be a cost that is borne by others? I guess we should eliminate all bad consequences in life. Why do they give out only one gold medal at the Olympics when maybe 30 people compete? Its not fair! Bwah Bwah Bwah!!!!
You would eliminate moral hazard in life. Consider a loan an “option” that will be repaid only if it works out for you.
Your post assumes that huge swathes of the population are losers who are gulled into making poor choices by misinformation. Can it be that so many Americans are that gullible and foolish?
And how do you measure success? I grew up poor, the son of immigrants. Many of my friends didn’t go to college - they became cops, fireman, grocery store workers. They live within their means and are not “losers”. They were serious minded people who understood that college was not for them and are mostly happy with their lives. Others did go to college and there is a spread of outcomes, from amazingly wealthy to unsuccessful. That’s how life works.
The question is how you define success. By money in the bank? He who dies with the most money wins? I know plenty of miserable people who have lots of bank. And why do you feel the need to define success levels in a comparative frame of reference? The happiest guy I know is a retired cop who never earned $100,000 in his life, who still works after retirement to pay his debts, loves his family and smiles all day long with his lot in life. He’s aligned his needs and his wants with his resources, has a happy family life and loves his job.
If you drink the Koo-laid offered by “THEM” it’s your own fault. Everyone in the world doesn’t have to pay for your mistakes.
And as to other countries providing educations without cost, don’t kid yourself. There is no such thing as FREE. Someone is paying the bill. You seem to just want something for nothing and are angry about the amount of coin in your pocket, relative to your appetite and how much others have achieved.
Rick has a lot of platitudes about morality and responsibility, but the truth is he is a sick and twisted individual that spews a lot of bullshit to justify being an asshole.
Chris: "Hey, I know I fucked up, but this is really difficult to deal with, can I get some help?"
Rick: "No! Fuck you! HA HA HA HA! Look at how stupid you are! You fucking dummy! You should have been smart like me, then you wouldn't be suffering!"
It's a pretty disgusting world where people have bought into this mentality that individuals fucking society over under the legal fiction of a corporation get to duck personal responsibility, but individuals getting fucked over by corporations need to eat shit and like it. People like Rick make it all the worse by actually taking pleasure in the misfortune of individuals and jeering right at them as if this is some game he has won and Chris has lost.
So perhaps you'll be sending Chris a check to help him out?
Name calling and ad hominem attacks are not really forms of debate. This is a comment section where people express opinions. Is it possible for you to disagree with Rick without implying he's an asshole filled with bullshit? Asking for a friend.
Rick's a big boy. I don't appreciate people attacking others here for language, frankly. That is a form of censorship, and in itself poisons free speech. I appreciate Harvey's choice of words. If we need the PC cops to come here and clean the place up, we'll call you.
Thats......not what Rick said at all. Terrible response.
Every last one of us is and has been a loser at one point or another, for short or interminable periods, struggled, been humbled by life, thought we couldn't get any lower, and yet still did. Many of us never recovered, many of us overcame. So it's not the lot in life you've been dealt that determines your worth or whether you're a winner or a loser. You're the one putting people in this categories and reserving your contempt for those who don't loudly take pride in and blame others for their losses.
Well that is your opinion and you're welcome to it. Obviously, others disagree with you as evidenced by their choice of words. It's called free speech, and I for one am ALL FOR IT. If you are insulted, offended, or hurt by the syntactical choices that others make while expressing themselves so much that you choose to comment on that rather than the substance of the debate, you only serve to distract and and confuse the debate. Notice how absolutely nothing in either my comment that I am typing RIGHT NOW has NOTHING to do with the subject matter? Yeah. You caused that. Knock it off. Stick to the topic.
Rick you're making a logical fallacy by implying since Chris made some stupendously bad choices everyone who took on student loans is guilty of the same. But 17 and 18 year old kids were fed propaganda about how they needed a college degree all the way through high school and were lied to by their guidance councilors and admissions staff. This was plain and simple wealth extraction from the younger generation to the older. The kids who naively signed themselves into nondischargeable debt that they cannot service deserve some compassion. The banks, who know better and lobbied for this exact situation, are the ones who deserve our ire.
I don't support completely forgiving the loans, but situation right now is unsustainable and unjust. At a minimum the following should be done:
1. Allow refinancing to a low interest rate. It's a compromise between doing nothing and forgiveness.
2. Allow discharging of student debt in bankruptcy.
3. Make it mandatory that when payments are set up a certain percentage goes towards the principal. Interest only payments should be illegal.
Nonsense. What, exactly, is NATURAL about a lending system from which every consumer protection (that exist for EVERY other loan) has been stripped, unbeknownst to the borrower, such that guys like Chris can see an $80,000 loan be artificially JACKED to a HALF MILLION DOLLARS OR MORE?!! LOL. There is nothing "natural" about this, you douche.
You’re out of control with your name calling and personal attacks. I recognize you have some preeminent knowledge and experience in this area. But for someone who wants to educate other people about an injustice, you sure are unjust in your general nastiness
Nonsense. I'm DONE with "up by your bootstraps" DOUCHES like what we see from the commenter above trying to lecture us on hard work, financial management, etc. This is not a problem that benefits WHATSOEVER from such comments. In fact, such comments only serve to kill the conversation that needs to be had about this unconstitutional lending SCAM that will go down as the largest not just in US History, but world history. We are at the point now where people fleeing the country and even KILLING THEMSELVES as result of this debt being inflicted upon the country, which is literally conquering and enslaving over 40 milliion people in this country, and threatens to ruin far more as long as assholes like this guy are allowed to interrupt this conversation with their nonsense. I don't appreciate you trying to assume the position of PC police here. Let this guy respond as he wants. Neither he, nor I need you stepping in the middle to call PC balls and strikes.
In SOME countries college is free - but those same countries have extremely high tax rates.
Nothing is free. Someone always pays. In this country, 45% or so pay nothing and more pay relatively little. So it’s easy for them to say I want more....
45% pay little because they have nothing. It’s an indictment of the system that the wealth is so skewed.
I agree. There are far too many people who lack the desire to provide for themselves. Too many people who have gotten too comfortable in the safety hammock of the nanny state.
That's true. College tuition is not "free". Germany for example, where my brother teaches, has very high taxes, few private colleges, and far fewer people going to college. This enables the government to subsidize higher education significantly. However, they also have a very strong apprenticeship program and people know that they can make a respected and good living in the trades. It's also a more equal society. People feel less pressure to take a huge gamble on a private college or some degree which they are ill-suited for in the hopes they can stop living paycheck to paycheck, or finally get decent healthcare via a better-paying job.
Good point to mention Germany. They have Hauptschule, Realschule and Gymnasium. Basically, you get sorted into a track based on what your academic abilities are. The Uni's also have limited space and there are decisions that we need X number of dentists, so let's put those in the pipeline. And of course, no student gets fleeced $40k to get an AA in culinary, there's an apprentice system in place.
There's plusses and minuses to this. Late bloomers would be out of luck or on their own to try and start something new. But I think that's a more realistic approach since you're not burdening those young people with debt. Most of Europe has low to no-cost education, and is friendly to non-Europeans going there to study. It's not free, but compared to America, it's a screaming bargain. You can get med school for like $10k a year for non-residents.
Good rundown of the times. I graduated in '78, just before the big pushes started to get everybody to go into hock for that parchment. I took out no debt because my folks made too much money and the system was not going to lend me anything. So I ended up doing it by myself- lived very simply- almost deprived in a sense.
But the system is predatory, or at least got increasingly so through the 80s. This is a classic case of the elites losing any connection to the citizens. I understand your questioning of just how educated a person really is if he doesn't pay attention to his world. You're right on that. But I do have a lot of trouble with a system that blatantly lures people into servitude. It's not what a sane, civil society does to its people.
But that seems to have become the American Way. And by the way, IMO college is currently more scam than not- the debt is only part of it. I won't be encouraging any of my 3 kids to go.
You do your 3 kids a tremendous, if not cruel disservice. Learning is one of the great joys in life. The 4+ years of college foster an open mind that sates the curious and discourages a mindless existence. It's not about the riches they may go on to make. It's about feeding the single greatest gift man has over the beasts of the field: knowledge.
I am not disagreeing with you in principle, but the idea one has to subject themselves to the current system to enjoy the discovery of new ideas and learning about the world is hugely mistaken. I AM disagreeing that 4+ years of college “fosters an open mind and discourages a mindless existence”. I live in an elite university town (Evanston, NU), and I am continually amazed at the extremely narrow intellectual and ideological bandwidth of the professoriat; I’ll spare you the examples. To think that the current university system holds a monopoly on learning about the world is a misguided perception.
I don't typically deal (or argue) in absolutes. In fact, the college experience DOES foster expanded learning and intellectual growth. It does not guarantee it, and a community college probably doesn't offer the same fostering as an Ivy League experience. Nor does a community college cost what an Ivy League school costs.
Sending your children out to experience the world and attend the fabled school of hard knocks is certainly an option. But you'll not convince me it's a better option for fostering intellectual endeavors and the joys that accompany them.
As for narrow minds and narrow perspectives, education is not always a cure, and I agree with you that often education can foster a narrower mind rising out of arrogance (I'm educated so I'm right).
I’m not trying to convince anyone of anything. I don’t believe the school of hard knocks is the smart way to pursue one’s life. I am saying that imagining a 4+ year degree at (an American) university is the way to enlightenment is an astoundingly small view of how to live in the world. Your observations about arrogance are spot on. I have actually had people debate me by saying “I went to Stanford” as the trump card in their argument. Here’s an idea.... I live a good chunk of my year in China, Wuhan to be exact. Spend a few grand, attend a Chinese university. You’ll learn more about the world than you’ve ever imagined.
I studied the politics of China while in college. I studied the politics of the USSR while I was in college. Both were fascinating, and prompted me to go to both China and the USSR. I likely would not have put either on my vacation bucket list had I not studied them in school first. In fact, had it not been for the opportunity presented to university students to study in the USSR, I likely never could have even gotten in to the country in the first place. Oppressive communist regimes don't really make hot tourist attractions, but the incredible history, culture, politics, and sociology of the countries that I learned about while in school led me to them and I was the richer for those experiences; experiences that help me today when looking at a lot of the problems in this country (most notably the demise of our free and independent press, lamented by both Taibbi and Greenwald here on substack).
I find it interesting that institutions of higher learning are so scorned by absolutists who look at the limitations of those institutions and argue them as absolute and therefore worthy of scorn, contempt and disparagement. Perfection being the enemy of good, I would never encourage my kids to avoid opportunities that, imperfections and shortcomings notwithstanding, provide an environment so fertile for intellectual rigor and growth. Opportunities, again, a key word in my position, are entirely what a person makes of them. And there are few places in the world offering more opportunities for everything from learning to make a bong out of an apple to pondering existentialism and that wondrous universe beneath one's thumbnail.
"I have never let schooling interfere with my education"- Mark Twain
Did you by any chance produce colored brochures for colleges to entice freshmen to attend and their parents to pay the bill?
The claim that college fosters an open mind is bullshit and just not true. At one time perhaps, but currently? No way.
The college route offers a very limited view of the world. Here's my experience: 4.5 years to get a degree in Range Management (grazing, soils, forage plants, animal husbandry). Right out of college got a job with the Forest Service in Nevada as a range rider and wild horse tech and occasional fence builder. What a life! Wasn't just a job or a lifestyle- it shaped me. 14 hrs/da in the saddle (got paid for 8, but I didn't care), 10 days on 4 off, on my own just me and the horse (or mule as the case may be- the source of my title in these comments). Did that for several years before going back into wildland fire where I made my career. And that career, being seasonal and all, allowed me to see the world. No college needed.
Only needed that degree to get that initial job, since then never really used it though I will admit to still having an interest in range. So there is that.
But, any given day on horseback or on the fireline grants me more adventure, excitement and learning than 4 yrs total of college ever thought of doing. In just one day! Get the perspective? It's out of all proportion.
Riches? Not from working, no. No debt either.
Think abut this: I could send my kid to school for language study. He takes 1 hr/day 3 days/week. At the end of 3 years he does ok. But put him in Peru- their Spanish is clear and beautiful- do a home stay and individual studies and he'll come out in 4 months speaking like a native, with incredible personal experiences. Conversely, what does he do in college after class- go drink beer or paint his face and go to a lousy football game? You're way over rating the college experience IMO.
Wish millions and millions of people could do this.
oh yeah my vast knowledge afforded to me by my liberal arts political science degree sure gets me interviews at companies that want very specific skill sets and experience not someone "who can learn." My first professional job with my fancy university degree was working for Harris Teeter cleaning mop sinks with my bare hands for $8.50/hr. I value my degree greatly, but that doesn't pay my bills or give me the career growth I so desperately need to stave off rising healthcare, HOA dues, and food costs. I wish I had been told to become an electrician.
I'm sorry you've been unable to make the most of your college education. Perhaps it's your interpersonal skills that, as evidenced from your post, have failed you, not your education?
You probably would like it.
My second job was cooking and serving drinks at a bowling alley for min wage plus tips.
My third job was pricking plasma donor's fingers and screening their blood pressure for $10/hr at a plasma donation center.
My fourth job was working 10 hour shifts on the manufacturing line where they packaged the medicines produced from the plasma donations for a whopping $12/hr. I went to college because I was told I would work at the factory without a degree, but I had to work my way UP to factory work. You can have your knowledge. It is worthless.