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US students drowning in debt
Published: 04 September, 2010, 02:10
Edited: 05 September, 2010, 11:18
A ticking time bomb of American debt. Over $830 billion are owed by college students in the US with $3 thousand more added on every second.
The most traditional financial baggage for Americans was credit card debt. For the first time, debt belonging to college students has over taken that number one spot.
Economist Max Wolff said, “Students graduating in 2008, 2009 and 2010 are facing the worst job markets in a generation at least. And so you have people with more debt that we have ever seen before, who are having a harder time finding any job, let alone a job that pays them enough to somehow pay off all this debt.”
29-year-old Shana Falb is haunted by major money problems.
If she continues at the loan rate she entered her first year, by the time she is finished with school, she will have about $120,000 worth of debt, just from school loans.
What Falb earns now is barely enough to survive on a day to day basis, let alone pay back her loans.
“The money that comes from the internship is, like I said, very little. It doesn’t pay for much. It could pay for a dinner, or two,” she said.
The combination of a lack of jobs and growing debt has never been as tight for graduates.
At some US universities, students have been borrowing 70 percent more money in the last year.
RT contributor Danny Schechter told RT, “Universities are actually cutting deals with the student loan companies and making money on the side. There has been a lawsuit in New York – a million dollar fine – against Columbia University for steering people to expensive loans. The danger here is that instead of capitalism we end up with serfdom, because these students are indebted for life”.
Dennis House lives in a basement in Queens, NY with two roommates, he argued, “Your loan that you are paying back shouldn’t cost you as must as it costs to live in a home. What they’re doing is completely lowering the standards of living for an entire generation of people who couldn’t help it in any way”.
Just months after graduation, he said he receives calls four times a day.
“They’re terrible. They’re the biggest loan sharks in the world right now. If you’re late on a payment, they’ll harass you,” he added.
This harassing will never go away – college debt owners cannot eliminate their debt by filing for bankruptcy.
Max Fraad Wolff explained, “Your housing debt, your car debt, your credit card debt – if you go bankrupt, it gets wiped away. You literally cannot get out of your student debt. If you decide you can’t pay it – too bad. Student loan debt is special and it’s specially sticky and hard to get rid of”.
Moreover, when your credit score falls, getting a job becomes even harder as many companies check these numbers during hiring.
Outside a major loan corporation, journalist Joe Weisenthal said youth are often pressured into taking on commitments they cannot afford without even realizing it.
“There is an incredible amount of propaganda regarding student loans and education in general. How many times have you heard the phrase ‘education is the best investment you can make’,” said Weisenthal.
But unless a dramatic turnaround in the system takes place, that statement may soon become obsolete.
Ever since the economic crisis began in the US, the debate of how it started and how to define what is rages on. But in the meantime, a generation that is supposed to be the driving force for the country is stuck – jobless and indebted.
03.09.2010, 20:50
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04.09.2010, 03:36
2 comments
Labor movement slowing down in AmericaLabor Day, a time when Americans can kick back and relax, enjoy the last days of summer and prepare for the school year. But that wasn’t always the case. |
Indebtedness will get worse as pressure builds for the government to increase the federal student loans limits. Most colleges are already priced too high for the current limits.
The good thing about the Australian HECS system is that that we owe the debt to the government, who also subsidises the education we recieve. The interest rate is only about 2% (inflation is about 4% here) and we don't start payments until we earn over $30k. I'm doing a Bach. Engineering in a prestigous university for only around $5k per year. Its basically the next best thing to free tertairy education.
There are two parts to education. There is a societal part, to develop individuals who have wide knowledge, developed reasoning and adequate presentation skills. Individuals that realise their academic capabilities and have developed fully realised minds according to their potential. This adds to any enlightened society and improves the civilised nature of it. This doesn't mean that every one needs to go to university, or indeed university is the only means to achieve this, it just means everyone should be allowed to reach their academic level, for the good of society. But this does not mean a free choice for any course, it means government controlled programs. Then there is a second part, and that is a vocational part. Here the individual is expected to get a return on investment. The course is linked to the individuals future prosperity, it is an open choice, in an open market. Here the market forces need settle the demand and the provision of these courses. The result of these factors is that the government must pick up the tab for the societal component, whilst the individual must pick up the tab for the vocational component. But it doesn't end there. To maintain fairness in the vocational area. The government further has to provide financing, so that the playing field is level for entry, preventing a class system being instantiated. It must also make sure that the vocational course can be taken at any age in life, and entry into the resultant work secured, so that true freedom exists, allowing potential students to work first, to support latter vocational aspirations. The problem today with education, is that, for monetary reasons, it is only seen as a step to a job, so the potential worker must pay. It is capiatlism to the extreme, leaving out the reality that education in general is a bedrock for any civilsed nation. The horrendous by product of this, is that eucation has now just turned into the fastest training possible, we lost education!