Golly, didn’t I recently see an ad for jobs in academe in Uzbekistan? Sounds great to know all these important things, but I am having trouble finding it on my almost brand new map of Asia. Where do they hide this “stan”?

“We need to selectively wean college students from their debt addiction by beginning to restrict eligibility for borrowing to the most needy.:

I think you meant to say “By not increasing tuition rates by 5-10% per annum at every institution in the nation.” 

As a fellow law school graduate whose long-term unemployment and burgeoning debt have given me physical ailments, I can empathize with the attorney in the story.

“Since federal policy puts a 20-year time limit on repayment.”  My understanding is that only applies to folk on IBR.  For people not on IBR (or for the many people with private student loans), statements keep arriving until the balance is paid in full.  And of course, there is still an ongoing debate whether folk on the non-PSLF, 20-year IBR schedule will have all of the forgiven balance count as income for taxation purposes.  Mind you, if payments under IBR never surpass the amount added in interest each month, those poor souls might be looking at a tax bill on hundreds of thousands of dollars.

What would be nice for you to include in an article is how student loans are unique.  How they aren’t dischargeable in bankruptcy.  How they aren’t subject to the statute of limitations.  Or state usury laws.  Or the Truth in Lending Act.  Or the FDCPA.  Or how default can quickly tack on nearly 50% of the balance in penalties.  Or of the 9:1 interest:principal amortization schedules.  Or of how at least some student loan providers delay processing of payments for 4-7 days to tack on a few hundred dollars more in interest (which immediately becomes new principal).  Or how “non-profit” student loan providers, if their debtors die early of cancer/accident/etc, move against the homes of the parents who cosigned the loans. Or how the Lumina Foundation – often lauded by CHE for its “efforts” to get 60% of Americans to become BA/BS holders - was founded off the sale of one student loan provider’s (USA Group) assets to another (Sallie Mae), and how the board is entirely staffed by current/former student loan executives who deny the existence of a student loan crisis as they fund “MOAR COLLEGE!” studies with their $1.5 billion endowment and non-profit status.  Or how beyond the 1 in 4 delinquent loans and 1 in 2 loans that are in forbearance or deferral, many loans are only current because grads are spending 1/3, 1/2, sometimes 2/3 of their paycheck making the minimum payments on a 20 or 30 year schedule.  The rabbit hole is very, very deep – as one would expect of a $110 billion/year market that is largely guaranteed by the federal government and growing at nearly 10% per annum.

Should I even mention the slicing and dicing of student loans into asset-backed securities (SLABS), whose combined valuation is way over the trillion-dollar outstanding balance? Pioneered by Sallie Mae, and successful enough that their longtime CEO (Al Lord) now lives on a 200-acre estate outside of DC, replete with his own private 18-hole golf course. Sallie Mae has also lobbied to the tune of tens of millions over the years to eradicate the aforementioned consumer protections from its products. Just a coincidence, I’m sure.

I would like to point out, as I have in other articles, that this bubble is not like the housing bubbles, which were experienced from Vegas to Dubai to Dublin to Granada.  No, in this age of global wage equalization, outsourcing, insourcing, automation, post-grad “unpaid internships,” and all the rest, the higher education bubble exists in exactly one nation on the planet.  Even four years at Oxbridge or McGill don’t equal one year at George Washington, BU, or NYU.  It will ultimately have disastrous effects on the nation, when “the market” learns that Millenials can not begin to afford to prop up the housing market, consumer spending, the birth rate, the national debt, etc.  It is going to get very, Very, VERY ugly.

We need a new model. I have long advocated this solution: evaluate students’ ability to do college level work, rather than weakening the curriculum to meet what poorly prepared high school students can now manage to do. Then pay them to be students, and fire them if they flunk. Students should graduate without debt and actually knowing something well enough to be contributing members of society. That is the only way to achieve the next generation of scientists, creative artists, and innovators necessary to meet the myriad challenges of our era that our current “leaders” in both/all parties seem unable to address. How fund? Lift the income cap on social security tax to fund social security, and hire able bodied seniors on social security to supplement overburdened existing younger faculty. No doubt there are many problems with this proposal, but we need to do something better — charging extra tuition for extra “necessary classes” as is currently being discussed in California shows how bankrupt, absolutely bankrupt, our current system really is.

At least now there is an open and honest discussion about the student debt problem.  I personally
know a number of people in their 40s who are still only half way through large student debts.  These
are people with doctorate degrees who are tenured university professors. Their debt/income ratios
were high.  I suspect this is not uncommon.  It would interesting to hear how adjunct faculty are managing their student debts as well.
Has anyone done a study about the costs to the economy when young people cannot 
purchase houses, afford to marry, start a family or  contribute to the overall economy?
I write this because it is not just the people who do not finish degrees or drop out of for-profit
programs carrying large unpaid student debts.
Then there are those who have lost jobs in the past four or five years, who have defaulted and
cannot get any relief.  I write this because serious, excellent students who have graduated,
ready to serve society are burdened with student debts.  It is not simply the “losers” who
have dropped out or were “hood-winked” into some for-profit institution’s trap.
I do not think that the so-called “debt addiction” will continue.  Students simply will choose not
to go to college.   Fewer students will not bring down the tuition costs, as Dr. Vedder suggests.
However it will force colleges to cut programs and perhaps close their doors.
Why doesn’t anyone suggest better pay for people who are working in jobs that require college
degrees?  If people were paid more, then they could afford to pay back their debts.  How
about affordable healthcare? How about more public support for education?
Oh, my goodness, I must be a lefty radical!

yep that’s me. My student loans exceed my annual income and I know I am not alone. 5 years after graduation, I still owe the same amount I did when I graduated due to interest. Paying them all off will probably never happen. 

Independency would be reined in.  In the 1970s and 80s it was primarily for emergency purposes, and financial aid officers used professional judgment.  Then it was continually broadened so that, even for undergraduates, independents are now up to 65 percent of the pie.  It is implausible, even in the cheapest parts of the USA, that people are living on the $3000 they put down as income on the FAFSA.  Most are clearly getting income from parents or other relatives.  In this day an age, the automatic independence for federal aid based solely on things like being 24, having a baby, being a veteran, etc., needs to be repealed.  For starters, the era of the prototypical 18-22 year-old undergrad is long past.

Universal independency may appear to help the needy but it only complicates their lives.  If you want to go to one of the College Board member schools, you need to file an additional Profile financial aid application for institutional aid.  Those schools use the traditional 1980s definition of independence, that you need to show 7 years (10 in some cases) of not receiving any financial support from parents or other family members.  Some expensive schools ask 50 year-olds going back to school for their masters degrees for parental income information.

There is a lot of talk about FAFSA simplification, but what use is a simple FAFSA if needy students have to file a separate form that is more complicated than a tax return to get in the front door of the classroom?

Besides the independency overreach, Congress added some (middle class) voter-friendly enhancements to the financial aid methodology in 1992 that need to be rolled back to restore the focus on the needy.  Example #1 is adding value of the home back into the financial aid formula.  The colleges want this data but it is not on the FAFSA because it is no longer asked.  To identify who is truly needy, you need to look not only at income but also at assets.  The exclusion of home value was possibly another factor in the housing bubble, as it provided an incentive for people to shift their assets into their home, which would not be counted for FAFSA purposes.

Many who (have to) borrow to attend college might have been bad candidates for going to college in the first place.

Now, let the rage settle, and let me flesh that out.

K-12 is a mess, period.  The result is: high school graduates who should not attend college because they *cannot* meet the challenges, because no one has given them the tools.  The minority is of two groups who have either been under-challenged, so they expect college to be a breeze (‘I didn’t get an A!?!?’”) or they were whelmed by the work, concepts, etc., and simply shoved along.  The former often make it in college once they realize they now must work; the latter fail miserably.  The majority  do graduate from high school, yet their skills are poor, their intellect is poorly developed (not challenged), and college is a crap shoot for them: some rise to the occasion, some do not.

Consequently, universities and colleges have lowered their standards in order to make money (to ‘survive’ – another discussion in and of itself), which means lots of students can get in and, per the topic here, have met the qualifications for a student loan: acceptance into a college.

I certainly don’t have the answer for the state of indebtedness, but if standards were higher as they should be (and K-12 possibly razed and rebuilt), things would likely be different.

Of course, there is the business mentality of higher education, an obvious problem, but my fingers are tired..

When I was a full-time non-tenure-track Instructor at a large state institution, I thanked my lucky stars every day that it took me well into my 30′s to finish my BA, and into my mid 40′s to finish my terminal degree, because I paid cash as I went.  I watched my colleagues with student debt, even those with dual income households, struggle and fall with any major financial event.  Many have multiple bankruptcies behind them, while all the while they’ve been working not only at one institution, but very often adjuncting almost full-time at the local community college.  Dreadful.

The student loan bubble is redefining the term “Greek life.”