Serfdom via student loans – Lenders going after Social Security and saddling college graduates with a debt albatross. Modern day debtor’s prison comes with a University degree.
The sharp attention being pointed toward higher education is important for a variety of reasons including the grim reality that we are facing another extraordinary bubble. Instead of blindly following into another credit fueled bubble we should probably pause as we cross the $1 trillion student loan threshold. The cost of education is becoming onerous and student loans are littered with financial landmines. Many are given to students to attend for-profit schools that will yield very little return on investment in the market aside from stockholders and corporate leaders. The uglier side also includes the inability to discharge student loans in bankruptcy. Americans have the ability to discharge mortgage debt if they are unable to pay their home payment. Businesses have the power to renegotiate contracts and loans with banks. Yet we somehow have managed to recreate debtor’s prison except it comes in the form of a student loan. Another dirty secret comes from the financial institutions gouging students with additional fees on top of the original loan balance. The higher education bubble is popping and the long-term implications loom large for our struggling economy.
Student loans creating a generation of serfs
One of the implicit tenets we live by in America is the ability to fail and comeback from setbacks. Currently this idea has been usurped by the giant financial organizations and has excluded virtually every other American. You have luxury hotels imploding and banks simply dishing billion dollar bad bets to the American taxpayer. At the core of the too big to fail bailouts is the notion that banks made horribly bad bets and needed to walk away. So they did by saddling the American taxpayer with the bill. Yet with student loans banks are lending to anyone and everyone willing to attend any questionable institution. The due diligence is comical and the corruption that is occurring is similar to the mortgage boiler rooms that were dishing out subprime loans to any person that walked in through the front door. The stories of student loan purgatory are starting to fill the internet.
See below, a graphic breaking this concept down. To read more, click here