Sunday, October 23, 2011

The huge student loan mess

A generation of college graduates took on a crushing burden of student loans -- $1 trillion worth, according to USA Today. Students are borrowing twice as much as they did 10 years ago. We all know what their job prospects are.

Alternet has a terrific story explaining what happened.
Some people have noticed that “student loan debt” comes up a lot among the Wall Street Occupiers and the members of the 99 percent movement. Often, older people, who either attended school when tuition was reasonable, or who didn’t attend college at all in an era when a high school diploma was enough of a qualification for a stable, middle-class career, tend to think this is all the entitled whining of spoiled kids. They don’t understand that these kids accepted a home mortgage worth of debt before they ever even had a regular income, based on phony promises, and that the debt is inescapable, regardless of life circumstances or ability to pay.
Thanks to the horrific 2005 bankruptcy bill, one of the most nakedly venal modern examples of Congress serving the interests of the rentiers and creditors over the vast majority, debtors cannot discharge student loans through bankruptcy. The government is shielded from the risk, and creditors are licensed to collect by almost any means they deem necessary, giving no one in charge any real incentive (beyond basic human decency) to fix the situation.
In other words, this is unprecedentedly awful for an entire generation of young people just entering adulthood.
Among the culprits: The Washington Post and the Great Vampire Squid itself, Goldman Sachs.

Read the whole thing here.