Tuesday, February 3, 2009

College Complex

"As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege. ... The two disillusioned attorneys were victims of an unfolding education hoax on the middle class that's just as insidious, and nearly as sweeping, as the housing debacle. The ingredients are strikingly similar too: Misguided easy-money policies that are encouraging the masses to go into debt; a self-serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks. ... Like many good cons, this one contains a kernel of truth. Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. .... While the premium that college grads earn over high schoolers has remained relatively constant over the past five years, the cost of acquiring a degree has risen at twice the rate of inflation, dramatically undermining any value a sheepskin adds. ... Many private lenders tack 10% origination fees onto 18% variable interest rates (there is no legal limit), which begin accruing the moment a loan is funded. That has made private loans more than twice as profitable as government-guaranteed ones and lured heavy involvement from Citigroup, Bank of America and Wells Fargo. ... Lacking honest input, three-quarters of high schoolers will seek to go on to college, many deluded about the financial prospects it holds, says American Institutes for Research's [Mark] Schneider. 'Part of the drive is the idea that it pays,' he says. 'We need somebody making more realistic statements about the risks.' ... [Mindy] Babbitt is no oddity. In fact, one in four college grads takes home considerably less than the top quartile of high school grads, according to a College Board study. ... U.S. universities also minted 37,000 history degrees in 2006, including 852 Ph.Ds. That for a field with fewer than 500 job openings and average pay of $48,500", my emphasis, Kathy Kristof at Forbes, 2 February 2009.

WC Varones has a 27 January 2009 post on this, link: http://wcvarones.blogspot.com/2009/01/education-scam.html.

I love it, "education industrial complex". We are drowning in "complexes". See my posts about our newest educational heroine, Michelle Rhee. As for college not paying, see my 15 April, 23 August and 1 September 2008 posts, links:



Anonymous said...

It's a racket... the "education industrial complex"... ha!

Interesting point about the corrupto banks ::: Citigroup, Bank of America and Wells Fargo ::: playing in the student loan market at inflated rates...

Isn't it TOO rich that these banks are being bailed by the taxpayers?

The veneer of "fair and necessary financial intermediator" is wearing really thin for these "too big to fail" jumbobanks...

Printfaster said...

I have had my own run ins with the student loan industry. My advice: Never ever co-sign a student loan. If you do, buy life insurance for the loan. The bastards will not forgive a loan if your child dies.

By the way, all this government involvement in society, is creating a brutish, nasty, vicious society. Quite the opposite of what the "peace now" people think that they are getting. The road to "papers please" is not far off.

More evidence of this brutishness, is social security. Guess what you pay into it all your life. You expect that money will go to your spouse after death. Well any claim more than six months out, loses any back social security payments. Where does the money for those payments go? Congressional salaries? The Senate cafeteria? Gad, this country is getting to the point that Russia is looking better all the time.

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