The real problem with college debt

Congress passed a law which will lower interest rates on certain student loans for the immediate future.  But Alan Collinge, author of The Student Loan Scam and founder of, told the Real News Network that interest rates are not the most important problem.

The big problem, he told the Real News Network, is that people who take out student loans do not have the same legal rights as other borrowers—bankruptcy, statutes of limitations, truth-in-lending laws, refinancing rights and abusive collection practices, including predatory fees on defaulted loans.  This may have been what he had in mind when he said some lenders find it more profitable to have a loan in default than to be paid up.

The other problem is not the payment plan but the sticker price.  The cost of college tuition and fees is rising faster than anything else, even medical costs.

Higher Ed Inflation


I don’t know all the reasons for such increases, but I am pretty sure it is not because of the rising cost of instructing students.  My friends who work in academia tell me that there are more administrators than teachers at their institutions.  And while there is a strong effort to reduce the cost of teaching by shifting to part-time and adjunct faculty, there is no parallel effort to reduce the size and pay of administrative staff.

Probably some of the increase in administrative staff is due to the cost of compliance with government regulations and of seeking government and private grants.  I don’t know.  My guess is that the growth of administration is an illustrations of the Firemen First principle enunciated years ago by Charles Peters of The Washington Monthly—bureaucrats always cut the lean rather than the fat because they are the fat.

More broadly it looks like an example of what is wrong with American society generally—that there are better rewards for working the system than for working.

Click on Dartblog for an account of overhead costs at Dartmouth College.  I doubt if Dartmouth is unusual in this respect.

Click on Congress Votes to End Fixed Interest on Student Loans for the Bloomberg report on the student loan interest bill enacted by Congress.

Click on for that organization’s home page.

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4 Responses to “The real problem with college debt”

  1. EthnicKonflict Says:

    A nearly total lack of real opportunity to improve one’s life situation drives the student loan crisis. Smart kids whom the State indoctrinated into believing that if they worked hard, studied, played sports, and volunteered now find themselves pinned against a food service job and the maximum aspiration of becoming a food service manager. All the while, they are insulted by sinecure cushioned elites who now say they are spoiled and who say they expected too much before in their imagining themselves as something better than meager wageslaves.

    In such a situation, going back to school to re-embrace the idea that there is hope for an American dream, to find some way to work hard and still be happy and satisfied with one’s industry, holds a huge weight of appeal for the newly forming and unprecedentedly large and diverse generation of educated slaves.

    Telling a slave he or she may win freedom through education and then using this human’s optimism in order to make life worse for the person has become the great American passtime for our ever more despicable elite class. Everywhere I go I hear rumors of rebellion on the one side and rumors of disarmnment on the other.

    Meanwhile, planet Earth cannot hold two contradictory ideas in its mind anywhere near as effectively as the average person.


  2. EthnicKonflict Says:

    I should also point out that I’ve decided to go back to get a master’s degree, since I found myself very unhappy putting boxes on shelves for a living working as a merchandizer at an electronics store. A lot of the employees there, including a nuclear engineer and a mechanical engineer, told me they were just happy to have a stable job. I am probably falling right into the same trap as these other students, but it’s still the rational decision in my opinion. Maybe I will meet just the right people and develop just the right skillz. Yada yada yada.

    There was a point when I considered heroin OD.


    • philebersole Says:

      I’ll risk giving some unwanted advice. Take it for what it’s worth (or not worth) to you.

      Before starting a new path, sit down and figure out what it is you want to be doing for the rest of your life. What are you good at? What do you like doing? What gives you satisfaction?

      If you can find good answers to these questions, you probably have a good idea of what, if anything, you should study for your master’s degree. And following up on these answers is as likely to be as lucrative – for you – as anything else you could do.


  3. mygreenstudent Says:

    Reblogged this on GreenStudent.


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