Welcome to our next rigged institution, the famed American post-secondary education system. Part of the American Dream is supposed to be going to college, getting a degree, and becoming part of the skilled workforce. We have to ask ourselves, is this dream a reality? If we look at the facts, that would be a No, No, and No.
Somehow, this essential component of the American Dream has been rigged to favor the plutocrats who run the system; perhaps that’s why everyone’s amped up that interest rates on student loans just doubled to 6.8%, and why the Senate is being pressured to postpone (they call it “reverse”) the rate hikes.
Let’s go through our next chapter of the series: The Student Loan Bubble
Over 60% of students, 12 million each year, borrow to go to college. They have an average debt of over $25,000. Right now, there’s about $1 trillion of student loan debt. So this isn’t exactly a small issue.
Most of the debt happens to be federal debt, meaning that students owe the government. Their loans are guaranteed by the government, so after 25 years, the government will pay the college if you can’t. Until then, students are under enormous pressure. That’s not hard to verify. This has a number of effects, and I’ll go through them briefly:
It’s Bad for the Economy
When students have too much debt, especially in a recession like this (yes, it’s still a recession for most of us), it worsens the economic situation. The interest they pay on their loans diverts part of their income away from consumption. By lowering their purchasing power, it further slows down economic activity and retards recovery. This is a simplification of what is known as debt-deflation.
It Makes Students Less Politically Active
I know this seems a bit of a stretch, but it’s a rather logical conclusion. This student loan bubble has made America’s youth hopeless about the country, the economy, the government, and the American dream. Hopeless, debt-ridden people don’t protest and go out of line; they don’t think anything can get better. Until they don’t change their outlook, it’s hard to believe anything will.
It Makes the Young Workforce “Flexible”
Those without a college degree already have it pretty bad. But those with a college degree aren’t faring too much better. Increasingly, they’re working low wage jobs, which is not surprising, given that most of them have debt. Quite simply, those who have debt to pay off can’t hold out for better jobs. That’s also why the voluntary quit rate’s gone down. This is great for the plutocrats, but not for the students working at minimum wage with no hope of advancement. Thus, the burden of student loan debt serves almost as an instrument of population control, both politically and economically.
Colleges Get the Money
This one is the most important result of the student loan bubble. Students are stuck footing a huge bill, and the government, using taxpayer money, guarantees the loans. As college tuitions keep going up, the only party making a profit here is the colleges. Even some not-for-profits are rolling in lots of money. In the end, the plutocrats running these institutions make the money. Wealth is simply redistributed upward.
But there’s still ways we can reclaim this institution for the people, rather than the plutocrats. Many on the right-wing have said that not everybody should go to college. Other developed nations disagree; maybe that’s why we’re ranked so low in international educational rankings, and why we have such low wages. If we understand the value of a college degree and want to stop letting plutocrats profit off of it, there is an alternative, and many countries have it already: Free universal college education, funded by taxes. I’ll sketch out the details of such a system in the American Manifesto.