Tuesday, September 29, 2009

Is Obama Perpetuating the Education Bubble?

This is probably too much for me to tackle at this time of night, when I had such a bad day, but I'm going to try and start it.  Please forgive grammatical or spelling errors.  

I like Obama. I voted for him and I don't regret that decision yet.  But there's one thing I hate about him.  His feeling that everyone needs an education. I can't say that I agree.  Everyone is entitled and needs a secondary education.  I agree with that. However, the enlightening experiences of college and graduate school, although wonderful in a Utiopia, are not for everyone. 

He is putting the cart before the horse.   Before he fixes the education system, post-secondary, he needs to rewrite the laws that prevent citizens from discharging student loans in bankruptcy.  The law was changed in either the late eighties or early to mid-90s.  I'm too tired to do the research.  Prior to that, they were dischargeable given certain conditions.  This is how I view the change in the bankruptcy law... I liken it to the bank bailouts which resulted from the sub-prime mortgage crisis. 

Basically, banks--who made stupid decisions to give people mortgages for homes that they cannot afford--were bailed out.  I think that both the banks and people who decided together to buy a home that is beyond them, should suffer the consequences of their decision.  The bank knows as much, if not more, than the mortgagor.  They have their own bank-ordered appraisal and they can decline to extend the mortgage.  But, they decided that giving 400K to a plumber who earns 69K  so that he can purchase a McMansion.  They even played with the payments so that the poor hypothetical plumber thought he could afford it, until he couldn't because interest kicked in... hence, the crisis that we're in. Instead of giving the money to the homeowner to pay back the bank, the government decided to give the money to the banks--insulating them from their own stupid decisions. 

What does this have to do with education?  

Well, the government, by changing the bankruptcy laws as they did, has insulated Sallie Mae and other student loan lenders from liability for their dumb decision to give money to an 18 year old to major in anthropology and other degrees that are unlikely to result in viable employment.  The only difference, in my mind, between the Real Estate Bubble and the Education Bubble is that the government bailout came after the bubble popped for the former and before the for the latter.  But to the same effect.  The education bubble will pop. It's just a matter of time.

In my world, where I rule with my libertarian principles in mind, Sallie Mae and the like would not be insulated and they would be forced to scrutinize the choices of the borrower.  They should be able to say, "Tom, you can't get a loan for 100K to go to 4 years of college at Penn State and major in Education.  You won't make enough to pay it back."  And don't worry about poor Tom because Penn State will be forced to re-evaluate the cost of its programs.  Penn State may decide to price the education you get, based on what your major is.  Otherwise, they may find that their students are unable to get adequate financing to attend.  Maybe Penn State will say that Education Majors from Penn State should only pay $25K for their education given what they are likely to earn as Teachers.  However, Engineers who earn decent money when they get out will have to pay a bit more (probably not 100K).  And maybe Penn State may decide that providing people with a degree in Education is not lucrative and they may discontinue the program.  But what would be so wrong with Colleges gearing themselves towards producing graduates that earn money?  Is that a bad thing?  So, before Obama starts preaching the importance of an education, maybe he ought to look in letting Capitalism do what it's supposed to do and change the bankruptcy law back.

I can't even get into the cruelty of insulating and bailing out huge financial monsters and leaving poor students pursuing empty dreams to fight bad credit and garnishment the rest of their lives.

There is a website that focuses on this very law and it has so many horrid stories about people unable to make money and unable to discharge student loans.  Here's a few of my favorites:


Let me begin by stating that I firmly believe in and support this great country of ours.  I am a first generation American whose parents and grandparents struggled to ensure that I would be given opportunities that they were not afforded in their native homelands.  Opportunity unfortunately has come at a great cost.  I was given the opportunity to attend undergraduate school and I earned a BS as well as going on to become a chiropractor.  The great cost I speak of is the staggering debt my education has put me in.  My loan balance is approximately $180,000.00 which $26,000.00 is interest.  My current monthly loan payment is $950.00.  The aforementioned loans have been consolidated.  I have another student loan that I received from the private sector which totals $18,000.00.  Securing a position in my field of chiropractic has been difficult; to pay my bills I took a position as a NYPD officer.  My NYPD take home is approximately $2000.00 a month.  

I have  been blessed to earn 2 degrees and cursed with student loan debt of 10 years of education.  Our country is truly great; however, it is disheartening and shameful that this great country cannot find a remedy to secure the future of its greatest resource.  That resource would be us.  Every young person with the true desire to contribute positively to our community only to be struck down by a government who drops billions of dollars in to our war chest fighting wars that are not ours, pursuing and fighting phantoms and nuclear threats that are unfounded, who is in bed with the oil nations who will never have our interests (only our purse strings)...  My solution is that the government pay for all undergraduate degrees as our allies on the other side of the pond do and also, forgive a percent of debt based on income and or previous years W2 as well as paying off debt by doing certain approved community service, repayment of loans based on a sliding scale and lowering the interest.  The American Dream is just that a dream.  It is a dream my parents and grandparents believed in and now because of high student loan debt that dream is just something I'll keep in the furthest reaches of my mind because I know I'll never become debt free and our government unfortunately will not help or provide support or solutions.


It had always been my dream to go to film school, and I was ecstatic when I got accepted into my first-choice school.  It was way beyond my ability to pay, and my parents didn't make enough money to give me much financial support.  Despite roughly $15,000 in scholarships and grants from the school, I still needed to borrow about $20,000 a year.  I had been religious about staying out of debt through college -- always paid off all credit card bills, etc, and was sure I could do the same for student loan bills. 

I graduated in 2001... And was living in New York.  When 9/11 happened, I lost all three jobs I had been working.  I searched desperately for new work -- but businesses were shutting down, and no one was hiring.  It was like the Great Depression had hit New York.  No one who had a job would leave their jobs, and people with far more experience than I had also lost their jobs.  I got a brief respite for six months, but interest was accruing.  When I tried to explain the situation, I was told there was nothing they could do.  I started being hounded about my student loans, and was given no cooperation or alternate repayment option when I explained my situation.  If 9/11 doesn't qualify as unforeseen special circumstances, I don't know what does.

My loan has since doubled, from about $60,000 to over $100,000 (this, in just five years).  No one is able to offer any protection, since Sallie Mae is so protected by the law...  There is  no reasoning with them, there are no lawyers who are willing to try to fight them, and there is no governmental help at all, to get even a second look at your case.  They act as judge, jury and executioner.

The government needs to stop taking payouts from Sallie Mae and ignoring who they really work for -- the citizens of this country.


I am also a victim of student loan disaster.  I filed bankruptcy because of illness and unable to maintain a job.  Then I filed for disability later after several surgery, during which time I was not able to contact physicians due to death or geographic disaster and with new laws hospitals and/or doctors offices have a limitation on how long they have to retain medical information.  Therefore, I have not been able to have my loans forgiven.  So I am still fighting to find a way to pay student loans.  I loved going to college (even though I couldn't finish}.  I wanted my kids to go college, and they did, unfortunately, now they are battling to pay extreme amounts of money, because of interests and whatever else.  Just like me no credit, mostly due to student loan reports.  Unless we get lucky and win the lottery or create a successful business. I feel very sad for all of us.  To try so hard to come from the bottom of the social system with pride and yet be destroyed mostly because you wanted more out of life.  I don't wish that the rich fall, because their are some decent rich at the top, however, my dream is that our government would wake up and realize what this county is suppose to stand for and what made it great, starting with morality.  And allow those that want to be apart of a great nation to do so and put forth a honest misson to sincerely help us.  And stop underhanded greedy secret tactics to discredit and hinder the "trying to get up have-nots" out of fear of who might get up and how many.  Either because they want to have and be in control of everything and everyone and their ability to do, be or live in freedom and have the ability to share the power to make positive changes for the less fortunate that want to do all they can to make the world a better place, especially, here, at home in our land of the free and home of the brave.

I am, by no means, saying that these poor souls were irresponsible. I'm not judging them at all. I understand that life happens. But life ought to happen to the lenders as well. Why is all of the risk centered on the shoulders of the borrower for (what should be) an unsecured debt. Lenders ought to be smarter. We may have to sacrifice a decade of college graduates to fix this system. But I'm sure that a college education will once again be attainable and high schools will rise to the occasion by giving their grads skills that they can use in the real world. What do you think?


  1. Here I go...another victim of the student loan trap! I'll pay it back until the day I die!!

  2. Obama is indeed perpetuating the higher education bubble. He is part of the system that seeks to give the appearance that "things are getting better." "Education is still the KEY to a better life." He also wants to make sure that the student loan cartel rakes in all the money it possibly can.

    I love your idea of varying tuition at the same university. A film student and an applied mathematics major have MUCH different prospects and earning potential. Unfortunately, I do not see this changing for the simple reason, "Because it is the way it has always been done." Keep up the brutal honesty. I plan on keeping up my attack.

  3. Great post! Found it through my contact Nando. I have a blog, too and I'll link yours on it.

  4. A person with "libertarian values" who voted for Obama? Are you confused about what libertarian means?

    Also, the federal government will make money, if it hasn't already, on the bank bailout. They loaned money and most of it has been paid back with interest. So much of what you said here, I know it was 2 years ago, doesn't really make sense.



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