"The personal impact is huge but the systemic risk is minimal."
Friday, September 13, 2013
The Personal Impact Is Huge
We want to bring your attention to this Yahoo! Finance Breakout article: Student Loans Not A Threat. John Cannally, an economic strategist at LPL Financial, says that our $1 trillion in student loans is not that big a problem. He says:
Roughly speaking, using the numbers in the article, 20 million people owe about $50,000 each in student loans with payments of about $500 a month. That is $6,000 a year. On average, they spend 20 years paying on these loans.
That is, 20 million college graduates will suffer under student loan debt for what would otherwise be the best 20 years of their lives. Also, we graduate more debtors every year as a result of government student loan policy. The system is a debt factory, churning out new debt at a high rate. Yet this is not considered a systemic risk. Maybe the lesson here is that only the rich count. When the rich are at risk, then the economists start to worry.
This is all very well for the rich, but are the rest of us content with our debtor-generating, loser-generating society and the direction it is headed? Tosoc.org says no, we are not content. We also say that this system is consistent with what appears to be the planned impoverishment of the average American worker that we mentioned in our No Jam Ever Again and No Jam Ever Again II posts.
On The Other Side Of Capitalism, our major universities for the rich would move into the external markets and use the external U.S. Dollar. They are hardly "American" anymore, anyway. They could even more freely follow their calling to be world universities for world citizens, as it were. They could keep their cultures of economic anxiety (see The Other Side of Education). They would operate very much like they do today, except that their relationship with the U.S. government would change. In the allocation of U.S. resources for education, research, and projects, it seems likely that the U.S. government would prefer internal universities to external universities.
Other U.S. universities would move into the new internal markets and use the new internal currencies. Since all of their students would also use the internal markets and currencies, all of their students would have basic room, board, healthcare, education, and transportation already. The changes that the internal universities would need are not things that could be done all at once, however, because it is not clear that the classroom model of education is best for the future, or even best for all circumstances right now. The one thing that is certain is that no one would leave any of them with student loan debt.
It is clear that our higher-education system right now is a giant debtor-creation factory that leaves most of its graduates struggling under high levels of debt. It is about creating scarcity and economic anxiety, making most everyone more beholden to the U.S. government and making them beg for jobs that pay enough to cover their student loan debt as well as their other living expenses. This seems unnecessary and destructive to tosoc.org.
In contrast, the approach from the other side of capitalism is that higher education will be an opportunity-creation factory that leaves its graduates with no debt at all. Instead of suffering under the scarcity of economic anxiety, knowing "I have no choice," they will choose from the possbilities of economic abundance, asking "What is best?" We expect that the personal impact of this would be huge, too, but in a positive way.
The way capitalism should be.
Socialism for the socialists and capitalism for the capitalists.
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