Reason Writers Around Town: Jacob Sullum on Where Default Lies

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Over at The Wall Street Journal, Senior Editor Jacob Sullum reviews The Student Loan Scam, by StudentLoanJustice.org founder Alan Michael Collinge.

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  1. Just as not everyone needs a car or large house, not everyone needs a 4 year education from a university. Some people need to spend two years studying at ITT Tech.

    And liberal arts degrees may be useful to your personal growth, but unless you’re pursuing a post graduate degree of some sort, they don’t have a high return rate. The world only needs so many art critics and history teachers.

  2. LIT,

    You forgot waiters.

  3. Talk about predatory-lending and ignoring ability to repay. These terms are used in the subprime mess, but seem to apply much more here.

    1) There is no collateral. Unlike a degree, a house can be repossessed. Not so for human capital.

    2) Debt can not be discharged and creates a form of indentured servitude.

    3) Degrees are not ranked by earnings and ability to repay therefore appears to be ignored.

    Many people end up with jobs similar to what they would have had if they had never gone to college: customer service, bartending, waitressing, receptionists

  4. ProL,

    Ostensibly, history teachers and art critics could benefit from a degree in related fields. Waiters may benefit from a psych degree possibly, but its a stretch to say knowledge of Freud’s definition of the id would help in the reccomendation of whether to go with a cherry or banana sundae for dessert.

  5. I recommend checking out the Student Loan Justice website for a never-ending parade of bad decisions. For every person who had some legitimate crisis befall them and impair their ability to work and pay back their loans, like a serious illness or injury, there are three who made dumbass mistake after dumbass mistake, and now blame colleges for it.

  6. I’m not sure they are blaming the colleges, except for wondering why the financial aid department was so willing to help them get loans they may not eventually be able to repay. The real anger there seems to be at Congress for changing the laws regarding student loans, and I agree there. Particularly making it damn near impossible to include student loan debt in a bankruptcy proceeding.

  7. I am somewhat sympathetic to the student loan recipients. They are lied to about the importance of an education.Encouraged to pursue worthless degrees in the liberal arts rather than learning real skills. They are gullible naive and looking to party on somebody else’s dime.At 18 -21 you think you are immortal and can always pay that debt back later when you are making the big bucks a college degree entitles you to.Most of them couldn’t even define “non-dischargable debt”.

    That said, life isn’t fair and they ought to chain them to a bench painting lead toys with date rape drug paint until they pay it all back with interest. Moral hazard and all that.

  8. One thing to consider is the overwhelming fraud occuring in higher education. In 1990, I used the starting salaries reported by colleges to determine the value of a higher degree.

    It wasn’t until aferward that I found out that those numbers are a blatant fraud. They only included the couple people lucky enough to gain a position through career planning and placement. They did not include the 90% or so of the class that was only able to obtain minimum wage positions.

    As far as I konw, there still is no accurate starting salary survey by school by major. The only way to do that is to take a random sample from all grads by major and include all outcomes.

  9. As far as I know, there still is no accurate starting salary survey by school by major. The only way to do that is to take a random sample from all grads by major and include all outcomes.

    Plenty of schools conduct their salary surveys this way (or at least attempt to). I don’t know if any of them publisht eh results outside of teh university, though.

  10. And folks who can’t believe student loans aren’t dischargeable need to think about it the other way ’round.

    Lenders in the stafford program lend significant amounts of money, unsecured, at low interest rates, for very long terms, to people who are mostly complete unknowns vis-a-vis credit risk. In exchange, they get to know the debt can’t be shed for a few hundred dollars and an afternoon in the courtroom. (Seriously, what newly-minted graduate isn’t completely bankrupt at graduation?).

    The fact that they are willing to do this at all is a testament to the cost premium dischargability adds to other loans. (Thank God for credit scoring)

  11. I just graduated last year with over $30,000 dollars in debt. However, I consider it worth every penny, as it led to a well-paying job in a demanding field (electrical engineering). In fact, the main problem in my life right now is that I feel a little bit too satisfied with myself. I’m having to look over my shoulder to avoid any Greek tragedies befalling me.

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