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students are really the perfect choice of victim for the educational financing machine: they are typically naive about money, and a combination of incredibly hopeful and incredibly thoughtless about their futures – if they think about the future at all, they project themselves to be as successful as some chosen role model, against all odds.... More generally, the existence and price of college itself is a perfect trap for students. It’s been a growing assumption in the past few decades that one needs a college education to get a good job, and certainly in a poor job market like the one right now that is certainly true. And yet, the student debt load is increasing faster than the opportunities higher education provides.....
The Student Debt Crisis
I hope it’s not too hard now to understand why student debt has just surpassed $1,000,000,000,000 in this country, ahead of credit cards. On the banker side of the room, these student debts are being bundled up and securitized and sold to investors just like old mortgage-backed securities (which, as you recall, couldn’t fail because the housing market always goes up) who are being told there’s very little risk since students can’t discharge student debt through bankruptcy. There’s a strong analogy with the previous housing bubble and the current education bubble: even ignoring the individual’s goal of becoming an educated citizen and qualified worker, there’s the demand side from the banking system itself which feeds on the fees of securitized products that seem riskless.... Is it a certification process that people should pay for? Or is it a part of what we offer our citizens as their right?
.................................. mathbabe
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