Seems sometimes that those people who are 'still waiting' are waiting for Daddy Obama to pay off their loans for them, with our (yours and mine) money.
I don't think the student loan mess can be fixed until the federal government gets out of the business entirely. Last night's guest is exactly right when he says that student loan firms should be subject to the same collection practice laws as any other creditor, and any loan balance, student or otherwise, should be prohibited by law from exceeding the original loan amount plus accrued interest. The horror stories told last night about $40,000 balances ending up at $250.000 due to shenanigans by lenders and collection agencies are shameful.
I'll even (reluctantly) agree with the guest that student loans should be dischargable in bankruptcy. Problem is, we taxpayers will end up eating those losses the way things are now.
The student loan business should be private lenders making loans to individual students, basing the market interest rate on demand, competition and risk assessment. If too many students graduate and declare bankruptcy, the price for loans will go up, or they won't be available. That's the way it's supposed to work. Tuition rates would plummet, too.
A lot of the lenders are private banks -- Collins doesn't exactly paint a false picture of the situation, but he does leave out information so that people come to the conclusions he wants them to. His job is to be the "guru" of the subject so he can consult and sell books.
I teach full-time at a community college and for many years taught part-time in addition at my alma mater, a four-year university. I've been in the business more than 20 years in some capacity. I can tell you that the financial aid situation has changed quite a bit -- which Collins correctly points out -- and has mostly shifted to loans rather than scholarships and government grants, but I can also tell you that the student attitude about how to pay for college -- which Collins does not correctly point out -- has also changed considerably in those years.
I put myself through my undergraduate programs by working about 40 hours a week in two rather low-paying part-time jobs on campus. Though I didn't make much, I could walk to those jobs and also fit them in between classes, so it made more sense than being a server or something else off campus. It kept me out of trouble until the weekend too. I took out no loans and came out debt free. Because my grades were good, I went to grad school for free and received a stipend to live off of too. I took out a small loan, invested it, made some money, paid back the principal, and once again was debt free.
I had to sacrifice some things in order to do this. I didn't have the latest whatever was popular at the time, and I wasn't jetting off to Europe for a term of study. I lived in the dorm because it was cheap, and when I got an apartment in the student ghetto, it was with three other guys (and occasionally one or more of our girlfriends) so we could keep the rent affordable. We didn't have cable TV or any of the other luxuries around at that time. There were two cars among all of us.
By contrast, many, if not most, of my students now are in apartments alone or with only one other person. They're not slumming it in the traditional sense, but often are in some pretty swanky places. They all have their own cars, along with the carnotes and insurance. Monthly, they have $100 cell phone and data plans on $300 smartphones, $100 cable and Roadrunner bills, $60-70 for video games. They have $500 laptops, $200 iPods, $100 sneakers, $200 dresses and other clothes for weekends. They take trips -- and not just the classic road trips to another college, but get on planes and fly and stay in hotels. They go out to eat several nights a week or more, and on weekends they spend their money not in the campus dives but in the pricier bars and restaurants off campus.
They expect to live their lives starting at 18, which is fine, but they do it by borrowing against the future. We have discussions about the student loan "problem" in class and the recurring theme is that as much as they hate taking out loans they don't want to sacrifice for a few years anything in terms of the quality of life in order to be debt free.
On top of that, many of them come with unrealistic expectations about what college is about. They assume all they have to do is get the degree and there will be a job waiting for them -- there has to be because it's someone else's responsibility to make sure that happens. They don't learn anything beyond that, and as a result, they don't do much while they're in school to create opportunities and are less competitive when they graduate. They put in minimal time. College was always about being elite, and even then some people didn't get work in their field. Now college is mainstream, and graduates are basically average, which hinders their getting jobs.
Not all students fit this mold, but enough do that that contributes to the "crisis."
Another thing that bothers me about Collins is his constant ragging on any field of study in the Humanities. Let me say this, and only to make the point: I graduated with two degrees in the Humanities and one in what marginally is in the social sciences. Through teaching, writing, and consulting, I collectively make more money than anyone I know, including friends in engineering, business, and most medical jobs. The notion that the field is what produces a successful person is silly; what makes the person successful is what they do in their field.
And I'm about to return to school for another degree. I won't be going into debt for that degree either.
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