Posts tagged with: student loan

BrendleIn his article today Anthony Bradley asks, “When Did College Education Reduce To Making Money?

Our country’s narcissistic materialism has created a neurotic obsession with disparities between the incomes of individuals resulting in an overall devaluing of the learning goals and outcomes of what colleges exist to accomplish. There is a major disconnect here. I wonder if this explains why many parents do not want their children studying the humanities in college.

While I completely agree with Anthony about what the purpose of college should be (“a place where men and women are educated and formed into more virtuous citizens”), I think he’s overlooking how we got into this situation: College is priced like a luxury good but treated as a prerequisite for most forms of employment.

Unfortunately, the types of degrees that best fulfill the primary function of a college (e.g., liberal arts) are also the most likely to lead to underemployment.

A couple of years ago, Andy Whitman wrote an article for Image, “Starbucks and the Liberal Arts Major”, that highlighted the problem:
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“When loans are guaranteed by the state and detached from market forces and personal responsibility,” says Dylan Pahman in this week’s Acton Commentary, “those institutions being paid with that loan money experience inflated demand as everyone and anyone now can go and wants to go college. As a result, tuition prices have been inflated. The full text of his essay follows. Subscribe to the free, weekly Acton News & Commentary and other publications here.

Federal Student Loans: A Problem of Subsidiarity

by Dylan Pahman

Ever see one of those used car ads that says, “Bad credit? Drive today!” The implication being that the dealer will happily arrange a loan regardless of the borrower’s credit history. For years now, the federal government has been running a similar scheme: “Poor student? Go to college anyway!” While this campaign has had better intentions behind it, it is no less of a problem. In the field of higher education, the federal government has usurped the roles of families, private organizations, and markets, with negative moral and economic consequences.
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At the height of the housing crisis, it was estimated that 11 million homes in America were mortgaged for more than they were worth. That debt crisis may soon be dwarfed—if it hasn’t been already—by the student loan debt problem:

With college enrollment growing, student debt has stretched to a record number of U.S. households — nearly 1 in 5 — with the biggest burdens falling on the young and poor.

The analysis by the Pew Research Center found that 22.4 million households, or 19 percent, had college debt in 2010. That is double the share in 1989, and up from 15 percent in 2007, just prior to the recession — representing the biggest three-year increase in student debt in more than two decades.

Unlike an negative equity mortgage, student load debt is not dischargeable in a bankruptcy. It’s also non-transferable—the college degree that was “bought” with the debt cannot be sold or traded. That makes degrees that are not “marketable” or that were acquired for reasons of personal growth an expensive luxury good.

Obviously many people (including me, with some qualifications) believe that the value of obtaining a liberal education is worth taking on debt. But what about graduates who will receive neither a life-broadening education nor a vocationally useful skill-set from getting a college degree? Should we continue to encourage them to take on debt to pay for higher education?

On June 29, both Houses of Congress passed, and President Obama signed, a law maintaining Stafford student loan interest rates at 3.4 percent for one more year – two days before they were scheduled to double. A number of human rights groups and religious communities have praised this development. The Jubilee USA Network, a coalition of over seventy-five churches, has been pushing for passage of this bill, and now celebrates it as a living-out of the Biblical practice of periodic forgiveness of debts. Even the organization’s use of the word “Jubilee” in its name is a reference to a practice God commanded for the Israelites in the Old Testament: “Thou shalt sanctify the fiftieth year, and shalt proclaim remission to all the inhabitants of thy land: for it is the year of jubilee,” (Leviticus 25:10). Similarly, the Catholic Church has a long tradition of periodically holding a Jubilee Year celebrating forgiveness. There’s no question that the concept of pardoning debts out of pure mercy is certainly a Judeo-Christian one. But intellectual honesty requires us to ask whether any particular event is an example of a given principle. Is maintaining the current Stafford student loan interest rate actually a Christian “jubilee” event?

The first Church-wide jubilee was proclaimed by Pope Boniface VIII on February 22, 1300, granting indulgences and remission of the penalty for sins to all the faithful who would make a pilgrimage to Rome and Saint Peter’s Basilica. As the concept of the Jubilee was gradually being developed, the details continued to change over the next hundred and fifty years (various lengths, such as 25, 33 and 100 years were proposed as the time span between Jubilees) but beginning in 1450, the Church has held Jubilees once every 50 years up to the present day, with only three omissions. (more…)