Students: You Are Exploited Debt-Serfs

By Charles Hugh Smith on 04/12/2011 – 7:10 am PDT — Investing & Markets

Students and parents, wake up: your only salvation lies in political engagement and action.

Of all the exploitative systems in the U.S., none is more rapacious than the Education Cartel. Like the proverbial frog that is unaware that it’s being boiled because the water temperature rises so gradually, college students and their parents are unable to recall what higher education was like before students were herded into debt-serfdom.

Apologists for the Education Cartel like to blame Corporate America or the banks, but the reality is that the Federal and State governments and the employees of the Cartel are willing partners in the exploitation and fraud. How did we get to the boiling-water point where students are expected to take on $100,000 or more in debt to attend college–even a mediocre one?

Answer: immensely profitable Government-backed loans. If the Central State wasn’t partnered with the Education Cartel, today’s debt-serfdom would be impossible.

The partnership plays out on multiple levels. The San Francisco Chronicle recently reported that “Liberal” U.S. Representative Nancy Pelosi is fighting vigorously to defend the debt-serf-based empires of for-profit “colleges.” Why? because these billion-dollar empires give her hundreds of thousands of dollars in campaign contributions (duh!). (“Conservatives” love for-profit “colleges” for the same reasons, of course.)

There is nothing remotely educational or liberal about an exploitative Cartel that provides no measurable value to its students while graduating 10% of them. As reported in The New Republic, when General Accounting Office (GAO) investigators posing as prospective students applied to 15 major for-profit “colleges,” every one made misleading sales pitches.

The largest for-profit, the University of Phoenix, graduates less than 10% of its students within 10 years. You may not get any useful skills or a meaningful diploma, but you will end up with $100,000 in debt that can never be written off. Loans imply risk: nobody forces a lender to take on the risk of lending money to a borrower. If the borrower ends up being unable to pay his debts and declares bankruptcy, the debt is wiped off the books and the lender loses the money that was at-risk.

Thanks to the Central State’s partnership with the Education Cartel, student loans cannot be dismissed even in bankruptcy. This makes them unique in the world of credit and debt. Banks lobbied the Central State for guaranteed, no-risk student loans, and the Government was pleased to oblige.

The Status Quo fully supports colonizing the “home” population of vulnerable students and turning them into debt-serfs that banks can hound til death and beyond; they’re much more pliable and less troublesome than foreign populations who might rebel against the Imperial lash. (This is drawn directly from theSurvival+ critique.)

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Filed under 9.5 percent, 9.5 percent SAP, federal direct loans, FFELP, for-profit colleges, for-profit schools, PLUS, Stafford, student loan lenders, student loan program, student loan scandal, student loans

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