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American Education System: Part 3

March 18, 2019

American Education System: Part 3

Student Loans/Debt

After the counter-culture movement of the 1960s, where the first generation of young, college-educated adults used their newly acquired knowledge to refuse the governments corruption and the illegitimate war in Vietnam, coincidentally or not, the price of higher education slowly increased and its purpose changed from educating the youth, into a business that enriches corporate lenders and the government, which loan money to children at high-interest rates and a low likelihood of repayment as the job market continues to shrink, making it more difficult to pay off the enormous loans.

The price of a college education discourages many intellectually capable students from pursuing a degree, and places a financial burden over those that do in what appears as a cruel form of tax or punishment for pursuing knowledge; and as a students debt increases, they are less likely to take risks in becoming an entrepreneur by starting their own business, as doing so may put the student at an even greater risk of crippling and perpetual debt for the rest of their lives.

Over 44 million Americans owe a combined $1.5 trillion in student loans (1 in every 4 American adults). 71 percent of college students graduate with a significant amount of debt and enter into a workforce and an economy with few job opportunities than a college education promised in the past. The average student loan borrower owes $37,172, which is the same as a 20 percent down payment on a $185,000 home; a 10 percent down payment on a $370,000 home; a brand new car paid in full; or start-up costs for a business. The rise of student loan debt coincides with a drop in homeownership overall, as younger generations find themselves struggling to pay for what older generations could afford to pay for without a college education. As more young Americans, saddled with student loan debt, put off buying a home, the housing market may falter and crash from an entire generation unable to afford a home.

COLLEGE TUITION COSTS

Education spending cuts not only impact the quality of teachers and the learning outcomes of young American students in primary and high school learning programs but also places college students under greater burden of debt from student loans, which the government hands out relentlessly to any student that applies, often without the student realizing the long-term financial implications of such a major investment at such a young age.

20 million Americans attend college each year; the deeper the higher education spending cuts by state, local and federal governments, the greater the amount that higher education institutions will increase their tuition and fees and the greater amount of debt than larger amounts of the young college student population must fall into in order to pursue a degree.

This government loan strategy may appear sincere and wholehearted but actually functions by enslaving young 18-year-olds into a system of government control that they cannot escape from without damaging their financial wellbeing, as federal student loans, as of 1976, are not dischargeable, which means that the loans stay with the student even if they file for bankruptcy. This is the only form of debt that is not expunged upon bankruptcy. Students may file a case in bankruptcy court by proving extreme/undue financial hardship that shows that they cannot maintain a minimum standard of living if they continue to pay their student loans, but this would require a large amount of money in lawyer and court fees.

Increase in Students Share of College Tuition after Recessions

The price of higher education in the United States is increasing faster than the median (middle) income of the population due to inflation, and also increasing faster than employee compensation for those with a Bachelor’s degree. According to a 2017 report by the Center on Budget and Policy Priorities, after the budget cuts from the Great Recession, funding at two and four-year college institutions are more than $9 billion below 2008 levels; with tuition increasing by 36 percent since 2008, while median income increased by just 2 percent. This means that the return on investment for a college education is in the negative.

The larger the gap between college tuition costs and the median income level in American society, the greater the number of students that will be unable to afford a college education; rather than falling into decade long debt, or longer, students may forego college altogether to enter the dwindling job market. This harms the American economy in the long term and impacts Americas standing compared to other nations, as less of our population can afford to educate themselves, particularly poor and minority families; and those that decide to attend a university must dedicate a large portion of their income towards paying off this student loan debt during the most productive years of their young lives.

These debt payments never enter the flow of the economy, which decreases the purchasing power and economic mobility of the middle-class and stunts the growth of the American economy in its standing on the world stage. Tens of millions of young, college-educated Americans must put off important stages of their lives, such as moving out of their parent’s home, buying a car or their own home, traveling, starting a business or a family, in order to pay back these high-interest rate, government-provided loans.

Decrease in State and Local Funding

These life milestones, among others, are put off by an entire generation of educated Americans who are now punished with soul-crushing debt for pursuing knowledge. These individuals must dedicate a large portion of their monthly income towards debt payments that may last for ten years or more. The more money going towards these student debt payments, which is owned by 44 million Americans and continues to climb at over $1.5 trillion- second only to home mortgage debt in terms of debt owed by Americans, more than both credit card debt and auto loan debt- the less money that enters the flow of the economy, which harms small business, interferes with poor and middle-class economic mobility- who own a majority of the student debt- and impedes overall economic growth for the nation in the long term as less money goes towards services and industries that are vital for the countries progress.

College tuition is not the only good or service that Americans pay more than their counterparts in other countries: The U.S. spends over $10,000 per person, over $3.5 trillion total, on health care each year (25 percent more than Switzerland, the next biggest spender), according to the OECD’s 2017 Health at a Glance report; but our life expectancy is now almost two years below the average for the developed world, and declining for the past three years. Our poor and continually declining life expectancy is brought down due to the inordinate amount of deaths from American diseases of despair, from drugs and alcohol; drug overdose deaths, from legal prescription opioids and painkillers, in particular; deaths from suicide; deaths from obesity, heart disease and other health-related aspects in which Americans suffer from.

Inflation and College Tuition

Prices on higher education in the United States are not centrally controlled, unregulated by the central government, which means that education institutions can charge whatever price they want. If a high tuition cost prices out lower-income and minority students, in the university’s mind, there are plenty of affluent students willing to pay that high price to compensate for the drop off in lower-income applicants. A similar situation to the American healthcare industry, which charges whatever price they choose for life-saving medication and treatments, as the U.S. government is prevented from negotiating for lower drug prices; if a poor family cannot afford a 500 percent, price-gauging markup price on cancer or diabetes medication or a life-saving surgery, the pharmaceutical company knows that other families are there to pay that exploitative price, while the government sits idly by and accepts its bribes from Big-Pharma corporations.

Tuition Increase at Universities

U.S. government-backed student loans were first offered in 1958, under the National Defense Education Act, with the goal of creating greater social mobility and equality of opportunity among the diversifying American population. This program provided a small number of American college students with loan assistance but still remained at sustainable levels as not every college student was eligible to receive a loan. The Middle Income Student Assistance Act of 1978 amended the Higher Education Act of 1958 and opened the subsidized loan eligibility program to all undergraduates, regardless of financial need. From that period on, many student loan programs have been expanded to include more students for eligibility, including part-time students and students that attend vocational schools or community colleges. The federal government became the primary loan provider from this point forward as they discovered the dirty business of profit hidden beneath student debt and the recurrent high-interest payments that they could receive by pretending to support young American students with massive government-backed loans.

Numerous studies on government-approved student loans, including one conducted by economists at the Federal Reserve Bank of New York in July of 2015, found that the more federal student loans that a college institution receives to disperse amongst their students, the higher the university will raise their tuition costs as simply a matter of course for a profit-driven organization in the business of educating the youth. The more federal student loans that a college receives to disperse to students that request financial aid, the more likely that the college institution is to increase the cost of tuition. The federal government operates, in this sense, to artificially inflate the cost of college by offering an abundance of high-interest, long term loans, agreed to and accepted by unassuming 18-year-old children that often sign onto these loans with realizing the long term implications of perpetual debt controlled by the federal government. This leads to a system of dependence on big government for tens of millions of Americans.

When tuition is too high for students, government answers by offering more federal student loans; when the government offers more student loans, colleges answer by increasing their tuition costs even further as more students are now able to afford college with an abundance of federal loans, creating a vicious cycle of high college costs and government involvement in the financial wellbeing and future prosperity of young, college-educated, but debt-ridden Americans. For every dollar the government provides through Pell Grant loans, tuition increases by 55 cents; for every dollar that the government provides through subsidized loans, tuition increases by 65 cents; for every dollar that the government provides through unsubsidized loans, tuition increases by 15 cents, according to the Federal Reserve Bank of New York study.

Decrease in State Funding for College

The cost of an undergraduate degree increased by 129 percent at private schools and 213 percent at public universities since the first of the millennial generation were born in the early 1980s. This extreme price for a college education effectively pushes many towards the direction of ignorance, meaning lack of knowledge, as knowledge becomes associated with wealth, opulence, not worth the massive burden of debt that must be taken on to acquire valuable information, which is especially dangerous for younger generations growing up in our society today in a shrinking job market taken over by globalization and automation and a government that continues to artificially inflate the cost of college to corrupt levels.

No people will tamely surrender their liberties, nor can any be subdued, when knowledge is diffused and virtue is preserved. On the contrary, when people are universally ignorant and debauched in their manners they will sink under their own weight without the aid of foreign invaders.

Samuel Adams

Student Loan Statistics

  • Total number of borrowers: 44.7 million
  • The amount borrowed each year: $105.5 billion
  • Percentage of college graduates in debt: 71%
  • Average debt per graduate after graduation: $28,500
  • Total Student Loan Debt: $1.5 Trillion

Where Student Loans come from

  • Congress sets interest rates on federal loans.
  • Perkins loans are offered to students in extreme financial need, low-interest rates, subsidized. The program ended on September 30, 2017.
  • Stafford loans: Most popular; offer subsidized and unsubsidized to both graduate and undergraduate students that are enrolled in school at least part-time.

Types of Loans

  • Federal Subsidized: 20%
  • Federal Unsubsidized: 46%
  • Federal Parent PLUS: 12%
  • Grad PLUS: 10%
  • Perkins: 1%
  • Private lenders: 11%

This means that the federal government controls 89 percent of all student loans for its own profit. Rather than federal government involvement to regulate college tuition costs, the government artificially inflates prices and forces dependence on the government by students through loans. This gives the illusion that the federal government is in the business of helping struggling students attend college; what they are actually doing is creating a reliance and dependence on the government, on the system, by young students that hangs on them for the majority of their lives until their debts are paid. This creates a modern slave society of individuals that cannot escape from the government’s control.

From 2000 to 2012, the percentage of students who took out student loans jumped from 50 percent to 60 percent, according to a report by the American Academy of Arts & Sciences; the report also found that students borrow more money too, with the median cumulative loan amount increasing from $16,500 to $20,400 in that time.

Statistics by Center on Budget and Policy Priorities

  • Annual published tuition at four-year public colleges increased by $2,651, or 36 percent, since the 2008 school year, while real median income grew just over 2.1 percent.
  • Average tuition at public four-year institutions has increased by more than 60 percent in seven states; more than 40 percent in 20 states; and more than 20 percent in 40 states.
  • In 2017, 28 states had higher tuition costs than provided by state and local revenue funding, which means that students bear the education economic burden.
  • Between the 2008 and 2015 school years, the share of students graduating with debt from a public four-year institution rose from 55 percent to 59 percent.
  • Americans spend $30,000, on average, per year, per college student, which is 75 percent more than the average that students pay in other Western, industrialized, developed nations in the OECD.

College Board’s breakdown of how tuition has changed by decade, with all figures adjusted to reflect 2017 dollars

  • Students at public four-year institutions paid an average of $3,190 intuition for the 1987-1988 school year. Thirty years later, that average has risen to $9,970 for the 2017-2018 school year, a 213 percent increase. In 1988, the average tuition for a private nonprofit four-year institution was $15,160, in 2017 dollars. For the 2017-2018 school year, it’s $34,740, a 129 percent increase.
College Board Tuition

Public Four-Year Institution

  • Tuition for 1987-1988: $3,190
  • Tuition for 1997-1998: $4,740
  • Tuition for 2007-2008: $7,280
  • Tuition for 2017-2018: $9,970

Private Four-Year Institution

  • Tuition for 1987-1988: $15,160
  • Tuition for 1997-1998: $21,020
  • Tuition for 2007-2008: $27,520
  • Tuition for 2017-2018: $34,740

Poverties Impact on Education

  • 43 million Americans, 13.5 percent of the population, live in poverty, including 13.3 million children, 18 percent of all American children.
  • There are 18.5 million Americans living in extreme poverty (below one half of the poverty line); one-in-three children live in poverty, which is among the highest rates in the developed world; there are 8 million more poor whites than there are blacks; America has the lowest rate of social mobility of any of the rich, developed nations.
  • Of the 43 million Americans living in poverty, 23 million, 12 percent, are of working age (15-64). Within the working-age group: 4 in 10 are working; 1 in 10 had full-time, year-round employment, but did not earn enough to get out of poverty; 1 in 4 was employed, but not year-round; 1 in 25 was seeking employment; 1 in 3 works part-time, not year-round.
  • 2010: 46.2 million people living in poverty, most in U.S. history (height of the recession) 56 percent were women; 67 percent were white; 42 percent lived in the South; 84 percent were born in the U.S.; 1 in 3 were children; 11 percent were elderly, 65+.
  • Highest poverty rates by ethnicity in the United States: Native American- 27.6 percent; African American- 26.2 percent; Hispanic-23.4 percent; White-12.4 percent; Asian-12.3 percent.
  • In the OECD, the U.S. ranks 35th out of 37 model countries in terms of poverty and economic inequality.

Numerous studies show that poverty disproportionately affects minority and immigrant student’s test scores and learning outcomes, due to our current system of education funding that treats poor and minority communities with lower regard and less attention than affluent communities. Higher taxes in affluent communities lead to better schools and teachers, greater resources, better grades, and test scores and greater learning outcomes for students. As local, state and federal governments cut education funding, these poor communities must draw from fewer finances and resources to provide for their students. In order to improve the present social and political state of America, and improve student learning abilities and outcomes, the United States must decrease the education inequality gap by increasing funding in lower-income neighborhoods to limit the education, racial inequality gap that continues to exist in more subtle forms today.

The massive income inequality gap that permeates American society and continues to expand with each passing year functions by creating a two-tiered political, social, education, cultural and economic system that protects and coddles existing wealth from corporations and from affluent circles of power that manipulate the system of our public government through political bribes, legalized lobbying and corruption, while the government allows the poverty-stricken poor and dwindling middle class to fight over the scraps.

This economic inequality gap exacerbates the education inequality gap through the government ethos of rugged capitalism for the poor and socialism for the rich; and when politicians take too much wealth, jobs, opportunities and services from the poor and middle-class to hand to the already wealthy and powerful, the poor population, immigrants, and minorities are the first red herring attacked in order for the powerful to shirk the blame and convince the working population that corrupt politicians and tax-evading corporations are not the problem, but rather, the small segment of society struggling to survive like the rest of middle America under the domination of an overreaching government that cares only of sustaining its growth and control over the country.

Americans can no longer afford to allow the government to dictate the direction of the country through corporate bribery and corruption, while the poor and middle-class have their rights as citizens in this democracy taken away to protect the profits of corporations. The democracy of the United States of America is a democracy of the people, by the people, and for the people, at least, according to the plastic politicians that regurgitate the same political platitudes to fool the passive American population into blindly accepting and obeying the false authority of the government.

The education of our population begins with each and every one of us as individuals when we choose to escape from the grasp of government and the collective ignorance that federal organizations and the mainstream media– the communications arm of the federal government- push onto the population in order to encourage the expansion of consumerism in this materialist culture.

If profit is the end, then material consumption is the means. Our ignorance of our internal understanding and intrinsic values of our true self are quickly abandoned when the constant bombardment of extrinsically motivated items, objects, things, money, possessions fills our minds and tricks each of us into believing that happiness exists outside of ourselves. Our culture convinces us that these external obsessions will fill the void left from a life that lacks meaning and purpose; but an education and a conscious understanding of the world that seeks out challenges, asks complex questions towards those in positions of power and authority, and moves towards the direction of enlightenment through knowledge over ignorance, represents the surest way towards self-knowledge and, over time, self-discovery.

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