Tuesday, September 11, 2012

Unprepared high school students buried in debt

I read some articles recently in Bloomberg and on AP about the sad inadequacy of American high school students.  They are woefully unprepared for college. 

"A recent study issued by ACT Inc., a testing organization measuring “college readiness,” found that less than one-third of graduating high-school seniors met benchmark standards for science, and a majority failed to meet them for math. Even in English and reading, a large minority of students were below a level that would mostly earn a grade of C or better in college-level work" .Bloomberg.com Sept. 11, 2012.

This lamentable fact, coupled with the crescendo of calls for relief from the towering burden of student loan debt imply some serious problems for American participation in the world economy. 

Kids coming out of college today, buried in 100,000.00 of student loan debt, are unwittingly entering into servitude to student loan servicers.  The debt incurred by students is remarkably non-dischargeable in bankruptcy.  How is it that a company like Lehman Brothers, or Enron, that can financially ruin the lives of millions, can discharge its debt to all of its employees and other debt holders, with its officers walking away Scot free, without obligation to anyone, but a struggling film appreciaton graduate has to pay back their 50k student loan with interest, no matter how long it takes. 

It's true, even borrowers, or their cosigners, (read grandparents) are paying back student loans via forced deductions from social security payments.  Social security!

Hmm.  Let's see.  Schools and lenders urge kids to go to college to get a degree so that they can make more money, or be better workers.  The schools make it easy by putting financial aid sales people on staff.  The lenders get huge amounts of information from parents who want their kids to get the hallowed degree and will do what they have to do to get financing.  Then the kids and the parents fund the overpriced, OVERVALUED, product by borrowing against their hoped for but truly speculative future earnings.  It is an echo of the mortgage debt scam of the early 2000s, but more sinister.  Remember, the incurred debt is not dischargeable in bankruptcy except in very rare circumstances. 

We owe our kids better.  We owe ourselves better.  High cost "higher" education for the sake of merely getting a degree is a bad investment.  It is a loser from the first day of class.