The student loan debacle

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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Last May, we posted: The Money Trap: Student loans.  You should read it.

It compared the student loan debacle to: Indentured servitude, the “numbers game,” and loan sharking, all illegal in America, but apparently legal for the federal government.

Today, I saw these data on a site called, Student Loan Hero:

It’s 2016 and Americans are more burdened by student loan debt than ever.

You’ve probably heard the statistics: Americans owe nearly $1.3 trillion in student loan debt, spread out among about 44 million borrowers.

In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year.

General student loan debt facts

First, let’s start with a general picture of the student loan debt landscape. The most recent reports indicate there is:

  • $1.26 trillion in total U.S. student loan debt
  • 44.2 million Americans with student loan debt
  • Student loan delinquency rate of 11.1%
  • Average monthly student loan payment (for borrower aged 20 to 30 years): $351

If those numbers weren’t stunning enough, here’s a closer look at how students accumulate debt based on the type of school they attend.

In 2012, 71 percent of students graduating from four-year colleges had student loan debt:

  • Represents 1.3 million students graduating with debt, increase from 1.1 million in 2008
  • 66 percent of graduates from public colleges had loans (average debt of $25,550)
  • 75 percent of graduates from private nonprofit colleges had loans (average debt of $32,300)
  • 88 percent of graduates from for-profit colleges had loans (average debt of $39,950)

Graduate student loan debt

About 40 percent of the $1 trillion student loan debt was used to finance graduate and professional degrees.

Combined undergraduate and graduate debt by degree:

  • MBA = $42,000 (11% of graduate degrees)
  • Master of Education = $50,879 (16%)
  • Master of Science = $50,400 (18%)
  • Master of Arts = $58,539 (8%)
  • Law = $140,616 (4%)
  • Medicine and health sciences = $161,772 (5%)

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Here are the top 6 lenders of 2016 — (the businesses making billions from student loans):

earnest@2x /> citizens@2x logo_sofi_2016 lendkey@2x

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“I started Student Loan Hero in 2012 because you shouldn’t need a finance degree to understand your student loans. Since then, we’ve been lucky enough to help over 100,000 people better understand and eliminate over $2 billion dollars of student loan debt!”

Andy Josuweit · Co-Founder & CEO Student Loan Hero

Andy, I’m sure you do good work, but if the truth about federal financing were known, you wouldn’t have a business.  There would be no student loans and no need for thousands of students and their families to pay you to “eliminate over $2 billion dollars of student loan debt.”

JUST A FEW QUESTIONS:

Why does the federal government pay for our military?

Why does the federal government pay for our roads, bridges, and other infrastructure?

Why does the federal government pay to inspect our food and our pharmaceuticals?

Why does the federal government pay for a federal court system?

Why does the federal government do all the things it does for us?

Because the purpose of the federal government is to advance the best interests of America.

Does education advance the best interests of America? Of course. That is why the states and cities pay billions to educate children from grades K through12 and has for many years.

The states and cities pay for schooling, while the federal government provides loans. LOANS!

Here we have the cash-strapped, monetarily non-sovereign states and cities paying outright for K-12, while our  Monetarily Sovereign government, which never can run short of dollars, is providing LOANS.

These loans force students, who don’t come from wealthy families, into debt — debt that can last for years — debt that can travel through the generations — debt that hurts credit ratings, discourages college attendance and harms America.

The whole thing is nuts. 

Check out the 10 Steps to Prosperity, (See below) Step #4:  Our Monetarily Sovereign government, which never can run short of its own sovereign currency, should provide: FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE.

No taxes needed. No loans needed. No burden on anyone or any thing.

Of course, the lenders, who are raking in billions from their guaranteed, not-dischargeable-in-bankruptcy loans wouldn’t like losing all those easy dollars rolling in.

But should that be America’s primary concern?

It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.

Every day, the American public is pummeled with the Big Lie, that federal taxes pay for federal spending, and student loans is the result.

WANTED: ONE POLITICIAN WHO WILL TELL THE TRUTH ABOUT OUR MONETARY SOVEREIGNTY. HELLO? ANYONE?

If you, dear reader, do not understand MONETARY SOVEREIGNTY, and the reasons why the federal government should support education, I urge you to click the links. Don’t allow yourself to be one of the ignorant oppressed.

Then contact your Senators and your Representative

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the rich and the rest.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

7 thoughts on “The student loan debacle

  1. Why is the government charging students for wanting education and qualification to work and thus benefit society? It should be clear it is a bargain. The fed can simply “write a cheque” to each teaching institution every year.
    Our lawmakers are outright criminals.

    Like

  2. Germany has abolished college tuition. So have Finland, Norway, Sweden, Slovenia, Brazil, and several other countries. France only charges 187 euros (USG $200) for college.

    Americans imagine themselves “better” than these and all other foreigners. This is why Americans submit to being suckered by catastrophic student loan debt.

    For example, Cuba has free tuition for EVERYTHING. Nonetheless, average Americans regard Cuba as “evil,” since the Cuban government has successfully resisted U.S.-imposed neoliberalism, despite a 60-year U.S. –led blockade.

    Trump, Hillary, Sanders, and all other U.S. politicians regard Castro as “evil” because their rich owners require it.

    When Bernie Sanders calls Hugo Chavez a “dead communist dictator,” average Americans applaud.

    And they wonder why they are being raped.

    Like

    1. While your skepticism towards the mainstream view of Fidel Castro is understandable, you still have to understand that the reason Castro was able to keep the Yankee away was because of the iron fist he ruled Cuba with.

      Any form of dissent was treated as an American-led threat; freedoms had to be reduced in order to keep a close eye on Cuban citizens who might work for the CIA, and so on and so forth. That is the reason millions of Cubans fled the island; Castro had to be a paranoid leader, otherwise the Yankee would have taken away his power.

      I don’t know if you’ve ever heard the expression – “Camarón que se duerme se lo lleva la corriente”. Search it and you will understand why Castro ran a brutal regime in Cuba.

      ¡Azucar!

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      1. Cuba has been under a U.S.-led blockade for over 60 years, and is just 90 miles from the USA. There wre literally hundreds of U.S.-sponsored assassination attempts on Castro. Under such conditions, it is necessary for the government to watch internal matters carefully. Meanwhile average Cubans are more willing to help each other after a disaster (e.g. a hurricane) than are average Americans. Moreover Cuban medicine focuses on prevention, rather than needlessly expensive “cures.”

        The U.S. government works for the rich. Its function is to continually widen the gap between the rich and the rest. Foreign leaders who support this evil are called “benevolent statesmen.” Foreign leaders who do not this evil are called “brutal dictators,” especially if they offer free college and health care, and decline to indebt their people, or decline participate in the Global(ist) War Of Terror.

        Yoweri Museveni has kept the people of Uganda under his savage heel for thirty years. But since Museveni is a U.S. ally, he is a “statesman.”

        Please don’t believe everything you read in the U.S. corporate media outlets.

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        1. I am not swallowing the propaganda from the mainstream media. I know that if the mainstream media is attacking someone, that particular someone is probably doing something to piss off the establishment; but the ambivalence felt by some people towards Castro’s government is justified.

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  3. “An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.”( Rodger Malcolm Mitchell, Monetary Sovereignty)
    With NO misdirection:
    “An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government.” PERIOD.
    Whether this government has any ability to pay is of no consequence.
    It is the duty of the government to perform its duty for the benefit and betterment of all its people.
    Why not a KEEP IT SIMPLE Student Loan Program;
    All loans currently in existence are to be purchase by US Treasury Dollars
    and modified with the terms and conditions of the NEW 2017 Student Loan Program.
    All loans will be INTEREST FREE. A one time service charge will be applied.Payment will start when borrower files Federal Income Taxes in which there is an income reported greater than the standard deductions ( 2017, MAY be … for joint filers $50,000, from $12,600, and the standard deduction for single filers will be $25,000.)
    5% of the taxable amount shall be paid toward the balance of the loan.
    (Justaluckyfool)
    BTW****IT DOES NOT MATTER IF STUDENT LOAN BALANCES ARE $1TRILLION OR $10TRILLION- THE LOANS ARE AN ASSET ON THE BALANCE SHEET.PERIOD.
    $1.3 trillion today with a payback of $1.56 trillion (in 20yrs or 40yrs, doesn’t matter) it produces a NET PLUS for the taxpayers.
    I hope that someday, “We the People will discover “The Role Of Money.”

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  4. Roger,

    IMHO, you are the best I know of who’s capable of penning a reference book, “Monetary Sovereignty: Fiscal Policy for Dummies.”

    Looking forward to the first edition.

    Robert

    On Sat, Dec 3, 2016 at 3:05 PM, #Monetary Sovereignty – Mitchell wrote:

    > Rodger Malcolm Mitchell posted: “Twitter: @rodgermitchell; Search > #monetarysovereignty Facebook: Rodger Malcolm Mitchell > …………………………………………………… > …………………………………………………… > ……………………………………….” >

    Like

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