While America struggles with the Republicans’ $6 Billion, phony, “Wall crisis,” several real crises remain unattended, one of which is the Student Debt Crisis.
Back in December, 2015, we published, “Student loans and the unforgivable debt.” Today, more than three years later, the student debt has grown massively and remains even less forgivable.
Consider excerpts from the following article:
Student loan balances jump nearly 150 percent in a decade, By Jessica Dickler, CNBC
Over the last decade, college-loan balances in the United States have jumped more than $833 billion to reach an all-time high of $1.4 trillion.
The average outstanding balance is now $34,144, up 62 percent over the last 10 years.
In addition, the percentage of borrowers who owe $50,000 or more has tripled over the same time period.
A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home.
Many graduates have expressed buyer’s remorse regarding the cost of their education. To that point, 57 percent said they regret taking out as many loans as they did, and 36 percent said they would not have gone to college if they fully understood the associated costs.
That debt also has long-term consequences. From buying a car or a home to getting married and even having children, many millennials are putting off life’s major milestones because of their record debt.
Here are several observations regarding the above.
- The vast majority of American students attend grades K through 12 free, paid for by city and state governments.
- City and state governments are monetarily non-sovereign, meaning they do not have the unlimited ability to create money. City and state taxpayers fund city and state government spending, yet taxpayers, realizing the importance of education, willingly pay for K-12 schooling.
- By contrast the federal goverment is Monetarily Sovereign; it has the unlimited ability to create U.S. dollars. The federal goverment never can run short of dollars. Federal taxpayers do not fund federal spending. The federal government self-funds its spending by creating new dollars, ad hoc.
- In today’s, more sophisticated and competitive world, the education of young people, beyond high school, has become more important to America’s growth and success.
- Student debt discourages entrance to college, discourages finishing college, and discourages success after college.
- Student debt is unnecessary. Our Monetarily Sovereign federal government has no need to collect dollars from students. Rather than lending dollars to students, the government should give dollars to students, to pay for college. See: Ten Steps to Prosperity: Step 4: Free education for everyone and Ten Steps to Prosperity: Step 5: Salary for attending school.e
In short, saddling students with federal debt, when the federal government has no need to collect the debt, makes no economic sense, and in fact is harmful to America’s future.
So why do we do it?
First, the American people do not understand the federal government’s Monetary Sovereignty. They wrongly believe that federal taxes pay for federal spending, so they resist efforts to increase federal spending, lest federal taxes increase.
The people do not know that though state and local taxes pay for state and local spending, federal taxes pay for nothing, and in fact, are destroyed upon receipt by the U.S. Treasury.
Thus, we have the incredible irony of Americans willing to pay taxes to fund grades K-12, but not to fund grades 13+, which would cost no tax dollars at all.
Second, the rich run America by bribing politicians via political “contributions.”
“Rich” is a comparative term. A person having $100 is rich if everyone else has only $1, but is poor if everyone else has $10,000. So, in order to become richer, one either must increase his own wealth, or decrease everyone else’s.
(Gap Psychology describes the human desire to widen the Gap below oneself, on any economic or social measure, and to narrow the Gap above.)
Motivated by Gap Psychology, the rich wish to distance themselves from the not-rich.
One of the many ways the rich do that is by indebting the not-rich. Because the rich pay for their children’s college simply by writing checks, while the not-rich pay by borrowing, the student loan debt is a perfect device for widening the Gap between the rich and the rest.
(The rich also widen the Gap by such actions as:
- Cutting Social Security benefits on the false claim that Social Security is “insolvent.”
- Taxing Social Security benefits
- Collecting FICA and limiting collection to salaries below $132K
- Requiring everyone to pay for Affordable Care Act (Obamacare), even when well.
- Taxing salaries at a higher rate than other forms of income most received by the rich.
- Allowing for tax shelters most used by the rich
- Requiring Medicare to be incomplete, i.e. not covering coinsurance, deductibles, and copayments.)
Bottom line: Student debt is an unnecessary, harmful program, perpetuated by the rich to widen the Gap between the rich and the rest.
To advance the interests of the United States, the federal government should eliminate student debt and provide a free college education for all who want one.
Rodger Malcolm Mitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
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:
2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
8 thoughts on “Student debt: The intentional crisis.”
Rodger … there are other pernicious elements attached to student loan debt. That is the student loan securitization and debt collecting businesses. Many of these loans have been packaged and discounted into the market place. Having been sold at a discount while the income is recognized on the stream of incoming payments means that any early payoff will have to recognize that potential of future income. Hence it is very difficult or impossible to economically payoff the loan. In conjunction, this fact gives the debt collection business fertile ground to plow.
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Good point. Every economic evil seems to come down to the rich and their banks.
Spot-on analysis as usual, Rodger. I couldn’t have said it better myself.
It is just straight up an EVIL law. Here in Australia cities do not pay a dime towards K-12 education. The state pays, but gets help annually from the federal government. I’m not sure how much is reimbursement for education costs. We now have fees for tertiary education, mollified by bursaries etc, We call it HECS but it is not as burdensome for locals, [expensive for foreign students]. You have to repay only after your income reaches a certain thresh hold. My 18 year old grand daughter is about to start Uni, but I’ve yet to find out what fees she will pay. However it’s not necessary at least for undergraduate courses as the fed has the money. as you and I know.
Personal observation, my neighbor’s son who I have watched grow, graduates h.s. and shows a aptitude for sound quality. He is accepted by a downtown Chicago higher education school and takes a loan out for tuition, his parents agree but do not co-sign or it is unnecessary. Payments are not due until some months after graduation, unfortunately interest started on day one of acceptance. He graduates the two year program with $32,000 in school loan debts, at the age of 21. His first job as a intern, is a private firm associated with the school. His pay is minimum wage, as he is a intern but “the possibility is endless”. He’s bored to death as he is a gopher for coffee,lunch, etc. and leaves to freelance at local bars and shows that need sound engineering. He learned his lesson and is paying that loan down some 7 years later.
Sadly, an all-too-common story in many variations. The federal government has the power to do what state and local governments do for grades K-12 — pay for grades 13+
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He has learned some things I never experienced. In the early 70’ I was able to earn enough money during the summer at factory jobs, (Essex Int., Reynolds Aluminum) to pay for my tuition and room and board at Illinois State U. It wasn’t unusual or out of place! )