The most recent report about student loans in the US is
alarming. It reinforces what we already know that student loan debt in the
nation has already surpassed the $ 1 trillion. That sum is larger than all of
credit card debt put together. This by
itself is a cause for concern not only because of the implications on the
individual student loan debtors but also because of the macro implications of
dealing with such a high level of debt.
Whenever a nation is faced with the fact that tens of millions of its
households will have difficulty meeting their financial obligations then one of the most
important issues becomes that of the financial ramifications of this debt burden.
Student loans are typically held by individuals in their twenties and
increasingly in their thirties. If these individuals are to spend the next
10-25 years of their life paying back the loans that they had borrowed for
their education then when are they going to save for their own retirement,
purchasing a home, saving for their children’s’ college expenses…
One of the most distressing facts of the most recent report
is the fact that 1.4 million student loan borrowers are already over $100,000
in debt. Such figures are mindboggling especially if we recall that most
general affordability models suggest that total student loans should never
exceed the expected first year earnings after graduation. This extraordinarily
important issue ; debt in excess of what the quantitative models suggest is
affordable, is an indictment of the current system that seems to be interested
only in recruiting college students, arranging for them loans but never
explaining in full and clear details what such obligations mean. The inevitable conclusion, based on the above, is to
suggest that the financial institutions have no interest in reducing the flows
of these loans since they are guaranteed by the federal government and that the same
is equally true of many educational institutions that are either run for pure
profits or that are not willing to inform the potential student loan recipients
about the negative financial implications of such loans. As Eli Wiesel has
often preached, those that acquiesce are just as guilty as those that pull the
trigger. Unfortunately many of our universities have flunked the moral and
ethical standards that one would have associated with such institutions of higher learning.
Note the dire implications of what the recent data reveals.
1.4 million students have student loan debt in excess of $100,000 when everyone
knows that in general no loan above the expected first year earnings should be
approved. How many degrees have an expected first year earnings of over
$100,000? Not many. Besides those that are successful MD’s or the very few that
are successful lawyers no one comes even close. But the country graduates only
about 19,000 physicians every year and about 53000 lawyers pass the bar exam. But as
hard as it might be to believe the country needs only 26,000 new lawyers each
year. That is one reason that the median income for lawyers was only $44159 in
2009. As is obvious, there is only one conclusion: universities and colleges,
including Pace University, have flunked the only test that counts, that of
honesty and high ethical standards. No university has any business in either
encouraging students to get in debt beyond what the models suggest is
sustainable or not discouraging students from seeking such levels of
indebtedness. Any other course of action is inexcusable and unconscionable.
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