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How college loans exploit students for profit - Sajay Samuel

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Today, higher education has become a consumer product— costs have skyrocketed, saddling students with a combined debt of over $1 trillion, while universities and loan companies make massive profits. Professor Sajay Samuel proposes a radical solution: link tuition costs to a degree's expected earnings, so that students can make informed decisions about their future.

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The student loan industrial complex is large and profitable.

College debts are not as easy to discharge on bankruptcy as consumer loans or credit card debt. You have to prove "undue hardship," an ill-defined and incredibly difficult hurdle to jump over.

There is ample evidence that the for-profit higher education industry has failed miserably, whether measured by graduation rates, outstanding loans or employment. This fact should give serious pause to those uncritical boosters of the "free market" in education.

Penn State University can stand as an exemplar of what many students confront on graduating from college. Almost 60 percent graduated with some debt, the average of which was almost $37,000, and some 7 percent are in default. Penn State is also not unusual in having a food bank to address hunger within its student population.

Education that was once thought of as the great equalizer has now become a most efficient producer of a caste society, one in which people's life-chances are strongly influenced if not determined by the academic branding they receive: private vs public school, dropout vs. degree.

"Do the Benefits of College Still Outweigh the Costs? Current Issues in Economics and Finance” by Jaison R. Abel, Richard Deitz, 2014: Between 2001 and 2013, the average wage of workers with a bachelor’s degree declined 10.3 percent.

According to recent research published by the St. Louis Federal Reserve, the about 27 percent of those in repayment are 30 days or more delinquent on their payments.

The data on the differential burden that repaying debt places by major, see Major Decisions: What Graduates Earn Over Their Lifetimes, published by the Hamilton Project.

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