Student Loans — Gateway To Debt Slavery

The view here at DOTE is that American society is rotten to the core. Our Ripoff Economy touches every aspect of American society—no part is immune. I haven't written much about student loans up to now, but that was not because there was nothing to say about them. Rather, I didn't have detailed knowledge of how the ripoff worked in the student loan world. Now I do, thanks to collegescholarships.org and byJess.net. I am going to describe the student loan scam in two graphs and a large image. This last graphic, which was put together by those two websites, tells the story better than I ever could.

But before I present that story, I have a few things to say. The problems in American society and its economy are structural. A large part of that structural disaster is due to the fact that our economy, especially during the Bubble Era (1995-2007), was "growing" because of an enormous expansion of credit and its obverse, debt. This system benefited creditors (e.g. Wall Street banks, Sallie Mae, etc.) and abused debtors. Laws were passed and regulations abolished to aid creditors. Therein lies just one of the diseases that characterize American society. The fact that many students start their adult lives as debt slaves—this is the "price" of a college education—is just one example of how this rotten system works.

It may appear to you that liberal economist Paul Krugman (left) is your friend. Nothing could be further from the truth. In reality, Krugman wants the economy to grow, no matter how high the cost to you. He is the Pied Piper of Debt. If you have to become a debt slave to get a college education and a job, and as a result the economy "grows," that's OK with Krugman. He currently wants to stimulate the economy to the tune of $800 billion to get us back on the "growth" path and create jobs. This sounds good, but Krugman also wants us to get back to Business-As-Usual as quickly as possible. But as we just observed, and as you will see below regarding student loans, Business-As-Usual is utterly corrupt.

It is a good thing that credit has been contracting for several quarters now. It is a good thing that households are shedding debt any way they can. The collapse of what some have called a 30-year Credit Bubble is going to cause us all a lot of short- to medium-term pain, but that's the price we have to pay get back to something resembling a "normal" society. I think it's too late to "fix" American society, to halt the Empire's Decline, but surely households (and students) racking up impossible amounts of debt only makes things worse. It certainly makes things worse for the debtors.

OK, here's the student loan scam.

College tuitions rise and rise, way above the rate of inflation or growth in average (not median) wages. From Tim Iacono.