Monday, January 10, 2011

Permanent debt bondage from America’s student loan racket

Harvard tuition for the 2010/2011 academic year is $35,568. Add room, board, health insurance fees, books and supplies, local transportation (if needed), plus miscellaneous and personal expenses raises the total to nearly $60,000. Moreover, with annual tuition/fees hikes, incoming freshmen may need $70,000 for senior year expenses.

According to an October 28 Los Angeles Times article titled, "College costs increase faster than inflation":
"State budget cuts and declines in philanthropy and endowments help push (college tuition costs) up much higher than general inflation across the country this year, amounting to an increase of 7.9% at public campuses and 4.5% at private ones, according to a new study by the nonprofit College Board."

In fact, some schools, like the University of California, raised fees by 32%, then announced a further 8% hike. The University of Illinois announced a 9.5% increase. Other public and private schools followed suit, some by over 10% when fewer students can pay it. The College Board said for the decade ending in 2008, tuitions rose 54% after 49% in the previous decade.

Student Loans/Debt Information

The Project Student Debt web site has a wealth of information on student loans and debt. Using US Department of Education data for the 2007/08 academic year (the most recent available), it said two-thirds (or 1.4 million) of 2008 college graduates had student loan debt, a 27% increase from 2004, breaking down as follows:

* at public universities, it was 62%;

* for private nonprofit ones, 72%; and

* at private for-profit institutions, 96% were debt entrapped.

In 2008, graduating seniors had an average debt burden of $23,200, a 24% increase from $18,650 in 2004. At public universities, it was $20,200. For private nonprofit ones, $27,650, and at private for-profit universities, $33,050.

However, given how government data is manipulated, true totals are far higher and rising exponentially. Many graduates have debt burdens approaching or exceeding $100,000. If repaid over 30 years, it amounts to a $500,000 obligation, and if default, much more because debt obligations aren't erased.

Moreover, regardless of inflation changes, tuition and fees rise annually. As a result, future costs are less affordable. Greater debt burdens are created, and for many students, higher education is out of reach.

For most others, completing college includes debt bondage because of what Valley Advocate.com writer Stephanie Kraft called "Killer Loans" in her October 14 article, saying: "....a large segment of the population is squeezed for interest payments and fees on loans taken out to pay for college, or for graduate or professional school."

The numbers are staggering – $96 billion loaned annually to attend college, graduate, trade or professional schools, excluding "shadow" borrowing. It includes tapping home equity, retirement accounts, other sources, and credit cards. A 2005 Smith College survey found 23% of students use plastic for college tuition and fees.

In the past decade, student loan debt ballooned over four-fold. In 1977, about $1.8 billion was borrowed. By 1989, it was $12 billion, and in 1996 $30 billion. According to the Student Loan Debt Clock, its cumulative principle and interest exceeds $877 billion, surpassing credit card debt for the first time last June, and will exceed $1 trillion in early 2012.

At its present rate, it increases $2,854 per second, entrapping most borrowers and forcing others to default. According to the Chronicle of Higher Education (CHE) last September: "The percentage of borrowers defaulting on their student loans (rose) for a third year in a row, reaching an 11-year high of 7 percent," based on US Education Department data – again grossly understated to hide a serious problem for millions."

The data is based on the number of graduates defaulting within two years of graduation so only capture "a sliver of the defaults that occur over the life of a loan," according to a CHE analysis. It estimates that one in five government loans entering repayment in 1995 defaulted. For community college graduates, it's 31% and at for-profit schools, 40%.

Yet little is reported on the scope of the student loan racket. The web site Student Loan Justice explains it, saying: "The federal student loan system has become predatory due to the Congressional removal of standard consumer protections and.... sanctioned collection powers that are stronger than those for all other loan instruments in our nation's history."

As a result, student borrowers are greatly harmed by unmanageable loan demands. Along with inflation and annual tuition/fee hikes, most graduates face an enormous burden, with no consumer protections, even in default. Once entrapped, escape is impossible. Debt bondage is permanent, and future lives and careers are impaired.

Congress ended bankruptcy protections, refinancing rights, statutes of limitations, truth in lending requirements, fair debt collection ones, and state usury laws when applied to federally guaranteed student loans. As a result, lenders may freely garnish wages, income tax refunds, earned income tax credits, and Social Security and disability income to assure defaulted loan payments. In addition, defaulting may cause loss of professional licenses, making repayment even harder or impossible.

Under a congressionally established default loan fee system, holders may keep 20% of all payments before any portion is applied to principal and interest due. A borrower's only recourse is to request an onerous and expensive "loan rehabilitation" procedure whereby they must make extended payments (not applied to principal or interest), then arrange a new loan for which additional fees are incurred. For many, permanent debt bondage is assured. No appeals process allows determinations of default challenges under a process letting lenders rip off borrowers, many in perpetuity.

"This fee system and associated rehabilitation schemes have provided a massive revenue stream for a shadowy nationwide network of politically connected (lenders), guarantors, servicers, and collection companies who have greatly enriched themselves at the expense of misfortunate borrowers."

As a result, millions of students and families have been gravely harmed, relegated to lifetime debt bondage. Yet industry predators thrive. The fee system is their "lifeblood," providing on average 60% of their income through "legalized wealth extraction" – a congressional sanctioned extortion racket like Wall Street and unscrupulous investment companies scam customers.

Lenders thrive from defaults, deriving income from debt service and inflated collection fees. A conspiratorial alliance of lenders, guarantors, servicers, collection companies, and government prey on unsuspecting borrowers. Lifetime default rates approach up to one-third of undergraduate loans, higher than for subprime mortgages. "This is, in fact, is higher than the default rate of any known (US) lending instrument...."

An Example of Systemic Predation

Sallie Mae (SM) is the largest student loan originator, servicer and collector, managing over $180 billion in federally guaranteed and private loans from over 10 million borrowers. If they can't repay after 270 days, loans are in default. Washington pays SM the balance plus interest. For repayment, collection agencies like General Revenue Corporation (GRC), the nation's largest, impose 25% loan collection fees plus 28% commission charges on borrowers, and can garnish wages and other income for payment.

No statute of limitations applies. For GRC and other predators, a steady profit stream is assured at the expense of borrowers. Even schools benefit by raising tuition and fees far above inflation rates and income growth, making college more expensive, less affordable, and assuring higher future defaults on greater amounts.

Obama's student loan overhaul was a scam. Effective July 1, 2010, it does little to mitigate lenders' ability to rip off borrowers in perpetuity, yet he called it "one of the most significant investments in higher education since the GI bill." He lied.

A Final Comment

More than ever, higher education is out of reach for millions. Most others require substantial scholarship and/or student loan help. During times of economic crisis, families are greatly burdened to assist financially. A 2008 National Center for Public Policy and Higher Education study said they contribute, on average, 55% of their income for public, four-year institutions, up from 39% in 2000, and higher still today to meet rising school costs.

As a result, today's higher education means crushing debt burdens at a time systemic high unemployment and fewer good jobs make repaying them onerous to impossible. America's ownership society is heartless, favoring capital, not popular interests, a policy with strong bipartisan support.

More here





Northern English colleges popular

Usually, the North is much looked down on by people in the Home Counties (S.E. England)

Some of the country's top universities - including Oxford and Cambridge - could be failing to attract the brightest students because of the higher cost of living in the south of the country.

Figures released by the Universities and Colleges Admissions Service show that, while there has been an overall slight increase in the number of students applying for a university place this September compared to last year, there are wide variations between colleges.

And although universities in the Midlands and the north have seen interest in courses skyrocket by as much as 50 per cent, some highly-ranked colleges in the more expensive south have seen a dip in applications - fuelling speculation that cash-strapped students are applying for university places with one eye on their wallets.

The University of Derby has seen applications increase by 50 per cent, while Liverpool Hope and Edge Hill, near Preston, have witnessed application increases of 37 and 35 per cent respectively. Conversely, applications for Cambridge and University College, London, are down by about one per cent and Oxford has seen a five per cent fall in British applicants. Bournemouth University applications are down nine per cent on last year.

Ian Roberts, admissions director for Manchester Metropolitan University, which has seen applications increase by 20 per cent, suggested that students could be attracted to northern universities because of cheaper living costs.

'There seems to be an emerging north-south divide,' he told The Sunday Times. 'The northwest is well served by local universities and clearly the recession is having an effect. The northwest has lower living costs and represents good value for money.'

Kelvin Everest - pro-vice chancellor at Liverpool University where applications are up 21 per cent, added: 'There's an emerging trend of more students studying at home and for recruits coming from around the country, as they are going to find Liverpool cheaper. 'It's also on the back of a general rush for places ahead of 2012.'

According to the British Council, a student living in London is likely to spend almost 60 per cent more than if they were studying in Liverpool - £9,500 compared to £6,000.

SOURCE






British schools inspectorate warns of 'dull' school science experiments

Thousands of children are being let down in school science lessons by boring experiments, according to Ofsted. Inspectors warned that practical work was too prescriptive in up to a third of secondary schools as pupils were left “merely following instructions”.

Despite improvements in recent years, these schools were more concerned with preparing pupils to pass exams than carrying out their own scientific investigations.

The study – based on inspections of 221 state schools and colleges in England – praised a rise in the number of teenagers taking separate GCSEs in biology, chemistry and physics.

But inspectors suggested some secondaries also pushed pupils into taking less academic vocational science courses between 14 and 16 – “restricting” their chances of studying the subject at A-level. Just one in 100 of these students go on to take advanced science qualifications in the sixth-form.

At primary level, children’s grasp of science was often undermined by a lack of expertise among teachers, which “limited the challenge for some more able pupils”, it was disclosed.

Since 2007, the performance of the brightest pupils aged seven to 11 has declined, Ofsted said.

The conclusions come just weeks after a major report found UK schools had fallen in an international league table ranking standards of school science.

Christine Gilbert, the chief inspector, insisted it was vital that teachers who “still lack confidence in scientific enquiry” are given more help and on-the-job training. “This report highlights what the best schools are doing to ensure science courses prepare pupils for continuing education, training and living in a technological society,” she said. “This should be a stimulus to better practice and improvement.”

Ofsted investigated standards of science in schools and colleges in England between 2007 and 2010. It found pupils’ progress in the subject was good or outstanding in 70 per cent of primary schools and around two-thirds of secondaries. Lessons were worse in colleges where science was often regarded as the worst-taught subject.

The report – Successful Science – said a decision by the last Government to axe science Sats tests for 11 and 14-year-olds led to widespread improvements in schools. It helped schools “avoid an undue concentration on revision” at the end of primary school and half-way through secondary education, Ofsted said, freeing teachers to provide more stimulating lessons.

The report said more secondary schools were also offering an “increased range of courses” for 14- to 16-year-olds, including the option to take three separate sciences.

But it suggested at least a third of secondaries – where pupil progress is no better than satisfactory – gave students “limited” opportunities to “design and carry out experiments”. “Too much of the practical work was prescriptive, with students merely following instructions,” said the report.

“These schools were often influenced too much by the specific ways in which practical work and scientific enquiry skills were assessed for GCSE sciences and, as a result, were less concerned with providing opportunities for wider-ranging investigations.”

The report added that in primary schools a “lack of specialist expertise limited the challenge for some more able pupils”.

SOURCE

No comments: