First there was the housing bubble, but now a new crisis has emerged in America. The student debt bubble has now accumulated over $1 trillion in student loan debt and, starting July 1, Federal Pell Grants are set to be cut for thousands of student across the US. Sarah Jaffe, associate editor for AlterNet.org, joins us with her take on student debt.
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is not discussed in this video - i.e. an already robust lender market for student debt is in the process of being induced to grow towards its own "financialization." Private lenders have preyed upon unsuspecting first generation college goers for years, now. They have intentionally targeted those coming from poor socio-economic and/or academic backgrounds. They duped such students into applying for exorbitant loans with high interest for the sake of attending - primarily - for profit, private trade schools or occupation-specific "colleges" (i.e. "trade schools"). The "colleges" have principally catered to the needs of allied health and tech/software industries seeking trained entry-level workers and low-level managers. From the industries' perspective, a "liberal arts" education would render such persons less skilled and manageable. From the lenders perspective, the selling of loans to unsuspecting students truly ignorant of the college experience and what a real education would gain them means students are nothing but raw meat for the usury grinder: they are being preyed upon for the making of debt sausage. What's more is the fact that the removal of public low interest loans will have more and more people turning to such lenders for deals on bad loans. Moreover, given the federal guarantee on student debt (i.e. it cannot be "forgiven" in most bankruptcy proceedings), the lenders are then free to run wild and free as they manifest their deepest and darkest predatory securitization dreams.
People can always walk away from a house and their payments for it, but can they leave the debt of their student loan(s)? The answer, conveniently for some: No! The primary issue, then, is two-fold: 1) an entire section of the populous is seen as a debt generator and as instrument of financial gain for others consuming monetary gains from them (How's that for "human resource?"); and, 2) the government is either grossly ignorant, perhaps negligent, andor complicit in such schemes.
Here comes securitization bubble number... lost count... that is if the wheels don't run off first.