Banks want to keep students stupid and in debt. A lesson in economics.
Image by Dan Zen via Flickr
The first lesson we learned from the current economic collapse is:
The market does not solve everything. Despite what the neo-cons like Ronald Reagan and George Dubbya told us, turning all state responsibility over to the market means that the entire country is motivated by profit and therefore operates under a value system of greed. This market-first government has not benefited most of us. In fact, it’s only really benefited the super rich, like Reagan and Dubbya.
The second lesson is that a government unduly influenced by the market, by corporations’ and banks’ lobbying and political contributions, will not be able to fulfill its responsibility as regulator of the market.
A case in point: student loans.
The banking industry is lobbying Congress (and to a lesser extent, the American public) to convince us that the current system of student loans is working just fine. Last Thursday, the House passed a bill that would stop giving money to the banks so they can no longer extract wealth from students. The House bill would give money directly to the students.
The banks are trying to convince us that this will be “bad for students” and “end competition” and “cost the US taxpayers more money.” The banks are, of course, lying through their teeth, but again, their motive is profit, not truth.
Brainstorm – Increasingly Desperate Arguments Against Student Loan Reform – The Chronicle of Higher Education.
The truth about student loans is that they became, under the incredibly pro-market policies of Ronald Reagan, a way to extract profit from students. At this point, the average graduating college student is about $24,000 in debt in commercial loans to banks as well as another couple of thousand dollars in credit card debt. That’s because the government student loan subsidies started going to commercial banks (rather than being distributed through Pell grants and other state-run programs) so banks could make a profit off of students and their families.
Some will say: yes, but that college student will earn on average a million
http://trueslant.com/laurieessig/200...-in-economics/
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