The New Indentured Servants

[Mormon...@aol.com]

 

admin posted: "Dave Dayen on Student Loans as Medieval Indentures Posted: 05 Jun 2013 11:53 PM PDT Dave Dayen’s latest article at Salon makes a critical point about student debt, that is it fundamentally misleading to call it a loan: The roughly two-thirds of U.S" Respond to this post by replying above this line New post on Seniors for a Democratic Society Naked Capitalism: Students the New Indentured Servants by admin Dave Dayen on Student Loans as Medieval Indentures Posted: 05 Jun 2013 11:53 PM PDT Dave Dayen’s latest article at Salon makes a critical point about student debt, that is it fundamentally misleading to call it a loan: The roughly two-thirds of U.S. students who take out loans to finance their college education can end up in a situation most resembling the historical concept of indenture. In medieval times, peasants would sign deeds to work land, which would then get cut in a jagged line (looking like teeth, or “dentures”). Each party would get half, and rejoining them would prove the authenticity of the contract. Colonial indentures would trade years of labor for the opportunity of transportation to the New World. The indentured could not alter the terms of the contract, no matter their circumstances. One way or another, the debt would get paid. Student debt slavery is in many respects worse than indentured servitude. Indentured servitude in America occurred most often when men with no or little in the way of savings pledged their labor to pay for the cost of passage. The term varied, depending on the vigorousness of the worker and his skills, with the time of bondage typically three to seven years. (Historical trivia: this practice had become illegal in England after the Middle Ages but was revived in the Colonial period. The Mayflower Compact served to head off an incipient indentured servant revolt, since the ship landed north of where the Separatists, aka Pilgrims, had negotiated a land patent from the Virginia company. The servants argued that that put them outside the jurisdiction of English law, rendering their agreements void. The non-Separatists “strangers” who were free tradesmen and craftsmen had been recruited by the promoters, were also chafing under Pilgrim rule on ship and joined with the servants. The Mayflower Compact created a temporary government to deal with this mess). By contrast, as Dayen stresses, one of the horrors of student debt peonage is how crushing and inescapable the debt becomes for those who have trouble finding lucrative enough work to pay it off. You can’t discharge it in bankruptcy, unless you can prove “undue hardship” which is a very high bar. You can’t refinance it. The Feds can even garnish your Social Security. And we are well into Herbert Stein, “That which is unsustainable must stop” territory, although no one seems willing to admit to that. The official rate of 90+ day delinquencies is over 12%. but (based on 2011 data) 47% of the loans don’t require payment because they are in forbearance or deferment. So the actual delinquency rate is whopping 23%, well above that of any other category of consumer debt. Dayen stresses that there are social and economic negatives to having young people acquire debt millstones in order to get a higher education: Princeton professor Jesse Rothstein argued in a recent working paper that graduates burdened by debt will choose higher-paying jobs to pay off the loans, draining the talent pool for lower-paid, but critical, “public interest” job sectors like education, government or nonprofits. This further erodes the nation’s seed corn and funnels the best and brightest into the financial industry or other higher-paying power centers, reducing entrepreneurship in the bargain. Student debtors also put off major purchases like houses or cars, and the Federal Reserve believes this is having a serious negative effect on our economy. Dayen argues, as we have, that various proposals that simply dork with interest rates is rearranging deck chairs on the Titanic. He argues forcefully for ending the privileged status of student loans and the overly large role they’ve come to play in financing advanced education. One good idea for future borrowers is “income based repayment” in which payments for low income debtors are limited to 10% of income. The Administration wants the time limit for IBR payments to be 20 years. Representative Karen Bass has proposed the IBR be limited to ten years and that loans be deferred, interest free, when a borrower is unemployed. Dayen also recaps the proposals for allowing borrowers who already have student loans to refinance. The big needed change is to allow these borrowers to declare bankruptcy. Weirdly, policymakers appear obsessed with the idea that someone borrowed to go to college (presumably to party and get laid) and then stiffs his lender. The initial remedy was to bar bankruptcy filings for five years; that sort of compromise would force badly needed discipline on lenders. I’d also like to see more pressure on college costs. Gold plated pay packages for administrators and overinvestment in dorms and facilities doesn’t improve the quality of the educational product. And what about disclosure? The Consumer Financial Protection Bureau is big on simple forms for mortgages. But prospective homeowners (nowadays) have incomes. By contrast, colleges make general pitches to students on the value of a degree without discussing the experience of new graduates or breaking down results by major. Showing students what 50th percentile and (say) 20th percentile after tax incomes in their likely majors in high and low income tax states v. their post-graduation debt service costs are like would focus a lot of minds. Fixing the student debt problem is not going to be easy. But student debt penury is having enough of a macroeconomic impact to be capturing the attention of policymakers and possible real economy allies, such as consumer goods companies. But the biggest wake-up call has already come in the form of declining enrollments for law schools and other programs which were once seen as sure-fire routes to a middle class or better lifestyle. But absent more pressure from students themselves, we are likely to see patchwork rather than real reform. So keep the heat on. admin | June 6, 2013 at 6:24 am | Categories: Shared Art | URL: http://wp.me/p1xKve-1YY Comment    See all comments    Like Unsubscribe or change your email settings at Manage Subscriptions. Trouble clicking? Copy and paste this URL into your browser: http://seniorsforademocraticsociety.wordpress.com/2013/06/06/naked-capitalism-students-the-new-indentured-servants/ Thanks for flying with WordPress.com

 

We have no more thought of using our own powers to escape the arm of authorities than had the Apostles of old. No more are we ready to keep silent at man's behest when God commands us to speak. For it is, and must remain, the case that we must obey God rather than man. (Last sermon before being imprisoned by the Nazi regime of Germany (27 June 1937) --Martin Niemollers

[Kent Page]

One of the things a government does best is foul things up beyond all recognition (FUBAR). Just as soon as colleges and universities learned the Department of Education would loan money to students to pay tuition with, the tuitions started climbing yearly by 9 -19% for the last 20 years. Tuition alone at this little rural college in NW TN is $4K a semester and it just keeps climbing. Tack on the fees, dorms and meal tickets and it’s a goodly sum for 16 weeks of classes. And Education just keeps on grantin’ the Pell grants (never forget those grants are funded by tax payers) and making the loans. By contrast, my University of AZ degree cost around $6K for 4 years. I worked and paid my way through school w/ no debt when I graduated. Granted that was the 60s and 70s but there’s the contrast.

 

I call the dilemma education’s Catch-22.

 

In the interest of fairness I should note that when state legislatures figured out the scam, they started cutting budgets for public schools so the net effect for schools has been a zero sum game. One of the few exceptions in this funding dance was CA and now that state is dead broke and watching a capital drain as the wealthy move out of state. FUBAR. Unfortunately, they take their CA ‘tudes w/ them. FUBAR.

 

BTW, Deborah, that’s why socialism can’t work. The people who are supposed to pay for it emigrate.

 

kent

 

On Behalf Of Mormon...@aol.com
Sent: Thursday, June 06, 2013 7:46 AM
To: mormons-onl...@googlegroups.com
Subject: [MO-Speak-Out] The New Indentured Servants

 

 

New post on Seniors for a Democratic Society

Naked Capitalism: Students the New Indentured Servants by admin

[Mormon...@aol.com]

This is not a socialist program and the banks are singing in all their collective showers every day.

Loans of the magnitude they are making,,,,,,and they can never be bankrupted and they can keep

raising the usury on them????. A bankers dream.  Unfortunately the banks are international or the

students could take a foreign language and flee the country to practice their knowledge/degrees.

 

deborah

 

We have no more thought of using our own powers to escape the arm of authorities than had the Apostles of old. No more are we ready to keep silent at man's behest when God commands us to speak. For it is, and must remain, the case that we must obey God rather than man. (Last sermon before being imprisoned by the Nazi regime of Germany (27 June 1937) --Martin Niemollers

 

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[Kent Page]

Oh Deborah, Deborah, Deborah. Take off your blinders and take credit for what you so profoundly believe in. Of course it’s a socialist program. The government guarantees the loans in the first place. No prudent banker would ever loan tens of thousands to a kid who has no credit history and no job w/o first rate collateral and government promises are just such collateral. And 4-6 years later, voila, the government has another willing serf. Isn’t serfdom the definition of socialism? For sure, wealth and prosperity are not the definitions.

 

kent

 

On Behalf Of Mormon...@aol.com
Sent: Thursday, June 06, 2013 4:42 PM
To: mormons-onl...@googlegroups.com
Subject: Re: [MO-Speak-Out] The New Indentured Servants

[Mormon...@aol.com]

It's FASCISM> The marriage of International private corporate with governments. That's Mussolini's

definition and he surely should have known.

 

deborah

 

We have no more thought of using our own powers to escape the arm of authorities than had the Apostles of old. No more are we ready to keep silent at man's behest when God commands us to speak. For it is, and must remain, the case that we must obey God rather than man. (Last sermon before being imprisoned by the Nazi regime of Germany (27 June 1937) --Martin Niemollers

 

--

[Kent Page]

No, not fascism. There were several wealthy German industrialists under Hitler and Goering fancied himself a collector of European art. Other terms come to mind to describe what he did – rapine being the mildest.

 

Serfdom is what college grads w/ huge student debt and no jobs can expect and THAT is socialism.

 

A Briton, a Frenchman and a Russian are viewing a painting of Adam and Eve frolicking in the Garden of Eden.

"Look at their reserve, their calm," muses the Brit. "They must be British."

"Nonsense," the Frenchman disagrees. "They're naked, and so beautiful. Clearly, they are French."

"No clothes, no shelter," the Russian points out, "they have only an apple to eat, and they're being told this is paradise.

They are Russian."

 

 

kent

 

On Behalf Of Mormon...@aol.com
Sent: Thursday, June 06, 2013 10:52 PM