By Ben Cohen: To get ahead in life, going to college has traditionally provided the surest way of creating career opportunities. An academic or skills based education opens doors to high paying work, and the better the college, usually, the better the job. What has happened in recent years in America though, is threatening to destroy that promise and saddle students with so much debt that going to college will become a burden rather than an opportunity.
The war on students and the poor is happening on two fronts - first is the ongoing Right wing crusade to privatize education in all its forms - a well known method of disenfranchising the poor, and second the insidious behavior of banking institutions that have found ways to legally take money from students under the guise of providing administrative services. In a devastating public interest report leaked to the AP, as many as 900 colleges are pushing payment cards with extortionate fees on their students who sometimes have to use them to receive their financial aid:
Colleges and banks rake in millions from the fees, often through secretive deals and sometimes in apparent violation of federal law, according to the report, an early copy of which was obtained by The Associated Press.
More than two out of five U.S. higher-education students — more than 9 million people — attend schools that have deals with financial companies, says the report, written by the U.S. Public Interest Research Group Higher Education Fund.
"For decades, student aid was distributed without fees," said Rich Williams, the report's lead author. "Now bank middlemen are making out like bandits using campus cards to siphon off millions of student aid dollars."
Programs like Higher One's shift the cost of handing out financial aid money from universities, which no longer have to print and mail checks, to fee-paying students, Williams said.
The fees add to the mountain of debt many students already take on to get a diploma. U.S. student debt tops $1 trillion, according to the Consumer Financial Protection Bureau.
Government loans and financial aid have traditionally been distributed directly to students, but due to lack of regulation, banking institutions have latched onto a captive market of extremely vulnerable people who are either in dire need of money, or unaware of the debt they are incurring. It is the worst form of predatory lending, and the effects if left unchecked could be devastating.
Student debt is bad enough as it is - the cost of education is soaring in America, and it is not slowing down. As The New York Times reported in 2008:
According to the biennial report from the National Center for Public Policy and Higher Education. Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.
It is amazing that on top of this, banks are adding to the costs with services that should be provided by the state or higher education institutes themselves.
The ramifications of this abuse of students should cause some serious concerns. It is difficult not to sound conspiratory, but a clear pattern is emerging that has seen banks attain dangerous levels of control over people's lives. The use of debt as a control method is as old as banking itself, but the situation is now so dire that students face the prospect of an entire lifetime of debt. The alternative is equally as bad - young people will simply stop going to college to avoid owing all their future earnings to banking institutions and consign themselves to work in unfulfilling, low paying jobs. The outcome is of course the same: Education becomes a luxury for the rich, while everyone else gets poorer.
More worryingly, the system of extreme debt could collapse on itself at any moment as it did in 2008 when housing debt levels were so high that no one could pay their mortgages to the banks. Government stepped in to guarantee the loans and prop the system up again, but if student debt becomes intolerably high (and it looks like it is) the country could be faced with another situation where the banking system falls apart when the jobs market fails to produce high enough salaries for employees to pay back their loans.
It is another example of short term greed not only destroying lives, but preventing them from even starting.