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"Banks have ceased to lend money to students."

"All we have to do is have Congress decide to vote for the AMERICAN PEOPLE and FUND the education of OUR CHILDREN."

This is one area where you and I can agree completely: funding education is one of the things government SHOULD be doing.

Elaine Meinel Supkis

I should hope so, Smith. Since the founding of the colonies, the concept of community schools supported by the government has been a huge American innovation.


What I find frightening is that these are the most secure loans. You can basically NEVER get free of them in bankruptcy. The IRS will collect on the loan via withholding tax refunds. Your wages may be garnished.

At least for now you most likely wouldn't be extradited from another country:


Even dying or becoming permanently disabled may not free you and your family of this debt:


And that applies to the private loans too.


If banks think these loans are too risky then the end is surely nigh.

Christian W

The banks of Iceland are tottering too, they went overboard with the carry trade. Now they are crying speculators are out to get them heh.

Christian W

Oops forgot the link:



Elaine, you and I have discussed the incredible cost of a college education before. Because of global wage arbitrage, for most college graduates as far as salaries, it has gotten to the point that it is not worth the tremendous cost of that education to go to college, even for professionals. It appears that jobs that could not be outsourced such as teaching are now going to be affected. Maybe tuition costs and professor's salaries will drop dramatically since they have been increasing much faster than inflation for the last 20 years or so since there was a surge in college students because it was considered the only way to get ahead in the global economy. Let's start building state of the art factories for our children which will ultimately support the rest of our economy including teaching.

Crimson Ghost


I usually agree you but differ strongly on college loans.

The fact is that inflation in the higher education "industry" has been running far ahead of overall inflation for decades. Just like housing, we have had a bubble in college costs fueled by excessively easy credit. And this at a time when the "value" of many college degrees is dropping because of globalization.

This hugely bloated sector needs to downsize and cut costs in a serious way.

Christian W

@Crimson Ghost

But white collar jobs and education was supposed to make up for all the jobs lost to globalization...

Paul S

Poor poor education lobby. For years they were able to get away with above inflation rate tuition increases because the banks were there to act as enabler. Of course, this means saddling students/graduates with debt, but aw, what the heck. What a nice way for a new College graduate to start out in life: with student loans to pay off. The higher education system would NEVER have gotten away with these price increases if students did not have the "privilege" of going into debt via student loans. They would have tapped out much earlier and THEN we would be discussing the cost of education. Instead, we have the worst of both worlds: students starting out in life already in debt AND a wildly expensive education system. Don't you get it? The banks and the higher education lobbies were working together for each others benefit and to hell with the fact that the supposed "benficiary," the student, is the one who has to pay the freight. And let's not forget that the banks, a.) have 100% guaranteed repayment for their student loans (almost impossible to match, unless you are tight with Paul Bernanke or Henry Paulson) and b.) on top of your !00% guarantee of repayment, you get to take a 'service fee' off the top of the loan for the privilege of giving the money to students. Nope. The banks and Colleges had a sweet deal going. Maybe out of all this will come the LONG LONG overdue discussion about cost containment. Let's have a higher education system that is directed at the student benefit and not endowment growth so University mandarins can have an ever larger financial Empire. Time is long overdue for the Coleges and Universities to be accountable; answer to a reasonable set of standards where the student really IS the main benficiary and it's not just some mantra that the corrupt parites mouth to wrangle money out of the system. I am all in favor of higher eduacation--although I think K-12 education should be upgraded first; we need to have 12th graders graduating from high school who HAVE 12th grade reading, writing and 'rithnetic levels of performance. I think if we had had a better educated public in this country, the ruling class would not have been able to pull half the crap they have.


Paulson is proposing more pure fantasy, refusing to mark to market the bad loans. Basically, he wants to bail out the non-performing leveraged with more leverage using taxpayer money that we don't have. Isn't this leveraging of the derivatives that are leveraging the orignal debt an oxymoron under the circumstances, I mean how do you leverage over-leveraged debt when you have negative savings? If it works, it would require the consumer (sheeple) to have the utmost confidence to go deeper into debt and be fleeced one more time, leading to more concentration of the wealth. But really, how long can that last? So far, foreign central bankers seem to like the speech since the dollar is stable. Do you think they want more of our jobs and will buy more of our bad debt?


I don't have the numbers to back me up, but didn't college costs start to skyrocket as the government started understating inflation? Could it be that college costs have gone up at the real rate of inflation because so little of a brick and mortar college or university can be outsourced? By the way, many colleges and universities are outsourcing some departments and functions. If loans truly dry up and costs continue to rise, the college experience will have to change dramatically in order to be available to middle class Americans. Not very many schools have obscene endowments, and some institutions are paying expenses out of their endowments now to keep tuition competitive. They cannot do that for long.

Elaine Supkis

I should have made is clear that college loans, being 'safe' are NOT PROFITABLE. Banks want a bigger return like with the credit card loans.

About schools: my family has been involved in all this for generations. My daughter still is. Pay is, for the most part, wretched. I once worked for a major university, RPI, pay was atrocious. We did this for the side benefits to pay for children's education in the future!

No, the people who are well-paid happen to be the most useless. Football and basketball coaches being the main beneficiaries.

Pat O'Meara

It may be that the education lobby has ripped off the students and needs fixing but the students must be educated or the country will be third world.
I think you will see the Monolines being rescued, perhaps nationalized, but the banks will be saved and the toxic waste will be valued at near face value. When the government honours the insurence they will trade and the taxpayers will eat it, again.

Elaine Meinel Supkis

Possibly totally correct, Pat. Alas.


Fuck'em. The Universities never taught anything anyway, the only thing they produced was educated idiots like we have now running the economy! Get out of the country if you dont want to sharpen your hoes and garden we are gonna be in a food crises. Articles on the web are talking about food riots around the globe already. One anaylist stated that this was going to be a problem in the third world. Guess what? We are a third world country! Has anyone drove around and takin a look lately? We are and have been for quite some time. Society was just an illusion for the last twenty years maybe a little longer. Start your own economy locally by barter. Food has become valuable again because the government cannot afford to subsidize prices down anymore!


@ Dutch

Funny you should say that. I recall hearing Americans saying the same thing about England on a visit about 10 years ago..."England is really a third world country." I liked what I saw there. Namely the zoning that maintained farm land by limiting development, and the greater access to medicine and medical care.

Onward and Upward

Bushit Co. et Al are putting tremendous pressure on all banks globally not to deal or service ANYTHING from Iran. It is so over the top, even within banking circles, that some are actually marking at as the start of hostilities (war) with Iran. If you did this to almost any other nation, strangle their ability to even use the banking system for any purpose, they would consider it an act of war.

This is going to be the great distraction when the dam breaks shortly over finances.

Look, look, over there, Iran is starting a war with US!


Tennessee has a lottery, the proceeds of which are used to provide scholarships to Tenn. residents who attend college here. I voted against the lottery for a number of reasons, but one of my main concerns has now proved to be true: the money is mostly going to upper-middle-class kids. It's become welfare for the well to do, not scholarships. There's also a surplus of money now (roughly $400 million), and of course the politicians are arguing about how best to spend it. One proposal is to give grants to returning Iraq/Afghanistan vets to go to college because the GI Bill under Bush now pays only about 60% of the cost of college. Last year, lottery scholarships in Tenn. were awarded solely on the basis of grades, so plenty of the State's wealthiest families sent their kids to college for free. Now there's a battle in the State Legislature, with the Republicans desperately trying to ensure that no minorities or poor people get any of the money.

Meanwhile, as the rich kids sun by the pool waiting for their lottery checks, the State cuts benefits to the severely retarded:


And truckers are going bankrupt:


And people are pawning their jewelry to buy gas:


Relatedly, perhaps, I've noticed that in the new--and collapsing--world of credit, I am at an advantage. I have always had a high credit score, but banks don't enjoy lending to people like me who never borrow more than they can afford to pay back, never pay late, and never run a balance on a credit card. They see me as a financial traitor to the nation. I was low risk, low return--a neocon banker's nightmare. Now, however, I'm suddenly very popular. I applied for an auto loan recently and was approved over the phone once they saw my credit report. My mortgage company (Countrywide) is begging me to take out a home equity loan of $140,000.

I notice, however, that it's still relatively easy to get money for people like me--but only if you want to go shopping with it or buy a big-ticket item. As you have noted, the elites want to continue the same cycle: debt-based wealth and consumerism, which is actually poverty if people would only look at it sensibly.


Sorry, that first link didn't work:

Try this.

Paul S

I believe if we don't get costs under control, a University education will be unaffordable to most in the Middle class. It already is that way for large numbers in the Middle class. If things continue, we really will have a third world country where only the upper classes attain higher education levels.

Elaine Meinel Supkis

Thanks for the information, Daliwood. And yes, they are now cutting back on services to the 'disposable' people the rulers have no need for.

Gary W

All the noise about Iran is just thud and blunder, the US thrashing around impotently. Iran has oil, and they sell it to FRIENDS, for euros and yen. They also have large, well-equipped defence forces, not the sort of impoverished third-world country that is all the US can invade. Any military action against Iran would be the biggest fiasco since the Bay of Pigs, and hence, cannot be ruled out :-(

We have student loans in Australia too, which are repaid more or less reasonably through the income-tax system. Sadly, at the same time, the late unlamented government starved universities, forcing them to accept increasing "full fee-paying" students, that is, the progeny of the elite, local and overseas. It remains to be seen how the new government is going to recover from this damage.


China have increased recruiting for teachers and lecturers at university level - I understand they plan to increase output of students greatly and the pay is going up and lots of money for research too!

The plan, as I understand, is to increase level of expertise needed to scale up to match Japanese technology and manufacturing capability. To do this, they needs lots and lots of brain power which they are prepared to pay.

1st step to the game plan: give shit loads of scholarships to PhD candidates to all overseas universities. They no longer fear students staying back in US after graduation as the students realize US is going down soon.

2nd step: once they have quality researchers and lecturers; turn on the tap to produce shit loads of researchers for all types of technology and manufacturing. Using same tactics as in Korean war; they plan to unleash human wave of researchers going after all technologies at the same time - Chinese version of Pearl harbor.

3rd step: lower levels of research or manufacturing is going to be over run. Gain enough market share to crush remaining opposition members by takeovers or market domination or cutting access to critical commodities or components or collapsing their currencies like Argentina.

4th step: Stock up, re-assess current situation, adopt defensive market positions and go after the good stuff.

5th step: in charge of entire manufacturing base in this planet, sit tight and hold out as long as possible like 1000 years - game over for the rest of us!!

Japanese and Korean counterstrike - abandon exposed positions in technological arena.

Step 1: Identify high value products.

Step 2: Put all resources into high value stuff and in manner not exposed to future Chinese threats such as dependency on rare metals from China (China controls 95% of entire planet's rare metals.

Step 3: Get a head start before human wave hits


OC, it sounds like WWIII to me.

Elaine Meinel Supkis

The Chinese 50 year plan hatched 25 years ago is to put a pillow under the US and let it slowly collapse onto this pillow.

Our leaders know of this plan, they heard an earful from me about this back then. Now they are struggling against it but stupidly, as I expected.

They hope to tear apart China. The monks demonstrating is a pure CIA operation. The Dalai Lama has been backed by the CIA since 1960.


Paul S.: "Time is long overdue for the Coleges and Universities to be accountable; answer to a reasonable set of standards where the student really IS the main benficiary..."

Students weren't ever the "main beneficiary" at the major universities, anyway. Those are research institutions where undergraduates are maybe third on the priority list. There are places where undergraduates are the main focus, but the big state schools and top-level privates ones aren't among them.

It's interesting that of the top ten universities in the world, only two (Oxford and Cambridge) arent in the US.

"Articles on the web are talking about food riots around the globe already. One anaylist stated that this was going to be a problem in the third world."

Are you sure that analyst isn't an educated idiot?

"The monks demonstrating is a pure CIA operation."

Nah - our CIA's too stupid to pull something like that off.


Of course he was an educated idiot. You would have to be half mad to believe what I know.


We need the three R's reeding, riting, and 'rithmuhtic!


"So I say, arrest these guys. The top ones have many millions in profits from this fraud. Governments can use these profits to fund education for our youth."

Great idea!

One problem: The Monkey King has NO desire that people be educated. 'Taught to the test,' sure - this makes them more efficient drones, better gears in the corporatist machinery. But an actually educated populace?! Perish the thought!

Arresting them is no good; as I noted elsewhere, they own the CJ system - lock, stock and barrel. No, they must swing from gallows erected on the steps of the Capitol, at high noon, on July 4th.

Vive la résistance! Vive la révolution! La mort aux tyrans!




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