College Students Are Being Fleeced By the Government

Has it ever felt worse to be young? By the time we’re old, Social Security very well could be bankrupt, climate change may have irreparably damaged the environment, and dinner will consist of fake meat and Soylent. We'll also still be paying off the debts of generations past.

But in all of those scenarios, we can take some solace in the fact that, at least for now, they represent a distant future, a future that no we still might have some semblance of control over, no matter how dystopian shit's gotten.

Yet the most damning indictment of how the kids are getting screwed is unraveling right before our eyes: college. At this very moment, as starry-eyed 18-year-olds across the country prepare for their first steps into post-secondary education, America’s barely-adults are getting screwed up almost every orifice possible whether or not they’re still virgins.

When it comes to politics, we often think of Republicans as the cold-hearted guys in suits, in part thanks to schmucks like Mitt Romney and his infamous comments about the 47 percent. Operating under this idealistic cliche, the Democrats are the guys who want to help. President Obama often talks about their goals to offer the opportunity to attend college for as many people as possible.

But the issue here isn’t political. It’s systematic, and everyone involved is at fault. And like most problems that fester at first, only to infect all the vital organs in time, this problem begins with a lie.

There are frightening similarities between the current problem with college and our last national disaster, the housing crisis. Then, the problems also stemmed from both sides of the political spectrum, founded once again on the myth of the American Dream. Just like they believe everyone should go to college, the Democrats also wanted everyone to own a home.

The possibility of this myth began with easy money, subsidized by government-backed loans through quasi-private-public companies like Fannie Mae and Freddie Mac. On the other end of things, Republican-backed deregulation meant Wall Street, reeling from the scent of fresh blood, quickly closed in for the kill. One global financial collapse later and the end losers are the low income families who bought into the myth that the system was supposed to help them and pretty much anyone else, including taxpayers, savers, and pensioners. Everyone except, of course, the ones actually gaming the system.

The scam perpetuated this time around is much more sinister for the simple fact that it targets kids. The typical college bound student has, at the ripe old age of 18, only just become an adult as recognized by law.

College freshmen are idiots. This is a fact. Remember the bliss? We were all idiots once. You can’t rent a car for the weekend without paying astronomical fees because you are, by definition, irresponsible. You are so irresponsible that the government long ago decided that you needed to mature another three years before you could legally buy your first beer.

Despite all of that, Obama still believes you have the wherewithal to sign yourself into mountainous debt, which, at its extremes, hovers into six figures at a time when we can only be expected to be totally financially inept. The average student now leaves school with $27,000 in student loan debt, a figure that can quickly balloon into the hundreds of thousands upon default once the interest and fees start piling up.

Just as your adult life is about to begin, the government is enticing you to essentially sign away your life, a single choice that could haunt you until your death. Similarly spun as a chance for a better life (eventually), this is America's modern day version of indentured servitude that for many will last indefinitely and ruin countless lives because for some reason student debt is treated differently than anything else. Unlike your credit cards or your mortgage or anything else really, student debt is inescapable.

This tiny yet ridiculous detail makes the current situation profoundly different from the mortgage crisis. How do we know? Wall Street isn’t worried. Why? Even bankruptcy won’t save you from your single mistake made at a time when mistakes are the only thing expected from us. Kiss the wrong girl. Smoke a little weed. But just don’t dance with the devil, the United States Federal Government, in this case, because decades later they could still be garnishing wages from your disability check.

Thanks to that tiny detail, we probably won’t expect a crash like that of 2008, even as the bubble that is student loans surpasses the levels of credit card debt. But the implications can be just as devastating, if not worse.

For one, it’s ruining the college system, mainly by making it offensively unaffordable. The idea that anyone should have the opportunity to attend college, much like the notion that anyone should be able to buy a home, is noble in principle but deeply flawed, and the propagation of what can ultimately be broken down into a lie. When everyone wants to go to college and anyone can do so by signing away their soul, the logical economic response by colleges everywhere is to continuously hike tuition. There are no real market forces at play. As such, college tuition has outpaced inflation threefold over the years, according to Moody’s.

The other issue is that this kind of system has commoditized the higher education experience. The number of elite institutions has not increased annual enrollment in any significant way, as they simply don’t have the capacity. And yet more and more people are attending college in general. That means the bulk of this attendance is being soaked up by what can only be considered subpar schools, many of which are for-profit institutions that receive the bulk of their revenue straight from the Feds in the form of easily accessible student loans.

The result is that higher education is focusing less and less on, you know, actual education. Pay able professors more? Pff.

In order to differentiate themselves from the mediocrity that surrounds them, schools employ a tactic known as gilding—building shiny new buildings, investing in athletic facilities, and hiring more administrators than ever, all in order to lure prospective students. Celebrity endorsements also look great on brochures. Sure, students aren’t getting better quality education, but at least they can wet their feet in a state-of-the-art Olympic-sized swimming pool as they drown in debt. Across the board money is the bottom line. And when the government subsidizes the experience, there's no reason to cut costs or lower tuition. Ever.

And just as the housing crisis was fueled by the debt of first time buyers and high-risk borrowers, the student loan problem impacts low-income students disproportionately in what essentially amounts to a federal education tax on poor people. College was supposed to be the noble wings by which to ascend the social ladder. Instead, it’s become an anchor. It’s meritocracy of the worst kind. The rich have no worries. The poor have little hope. Student loans are the new first mortgage. Which means buying a home isn’t even on the radar anymore (although that isn’t necessarily a bad thing).

The worst part? We simply don’t have a choice. The system is totally fucked, but our only option is to play the game anyway. A bachelor’s degree is the new high school diploma, the New York Times reported earlier this year. Yet the prospects of having that degree remain dismal even as we see glimpses of an apparent economic recovery. Whether it’s because of outsourcing, robots, or Congressional incompetence, companies aren’t hiring like they used to. For those on this socially celebrated four year track, there’s no clear path as to how they will eventually pay back that money, and at this rate, find affordable health care.

Why is the government doing this? Politically, the student loan debacle has been celebrated as a bipartisan triumph. What can a Congress as notoriously divided as ours agree on? Profits. After the latest compromise over Stafford loans interest rates, the Department of Education looks to make revenues of $185 trillion over the next ten years, which amounts to profits of $185 billion, convenient billing given Washington’s well known budgetary problems.

Typically, we like to villify banks for all issues pertaining to money, greed, and market manipulation. But the private sector was cut out only a few years ago following a complete government takeover. Had we stuck with Wall Street’s “greedy” middlemen, the predicted profits over that same period would have been less than half, or about $86.8 billion, according to the Congressional report.

In this case, we might have been better served by Goldman Sachs rather than Capitol Hill, and not just because of the amount of money they’re making. Bankers have to worry about defaults. If college graduates don’t perform well, neither do their loans. Poorly performing student loans would eventually affect poorly performing schools, which in turn, would have to lower tuitions and cut costs. None of which is the case when the government controls the entire system. So our current ails could continue into perpetuity: ever-increasing tuitions and a growing population of twenty-somethings struggling with debilitating debt, an albatross that often determines the course of their entire life.

The saddest part of this story is that, much like our convoluted health care system, there are no obvious fixes. Some have invested their hopes in innovation, such as the availability of cheaper, online alternatives, like MOOCs. But the technology remains raw and untested, and perhaps more cynically, only threatens to further the divide between the haves and the have nots.

Maybe, like cheap fossil fuels, the concept of “the college experience” is an American luxury that has grown quaint, no longer providing the returns or quality of education that it once did, a system that is inherently unsustainable, one that requires a top-down, critical re-examination. Some are taking notes from guys like Steve Jobs, Mark Zuckerberg, and now Peter Thiel , andare writing it off completely. But that might be a dangerous overreaction. Because then you look at a place like Europe, where higher education, like health care, remains utterly affordable. Maybe, just maybe, it’s our system that’s broken.

All we do know is that the status quo cannot continue. Our students are our future and to allow them to be undercut so systematically is a national shame that could have consequences spanning generations. And why? Simply because they’re the easiest targets next in line.

The weakest shall be fleeced. In this case, they are our sons and our daughters. It’s “America” at its most vile. Education is supposed to be the platform for progress, both social and technological. Instead, we’re allowing the honest pursuit of it to drown our children.

For an in depth report on the college loan scandal, check out Matt Taibbi's excellent investigation.

@sfnuop