Why aren’t we learning from history? Repeating the 2008 Financial Crash Sooner Than We Think

In one week, the stock market dropped 18%. The 2008 story of the financial crash is not the first; it’s the same story, but a different time. That similar story will be back sooner than we think. However, it’s not sub-prime mortgages, it’s an educational loan crisis.

Student-Debt-Crisis“Pew Research Center reported that a record one-in-five households owe student loan debt. The average student loan debt in 2011 was $23,300” (Bennett, 2012, p.1). In March 2012, education loan debt surpassed auto and credit card debt at nearly 1 trillion dollars. In the documentary

College, Inc., college recruiters of for-profit colleges admitted to making at least 300 sales calls per day to lure in students. These tactics were similar to those used by lenders and salespeople who were partly responsible for the 2008 mortgage crash. Additionally, individuals at the top (i.e., CEO and top executives) were making millions of dollars while students were amounting massive amounts of debt. The same is true for Wall Street execs who crashed the economy, but walked away with bonuses in 2008: AIG Exec (34 million), Citigroup CEO (11 million), Bank of America CEO (10 million), and JPMorgan Chase CEO (20 million) (see source: MotherJones). Some have used the term “too big to fail” to describe massive for-profit colleges. It’s clear the similarities are alarming, but what’s the difference?

The Difference

Individuals cannot escape education loan debt. We can file for bankruptcy for failure to pay back mortgages and credit card loans, but you can’t escape education loans. The IRS can take your refund, debt collectors can garnish your wages, one cannot escape. Thus, the next crash is looming. Why aren’t we doing more to protect consumers (students)? Better yet, why aren’t we doing more to protect ourselves?

1_WSJ_Student_Loan_Debt_11-28-12

(source: CBS)

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~ by shanemccarty on May 1, 2013.

2 Responses to “Why aren’t we learning from history? Repeating the 2008 Financial Crash Sooner Than We Think”

  1. Man- this could not be more true. We are entering an age of over-educated folks with lots of debt and no jobs to be filled. Tough period that I hope we survive

  2. I watched a documentary (perhaps PBS Nova) about online educations and it’s really startling to see how these places don’t care about the retention rates. They enroll anyone, provided they can secure student loans and regardless of whether the student continues or not their bottom line is to collect the student loan money and then a student who is struggling is left with 1) debt to repay, 2) no degree and 3) feeling like they aren’t good enough because they were swindled in the first place.

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