Friday, June 28, 2013

Debt slavery

Here's a guest post from a certain lady toward whom I bear a certain fondness. She's concerned (and by "concerned," I mean infuriated) by the strong possibility that Congress will soon allow the interest on student loans to double.

All the words below the asterisks are hers.

* * *

From the Desk of Ms. Vandal:

It is not often I use Joseph’s blog to voice my own opinions and concerns, but today I am dealing with a problem facing so many students graduating college.

Before I went back to school, I worked as a Data Analyst for a subsidiary of the Boeing Commercial Air Group. As often is the case in the aerospace industry, one day I received a beautiful pink slip. Instead of weathering out the storm in an industry hostile to those without a degree, I decided to go to back to school and get that degree.

With the best of intentions, I started at a community college. I waded the tumultuous waters of placement exams and prerequisites, and built up credits to transfer to a university. I did well. I was graduated with honors. And while the degree came from a school you may not have heard of -- the University of California at Riverside -- it is a prestigious sister school to UCLA.

But when I left college, I faced a much tougher job market. Now I work at a children’s museum. It's a great job, but it pays only $7.50 an hour. I am not full time, nor do I have benefits. Although I have often applied for better-paying positions, the competition is horrifying. At this rate, I cannot afford to pay back my student loans -- hell, I can barely afford food.

And now they want to DOUBLE the interest rate of my loan?

I called the phone number on the Move On infographic posted to the right of these words. They connected me to my local congressional representative. I relayed my story to a staffer, and informed her that doubling the interest rate would put me even further behind on my payments. I wept. She grumpily replied: “I’ll pass the message on.”

I doubt that she will. Nevertheless, I'm glad that I called -- and I hope you will do so as well.

Now we have just one day to get the message out. We have to tell Congress not to double the interest rate on student loans.

Raising the rate is not a move that will help the economy. This lines the pockets of the banks who took on the loans. Those banks are the reason we are in our current financial debacle. Go after the banks! They received billions in bailout money because they were too big to fail. But who cares about me if I fail?

Not the bank. Not the government.

Student loan debt is over a trillion dollars. How will doubling the interest rate help these people pay their student loans? This move will only increase defaults, forcing hardworking people to live with a stigma that will follow them for the rest of their lives.

This fight is not just about the student loan interest rate. This is also about raising the minimum wage. Paying working people better will give them a greater pool of money to bolster the local economy. They will be able to afford groceries, to attend movies, to go to museums, and to have the occasional dinner out. And they will also have a much easier time making their student loan payments.

Correction: The original version of this post accidentally said "Student loan default is over a trillion dollars." The default rate is between 9 and 10 percent.
Comments:
Welcome, Ms Vandal.

I empathize with your predicament, but caution you to temper the moral challenge of it. Student loans is another banking crisis waiting to happen. It's another too big to fail Diorama and as long as the Petro-dollar remains the currency of record.

If it doesn't survive BRICS, your loan won't matter in the least. Don't create unnecessary angst for the loan.

It's been bought and paid for several times in the MP. Add to that, there are significant numbers in your self-same bind. There is strength in numbers, if not from Congress.

Cheers-

Ben Franklin (not that one)
 
Can we call on a Saturday? I was always appalled at the payrates at museums. I'm still working on lining up income...I'm at the point where I can see the light on the other end of the tunnel and am hoping it's not that of the proverbial oncoming train!
 
Great letter from Ms Vandal. America cannot keep punishing its own people this way.

The student loans scam is similar to the home mortgages scam. Everybody wins except the student (and their parents!). The colleges win because they can increase enrollments and fees. The loan originator obviously wins. The industry has boomed ever since Congress passed a law insulating student loans from bankruptcy write downs. It's a guaranteed money spinner for the finance industry, a corrupt, deeply criminal system run for the finance industry and against students and the nation as a whole.

Second, the minimum wage 'debate' is past debating. There is no doubt that increasing the minimum wage would dramatically boost the national productivity and well being. Ralph Nader points out that Obama could institute such a move for federal employees and contractors without batting an eyelid simply by an executive order.

http://www.counterpunch.org/2013/06/27/raising-the-minimum-wage-by-executive-order/

Also, from the post war period right up till 1975 wage increases for ordinary workers tracked US national productivity increases. Bureau of Labor Statistics figures show that from 1975 till the present productivity increased by a massive 154% while US wages increased by a measly 13% in real terms. Workers are now working twice as hard for the same or even less pay than they were earning in 1975. So there is no question that the middle and working classes have been totally ripped off by employers and the wealthy.

http://www.epi.org/publication/ib330-productivity-vs-compensation

The current public debate on wage increases has focused on the benefits to the economy and the over-rated impact on employer costs. These arguments fail to address the economic elephant in the room -- that workers have been systematically robbed for a generation of wage increases to which they are fully entitled.

The system of student loans will also fail eventually but not before it trashes many lives.
 
The doubling of the interest rate is only for new student loans, not existing student loans. So since it won't affect you, you can choose to happily skip away and not worry about it. That is the american way and why the banks always win.

By the way, my best blog ever is now up. Debt Suspension Rights
 
The total outstanding student debt exceeds $1 trillion, but the part in default is not a majority of that total.

Still a very high number, and steeply increasing, as a national tragedy that will overhang a generation.

All prior foundational principles of the American dream have crumbled, as our economy shrivels, sputters, and fades. The higher education path to prosperity is now a racket.

XI
 
Student loan default is over $1T! I wonder how much the debt itself is worth! Most of the population nowadays are got into debt at the earliest age they can lawfully borrow, and it's debt that most of them will probably never get out of.

This feature of the present, which is so seldom commented on or understood, is a major indicator of the future that the rulers want.

In Britain, half the chattering classes became experts on the macroeconomics of lending to 'subprimes', aka 'chavs', 'pikies', 'council trash', or 'proles'. That's if being led by the nose by the television and newspapers made them experts. And on 'bankers' bonuses' too. As if anything other than a tiny part of the profit that's made from debt gets paid in fucking bonuses! As Edward Bernays said, it's all about stockphrases.

I'm told part of the US racist right wing uses the term 'subprime' to denote the black poor. There's nothing like a 'technical' term, re-regurgitated out, for putting people down! Isn't that what much of 'politics' is all about? The racist scumbags would be more honest if they said 'niggers'.

As for the 'credit crunch'! I thought too much debt was the fucking problem, not how 'hard' it has supposedly become to borrow! And as for banks lending less to each other, well so fucking what? Ask who does what to whom? But then I'm a socialist, so I ask the social question.

Debt atomises. Finance capital is united. We are weak and divided. Pannekoek said we're divided because we're weak, rather than the other way round, but the observation doesn't get us very far.

In Britain, you just have to go to any supermarket or walk down any High Street and you'll pass dozens and dozens of crude adverts aimed at less well-educated people, pushing loans and insurance scams. But since this isn't mentioned in the newspapers, there's little collective notice of it. 'Subprime' has already become passé at dinner parties. Enormous profits are made out of 'direct debit' scams too.

The next big 'event' will dwarf the shit out of Lehmans 2008.
 
Student loan default is over $1T! I wonder how much the debt itself is worth!

B: No, the TOTAL (of all student loan debt) is over $1 trillion. Not the amount in default.

A search finds numbers at about 11% default (of that total, up from about 8% a couple of years back), or, if counting additional student loans in allowed deferment/abeyance, and thus also not performing (being paid), to reach to a 30% range.

XI
 
XI, I corrected the story early this morning. How on earth did you contrive to read the original version with the typos (which really is all it was)?
 
Joseph;

I don't thank you enough for your hard work. I really admire your efforts to cudgel the truth out of exigent circumstances.

Just thought i would give credit where credit is due.

Ben
 
It was ever thus. Debt as social control. Usury is a sin when practiced on your own people. You are meant to rebel but you are too ignorant. The brazilians show you the way. But the time is not ripe. When things change they will change for the worse.

Long live the british Pikey. Down with the billionaireclass.

Harry
 
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