by David Benoit
I owe roughly $50,000 in student loan debt. My debt includes graduate school too. Not too bad, huh? My wife owes about the same, but she went to some trendy private art school and got a bachelor’s degree in underwater basket weaving. I think between the two of us, I won in making the least stupid student loan decision. That’s not to say I made the best decisions though. Regardless of right or wrong, or who was better with their debt when we were younger, together we are $100,000 in debt. That’s scary.
The State of Georgia’s current student loan placement amongst other states is 24th in the country. The State’s student populations assume roughly $24,517 in debt with 61% of the population in student loan debt. I assume it’s safe to say that Georgia isn’t doing too badly. However, this data does not include private institutions such as Emory University of Savannah College of Art & Design
How does this all this student debt work? What if we don’t pay? Is student debt the subprime crash of the future? A lot of people say so. I once made a comment, about five years ago, to my financier uncle that the student loan bubble was about to pop. He laughed and said “About to? It already has! We are taking on that debt right now.” The basics are as follows:
Please note that Sallie Mae owns GCA and that Sallie Mae is now double dipping into your debt. They are effectively collecting twice from your ass. I don’t know what to call the double dipping here in Georgia, but where I’m from, it’s called Mafia.
Why do I call it mafia? Aside from the fact that the debtors are taking from you twice, but they also have your lifetime to get their money. There is no statute of limitations on student loan debt. GCA can go after your parents if they consigned, or take from your social security checks – that hollowed institution whose promise is to ensure you won’t die in extreme poverty.
It’s so profitable for every institution involved when a student defaults that changing the system isn’t fully considered. Sallie Mae receives a huge return, guaranteed, with an exceptionally low risk, and the federal government makes a few extra bucks in profit too. All this rhetoric about fixing the student loan system from our politicians, when the truth is, the more broken the system gets, the better it is for the government and its subsidized entities.
Since students who default on their loans are such a gain for all except the student, there is no incentive to moderate or lower tuition for public universities. Why would there be? The Universities are in on it too. Georgia State University raised tuition substantially just because someone wanted a football team one day. I bet there wasn’t even a flinch at the GSU board room table when raising tuition was considered a viable option. And why should there be? The student would get the loan and the University would get paid immediately on the front end. The Universities’ cut is taken care of immediately.
Regardless of the hypothetical, yet plausible, downward spiral a student could enter if the student defaults, the State of Georgia isn’t exactly offering personal economic prosperity. The Republican politicians have promised that their policies will sustain a future where the American Dream is attainable for anyone. However, the numbers show that such a promise simply isn’t true. As of this January 2015, the state unemployment rate is 7.7% and the Atlanta unemployment rate is a staggering 9.4%. For the State of Georgia and the City of Atlanta, we’ve never really risen above the Great Recession. We are technically still in the midst of it.
In a previous article, I wrote about the Gini Coefficient as a determinant of the wealth income divide and the United States placement in regard to income inequality. Now, as a testament to the lack of opportunity in the Atlanta metropolitan area, we are number one in wealth inequality in the United States. A student graduating from a university in Kenya has a greater chance of a middle class life in Nairobi than in Atlanta.
In the end, we do the best we can. For those of us with automatic withdrawal and an account to withdraw from, our student loan payments are made on time and things are static, but if catastrophe were to strike we may become a desperate person grasping for an opportunity to feed our family while the Republican elite of the State of Georgia repeats to us that poverty is our fault and that we are not working hard enough. Perhaps we should request that Nathan Deal chip in a little for our monthly student loan payments.