How college loans exploit students for profit | Sajay Samuel | TEDxPSU
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0:01 - 0:06Today 14 million Americans are indebted
for their passage to the new economy. -
0:08 - 0:10Too poor to pay their way through college,
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0:10 - 0:15they now owe lenders
more than one trillion US dollars. -
0:16 - 0:18They do find what jobs they can get
-
0:18 - 0:20to pay off a debt
that is secured on their person. -
0:21 - 0:23In America,
-
0:23 - 0:29even a bankrupt gambler
gets a second chance. -
0:30 - 0:33But it is nearly impossible
-
0:33 - 0:37for an American to get discharged
their student loan debts. -
0:40 - 0:43Once upon a time, in America,
-
0:43 - 0:46going to college did not mean
graduating with debt. -
0:47 - 0:53My friend Paul's father
graduated from Colorado State University -
0:53 - 0:54on the GI Bill.
-
0:56 - 0:57For his generation,
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0:57 - 1:00higher education was free or almost free,
-
1:00 - 1:02because it was thought of
as a public good. -
1:04 - 1:05Not anymore.
-
1:06 - 1:10When Paul also graduated
from Colorado State University, -
1:10 - 1:14he paid for his English degree
by working part-time. -
1:14 - 1:1530 years ago,
-
1:15 - 1:18higher education tuition
was affordable, reasonable, -
1:18 - 1:21and what debts you accumulated,
you paid off by graduation date. -
1:22 - 1:23Not anymore.
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1:24 - 1:27Paul's daughter followed in his footsteps,
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1:27 - 1:29but with one difference:
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1:29 - 1:31when she graduated five years ago,
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1:31 - 1:32it was with a whopping debt.
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1:33 - 1:37Students like Kate have to take on a loan
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1:37 - 1:40because the cost of higher education
has become unaffordable -
1:40 - 1:43for many if not most American families.
-
1:44 - 1:46But so what?
-
1:46 - 1:49Getting into debt to buy
an expensive education -
1:49 - 1:51is not all bad if you could pay it off
-
1:51 - 1:55with the increased income
that you earned from it. -
1:55 - 1:57But that's where the rubber
meets the road. -
2:00 - 2:05Even a college grad
earned 10 percent more in 2001 -
2:05 - 2:07than she did in 2013.
-
2:08 - 2:09So ...
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2:10 - 2:11tuition costs up,
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2:11 - 2:13public funding down,
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2:13 - 2:15family incomes diminished,
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2:15 - 2:18personal incomes weak.
-
2:18 - 2:23Is it any wonder that more
than a quarter of those who must -
2:23 - 2:25cannot make their student loan payments?
-
2:27 - 2:30The worst of times
can be the best of times, -
2:30 - 2:34because certain truths flash up
in ways that you can't ignore. -
2:34 - 2:36I want to speak of three of them today.
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2:38 - 2:411.2 trillion dollars of debts for diplomas
-
2:41 - 2:44make it abundantly obvious
-
2:44 - 2:48that higher education
is a consumer product you can buy. -
2:48 - 2:53All of us talk about education
just as the economists do now, -
2:53 - 2:58as an investment that you make
to improve the human stock -
2:58 - 2:59by training them for work.
-
3:00 - 3:05As an investment you make
to sort and classify people -
3:05 - 3:07so that employers
can hire them more easily. -
3:08 - 3:12The U.S. News & World Report
ranks colleges -
3:12 - 3:15just as the consumer report
rates washing machines. -
3:15 - 3:19The language is peppered with barbarisms.
-
3:19 - 3:22Teachers are called "service providers,"
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3:22 - 3:24students are called "consumers."
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3:26 - 3:29Sociology and Shakespeare
and soccer and science, -
3:29 - 3:31all of these are "content."
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3:33 - 3:35Student debt is profitable.
-
3:35 - 3:36Only not on you.
-
3:38 - 3:42Your debt fattens the profit
of the student-loan industry. -
3:42 - 3:44The two 800-pound gorillas of which --
-
3:45 - 3:47Sallie Mae and Navient --
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3:47 - 3:52posted last year a combined profit
of 1.2 billion dollars. -
3:53 - 3:55And just like home mortgages,
-
3:55 - 3:58student loans can be bundled
and packaged and sliced and diced, -
3:58 - 4:00and sold on Wall Street.
-
4:00 - 4:02And colleges and universities
-
4:02 - 4:05that invest in these securitized loans ...
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4:06 - 4:07profit twice.
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4:08 - 4:09Once from your tuition,
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4:09 - 4:12and then again from the interest on debt.
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4:13 - 4:15With all that money to be made,
-
4:15 - 4:21are we surprised that some
in the higher education business -
4:21 - 4:23have begun to engage in false advertising,
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4:23 - 4:24in bait and switch ...
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4:27 - 4:31In exploiting the very ignorance
that they pretend to educate? -
4:32 - 4:33Third:
-
4:34 - 4:35diplomas are a brand.
-
4:36 - 4:38Many years ago my teacher wrote,
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4:38 - 4:41"When students are treated as consumers,
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4:41 - 4:44they're made prisoners
of addiction and envy." -
4:48 - 4:52Just as consumers can be sold and resold
upgraded versions of an iPhone, -
4:52 - 4:55so also people can be sold
more and more education. -
4:57 - 4:59College is the new high school,
-
4:59 - 5:00we already say that.
-
5:01 - 5:03But why stop there?
-
5:03 - 5:06People can be upsold
on certifications and recertifications, -
5:06 - 5:09master's degrees, doctoral degrees.
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5:11 - 5:15Higher education is also marketed
as a status object. -
5:17 - 5:18Buy a degree,
-
5:18 - 5:21much like you do a Lexus
of a Louis Vuitton bag, -
5:21 - 5:23to distinguish yourself from others.
-
5:23 - 5:25So you can be the object
of envy of others. -
5:27 - 5:28Diplomas are a brand.
-
5:29 - 5:36But these truths are often times
hidden by a very noisy sales pitch. -
5:37 - 5:38There is not a day that goes by
-
5:38 - 5:43without some policy guy
on television telling us, -
5:43 - 5:45"A college degree is absolutely essential
-
5:45 - 5:48to get on that up escalator
to a middle-class life." -
5:49 - 5:53And the usual evidence offered
is the college premium: -
5:53 - 5:58a college grad who makes on average
56 percent more than a high school grad. -
5:58 - 6:00Let's look at that number more carefully,
-
6:00 - 6:02because on the face of it,
-
6:02 - 6:05it seems to belie the stories we all hear
-
6:05 - 6:10about college grads
working as baristas and cashiers. -
6:11 - 6:16Of 100 people who enroll
in any form of post-secondary education, -
6:16 - 6:1945 do not complete it in a timely fashion,
-
6:19 - 6:22for a number of reasons,
including financial. -
6:22 - 6:24Of the 55 that do graduate,
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6:24 - 6:26two will remain unemployed
-
6:26 - 6:29and another 18 are underemployed.
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6:30 - 6:34So, college grads earn more
than high school grads, -
6:34 - 6:37but does it pay for the exorbitant tuition
-
6:37 - 6:39and the lost wages while at college?
-
6:40 - 6:42Now even economists admit
-
6:42 - 6:48going to college pays off
for only those who complete it. -
6:48 - 6:52But that's only because high school wages
have been cut to the bone, -
6:52 - 6:54for decades now.
-
6:55 - 6:57For decades,
-
6:57 - 7:00workers with a high school degree
-
7:00 - 7:04have been denied a fair share
of what they have produced. -
7:04 - 7:07And had they received as they should have,
-
7:07 - 7:11then going to college would have been
a bad investment for many. -
7:11 - 7:14College premium?
-
7:14 - 7:16I think it's a high school discount.
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7:17 - 7:21Two out of three people who enroll
are not going to find an adequate job. -
7:22 - 7:25And the future, for them,
doesn't look particularly promising -- -
7:25 - 7:27in fact, [it's] downright bleak.
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7:27 - 7:29And it is they who are going to suffer
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7:31 - 7:33the most punishing forms of student debt.
-
7:34 - 7:35And it is they,
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7:35 - 7:37curiously and sadly,
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7:37 - 7:40who are marketed most loudly
about this college premium thing. -
7:42 - 7:44That's not just cynical marketing,
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7:44 - 7:46that's cruel.
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7:47 - 7:48So what do we do?
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7:49 - 7:55What if students and parents treated
higher education as a consumer product? -
7:56 - 7:58Everybody else seems to.
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7:59 - 8:01Then, like any other consumer product,
-
8:01 - 8:03you would demand to know
what you're paying for. -
8:03 - 8:05When you buy medicines,
-
8:05 - 8:07you get a list of side effects.
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8:07 - 8:09When you buy a higher educational product,
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8:09 - 8:10you should have a warning label
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8:10 - 8:13that allows consumers to choose,
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8:13 - 8:14make informed choices.
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8:15 - 8:16When you buy a car,
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8:16 - 8:19it tells you how many
miles per gallon to expect. -
8:19 - 8:21Who knows what to expect
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8:21 - 8:24from a degree say, in Canadian Studies.
-
8:25 - 8:26There is such a thing, by the way.
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8:29 - 8:31What if there was an app for that?
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8:34 - 8:39One that linked up the cost of a major
to the expected income. -
8:40 - 8:43Let's call it Income-Based Tuition or IBT.
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8:43 - 8:44One of you make this.
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8:44 - 8:46(Laughter)
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8:46 - 8:47Discover your reality.
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8:47 - 8:50(Laughter)
-
8:50 - 8:51There are three advantages,
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8:51 - 8:54three benefits to Income-Based Tuition.
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8:55 - 8:57Any user can figure out
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8:57 - 9:00how much money he or she will make
from a given college and major. -
9:01 - 9:02Such informed users
-
9:02 - 9:06are unlikely to fall victim
to the huckster's ploy, -
9:06 - 9:08to the sales pitch.
-
9:08 - 9:10But also to choose wisely.
-
9:10 - 9:12Why would anybody pay more for college
-
9:12 - 9:15than let's say, 15 percent
of the additional income they earn? -
9:17 - 9:20There's a second benefit
to Income-Based Tuition. -
9:20 - 9:23By tying the cost to the income,
-
9:23 - 9:27college administrators would be forced
to manage costs better, -
9:27 - 9:30to find innovative ways to do so.
-
9:30 - 9:31For instance,
-
9:31 - 9:35all of you students here pay roughly
the same tuition for every major. -
9:35 - 9:40That is manifestly unfair,
and should change. -
9:40 - 9:44An engineering student uses more resources
-
9:44 - 9:47and facilities and labs and faculty
-
9:47 - 9:48than a philosophy student.
-
9:50 - 9:52But the philosophy student,
as a consequence, -
9:52 - 9:54is subsidizing the engineering student.
-
9:54 - 9:57Who then, by the way,
goes on and earns more money. -
9:57 - 10:01Why should two people
buy the same product, -
10:01 - 10:02pay the same,
-
10:02 - 10:05but one person receive
half or a third of the service. -
10:06 - 10:11In fact, college grads, some majors,
-
10:11 - 10:14pay 25 percent of their income
servicing their student debt, -
10:14 - 10:16while others pay five percent.
-
10:18 - 10:22That kind if inequity would end
when majors are priced more correctly. -
10:23 - 10:25Now of course, all this data --
-
10:25 - 10:27and one of you is going to do this, right?
-
10:27 - 10:29All this data has to be well designed,
-
10:29 - 10:31maybe audited by public accounting firms
-
10:31 - 10:33to avoid statistical lies.
-
10:33 - 10:35We know about statistics, right?
-
10:37 - 10:38But be that as it may,
-
10:38 - 10:42the third and biggest benefit
of Income-Based Tuition, -
10:42 - 10:48is it would free Americans from the fear
and the fact of financial ruin -
10:48 - 10:50because they bought a defective product.
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10:51 - 10:53Perhaps, in time,
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10:53 - 10:55young and old Americans may rediscover,
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10:55 - 10:58as the gentleman said earlier,
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10:58 - 11:00their curiosity, their love of learning.
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11:00 - 11:01Begin to study what they love,
-
11:01 - 11:02love what they study,
-
11:02 - 11:04follow their passion ...
-
11:05 - 11:07getting stimulated by their intelligence,
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11:07 - 11:11follow paths of inquiry
that they really want to. -
11:11 - 11:15After all, it was Eric and Kevin,
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11:15 - 11:16two years ago,
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11:17 - 11:21just exactly these kinds of young men,
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11:21 - 11:23who prompted me and worked with me,
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11:23 - 11:25and still do,
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11:25 - 11:28in the study of indebted
students in America. -
11:29 - 11:31Thank you for your attention.
-
11:31 - 11:35(Applause)
- Title:
- How college loans exploit students for profit | Sajay Samuel | TEDxPSU
- Description:
-
With college incomes dropping, millions in America carry the burden of unpayable student debts. Only university administrators can effectively control this untenable situation. In this talk, Professor Samuel suggests that college tuition should be linked to the expected income earned from a major. Prospective students need this information to make informed decisions. Income based tuition will also make the humanities as economically attractive as technical fields of study.
Sajay Samuel has taught Management Accounting and related subjects to undergraduates, MBA's and Executives over assignments that included stints at Bucknell University and the University of Connecticut. His research published in scholarly journals aims at clarifying some of the foundational assumptions of management thought and practice. Parallel to these researches on management and accounting he also studies political philosophy and history. He has presented the early fruits of this work in France, Italy, Germany and England. Professor Samuel is working on the political significance of administrative agencies (e.g, SEC) and professional associations (e.g, Accounting Profession) in liberal democratic polities.
This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDxTalks
- Duration:
- 12:37
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
Ivana Korom edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU |