How college loans exploit students for profit | Sajay Samuel | TEDxPSU
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0:17 - 0:19Four hundred years ago,
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0:19 - 0:23thousands seeking a better life
in the new world -
0:23 - 0:26came as [unclear] servants.
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0:28 - 0:31Too poor to pay the passage,
they got into debt -
0:32 - 0:37and in exchange for working
up to 7 years in bonded labor. -
0:38 - 0:44Today 14 million Americans are indebted
for their passage to the new economy. -
0:46 - 0:48Too poor to pay their way through college,
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0:48 - 0:52they now owe lenders
more than one trillion US dollars. -
0:53 - 0:55They do find what jobs they can get
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0:55 - 0:58to pay off a debt
that is secured on their person. -
1:00 - 1:02In America,
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1:02 - 1:08even a bankrupt gambler
gets a second chance. -
1:10 - 1:12But it is nearly impossible
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1:12 - 1:16for an American to get discharged
their student loan debts. -
1:20 - 1:22Once upon a time, in America,
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1:22 - 1:25going to college did not mean
graduating with debt. -
1:27 - 1:32My friend Paul's father
graduated from Colorado State University -
1:32 - 1:33on the GI Bill.
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1:35 - 1:36For his generation,
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1:36 - 1:39higher education was free or almost free,
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1:39 - 1:42because it was thought of
as a public good. -
1:43 - 1:44Not anymore.
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1:47 - 1:51When Paul also graduated
from Colorado State University, -
1:51 - 1:55he paid for his English degree
by working part-time. -
1:56 - 1:5730 years ago,
-
1:57 - 2:00higher education tuition
was affordable, reasonable, -
2:00 - 2:03and what debts you accumulated,
you paid off by graduation date. -
2:04 - 2:05Not anymore.
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2:07 - 2:10Paul's daughter followed in his footsteps,
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2:10 - 2:12but with one difference:
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2:12 - 2:14when she graduated five years ago,
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2:14 - 2:16it was with a whopping debt.
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2:16 - 2:20Students like Kate have to take on a loan
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2:20 - 2:23because the cost of higher education
has become unaffordable -
2:23 - 2:27for many if not most American families.
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2:28 - 2:30But so what?
-
2:31 - 2:33Getting into debt to buy
an expensive education -
2:33 - 2:36is not all bad if you could pay it off
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2:36 - 2:39with the increased income
that you earned from it. -
2:40 - 2:42But that's where the rubber
meets the road. -
2:44 - 2:50Even a college grad
earned 10 percent more in 2001 -
2:50 - 2:52than she did in 2013.
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2:54 - 2:55So ...
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2:56 - 2:57tuition costs up,
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2:57 - 2:59public funding down,
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2:59 - 3:01family incomes diminished,
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3:01 - 3:04personal incomes weak.
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3:04 - 3:08Is it any wonder that more
than a quarter of those who must -
3:08 - 3:10cannot make their student loan payments?
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3:13 - 3:16The worst of times
can be the best of times, -
3:16 - 3:20because certain truths flash up
in ways that you can't ignore. -
3:20 - 3:22I want to speak of three of them today.
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3:25 - 3:291.2 trillion dollars of debts for diplomas
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3:29 - 3:31make it abundantly obvious
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3:31 - 3:35that higher education
is a consumer product you can buy. -
3:36 - 3:41All of us talk about education
just as the economists do now, -
3:41 - 3:45as an investment that you make
to improve the human stock -
3:45 - 3:47by training them for work.
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3:47 - 3:52As an investment you make
to sort and classify people -
3:52 - 3:55so that employers
can hire them more easily. -
3:56 - 3:59The U.S. News & World Report
ranks colleges -
3:59 - 4:03just as the consumer report
rates washing machines. -
4:03 - 4:06The language is peppered with barbarisms.
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4:06 - 4:10Teachers are called "service providers,"
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4:10 - 4:12students are called "consumers."
-
4:13 - 4:17Sociology and Shakespeare
and soccer and science, -
4:17 - 4:19all of these are "content."
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4:21 - 4:22Student debt is profitable.
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4:22 - 4:23Only not on you.
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4:25 - 4:29Your debt fattens the profit
of the student-loan industry. -
4:30 - 4:32The two 800-pound gorillas of which --
-
4:32 - 4:34Sallie Mae and Navient --
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4:34 - 4:39posted last year a combined profit
of 1.2 billion dollars. -
4:40 - 4:43And just like home mortgages,
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4:43 - 4:46student loans can be bundled
and packaged and sliced and diced, -
4:46 - 4:47and sold on Wall Street.
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4:48 - 4:49And colleges and universities
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4:49 - 4:53that invest in these securitized loans ...
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4:54 - 4:55profit twice.
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4:55 - 4:57Once from your tuition,
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4:57 - 4:59and then again from the interest on debt.
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5:01 - 5:03With all that money to be made,
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5:03 - 5:09are we surprised that some
in the higher education business -
5:09 - 5:11have begun to engage in false advertising,
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5:11 - 5:12in bait and switch ...
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5:14 - 5:18In exploiting the very ignorance
that they pretend to educate? -
5:20 - 5:21Third:
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5:21 - 5:23diplomas are a brand.
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5:23 - 5:26Many years ago my teacher wrote,
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5:26 - 5:28"When students are treated as consumers,
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5:28 - 5:31they're made prisoners
of addiction and envy." -
5:35 - 5:40Just as consumers can be sold and resold
upgraded versions of an iPhone, -
5:40 - 5:43so also people can be sold
more and more education. -
5:45 - 5:47College is the new high school,
-
5:47 - 5:48we already say that.
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5:49 - 5:50But why stop there?
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5:50 - 5:54People can be upsold
on certifications and recertifications, -
5:54 - 5:56master's degrees, doctoral degrees.
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5:59 - 6:03Higher education is also marketed
as a status object. -
6:04 - 6:05Buy a degree,
-
6:05 - 6:08much like you do a Lexus
of a Louis Vuitton bag, -
6:09 - 6:10to distinguish yourself from others.
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6:10 - 6:13So you can be the object
of envy of others. -
6:18 - 6:20Diplomas are a brand.
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6:21 - 6:27But these truths are often times
hidden by a very noisy sales pitch. -
6:28 - 6:30There is not a day that goes by
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6:30 - 6:35without some policy guy
on television telling us, -
6:35 - 6:37"A college degree is absolutely essential
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6:37 - 6:40to get on that up escalator
to a middle-class life." -
6:40 - 6:44And the usual evidence offered
is the college premium: -
6:44 - 6:49a college grad who makes on average
56 percent more than a high school grad. -
6:50 - 6:52Let's look at that number more carefully,
-
6:52 - 6:53because on the face of it,
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6:53 - 6:57it seems to belie the stories we all hear
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6:57 - 7:01about college grads
working as baristas and cashiers. -
7:02 - 7:07Of 100 people who enroll
in any form of post-secondary education, -
7:07 - 7:1045 do not complete it in a timely fashion,
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7:10 - 7:13for a number of reasons,
including financial. -
7:14 - 7:16Of the 55 that do graduate,
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7:16 - 7:18two will remain unemployed
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7:18 - 7:21and another 18 are underemployed.
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7:24 - 7:27So, college grads earn more
than high school grads, -
7:27 - 7:30but does it pay for the exorbitant tuition
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7:30 - 7:33and the lost wages while at college?
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7:35 - 7:37Now even economists admit
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7:37 - 7:42going to college pays off
for only those who complete it. -
7:43 - 7:47But that's only because high school wages
have been cut to the bone, -
7:47 - 7:48for decades now.
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7:50 - 7:52For decades,
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7:52 - 7:55workers with a high school degree
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7:55 - 7:59have been denied a fair share
of what they have produced. -
7:59 - 8:02And had they received as they should have,
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8:02 - 8:06then going to college would have been
a bad investment for many. -
8:06 - 8:08College premium?
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8:09 - 8:11I think it's a high school discount.
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8:13 - 8:18Two out of three people who enroll
are not going to find an adequate job. -
8:18 - 8:22And the future, for them,
doesn't look particularly promising -- -
8:22 - 8:23in fact, [it's] downright bleak.
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8:24 - 8:26And it is they who are going to suffer
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8:28 - 8:30the most punishing forms of student debt.
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8:31 - 8:32And it is they,
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8:32 - 8:34curiously and sadly,
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8:34 - 8:37who are marketed most loudly
about this college premium thing. -
8:39 - 8:41That's not just cynical marketing,
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8:41 - 8:43that's cruel.
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8:44 - 8:45So what do we do?
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8:46 - 8:52What if students and parents treated
higher education as a consumer product? -
8:53 - 8:55Everybody else seems to.
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8:56 - 8:58Then, like any other consumer product,
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8:58 - 9:00you would demand to know
what you're paying for. -
9:00 - 9:02When you buy medicines,
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9:02 - 9:04you get a list of side effects.
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9:04 - 9:06When you buy a higher educational product,
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9:06 - 9:07you should have a warning label
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9:07 - 9:10that allows consumers to choose,
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9:10 - 9:11make informed choices.
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9:12 - 9:13When you buy a car,
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9:13 - 9:16it tells you how many
miles per gallon to expect. -
9:16 - 9:18Who knows what to expect
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9:18 - 9:21from a degree say, in Canadian Studies.
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9:22 - 9:23There is such a thing, by the way.
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9:26 - 9:28What if there was an app for that?
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9:31 - 9:36One that linked up the cost of a major
to the expected income. -
9:37 - 9:40Let's call it Income-Based Tuition or IBT.
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9:40 - 9:41One of you make this.
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9:41 - 9:43(Laughter)
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9:43 - 9:44Discover your reality.
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9:44 - 9:47(Laughter)
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9:47 - 9:48There are three advantages,
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9:48 - 9:51three benefits to Income-Based Tuition.
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9:52 - 9:54Any user can figure out
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9:54 - 9:57how much money he or she will make
from a given college and major. -
9:58 - 9:59Such informed users
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9:59 - 10:03are unlikely to fall victim
to the huckster's ploy, -
10:03 - 10:05to the sales pitch.
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10:06 - 10:08But also to choose wisely.
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10:08 - 10:10Why would anybody pay more for college
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10:10 - 10:13than let's say, 15 percent
of the additional income they earn? -
10:16 - 10:19There's a second benefit
to Income-Based Tuition. -
10:19 - 10:22By tying the cost to the income,
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10:22 - 10:26college administrators would be forced
to manage costs better, -
10:26 - 10:28to find innovative ways to do so.
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10:28 - 10:30For instance,
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10:30 - 10:34all of you students here pay roughly
the same tuition for every major. -
10:35 - 10:39That is manifestly unfair,
and should change. -
10:39 - 10:43An engineering student uses more resources
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10:43 - 10:46and facilities and labs and faculty
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10:46 - 10:48than a philosophy student.
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10:49 - 10:51But the philosophy student,
as a consequence, -
10:51 - 10:53is subsidizing the engineering student.
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10:54 - 10:56Who then, by the way,
goes on and earns more money. -
10:56 - 11:00Why should two people
buy the same product, -
11:00 - 11:01pay the same,
-
11:01 - 11:04but one person receive
half or a third of the service. -
11:06 - 11:10In fact, college grads, some majors,
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11:10 - 11:13pay 25 percent of their income
servicing their student debt, -
11:13 - 11:15while others pay five percent.
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11:17 - 11:21That kind if inequity would end
when majors are priced more correctly. -
11:22 - 11:24Now of course, all this data --
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11:24 - 11:26and one of you is going to do this, right?
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11:27 - 11:28All this data has to be well designed,
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11:28 - 11:30maybe audited by public accounting firms
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11:31 - 11:32to avoid statistical lies.
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11:32 - 11:34We know about statistics, right?
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11:36 - 11:37But be that as it may,
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11:37 - 11:42the third and biggest benefit
of Income-Based Tuition, -
11:42 - 11:47is it would free Americans from the fear
and the fact of financial ruin -
11:47 - 11:49because they bought a defective product.
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11:51 - 11:53Perhaps, in time,
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11:53 - 11:56young and old Americans may rediscover,
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11:56 - 11:58as the gentleman said earlier,
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11:58 - 12:00their curiosity, their love of learning.
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12:00 - 12:01Begin to study what they love,
-
12:01 - 12:03love what they study,
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12:03 - 12:04follow their passion ...
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12:05 - 12:07getting stimulated by their intelligence,
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12:07 - 12:11follow paths of inquiry
that they really want to. -
12:11 - 12:15After all, it was Eric and Kevin,
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12:16 - 12:17two years ago,
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12:18 - 12:21just exactly these kinds of young men,
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12:21 - 12:23who prompted me and worked with me,
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12:23 - 12:25and still do,
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12:25 - 12:28in the study of indebted
students in America. -
12:29 - 12:31Thank you for your attention.
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12:31 - 12:36(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 |