Tuesday, February 7, 2017

Project Idea

I've decided I would like to put more research into the student loan crisis afflicting millions of American students. I like to think of students as  "Professional Profit Centers" since these giant corporations like Sallie Mae effectively treat us as profit centers for their own well-being.

3 comments:

  1. Sounds like a good place to start. There is no question that privatization and the student debt it has spawned have made students into money sources for the affluent, from those directly involved in finance to those who invest in it to make money on their money (because student debt, like most debt, is then sold to investors). It's turning indebted graduates into subscribers or into renters of money, and you can imagine them like the human batteries that power The Matrix.
    https://www.youtube.com/watch?v=IojqOMWTgv8

    That may have been the metaphor that the Wachowskis were going for, and it is a useful image for helping us understand how what Stiglitz calls "rent-seeking" behavior works in the economy -- not trickling down nearly as much as it sucks up from those below. He gives an accessible explanation of rent-seeking here:
    http://www.vanityfair.com/news/2012/05/joseph-stiglitz-the-price-on-inequality

    But you might eventually read a more academic source (or one of his more academic writings).

    Students and recent graduates with debt are essentially professional rent-payers and, as you say, profit centers to the banks who service their debt and to those with money to invest in that debt. More of their money goes up the food chain than comes down it, especially if you include their use of credit card debt and apartment rents and leased vehicles (since students and grads with debt generally cannot afford to live a middle-class lifestyle except by credit).

    The readings in the class will be directly relevant to your project, as you likely are finding with the analytic essay. It would be good to focus on who is profiting from student debt. Ironically, it is often the parents of the more affluent kids on the party pathway or those well-supported kids on the professional pathway, who out-compete with their less affluent peers in part because of how those peers have to kick up money to those rich kids' parents....

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  2. Based on what you have written, it sounds like you see students in debt as preyed upon, as exploited -- treated only as a source of profit and not as human beings. If that's the case, I think you'd do well to try to understand the predator rather than focusing on the prey. Who is benefiting from students in debt? What motivates them? What tactics do they use? And do they ever think about the people they are exploiting?

    In this regard, the example of Josh Pruyn (from Walden on Wheels) is interesting, especially in the way he makes us recognize that exploitation is increasingly normalized in our economy. You might also consider the private, for-profit colleges, as they are the ultimate example of colleges exploiting students for profit (if that topic interests you, a good place to start is a classic Frontline documentary titled College, Inc., which you can watch online for free here: http://www.pbs.org/wgbh/pages/frontline/collegeinc/
    You can also find some interesting articles on for-profit colleges among our Supplemental Readings under Resources on our Sakai site.

    You could always discuss Trump University...
    http://www.newyorker.com/news/john-cassidy/trump-university-its-worse-than-you-think

    But the real exploitation of students happens by the banks -- and, less directly (and in a way that insulates them from feeling like they are exploiting anyone), by the investors who buy up the loans and invest in debt, in rent-seeking fashion. Collinge talks about this some, but you could go deeper.

    I'm not sure what to recommend, though a few titles spring to mind. But, ultimately, you are going to have to find your own direction that speaks to your specific questions. One book you might look at, though, is Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer by Dean Baker. But that would just be a starting point.

    No one has really done this topic, but you might look at these student blogs for ideas and possible sources:
    http://mafzane.blogspot.com/
    http://ryandusseau.blogspot.com/
    http://studentloanbubble1.blogspot.com/

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  3. An interesting article in today's NY Times gives you some sense of how hedge funds (and the elite business people who run them) are trying to make investment plays in the college loans market:
    https://www.nytimes.com/2017/02/09/business/dealbook/investing-in-the-pain-of-student-debt-is-a-tough-but-tempting-play.html

    Many of these plays could end up moving the student loan market into "big short" territory and bring on a crisis which will be lucrative for some, but costly for the rest of us.

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