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  • Today 40 million Americans are indebted for their passage to the new economy.

  • Too poor to pay their way through college,

  • they now owe lenders more than one trillion US dollars.

  • They do find what jobs they can get

  • to pay off a debt that is secured on their person.

  • In America,

  • even a bankrupt gambler gets a second chance.

  • But it is nearly impossible

  • for an American to get discharged their student loan debts.

  • Once upon a time in America,

  • going to college did not mean graduating with debt.

  • My friend Paul's father graduated from Colorado State University

  • on the GI Bill.

  • For his generation,

  • higher education was free or almost free,

  • because it was thought of as a public good.

  • Not anymore.

  • When Paul also graduated from Colorado State University,

  • he paid for his English degree by working part-time.

  • 30 years ago,

  • higher education tuition was affordable, reasonable,

  • and what debts you accumulated, you paid off by graduation date.

  • Not anymore.

  • Paul's daughter followed in his footsteps,

  • but with one difference:

  • when she graduated five years ago,

  • it was with a whopping debt.

  • Students like Kate have to take on a loan

  • because the cost of higher education has become unaffordable

  • for many if not most American families.

  • But so what?

  • Getting into debt to buy an expensive education

  • is not all bad if you could pay it off

  • with the increased income that you earned from it.

  • But that's where the rubber meets the road.

  • Even a college grad earned 10 percent more in 2001

  • than she did in 2013.

  • So ...

  • tuition costs up,

  • public funding down,

  • family incomes diminished,

  • personal incomes weak.

  • Is it any wonder that more than a quarter of those who must

  • cannot make their student loan payments?

  • The worst of times can be the best of times,

  • because certain truths flash up in ways that you can't ignore.

  • I want to speak of three of them today.

  • 1.2 trillion dollars of debts for diplomas

  • make it abundantly obvious

  • that higher education is a consumer product you can buy.

  • All of us talk about education just as the economists do now,

  • as an investment that you make to improve the human stock

  • by training them for work.

  • As an investment you make to sort and classify people

  • so that employers can hire them more easily.

  • The U.S. News & World Report ranks colleges

  • just as the consumer report rates washing machines.

  • The language is peppered with barbarisms.

  • Teachers are called "service providers,"

  • students are called "consumers."

  • Sociology and Shakespeare and soccer and science,

  • all of these are "content."

  • Student debt is profitable.

  • Only not on you.

  • Your debt fattens the profit of the student loan industry.

  • The two 800-pound gorillas of which --

  • Sallie Mae and Navient --

  • posted last year a combined profit of 1.2 billion dollars.

  • And just like home mortgages,

  • student loans can be bundled and packaged and sliced and diced,

  • and sold on Wall Street.

  • And colleges and universities

  • that invest in these securitized loans

  • profit twice.

  • Once from your tuition,

  • and then again from the interest on debt.

  • With all that money to be made,

  • are we surprised that some in the higher education business

  • have begun to engage in false advertising,

  • in bait and switch ...

  • in exploiting the very ignorance that they pretend to educate?

  • Third:

  • diplomas are a brand.

  • Many years ago my teacher wrote,

  • "When students are treated as consumers,

  • they're made prisoners of addiction and envy."

  • Just as consumers can be sold and resold upgraded versions of an iPhone,

  • so also people can be sold more and more education.

  • College is the new high school,

  • we already say that.

  • But why stop there?

  • People can be upsold on certifications and recertifications,

  • master's degrees, doctoral degrees.

  • Higher education is also marketed as a status object.

  • Buy a degree,

  • much like you do a Lexus of a Louis Vuitton bag,

  • to distinguish yourself from others.

  • So you can be the object of envy of others.

  • Diplomas are a brand.

  • But these truths are often times hidden by a very noisy sales pitch.

  • There is not a day that goes by

  • without some policy guy on television telling us,

  • "A college degree is absolutely essential

  • to get on that up escalator to a middle-class life."

  • And the usual evidence offered is the college premium:

  • a college grad who makes on average 56 percent more than a high school grad.

  • Let's look at that number more carefully,

  • because on the face of it,

  • it seems to belie the stories we all hear

  • about college grads working as baristas and cashiers.

  • Of 100 people who enroll in any form of post-secondary education,

  • 45 do not complete it in a timely fashion,

  • for a number of reasons, including financial.

  • Of the 55 that do graduate,

  • two will remain unemployed,

  • and another 18 are underemployed.

  • So, college grads earn more than high school grads,

  • but does it pay for the exorbitant tuition

  • and the lost wages while at college?

  • Now even economists admit

  • going to college pays off for only those who complete it.

  • But that's only because high school wages have been cut to the bone,

  • for decades now.

  • For decades,

  • workers with a high school degree

  • have been denied a fair share of what they have produced.

  • And had they received as they should have,

  • then going to college would have been a bad investment for many.

  • College premium?

  • I think it's a high school discount.

  • Two out of three people who enroll are not going to find an adequate job.

  • And the future, for them, doesn't look particularly promising --

  • in fact, it's downright bleak.

  • And it is they who are going to suffer

  • the most punishing forms of student debt.

  • And it is they,

  • curiously and sadly,

  • who are marketed most loudly about this college premium thing.

  • That's not just cynical marketing,

  • that's cruel.

  • So what do we do?

  • What if students and parents treated higher education as a consumer product?

  • Everybody else seems to.

  • Then, like any other consumer product,

  • you would demand to know what you're paying for.

  • When you buy medicines,

  • you get a list of side effects.

  • When you buy a higher educational product,

  • you should have a warning label

  • that allows consumers to choose,

  • make informed choices.

  • When you buy a car,

  • it tells you how many miles per gallon to expect.

  • Who knows what to expect

  • from a degree say, in Canadian Studies.

  • There is such a thing, by the way.

  • What if there was an app for that?

  • One that linked up the cost of a major to the expected income.

  • Let's call it Income-Based Tuition or IBT.

  • One of you make this.

  • (Laughter)

  • Discover your reality.

  • (Laughter)

  • There are three advantages,

  • three benefits to Income-Based Tuition.

  • Any user can figure out

  • how much money he or she will make from a given college and major.

  • Such informed users

  • are unlikely to fall victim to the huckster's ploy,

  • to the sales pitch.

  • But also to choose wisely.

  • Why would anybody pay more for college

  • than let's say, 15 percent of the additional income they earn?

  • There's a second benefit to Income-Based Tuition.

  • By tying the cost to the income,

  • college administrators would be forced to manage costs better,

  • to find innovative ways to do so.

  • For instance,

  • all of you students here pay roughly the same tuition for every major.

  • That is manifestly unfair, and should change.

  • An engineering student uses more resources

  • and facilities and labs and faculty

  • than a philosophy student.

  • But the philosophy student, as a consequence,

  • is subsidizing the engineering student.

  • Who then, by the way, goes on and earns more money.

  • Why should two people buy the same product,

  • pay the same,

  • but one person receive half or a third of the service.

  • In fact, college grads, some majors,

  • pay 25 percent of their income servicing their student debt,

  • while others pay five percent.

  • That kind if inequity would end when majors are priced more correctly.

  • Now of course, all this data --

  • and one of you is going to do this, right?

  • All this data has to be well designed,

  • maybe audited by public accounting firms

  • to avoid statistical lies.

  • We know about statistics, right?

  • But be that as it may,

  • the third and biggest benefit of Income-Based Tuition,

  • is it would free Americans from the fear and the fact of financial ruin

  • because they bought a defective product.

  • Perhaps, in time,

  • young and old Americans may rediscover,

  • as the gentleman said earlier,

  • their curiosity, their love of learning --

  • begin to study what they love,

  • love what they study,

  • follow their passion ...

  • getting stimulated by their intelligence,

  • follow paths of inquiry that they really want to.

  • After all, it was Eric and Kevin,

  • two years ago,

  • just exactly these kinds of young men,

  • who prompted me and worked with me,

  • and still do,

  • in the study of indebted students in America.

  • Thank you for your attention.

  • (Applause)

Today 40 million Americans are indebted for their passage to the new economy.

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B1 US TED college tuition higher education student education

【TED】Sajay Samuel: How college loans exploit students for profit (How college loans exploit students for profit | Sajay Samuel)

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    Zenn posted on 2017/06/16
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