The Student Loan scam and the decline of opportunity in the West
In Britain, the Brown/Blair era from 1997 on, saw a mass ‘re-branding’ of old polytechnic institutions as Universities in the UK. This brought about a plethora of new non-degrees, or ‘Mickey Mouse’ degrees such as Event Management or Performing Arts, courses which were not before deemed as ‘academia’.
The next step was a progressive lowering of entrance grades to get into university and the ‘dumbing down’ of A-levels, as well as the introduction of new vocational qualifications, such as the GNVQ for non-academic subjects.
The Student Loans Company – is a quasi-governmental institution, effectively a private bank run by the state (the state offered grants to students pre-1997). It creates credit out of nothing just like a regular bank. The poorer the social background of the student, the bigger the loan they are entitled to, and thus the greater the debt.
The propaganda behind this form of financing was that students from any background could have the opportunity to go to university and study a ‘degree’, by simply accessing credit from the SLC. The students were led to believe that, of course when they graduated they would get a job in their field of study and pay off the loan. Minimum mandatory repayments start when the debtor is earning over £15,500 per annum, although this does not affect the addition of interest.
The result of this:
Like the huge amount of credit thrown at people in the sub-prime mortgages of the past decade, the student loan situation is no different – a bubble of un-payable debt waiting to explode; at chronic levels in the UK, and even worse in the US. The propaganda sells students on ‘having the university experience’ at any cost.
Like with the mortgage method of lowering interest rates, and throwing money at unwitting citizens, Labour wanted to make everyone feel they were Middle Class. The method of doing this, as opposed to conventional ‘socialism’ was to persuade the poor to spend money on things they were led to believe they needed, or were socially engineered to want. Just like the Neo-Liberal credit expansion under Thatcher – Consumerism as a way of stimulating an economy which dosent produce anything anymore, and lacks a competitive edge. As a result, in the 80s real industry suffered, outsourcing was rife, with chronic unemployment. The Thatcher era economics was effectively shock therapy for the economy of a nation which had long been in decline. It was in this period that the ‘fake’ economy which we have today was born.
Certainly the parents of many students never had the ‘privileges’ of home ownership and university education, so of course it seemed like societal progress under the new government – just as with the ever increasing house prices of the past decade.
Again, to get the least well off to borrow their way to a ‘middle class’ lifestyle.
But as we know, one cannot borrow one’s way to prosperity, and the consequences for private debt in the UK have been disastrous.
See David Cameron’s words from 2011, regarding the now falling house prices, and his desire for bankrupt citizens to get borrowing again to buy houses, as part of efforts to “unstick” the housing market :
Cameron said: “It’s not just about the economy, it’s also about people’s hopes and dreams.
“You always remember that moment, if you’ve done it, when you get that key and you walk into your first flat, it’s a magic moment.
“It’s a moment I want everyone in this country to have, not just better-off people.
“The dream of home ownership is something that should be achievable for everyone.”
The reality for the average student:
Most students unwittingly graduate with a degree (and debt) into an ever shrinking job market which has little or nothing to offer them. One which only recognises skills & particularly work experience as anything of any worth.
Ever since the the start of the Depression in 2007, opportunity has continued to decline for the majority of graduates, with unskilled work being the only option for many, if anything is available at all.
This links to the total disintegration of any resemblance of meritocracy, which might have existed decades ago in the West, but does not any longer. The intentional de-industrialisation and outsourcing have largely been responsible for this. The result of all this is a future of lost generations of young people in the West.
In order for any economy to be strong, there needs to be skilled as well as unskilled labour, services, and a healthy manufacturing base; not just consumption (consumerism) as means of temporary economic growth.
Meritocracy is perhaps an idealistic notion – a society where those who work hard, study, and make something of themselves are naturally rewarded with greater opportunities and prosperity. This was particularly the case in history, when capitalism was truly free-market, with less monopolised industry, more available natural resources available to more people, less immigration, together with more social and economic freedom in society i.e. the concept of the ‘American Dream’, particularly in pre-WWII America. It was in this era that many of the great companies were born from good ideas and business acumen.
It is impossible to ever have this kind of society again, when young academics are burdened by debt before they even graduate, and when they are graduating into a society which has been impoverished of opportunity. There is now less opportunity for the youth in the West than 50 or even 100 years ago.
In conclusion, just like the suckers of the sub-prime mortgage crisis, the majority of students have been conned into taking on debt for no reward – money for nothing, or at least something which isn’t worth the money paid for it.
In the UK, since the coalition government raised tuition fees by a factor of three, students have for the first time in two generations, taken to the streets over the unfairness of having their futures stolen from them.
Good article. This is indeed the way I see student loan and the college mentality. In the U.S, affirmative actions allow kids from poor area to attend college despite the fact that they have lower grades and aptitude. The catch is that they either have to be really intelligent (which will earn them a full scholarship) or they'll have to borrow loans and work in school to stay afloat. Regardless of the goods and bads, 4-year universities have became a business which reputation comes from branding and unnecessary spending of infrastructures. There's hardly anyway out of this rat race unless one is willing to work hard and smart at the same time.
Thanks, good points!