Today's Scary Debt Chart

Via Henry Blodget:

The world's governments are borrowing $5 TRillion this year. $3 TRillion will be borrowed by the US.
Where will the money come from? And how will we pay it back?

Where the money comes from gets into a weird existential question about the nature of money. Basically sovereign governments print more money. This causes the value of the money to go down = inflation.
Inflation is one basic way we will "pay" the debt back. A second way is for future taxpayers to pay more taxes to service the debt and the interest. In this sense we are borrowing from ourselves and future generations. If households and companies buy more Treasury bonds, this is a way for these private entities to lend more money to the government, but it also means that these entities are spending and investing less in other things, which keeps a lid on economic growth.

Save Our Jobs, Plead Student Loan Companies

Sallie Mae and 31 other student lenders and allied groups have come up with a counterproposal to the switch to direct lending. Surprisingly, they are agreeing to the elimination of all subsidies for making the loans--this means they are agreeing that the business of actually lending money to students themselves is too risky or otherwise undesirable for private sector lenders. Instead, they want to collect fees to service the loans for which the federal government will provide the capital. Not so incidentally, their plan "...would preserve 35,000 jobs that are supported by the current system."

As student-aid expert Sandy Baum told me today, "At this point in time it seems pretty clear that private sources are not actually funding these loans, so it doesn't make sense to pay them to fund the loans.
We should do whatever is most efficient, saves money, and works for students." Whether that means a single, government-administered and serviced program or a complicated nationwide network of public and private entities using additional taxpayer money to produce the image of "competition"...well, you can ask the health care reformers.

Local NYC Debt Help!

Heard about this from a new acquaintance on the 4th of July. She writes:

"The CLARO clinic. Every Thursday from 2:30-4:30 and 6-8 PM (Kings County Civil Ct, 141 Livingston St rm 403), volunteer attorneys assist those in need of consumer debt legal assistance by filling out the proper court documents etc. It's run by Sidney Cherubin, the supervising attorney of the Brooklyn Bar Association's Volunteer Lawyer's Project"

Is the Bachelor's Degree Obsolete?

Wick Sloane is a business guy who got obsessed with fixing our education system. He actually volunteered for the front lines, taking a job teaching at Bunker Hill Community College. If you go here you can read his entertaining column and download his enlightening and provocative pamphlet on the future of higher education, modeled after Tom Paine's Common Sense.

In other news, some private student loan borrowers who got ripped off by a flight school are suing. Alan Collinge has collected a million stories like these. Vocational schools (beauty school, truck driving school, culinary school) + private student loans = trouble.

"You'll Never Be A Lawyer," Says Sallie Mae (Mwah ah ah)

This guy has absolutely no luck, and his case is sure to cause a deserved outcry.

Robert Bowman grew up in foster care, worked his way through community college, college and law school, and survived two accidents, on an ATV and a Jet Ski, the former of which nearly cost him a leg. Along the way he took out 32 separate student loans, both federal and private, which because of the medical deferments (and because of his private loans going into collection) ballooned from $270,000 to $435,000 over a period of four years.

Now the NYC bar is refusing to admit him because his loans are so crazy huge! But of course unless he can practice law he has little hope of ever paying them back.

Anyone who thinks that a crushing burden of debt is a sane way to offer opportunities to the disadvantaged, speak up.

College Doesn't Pay?

Not so sure about the NYPost's math here, but it's interesting that the conventional wisdom may be shifting...

"College degrees bring higher income, but at today's cost they can't make up the savings they consume and the debt they add early in the life of a typical student. While Ernie was busy earning, Bill got stuck under his bill."

What Counts

Yesterday I attended the funeral of my mother's oldest sister, Anna Lisa Crone. My aunt was a blonde beauty and a warm wit who spoke eight or nine languages fluently, and left behind her upbringing in rural North Carolina to marry and live among Russian intellectuals. She got her PhD from Harvard and taught in the Slavic department at the University of Chicago for nearly 30 years. At her memorial service, held in an ivy-shrouded Gothic chapel on the campus of the Divinity School, distraught colleagues and students stood up one after the other and bore witness to her achievements as a friend, scholar, mentor and teacher. My mother, who gave the eulogy, repeated that my aunt's essential engagement with life was as an educator even when she was a little girl, drilling her baby sister in Latin conjugations for fun.
Although she contended with sexism at the beginning of her career, my aunt survived to be lauded nationally and internationally for her contributions to the study of Russian letters and even more so, to the community of scholars who loved these 18th, 19th and 20th century writers--Derzhavin, Tsvetayeva, Turgenev--as much as she did.

My aunt was a specialist. She was an expert in a concentrated area of the humanities with no immediate economic payoff, the type of department that is most likely to be targeted for cuts in an era of scarcity like today's. Her life's work was not interdisciplinary or innovative when it came to technology or a million other buzzwords. She imparted her wisdom as a teacher the old-fashioned way, through time and intense attention, face to face.

I'm working on a book about the future of higher education: cost, access, productivity, specific learning outcomes, and many other values that can be measured. In honor of my aunt's memory, and of my parents, who are both lifelong academics as well, I will be working hard to keep in mind the values of education that cannot be measured.