The Truth About Student Loans | SHOAH

QUESTION: WHY ARE STUDENT LOANS BEING REPACKAGED AND USED TO CREATE GREAT WEALTH ON WALL STREET WHILE FUNDING, GRANTS, AND SERVICES, ARE BEING CUT AND AT THE SAME TIME AS COST FOR STUDENTS AND FAMILY INCREASES? Our great nation is facing a new Financial Crisis and if our Media groups and Legislator continue to ignore this it will make 1929 and 2008 look like child?s play. ISSUE: THE HIGH COST OF STUDENT DEBT THIS IS NOT A QUESTION ABOUT MONEY IT IS A QUESTION ABOUT WHAT THE GOVERNMENT PLANS TO DO ABOUT IT.

The only thing keeping government from fully funding Higher Education is if they choose not to do so. It is only a question of fulfilling the 4o year old promises by government to its citizens. The lower current interest rate stemmed from the 2007 College Cost Reduction and Access Act, which reduced interest rates on subsidized Stafford loans over the following four academic years ? from 6.8 percent to the current 3.4 percent ? with the proviso that the rates would revert to 6.8 percent July 2012 it is estimated in the short run this increase would add the value of $8 billion to the CDO?s and add millions in profit for Wall Street.

While this trend continues to increase the cost to students each semester and there is no opportunity of wage labor to cover these cost nor is there any other financial aid that will be issued to cover present or future increased costs, other than student loans. Attending an institution of higher education has historically been a partnership between society, private, and government institutions, that makes us all part of the future. It is a contract between the culture of one generation and the next. It is in the form of understanding that we will provide the resources for the next generation (compare 1970 to 2012 cost of tuition and $1 trillion in student debt that un-regulated Financial firms now use to make billions in profits).

The next generation?s contract will read only as debt. The new graduate must demand higher wages to cover this debt, placing the entire burden on small business. Large corporation receive an unfair misappropriated subsidies that small business are disqualified from at many levels. In the 1980?s the political cry was ?Quality of Life and Trickle-down Economics? in 1990?s it was a ?Thousand points of light and Capital Gains tax cuts.? At the beginning and ending of the first decade in this new Century it was ?Tax Cuts for the Job Creators?. Institutions of all levels and types of public education their students, educators, parents, local employers, have all done their part for the past Forty years, and now is the time for Government to fulfill its portion of this contract it made with the citizens of this great nation.

Right now on Wall Street student loans are being repackaged (Super Senior Tranches or CDO?s) with nixed financial capital paper and resold for millions in profit (no taxes paid on transactions) creating the next bubble to burst with catastrophic results. The only way to fix this problem before it comes crashing down on the taxpayer as a new financial bail-out that will cost several trillion dollars. We must turn this around by fully funding education from pre-school to a master?s program including health and nutrition services. Cutting the cost of tuition and forgiveness of 100% of current student debt and return collective bargaining for staff and educators. We can do this now, or we can ignore the systemic risk that comes with capitalism as financial crises, and pay trillions in bail-outs to financial intuitions as was done in 2008.

This can be paid for by recouping a small portion of the billion made from Wall Street profits connected to student debt and eliminating government funding of private institutions. Lobbyist work hard to influence this trend, Because; of the high demand by Financial Firms for COD?s, and these loans will continue to be used by Wall Street repackage and resold for high profits and bonuses, in the same manor that subprime loans were repackaged and resold many times.

This lead to the Financial Crisis in 2008: Federal Reserve Chairman Ben Bernanke now acknowledges that he missed the ?systemic risks[ ]?. ?Prospective subprime losses were clearly not large enough on their own to account for the magnitude of the crisis,? Bernanke told the Commission. ?Rather, the system?s vulnerabilities, together with gaps in the government?s crisis-response toolkit, were the principal explanations of why the crisis was so severe and had such devastating effects on the broader economy.?(Inquiry Report page 27).

A crash in the student loan markets will end higher education, other than private institutions, that currently charge twice that of public education with limited access. A government that fails to provide all citizens with basic needs to sustain life, food, shelter, adequate education, and health care is treating its citizens unjustly. The citizens will believe that their obligation to obey laws diminished. The citizens who are better off will have diminished obligations, since the justice of a government depends on whether it provides just treatment for all citizens, not special benefits for some. Lobbyist work with Financial firms and invented derivatives or CDO?s (collateralized debt obligation) called ?Super-Senior Tranches?, mixing loans together- good and bad with regional or geographic separation ? bundles of credit debt, (car loans/short term lending/ junk bonds and subprime mortgages).

The rating industry give these a AAA rating (enhanced by student debt) sold by financial firm as SIV ?structured investment vehicles? (virtual banks or commercial investment firms un-regulated)?. After the financial crash in 2008, SIV needed renewable and highly rated capital finance opportunities to capture and package, a holy grail of finance and the new sources is the high demand for financial firms to acquire student loan debt, it made that vehicle vary attractive. With the cuts in student funding and the rapid increase in tuition the students only choice is to gain additional loans to secure education opportunities. The 20-30 hr workweek will not support these added costs.

Small business and communities cannot absorb any more expense nor can they absorb any additional entitlements or block grant cuts.

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