How college loans exploit students for profit | Sajay Samuel | TEDxPSU
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0:17 - 0:19Four hundred years ago,
-
0:19 - 0:23thousands seeking a better life
in the new world -
0:23 - 0:26came as indentured servants.
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0:28 - 0:31Too poor to pay the passage,
they got into debt -
0:32 - 0:37and in exchange for working
up to 7 years in bonded labor. -
0:38 - 0:44Today 14 million Americans are indebted
for their passage to the new economy. -
0:46 - 0:48Too poor to pay their way through college,
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0:48 - 0:52they now owe lenders
more than one trillion US dollars. -
0:53 - 0:55They do find what jobs they can get
-
0:55 - 0:58to pay off a debt
that is secured on their person. -
1:00 - 1:02In America,
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1:02 - 1:08even a bankrupt gambler
gets a second chance. -
1:10 - 1:12But it is nearly impossible
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1:12 - 1:16for an American to get discharged
their student loan debts. -
1:20 - 1:22Once upon a time, in America,
-
1:22 - 1:25going to college did not mean
graduating with debt. -
1:27 - 1:32My friend Paul's father
graduated from Colorado State University -
1:32 - 1:33on the GI Bill.
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1:35 - 1:36For his generation,
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1:36 - 1:39higher education was free or almost free,
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1:39 - 1:42because it was thought of
as a public good. -
1:43 - 1:44Not anymore.
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1:47 - 1:51When Paul also graduated
from Colorado State University, -
1:51 - 1:55he paid for his English degree
by working part-time. -
1:56 - 1:5730 years ago,
-
1:57 - 2:00higher education tuition
was affordable, reasonable, -
2:00 - 2:03and what debts you accumulated,
you paid off by graduation date. -
2:04 - 2:05Not anymore.
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2:07 - 2:10Paul's daughter followed in his footsteps,
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2:10 - 2:12but with one difference:
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2:12 - 2:14when she graduated five years ago,
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2:14 - 2:16it was with a whopping debt.
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2:16 - 2:20Students like Kate have to take on a loan
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2:20 - 2:23because the cost of higher education
has become unaffordable -
2:23 - 2:27for many if not most American families.
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2:28 - 2:30But so what?
-
2:31 - 2:33Getting into debt to buy
an expensive education -
2:33 - 2:36is not all bad if you could pay it off
-
2:36 - 2:39with the increased income
that you earned from it. -
2:40 - 2:42But that's where the rubber
meets the road. -
2:44 - 2:50Even a college grad
earned 10 percent more in 2001 -
2:50 - 2:52than she did in 2013.
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2:54 - 2:55So ...
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2:56 - 2:57tuition costs up,
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2:57 - 2:59public funding down,
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2:59 - 3:01family incomes diminished,
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3:01 - 3:04personal incomes weak.
-
3:04 - 3:08Is it any wonder that more
than a quarter of those who must -
3:08 - 3:10cannot make their student loan payments?
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3:13 - 3:16The worst of times
can be the best of times, -
3:16 - 3:20because certain truths flash up
in ways that you can't ignore. -
3:20 - 3:22I want to speak of three of them today.
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3:25 - 3:291.2 trillion dollars of debts for diplomas
-
3:29 - 3:31make it abundantly obvious
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3:31 - 3:35that higher education
is a consumer product you can buy. -
3:36 - 3:41All of us talk about education
just as the economists do now, -
3:41 - 3:45as an investment that you make
to improve the human stock -
3:45 - 3:47by training them for work.
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3:47 - 3:52As an investment you make
to sort and classify people -
3:52 - 3:55so that employers
can hire them more easily. -
3:56 - 3:59The U.S. News & World Report
ranks colleges -
3:59 - 4:03just as the consumer report
rates washing machines. -
4:03 - 4:06The language is peppered with barbarisms.
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4:06 - 4:10Teachers are called "service providers,"
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4:10 - 4:12students are called "consumers."
-
4:13 - 4:17Sociology and Shakespeare
and soccer and science, -
4:17 - 4:19all of these are "content."
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4:21 - 4:22Student debt is profitable.
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4:22 - 4:23Only not on you.
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4:25 - 4:29Your debt fattens the profit
of the student-loan industry. -
4:30 - 4:32The two 800-pound gorillas of which --
-
4:32 - 4:34Sallie Mae and Navient --
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4:34 - 4:39posted last year a combined profit
of 1.2 billion dollars. -
4:40 - 4:43And just like home mortgages,
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4:43 - 4:46student loans can be bundled
and packaged and sliced and diced, -
4:46 - 4:47and sold on Wall Street.
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4:48 - 4:49And colleges and universities
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4:49 - 4:53that invest in these securitized loans ...
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4:54 - 4:55profit twice.
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4:55 - 4:57Once from your tuition,
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4:57 - 4:59and then again from the interest on debt.
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5:01 - 5:03With all that money to be made,
-
5:03 - 5:09are we surprised that some
in the higher education business -
5:09 - 5:11have begun to engage in false advertising,
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5:11 - 5:12in bait and switch ...
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5:14 - 5:18In exploiting the very ignorance
that they pretend to educate? -
5:20 - 5:21Third:
-
5:21 - 5:23diplomas are a brand.
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5:23 - 5:26Many years ago my teacher wrote,
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5:26 - 5:28"When students are treated as consumers,
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5:28 - 5:31they're made prisoners
of addiction and envy." -
5:35 - 5:40Just as consumers can be sold and resold
upgraded versions of an iPhone, -
5:40 - 5:43so also people can be sold
more and more education. -
5:45 - 5:47College is the new high school,
-
5:47 - 5:48we already say that.
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5:49 - 5:50But why stop there?
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5:50 - 5:54People can be upsold
on certifications and recertifications, -
5:54 - 5:56master's degrees, doctoral degrees.
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5:59 - 6:03Higher education is also marketed
as a status object. -
6:04 - 6:05Buy a degree,
-
6:05 - 6:08much like you do a Lexus
of a Louis Vuitton bag, -
6:09 - 6:10to distinguish yourself from others.
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6:10 - 6:13So you can be the object
of envy of others. -
6:18 - 6:20Diplomas are a brand.
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6:21 - 6:27But these truths are often times
hidden by a very noisy sales pitch. -
6:28 - 6:30There is not a day that goes by
-
6:30 - 6:35without some policy guy
on television telling us, -
6:35 - 6:37"A college degree is absolutely essential
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6:37 - 6:40to get on that up escalator
to a middle-class life." -
6:40 - 6:44And the usual evidence offered
is the college premium: -
6:44 - 6:49a college grad who makes on average
56 percent more than a high school grad. -
6:50 - 6:52Let's look at that number more carefully,
-
6:52 - 6:53because on the face of it,
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6:53 - 6:57it seems to belie the stories we all hear
-
6:57 - 7:01about college grads
working as baristas and cashiers. -
7:02 - 7:07Of 100 people who enroll
in any form of post-secondary education, -
7:07 - 7:1045 do not complete it in a timely fashion,
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7:10 - 7:13for a number of reasons,
including financial. -
7:14 - 7:16Of the 55 that do graduate,
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7:16 - 7:18two will remain unemployed
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7:18 - 7:21and another 18 are underemployed.
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7:24 - 7:27So, college grads earn more
than high school grads, -
7:27 - 7:30but does it pay for the exorbitant tuition
-
7:30 - 7:33and the lost wages while at college?
-
7:35 - 7:37Now even economists admit
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7:37 - 7:42going to college pays off
for only those who complete it. -
7:43 - 7:47But that's only because high school wages
have been cut to the bone, -
7:47 - 7:48for decades now.
-
7:50 - 7:52For decades,
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7:52 - 7:55workers with a high school degree
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7:55 - 7:59have been denied a fair share
of what they have produced. -
7:59 - 8:02And had they received as they should have,
-
8:02 - 8:06then going to college would have been
a bad investment for many. -
8:06 - 8:08College premium?
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8:09 - 8:11I think it's a high school discount.
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8:13 - 8:18Two out of three people who enroll
are not going to find an adequate job. -
8:18 - 8:22And the future, for them,
doesn't look particularly promising -- -
8:22 - 8:23in fact, [it's] downright bleak.
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8:24 - 8:26And it is they who are going to suffer
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8:28 - 8:30the most punishing forms of student debt.
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8:31 - 8:32And it is they,
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8:32 - 8:34curiously and sadly,
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8:34 - 8:37who are marketed most loudly
about this college premium thing. -
8:39 - 8:41That's not just cynical marketing,
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8:41 - 8:43that's cruel.
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8:44 - 8:45So what do we do?
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8:46 - 8:52What if students and parents treated
higher education as a consumer product? -
8:53 - 8:55Everybody else seems to.
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8:56 - 8:58Then, like any other consumer product,
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8:58 - 9:00you would demand to know
what you're paying for. -
9:00 - 9:02When you buy medicines,
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9:02 - 9:04you get a list of side effects.
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9:04 - 9:06When you buy a higher educational product,
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9:06 - 9:07you should have a warning label
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9:07 - 9:10that allows consumers to choose,
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9:10 - 9:11make informed choices.
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9:12 - 9:13When you buy a car,
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9:13 - 9:16it tells you how many
miles per gallon to expect. -
9:16 - 9:18Who knows what to expect
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9:18 - 9:21from a degree say, in Canadian Studies.
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9:22 - 9:23There is such a thing, by the way.
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9:26 - 9:28What if there was an app for that?
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9:31 - 9:36One that linked up the cost of a major
to the expected income. -
9:37 - 9:40Let's call it Income-Based Tuition or IBT.
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9:40 - 9:41One of you make this.
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9:41 - 9:43(Laughter)
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9:43 - 9:44Discover your reality.
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9:44 - 9:47(Laughter)
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9:47 - 9:48There are three advantages,
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9:48 - 9:51three benefits to Income-Based Tuition.
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9:52 - 9:54Any user can figure out
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9:54 - 9:57how much money he or she will make
from a given college and major. -
9:58 - 9:59Such informed users
-
9:59 - 10:03are unlikely to fall victim
to the huckster's ploy, -
10:03 - 10:05to the sales pitch.
-
10:06 - 10:08But also to choose wisely.
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10:08 - 10:10Why would anybody pay more for college
-
10:10 - 10:13than let's say, 15 percent
of the additional income they earn? -
10:16 - 10:19There's a second benefit
to Income-Based Tuition. -
10:19 - 10:22By tying the cost to the income,
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10:22 - 10:26college administrators would be forced
to manage costs better, -
10:26 - 10:28to find innovative ways to do so.
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10:28 - 10:30For instance,
-
10:30 - 10:34all of you students here pay roughly
the same tuition for every major. -
10:35 - 10:39That is manifestly unfair,
and should change. -
10:39 - 10:43An engineering student uses more resources
-
10:43 - 10:46and facilities and labs and faculty
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10:46 - 10:48than a philosophy student.
-
10:49 - 10:51But the philosophy student,
as a consequence, -
10:51 - 10:53is subsidizing the engineering student.
-
10:54 - 10:56Who then, by the way,
goes on and earns more money. -
10:56 - 11:00Why should two people
buy the same product, -
11:00 - 11:01pay the same,
-
11:01 - 11:04but one person receive
half or a third of the service. -
11:06 - 11:10In fact, college grads, some majors,
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11:10 - 11:13pay 25 percent of their income
servicing their student debt, -
11:13 - 11:15while others pay five percent.
-
11:17 - 11:21That kind if inequity would end
when majors are priced more correctly. -
11:22 - 11:24Now of course, all this data --
-
11:24 - 11:26and one of you is going to do this, right?
-
11:27 - 11:28All this data has to be well designed,
-
11:28 - 11:30maybe audited by public accounting firms
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11:31 - 11:32to avoid statistical lies.
-
11:32 - 11:34We know about statistics, right?
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11:36 - 11:37But be that as it may,
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11:37 - 11:42the third and biggest benefit
of Income-Based Tuition, -
11:42 - 11:47is it would free Americans from the fear
and the fact of financial ruin -
11:47 - 11:49because they bought a defective product.
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11:51 - 11:53Perhaps, in time,
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11:53 - 11:56young and old Americans may rediscover,
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11:56 - 11:58as the gentleman said earlier,
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11:58 - 12:00their curiosity, their love of learning.
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12:00 - 12:01Begin to study what they love,
-
12:01 - 12:03love what they study,
-
12:03 - 12:04follow their passion ...
-
12:05 - 12:07getting stimulated by their intelligence,
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12:07 - 12:11follow paths of inquiry
that they really want to. -
12:11 - 12:15After all, it was Eric and Kevin,
-
12:16 - 12:17two years ago,
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12:18 - 12:21just exactly these kinds of young men,
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12:21 - 12:23who prompted me and worked with me,
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12:23 - 12:25and still do,
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12:25 - 12:28in the study of indebted
students in America. -
12:29 - 12:31Thank you for your attention.
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12:31 - 12:36(Applause)
- Title:
- How college loans exploit students for profit | Sajay Samuel | TEDxPSU
- Description:
-
"Once upon a time in America," says professor Sajay Samuel, "going to college did not mean graduating with debt." Today, higher education has become a consumer product -- costs have skyrocketed, saddling students with a combined debt of over $1 trillion, while universities and loan companies make massive profits. Samuel proposes a radical solution: link tuition costs to a degree's expected earnings, so that students can make informed decisions about their future, restore their love of learning and contribute to the world in a meaningful way.
This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDxTalks
- Duration:
- 12:37
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
TED Translators admin edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU | ||
Ivana Korom edited English subtitles for A solution to student debts in America | Sajay Samuel | TEDxPSU |