How college loans exploit students for profit
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0:01 - 0:06Today 40 million Americans are indebted
for their passage to the new economy. -
0:08 - 0:10Too poor to pay their way through college,
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0:10 - 0:15they now owe lenders
more than one trillion US dollars. -
0:16 - 0:18They do find what jobs they can get
-
0:18 - 0:20to pay off a debt
that is secured on their person. -
0:21 - 0:23In America,
-
0:23 - 0:29even a bankrupt gambler
gets a second chance. -
0:30 - 0:33But it is nearly impossible
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0:33 - 0:37for an American to get discharged
their student loan debts. -
0:40 - 0:43Once upon a time in America,
-
0:43 - 0:46going to college did not mean
graduating with debt. -
0:47 - 0:53My friend Paul's father
graduated from Colorado State University -
0:53 - 0:54on the GI Bill.
-
0:56 - 0:57For his generation,
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0:57 - 1:00higher education was free or almost free,
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1:00 - 1:02because it was thought of
as a public good. -
1:04 - 1:05Not anymore.
-
1:06 - 1:10When Paul also graduated
from Colorado State University, -
1:10 - 1:14he paid for his English degree
by working part-time. -
1:14 - 1:1530 years ago,
-
1:15 - 1:18higher education tuition
was affordable, reasonable, -
1:18 - 1:21and what debts you accumulated,
you paid off by graduation date. -
1:22 - 1:23Not anymore.
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1:24 - 1:27Paul's daughter followed in his footsteps,
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1:27 - 1:29but with one difference:
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1:29 - 1:31when she graduated five years ago,
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1:31 - 1:32it was with a whopping debt.
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1:33 - 1:37Students like Kate have to take on a loan
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1:37 - 1:40because the cost of higher education
has become unaffordable -
1:40 - 1:43for many if not most American families.
-
1:44 - 1:46But so what?
-
1:46 - 1:49Getting into debt to buy
an expensive education -
1:49 - 1:51is not all bad if you could pay it off
-
1:51 - 1:55with the increased income
that you earned from it. -
1:55 - 1:57But that's where the rubber
meets the road. -
2:00 - 2:05Even a college grad
earned 10 percent more in 2001 -
2:05 - 2:07than she did in 2013.
-
2:08 - 2:09So ...
-
2:10 - 2:11tuition costs up,
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2:11 - 2:13public funding down,
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2:13 - 2:15family incomes diminished,
-
2:15 - 2:18personal incomes weak.
-
2:18 - 2:23Is it any wonder that more
than a quarter of those who must -
2:23 - 2:25cannot make their student loan payments?
-
2:27 - 2:30The worst of times
can be the best of times, -
2:30 - 2:34because certain truths flash up
in ways that you can't ignore. -
2:34 - 2:36I want to speak of three of them today.
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2:38 - 2:411.2 trillion dollars of debts for diplomas
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2:41 - 2:44make it abundantly obvious
-
2:44 - 2:48that higher education
is a consumer product you can buy. -
2:48 - 2:53All of us talk about education
just as the economists do now, -
2:53 - 2:58as an investment that you make
to improve the human stock -
2:58 - 2:59by training them for work.
-
3:00 - 3:05As an investment you make
to sort and classify people -
3:05 - 3:07so that employers
can hire them more easily. -
3:08 - 3:12The U.S. News & World Report
ranks colleges -
3:12 - 3:15just as the consumer report
rates washing machines. -
3:15 - 3:19The language is peppered with barbarisms.
-
3:19 - 3:22Teachers are called "service providers,"
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3:22 - 3:24students are called "consumers."
-
3:26 - 3:29Sociology and Shakespeare
and soccer and science, -
3:29 - 3:31all of these are "content."
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3:33 - 3:35Student debt is profitable.
-
3:35 - 3:36Only not on you.
-
3:38 - 3:42Your debt fattens the profit
of the student loan industry. -
3:42 - 3:44The two 800-pound gorillas of which --
-
3:45 - 3:47Sallie Mae and Navient --
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3:47 - 3:52posted last year a combined profit
of 1.2 billion dollars. -
3:53 - 3:55And just like home mortgages,
-
3:55 - 3:58student loans can be bundled
and packaged and sliced and diced, -
3:58 - 4:00and sold on Wall Street.
-
4:00 - 4:02And colleges and universities
-
4:02 - 4:05that invest in these securitized loans
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4:06 - 4:07profit twice.
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4:08 - 4:09Once from your tuition,
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4:09 - 4:12and then again from the interest on debt.
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4:13 - 4:15With all that money to be made,
-
4:15 - 4:21are we surprised that some
in the higher education business -
4:21 - 4:23have begun to engage in false advertising,
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4:23 - 4:24in bait and switch ...
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4:27 - 4:31in exploiting the very ignorance
that they pretend to educate? -
4:32 - 4:33Third:
-
4:34 - 4:35diplomas are a brand.
-
4:36 - 4:38Many years ago my teacher wrote,
-
4:38 - 4:41"When students are treated as consumers,
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4:41 - 4:44they're made prisoners
of addiction and envy." -
4:48 - 4:52Just as consumers can be sold and resold
upgraded versions of an iPhone, -
4:52 - 4:55so also people can be sold
more and more education. -
4:57 - 4:59College is the new high school,
-
4:59 - 5:00we already say that.
-
5:01 - 5:03But why stop there?
-
5:03 - 5:06People can be upsold
on certifications and recertifications, -
5:06 - 5:09master's degrees, doctoral degrees.
-
5:11 - 5:15Higher education is also marketed
as a status object. -
5:17 - 5:18Buy a degree,
-
5:18 - 5:21much like you do a Lexus
of a Louis Vuitton bag, -
5:21 - 5:23to distinguish yourself from others.
-
5:23 - 5:25So you can be the object
of envy of others. -
5:27 - 5:28Diplomas are a brand.
-
5:29 - 5:36But these truths are often times
hidden by a very noisy sales pitch. -
5:37 - 5:38There is not a day that goes by
-
5:38 - 5:43without some policy guy
on television telling us, -
5:43 - 5:45"A college degree is absolutely essential
-
5:45 - 5:48to get on that up escalator
to a middle-class life." -
5:49 - 5:53And the usual evidence offered
is the college premium: -
5:53 - 5:58a college grad who makes on average
56 percent more than a high school grad. -
5:58 - 6:00Let's look at that number more carefully,
-
6:00 - 6:02because on the face of it,
-
6:02 - 6:05it seems to belie the stories we all hear
-
6:05 - 6:10about college grads
working as baristas and cashiers. -
6:11 - 6:16Of 100 people who enroll
in any form of post-secondary education, -
6:16 - 6:1945 do not complete it in a timely fashion,
-
6:19 - 6:22for a number of reasons,
including financial. -
6:22 - 6:24Of the 55 that do graduate,
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6:24 - 6:26two will remain unemployed,
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6:26 - 6:29and another 18 are underemployed.
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6:30 - 6:34So, college grads earn more
than high school grads, -
6:34 - 6:37but does it pay for the exorbitant tuition
-
6:37 - 6:39and the lost wages while at college?
-
6:40 - 6:42Now even economists admit
-
6:42 - 6:48going to college pays off
for only those who complete it. -
6:48 - 6:52But that's only because high school wages
have been cut to the bone, -
6:52 - 6:54for decades now.
-
6:55 - 6:57For decades,
-
6:57 - 7:00workers with a high school degree
-
7:00 - 7:04have been denied a fair share
of what they have produced. -
7:04 - 7:07And had they received as they should have,
-
7:07 - 7:11then going to college would have been
a bad investment for many. -
7:11 - 7:14College premium?
-
7:14 - 7:16I think it's a high school discount.
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7:17 - 7:21Two out of three people who enroll
are not going to find an adequate job. -
7:22 - 7:25And the future, for them,
doesn't look particularly promising -- -
7:25 - 7:27in fact, it's downright bleak.
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7:27 - 7:29And it is they who are going to suffer
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7:31 - 7:33the most punishing forms of student debt.
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7:34 - 7:35And it is they,
-
7:35 - 7:37curiously and sadly,
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7:37 - 7:40who are marketed most loudly
about this college premium thing. -
7:42 - 7:44That's not just cynical marketing,
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7:44 - 7:46that's cruel.
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7:47 - 7:48So what do we do?
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7:49 - 7:55What if students and parents treated
higher education as a consumer product? -
7:56 - 7:58Everybody else seems to.
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7:59 - 8:01Then, like any other consumer product,
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8:01 - 8:03you would demand to know
what you're paying for. -
8:03 - 8:05When you buy medicines,
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8:05 - 8:07you get a list of side effects.
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8:07 - 8:09When you buy a higher educational product,
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8:09 - 8:10you should have a warning label
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8:10 - 8:13that allows consumers to choose,
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8:13 - 8:14make informed choices.
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8:15 - 8:16When you buy a car,
-
8:16 - 8:19it tells you how many
miles per gallon to expect. -
8:19 - 8:21Who knows what to expect
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8:21 - 8:24from a degree say, in Canadian Studies.
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8:25 - 8:26There is such a thing, by the way.
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8:29 - 8:31What if there was an app for that?
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8:34 - 8:39One that linked up the cost of a major
to the expected income. -
8:40 - 8:43Let's call it Income-Based Tuition or IBT.
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8:43 - 8:44One of you make this.
-
8:44 - 8:46(Laughter)
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8:46 - 8:47Discover your reality.
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8:47 - 8:50(Laughter)
-
8:50 - 8:51There are three advantages,
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8:51 - 8:54three benefits to Income-Based Tuition.
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8:55 - 8:57Any user can figure out
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8:57 - 9:00how much money he or she will make
from a given college and major. -
9:01 - 9:02Such informed users
-
9:02 - 9:06are unlikely to fall victim
to the huckster's ploy, -
9:06 - 9:08to the sales pitch.
-
9:08 - 9:10But also to choose wisely.
-
9:10 - 9:12Why would anybody pay more for college
-
9:12 - 9:15than let's say, 15 percent
of the additional income they earn? -
9:17 - 9:20There's a second benefit
to Income-Based Tuition. -
9:20 - 9:23By tying the cost to the income,
-
9:23 - 9:27college administrators would be forced
to manage costs better, -
9:27 - 9:30to find innovative ways to do so.
-
9:30 - 9:31For instance,
-
9:31 - 9:35all of you students here pay roughly
the same tuition for every major. -
9:35 - 9:40That is manifestly unfair,
and should change. -
9:40 - 9:44An engineering student uses more resources
-
9:44 - 9:47and facilities and labs and faculty
-
9:47 - 9:48than a philosophy student.
-
9:50 - 9:52But the philosophy student,
as a consequence, -
9:52 - 9:54is subsidizing the engineering student.
-
9:54 - 9:57Who then, by the way,
goes on and earns more money. -
9:57 - 10:01Why should two people
buy the same product, -
10:01 - 10:02pay the same,
-
10:02 - 10:05but one person receive
half or a third of the service. -
10:06 - 10:11In fact, college grads, some majors,
-
10:11 - 10:14pay 25 percent of their income
servicing their student debt, -
10:14 - 10:16while others pay five percent.
-
10:18 - 10:22That kind if inequity would end
when majors are priced more correctly. -
10:23 - 10:25Now of course, all this data --
-
10:25 - 10:27and one of you is going to do this, right?
-
10:27 - 10:29All this data has to be well designed,
-
10:29 - 10:31maybe audited by public accounting firms
-
10:31 - 10:33to avoid statistical lies.
-
10:33 - 10:35We know about statistics, right?
-
10:37 - 10:38But be that as it may,
-
10:38 - 10:42the third and biggest benefit
of Income-Based Tuition, -
10:42 - 10:48is it would free Americans from the fear
and the fact of financial ruin -
10:48 - 10:50because they bought a defective product.
-
10:51 - 10:53Perhaps, in time,
-
10:53 - 10:55young and old Americans may rediscover,
-
10:55 - 10:58as the gentleman said earlier,
-
10:58 - 11:00their curiosity, their love of learning --
-
11:00 - 11:01begin to study what they love,
-
11:01 - 11:02love what they study,
-
11:02 - 11:04follow their passion ...
-
11:05 - 11:07getting stimulated by their intelligence,
-
11:07 - 11:11follow paths of inquiry
that they really want to. -
11:11 - 11:15After all, it was Eric and Kevin,
-
11:15 - 11:16two years ago,
-
11:17 - 11:21just exactly these kinds of young men,
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11:21 - 11:23who prompted me and worked with me,
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11:23 - 11:25and still do,
-
11:25 - 11:28in the study of indebted
students in America. -
11:29 - 11:31Thank you for your attention.
-
11:31 - 11:35(Applause)
- Title:
- How college loans exploit students for profit
- Speaker:
- Sajay Samuel
- 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.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 11:48
易帆 余 commented on English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit | ||
Brian Greene approved English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit | ||
Brian Greene edited English subtitles for How college loans exploit students for profit |
易帆 余
What is the meaning of "be upsold on" at 5:02 ?