Thursday, October 2, 2008

Summa cum debitum

Summa cum debitum
So while we’re focused on debt, bail-outs, rescue plans and the appropriate public policy to deal with the financial crisis created by mortgage-backed securities, let’s look at, think about and even do something with the monumental problem of student loans.

Over the last decade or two, we have transformed a significant number of young people into a legion of debtors holding degrees awarded summa cum debitum. In many cases, students have been prepared for jobs that don’t exist or a life’s work that cannot amortize their student loans. And just as mortgages were bundled and sold as investment securities, student loans have been packaged and sold as bonds, many on the infamous auction-rate securities market that collapsed last February.

The adverse social, civil and political impact of student debt is not limited to those who incur it unwisely, those who fund it improvidently or those who invest in its securitized structures unsuccessfully. Civil society depends upon a wide range of skills to invent, perfect, make, maintain and operate its wheels and gears. When the allocation of work is driven by the need to pay onerous loans, terrible societal dysfunctions result.

Many young people have started life with little and some have started with nothing but today a significant number are starting with even less.

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