Michele BachmanIn light of Bachmann’s recent win in the Ames straw poll, a totally meaningless poll in which the Iowa GOP faithful pay to vote and, astonishingly, have a good track record of picking the eventual nominee, I present the following without comment:

From Bachmann’s campaign website:

It’s time to draw a line in the sand and stop increasing the debt load on our nation, our children and our grandchildren.

From the highlights of a bill that Bachmann voted for:

– Increases the loan limit above the determined financial need for graduate students enrolled in an eligible institution from $10,000 to $12,000, allows a limit of up to $2,000 for dependent undergraduate students, and increases the limit amounts for independent undergraduate students from $4,000 to $6,000 for the first two years of study and from $5,000 to $7,000 for the second two years of study (Sec. 2).

– Increases the total federal loan limit for undergraduate studies from $23,000 to $31,000 for dependent students and from $46,000 to $57,500 for independent students (Sec. 2).

The Christian Science Monitor seems to think so. In “The higher education bubble has popped,” Doug French says that the higher education bubble is like the housing bubble.

A true bubble is when something is overvalued and intensely believed. Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.

The excesses of both college and homeownership were always excused by a core national belief that, no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

I disagree with French–there’s a bubble, but it hasn’t popped yet. And there are a few things that make it different from the housing bubble. First, the market will have a hard time dictating when the bubble has popped. Most student loans are financed by the government, and the government will have a difficult time justifying any drastic pullback in higher education funding.  Most likely, they’ll pull funding for schools with high student loan default rates. For-profit universities have some of the highest default rates, so they’re likely to get hit hard in the pocketbook.

Second, you can’t just walk away from student debt like you can from a house. Student debt is non-dischargeable in bankruptcy, except in unusual circumstances that don’t apply to the vast, vast majority of graduates. This is important because it makes lenders more willing to loan to students at “attractive rates.”  Those rates really aren’t so attractive when factoring in the lack of risk that the lender takes. If students default, investors can squeeze students–forever.

Finally, if it’s any indication, look at what ad popped up in my Google Reader feed in connection with this article:

There’s been a few stories in the news highlighting student loans and higher education. The first, “Seeking Arrangement: College Students Using ‘Sugar Daddies’ To Pay Off Loan Debt,” from the Huffington Post, says it all with its title. Students are being enticed into prostitution by the lure of education. The stripper who’s working her way through college? How quaint. Stripping is legal, prostitution ain’t.

Perhaps most striking about the story is that a website devoted to hooking up the wealthy with down-and-out students, Seeking Arrangement, openly solicits students who are searching for ways to pay back their student loans:

Debt-strapped college graduates weren’t included in his original business plan. But once the recession hit and more and more students were among the growing list of new site users, Wade began to target them. The company, which is headquartered in Las Vegas, now places strategic pop-up ads that appear whenever someone types “tuition help” or “financial aid” into a search engine. And over the past five years, Wade says he’s seen a 350 percent increase in college sugar baby membership — from 38,303 college sugar babies in 2007 to 179,906 college sugar babies by July of this year.

Make no mistake about it: the number of students entering the sex trade has increased. And it’s not just due to the bad economy:

“I attribute it to the rising cost of college and ease of loans, especially in an economy where the buying and selling of emotions and companionship is increasingly easy to afford,” says Sanders, who teaches at the University of Leeds.

The world needs to return to sanity, where students can afford an education without turning to prostitution to make ends meet.

Happy $900 Billion Day! Today we celebrate the outstanding student loan debt clock flipping over the $900 billion mark. How does outstanding student debt compare to other debts?

Outstanding student loans chart

Outstanding student loans as compared with other figures

Student debt now outweighs credit card debt; the external debt of Russia and China (among others); the cost of the wars in Iraq and Afghanistan (but, at least, not combined); the pre-filing assets of Lehman Brothers, the largest bankruptcy; the GDPs of the Netherlands and Switzerland (among many others); the revenues of every single company in the world, including the two highest, WalMart and Exxon Mobile.

I considered adding Harvard University’s endowment ($28 billion) and the principal losses in the Madoff Ponzi scheme ($18 billion), but these numbers were negligible.

It’s hard to find things to compare to student loan debt. All the numbers are so astronomical and intangible, all comparisons become meaningless.

Back from a two-week hiatus…

Jerry Ashton (“Written Off”) interviews student loan activist C. Cryn Johannsen. [PWRN]

Suit alleging Sallie Mae overcharged students who defaulted on student loans may proceed, California court rules. [Higher Ed Watch]

What are for-profit colleges good at? Delivering federal dollars to themselves. [NYT Economix Blog]

How do you understand your own student loan disillusionment? [All Education Matters]

“Blame the student” philosophy when it comes to student loan debt suffers from a fundamental attribution error. [But I Did Everything Right!]