"I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power." - Thomas Jefferson 1820

"There is a growing technology of testing that permits us now to do in nanoseconds things that we shouldn't be doing at all." - Dr. Gerald Bracey author of Rotten Apples in Education

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Wednesday, September 12, 2012

Is THIS why Arne Duncan wants Everyone to go to College?

Is college debt collection the new "Wild West in Education" scheme for "entrepreneurs" to make money?

It is no secret this Administration's goal is to make the majority of students college/career ready, in fact, it is in its educational blueprint and heard in many of their speeches.  What is the stated goal of the Administration's school reform?  From an Arne Duncan speech:

Today, we have a unique opportunity to rethink the mission of high school for the 21 century and educate our way to a better economy. I'm convinced that what we do in the next several years to complete this transformation will help America's children and the nation's workforce for decades to come.

Students are to be educated so they are globally competitive and help the nation's workforce.  The emphasis is on training human capital to supply the needs of the economy. In Duncan's world, this means there should be opportunities for all students to go to community college, career college or a four year university so as to help private businesses (and government) be successful.

Does a goal of most people achieving the same outcome make you a little nervous and suspicious?  Do you remember the No Child Left Behind Goal of "100% of students will be proficient by 2014"?  That goal was unattainable and ridiculed from the beginning, no matter how noble its intentions.

The goal of the majority of students to go to some sort of post-high school program is unattainable as well.  Some students are not motivated enough and/or are not intellectually able to handle post-high school programs.   Why is there this push for students to become become theoretically smarter and more productive human capital by furthering their education? 

What's occurring with this plan?  While more students are attending post high school programs,  it's establishing student servitude to the Federal Government long after the students have graduated due to student debt.  Since 2010, the Federal Government directly makes student loans, not private companies.  The loans are to be paid directly to the government, not private industry.  It's a pretty nifty program to ensure a money stream for a cash strapped country.  It falls apart when those students can't find a job and don't have enough money to pay their bills, much less the government treasury.

At a protest last year at New York University, students called attention to their mounting debt by wearing T-shirts with the amount they owed scribbled across the front — $90,000, $75,000, $20,000.  

On the sidelines was a business consultant for the debt collection industry with a different take. 

“I couldn’t believe the accumulated wealth they represent — for our industry,” the consultant, Jerry Ashton, wrote in a column for a trade publication, InsideARM.com. “It was lip-smacking.” 

Though Mr. Ashton says his column was meant to be ironic, it nonetheless highlighted undeniable truths: many borrowers are struggling to pay off their student loans, and the debt collection industry is cashing in. 

In an attempt to recover money on the defaulted loans, the Education Department paid more than $1.4 billion last fiscal year to collection agencies and other groups to hunt down defaulters.

The article highlights one private company reaping huge dividends from the government to go after debt:

The New Oil Well?
Business is booming at ConServe, a debt collection agency in suburban Rochester. The company recently expanded into a neighboring building. The payroll of 420 is expected to double in three years. 

“There is great opportunity,” said Mark E. Davitt, the company’s president and founder.
Where some debt collection firms have made their fortunes collecting on delinquent credit cards or hospital bills, ConServe is thriving because of overdue student loans, a large majority of its business. 

With an outstanding balance of more than $1 trillion, student loans have become a silver lining for the debt collection industry at a time when its once-thriving business of credit card collection has diminished and the unemployment rate has made collection a challenge. To recoup unpaid loans, the federal government, private lenders and others have turned to collection agencies like ConServe. 

Mark Russell, a mergers and acquisition specialist, writing in the same trade publication as Mr. Ashton, the consultant at the N.Y.U. protest, suggested student loans might be a “new oil well” for the accounts receivable management industry, or ARM, as the industry is known.

Mr. Ashton's and Mr. Russell's comments remind me of education venture capitalist Scott Joftus remarking that "education is the Wild, Wild West and there is a lot of money to be made".  Not only will education reformers and venture capitalists make money from laws tweaked by politicians, so will debt collectors.

Does the alliance with private companies (ed reformers, venture capitalists, Solyndra, Mamtek, etc) with the Federal Government cause concern?  Are our tax dollars propping up this economy under the guise of supporting private industry?  Why are tax dollars being used for private industries in the first place? 

While ed reformers espouse "free market" principles in "choice" schools, it's really not "free market" at all.  The money used to fund these schools are from your tax dollars and there is little to no risk to the "entrepreneurs".   Meanwhile, education venture capitalists like Bill Gates and Scott Joftus are making money from the mandates put in place by the politicians and the Department of Education.

Now the debt collectors can step in and reap the benefits of the unattainable goal pitched to  students that they can and should (it's their "right") to go to college.  It's a Utopian goal and we know there is no Utopia.  If there is no Utopia, what is the real reason for this structuring of educational reform?

Take some time and read the comments at the end of the Times article.  Interesting stories and theories on debt, student responsibility, the structure of the economic system, etc.

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