Unequal Justice: Student Loans Could Dictate Justice

Go Lean Commentary

Education is all the rage for elevating individuals in society … to be more prosperous, to earn more and have a better life. This is why we send children to school starting at Age 5; and encourage them to work hard and do their homework …

… and why we invest in Student Loans so that they can get a college education.

But there is Unequal Justice in this eco-system.

Quick: Do you see the injustice in this situation?

You get a $30,000 Student Loan to go to college … for 2 years … for an Associates Degree. Afterwards, you have no job, a worthless degree and $30,000 in debt. – See the narrative in the Appendix VIDEO.

That is an economic injustice – welcome to the dispositions of Millennials in America in 2019; (actually the last 20 years). But America is not the only community experiencing dysfunction and economic injustice due to Student Loans. We have a lot of dysfunctions in the Caribbean too. See the details here, as this issue of Student Loans in the economic fabric of society have been deliberated in previous blog-commentaries; see here:

Title #1: Student debt holds back many would-be home buyers – April 30, 2014

“Of the many factors holding back young home buyers … none looms larger than the recent explosion of college debt”.

The book Go Lean … Caribbean serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), for the economic optimization in the region. If the target of the book is the Caribbean, why does this article about American student loans weigh so heavy in a consideration of Caribbean economics?

There are lessons to be learned here! Not just for student loans, but also regarding education policy. This issue is pivotal to the economics of the Caribbean region.

Classic economic policy promotes that education has a direct effect on a community’s economy and the standard-of-living, quantified as each increased-grade-level, raises GDP by 3 percent (Appendix C2Page 258). But, the Go Lean roadmap posits that this rule is not true for the Caribbean, because of the debilitating emigration rate, the brain drain in which our educated population flees for foreign shores, or worse, students that do not return after matriculating – despite using funding from their Caribbean homeland. These are all investments with no return. In short, the economy of the Caribbean can be impacted by the activity of this recent-student population, when they repatriate; but when they emigrate, they hurt the economy.

… education funding policies adversely affect major areas of the economy, in this case home-buying. The cause-and-effect paradigm is direct, within 5 to 10 years after graduation; a former student should be planning to buy a house. Apparently the [American] macro economy is dependent on this relationship. According to the foregoing [an embedded] article, the National Association of Realtors (NAR) identified student debt as a key factor in soft demand for home-buying this spring (2014).


Title #2: A Lesson in Economic Fallacies – Student Loans As Investments – July 9, 2016

The Bahamas Education Loan Authority (ELA) is owed over $155 million in outstanding loan payments for its student loan scheme, with a default rate of 75 percent.

This Caribbean community should now be saying: “Give me my money!”

However, this commentary extends the criticism further: The money being demanded is the principal and maybe even some interest amounts due. But student loans are supposed to be investments in the young people of the community. This commentary trumpets the reality of Caribbean student loans as a fallacy: Where is the return on these investments?

This commentary asserts that those who advocate to remediate Caribbean economics needs to avoid a series of Economic Fallacies.

The movement behind the book Go Lean…Caribbean have addressed Income Inequality and the contribution of Student Loans to this plight. It is our position here that the eco-system of Student Loans can be a “weather vane” of justice in society; one that reflects the direction of society and can possibly effect the direction.

Weather vane
weather vanewind vane, or weathercock is an instrument used for showing the “direction of the wind“. It is typically used as an architectural ornament to the highest point of a building. The word “vane” comes from the Old English word “fana” meaning “flag”.

Although partly functional, weather vanes are generally decorative, often featuring the traditional cockerel design with letters indicating the points of the compass.

Student Loans can indicate the “direction of the winds” of society.

  • Loans are debt, paying for past activities for a government service that used to only be a marginal expense (and free in some countries). See this point from that previous Go Lean commentary:
    It’s not the cost of the loan ([interest)] that’s the problem; it’s the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. – Ripping Off Young America: The College – Loan Scandal By Matt Taibbi, Rolling Stones Magazine; August 15, 2013. (Appendix IH of Go Lean book – Page 286).
  • Student Loans are investments, preparing for the future. Those who pursue higher education always enjoy a higher pay-rate than without. The prospects of this Return on Investment motivates people and incentivizes them to follow prescribed courses of action;  social justice and development advocacies can be urged. The member-states of the Caribbean region are urged to follow the model of the US Federal Perkins Loans – defined here:
    The Bottom Line on Perkins Loans
    A Federal Perkins Loan is a need-based student loan offered by the US Department of Education to assist American college students in funding their post-secondary education. Perkins Loans carry a fixed interest rate of 5% for the duration of the ten year repayment period. The Perkins Loan Program has a nine-month grace period, so that borrowers begin repayment in the tenth month upon graduating, falling below half-time status, or withdrawing from their college or university. Because the Perkins Loan is subsidized by the government, interest does not begin to accrue until the borrower begins to repay the loan.
    As of the 2009-2010 academic year, the loan limits for undergraduates are $5,500 per year with a lifetime maximum loan of $27,500. For graduate students, the limit is $8,000 per year with a lifetime limit of $60,000 (including undergraduate loans).
    Perkins Loans are eligible for Federal Loan Cancellation for teachers in designated low-income schools, as well as for teachers in designated teacher shortage areas such as math, science, and bilingual education. This cancellation also applies to Peace Corps Volunteers. Cancellation typically occurs on a graduating scale: 15% for year 1, 15% for year 2, 20% for year 3, 20% for year 4, 30% for year 5. These percentages are based on the original debt amount. Thus after 3 years of service, one would have 50% of their original debt cancelled.

Student Loans can also dictate justice, by the priority that society places on them and the incentives and mandates provisioned for participating students (deferments, cancellations and postponements). This is how Student Loans can dictate the “direction of the winds” of society.

This blog-commentary submission, entry 4-of-4, completes this series on Unequal Justice. The first 2 submissions traced bad history of tyrants here in our New World and how that tyranny imperiled whole populations. These last 2 submissions address matters of economics. The full series on Unequal Justice is cataloged here as follows:

  1. Unequal Justice: Soft Tyrannicide to Eliminate Bottlenecks
  2. Unequal Justice: Economic Crimes Against Tourists and Bullying
  3. Unequal Justice: Envy and the Seven Deadly Sins
  4. Unequal Justice: Student Loans Could Dictate Justice

In this series, reference is made to the fact that Bad Actors can always disrupt the peace and prosperity in society; sometimes the Bad Actor is a person, a group or an institution. So there is always the need to be On Guard to ensure justice is optimized in the region; for all people: young and old. Yes, the need for justice in the Caribbean societal engines transcends borders, politics, class and race. We need to make sure the “game is not rigged”, and we can abate and mitigate unequal economic structures.

The best counter-strategy for Income Inequality is a thriving Middle Class. The best way to get to the Middle Class is through educational empowerments; (see Appendix below). The subject of educational empowerments has been addressed in many previous Go Lean commentaries; see this sample list here:

http://www.goleancaribbean.com/blog/?p=17992 What Went Wrong? Losing the Best; Nation-building with the Rest
http://www.goleancaribbean.com/blog/?p=16882 Exploring Medical School Opportunities … as Economic Engines
http://www.goleancaribbean.com/blog/?p=13472 Future Focused – College, Caribbean Style
http://www.goleancaribbean.com/blog/?p=9751 Where the Jobs Are – Teaching for Animation and Game Design
http://www.goleancaribbean.com/blog/?p=8669 Detroit makes Community College free … as part of their Turn-around
http://www.goleancaribbean.com/blog/?p=6269 Education & Economics: Welcome Mr. President
http://www.goleancaribbean.com/blog/?p=5482 Bad Model: For-Profit Education: Plenty of Profit; Little Education

We must be On Guard and ever vigilant in our battle against inequality and unequal justice.

There will always be villainy – Bad Actors…

… sometimes the villainy is just one character, a tyrant or a bully, sometimes its an organized criminal organization and sometimes still, its a broken eco-system. We must be prepared to abate, mitigate and remediate all tyranny.

We urge all Caribbean stakeholders to lean-in for the empowerments described here-in and in the book Go Lean … Caribbean. Our quest is the full elevation of the economic, security and governing engines of our society. We can do better. It is conceivable, believable and achievable to elevate all 30 Caribbean communities – individually and collectively. We can succeed in making our homelands better places to live, work and play. 🙂

About the Book
The book Go Lean…Caribbean serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU), for the elevation of Caribbean society – for all member-states. This CU/Go Lean roadmap has these 3 prime directives:

  • Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
  • Establishment of a security apparatus to ensure public safety and protect the resultant economic engines.
  • Improve Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society.

Download the free e-Book of Go Lean … Caribbean – now!

Who We Are
The movement behind the Go Lean book – a non-partisan, apolitical, religiously-neutral Community Development Foundation chartered for the purpose of empowering and re-booting economic engines – stresses that reforming and transforming the Caribbean societal engines must be a regional pursuit. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 13):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xvi. Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes … can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation. 


Appendix VIDEO – How college loans exploit students for profit | Sajay Samuel –  https://youtu.be/YXWKuK-Qsu4

“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.

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Appendix – Education and Economic Growth

The relationship between economic growth and education has been one of the central threads of economic analysis. Both Adam Smith in the 18th century and Alfred Marshall in the 19th century, two important figures for the economics profession, addressed the question of how individual investments in “education” influence the wealth of nations. Throughout the 20th century, as Krueger and Lindahl (2001) point out in their survey of these issues, modern professional economists have been attempting to develop empirical estimates of the relationship between education and economic growth. Some of the most famous names in late 20th century economics made their reputations studying the question of individual returns to investment in education. Jacob Mincer (1974), Gary Becker (1964) and a long list of researchers inspired by their work have produced hundreds of books and papers.

Much of this literature is highly technical in the sense that it uses formal econometric models to test hypotheses using empirical data. The bottom line of this impressive work is that the economic evidence supports the view that both public and private returns to investment in education are positive—at both the individual and economy-wide levels. The vast technical literature on this subject can be subdivided into two general areas:

  1. The micro-economic literature looks at the relationship between different ways of measuring a person’s educational achievement and what they earn. Most studies show consistent results for what can be called the private or personal payoff from education. For individuals this means that for every additional year of schooling they increase their earnings by about 10%. This is a very impressive rate of return.
  2. The macro-economic literature examines the relationship between different measures of the aggregate level of educational attainment for a country as a whole and, in most cases, the standard measure of economic growth in terms of GDP. Once again, most studies find evidence of higher GDP growth in countries where the population has, on average, completed more years of schooling or attains higher scores on tests of cognitive achievement. However, as will be explained in somewhat greater detail below, given the diversity of national experiences, particularly over time, it is hard to settle on one figure for the rate of return at a social level.

(Based on established and historic Economic Theories – By Riel Miller, www.rielmiller.com; commissioned by Cisco Systems, Inc.)

Source: Go Lean…Caribbean Appendix C2 – Page 258

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