Why Pretend?

Data on non-repayment rates shows a new dimension of the problem, particularly with for-profit colleges and historically black institutions.

Source: Student Debt Is Worse Than You Think – The New York Times

I had to take the opportunity to comment that

“The Academic-Financial Complex runs what I call a “pass-through” scheme. I understand the academic part well since I’m a former professor. Before I explain how it works, here is a quote from Bill Gross, someone who certainly understands the financial side.

“…Universities are run for the benefit of the adult establishment, both politically and financially, not students…” (Quoted with permission. See my blog inside-higher-ed for the link.)

So, how does this “pass-through” scheme work?

It’s easy. Money passes through naïve “customers” (once quaintly called “students”) to universities, then businesses and investment companies. “Student” borrowers then pay back the loans to investors.

Maybe we could just skip the faux-educational part.

We could require most young people to pay universities principal and investors interest on a monthly basis. The universities could continue with their building projects, hedge funds and entertainment businesses (aka “sports”). The young folks could party or work, or whatever. We would have a system similar to today’s, but more efficient.

The reason I said “most” young people is that the rich and some of the talented and gifted would get to go to college just like before.

This whole scheme would be a little complicated but I’m sure there are professors who know how to work it all out. Of course, the young people would have to pay them for their time.

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