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Comment by jcfrei | Hacker News Reader

So, help me out here. Who is profiting from this? The companies who service the debt? Were costs for higher education in the US inflated under this program or is this a false impression?

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"She spends her days fielding calls from government-contracted debt collectors.

The companies making those calls are just one part of an ecosystem feeding on federal student loans. There are also debt servicers, refinance lenders, firms that help former students stay out of default and for-profit schools that make money as borrowers try to repay more than $1.2 trillion in government-backed education debt."

It's literally the first and second paragraph of the article.

I would say it is a way to boost the dollar. The alternative is everyone paying the education year by year, as taxes, during their lives as citizens. But here there are people who are forced to pay it all in one go. So this boosts the short-term demand for dollar, more than if it was spread out as a life-long tax. So it seems to me, all well-off Americans benefit, and it is at the expense of the poor, and the competing currencies. It doesn't matter if some default, as long as most pay it off. But I'm not an expert. It's just a thought.

It pushes higher money creation at the point of inception. Debt can be created instantly and enters the system and becomes "dollars" as another account is credited to balance.

Then over the lifetime of the ex-student they pay back this "money" plus interest which destroys the principal and consumes existing "money".

It should be noted that the creation of the debt benefits "growth" in the present electoral cycle whilst the repayment occurs mostly in other electoral cycles.

for-profit colleges profit

You think all colleges don't profit? The fact that a place like Princeton can be considered anything but for-profit is criminal.

I agree with your sentiments, if any college is taking any form of payment from Federal loans, I would say they are profiting. I think the focus on explicit "For profit" colleges is a fake out, as if no other actors are capable of questionable behavior. My parents ~$2k per semester at a 4 year uni in the early-mid 80's makes this all look like a scam… but I dropped out from a ivy and maintain a comparatively little in debt than avg so that's my position… I see it as cutting my losses, and four years since, I think I came out ahead… many ways to pursue knowledge and I rather leave out servicing interest on debt from my life. I'm ok with others having different opinions on this, after all it's their life to live.

CSU (not UC) was quite a bit cheaper than that in the mid 80s. I believe I paid $210 for fall '83.

Of course, that was before we were far into (sarcasm) The Golden Age of Reaganism - schools were more funded by tax money than loans, so the budgeting wasn't left up to the credit whims of 18 year olds. Tuition/fees went up quite a bit by '88, though still nothing like what we are paying for my daughter now.

I just don't see how people want to deal with this, I mean I can understand if they think if they need $x in order to do $y (but for most, usually having that $x isn't the only thing people will consider in order for one to do $y, and increasingly acts as a negative signal, not to mention all the bs people complain about which gets annoying to listen to when they keep doing the same thing…), but I think we've long passed the Rubicon as far as this is concerned. I perceive it as insanity, and I almost don't feel bad anymore if people keep playing this game with their lives, makes it easier for people who opt out.

The question is silly. It's common knowledge that the degree inflation masters of the University of Phoenix, APUS, Liberty, DeVry, Capella, Kaplan U, etc., are all the ones cashing in on this.

It doesn't seem like they would explain all of it. U Phoenix is a bigger one and collects ~$3 billion a year in tuition:

http://biz.yahoo.com/e/151022/apol10-k.html

Which still fits in under cashing in, but there must be more to the story than for profits.

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