“Trillion Dollar Day” was the day last April when student debt in the U.S. exceeded one trillion dollars, sur-passing even U.S. credit card debt. Student debt amounted to only $100 billion in 2010, just two years ago! It is growing faster today than did the sub-prime mortgages during the housing bubble.
Since the 1960s, four-year public universities have been a way out of poverty for a majority of Americans. On January 24, 2011, the New York Times reported the dire news: “In most states the era of affordable four-year public universities, heavily subsidized by the state, may be over.”
Now students virtually have to ask Wall Street’s permission to go to college — by accepting student loans. Students go into debt to get an education to get a job to pay off the debt. But employers regularly check credit card status and will fire you if you are not current on the debt you took on to get a job in the first place.
The current generation of college students belongs to the most indebted, as well as the most criminalized, generation in history.
Thirty-six million Americans have student debts. 94% of students getting degrees have become indebted. States increase student fees, which further increases debt and feeds private profits. University of California fees, for example, have doubled since 2007.
More than 80% of the class of 2011 have had to move back in with their parents — an unheard-of figure. Only one student in two of the Class of 2012 will find a job that matches their degree.
The rising student movement, from California to Quebec to everywhere else, has taken to the streets to save public education. As students fight tuition increases, often focusing anger on school administrators, they are also raising the question of the role of the banks in the situation they face. The next step is to confront the question of how power is held in this country and how the power of the government is used for the benefit of the banks and corporate class, not to educate young people. This requires examining some critical questions that clarify the way forward.
Is the destruction of public education the result of the actions of a few “rich guys”, or is it an attack by the capitalist class on the working class? Can we return to the way things were or must we fight forward to a new system? Can a political attack be countered by incremental reforms, or must the economic system be transformed? How can we pass over from defensive positions to take the political offensive?
The Crisis in Higher Education
The root of the current crisis is that public education at all levels, once perceived as a public good, has always been a publicly financed system to prepare the workers the capitalist system needs. The introduction of the microprocessor in the 1970s led to increased computerization that replaces human labor. Fewer workers are needed, and the capitalist class is reconfiguring higher education accordingly.
In the late 1960s, student strikes by African Americans and Latinos forced open the doors of higher education to millions of poor students of all colors. By the 1980s, the capitalists had begun promoting a “War on Drugs”, creating a political climate where politicians could be “tough on crime”. Millions of mostly African American and Latino men are now imprisoned in what has become the world’s largest system of incarceration and control. This Prison-Industrial Complex has been financed at the state level by revenue taken from public higher education.
Corporations expanded into the vacuum left by these cuts to public education, claiming that corporate practices were more efficient and cheaper than those of the state or federal government. This corporatization meant forcing universities more tightly into a profit-making model and integrating them into the corporate system.
Under corporate pressure, universities began to reduce their offerings while entering into research determined by corporations, which then have proprietary control over the results. By the mid 1990s, public higher education institutions such as the University of California, Michigan State and others received more revenue from corporations than from state governments. Student fees and tuition have increasingly been diverted to support corporate research, rather than corporate fees being used to keep tuitions affordable.
In 1994, the North American Free-Trade Agreement (NAFTA), passed by the Clinton administration, defined public education as a “service,” a consumer product, a commodity offered by the market, not a right guaranteed by government. This treaty opened the doors to privatization — diverting public assets into corporate hands.
Student Debt — Financialized and Criminalized
Since the financial meltdown of 2008, government at all levels has become actively involved in guaranteeing corporate profitability in industry after industry. Government has actively restructured the financial industry, auto, health care, energy and public education. Under capitalism, maximum profit trumps every social necessity. In this period of austerity and declining profit, public education, as with all public goods, will ultimately be entirely privatized. This requires that the government abandon its accountability to the public, even as it gives trillions of dollars in public taxes directly to corporations.
Students are forced into debt so that corporations can profit. This is the inevitable result of turning a social good into a commercial process.As the 21st century began, students were told that they were doing everything right — take out more student loans, get a Bachelor’s degree and get a good job. When everything collapsed in 2008, students discovered that they had become debt slaves and that the jobs had vanished. Today a new stage in this process is emerging. Higher education has become financialized, transformed into a financial security like a sub-prime mortgage. Public higher education is becoming configured as a mechanism to benefit Wall Street, not students.
Student fees are immediately invested by universities in bonds so the university can finance more corporate research. Student debt is “securitized” into SLABS — Student Loan Asset Backed Securities. Like mortgages, SLABS are sliced and diced, sold and re-sold daily to turn students into an ATM for Wall Street. The speculative market on the trillion dollar student debt is estimated to be over $2.67 trillion. The student loan bubble may be the next hit to the economy.
Highly-indebted college students now see that criminalization inevitably follows financialization. “Corporate persons” have the right of individuals to go bankrupt, but individuals do not. The State steps in and uses its coercive powers to collect the debt. There’s no way out. Federal law guarantees these profits to Wall Street, since students cannot discharge student loan debt through bankruptcy. Further, the Department of Education assumes this debt as a guarantee to the speculators. In essence, it has become a crime not to pay off student debts.
These modern forms of criminalization extend legal sanctions to students that go further than incarceration. The State empowers private corporations as collection agencies. They are given extraordinary legal powers to garnish wages, tax returns, social security, and disability payments. They can also, without a court order, suspend professional licenses and terminate public employment. This is similar to the situation of felons on parole, who are likewise still ensnared in the criminal justice system, even though they are out of jail.
Meanwhile colleges at all levels are eliminating classes, making it harder to get a degree. Increasingly schools are denying students the chance to make up a course they fail. Turning people away from public higher education “creates the market”, commercializing education to benefit for-profit higher ed corporations.
Parasitic “education” corporations, like Kaplan and the University of Phoenix, reveal the future capitalism has in store for the working class. For-profits are principally financed by student loans. They have 12% of the students, but get 26% of the student loans. They charge much more for each credit, yet graduate a mere 20% of their students. The University of Phoenix has the 4th largest student population in world and gets 90% of its revenue from student loans.
For-profits spend half their revenue — guaranteed by student loans — for profit, executive salaries and marketing. The government is actually forcing students to fund the privatization of their own education!
The Emerging Political Direction
The form of the crisis today is the open reorganization of government at every level to become agents of corporations, rather than promoting the interests of the public.
Student debt, financialization and criminalization are part of a government-led system that benefits corporations and is enforced by the State. This is the program for public higher education that is put forward by the class that owns the banks and corporations. What then is the program of our class — those who have everything to lose and nothing to gain by the protection of private property? The government nationalized bank debt by buying it for trillions of dollars. It can easily nationalize student debt. Higher education should be free for everyone. The capitalists’ goal of private profit is completely opposed to the interests of the public. Corporations have no business in the government. It’s time to get them out. Their tyranny and rule has no legitimacy, precisely because it attacks the public.
What’s happening to public education shows that the people will either have to take over the corporations, or corporations will destroy society and the planet in the bargain. The public good is the measure of everything. This is the political battle of our time.
We cannot fix public education by returning to the status quo. The public educational system of the industrial era is being dissolved by the new possibilities of electronic technology. The resources are there for a new public education system that could go beyond what we see now. Education must be, is, a public good that benefits all of society.
Revolutionaries grow out of these struggles as they confront a system that does not allow them to survive. The economic crisis has the potential to pass over into a political crisis where the political power of two antagonistic classes becomes central. Revolutionaries must keep the struggles on track to eliminate the power of the corporations, which are causing the destruction of public education. This defines the direction of our strategy and tactics. Every issue must be used to directly challenge the capitalists’ right to rule and expose the question of political power. Every action must help us to form ourselves into a political force that can achieve political power for our class.
September/October.Vol22.Ed5
This article originated in Rally, Comrades!
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