Student Loans & Sallie Mae

I am growing increasingly concerned about the levels of student loan debt students are owing. It is all the more sad as people are accruing debt to improve themselves and start new careers.

I have given this advice to college students who have asked me for college/graduate school advice: please be prudent about taking out student loans (less is better). The loans must be repaid with interest.

It is not easy to borrow little given the increases in tuition costs. I want the students to owe as little as possible to the gluttonous Sallie Mae.

Regarding Sallie Mae, the large educational loan monster company, I have no respect for this organization. Sallie Mae’s business practices are often in direct conflict with the borrower’s interest.

For example, the rule making it illegal to refinance Sallie Mae’s consolidation loans is nothing less than a demonstration of naked avarice despicable. Sallie Mae’s lobbying for the measure is all the more galling. (Google: Alan Collinge, Student Loans: A Cash Cow for Industry, Ball and Chain for Students).

If interest rates on a home mortgage go down, the borrower can refinance the mortgage to take advantage of the lower interest rate.

My concerns with the rising student loan debt burden and the absolute greed of loan companies like Sallie Mae are the reasons why I have linked to studentloanjustice.org in my blogroll.

Causes for Concern & Worry: Exorbitant Airline Executive Compensation; Outsourcing of Aircraft Maintenance

Airline companies are difficult businesses to operate. Despite the challenges airline executives face in the airline industry, airline executives are not begging at street corners for food being rewarded handsomely. The employees, who cut their pay and benefits (wage concessions) for the sake of helping the company regain profitability, do not receive any share of the good fortune. The employees rightfully become offended with being left out:

American Airlines executives should have been celebrating last week during their annual stockholders’ meeting, the first in six years at which they could spotlight an annual profit.
Instead, chief executive Gerard J. Arpey spent much of the session fending off questions from irate employees. After agreeing to accept massive pay cuts in recent years to keep American flying, the employees said they were upset that the carrier’s top officers have been given stock-based bonuses worth millions of dollars. One employee at the meeting called Arpey and other executives “arrogant, greedy, selfish and heartless individuals.“

The goal of a firm is to increase the price of its common stock. Simply put, the labor union’s wage concessions helped increase the price of the airlines’ common stock (and the value of airline executives’ stock options), thus, there is little chance that employees will see their former wage rates again. Indeed, employees may be asked for more wage concessions.

The common stock price goal ignores the fact that airline executives cannot operate the airline businesses they manage (imagine a CEO preparing ticket holders to board a flight as a gate agent). Skilled, devoted, and fairly compensated employees are necessary to run the day-to-day operations of an airline: the pilots, the flight attendants, the ground crew, the ticket and gate agent crew, and the aircraft mechanics. [I'm not an expert on airline operations, so I hope I got all sectors of the vital airline labor pool.] All of these jobs require skill and talent, some have the additional responsibility of safeguarding human lives (pilots, aircraft mechanics, in particular).

A disconcerting related issue: airline maintenance is being increasingly outsourced to mechanics outside of the airlines in the United States and also outside the United States to reduce costs (and increase common stock prices). Where does safety of the persons flying in the airplanes fit in the equation?

The Federal Aviation Administration (FAA) stated that outsourcing airline maintenance in and outside of the United States does not pose a safety risk. The Inspector General of the Department of Transportation (DOT) stated in testimony that the FAA has to have more vigorous oversight [DOT OIG testimony].

I am already equivocal about flying (it’s disconcerting to be so high above the ground), so this move to increase outsourcing by airlines without a equally robust inspection system only makes the situation worse. I prefer well-paid, skilled mechanics who work for the airlines for such a vital job.