STUDENT DEBT: America's Next Bubble?

[Geee]

Fox News:

“I still have student loans,” David Guard, a graduate of Gettysburg College and American University, told Fox News recently, as lawmakers and the White House bickered over the debt ceiling. “I could see an increase in those interest rates.”

Such fears are commonplace and spreading, as educators, economists, parents, and students watch with growing dismay what some are calling America’s next bubble: the skyrocketing volume of student loan debt.


Figures provided by the Federal Reserve Bank of New York show that since 1999, outstanding student loan debt has grown by more than 511 percent. Over that same period, all other household debt in America – the sum total of all credit card bills, all auto loans, even all mortgage debt assumed during the great housing boom and bust that triggered the financial crisis – grew by about 100 percent.

Rising by $100 billion a year, outstanding student loan debt now stands at about $930 billion, and is expected to reach $1 trillion by year’s end.

“Student loan debt has become a macroeconomic factor; it affects the economy,” said Mark Kantrowitz, publisher of the financial aid website www.finaid.org. “Students who graduate with excessive debt are more likely to delay buying a car, buying a house, getting married, having children, saving for their retirement….They're spending less because they first have to tackle their student loan debt.”

Tackling that debt, at a projected monthly rate of .5 to 1.0 percent of the overall amount due, means that an estimated $5 to $10 billion is being sucked out of the economy each month.

What’s more, the country’s dismal job market leads to rising rates of delinquency and default. Unemployed, and under-employed, college graduates have a tougher time making payments on their student loans; as a consequence, the rate at which such payments are falling more than 90 days past due is on the rise.

“Certainly, students have their role,” Michelle Asha Cooper, president of the Institute for Higher Education Policy, told Fox News. “They’re individual consumers. We need them to make wise and appropriate choices about where they go to school, and their repayment options.”

Experts cited a confluence of factors creating the student loan bubble: larger numbers of college enrollees; rising tuition rates; diminishing pools of grant aid; and sometimes extravagant, and unnecessary, spending by institutions of higher learning, who pass their costs on to student borrowers.

Colleges and universities, said Cooper, “have a responsibility to make sure that they are doing everything possible to restrain college costs.”

But while he agrees the explosion in student debt is cause for alarm, Kantrowitz – who earned bachelor degrees in mathematics and philosophy from MIT and a master’s degree in computer science from Carnegie Mellon University – rejects the application of the term “bubble” to the problem. That, he said, would require an “oversupply of liquidity” relative to the value and cost of an education that is not discernible at present.

[Valin]

Last week I was working with a young intern about to start her senior year (chemical engineer) she said when she graduates she'll be $100,000 in debt. That's in 4(?) years at a state university!

(the mind boggles)

[clearvision]

School loan for 100,000 dollars, and what do you get?

Another day older and deeper in debt.

Saint Peter don't you call me 'cause I can't go.

I owe my soul to the government more.

[Pepper]

Clearvision!

Under Obama's worthless economic policies schooling on potentially someone else's dollar looks like a great way to spend 4 or 6 years.

 

Surely someone would explain the calculus of loan to value to these people.

 

Eh, probably not.

 

 

 

 

Get ready for more student loan forgiveness in exchange for votes.

[Argyle58]

Student loan debt is not the only problem. Credit card companies flock to these naive students, giving them pre-approved cards at high interest rates. Many get into serious personal debt over and beyond the student loan debt because they are just not mature or experienced enough to use them properly.

[pollyannaish]

One of the things I keep hearing college educated (and more than college educated) liberals say is that the only thing that will save this country is education and more manufacturing.

 

And I keep thinking, wait. So what you're suggesting is that everyone get college educated and then have a career on a production line? Really? Does this seem cost effective? Do you think people who are willing to work hard for college educations are going to be happy working on a manufacturing line?

 

The other thing is, there is a belief among many elites that if you don't have a college degree your an idiot and need to be spoken to in simple terms. I can tell you from experience that degrees and simple intelligence are not mutually exclusive. The arrogant, better than thou attitude of today's leftists is really quite astonishing. If only they organized everything.

[Casino67]

Student loan debt is not the only problem. Credit card companies flock to these naive students, giving them pre-approved cards at high interest rates. Many get into serious personal debt over and beyond the student loan debt because they are just not mature or experienced enough to use them properly.

 

I think one of the pieces of legislation changed the way credit card companies hand out the cards. I could be wrong, but I think they have to show they have the means to pay their bills. I worked for a cc company and saw how the students got themselves in way over their heads. Miss a payment and the interest rate went outta sight.

[Argyle58]

One of the things I keep hearing college educated (and more than college educated) liberals say is that the only thing that will save this country is education and more manufacturing.

 

And I keep thinking, wait. So what you're suggesting is that everyone get college educated and then have a career on a production line? Really? Does this seem cost effective? Do you think people who are willing to work hard for college educations are going to be happy working on a manufacturing line?

 

The other thing is, there is a belief among many elites that if you don't have a college degree your an idiot and need to be spoken to in simple terms. I can tell you from experience that degrees and simple intelligence are not mutually exclusive. The arrogant, better than thou attitude of today's leftists is really quite astonishing. If only they organized everything.

 

Sad thing is that in the opinion of those same elites, if your degree isn't from an ivy league college, you are still an idiot. I have three degrees, all three from respected schools, but none of them are Harvard, Yale, Brown, etc., so in their eyes I am still a bumpkin.

[pollyannaish]

One of the things I keep hearing college educated (and more than college educated) liberals say is that the only thing that will save this country is education and more manufacturing.

 

And I keep thinking, wait. So what you're suggesting is that everyone get college educated and then have a career on a production line? Really? Does this seem cost effective? Do you think people who are willing to work hard for college educations are going to be happy working on a manufacturing line?

 

The other thing is, there is a belief among many elites that if you don't have a college degree your an idiot and need to be spoken to in simple terms. I can tell you from experience that degrees and simple intelligence are not mutually exclusive. The arrogant, better than thou attitude of today's leftists is really quite astonishing. If only they organized everything.

 

Sad thing is that in the opinion of those same elites, if your degree isn't from an ivy league college, you are still an idiot. I have three degrees, all three from respected schools, but none of them are Harvard, Yale, Brown, etc., so in their eyes I am still a bumpkin.

 

I know. And to think, they are the only ones for the little people. (Read as "people too stupid to take care of themselves.")

[nickydog]

Last week I was working with a young intern about to start her senior year (chemical engineer) she said when she graduates she'll be $100,000 in debt. That's in 4(?) years at a state university!

(the mind boggles)

$100,000!! My, gosh!

[Saltbag]

Last week I was working with a young intern about to start her senior year (chemical engineer) she said when she graduates she'll be $100,000 in debt. That's in 4(?) years at a state university!

(the mind boggles)

 

 

It is truly nuts! Coincidentally my degree is Chem Engineer, and I was able to work my way through college bar-tending and otherwise. That's absolutely impossible now. I graduated in '93 and my total loan outstanding was $9,000. My nephew applied to U of Maryland a few years ago, in state, and his tuition would have been almost 10x what paid 20 years ago. The irony is that he didn't get into the school of architecture with a 4.0 high school GPA, several accolades, and both parents having UMCP as their Alma Mater. Reason? Out of state students get charged more, so they get priority. Not exactly a state school, is it? He's in Virginia Tech and loving it... all the better.

[Casino67]

What did Obama have up his sleeve for taking over the student loan business?

 

Seems as though the Pell Grants increase, then tuition goes up to get the bucks. Congress is always increasing the grant money; tuition is always going up. Chicken or the egg?

[Argyle58]

What did Obama have up his sleeve for taking over the student loan business?

Seems as though the Pell Grants increase, then tuition goes up to get the bucks. Congress is always increasing the grant money; tuition is always going up. Chicken or the egg?

 

By cornering the market on student loans, the financial vehicle for approximately 90% of all grad students, it gives the government the opportunity to force political indoctrination into the educational system. The already have done so with the public school system, now they are trying to get it at the graduate and post graduate levels.

 

Colleges and universities are already bastions of the political left, government is now trying to make it policy, not just proclivity.