Student Loan Bubble

Accuracy in Academia ^ | August 18, 2010 | Deborah Lambert

[AccuracyAcademia]

For years, America has bought into the idea that college degrees are not only badges of honor but must-have tickets that miraculously open doors for the recipients and practically guarantee lucrative careers.

Of course, they were told, you’ll have to pay off your student loans, but consider this as “good” debt – investment debt that creates value – as opposed to “bad” debt,” i.e. those car payments or travel expenses.

If that’s true, then we’re on the verge of suffocating from good debt these days.

“From where I’m sitting, the buildup of the national student loan balance looks like a massive betrayal of trust,” noted Anya Kamenetz in the Huffington Post. “People have been told for decades that this is ‘good’ debt. In fact it’s really bad debt,” she explained.

Latest figures show the “total balance of all outstanding U.S. student loans . . . is now estimated by Mark Kantrowitz of Finaid.org at more like $830 billion — $605.6 billion in federally guaranteed student loans . . . and a further $167.8 billion in private student loans, with interest rates that hover around 18-20 percent.”

[dalebert]

dont worry Obama can brainstorm us out of it..

[kittymyrib]

Too bad there isn’t a statistic that reports unemployed college graduates. Ouch...that would be embarrassing for all those expensive colleges that can’t guarantee anyone a job, though graduates have invested tens of thousands of dollars for their worthless degrees.

[pingman]

And the assumption is that this wasn’t planned?

[pingman]

Yet the “focus” of the Government is going after ‘for-profit’ community colleges that train folks for blue and pink collar jobs?

[goseminoles]

I think most with degrees get jobs. I have a couple liberal arts degrees, have paid off my loans, and am doing just fine.

[RobRoy]

I’m 56 and have done very well with out a college indoctrination.

[E. Pluribus Unum]

Much of the student loan debt load is the result of reparations, where universities overcharged white students, forcing them to take out loans, and used the proceeds of the exorbitant tuition fees to underwrite "scholarships" to black kids. This is the primary reason college tuition has risen 500% since 1980.

Student loans are the ONLY debt that cannot be escaped through personal bankruptcy.

Now, Obama is talking about making people with outstanding student loans indentured servants to the federal government.

Coincidence?

[Atlas Sneezed]

Student loans are the ONLY debt that cannot be escaped through personal bankruptcy.

---

True, and they are also atypical in that they ARE forgiven at death, unlike other loans that are offset against assets when the estate is probated. Essentially, they function like a life insurance policy.

[E. Pluribus Unum]

Essentially, they function like a life insurance policy.

Or an anchor around your neck.

[Atlas Sneezed]

Or an anchor around your neck.

---

True for many who are pulled into getting degrees that really aren’t financially justified. But me and the Mrs. happily carry our balances we could easily have paid off, because fixed rate loans that discharge on death are too good to let go of, especially with the inflation ahead (perhaps after a period of deflation.)

[E. Pluribus Unum]

I got my three degrees by the pay-as-you go method.

Debt makes you vulnerable. I don't like being vulnerable.

[Dayman]

Students don't need to go terribly in debt to get a quality education. Too few gage the cost of the school against the value of the degree they are going to try to earn Going to a $50k/yr school to get a degree that will get you a $40k/yr job isn't a smart idea. Doing that then complaining about having $100k+ in debt and too poor of a job to pay it off isn't the hallmark of an educated person.

High schools should do a better job instilling a realistic outlook of what they can expect when they get out of school, and help them to make school choices appropriately, whether it's a community college, state school, vocational school, etc. High schools are doing kids a disservice drilling into them the notion that they have to go to the best, most flashy, expensive school they can get into regardless of what they want to do for a living.

[Valpal1]

Student loans are just another wealth transference from the middle and working class to the wealthy ruling class and their lapdog academics.

The student loan bubble is what finances all those lovely paychecks and perks that professors get while their interns and adjuncts do the real teaching for a pittance.

Easy money has caused tuition inflation in order to absorb it. It’s as predictable as Obama’s socialism. Of course they will go after the “for profit” vo-tech schools because they’re getting too much of the pie that the state colleges and Ivy League want to keep to themselves.

I expect the “for profits” will quickly hire lobbyists and make appropriate campaign donations in order to protect their place at the trough.

[pepperdog]

Personally I doubt that 75% of the jobs require any college indoctrination at all. Tech schools are the real $$$ producers as far as income is concerned. Also the apprentice jobs, like electrician and plumber etc.

[outpostinmass2]

I never really bought into the whole “good” debt versuses “bad” debt thing. Debt is debt. The way I looked at it is a person can only have so much debt. If you have too much “bad” debt then you cannot at the same time have very much “good” debt. Debt needs to be paid off as soon as possible whether you deem it “good” or “bad”

I still don’t consider a home mortage to be good debt since most people will die in their homes anyway. Most people are over-invested in their homes. If you can rent out your home and make a profit then that is “good” debt.

[Liberty1970]

18-20%???

My wife grew up in a 'working poor' family and graduated with her M.Sc. with about $27,000 in loans. Her interest rate now is locked in around 2.25%. I have to keep telling her that I don't WANT to pay it off, I want to let it ride as long as possible while I invest the money that would otherwise go into paying it off and earn more than that.

[klgator]

Classic law of supply and demand. As student loans became more available, tuition rates rose. Not unlike when mortgages became more available, housing costs rose.