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The Long Road to the Student Debt Crisis
Wall Street Journal ^ | June 7, 2019 | Josh Mitchell

Posted on 06/08/2019 3:29:53 AM PDT by reaganaut1

The U.S. student loan system is broken.

How broken? The numbers tell the story. Borrowers currently owe more than $1.5 trillion in student loans, an average of $34,000 per person. Over two million of them have defaulted on their loans in just the past six years, and the number grows by 1,400 a day. After years of projecting big profits from student lending, the federal government now acknowledges that taxpayers stand to lose $31.5 billion on the program over the next decade, and the losses are growing rapidly.

Meanwhile, four in 10 recent college graduates are in jobs that don’t require a degree, according to the New York Federal Reserve. And many American colleges are dropout factories: At more than a third of them, less than half of the students who enroll earn a credential within eight years, according to the think tank Third Way.

The U.S. is shoveling more and more money into a highly inefficient system that, polls find, Americans are increasingly dissatisfied with. College tuition has soared 1,375% since 1978, more than four times the rate of overall inflation, Labor Department data show. The U.S. now spends more on higher education than any other developed country (except Luxembourg)—about $30,000 a student, according to the OECD. Meanwhile, college presidents are being handsomely rewarded for the success of their enterprises: Seventy of them, including a dozen at public colleges, earned over $1 million in 2016-17, according to the Chronicle of Higher Education.

How did we get here?

The student loan system was built in the 1960s on the overarching belief that higher education is a safe and worthy investment for both society and the individual. At the time, the first children born after World War II—the baby boomer generation—were beginning to graduate from high school and enter college.

(Excerpt) Read more at wsj.com ...


TOPICS: Business/Economy; Government; US: Massachusetts; US: Vermont
KEYWORDS: 2020election; berniesanders; college; election2020; elizabethwarren; fauxahontas; massachusetts; slingingbull; studentloans; vermont
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To: rb22982

Should it really take a personal finance class? The vast majority of people on the planet have never had a personal finance class. And what can that class do, tell them don’t sign up for college debt unless you’re smart enough to make the money to pay it back? How about the kid who blows his money on hotrods, drugs and girls at 18, do we need to bail him out too?

And how about for their second, third, fourth and fifth years of debt—are they still somehow too idiotic to be responsible for that too?


101 posted on 06/09/2019 7:59:14 PM PDT by 9YearLurker
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To: rb22982

Huh?

People actually attended college and grad school in the 1970s, 1980s, and 1990s. Were you not born yet?

And, yes, they had invented student loans waaaaayyyyyy back then.

In the days of yore, the checks were issued by private banks; Citibank was a big player, and subsidized by the federal government.

The loans that are crushing seniors are the ones they took out to pay for their education decades ago.

What are your sources for your data?


102 posted on 06/10/2019 2:19:51 AM PDT by jazminerose (Adorable Deplorable)
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To: jazminerose

First of all, the cost of college since the since the 70s has gone up 600%+ in real cost in that time. it’s up 150% in cost since I went in 2000 alone. Second, any debts from back then would be paid off at this point even in the worst case scenario. Third, total student loan debt outstanding from 2001 to 2016 in constant dollars increased from $340 billion to to $1.3 trillion. Student loans now are 1.6 trillion. Even if you assume 0% of the $340 billion outstanding in 2001 was paid off (which is a bad assumption), it means 80% of student loans outstanding were originated in the last 16 years. The amount of student loans issued in 1990 was less than 20 billion a year and in 1970 would have been a mere fraction of that.


103 posted on 06/10/2019 6:15:15 AM PDT by rb22982
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To: 9YearLurker
Absolutely should be taught in a personal finance class. What's more important in HS for a senior's long term success? A 4th year of literature or personal finance? You do know 50% of the population couldn't come up with $500 without borrowing money now right? Sure lots of people make it because they are successful with their jobs (eg: myself) or their parents cover them or they get scholarships. But plenty are not successful

And how about for their second, third, fourth and fifth years of debt—are they still somehow too idiotic to be responsible for that too?

You are acting like student loan debt is similar to other forms of debt with immediate cost/benefit. That is not how student loan works. Kids are brainwashed to believe it will all work out! Take on all this debt. You don't need to pay a penny while in college! You'll get an amazing job and the cost of this debt will be nothing! For a lot of people it does work just fine. What about the 50% who don't complete their degree because they realize they aren't truly cut out for college? What about those who were sold a bill of goods on a crappy major? What about those who enter the economy in a recession? What about those who just aren't that bright and even if a local college says they have a degree simply aren't smart enough to cut it in the real world for a high paying job? By the time the person realizes 2 or 5 years post college it was a mistake the debt has long since been incurred.

104 posted on 06/10/2019 6:43:53 AM PDT by rb22982
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To: rb22982

They want and get a massive six-year vacation on the taxpayers’ dime.

Enough of this “brainwashed so we don’t have to pay for our six-year vacation” crap!

Go over to Democrat Underground if that is your approach to things.


105 posted on 06/10/2019 7:00:26 AM PDT by 9YearLurker
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To: 9YearLurker
Wow, multi straw-man argument that completely misses the point! Congrats for being an idiot. Let me see if I can explain it to you more slowly. Everyone in a kids life in a position of power - EVERY ONE - tells them its a great idea. The reward, if it comes, is 6 months to 5 years AFTER their FINAL year. There is NO WAY for the young adult to tell if the people of positions of power are right until the debt is incurred.

This wasn't a big deal back in the 70s and 80s because the cost of college was ~1/10th as cheap as it is today in real terms. It was an issue but less so 20 years ago when I went off to college and borrowed $20k (and my wife did similar amount), which I paid back, plus interest, in full. I'm not in favor of eliminating the debt these kids have but some pity absolutely. I also want to change it so that future kids have a fighting chance. I'd require personal finance classes in HS (and freshman year in college for anyone taking Stafford loans). I'd tie stafford loan limit amounts to graduation rates and job placement rates by university. I'd let student loans be dis-chargeable in bankruptcy again with 50% off the loss shared by the college. Among other things.

106 posted on 06/10/2019 7:36:07 AM PDT by rb22982
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To: rb22982

You are wrong and patronizing and not conservative.

And the feds just need to get out of funding higher ed completely.

Everyone would be better off with these students working their way through community college to start, not incurring debt, and having productive routes off the merry-go-round.


107 posted on 06/10/2019 7:40:13 AM PDT by 9YearLurker
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To: 9YearLurker

“You are wrong because I say so!” Thanks for the laugh - seriously - my co-workers just looked at me funny. I’d 100% love to get the federal government out of college, out of K-12, out of healthcare, out of retirement and a number of other things it has no business being involved in. But given the extremely unlikelyhood of that happening, I would suggest changes that actually have a prayers chance of passing that would drastically improve the situation.


108 posted on 06/10/2019 7:46:27 AM PDT by rb22982
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To: rb22982

You are offensive and insulting and wrong. Look back at what you have written to me.

Idiot yourself.


109 posted on 06/10/2019 7:47:58 AM PDT by 9YearLurker
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To: FreedomPoster; thoughtomator

>
Great summary on that last. We are turning our young into indentured servants. I do see quite a bit of awareness on this by younger folks over at r/The_Donald, FWIW.
>

Um, we’ve ALREADY allowed our *taxpayers* to be turned into indentured servants via the illegal, unconst. 1) size/scope of Fedzilla 2) the welfare state (aka Socialism).

Hell, many on FR *applaud* the same, just visit any SS/MediXYZ Ponzi scheme thread. You’d think they actually PAID into something instead of simply taxed w/ false premises\promises.


110 posted on 06/10/2019 7:49:24 AM PDT by i_robot73 (One could not count the number of *solutions*, if only govt followed\enforced the Constitution.)
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To: 9YearLurker

again - “You are wrong!” I can’t tell you how but you are!!


111 posted on 06/10/2019 9:12:15 AM PDT by rb22982
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To: rb22982

Putting debtors’ debt or blame on others is wrong and not conservative. I don’t know what your link to what debt you want to stick the taxpayers with but your logic and argument are pathetic. A free country is dependent on people being free to make good and bad choices and living with the consequences.

But again, you’ve already been foul and insulting to me and I am not responding to you again.


112 posted on 06/10/2019 9:17:04 AM PDT by 9YearLurker
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To: 9YearLurker
Putting debtors’ debt or blame on others is wrong and not conservative.

Not holding parents, schools, counselors and government etc accountable for miss-representing and outright LYING to kids about how valuable college is and how easy it is to pay back your loan and that everyone gets a good job isn't conservative. It'd be like the bank telling you you could borrow at 4% on your mortgage and then in year 6 changing it to 15% and going "hah! Jokes on you! Buried in the fine print on page 187 in the footnotes we have the right do it! Suck it up, sucker!." - except worse, these are people you trust and society tells you to trust - no one trusts banks.

You threw out the first insult and continually make up straw-man arguments and ignore very easy common sense things. I'd love to get the government out of the student loan game but until that happens, common sense changes such as person finance classes (which are very helpful beyond student loans) and tying federal government loan limits and the like by school based on results would DRASTICALLY improve the situation.

113 posted on 06/10/2019 9:22:15 AM PDT by rb22982
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