Posted on 02/20/2018 7:02:15 AM PST by reaganaut1
During the housing boom of the 2000s, jumbo mortgages with very large balances became a flashpoint for a brewing crisis. Now, researchers are zeroing in on a related crack but in the student debt market: very large student loans with balances exceeding $50,000.
A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt.
As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt.
“This is comparable to mortgage lending, where a subset of high-income borrowers hold the majority of outstanding balances,” write Adam Looney of Brookings and Constantine Yannelis of New York University.
“A relatively small share of borrowers accounts for the majority of outstanding student-loan dollars, so the outcomes of this small group of individuals has outsized implications for the loan system and for taxpayers,” the authors say.
The problem is particularly acute among borrowers from graduate schools, who don’t face the kinds of federal loan limits faced by undergraduate students. Half of today’s big balance borrowers attended graduate school. The other half went to college only or are parents who helped pay for their children’s education.
(Excerpt) Read more at wsj.com ...
This is a problem created by the government. If the government steps away form backing student loans, this problem will self correct.
When this blows up in Fed.gov’s face, just like Fannie and Freddie, people will be amazed to see how much outright fraud is in this system.
Perhaps, but the real solution to making colleges and universities ‘affordable’ is ceasing with the practice that everyone should have a college degree and then placing stricter requirements on government and private college funds, etc. Having taught at a university for nearly a decade, whether a college is for profit or non-profit, everything revolves around the $$$$! Research how many actual students are paying verses those receiving Staffords, etc. End this sh** and colleges and universities will inherently have to reduce prices to compete for students and real $$$.
” . . . how much outright fraud is in this system.”
Ya’ think? Ex. A: “Your Honor, I will be able to post bail and hire my own attorney once my Pell Grant and student loans hit my bursar’s account.”
The taxpayers NEVER signed on for uses of loans like that.
A year of technical school cost me $1,200 in 1974...
As a potential employer, I am interested in how the candidate financed their education. All things being equal, I would pick the candidate who at least paid for at least a part their own education.
The cost of classrooms and professors' salaries is a fraction of the cost of running one of these huge universities these days. They do it because they can.
Sarah Palin said that of all the things she didn’t expect as a candidate, it was to be criticized for paying for her own college education through work and loans. That it took her 5 years instead of 4, never occurred to her to be an indication of anything but hard work.
She said if only she had been a trust fund baby like the eastern Democrat candidates, she could have completed college easily in four years.
For what it’s worth, she paid back her loans.
Oh, I was giving just one tiny example. I am fully aware of the bloated administrations and faculty costs. I worked many years in a land-grant university city. Eye opening, indeed.
where in the Constitution does it permit the federal government to give my money to some millennial twit to study Trangender Cambodian Poetry or some such nonsense?
Over there, in the emanations and penumbras.
There will be some short-term hardship.
Nice "dangling participle" there!
I take it that you didn't teach English?
Regards,
Student loans should be illegal.
Maybe they think the government will bail them out, maybe they think "screw the big banks they owe it to me" or whatever.
I had $4,000 in student loans when I enlisted in 1971. That equates to about $20,000 in current dollars. I paid the loan off in three years while making about $375 a month or less. That $375 looked like about $1,700 in 2017 bucks about 1/3 of contemporary salary expectations of today's graduates.
Alright, I did get an all expense paid trip to Thailand and lodging for a year, but no graduation summer in Europe, no Porsche, no designer dog, no condo in LaJolla, no health club membership...yada yada yada.
Around $7,000 in today's money.
The encouraging thing is that the raw number of borrowers does not yet seem to have reached critical mass to where loan forgiveness becomes a political inevitability.
But if nothing is done we WILL get there.
I’ve got one full time in college, one part time paying her own way.
The full timer is going for engineering. About 1/3 was scholarships. We loaned him most of the rest. He has a small amount of student loan debt which he plans to pay off very rapidly.
His college job actually has tuition reimbursement so thats also covering part of it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.