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US Student Loans Exceed $1 Trillion
sycodon writes "Politico reports that student loan debt now exceeds one trillion dollars, an amount that should impress even Dr. Evil. Politico further reports that this is one of the more concrete issues driving the OWS protests and provides some enlightening examples of their particular gripes."
Just wait until you see what happens if THIS group starts going en masse into default. At least with houses, there is some collateral there. What are you going to foreclose on when little Johnny goes into default on his $100,000 loan debt because he can't find a job? You going to foreclose on and resell his worthless degree?
And, sadly, this is only going to get worse. Tuition has been going through the roof at universities in the U.S., even as wages for the jobs post-grads get afterwards have remained stagnant. The wages of parents and post-grads have stayed the same, but they're having to fork out more and more for tuition--driving them to even more debt. So it's hardly surprising to find out that student loan debt has increased over 63% in just ten years.
So what do you think the end result is if this trend continues? Either large segments of the population are going to have to give up on college or they're going to have to put themselves in a position where default is almost an inevitability. I guess that could actually have one positive effect. It could finally dispel the idea that everyone can or should go to college (or that a college degree should be considered a prerequisite for any white collar job).
And, BTW, you know who pays when someone defaults? The U.S. government foots the bill, since these loans are federally guaranteed. So Uncle Sam gets to fund the bailout on that one too, just like he did with the banks and domestic car industry.
SJW: Someone who has run out of real oppression, and has to fake it.
Anyone that still believes that America's colleges and universities are "non-profit" institutions, should think again at this. For two of the most obvious examples, I cite you the "Bowl Championship Series" and most college sports in general (namely football and basketball), as well as the fact that student dormitories and student unions have largely been turned into country clubs, with just about every one of them having a Starbucks (heck, that's in the library now, too), and having such amenities as rock climbing walls, gyms with workout equipment that rival Gold's Gym, and many schools are giving every student their own iPad these days. Plus, when most schools in Division I pay their football or basketball coach twenty times the salary of the average professor, and four times the salary of the university president, you know something's fouled up,. . .
I have a hard time sympathizing with anyone who has voluntarily taken on large amounts of debt
With almost any decent job these days requiring a 4-year college degree, what the hell do you expect? Unless your parents are upper-class or have had the foresight to save up the money (with no intervening crises to eat it up), your only hope to get anything better than slave wages at some manufacturing plant (that's probably going to China at any minute) is to get a highly-competitive scholarship or take out a student loan. And there are only so many scholarships to go around.
SJW: Someone who has run out of real oppression, and has to fake it.
With almost any decent job these days requiring a 4-year college degree, what the hell do you expect?
That is why high school is worthless now days. You might as well drop out with a GED and go to community college. High school and GED gets you the same job now days, there's no need to waste those 4 years when you could go to college and at least get an associates and move on to bachelors at a real school.
Of course this only applies to the 99%, the 1% go to Ivy League high schools and Ivy League colleges so they don't need to worry about community college.
my karma will be here long after I'm gone
There are plenty of students who majored in very reasonable and marketable courses of study and came out with a mountain of debt and dramatically worse job prospects than what were available when they began their studies. These people have a very real complaint.
However there are also people out there who went to college and majored in drama, or comparative literature, or film studies, or any of a number of other fields that have very marginal job prospects even in a good economy. They are carrying debt because they took a foolish risk with 4 years of their lives. Of course, some of them may have been poorly informed by their college with regards to what they could do with their degree. Others didn't give a damn and set off determined to "study what I want" or whatever. This latter group dug their own hole and I don't have a lot of sympathy for them.
In short, if you majored in engineering and then couldn't find a job after the economy went down the toilet while you were in school working your ass off, I feel for you. But if you spent four years in a field with ordinarily terrible job prospects and now you are shocked that you have no job prospects, I don't have much sympathy for you as you took a great opportunity and managed to squander it.
However, those who excel at taking great opportunities and squandering them may yet have a future in American politics.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
I wont be the first or last to say it, but I have a hard time sympathizing with anyone who has voluntarily taken on large amounts of debt and doesn't understand that they made a poor choice.
OK, let me get this straight:
1. Don't go to college, can't find a job. Poor choice.
2. Go to college, can't find a job. Poor choice.
What we have here are a bunch of people willing to work, but the market is unable to find work for them. You blame the people, when the market is what's causing the problem.
First, there is usury. Student loans are unsecured, but federally backed. There is very low risk to the bank. Yet interest rates charged tend to reflect that of high risk loans. Further, while payments are deferred, interest isn't. Not all of this is fully disclosed to the borrower. For instance, do all students know that they are payig interest rates comparable to normal loans, yet with normal loans a borrower can default on a loan. With student loans the must must be paid back, and garnishment of wages and other restrictions on one's livelihood are very easy. Unlike most loans, which are regularly renegotiated, the student loan, with exorbitant interest given the level of risk, is not.
Then there is collusion in the defrauding of the american public. Much of the loan money goes to private distance Universities. These Universities are well known for having very high default rates, and are well known for being victims of straw men loans. In any other financial process, the banks would conduct due diligence to minimize exposure. However, as this is a way to transfer taxpayer money to private banks, there is almost no due diligence. The money is handed out. Banks know or should know the forms are fraudulent. There was one reported case of many forms asking for money to the same address. However, as there is no real risk, and it free money for the bank, no such diligence is performed and banks happily take tax payer money. Unfortunately, all risk and blame is placed on the university and student. While this is appropriate, more blame must be placed on the people who are fundamentally profiting from the fraud. The bankers.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
My knee-jerk reaction is the same as yours. "Why did you take out loans you can't afford? Regardless of why, it's your fault for doing it."
However, looking at the times we live in, I have a lot of sympathy for the OWS movement. I recently got my PhD in Physics from a top university, and was a triple major as an undergrad. All of this happened without a single penny of student debt, and in fact I was actually supporting one of my parents on my grad student stipend. While I was in school, employers were often contacting me with offers of, "Please quit! Come work for us at Facebook!", and "Please quit! Come work for us at Hedge Fund!" I flew out to a few of the places to interview just because I wanted to see the city. Now that I'm done, the job market has since collapsed. It's hard to even get a call back, even with a decade of programming experience, several publications in an emerging field a PhD, and international recognition for my programming abilities. My university is balking at paying me a $2150/month stipend for me to continue doing research there as a postdoc.
I'm left thinking that leaving the good thing I had in high school and undergrad, a well-paying job in a contracting collective, was a big mistake. A huge mistake. Because even the opportunity cost of going to university for 10 years for free was greater than the value of the education. Now imagine you're one of the 99% who took out loans on the promise that they'd get a better paying job that would cover them in the future, and you're thrust into a workforce that doesn't want you. You can't bankrupt your way out of it. You can't take a job at McDonalds because the student loan payments are more than you'd be making. You feel like going to university in the first place as opposed to working a McJob was a mistake.
So, I do have a lot of sympathy for them. I can't imagine being in that position, and the promises they were given by their institutions are worth about as much as the paper the diploma was printed on. Their student debt has them saddled for life--they can't default or bankrupt their way out of it. They'll be paying until they die. I wish I could do something to help them, but until someone will call me back for something other than evil (damn you hedge funds), I'm out of luck too.
AC because this is embarrassing. I support you OWC. :(
Coming from your background, that's fine. Here's my story: my dad worked at Merck, and was earning well over 100k a year. I was told that my student loans wouldn't be a worry, and thanks to being a mediocre student in high school combined with his earnings, I didn't get much financial aide (not for want of talant, but because I was frequently sick and missed a lot of school). My parents wanted me to go to a highly ranked local private college for my CS degree. I didn't want to go, but they refused to sign my financial aide papers (FAFSA) if I didn't go where they wanted. I applied early admission, which barrs me from applying elsewhere. A quarter way through my junior year, my father has a series of heart attacks, is diagnosed with cancer and lyme disease. My mother is diagnosed with uterine cancer. Neither one lasted long. All of their money? Gone in an instant from medical bills. His pension? Merck decided to fire him after due to frequent illness thanks to the cancer, so it was lost. My situation? Newly graduated with over $100,000 in student debt thanks to interest rates peaking at 8%. Now, this is all my fault, I knew that money was racking up, but honestly it never clicked. Pair that with an utter lack of money management skills being taught in my school or by my parents, and it was a recipe for disaster. It was something I never knew I needed to know, or even thought to learn about it. Not everyone has something "seriously wrong with them" and that sort of world view will get you branded as shallow and ignorant. Some people honestly get screwed by student loans.
Perhaps the issue is that the inflation rate for college tuition is well above the general inflation rate, that states are contributing a far lower percentage toward operating state unis and community colleges than they have in the past, and that more and more employers are requiring a 4 year degree for positions which don't really need one in the first place.
Perhaps they're not protesting their own debt. Perhaps they're protesting the current situation -- created by banks, governments, universities, and employers -- which has helped foster the enormous tuition rates being charged for students *today*, thereby necessitating massive student loans or a society in which upward social mobility is unnecessarily reduced.
Perhaps there's more to a strong and diverse society and culture than engineering. Perhaps your $USELESS_DEGREE has tremendous social value, and the real problem is that our current economic structure doesn't reward the people working in job($USELESS_DEGREE) well enough. Perhaps they think the problem is that we're simply not funding enough social workers and teachers and the arts -- not that there are too many young people with those degrees.
Look -- I earned a whole bunch of college degrees on full scholarship in tUSA, in fields which pay reasonably well. This isn't about me. Yet, I do agree with the OWS protesters. College debt is too high. Sure, it was all taken voluntarily, but that doesn't mean that we shouldn't change the circumstance for future high school graduates. I believe that the Federal Gov't should open more universities at free/low tuition, and not require military service to be admitted -- and focus on areas where we have a national interest. Health care, energy, infrastructure, etc. I believe that state governments should pour far more money into their state universities. I believe that both Fed and state gov'ts should hire more teachers and fund more arts. I support raising taxes on folks with more money [both income and wealth] to pay for it. I think that if we moved in that direction, we'd have a safer, healthier, *better* society.
Support a few technologists in Washington.
NIA today officially released the most comprehensive documentary ever produced about higher education in the U.S. NIA's hour-long documentary called 'College Conspiracy' exposes the facts and truth about America's college education system. 'College Conspiracy' was produced over a six-month period by NIA's team of expert Austrian economists with the help of thousands of NIA members who contributed their ideas and personal stories for the film. NIA believes the U.S. college education system is a scam that turns vulnerable young Americans into debt slaves for life.
It also remind us:
After the burst of the Real Estate bubble, student loans are now the easiest loan to receive in the U.S., and total student loan debts now exceed credit card debts.
It was written May 16, 2011 ...
It also is a replay of the mortgage market.
When consumption of goods becomes third party in nature the costs explode. This happened in medical care when employers and the government started to pick up the tab. People didn't realize the costs of services and they have become used to not caring. As a result the services got more expensive over time, usually outstripping inflation.
Student loans and student aid did the same thing. They separated the costs of education from the student. Oh sure the student knew they were going to pay but they didn't have to pay NOW and that was key. They had to make installment payments. That reduces the psychological sting all that money made.
Schools then abused that through incredible marketing both direct and indirect. By having all sorts of support industries to include the press and such espouse all the benefits a high dollar education conferred. The one fact they left out was, the majority would never succeed. Everyone is not equal and the same education does not mean all parties have the same out come.
As for the OWS, go read their site. If that doesn't frighten off people here then I would be shocked. It all centers around having GOVERNMENT become more oppressive. They want, want, want, want, and want. There is no talk about what they will do for others only what others should be compelled to do.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
This is almost true. There are some problems with your post, though.
"Educators will tell you that perhaps college should be reserved for those with the ability and initiative to do the work. Not everyone is ready for a college education, or able to engage in the rigorous critical thinking required. That's not popular with the salespeople, who want to sell college to everyone."
The 'salespeople' here are our government, trying to sell hope that even though they encourage industry to move offshore, there is a way for everyone to live happy fruitful lives. Education was that way. And it's necessary now; after all, to get a decent white-collar job now you need 'a degree'. It doesn't have to be related to your job. Jobs available (if you don't have a degree) will ensure that you live in poverty and die early.
"High school is now four years of day care because those teachers figure the kids will really learn to spell in college."
No. High school is now daycare because both parents now have to work to survive and NEED DAY CARE. Teachers are now expected to raise kids, but aren't allowed to punish them. Parents freak when 'little johnny' fails, and rather than take responsibility, they blame the teachers for their kids lack of effort - even though teachers have little or no power to make the kids do ANYTHING.
"When they cheapen those, too, we're going to have to cut out the middleman and bribe our way into careers."
Yes. Only the upper classes will be able to do this too. Oligarchy becomes permanent and the American Dream dies. A permanent, desperate underclass that will work like slaves for almost nothing will be available, and America will finally become 'competitive' with the third world. By becoming a third-world nation.
Paranoia is a Survival Trait!
The government helps students take on loans -> colleges increase tuition because students can afford more thanks to the loans -> there is societal and economic pressure to help people go to college -> the government helps students take on loans ...
The three sectors that increased much faster than inflation (housing, health care, higher ed) all have their cost subsidized by government. Is this a coincidence?
And this is the relative size of the higher education bubble: http://www.di.net/blog/wp-content/uploads/2011/06/tuition-housing-cpi1.jpg
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Watching OWS protests, where we have largely a population of educated middle-class or higher kids (who are staggeringly wealthy by any world standard), who have spent their lives:
- getting everything they need, and pretty much everything they want
- have never known hunger
- have always been basically healthy
- have never seen war except as volunteers, which is pretty damn unlikely anyway (more importantly, have never faced the ravage of war across their homes)
I recently graduated with a degree in Electrical Engineering, easily one of the most "Useful and Marketable" undergraduate degrees you can have. I am also a veteran who spent 2 years serving his country, 6 of them getting shot at in Kandahar. I have relocated to the DC-Metro area, one of the areas of lowest unemployment in the country. I BARELY found a job, and at a significantly lower salary than what my peers were being offered in 2007. My tuition costs more than doubled while I was in school. All the while, we've been dumping trillions of dollars to cover the asses of bankers and insurers underwriting ridiculous risks in order to make a quick buck.
But sure, OWS is a bunch of whining leftist hippies. Seriously dude, get fucked.
dent loan debt is nondischargeable in bankruptcy unless the debtor can meet a very high burden of proving hardship.
It's no wonder that lenders lend insane amounts, when they can hound their borrowers for years and years.
No way is this in the long term interest of business, but since when has business ever cared about the long term. They buy their congressmen and this is what they get.
Same thing for the goddamn mortgage industry. Banks get super-protection for their residential mortgages in bankruptcy, so they can write stupid mortgages without fear that the mortgage will be modified in a Chapter 13. This is a contributor to all the stupid loans.
Then business sells us on the idea that it's all the debtor's fault. That's the stupidest thing of all. Sure it's the debtor's fault. When the moron takes the stupid home loan or the stupid mortgage, he has only himself to blame. But business interests want us to think: Fuck him. He can sort his own sorry shit out. And we're morons if we agree with that. If our stupid ass neighbor goes down with a bad mortgage--our property values suffer, our banks suffer, and we all suffer. We're all interdependent. Looking out for other people is looking out for ourselves. The frontier ethic doesn't work anymore when we're jammed together in cities.
Enough of a rant. Now I'll get flamed by the small government people who would rather be governed by banks than by elected representatives.
You nailed it. We are becoming a third world nation.
1) Huge wealth disparity between the rich elite and everyone else. (check)
2) Decreasing access to health care for the masses. (check)
3) Little social mobility. (check)
4) Decreasing access to education for the masses. (check)
--PM
Want to see a real uprising? Watch what the hard working middle class who already paid off their own student loans do when their earnings are taken away to forgive some occupy-wall-street-dirty-hippie's B.A. Art History debt.
I remember how you guys rose up over the Wall Street bailout. Boy are those guys reeling from how you gave 'em the scowling of a lifetime.
I am not a crackpot.
Make all education free for all. That's what Finland is doing, and it works brilliantly: the scientific output of this small (by population numbers) country is extremely high, as well as the effects of it on industry.
Now the UK has introduced tuition fees that are, in most cases, about GBP 9000/year. Many universities in The Netherlands (where education is free for all, as well) are now marketing all-English language master programmes to UK students that cannot afford the tuition fees. That will cause an influx of people who will, by studying in The Netherlands, contribute to the science in that country, and most likely stay as PhD students, contributing even more.
By the way, in addition to free education for all, the US should really introduce single payer, too. A system where children (as well as adults) are left without health insurance should alarm you.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
Coming from your background, that's fine. Here's my story: my dad worked at Merck, and was earning well over 100k a year. I was told that my student loans wouldn't be a worry, and thanks to being a mediocre student in high school combined with his earnings, I didn't get much financial aide (not for want of talant, but because I was frequently sick and missed a lot of school). My parents wanted me to go to a highly ranked local private college for my CS degree. I didn't want to go, but they refused to sign my financial aide papers (FAFSA) if I didn't go where they wanted. I applied early admission, which barrs me from applying elsewhere. A quarter way through my junior year, my father has a series of heart attacks, is diagnosed with cancer and lyme disease. My mother is diagnosed with uterine cancer. Neither one lasted long. All of their money? Gone in an instant from medical bills. His pension? Merck decided to fire him after due to frequent illness thanks to the cancer, so it was lost. My situation? Newly graduated with over $100,000 in student debt thanks to interest rates peaking at 8%. Now, this is all my fault, I knew that money was racking up, but honestly it never clicked. Pair that with an utter lack of money management skills being taught in my school or by my parents, and it was a recipe for disaster. It was something I never knew I needed to know, or even thought to learn about it.
I'm sorry to hear about your parents' illness, but sorry to break it up to you. They were fucking stupid and they fucked you up. They projected their own ideals of life into you in a manner that only served to indulge their shallow, narrow-minded (and I dare say arrogant) world view (a particular trait in our culture which is what is putting us in the fucked up place we are right now). Their interests, their pushing their agenda on you, that never represented your best interests. I'm sure they loved you dearly, but love is not enough. I mean, what kind of parent would refuse to sign FAFSA papers for his children just because his children do not want to go to a private university?
I mean, think about it. In that aspect, they fucked up in their parental duties, they played God, and as a result, they have loaded your life with $100K in debt that cannot ever be defaulted by the normal venues of bankruptcy. Sorry pal, I am not the one risking being branded as shallow and ignorant.
And speaking of world views...
Not everyone has something "seriously wrong with them" and that sort of world view will get you branded as shallow and ignorant.
I'm sure that in your college education you were exposed to the concept of reading comprehension, and reading skills in general. This is what I wrote. Tell me how the "something fundamentally fucked up with you" passage applies to you (who went to a private university for a STEM degree):
one should only get over $60K in student loans if you get a degree in medicine or law or STEM degree (in particular from a private university.) If you have $40K or more in student loans with only a B.A. degree in History from a public university, there is something fundamentally fucked up with you.
So. Read.
Some people honestly get screwed by student loans.
No. People do not get screwed by students loans. People screw themselves with the decisions they make with them (or in your case, your parents screwed you up with them.) Your case does not represent a general case, and doesn't even represent the general case described in my description of things, so I don't what sort of mechanisms you are using when extracting meaning from written passages.
Having said that, I have to say I sympathize with you. I do not know your situation (I also went through a terrible period of disproportionate personal debt - private credit debt - due to a lack of sound money skills.) But, unless you are facing health issues, or you are already married