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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
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.
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!