Slashdot Mirror
U.S. Students/Grads Carrying Over $1 Trillion In Debt
An anonymous reader writes "Time reports that American students and grads were carrying $1.08 trillion in student loan debt at the end of 2013. This compares to just $253 billion a decade earlier. Aggregate debt grew 10% in the past year alone. 'By comparison, overall debt grew just 43% in the last decade and 1.6% over the past year.' About 70% of students graduate with some amount of debt, and the average amount owed is $29,400. 'Delinquencies on student loans have risen dramatically over the past decade: 11.5 percent of graduates were at least 90 days late on paying back their loans at the end of 2013, compared with 6.2 percent delinquencies on student loans in 2003. Moreover, the Fed's figures on delinquencies hide more stark data: nearly half of all students with debt aren't currently in repayment thanks to deferments and forbearances and the fact that students are not expected to pay while they're in school.' An attached graph shows an alarming spike in delinquent loans that looks a bit like mortgage delinquencies did at the beginning of the sub-prime crisis."
Tell me again why college in the US costs sooooo much? It's not like you are getting a super special top notch education that is not comparable to top Canadian universities for example.
Tired of my customary (Score:1)
The problem is that anyone can get a loan, even people who definitely have no prospect of paying it back. With guarenteed loan money, schools can charge whatever they want and you'll just have to take out a bigger loan. And of course 18 year olds fresh out of high school don't understand the power of compound interest, they just know that they "have" to go to college to get a good job and they'll get a better job if they go to a fancy private school.
While you can't get a bachelors from our local community college, it only costs $2,500 a year in tuition and you're getting credits that can transfer to any state school. Why can a community college offer actual college classes for that little, but a 4 year school can charge $10,000, $20,000 or more for largely the same education? Its just insane.
In Finland, the government-backed student loan is tied to the student benefit, which you in turn get only for the typical length of the studies for that degree, so in practice you can only draw about €10,000 at maximum for a single 4-year degree. If your studies take longer than that, you have to pony up the extra money by yourself.
No. It's not the borrowers who get bailouts -- it's the lenders.
But in 2005, Congress and the Bush Administration clamped down on bankruptcy filings, placing hurdles in the path of Americans trying to file and making it more difficult to discharge debts. In particular, the 2005 law made private student loan debt, like federal student loans, impossible to discharge in bankruptcy except under a difficult to meet hardship exemption. Today, bankruptcy allows for the discharge of credit card debt and auto loans but not student loan obligations. At the same time, the law permits judges to modify loans used for commercial real estate, vacation homes, and even yachts, but not a family’s primary residence. Two of the largest investments Americans make in order to enter the middle class – in their homes and their educations – are thus excluded from the relief offered to other debtors.
If Evil exists, this is it.
I delt with the delinquencies department when I was stuck living in the middle of the countryside with my mother, a fake leg and depression and no self confidence. They threatened me at home until I moved into a gay friend (uncomfortable sometimes) in another city where I started work I couldn't physically in retail. When my fake leg broke, they more or less said it was my fault for taking the only work that was around and for being handicapped. I should have died from cancer when I was 12 at that rate. I was close to hanging myself in Seattle in front of a bunch of children to protect them from a similar fate because of them.
The department of education cares for no-one. They are only full of threats. The kind where if you tell a person in a wheelchair every day, they will eventually kill themselves.
My theory: This "student loan bubble" is actually the bubble that caused the mortgage bubble. For the past 30 years, college loan professionals have been convincing 18 year olds that 5-digit debt is ok. We were "broken" (as in horse context) by the time we borrowed for our first car, our eyes glazed when buying our first house. We were trained to be numb by rationalizations worthy of drug pushers. The first thing a young person does at 18 is sabotage any hope of compound interest savings accounts, as every penny that would have been put away is spent on compounding interest in the wrong direction.
Ok, my college experience turned out ok. But I circumvented work-study and doubled my working hours (food service). If you DO borrow to go to college, it may turn out ok, but be sure to work in a few economics and accounting classes.
Gently reply
It can't be discharged by any bankruptcy proceedings. You are hooked for life once you take a loan in this form. We abolished debtors prisons sometime around 1800s, then indentured labor then fought a civil war to end slavery. Then created a debt that can survive even bankruptcy chaining the earnings of someone for life!
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The government has essentially taken over the academic loan business in order to make funds more readily available to a greater number of people seeking a college degree. The result of this easy money? Not only this debt crisis but also college tuition and fees inflated at four times the rate of cost-of-living inflation. Way to go government intervention!
About 10% of the debtors owe more than $40,000. There is no reason to take on that much debt unless you are going to medical school.
Need to drop the college for all idea and replace it with more trades / tech schools / apprenticeship and get rid of the 4+ year idea as well.
But in 2005, Congress and the Bush Administration clamped down on bankruptcy filings, placing hurdles in the path of Americans trying to file and making it more difficult to discharge debts. In particular, the 2005 law made private student loan debt, like federal student loans, impossible to discharge in bankruptcy except under a difficult to meet hardship exemption.
The lead-in for this, which made it possible in the first place, was the 1999 Gramm–Leach–Bliley Act, signed by Bill Clinton, which is what allowed the merger that led to the legislation. This effectively turned credit card debt for students who shouldn't have been offered credit cards in the first place to be non-dischargable by bankruptcy (effectively turning uncollateralized loans into collateralized ones).
http://en.wikipedia.org/wiki/G...–Leach–Bliley_Act
Frankly, there's no difference between the parties; they both work for the banks.
Once the fluid pool of global investment money was throttled back from the slimy mortgage market, they were bound to look at student loans. Everyone can get them, they are not dischargable in bankruptcy, they are increasing every year, the interest rate is way higher than the mortgage rate. This will be the next source of a financial meltdown.
If Slashdot were chemistry it would look like this:Cadaverine
Very.
I have worked with CS degre'ed people and industrially educated people in I.T.
I have been trying to understand whyt here is such a huge difference between CS Degree;ed people, with BS/MS degrees and Industrially educated people.
I have come to the conclusion that:
1) Industry educated people love their work far more than CS degree'ed people. Daddy didn't pat for their education, they come to work everyday because they want to, not because they have loans to pay off.
2) Industry educated people are far more motivated than CS Degree'ed people. The reason why this fits my observations is the typical CS degree'ed person wants someone to teach them, which is why they went to school anyway. Industrially educated people see education more as their responsibility.
Carefully looking at resume's, I found industrially educated people who do nat have CS degree'es statistically have more independant/free lance work on their resumes. (i.e. They know how the technology works to the extent that, they do not need someone to hand them a check every 2 weeks. They really can develop solutions themselves and sell them.)
But, that may be due to the fact that some jobs require CS degrees and industrial educated people find that if they want to eat, they have to do it all themselves.
So they are much more resourceful and typically better business people.
3) Personally, looking at the education of a typical CS graduate, I am not convinced a university degree in the age of the internet is worth $120K.
My house for example, is worth $150k. I don't have a degree, but I own a house. I think it was a much better investment.
I still am employed in the I.T. world though, so in my opinion if you are doing hardware or software in the engineering department, or selling solutions, you can do a University program for 4 years, but you are at an EXTREME disadvantage compared to a person like me, that leverages a internet connection, does a few free lance jobs to get your career going.
Plus you typically get to stay at home rent free while you figure this stuff out.
By the time compare a 4 year tour through a university, you will most likely already have references, no debt and may even be employed.
However, Universities do have their place in education, but not at the $120K level for years anymore.
I could go back to school and would, but I would probably pay about $15K for a university degree for 4 years.
I don't think it is worth more than that, in my opinion as both a 25 year veteran working in the computer industry, and hiring and firing many of you out there with CS degrees.
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
1) Go to college because your parents tell you its the only way to succeed.
2) Bust your tail and do well in college.
3) Be unable to find any job coming out of college.
4) Be unable to work a minimum wage job because it won't even pay off interest on your loans.
5) Now what?
God spoke to me
buy a new car as soon as they get that first job. A mid-level car costs about $23K (Toyota Camry starts at $22,495) but they won't bat an eye about the car payment while they moan about the student loan.
Go to a state school, live on campus, buy used textbooks, apply for any financial aid available beyond student loans. It is possible to graduate without massive debt. Oh, and get a degree in something more useful than Social Work or Ethnic Studies. There's just not that many jobs for French Literature grads or Art History majors.
Thanks government for making student loans "affordable". All the easy money in student loans did was drive the prices higher; we had inflation in college costs because of an oversupply of easy money.
The education you get at Harvard or Yale isn't first on the list of reasons why people want to go to those schools (or maybe even second or third).
The big reasons are the cachet of a diploma from those schools opens doors at grad schools and employers, and maybe even more importantly it's the people you go to school with are the economic elite. You get to rub shoulders with the rich and make contacts with them.
Other schools may offer equal or even better educations, but they don't offer access to those people.
Companies don't train anymore. They won't even look at you if you're not carrying a 4 year degree. Why should they? Congress will give them all the Work Visas they want.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
No one wants to hear it, but when it requires a college degree to flip burgers, you have a problem. When people have a bachelors degree to become "Java programmers" you have a problem.
Stupid people doing stupid jobs don't need a college degree.
HR departments and hiring managers need to learn this.
There is a lot of little things, not just one big answer. But it comes down to supply and demand all along the chain.
Well, that 20,000 square foot gym and aquatic center with 2 Olympic sized lap and diving pools wasn't built for free you know, and all of those brand new buildings, designed by world class architects no less, also cost money to build. Then you have the brad new student center with the gourmet food court, luxury spa and other resort type amenities. All of this designed to appeal to the spoiled and narcissistic undergraduates who attend these 4 year vacation destinations, financed by taxpayer backed loans, and whine when they have to work hard and pay them back after they leave school, with or without a degree. A big part of why college cost less for our parents' generation was less government financing, with the exception of the GI Bill which was limited to veterans, and more spartan facilities designed to be minimalist and functional, not luxurious and indulgent.
The only question I have is "how do I profit from the knowledge that there is another loan bubble?"
It seems you could short equities in for-profit colleges, but they don't represent the bulk of the debt (at least I don't think so.) As far as student loans themselves are concerned, aren't most of them backed directly by the gov't? In other words there's no Fannie/Freddie that I could short sell.
I'm sure some savvy investors have also thought of this - does anyone have any sage insight for me?