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Student Loan Debt Has Nearly Tripled (npr.org)
An anonymous reader shares a report: Recent college graduates who borrow are leaving school with an average of $34,000 in student loans. That's up from $20,000 just 10 years ago, according to a new analysis from the Federal Reserve Bank of New York. In that report, out this week, the New York Fed took a careful look at the relationship between debt and homeownership. For people aged 30 to 36, the analysis shows having any student debt significantly hurts your chances of buying a home, compared to college graduates with no debt. The cliche of "good debt" notwithstanding, the consequences of borrowing are real, and they are lasting. The report paints a mixed picture of how student borrowing has evolved over the last decade, since the financial crisis. There are some bright spots: For example, student loan defaults peaked five years ago and have declined ever since. And repayment seems to have slowed down among high-balance borrowers -- those who owe $75,000 or more. Meaning, after 10 years, they have paid down only one-quarter to one-third of what they owe.
The problem is special case cared out for student loans - in US you can't discard them in bankruptcy. This should be ruled unconstitutional. If you could discard them in bankruptcy, lenders will be forced to re-introduce risk analysis back into the system. Some loans will be declared too risky based on costs and job prospects for graduates from specific program at a specific institution. This will put pressure on universities to keep costs in check as it will be again possible to price out 'consumers' out of the system.
Yea, those people that vote the way I don't like should totally not be able to vote because I don't like their decision! Everyone should think like me because I am morally superior. I am fucking better than you.
Very accepting of your fellow man, aren't you?
I don't think the quality of education has deteriorated at all, rather many students are choosing to get totally worthless degrees because they feel entitled to pursue their passion.
That said, I'm sure that schools are pumping out better and better art historians, music therapists, and western philosophy majors than ever, but that doesn't necessarily mean that these majors have any actual economic demand.
I mean think about it: Last time you were pondering your own existence, when did you consider hiring a philosopher to help?
And the reason tuition rates are going up is because of the increase in the money supply in the higher education system, which itself is entirely caused by the increased availability and ease of acquiring of student loans. And, I know an easy fix: Make it possible to go bankrupt on these loans just like any other unsecured loan. If you do that, watch how basically overnight, lenders will start scrutinizing borrowers more, and borrowers will be thinking harder about borrowing to begin with in light of higher interest and/or collateral.
< life story >
I went to a public/private university. Tuition was >40k$ / year. I was able to get 25k in grants and scholarships, but that left me and my parents with a 15k gap.
As my parents had shit credit, they couldn't help co-sign any loans. I had to get an extended family member to help.
After the first year, I couldn't afford it. Flat out.
So I dropped out after one year. No degree. Entered the minimum wage workforce making 8$/hr as a line cook. Worked my way up to Assistant Manager with... $9.50/hr...
Two years later, two shit cars later, and countless roommates later. I lost my job. My father was working as a Project Manager for a nationwide networking company. He helped me land a part time gig that paid 25$/hr but hours ranged from 0 to 30 a week depending on what projects he could help me get on.
But it took nearly 6 months before I was handed that part time gig... I also went to craigslist and worked landscaping when I could, making 10$/hr. However, during the next year, and the flaky hours, I was evicted from my apartment, and I defaulted on my student loans (yes I used all the deferred time (whatever it was really called) I could)... At this time the amount was ~10k.
Before I went into default, I knew exactly how to pay back my debt, I go to a website, enter in the amount, bank account info, done.
A couple years later I found a Software Developer position making ~45k/year. Trying to get my credit back on track, I went to research how to start paying back my debt. This was the most difficult process I could imagine. How can it be that hard to find out who you owe money to?!
A couple months later I finally figured it out, but saw that they charged enough fees for the amount go back up to the original 15k!!!! WHAT?!
Every step of the way in trying to pay back my debt, I stumble on some problem or another. Medical bill, car repair/inspection/registration, roommate leaving without notice leaving me with 2x rent.
</ life story >
I'm am incredibly happy that debtors prison is outlawed, but it seems they have just morphed it into this obscene beast that just eats anyone and everyone dumb enough to fall for this popular fallacy of graduating HS, going to college for 4 years, then landing a job that can help pay back ur debt and life style.
Now, before all you red-wing nuts say "Don't live beyond your means, get a better job, blah blah" I did all of that. Sold my car, rode public transport, lived in a 2 bdrm apartment with 6 other dudes, moved back in with my parents for a while, etc... I did everything I could to save every penny I could... still wasn't enough.
Student debt is today's slavery.
And you know what? Of my group of friends, I'm considered one of the more fortunate ones... Another friend of mine is over 100k$ in debt... And he's currently unemployed.
Let's tell everyone they need college in order to be successful, but let's not be specific about what kind of college will get you success; after all a basket weaving degree is just as valuable as an engineering degree.
Let's tell them that college is so important that we'll make government-guaranteed loans available to be sure they can afford that critical degree.
We'll add to the mix the natural market reaction of increasing prices as more money is made available to pay for the product.
Then we can all act surprised as loan loads increase, the feel good degrees don't allow one to make payments causing the ability to pay those loans to decrease resulting in a requisite government-bailout for everyone who got a student loan to pay for a degree that has no value.
If you think a degree is going to have a positive economic value for you then you make the investment to get the degree. If that means working two jobs and taking 6 years to get a degree then so be it, you can make the economic decision to do that. If the economic numbers don't make sense for you then don't go to college to get a degree.
The whole story line about college being better for you economically is based on a mis-understood or mis-applied correlation: people who went to college earned more than people who didn't. That headline is based on the overall group. A more interesting question would be what is the net cost of college by degree-type. A student who spends $50,000 for a worthless degree will be overshadowed by someone who spends $50,000 for a degree ultimately worth millions. The average of the degrees is higher than those who have no college but the value is still close to zero for the person with the worthless degree and $50,000 in student loans.
That $50,000 degree worth millions isn't because of the degree. It's because of the application of the knowledge attained with the degree by a person driven enough to use that knowledge in a way that creates market value.
https://nces.ed.gov/programs/d...
Short version: In constant dollars, tuition has doubled since your bottle collecting days.
And the reason tuition rates are going up is because of the increase in the money supply in the higher education system, which itself is entirely caused by the increased availability and ease of acquiring of student loans.
That's a big factor. But you're also overlooking that in the last ~25 years, most states have slashed state funding to state universities.
So all these students in the "second tier" of the system are getting a double whammy. These kids would mostly be from what used to be the middle class as opposed to most of those going to an ivy league school.
This myth won't die, will it? The funding for state schools has nothing to do with it.
https://www.insidehighered.com...
What I've found in the past when looking at long-term trends is that when state funding of universities doesn't rise, they raise tuition to "make up for it". But when the state funding goes up in the next year or whatever, the tuition never goes back down. So we have a ratchet effect.
State schools are well funded. Like most universities, they're also dramatically overstaffed, with a bunch of burdensome administrative staff members and no more faculty than before. That needs to change.
My only day job was working at Indiana University. One year they went nuts because there was a big cut in state funding. In reality, the state wasn't raising funding at the same level as the year before. We were still getting more money than last year, just not as much more as they wanted.
So we were told no pay raises, can't afford them. The morning that I was to talk to my manager about the pay raise I was walking in when I noticed the workers out front pulling up the flowers in front of our building to plant new ones. So when my manager tried to bullshit me about the "funding cuts" I shushed her and said "You know, it's funny, I *hear* about this lack of money, yet on my way in to work this morning I saw that the university is paying some guys to pull up perfectly beautiful flowers and plant new ones. See, if there really was some sort of budget crisis they wouldn't be pulling up flowers out front, because that doesn't help the university. I, on the other hand, do. So, since we're not acting like there's a budget crisis I'll assume it's made up bullshit and I'll be getting a raise this year." Yes, I was a dick. That was my largest single year raise during my four year tenure there.
I know a thing or two about this subject.
Do you have ESP?