[Ache]

http://bottomline.msnbc.msn.com/_news/2 ... to-explode

http://www.investmentnews.com/article/2 ... /120209938

[Timo]

Not good at all. We're collectively creating another (at least one!) lost generation in this failed experiment of ours. For what it's worth (probably not much), i somehow managed to get through my undergrad years debt free. I went to a large, midwest public university, was awarded a small music scholarship, Pell grant, and worked abhout 20 hrs per week to provide some spending money, but the secret was actually, and oddly, the student loans i took out to finance the entire endeavor. I didn't qualify for "normal" federal student loans, unlike my two brothers back in their college days. Regrettably, i had to inform my mother that in contrast to their situation, Ronald Reagan wasn't President when they went to school. Anyway, my parents co-signed for a regular, high-interest (+18%) bank loan, and i borrowed twice the amount i estimated i'd need for that year. When i got the check from the bank, i immediately paid off 1/2 the loan, freeing myself from the monthly payments for the next 9 months, and used my job money to buy groceries and beer. Beer was an essential part of college. Come summer, i worked as a swimming instructor and lifeguard at one my my local municipal swimming pools, and put in about 50 to 60 hours per week, enough to finish paying off the rest of my high-interst loan. (Oh, i was living with my folks each summer btw. No rent.) In September, i did the whole thing all over again. Each year's loan was paid off no more than 4 months after each school year. That's what worked for me. Unfortunately, i doubt it's a universal recipe for everyone trying to get through college these days. Still, hard work, long hours, and determination has to count for something.

[jedrider]

The combinatin of poor job opportunities and the rising cost of a college education is about the same as the combination of rising housing costs in the suburbs and the sinking economy, except that these kids can't even get out of debt in order to join the home owning generation. What opportunities will they have to join in on the Ponzi scheme?

I may sell off my future to get my kids through college, but I'm damned if they have to sell off their future. Mine is greatly discounted already

[SeaGypsy]

I don't get why your government churns this money through the banks. Here in Australia, I think NZ also, we have a student loan system. It works out you finish owing about 1/3rd of the cost of your degree to the student loan branch of the tax office, called 'study help'. You don't start paying a cracker until you make about $60kpa. Interest is pegged at inflation. The maximum taken out is 15% of gross wage. The banks have nothing to do with it. Why should they really? Seems to me just another ponzi operation in itself.

[Keith_McClary]

Senior citizens continue to bear burden of student loans

The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.

New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
...
“A student loan can be a debt that’s kind of like a ball and chain that you can drag to the grave,” said William E. Brewer, president of the National Association of Consumer Bankruptcy Attorneys. “You can unhook it when they lay you in the coffin.”
...

[Roy]

Seems to me just another ponzi operation in itsel

Welcome to the Ponzeconomy in the United States of Scamerica

What is not being talked about, is the rate of increase of college costs (and energy, and food, and health care but I digress)... ie INFLATION or currency debasement.

When I went to a state university late 80s/early 90's, total tuition, room, board and everything was less than $5k for 2 semesters. Now that same school costs over $5k just in in-state tuition for 2 semesters. The spartan, non-a/c dorm I lived in? Converted to opulent faculty offices. New 'luxury apartments' for students on campus (replacing old fashioned dorms with hall bathrooms etc) cost more per year than I paid for everything in a year.

Duke University, a fine school, will run you $56k per year for tuition, room/board, and books. How many hours flipping burgers, installing cable TV (what I did in school), or lifeguarding are you going to have to do to pay for that? Hell that's more than I bring home in a year right now with a 87th % percentile income -- which is barely enough to support my family on a very frugal lifestyle (there's that damn currency debasement thing again).

Just about 2 years ago, while listening to NPR, I heard a 'good news' story that the NC legislature had capped the amount colleges could increase tuition per year at 10%. That was supposed to be a good thing.

What they didn't say, and probably 99% of the audience didn't know, is that a 10% per annum increase results in doubling of tuition every 7 years.

Good news? Sure, for the people who work at the unis and the bankers who write non-dis-chargeable student loans, loaning money to anybody with a pulse for any degree.

For students? Not so much.

[FairMaiden]

This is so upside down. You take on debt to better yourself or increase your worth to society and it cannot be forgiven. But if you rack up thousands of dollars on TVs, cars, etc for your own personal enjoyment than it can!

[smiley]

I went to a large, midwest public university, was awarded a small music scholarship, Pell grant, and worked abhout 20 hrs per week to provide some spending money, but the secret was actually, and oddly, the student loans i took out to finance the entire endeavor.

Good story. In job interviews I always ask for people to tell how they financed their education and I'm hoping to hear something like this. Having worked your way to college (for me) is not only a sign of character (will work for money), but it also tells me you bring experience to the job.

The very least you learned how to find you way to a new job, but probably you picked up a trick or two which you can apply in your new profession. A couple of years back we had a failure at a project and I was pleasantly surprised when I heard that the project leader on site, had picked up a torch and layed down some good TIG welds to keep them going. It appeared he learned welding during a summer job at a farm during is studies. It certainly boosted his reputation within his team and the company.

Anyway about the debt thing. I think student debt is only part of the issue. If all debt was wisely spent on learning trades which are in demand by society then I think there is little too worry. Problem is there is a huge disconnect between the amount of students enrolling in certain subjects, and the jobs there are actually out there. A lot of that money will never be repayed.

I think Universities should be honest in telling potential students what their actual chances are, in finding a job in a field, or even restrict the number of enrollments accordingly.

[Plantagenet]

I think Universities should be honest in telling potential students what their actual chances are, in finding a job in a field, or even restrict the number of enrollments accordingly.

If universities actually did that, how would they ever get anybody to enroll to study in their hallowed halls?

-------------

College is a gamble, just like everything else. You pay your money and you take your chances. A few students will do great and go on to fabulous careers in their chosen fields, but most students won't get much out of the college experience except a good pirated music collection on their ipod, a few tattoos and some large student loans that have to be repaid with interest to uncle sugar.

[kublikhan]

It's not just the overall costs of college education increasing. The interest rate on the loans and the types of loans is a huge issue as well. When I went to college, I was able to get low interest loans from the federal government. They were great. The fact that they were non-dischargeable did not bother me much since they were such low interest rates with long repayment times. I was stupid and prepaid the loans early after getting a job. I wish I had made the minimum payment and used the money for other purposes instead. No were else could I borrow money that cheaply.

But now they want to double the interest rate and still keep the debt non-dischargeable? That's BS! And they are pushing college students into taking high rate private loans when they would qualify for federal loans instead. On top of that, the 2005 bankruptcy law changes removed the ability to discharge private student loan debt, despite the fact private loans can be very high interest. It's a big steaming pile of BS that needs to be addressed immediately.

Millions of college students could be in for a shock this summer when the interest rate on a popular federally subsidized student loan doubles unless Congress acts.

College students on Tuesday delivered more than 130,000 letters to congressional leaders asking them to stop rates from increasing from 3.4 to 6.8 percent. The rate hike affects new subsidized Stafford loans, which are issued to low and middle income undergraduates. They hope to raise enough awareness to get Congress to stop it.

Sen. Jack Reed, D-R.I., and Rep. Joe Courtney, D-Conn., who spoke at the press conference, said it doesn't make sense for student loan recipients to face a higher interest rate than homeowners are getting on mortgages or that banks are able to get. The two back legislation that would keep the lower rate, but both acknowledged that in the political climate, it will be challenging to get the legislation passed by the July deadline.

Stafford Loan Interest Rate Doubles, Students Petition Congress

“While overall growth in student indebtedness is troubling, the most pressing concern is private student loans which are being aggressively promoted by the for-profit college industry. Forty-two percent of for-profit college students had private loans in 2008 – up from just 12% in 2003. The for-profit college business model relies on steering students toward private loans and, as a result, many students are pushed into private loans when they are still eligible for federal loans – even when the lender knows they are likely to default. “

For the past decade, private student loans have been the fastest growing and most profitable part of the student loan industry. The interest rates and fees on private loans can be as onerous as credit cards. There are reports of private loans with interest rates of at least 15% and higher rates are not unheard of. This can place a tremendous burden on student borrowers with private loans and unlike federal student loans, there is no government-imposed loan limit on private loans and no public regulation over the terms and cost of these loans.

Durbin’s Fairness for Struggling Students Act would help address the looming student debt crisis by restoring a pre-2005 provision in the bankruptcy code allowing for discharge of privately-issued student loans – like other forms of private debt, including credit cards – in bankruptcy. Before changes were made to the bankruptcy code in 2005, only government issued or guaranteed student loans were protected during bankruptcy. This protection had been in place since 1978 and was intended to safeguard federal investments in higher education. Restoring this provision would once again make important relief available to students who are being crushed by overwhelming private student loan debt.

Durbin: Congress Ignores Exploding Student Debt Crisis

[rangerone314]

Faced with an untenable situation, a graduate with a useful degree could just leave the US and seek work overseas, and say "bye bye citizenship" and "bye bye debt".

Eventually there WILL be a drain brain of people leaving the US for a better future.

The same generation will probably get no social security or other such benefits, despite paying into the system.

Logan's Run time, anyone?

[rhian]

Virtually every school loans lender offers fixed and variable-rate loans, except Sallie Mae, the biggest private lender in the country. Sallie Mae has, however, relented and is now offering fixed-rate loans to borrowers. Source for this article: Sallie Mae finally offers fixed-rate student loans.

[radon]

Faced with an untenable situation, a graduate with a useful degree could just leave the US and seek work overseas, and say "bye bye citizenship" and "bye bye debt".

Wouldn't that be criminal offence followed by extradition.

[EnergyUnlimited]

Faced with an untenable situation, a graduate with a useful degree could just leave the US and seek work overseas, and say "bye bye citizenship" and "bye bye debt".

Wouldn't that be criminal offence followed by extradition.

He would have to carefully select new state to live in.
PRC?

[AdTheNad]

Faced with an untenable situation, a graduate with a useful degree could just leave the US and seek work overseas, and say "bye bye citizenship" and "bye bye debt".

Wouldn't that be criminal offence followed by extradition.

He would have to carefully select new state to live in.
PRC?

How long till we start seeing blind American dissidents turning up at Chinese embassies looking for asylum from an oppressive regime? Except it wouldn't make the news anyway.

[SeaGypsy]

12,800 yanks moved down under last year. We have plenty of openings here for professionals with 5 years of experience, anyone interested can google 457 Visa for Australia. If you are prepared to work remote for 2 years you will very likely get permanent status and be able to go anywhere thereafter. Family are granted visas with professional applicants. People with quals but less experience really need to set foot on the ground here to find a sponsor. It happens a lot, but you have to be very keen. Much easier for Europeans, Japanese and Koreans, with who we share a working holiday visa arrangement for under 30's.

(Many here would remember our young member Ainan?/ freshly graduated in IT from London, out of work for a little while after college. He PM'd me a few times and wound up coming to Australia, went to Tasmania. Last I heard he was building a relationship with a cabin in an orchard, a local newspaper as part time editing assistant who is qualified to sponsor him (there may have been a hint of romance in the air also/ hence lack of having much to say here If reading this: Hi Ainan, drop us all a line here?)

[Keith_McClary]

The student debt explosion(via PO news page)

If Quebec students noisily protesting hikes in tuition-fee hikes feel mistreated, they should look south of the border.

Aggregate student debt in the United States posted a spectacular jump in 2011 and now stands at $1-trillion (U.S.), or about 7 per cent of GDP, according to the U.S. Consumer Financial Protection Bureau.

The average outstanding student loan balance in the third quarter of last year was $23,000, according to the New York Fed.

Using these and other stats, Pierre Lapointe of Brockhouse Cooper argues that this student-debt explosion will result in a lower home-ownership rate south of the border.

U.S. college tuition costs have ballooned by a cumulative 57 per cent between 2001 and now, whereas average weekly earnings for 25 to 34 year olds fell by 7 per cent, he says.

“If wages are barely growing in real terms, it is no wonder that 27 per cent of all student loans are currently delinquent,” he writes.

A feeble employment outlook and sky-high student loans for an entire segment of the population will translate into less money flowing into home-ownership, he says in a recent report.

Just under 11.5 million students, or 39.6% of all young adults ages 18 to 24, were enrolled in either a two- or four-year college in October 2008
That $400B explosion in 2011 is $35,000/student .

[Cog]

When this blows, like all bubbles do, the economists will say "No one could have seen this coming".

Again

[mattduke]

I was listening to NPR the other day and they had the amazing story about how, with the rising price of government-subsidized university (sounds familiar?) students are now considering "majoring in subjects that will equip them with valuable job skills" as opposed to "cultural studies", etc, etc. I fell out of my chair laughing.

[SeaGypsy]

Only 1 year ago, my student load was 50/50 for practical/ trades courses and 'intellectual' this has now gone to 90%+ technical & almost none of the arts. The youth are catching on here in Oz, I guess they will likely do so globally.