Posted on 06/13/2012 9:30:14 AM PDT by SeekAndFind
The debate over the student debt crisis is still raging, and economists everywhere are weighing in.
University of Michigan economics professor Susan Dynarski and University of Virginia economics and education professor Sarah Turner recently wrote an article for CNN Money, where they blamed the media for hyperbolizing how many students are actually saddled with debt. They pointed to a report from the New York Federal Reserve Bank that showed fewer than 1 in 30 students have debt loads over $100,000, and a report from College Board showing average debt is $22,000, adjusted for inflation.
Dynarski and Turner say it's entirely possible to graduate with less than $100,000 in debt if you take out Stafford loans, which cap total debt for both dependent and older students, and that private borrowing is where the problems come in:
"In 2005, Congress handed a valuable gift to the private loan industry: loans made to students by private lenders were granted the same bankruptcy protection as federal loans. The survival of private loans in bankruptcy proceedings makes them an unusually safe bet for lenders. This creates a classic moral hazard problem: Lenders extend too much credit to borrowers likely to struggle in repayment since they know the borrowers can never escape the debt. Congress should repeal the protection from bankruptcy that it extended to private lenders in 2005."
The professors also point out that what sort of debt you take on should be measured against what you plan to major in — for example, if you're going to graduate with an engineering degree, go ahead and invest more in school; but if you plan to go into the fine arts, think twice about attending an expensive school.
(Excerpt) Read more at businessinsider.com ...
I'll retract if I can find some evidence that they were warning people before the housing clapse.
Yes. And the national debt is only $16 trillion.
> average debt is $22,000, adjusted for inflation.
Hmmm,, I wonder if the base year is 1952?
Let me see if I understand:
Two economists whose salaries are paid for by students who take out student loans to pay their tuition don’t see a crisis in student loans.
Did I get that right?
“a report from College Board showing average debt is $22,000, adjusted for inflation”
Oh that’s no problem, the average newly-minted student has that in their back pocket.../sarc
These people are either insane or bubble-dwelling econ profs (but I repeat myself).
That is twice what my parents paid for their first house and $4,000 more than I paid for my first.
The overhyping is deliberate and part of the ground preparation strategy for Obama’s “I will forgive your student loan” speech in October.
That is precisely why this academician is teaching instead of out in the real world earning her keep. Total bullshit.
Nice summary.
I agree with them.
Get rid of the law prohibiting bankruptcy for private student loans.
Then lenders will be much more cautious about who they lend to and how much they will lend. Then students will not get such large loans and in many cases no loans. Then universities will have to LOWER THEIR COSTS to keep their universities filled with students.
The anti-bankruptcy law was a give-away to lenders who must have lobbied hard for that little gem. Imagine if they did that for car loans? Then the price of cars would skyrocket.
I agree with them.
Get rid of the law prohibiting bankruptcy for private student loans.
Then lenders will be much more cautious about who they lend to and how much they will lend. Then students will not get such large loans and in many cases no loans. Then universities will have to LOWER THEIR COSTS to keep their universities filled with students.
The anti-bankruptcy law was a give-away to lenders who must have lobbied hard for that little gem. Imagine if they did that for car loans? Then the price of cars would skyrocket.
Yes. And the national debt is only $16 trillion.
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