Skip to comments.Looming Student Debt Crisis Hits the Senate
Posted on 03/28/2012 9:13:57 AM PDT by SeekAndFind
On March 20, your Student Loan Ranger attended "The Looming Student Debt Crisis: Providing Fairness For Struggling Students," a Judiciary Subcommittee on Administrative Oversight and the Courts hearing. (You can watch a video of the hearing, and we'll give a prize to the first person who sends us a frame showing the Student Loan Ranger in the audience!)
Obviously, that is right up our alley. And the fact that Sen. Dick Durbin (D-Ill.) convened the hearing, even though he's not a member of the Subcommittee, piqued our interest, because Durbin is the sponsor of the Fairness for Struggling Students Act of 2011, which would restore the ability to discharge commercial student loans in bankruptcy proceedings.
Not surprisingly, the need to provide bankruptcy protections for borrowers of private student loans was a focus of the hearing. There was moving testimony from Danielle Jokela, who has struggled to find work in her chosen field and to pay off her student loans after graduating from Harrington College of Design. Six months after her graduation in 2007, her initial student loan debt of nearly $79,000 had grown to more than $100,000 due to interest and fees. Twenty-five years (assuming the interest rates on her non-fixed interest rate private loans don't go up) and approximately $211,000 from now, Jokela will finally pay off her loans.
(Excerpt) Read more at usnews.com ...
‘Struggling’ students? That’s what the hell college is all about - you invest (wisely, of course) in your future and you must ‘take the plunge’ to get your investment returned to you. Don’t take worthless majors - take a major that can actually employ you!
I’m a ‘struggling’ homeowner, where is my relief?
Just maybe that top quality education was not worth the money.
Bad investment? Can we all agree to step up and bail them out?
HA....What we have here is another SHAKEDOWN of the American public.....by the elitists.
I believe that in the 60’s, tuition at Harvard was around $600. Today it is around $40,000. It’s the colleges that are causing the problems and the fools that pay it.
Try 52,650/yr. However, the ROI is priceless. Not alot of unemployed Harvard grads..
What debt crisis. College isn’t a mandate, yet! Perhaps had they chosen a major because it makes money maybe they wouldn’t be having trouble finding work. On the other hand, most of these puppies couldn’t cut it in a real world major.
We shouldn’t forget that this is the most anti-business administration in history, but still, a crisis.
It was a few years back when I read a report from The College Board. The particular report was detailing the rise in college tuition, public and private, from 1978 to 2006 (I think it was 2006).
The report included the average tiution in 1978 and the average in 2006?.
I took the two figures and determined the “inflation rate” (cumulative % increase) in the average college tuition from 1978 to 2006?. The result was an astronomical percentage.
I then went and found the average retail price for gasoline in 1978.
I then applied the “inflation rate” I had calculated for college tuition since 1978 and applied it to the average retail price of gasoline in 1978.
The result was that if the retail price of gasoline had kept pace with the “inflation rate” for college tuition since 1978, gasoline would be selling for $12.93 a gallon.
Now then, notice that nothing that the Marxists/Progressives/Liberals in Congress have done in the past 40+ years to address the “cost” of college tuition has ever done anything more than to help students pay for whatever was being charged, and when possible make the taxpayers responsible for either providing the funds, in loans or grants, and most recently make the taxpayers more and more responsible for college loans that are defaulted on.
In other words, as all Marxist/Progressive/Liberal programs do, it is never about actually reducing the costs, it is always about shifting the payment of the costs, whatever they are, and increasingly shifting the the ultimate responsibility for the costs to taxpayers.
At no time has the focus ever been placed on the supreme allies of the Marxists/Progressives/Liberals, the education industrial complex, and their outrageous costs; it has always only been about helping their costs get paid.
It is time the education establishment’s addiction to higher fees was cut off from the government’s assistance, cold turkey.
I see no reason not to allow them to seek bankruptcy protection. In time, if enough fruitcake majors lead to bankruptcy, the loans will dry up, useless programs will die, and college costs will drop because they will have to compete for a smaller pool of tuition payers. Then college can go back to being one option among many, subject to a rational cost benefit analysis, rather than the default option and extended high school experience it has become over the last few decades. Let prospective students sit down with a banker and explain how they’ll be able to pay off the loan they’re applying for.
@ Post 9 - excellent summary and points
Education is still a free market in the sense that you have the right to attend or not attend a school. However, the availability of student loans has created the same bubble we see in government salaries/pensions. It is the same bubble we saw in real estate... cheap loans inflated prices. The inflated amount of revenue to schools created the same salary/benefit increases that increased tax revenue brought to all levels of government. It did nothing to improve education.... it just made it more expensive. While most student debt is held by individuals that chose to take on those debts, the fundamentals are the same throughout our economy. The liability (like gov’t salaries and pensions) will be assumed by all taxpayers just as we are responsible for the obligations of Freddie/Fannie. On every level of government, we are wrestling with the same problem.... an unsustainable course with future promises that will be impossible to honor.
Those who comprehend the true number of bubbles that exist in our society have to be frightened for our economic future. Every bubble, and I include the stock market, has been financed on low interest loans. Health care (medicaid/medicare - gov’t insurance) is on the same course. All of these leveraged sectors are a huge portion of our economy.
When interest rates rise, and they will, we are going to witness the greatest economic crash in history. The Great Depression will pale in comparison and it will destroy our current economic structure. If anyone thinks this is far-fetched they have not examined the way our nation works. I continually see stories about specific industries or sectors of the economy, but add all of these together and you get the true image of our future. We have built our economic house on top of pillars that are made of cheap loans assuming a brighter future, low rates, and a booming economy. When interest rates increase the pillars will fail. When the economy slows down enough the pillars will fail. If government turns off the spigot of borrowed money the pillars will fail. If government prints money to continue the spigot the pillars will fail. Each pillar that fails - i.e. real estate, puts increased stress on the others.
We have lived through the biggest bubble in history and it’s going to pop. When institutions can no longer honor their promises they will not be able to borrow more to sustain the unsustainable.
Our national fabric is interwoven with cheap money and promises we can’t keep. Prepare accordingly.
Our national fabric is interwoven with cheap money and promises we cant keep. Prepare accordingly.
Repeat LOUD and OFTEN.....................
This is a set-up.
In the fall there will be a brazen Obama attempt to buy votes with student loan “forgiveness”.
Agreed. I was wondering how long it would be before that avenue would be taken - and the GOP will pander as well or be vilified by the media - and Oh Dear, they just couldn't stand that!
Don’t worry, Romney will say, “Forgiving all that student loan debt is an outrageously liberal idea, Barack. I’ll offer to forgive 75% of it. That’s the sensible approach.” Liberal Lite...the GOP strategy that never works and never dies.
I’ve gone back to school at 40, taking on some serious debt at a private institution. I guess im rolling the dice.
That graph certainly shows the abnormal growth in tuition costs. I tried to find a reputable graph showing public sector salaries and entitlements against CPI without success. I would expect the same reality.
We are broke. Tuition/student loans have grown faster than other spending/borrowing, but it’s only one sector among many that are not sustainable.
Government at all levels has taken on debt far beyond it’s ability to pay it back. Many of our fellow citizens have borrowed more than they can pay back, and that assumes the economy does not worsen.
It’s simplistic, but I wonder what the real inflation is for every trillion we print? We are in a catch-22 and anyone who thinks Uncle Sugar won’t print the dollars to keep the checks flowing has not paid attention.