Skip to comments.Recovery threatened by runaway student loan debt [Newt: "Student Loans a Ponzi Scheme"]
Posted on 04/03/2012 1:58:28 AM PDT by Cincinatus' Wife
Surging above $1 trillion, U.S. student loan debt has surpassed credit card and auto-loan debt. This debt explosion jeopardizes the fragile recovery, increases the burden on taxpayers and possibly sets the stage for a new economic crisis.
............. Newt Gingrich calls student loans a "Ponzi scheme" under which students spend the borrowed money now but will "have to pay off the national debt" later in life as taxpayers....
Lifting student debt higher and higher is the escalating cost of attending schools, with tuition increasing far faster than the rate of inflation. And enrollment has been rising for years, a trend that accelerated through the recent recession, fueling even more borrowing.
Mark Zandi, chief economist at Moody's Analytics, argues that government loans and subsidies are not particularly cost-effective for taxpayers because "universities and colleges just raise their tuition. It doesn't improve affordability and it doesn't make it easier to go to college."
"Of course, it's very hard on the kids who have gone through this, because they're on the hook," Zandi added. "And they're not going to be able to get off the hook."
..."Parents and the federal government shoulder a substantial part of the postsecondary education bill," said a new report by the Federal Reserve Bank of New York. And some of the borrowers are baby boomers, near or at retirement age. The Fed research found that Americans 60 and older still owe about $36 billion in student loans.
...."overburdened student-loan borrowers may fail to qualify for mortgages and "stay much longer in their parents' homes," Gault said. Young adults forming households have historically been the bulk of first-time home buyers and their scarcity could dampen any housing recovery...
..........The reduced federal rate is now 3.4 percent. It the cuts aren't extended, it will rise to 6.8 percent....
(Excerpt) Read more at hosted2.ap.org ...
What “recovery” are they talking about? Is there a “recovery” where you live?
I had to listen to five minutes of global warming diatribe from the over make-upped extra perky lady before she told the damn temperature this weekend. It’s not warm this week I guess because she shut the f up.
The problem with the easy loans to students is that an artificial demand is created. More students going with “free” money makes the price go up. But hey, its just pretend money anyway.
Same thing that happened with the real estate bubble. The gov’t financing easy loans, folks buying homes they couldn’t afford with money they didn’t have. But hey, we’ll make it back when we sell the house - because real estate only goes up “they aren’t making any more land you know”. Same with the education - “I’ll pay it back after I get that great job as V.P.” I forget what the unemployment rate is for college grads - 28% or something?
Just seen that addressed yesterday;
“While the economists have declared the recession to have been over for almost three years now, ...” said Bob Kurtter, ...Moody’s Investors Service.
The Worst Economic Recovery in History
No Problem, Democrats have authored and voted yes to make student loan debt part of the bankrupting of this country via the Unconstitutional (non)Affordable Heath Care bill.
Kari could then spend more time writing books like:
Norgaard, Kari Marie. 1999. Moon Phases, Menstrual Cycles and Mother Earth: The Construction of a Special Relationship Between Women and Nature, Ethics and the Environment 4(2): 197-209.
I imagine some of our intellects aren’t going to college now because of the high tuitions. At the Univ. of Washington they are turning away local valedictorians (sp??!! - I ain’t one!) in place of more out-of-state kids because they can charge the higher out-of-state fees.
It isn’t about education to many of the schools, it’s the money.
Suppose I borrow $1 to pay for "higher education" and then find myself in a position where I can't repay the loan. If I eventually default on it, did I ever really spend that $1 at all? A single case like this may be simple to understand, but keep in mind that my $1 "purchase" had already been reported in the nation's GDP figures.
Multiply this simple case by potentially hundreds of billions of dollars in unpaid student loans, and trillions of dollars in mortgages in default ... and you can see why so much of the U.S. "economic growth" of the last two decades was completely fictional.
We need the minds. This mess is...
Some colleges are actually extended vacation resorts in disguise. Their primary mission is to give unemployed vacationers the time of their lives on the taxpayers dime.
“More students going with free money makes the price go up. But hey, its just pretend money anyway.”
I would think that some schools would have closed in the past few years if those loans weren’t available to the students; on a positive note, I think kids will be much more reflective now on what kind of job market awaits them at graduation.
The communists that run higher education are applying the Cloward-Piven strategy to break the private system so the government can step in, ala Europe, and be a single payer for university education. It is all planned out. No other explanation makes sense
Its not so much the traditional four year universities. Its the for profit schools like University of Phoenix, Kaplan, and Strayer that are driving a lot of the debt.
This country has to get over the “everyone needs a college education” thing. Education is great, but indebting yourself to get one is insane. People used to get education, but they worked their way through college. Those are the ones who want an education so bad they are willing to do what it takes to get one and then they use the education they receive to actually accomplish something in life.
Education is like anything else, what you are given for free you don’t appreciate.