Skip to comments.Student loan debt a growing threat to the economy
Posted on 04/21/2012 7:00:52 AM PDT by SeekAndFind
Move over, mortgages. Get out of the way, Greece. Another economic doomsday scenario is emerging.
Student loan debt has reached about $870 billion, exceeding credit cards and auto loans, and balances are expected to continue climbing, the Federal Reserve Bank of New York said last month. In February, the National Association of Consumer Bankruptcy Attorneys referred to a "student loan 'debt bomb'" and wondered if it was shaping up to become "America's next mortgage-style economic crisis." Such a burden could crimp an already weak economy.
"Student debt poses a large and growing threat to the stability of our economy," Illinois Attorney General Lisa Madigan testified March 20 before a U.S. Senate judiciary subcommittee hearing in Washington on the looming student debt crisis.
"Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could very well prevent millions of Americans from fully participating in the economy or ever achieving financial security," Madigan said.
In January, Madigan's office sued for-profit Westwood College, claiming it misleads students enrolled in its criminal justice program, puts them deep in debt and awards a nearly worthless degree. She told the Senate last month that since filing the suit, 1,000 former and current Westwood students have come forward to complain about their experiences.
A spokesman for Westwood said Thursday that a motion to dismiss the case is pending.
The hearing was convened by Sen. Dick Durbin, D-Ill., who is pushing legislation, the Fairness for Struggling Students Act, which would allow students who borrowed from private lenders for their education to wipe out that debt in bankruptcy proceedings, just as credit card borrowers and many other unsecured debtors may do.
(Excerpt) Read more at articles.chicagotribune.com ...
The real threat is the overpaid professors and administrators.
How much of that ‘student loan’ stuff is from trucking schools, beauty schools etc. The kind that give cash rewards for ‘finders’ and tells kids they don’t have to show up for classes - ‘here’s your cash’... Lots of education scams out there.
Another handout for Obama’s FSA.
Here’s an alternate concept: don’t take out a loan for studying something that will NOT lead to a good-paying job.
MoreOn is also agitating for this. It’s like mortgages: the deadbeats get relief, and those of us who were responsible and paying off our loans get stuck with the bill. . .
In my observation many students take excessive loans not only to pay for their education but also to maintain lifestyle (pizzas, beer, trips and so forth). Pay your debt, you slacker bums.
To put this into simple language. Stan finishes four years at a out-of-state college. He owes $96k on his loan. The best he can do after graduation is a $34k job, which he accepts and in five years....he’s pulling in $40k.
Stan is limited on expenses because of what he pays each month. He can’t afford more than a week of vacation at some 2-star hotel near Myrtle Beach, SC. He has a gal that he’d like to marry (at age 28) but between the two of them...they both $138k on college loans.
They marry in a quiet and small ceremony...taking a honeymoon to a nice two-star hotel for a week. No purchasing of a house in their plans for the next ten years, because they owe so much. Their preference for cars? $15k Honda cars.
Somewhere around age 35, they agree that they can have kids now because their student loans are down to $60k. They would still be living in an apartment but Stan’s parents have passed on and left him their ‘old’ house.
Around age 44, Stan and his wife have finally paid off their student loans. They have virtually nothing in a 401k, and the house really needs renovation...so they pour their money into that. Around age 49, they finally can afford to start a 401k .
By age 65, Stan and his wife have around $100k in their 401k. It’s not much, for two people who have degrees, but they owed so much on the student loans. They retire on social security and $400 a month from the 401k they have. Life is fairly miserable but they have a good education to appreciate.
By 2030, a quarter of the nation would fall into Stan’s category. I don’t see much for the housing market, the investment market, electronic sales, tourism, or the banking sector. Other than the educational sector and the loan sector....everything else in America is stalled.
Is there anything wrong with this picture?
All of the early experience students I’ve had and the last student teacher I had do not have jobs. They finance all of their education at our local private university. When did people quit working their way through college?
I think you have hit the nail on the head.
I’ll take Medieval Literature, Alex for $60,000. For Final Jeopardy I won’t have any money after 5 years including dropping out of grad school and can’t even get a job at Starbucks, because all the overpriced and out of work MBAs got those plum gigs.
I would add another thing here.
You go off to some private college like Occidental in CA, and pay $100k over two years of college for tuition, room, board and books.
Then you go off to some private college like Columbia University for two years and pay $130k over two years for tuition, room, board, and books.
You skip around for five years and discover a passion for law, and enroll at Harvard Law School for two years ($130k for tuition, room, board, and books).
You end up as a part-time college instructor, a community organizer, state representative and US Senator. Most of those never pay nothing much.
So by age 40, if you were a normal American....you’d owe $350k...more or less....to some college loan....if you were a normal American. You’d never be able to pay that back....if you were a normal American. But then....some folks just aren’t that normal, and don’t have a student loan issue.
I am Stan. Except I went back to school last year for an MBA. At $52000.
The infusion of federal government money destroyed the health care system, the two-parent black family, the housing industry, and the trade schools, to name just a few.
Now the destruction of the college level education system itself is well underway and the root cause is once again government attempts at social engineering. The infusion of government money into the college loan industry is just another effort to pick winners and losers.
Every aspect of our society and culture the federal government touches becomes poisoned and is eventually destroyed.
“How much of that student loan stuff is from trucking schools, beauty schools etc.”
No question about that - we need them to go to real colleges and universities, where they can learn subjects that have a value in the real world. Things that will make America more able compete with the world. This is the kind of learning I’m proud to see us go into debt over:
1. The Phallus
Occidental College. A seminar in critical theory and social justice, this class examines Sigmund Freud, phallologocentrism and the lesbian phallus.
2. Queer Musicology
UCLA. This course welcomes students from all disciplines to study what it calls an unruly discourse on the subject, understood through the works of Cole Porter, Pussy Tourette and John Cage.
3. Taking Marx Seriously
Amherst College. This advanced seminar for 15 students examines whether Karl Marx still matters despite the countless interpretations and applications of his ideas, or whether the world has entered a post-Marxist era.
4. Adultery Novel
University of Pennsylvania. Falling in the newly named gender, culture and society major, this course examines novels and films of adultery such as Madame Bovary and The Graduate through Marxist, Freudian and feminist lenses.
Occidental College. Critical race theory and the idea of post-blackness are among the topics covered in this seminar course examining racial identity. A course on whiteness is a prerequisite.
6. Border Crossings, Borderlands: Transnational Feminist Perspectives on Immigration
University of Washington. This women studies department offering takes a new look at recent immigration debates in the U.S., integrating questions of race and gender while also looking at the role of the war on terror.
7. Whiteness: The Other Side of Racism
Mount Holyoke College. The educational studies department offers this first-year, writing-intensive seminar asking whether whiteness is an identity, an ideology, a racialized social system, and how it relates to racism.
8. Native American Feminisms
University of Michigan. The womens studies and American culture departments offer this course on contemporary Native American feminism, including its development and its relation to struggles for land.
9. Mail Order Brides? Understanding the Philippines in Southeast Asian Context
Johns Hopkins University. This history course cross-listed with anthropology, political science and studies of women, gender and sexuality is limited to 35 students and asks for an anthropology course as a prerequisite.
Cornell University. Cornells art history department offers this seminar looking at art produced under the influence of feminism, post-feminism and the Internet.
11. American Dreams/American Realities
Duke University. Part of Dukes Hart Leadership Program that prepares students for public service, this history course looks at American myths, from city on the hill to foreign devil, in shaping American history.
12. Nonviolent Responses to Terrorism
Swarthmore College. Swarthmores peace and conflict studies program offers this course that will deconstruct terrorism and study the dynamics of cultural marginalization while seeking alternatives to violence.
lenders would be more careful if they knew their loans could be discharged in bankruptcy.
This is a set up for a massive bail out of student loans in return for their votes to Obama.
So a moronic lefty (but I repeat myself) takes one or more of those courses and shockingly...shockingly!...can’t find a job, and they expect me to pick up the tab as a taxpayer?
This is no different from that Fluke womyn and her demand that others pay for her birth control. The students want other people to pay for their adventures. Instead of birth control, it’s playtime at college. It would actually be a double whammy against the American public: the students take worthless, socialism-laden courses demonizing and slandering the things and people that made America great, and then make the American taxpayer pay for it. No thanks.
Caveat emptor, potential students.
It's like the 'back pain' clinics that are pill mills... the ones that don't care about 'back pain' just pain pill addiction and the cash it brings.
I'm also with you on the 'real college' stuff - elite liberals are running the places - and the classes you write about are undoubtedly real... another scam ...
I say we assess all University professors a special tax to pay off those loans, since that's where the money went.
The new welfare scam is 'disability' - the 'disabled' get to dump their student loans... Fake schools that offer nothing except to 'split the money' are making out like bandits ...
Oh and the disability scams are destroying a system that was designed to protect the disabled. When scammers crash the program, they'll go on to the next scam. Those who really are disabled will die.