Of the 27.8 million Americans with federally guaranteed student loans, only 10.8 million (roughly 40 percent) are currently making payments, according to data compiled by the U.S. Consumer Financial Protection Bureau (CFPB).
“Of the remaining 17 million, 7.9 million are still in school … while a whopping 9 million, or almost the same number as those who (are) currently repaying, are either in default, in their grace period, or in deferment or some other form of forbearance,” the website Zero Hedge notes.
These are terrible numbers – and likely to get worse given the lingering softness of the American job market (and the rising cost of increasingly worthless college degrees).
In other words, get ready for another bubble to pop in the very near future …
“The housing bubble was inflated by government-dictated lending policies designed to expand home ownership by requiring banks to make loans to people who couldn’t meet traditional down-payment and credit standards,” Steven Greenhut of Reason.org. wrote recently.
Funny … that’s what we said five years ago.
“Government policies designed to expand educational opportunities have inflated the cost of tuition, cheapened the value of education and burdened new generations with crushing debt loads,” Greenhut continues. “Yet those of us who call for less government meddling and more private-sector discipline are the ones considered heartless.”
Exactly …
Whenever the federal government seeks to create “equality of outcome” as opposed to “equality of opportunity,” not only do its efforts fail – but the taxpayer always winds up getting stuck with the check. Why can’t we just accept that some people aren’t ever going to go to college – or own their own homes?
34 comments
This bubble should be interesting to watch and the both the “higher ed” and the “for profit” educational systems have been riding this gravy train a while now.
They’ve helped, along with the Fed and their crony banking system, to create a modern day indentured servant class. I’m sure they are all proud of their achievement. If some are ashamed, I’m quite sure they won’t be giving back their substantial salary’s and pensions to make up for the bamboozlement of many of the “yutes”.
This particular bubble fascinates me because unlike other bubbles, the debt is Federally “protected” and even bankruptcy can’t wipe it out. The human action here should be fascinating.
I wonder if the students with no hope of paying off their huge debt eventually end up doing like the Boomers did during Vietnam and simply going to Canada or something along those lines.
Even more interesting, will “word” simply get out and start dropping new enrollments in colleges?
Very interesting indeed…despite being sad.
This bubble should be interesting to watch and the both the “higher ed” and the “for profit” educational systems have been riding this gravy train a while now.
They’ve helped, along with the Fed and their crony banking system, to create a modern day indentured servant class. I’m sure they are all proud of their achievement. If some are ashamed, I’m quite sure they won’t be giving back their substantial salary’s and pensions to make up for the bamboozlement of many of the “yutes”.
This particular bubble fascinates me because unlike other bubbles, the debt is Federally “protected” and even bankruptcy can’t wipe it out. The human action here should be fascinating.
I wonder if the students with no hope of paying off their huge debt eventually end up doing like the Boomers did during Vietnam and simply going to Canada or something along those lines.
Even more interesting, will “word” simply get out and start dropping new enrollments in colleges?
Very interesting indeed…despite being sad.
So lets cut goverment loans, dumb down our kids even more (except for kids with names with ending in III, IV) and watch the rest of the best paying jobs here and abroad go to countries that support meaningful education. Old money and private schools don’t gaurrantee brains as evidenced by many stories on this site.
Government-backed student loans to dumbasses who don’t repay them don’t make kids smart. Many of these nitwits shouldn’t even be attending college – most should be at a local tech school or getting a job. The federal money teat creates artificial demand (and props up joke-ass diploma mills like the University of Phoenix). The smart kids (the ones who SHOULD be in higher ed) can either pay for college because they’re parents are more likely college educated, or they can repay what debt they do accrue because they get the professional jobs after attaining their degrees. Colleges have been in a student loan feeding frenzy for decades now.
So lets cut goverment loans, dumb down our kids even more (except for kids with names with ending in III, IV) and watch the rest of the best paying jobs here and abroad go to countries that support meaningful education. Old money and private schools don’t gaurrantee brains as evidenced by many stories on this site.
Government-backed student loans to dumbasses who don’t repay them don’t make kids smart. Many of these nitwits shouldn’t even be attending college – most should be at a local tech school or getting a job. The federal money teat creates artificial demand (and props up joke-ass diploma mills like the University of Phoenix). The smart kids (the ones who SHOULD be in higher ed) can either pay for college because they’re parents are more likely college educated, or they can repay what debt they do accrue because they get the professional jobs after attaining their degrees. Colleges have been in a student loan feeding frenzy for decades now.
Lots of brown eggs getting these loans and never finishing a degree. The handouts do not continue for life people.
I’m paying 8% interest on my student loans and the Federal Government makes a profit from the program. And if you don’t pay it, they have ways of getting the money back that make loan sharks envious, including taking your social security.
It’s not a handout, you turd.
Lots of brown eggs getting these loans and never finishing a degree. The handouts do not continue for life people.
I’m paying 8% interest on my student loans and the Federal Government makes a profit from the program. And if you don’t pay it, they have ways of getting the money back that make loan sharks envious, including taking your social security.
It’s not a handout, you turd.
“The housing bubble was inflated by government-dictated lending policies designed to expand home ownership by requiring banks to make loans to people who couldn’t meet traditional down-payment and credit standards…”
Absolute horseshit. I’m not even going to deal with this since it’s so ridiculous.
“Government policies designed to expand educational opportunities have inflated the cost of tuition, cheapened the value of education and burdened new generations with crushing debt loads,” Greenhut continues. “Yet those of us who call for less government meddling and more private-sector discipline are the ones considered heartless.”
Also horseshit. Tuition was $1,500 a semester when I started college. It was $500 a semester when my brothers attended college a decade before. It’s now in the 20k a year range where I work. And yes, it’s because of gov’t policy. That policy was to slash money to public colleges and transfer the costs on students via student loans.
I guess, like the everything else, we should just say fuck it. Enlightenment era notions like “public” education are antiquated. Thomas Jefferson is so 17th Century. Now we can get back to that Hobbesian paradise of the Libertarians.
That policy was to slash money to public colleges and transfer the costs on students via student loans.
You’re right, state governments withdrew funding from public universities over the past decade or two, but at the same time, public universities have increased their budgets. I went through using numbers from University of South Carolina a while back in some random thread here, and it was quite clear that SC has drastically cut funding to them over the years, and yet USC’s budget continued to rise beyond the rate of inflation. State government sees it as an opportunity to funnel funds to other agencies, or to tax cuts. State colleges see it as a way to afford more stuff they don’t need. Students just see a bigger pile of debt.
Most public colleges need to be reigned in to only be concerned with education, and provide quality education for an affordable rate. They should receive adequate funding, but in return be forced to meet requirements set by the state, including budget limitations, tuition rate limitations, and educational standards.
“The housing bubble was inflated by government-dictated lending policies designed to expand home ownership by requiring banks to make loans to people who couldn’t meet traditional down-payment and credit standards…”
Absolute horseshit. I’m not even going to deal with this since it’s so ridiculous.
“Government policies designed to expand educational opportunities have inflated the cost of tuition, cheapened the value of education and burdened new generations with crushing debt loads,” Greenhut continues. “Yet those of us who call for less government meddling and more private-sector discipline are the ones considered heartless.”
Also horseshit. Tuition was $1,500 a semester when I started college. It was $500 a semester when my brothers attended college a decade before. It’s now in the 20k a year range where I work. And yes, it’s because of gov’t policy. That policy was to slash money to public colleges and transfer the costs on students via student loans.
I guess, like the everything else, we should just say fuck it. Enlightenment era notions like “public” education are antiquated. Thomas Jefferson is so 17th Century. Now we can get back to that Hobbesian paradise of the Libertarians.
That policy was to slash money to public colleges and transfer the costs on students via student loans.
You’re right, state governments withdrew funding from public universities over the past decade or two, but at the same time, public universities have increased their budgets. I went through using numbers from University of South Carolina a while back in some random thread here, and it was quite clear that SC has drastically cut funding to them over the years, and yet USC’s budget continued to rise beyond the rate of inflation. State government sees it as an opportunity to funnel funds to other agencies, or to tax cuts. State colleges see it as a way to afford more stuff they don’t need. Students just see a bigger pile of debt.
Most public colleges need to be reigned in to only be concerned with education, and provide quality education for an affordable rate. They should receive adequate funding, but in return be forced to meet requirements set by the state, including budget limitations, tuition rate limitations, and educational standards.
Government could much more easily serve this purpose by offering affordable, no-frills public higher education that a student can afford to pay for via working through college.
One thing that should be immediately passed is that student loans should not be granted to students going to for-profit diploma mills, schools who do not have an acceptable track record of successful students, or for degree programs that do not result in a real career. If a student is extremely high risk for not being capable of paying back their astronomical debt, no point in lending to them.
“If a student is extremely high risk for not being capable of paying back their astronomical debt, no point in lending to them.” This is exactly what the government legislated away from banks with regard to lending policies for homes. You MUST give money to dumbasses or deadbeats or you are RACISS. Only difference here is that the shackles are permanent with a discharge in bankruptcy off the table.
This is going to be the big one, and if enough kids get fed up with the debt burden they had to incur because of the propaganda they had been fed for their entire lives in government school about higher education being “necessary,” almost amounting to a “right,” there is going to be some serious social implications. I can foresee a populist movement arising from the ashes of this thing when it pops.
Interestingly enough these perpetuations of government subsidizations of markets creating asset bubbles wreck havoc on the ability of businesses to create jobs that are supposed to be available once you have completed your indoctrination and received your debt shackles from the higher education indoctrination camps.
if enough kids get fed up with the debt burden
That will only happen after a significant portion of the youth population ends up with a worthless degree and the kind of student loan debt that could have bought them a luxury car, but at that point, it will already have taken its toll on the economy.
Even if kids could afford to pay off their student loans, the unnecessarily high tuition rates guarantee they spend a lot more than they should have, which means lost capital elsewhere. Taking longer to buy a house and move out, taking longer to afford a decent car, being forced to put off having kids, having fewer kids, or not having kids at all. All of that has ramifications on the economy.
Also, the problem with the propaganda that you have to go to college to succeed is that people hear it from their parents, teachers, friends, family, etc. They hear it from everyone, and often what they don’t get is direction. That’s why Suzy and Johnny go to college for 4 years to get a degree in Sociology and end up being a waiter/waitress for the next 20 years. No teacher told them how stupid that is. Mom and dad were just happy their son/daughter is in college and didn’t care to sit their kid down and actually help direct them like a parent should. Their friends are likely in the same (or similar) classes. The sad thing is, by time they figure out their degree is worthless, they can’t afford to go back to college because they still owe tens of thousands for their first degree, of which they are making payments on, and are probably hesitant to take on another load of debt.
Society is dooming children by not teaching them to wake the hell up while they still have the chance. “Figure out what you want to do, or what you are good at, and what you need to do to get there. Not everything requires a degree. Look at job listings for what you want, talk to people who do what you want to do, figure out what is worth getting and what is a waste of time. If you don’t know, don’t piss your money down the drain by going to college anyways, save it until you know what you want to do.” Parents that don’t say this are doing a disservice to their children.
This is the kind of stuff that makes the American Dream a dream of the pipe variety.
Sadly, we have probably lost a half a generation already(10 years or so), and it’s ongoing.
The solution is not keeping the proverbial spigot open(gov’t backed loans) to fund an ever less effective system.
Kids just need to get out and do something, anything.
I worked for a decade while attending universities. I never piled up debt…my Mom convinced me to take one loan for $1100 in 89′, which I regretted and paid back.
The rest of my education was paid for by me personally….either straight out of my pocket while working during the day and attending at night or in the case of one of my employers I negotiated payment of my school as part of my salary…which was a “win win” for both of us as it ended up being a deduction for him.
The “cherry” on top of it all is that most of my skills that help me make a living today were garnered outside of the colleges I attended. I could have probably just skipped school entirely and used the money to start a business earlier in life and been as much or even more successful.
Sure, I’m more “well rounded” today as a result of college…but that’s not what pays the bills in my case.
Government could much more easily serve this purpose by offering affordable, no-frills public higher education that a student can afford to pay for via working through college.
One thing that should be immediately passed is that student loans should not be granted to students going to for-profit diploma mills, schools who do not have an acceptable track record of successful students, or for degree programs that do not result in a real career. If a student is extremely high risk for not being capable of paying back their astronomical debt, no point in lending to them.
“If a student is extremely high risk for not being capable of paying back their astronomical debt, no point in lending to them.” This is exactly what the government legislated away from banks with regard to lending policies for homes. You MUST give money to dumbasses or deadbeats or you are RACISS. Only difference here is that the shackles are permanent with a discharge in bankruptcy off the table.
This is going to be the big one, and if enough kids get fed up with the debt burden they had to incur because of the propaganda they had been fed for their entire lives in government school about higher education being “necessary,” almost amounting to a “right,” there is going to be some serious social implications. I can foresee a populist movement arising from the ashes of this thing when it pops.
Interestingly enough these perpetuations of government subsidizations of markets creating asset bubbles wreck havoc on the ability of businesses to create jobs that are supposed to be available once you have completed your indoctrination and received your debt shackles from the higher education indoctrination camps.
if enough kids get fed up with the debt burden
That will only happen after a significant portion of the youth population ends up with a worthless degree and the kind of student loan debt that could have bought them a luxury car, but at that point, it will already have taken its toll on the economy.
Even if kids could afford to pay off their student loans, the unnecessarily high tuition rates guarantee they spend a lot more than they should have, which means lost capital elsewhere. Taking longer to buy a house and move out, taking longer to afford a decent car, being forced to put off having kids, having fewer kids, or not having kids at all. All of that has ramifications on the economy.
Also, the problem with the propaganda that you have to go to college to succeed is that people hear it from their parents, teachers, friends, family, etc. They hear it from everyone, and often what they don’t get is direction. That’s why Suzy and Johnny go to college for 4 years to get a degree in Sociology and end up being a waiter/waitress for the next 20 years. No teacher told them how stupid that is. Mom and dad were just happy their son/daughter is in college and didn’t care to sit their kid down and actually help direct them like a parent should. Their friends are likely in the same (or similar) classes. The sad thing is, by time they figure out their degree is worthless, they can’t afford to go back to college because they still owe tens of thousands for their first degree, of which they are making payments on, and are probably hesitant to take on another load of debt.
Society is dooming children by not teaching them to wake the hell up while they still have the chance. “Figure out what you want to do, or what you are good at, and what you need to do to get there. Not everything requires a degree. Look at job listings for what you want, talk to people who do what you want to do, figure out what is worth getting and what is a waste of time. If you don’t know, don’t piss your money down the drain by going to college anyways, save it until you know what you want to do.” Parents that don’t say this are doing a disservice to their children.
This is the kind of stuff that makes the American Dream a dream of the pipe variety.
Sadly, we have probably lost a half a generation already(10 years or so), and it’s ongoing.
The solution is not keeping the proverbial spigot open(gov’t backed loans) to fund an ever less effective system.
Kids just need to get out and do something, anything.
I worked for a decade while attending universities. I never piled up debt…my Mom convinced me to take one loan for $1100 in 89′, which I regretted and paid back.
The rest of my education was paid for by me personally….either straight out of my pocket while working during the day and attending at night or in the case of one of my employers I negotiated payment of my school as part of my salary…which was a “win win” for both of us as it ended up being a deduction for him.
The “cherry” on top of it all is that most of my skills that help me make a living today were garnered outside of the colleges I attended. I could have probably just skipped school entirely and used the money to start a business earlier in life and been as much or even more successful.
Sure, I’m more “well rounded” today as a result of college…but that’s not what pays the bills in my case.
Does “work-study” even exist anymore? I had friends on my hall who did that but it didn’t pay enough. I worked downtown because I had to because of no money.
I hear a lot about Student loans but not “working your way through college” like
the old days.
But given the costs now you would have to make $75k a years to pay for college?
Work Study is available for students who qualify and want to work. Signing some paperwork and getting a check is just easier for some.
Look at another issue, nobody is willing to make their kid spend a year or two in a dorm these days, they have to live in “apartments”. Public schools need to require Freshman and Sophomores to live on campus and live there without a car. It’s being done in some of the better schools around the country, there’s no reason it wouldn’t work at USC or Clemson.
The apartments cost 2/3rds that of on campus housing. Your idea would make student debt worse, and work-study even less effective.
Does “work-study” even exist anymore? I had friends on my hall who did that but it didn’t pay enough. I worked downtown because I had to because of no money.
I hear a lot about Student loans but not “working your way through college” like
the old days.
But given the costs now you would have to make $75k a years to pay for college?
Work Study is available for students who qualify and want to work. Signing some paperwork and getting a check is just easier for some.
Look at another issue, nobody is willing to make their kid spend a year or two in a dorm these days, they have to live in “apartments”. Public schools need to require Freshman and Sophomores to live on campus and live there without a car. It’s being done in some of the better schools around the country, there’s no reason it wouldn’t work at USC or Clemson.
The apartments cost 2/3rds that of on campus housing. Your idea would make student debt worse, and work-study even less effective.
Student loans should be granted based on prior year grade point averages, declared major, estimated ability to repay, and credit worthiness.
Granting a $20,000 loan to a 2.0 GPA, African American Studies student with horrible credit isn’t a good idea. Granting that loan to a 3.2 GPA, Accounting/Engineering/Nursing student with good credit is a good idea.
To determine whether a declared major is worthy of it’s name, if you have to ask, “What do you do with a degree in __________?” it’s probably a worthless degree.
Student loans should be granted based on prior year grade point averages, declared major, estimated ability to repay, and credit worthiness.
Granting a $20,000 loan to a 2.0 GPA, African American Studies student with horrible credit isn’t a good idea. Granting that loan to a 3.2 GPA, Accounting/Engineering/Nursing student with good credit is a good idea.
To determine whether a declared major is worthy of it’s name, if you have to ask, “What do you do with a degree in __________?” it’s probably a worthless degree.
One thing a lot of people don’t realize is that by failing to pay back federally back student loans, they will loose their eligibility for Social Secuirty disability and reitrement benefits as well as Medicare eligibility. So, if someone fails to pay back a 10K or even 100K student loan, and lives to say 70ish, this is still a winning proposition in general for the American tax payer (a default). So, just consider that when whining.
One thing a lot of people don’t realize is that by failing to pay back federally back student loans, they will loose their eligibility for Social Secuirty disability and reitrement benefits as well as Medicare eligibility. So, if someone fails to pay back a 10K or even 100K student loan, and lives to say 70ish, this is still a winning proposition in general for the American tax payer (a default). So, just consider that when whining.
These are actually very good numbers. Of the balances of loans that at some point have entered repayment (repayment, deferment, forbearance, bankruptcy, default, disability), 50 to 60 percent are consistently in current repayment. The other 40 to 50 percent eventually pay in full, or pay something, and the program makes money. The borrowers in-school or grace period are not “losers.” They are the future repayers and have always been so.
These are actually very good numbers. Of the balances of loans that at some point have entered repayment (repayment, deferment, forbearance, bankruptcy, default, disability), 50 to 60 percent are consistently in current repayment. The other 40 to 50 percent eventually pay in full, or pay something, and the program makes money. The borrowers in-school or grace period are not “losers.” They are the future repayers and have always been so.