Loan Shark Nation: Forcing Our Kids To Choose Between Student Loans And Everything Else

[DamianTV]

https://www.zerohedge.com/news/2018...ose-between-student-loans-and-everything-else

Authored by John Rubino via DollarCollapse.com,

It’s mid-winter, which means millions of high school seniors are winding up their childhoods and planning for what comes next. For many this next stage is college.

But in yet another example of how we baby boomers have rigged the system in our favor at the expense of pretty much everyone else, student loans – barely necessary when most boomers graduated 40 years ago – have become a life-defining problem for our kids and grandkids.

A college degree is now so expensive that for most students it requires massive borrowing. But the starting salary in most fields has risen so slowly that growing numbers of indebted grads can’t reduce – let alone pay off – their loans. From today’s Wall Street Journal:

Jumbo Loans Are New Threat in U.S. Student Debt Market

During the housing boom of the 2000s, jumbo mortgages with very large balances became a flashpoint for a brewing crisis. Now, researchers are zeroing in on a related crack but in the student debt market: very large student loans with balances exceeding $50,000.

A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt.

As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt.

“This is comparable to mortgage lending, where a subset of high-income borrowers hold the majority of outstanding balances,” write Adam Looney of Brookings and Constantine Yannelis of New York University.

“A relatively small share of borrowers accounts for the majority of outstanding student-loan dollars, so the outcomes of this small group of individuals has outsized implications for the loan system and for taxpayers,” the authors say.

The problem is particularly acute among borrowers from graduate schools, who don’t face the kinds of federal loan limits faced by undergraduate students. Half of today’s big balance borrowers attended graduate school. The other half went to college only or are parents who helped pay for their children’s education.

Grad school borrowers tend to be among the best at paying off student debt because they typically earn more than those with lesser degrees. But the rising balances unearthed in the latest study suggest that pattern might be changing.

Overall across the U.S., one-third of borrowers who left grad school in 2009 hadn’t paid down any of their debt after five years, compared to just over half of undergraduate students who hadn’t, federal data show.

The findings on graduate schools are particularly noteworthy because the government offers little information on the loan performance of grad students, who account for about 14% of students at universities but nearly 40% of the $1.4 trillion in outstanding student debt.

...

Full article at link.

 

[specsaregood]

How are they being forced to take out loans?

 

[oyarde]

Well , it is a lot worse for you personally than an underwater mortgage . You just owe money & interest and have no house .

 

[oyarde]

Never borrow money from the govt . Never .

 

[timosman]

How are they being forced to take out loans?

Lack of other options.

 

[specsaregood]

Lack of other options.

that sounds like bullshit, there are plenty of options. One can relatively easily pay their way through a community college degree, part time if necessary. Especially if their parents are willing to let them live at home.

The problem is the "college experience" that has been sold.

 

[tod evans]

Short of doctoring or lawyering a college degree seldom carries as much weight as 4 years of on the job actual work....

[edit]

People who go in debt to 'study' basket weaving, political-science or feminist bullshit really need to be saddled with debt..

 

[specsaregood]

Short of doctoring or lawyering a college degree seldom carries as much weight as 4 years of on the job actual work....

[edit]

People who go in debt to 'study' basket weaving, political-science or feminist bullshit really need to be saddled with debt..

As I've mentioned before. Dw paid about 10k for her associates in nursing at local CC. Got a decent job and employers paid for bachelors part time while working and almost finished getting her masters part time, all employer paid for. there are options, I bet there are even such options in the lawyering field.

 

[heavenlyboy34]

that sounds like bullshit, there are plenty of options. One can relatively easily pay their way through a community college degree, part time if necessary. Especially if their parents are willing to let them live at home.

The problem is the "college experience" that has been sold.

Community colleges only offer 2 year degrees. (unless you have some exceptional ones in your area I've never heard of) 2 year degrees are good for a number of things, but not everything. It's common for design firms to require a BA nowadays for example, even though you don't actually need to get one to develop the skills for the job. Easy way to narrow down the field of applicants, but often shuts out good people. #doubleedgedsword

 

[specsaregood]

Community colleges only offer 2 year degrees. (unless you have some exceptional ones in your area I've never heard of) 2 year degrees are good for a number of things, but not everything. It's common for design firms to require a BA nowadays, even though you don't actually need to get one to develop the skills for the job. Easy way to narrow down the field of applicants, but often shuts out good people. #doubleedgedsword

actually its quite common now for community colleges to partner up with local state schools are offer 4 yr degrees as well.

https://www.bing.com/news/search?q=community+colleges+begin+to+offer+bachelors+degrees&FORM=HDRSC6

edit: and I didn't say you had to stop at a 2 yr degree. nothing stops somebody from getting an associates cheaper at a CC, then transferring to a 4yr school, even part time, while working.

the fact is there ARE options, the people saying there are no option are just setting you up to say that the taxpayers should pay for everybody to get a 4yr degree for free.

 

[heavenlyboy34]

actually its quite common now for community colleges to partner up with local state schools are offer 4 yr degrees as well.

https://www.bing.com/news/search?q=community+colleges+begin+to+offer+bachelors+degrees&FORM=HDRSC6

edit: and I didn't say you had to stop at a 2 yr degree. nothing stops somebody from getting an associates cheaper at a CC, then transferring to a 4yr school, even part time, while working.

the fact is there ARE options, the people saying there are no option are just setting you up to say that the taxpayers should pay for everybody to get a 4yr degree for free.

+rep Last I heard, the MCCD *wants* to get 4 year programs (particularly at Phoenix College), but hasn't quite yet. Know what sucks about transferring credits? If you do it at ASU, they severely limit the amount you can transfer in your major(general requirements they're cool about) so you have to spend a ton on coursework and materials that just isn't worth what it costs.

 

[nikcers]

How are they being forced to take out loans?

Upper education is a boondoggle, you end up serving the military or huge loans because the government interference in price and competition.

 

[nikcers]

If you pay for an education, and you get taught deficits don't matter did you get a good education?

 

[Krugminator2]

This feels a lot like housing leading up to 2008. The idea that everyone should get into a house or go to college, backed up with government loans drives prices up.

I am sure people can avoid the high costs with community college, just like no one forced people into adjustable rate mortgages. But when enough people ignore caution, it means that the taxpayer is going to get stuck with the bill. If Pocahontas gets elected president, things are going to get a lot worse. http://money.cnn.com/2017/05/12/pf/...en-student-debt-umass-commencement/index.html

 

[heavenlyboy34]

that sounds like bullshit, there are plenty of options. One can relatively easily pay their way through a community college degree, part time if necessary. Especially if their parents are willing to let them live at home.

The problem is the "college experience" that has been sold.

That, and federal discrimination laws force employers to use degree requirements instead of intelligence tests. Damn hippie liberals made a simple IQ/aptitude test (or very rough equivalent thereof) cost 5-6 figures and 4 years you'll never get back.

 

[XNavyNuke]

the fact is there ARE options, the people saying there are no option are just setting you up to say that the taxpayers should pay for everybody to get a 4yr degree for free.

Our CC has a 2+2 program with a state university about thirty miles north. There are about a dozen majors, including STEMs, that are part of the program.

We HS, so far 3 of the 4 have taken this path. You can dual enroll at 16yo. Last one will be 16 next year.

XNN