The Student Debt Epidemic: 1 in 5 Households Now Owe Student Loans

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The Great Recession has pushed student debt to historic levels, and for the first time ever, almost 20% of U.S. households have outstanding educational loans.

Over the last decade, the percentage of U.S. households with student debt has been steadily climbing. By 2007, 15% of American households were in debt after taking out higher education loans. That was bad, but it was before the economy tanked.

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According to a new study by the Pew Research Center, 19% of households had outstanding student debt in 2010, by far the highest level ever, and it’s hitting younger Americans harder than any other age group.

Households headed by someone younger than 35 make up 40% of those that have student loans, the highest share for any demographic and another sign of how substantial the debt burden is for many young Americans who have recently graduated with piles of debt and few job options.

The debt burden is not only affecting a greater number of Americans, but those who are in debt owe more than ever before. The average outstanding balance rose from $23,349 in 2007 to $26,682 in 2010. Furthermore, 10% of debtor households owed more than $54,238 in 2007, while the same proportion owed more than $61,894 in 2010.

The student debt crisis has been compared to the subprime mortgage mess that contributed to the recession in 2008-09 and has been blamed for hindering the economic recovery, and these latest numbers show that the problem is only getting worse. While increased student debt doesn’t pose the same risks to the financial system that the subprime mortgage crisis did, having a country full of over-indebted graduates will — to one “degree” or another — slow economic growth.

For those with student debt but who are employed, a significant slice of their income is often going toward paying down their loans, rather than being spent in ways that do a better job of spurring economic growth. And for those who can’t pay, many of the loans go into deferment or forbearance, where they often accrue interest, making them even harder to pay back down the road. The Consumer Financial Protection Bureau has suggested as much, saying that the growing levels of student debt are holding back the overall economic recovery, with one CFPB official arguing that student debt is preventing new graduates from buying homes, further stifling the housing market and restraining the U.S. economy.

Interestingly, while the student loan burden is growing for all demographics and income levels, it’s hurting those at the extreme ends of the income spectrum harder than those in the middle. While lower-income households accounted for 13% of student debt owed in 2010 (which increased from 11% in 2007), the richest fifth of households owed 31% in 2010, up from 28% in 2007.

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Pew researchers also found that student debt is becoming a much larger share of U.S. household debt as a whole. In 2007, 3% of all outstanding debt was student-related, but in 2010, 5% of all debts were student debts, which is not only a reflection of higher total student debt but also of our efforts to pay down other debts like credit cards. According to the New York Federal Reserve Bank, student loans currently make up 8% of all household debt. Considering some of the more current numbers — all of Pew’s are from 2010 — it’s likely that there are already more than 19% of households carrying student debt.

Pew’s findings that more affluent households have been getting hit harder than other income levels also coincides with a Wall Street Journal analysis of Federal Reserve data last month, showing that households with income between $94,535 and $205,535 had the biggest spike in terms of percentage of households owing student debt. According to WSJ’s reporting, those affluent households owed $32,869 in 2010, an increase from $26,639 in 2007, all adjusted for inflation.

While the Obama administration has made attempts to ease the burden of student loans for some borrowers, the overall problem is only worsening. Agencies like the CFPB are urging Congress to act, but Washington seems unable to address the issue in a comprehensive way. And even though the economy is showing signs of improvement, through the eyes of those graduating with student debt, it’s a much bleaker picture.

MORE: New Frontier in Student Debt: It Stifles the Housing Recovery

71 comments
scottizu
scottizu

I can't believe 1 in 20 households.  I can't believe students are graduating with little skill sets, 60% not being able to find jobs in their fields.  I can't believe they are graduating with over $100,000 in debt and paying 8-9% out there.  Mortgages aren't even paying that much.  What are we going to do about the debt epidemic?  Please increase awareness or add to the conversation here: http://finlit.biz/how-do-we-fix-the-debt-epidemic-in-america.

AshleyAllen79
AshleyAllen79 like.author.displayName like.author.displayName 2 Like

To all of those who are against student loan reform,

First, I must say that if I hadn't researched this topic to death (since I have student loans myself), I would probably agree with you.  It isn't until you understand the true insidiousness of this system that you realize that we've ALL been scammed.  If you think that "Your tax dollars" belong in better places, let me just tell you, you've already paid for this and the longer you wait to fix it, the more it's going to cost you... again.

Let me tell you something about these banks that you so militantly defend.  They first petitioned Congress to allow them to remove all consumer protections from student loans including bankruptcy, truth in lending, statues of limitations, refinancing rights, usury, etc.  In fact, the biggest student loan holding bank, Sallie Mae, spends MILLIONS every year doing this.  They contributed $250,000.00 to John Boehner's campaign fund to encourage him to change the laws for their benefit.  Ironically, John Boehner's daughter works at Sallie Mae.  Then, they waited on the sidelines, rubbing their hands together, smacking their lips and laughing evilly while universities lured young, unsuspecting kids into their schools with promises of bright futures and stability.

Schools convinced young kids that student loans were "safe."  They had "protections" and were a good "investment" in their futures, particularly because the interest rates were low.  Let me tell you - when interest capitalizes and compounds, it is NEVER low.  Many kids will repay 3,  4, and even 5 times what they borrowed, and that's if they'll ever even be able to find work to afford the astronomical payments.

The banks then borrowed money from YOU, the TAXPAYER at 0%.  They lent money irresponsibly at high sums to students.  They KNEW that the students would never be able to repay this money.  In fact, they hoped they wouldn't.  If a student defaults, the bank tacks on a 25% default fee + a 25% collection fee - then, they send the bill to the collection agencies that THEY OWN.  So, that $100,00.00 has become $150,000.00 over night.  What's worse, THEY SEND THE BILL BACK TO YOU, THE TAXPAYER!  So they borrowed say $100,000.00 from the taxpayer, never paid you back, and are asking you to give them another $150,000.00.  Why? Because they lent recklessly!

But guess what?  It doesn't stop there.  Even though you, the taxpayer, has paid off the debt, they turn around and harass the poor student debtor for the rest of their lives.  They destroy their credit permanently so they can never stimulate the economy with house or car purchases.  They make it difficult for them to find jobs with tarnished credit.  They strip them of professional licenses, making it even more hopeless for them to repay their debts.  They garnish wages, take tax returns, empty personal bank accounts... those dirty banks will even seize any assets that a person may have when they die, so that they can leave nothing to their children.  Keep in mind that was never actually your bill... in fact, you were technically the creditor but since the banks paid off your representatives in Congress, they've been allowed to do this to you.

Of course, they don't tell you all of this because how else can they get you to play into their hands?  They want you to fight this as long as possible because the longer this takes, the more customers the will gain and the more the debt will increase with their interest rates.  They know you'll pay them back eventually because the loans are federally guaranteed so the longer you hold the line for them by fighting amongst your fellow citizens, the better.  Since you don't know all of this, you'll naturally defend the banks in the name of personal responsibility.  It's easier for you to be self-righteous and point your finger at "Those whiny students who think they're entitled to a college education."  How dare those 18-year-olds not know what they were getting into?  Truth be told, you probably wouldn't have known either as a 40+ year old.  Why?  Because as I said, Congress allowed the banks to remove truth in lending protections from student loan contracts so frankly, nobody has any real understanding of what they're signing.  The rules can change at any moment.  You can be sold, without notice, to any other bank for any interest rate and fee.  However, you aren't allowed to refinance.

What's worse is that the government comes up with "Income Based Repayment" programs to make the public think that there really is a solution.  Believe me when I say that this is not a solution.  At the end of the 20+ IBR program and the loan is "forgiven," the student now owes taxes on an ungodly sum that has been amassing interest for years.  It would not be unrealistic to say that this could be in the 7 figures.  The student then owes the IRS, and the IRS can put people in prison for an inability to repay.  Also, the most dangerous loans, private student loans, are not covered by IBR.

Please, please, learn the facts before you judge and before you defend the very corporations that are scamming us all into the next Great Depression.

electedface
electedface

Student debt is

stunting the growth of the economy. Student loans have increased by 275% over

past decade. As the next generation graduates from college, they are

plagued by insurmountable debt that places demands on their income,

limiting their ability to spend their earnings in ways that stimulate the

economy. 

http://www.youtube.com/watch?v...

Gary McCray
Gary McCray

Student loans are an abysmal device whereby lending institutions and schools take advantage of and create debtor slaves out of inexperienced young people who don't know any better.

EG: Students are among other things, ostensibly in school to learn how to avoid being taken advantage of  by institutional slime.

Albert E. Bannister
Albert E. Bannister

A huge part of the problem is the "charge-it" mentality in the country.  Time was when people used to save up for purchases, not everyone just signs for it. 

I worked in high school and saved my money. I also worked while I attended college and during summer breaks.  I didn't earn enough to pay my full tuition but graduated with 1/10 the debt of some of my classmates who never worked a day in their life. I have no sympathy for the fancy car, no job, binge drinking, spring breaking cry babies who don't want to pay off their student loans. 

If you can't afford college - then don't go.  Or get a job and save for it.  To quote Judge Smails from Caddyshack - "The world needs ditch diggers, too."

Janine
Janine

@Albert E. Bannister: "If you can't afford college - then don't go." <----- You do realize that this statement translates to "College is only for the wealthy". Get a job and save for it? What job can you get as a teenager that will allow  you to save $100,000 for college? Unless you are planning to go to college when you are elderly? Should we all work as unskilled laborers because we don't have cash in the bank for college? You went to college. Surely you can come up with a solution other than "if you can't afford it then don't go."

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

Rather cold-hearted, aren't you, Albert?  I'm guessing you aren't an incredibly young person so you were likely not subjected to the 800% (literally, and adjusting for inflation) increase in college tuition that these younger kids have faced?  By the time that I graduated from my state university, in-state, full-time tuition was $5,000 for 1 semester.  That's $10,000.00 per year.  Interesting because when I began 5 years earlier, I was only paying $1,300 per semester.

I worked full-time in high school and college, too.  I didn't party - I was a religious girl and was dedicated to my studies.  I lived at home, went to community college and graduated with a 4.0 from a state university. 

My master's thesis focused on self-entitlement of the younger generations and my research showed that we can owe the credit for this behavior to the parenting and society in which these kids were raised.  They were pampered by parents, they were practically forced into college if they were going to get decent jobs, they were taken advantage of by banks and colleges who ravenously raised tuition and fees... all of this before the age of 25, when the human brain is finished developing.  They graduate and a few years later, realize that their futures are literally hopeless and they have little incentive to keep going.  They get no second chances.  We treat our criminals in this country better than we treat our young.

I did what you did, only I did it more recently.  Thanks to the time at which I was born, my circumstances are very different from yours.  Please do not assume that everyone who has debt is a piece of dirt.  You were given more opportunities - there were more grants, tuition was cheaper, the government subsidized tuition more when you were in school - you did not do this completely alone, you just had different circumstances.  I'm not saying you didn't work hard but still, you had better opportunities.

Claiming credit for what others have done to you, and criticizing others for not having what you have is actually making you appear to be just as self-entitled and ignorant as the kids that you're pointing fingers at.  Please, consider that your view is not the only view.

Reythia
Reythia

Agreed.  But with two caveats:

1.)  The costs of college have increased dramatically in the last generation.  Which makes it a lot harder for a hard-working student to work summer and weekend jobs and be able to pay all/most of their bills.

2.)  The number of available unskilled labor jobs has significantly decreased, due to increasing automation and the lousy economy.  Which means that there aren't as many options of non-college-graduate jobs available.  It also means that college students have fewer part-time job options with which to pay their way through school.

AshleyAllen79
AshleyAllen79

 See, this is where we agree.  I cannot understand how someone can see education from this point of view, but be against student loan reform.  They can't pay their debts anyway, so why not give them the opportunity to do so by setting up something more reasonable?  Can we agree that some payment is better than no payment?  Can we also agree that destroying the credit ratings of the next generation and making employment difficult/impossible is counter-productive to loan repayment? 

You're all about teaching these darn kids a lesson (read: giving them a life sentence) for making decisions when they were 18.  Why shouldn't banks also be responsible for robbing the taxpayers?

Gary McCray
Gary McCray

I totally agree with you that people have not responded well to easy availability of credit.

Buy now pay later has over all been very destructive to our lifestyle and our economy.

Unfortunately, human nature is always to do what is easiest at the time and our whole credit industry is built on that premise.

House mortgages, credit cards, car loans and now student loans, we have credit maxed on everything, which means all our income goes to pay credit interest and fees and our actual buying power is near zero.

Of course, corporations and government bought into this too and now debt is totally out of hand and since the people have no buying power left, business is failing also.

Expecting inexperienced, underage people to handle student loan obligations is even more farcical.

The reality is credit is not a benefit to human endeavor, but a gigantic and terminally destructive force against civilization itself.

AshleyAllen79
AshleyAllen79

 What always comes to mind when I think about this is that these kids were the children of the parents who were duped into the mortgage crisis.  They saw their parents borrow into a lifestyle, so they did the same.  The only difference is their parents get a second chance when their houses go under water, but the kids are stuck with this debt even until after they've passed away.  There are so many factors that play into this but bottom line, debt slavery is immoral and illegal.  I want to pay my debts and think that we all should, we just need to stop the bleeding (cut student loans so universities will have to lower tuition) and make a REALISTIC repayment option so people can make good on their debts.  With capitalizing, compounding interest, I will repay about 4 times the amount that I took out.  Usury at its finest.

romerjt
romerjt

 

There is another aspect to the student debt problem and it

is revealed in the following from a NYT article 9/27/2011.

 

“In Texas,

for example, of every 100 students who enrolled in a public college, 79 started

at a community college, and ONLY

2 OF THEM EARNED A TWO-YEAR DEGREE ON TIME; even after four years, only 7 of

them graduated. Of the 21 of those 100 who enrolled at a four-year college, 5

graduated on time; after eight years, only 13 (50%) had earned a degree.” 

 

While the numbers might be better elsewhere, the

point is that most kids who start college don’t finish because they really aren’t

prepared for college even with the lower standards that colleges have

adopted.  However, given the idea that

everyone should go to college they are able to get loans and the colleges will

help them get in debt.

 

I used to teach high school seniors and have seen this first

hand and would ask students who didn’t like to read, didn’t like to write and

had problem getting there assignments in on time WHY they were going to the

local community college and what they expected to happen.   

 

Not unlike the home-buyers who got a mortgage they could

never afford, these students are getting loans for something that they can not

achieve.

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 Have you ever considered that maybe some people don't finish "on-time" because they're working full-time and are trying to be "responsible" by minimizing their student debt burden?  Geez, these kids can't win with people, can they? 

Go to school and get criticized for: having debt, not going fast enough,  going too fast, picking the wrong major, going to the wrong school, doing what you were told to do, etc.

Don't go to school and get criticized for: Not doing what you were told to do, not having an education, being unable to secure employment because all of your competitors have degrees, being lazy, being stupid, etc.

It is time that the older generations stop acting as if they had nothing to do with the younger generations.  These kids are doing the best they can with their limited life experience and their underdeveloped 18-year-old minds.  They're counting on the previous generations to lead them in the right direction.  Please stop pretending like you have nothing to do with this problem. 

PaisleyBlackburn
PaisleyBlackburn

@AshleyAllen79 

Great post Ashley. These judgmental people are sickening. Reading their posts makes me taste vomit in my mouth because of how they think everything should be done according to what THEY believe. I'm shaking my head at their unintelligent, judgmental posts.

Sara L. Rose
Sara L. Rose

I was fortunate in that I didn't need a loan. But I strongly believe that in order for our nation to move forward, we need to forgive all student debt.

Reythia
Reythia

So you'd like to punish people like me and yourself, who worked hard to come out of college without massive debts, and reward the students I've known who partied hard for the first two years, before settling down to earn their degree in 6 years?  Why would you ever want to reward bad behavior?

If we want to make college more affordable, let's do it the right way:  increase the number of merit-based scholarships, especially in degrees where jobs are available and where society as a whole needs new workers.  And lower the overall cost of tuition for everyone, by spending more tax money to pay for education.  Make college more affordable, rather than rewarding the people who waste the most money.

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 Reythia,

I don't care about your friends who were smart or stupid or what have you.  Do you not understand what has happened here?  The banks borrowed this federally guaranteed from YOU, the oh-so-holy, perfectly smart tax payer for 0%.  They lent the money to these students who, regardless of their reasons, borrowed it for 3.4%-18%.  The banks KNEW the kids couldn't pay it back and hoped they wouldn't because that way, they could inflate the balances with capitalizing, compound interest, 25% default fees and 25% collection fees.  This is GOOD for them, because all they have to do is send it back to you, the tax payer, and they get paid AGAIN, on the INFLATED balance.  Do you understand?  They took this money from you, didn't pay you back, and are now asking for MORE??  How do you not get this?

Whether the student is smart or stupid is irrelevant.  The point is that this is a huge scam that has been set up by the banks.  They have been around longer than these 18-year-0ld kids have been alive - they know what they're doing.  Eventually, most students WILL default meaning that the taxpayer WILL cover it because it's federally backed.  They'll still go after the debtors, too, so they can double and even triple dip, but that's a whole different story.

The longer we wait to remedy this situation, the more it's going to cost YOU and affect YOU because the balances are inflating at unholy rates.  Like it or not, YOU have already paid for it, and YOU are going to pay for it again.  It's just cheaper to pay for it now than it will be when this doubles to $2 trillion in the next couple of years.

We have no choice.  The banks have lobbied Congress to the tune of millions of dollars every year and this is the way it is

So actually, it is in YOUR best interest to do something about this sooner than later.

PaisleyBlackburn
PaisleyBlackburn

@AshleyAllen79  

Unfortunately Ashley, trying to get these people to see the truth will be next to impossible. They are regurgitating what FOX News has told them. It's hard for me to see so many ignorant fools out there who have to be spoon-fed their facts because they can't think for themselves and do their own research.

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 How would helping other people punish you?  Please do not whine about "YOUR TAX DOLLARS" because we all pay taxes and we see them wasted every day on stupid things.  How about helping our own people for once?

I graduated with a 4.0 so based on your theory, I should have been able to get a free education.  So can someone like me have my debts canceled since I'm "smart?" 

Where is the accountability for schools like the University of Phoenix who intentionally target the less smart, the poor, the homeless (literally) and anyone else who might not know better?  So since these people were sold a fake education at an astronomical cost, we shouldn't help them because they were "stupid?"

I am so terribly concerned about our good will as a society.  People have become so callous and individualistic.  It isn't all about you.

PaisleyBlackburn
PaisleyBlackburn

@Reythia 

If only there were a dislike button, you would have quite a few for your "opinion." Furthermore, I don't believe your story. Like most people that watch FOX News, you have "conveniently" come up with a story to back up your judgmental opinion. 

Reythia
Reythia

Yes.  Paying off the debts of other people who were either blatantly stupid or (worse) intentionally wasteful of their own funds IS effectively punishing the people who are not stupid and not wasteful.  As an example, let me tell you about two of my real-world friends, both of whom are very nice people and quite intelligent, but who made very different financial and lifestyle choices.  Both have their masters degrees in various fields of oceanography and neither got tons of money from their parents to pay for school.  In grad school (when I knew them), both got the same small stipend (~1000/month) to live on from the school (which is typical in science/engineering grad school).

Elizabeth finished undergrad in four years and the masters in 3, which is about standard.  Between her own scholarships, summer jobs, and her parents' help, she got out of undergrad with neither loans nor savings.  During at least grad school (when I knew her) she lived in a tiny apartment without central A/C (and we live in Florida, so that's a big deal) and with minimal amenities.  She wasn't slumming it, but she had to be very careful with her money to make due on her fellowship money.  She turned down vacations with other people, chose not to eat out much, didn't buy very much unnecessary for herself, and occasionally borrowed from friends until the semesterly stipend came in.  In short, she lived within her means and came out of school without loans.

Mindy, on the other hand, chose to go to a more expensive private school for undergrad, despite the fact that her scholarships didn't cover it all and her parents couldn't help her much.  She then got a masters in astronomy (2 years) at the same school, before deciding that she wanted to switch majors to oceanography.  The school she came to (the same as Eliz did) was a cheaper public school... but Mindy spent a full seven years before graduating with only a masters.  Part of that was because her prof was picky, but a lot of it was because she didn't push herself and work any harder than necessary the first few years.  When Mindy got to the last school, she moved into a fairly large apartment in a very nice area of downtown, where rents were high.  She had A/C, a pool, lived right by the nightlife.  She was happy to go out to eat or party whenever anyone asked, paid $200 every few months for a haircut.  She spent far more than her ~$1000/month, covering the remainder with student loans.  When she finally graduated, she had over $150,000 in loans.

Who was wiser?  And ask yourself this: if the government covers all student loans, regardless of the reason behind them, then what motivation do people like Elizabeth have to scrimp and save and live within their means?  If the government covers everything, it MAKES SENSE for people to live like Mindy.  To have a good time, since Uncle Sam will pay for all of it, so long as you eventually graduate. 

And what will that mean in the long run for the government (and yes, the taxpayers)?  If we outright ENCOURAGE students to spend as much as they want, for any reason, for any length of time, they're going to do just that.  Even the smart and conscientious ones will, to some extent, because living like Elizabeth did and worrying about money SUCKS.  Which means it's going to become expected that students get bigger, nicer apartments, take fewer hard classes a semester, pay more for parties and food, and take summer trips to Europe...  because the government will cover all of it with tax money, so long as they graduate.

This is NOT a wise financial decision for the country.  We want to encourage our students to make the tough decisions like Elizabeth did, not the short-view lifestyle choices that Mindy did.  And if we bail out the Mindy's of this world, then we've cost the Elizabeth's something: the A/C, nice food, expensive clothes, party costs, etc, that Elizabeth COULD have bought but responsibly chose not to.  As one of the people who lived within her means during school, giving my less responsible fellows a free out DOES cost me something: the more expensive fun and less stress that THEY bought but I responsibly passed up on.

For the record, I have no problem lowering or even eliminating the interest on school loans, but I am strongly against automatically eliminating the PRINCIPAL on those loans.  Students need to learn that if they take out a loan, that MEANS something.  What good does it do to teach them that money grows on trees, when normally it doesn't?  Shouldn't college be about teaching young adults to become RESPONSIBLE adults?

We also want to encourage students to major in fields where there are jobs available and workers needed.  Not FORCE people to go into those fields if they have a burning desire to do something else, but we CAN use market tools to make some harder schooling choice more attractive.  If the country needs engineers and medical technicians (or whatever), we OUGHT to fund more of the college classes in those majors.  And if we want to get the most for our buck, we ought to be SURE to fund the best and brightest who want to go into those fields -- because those are the ones most likely to give the biggest payback to society.  That's not saying we shouldn't fund anyone who's not the top of her class.  Like I said, I think the government (on a state and national level) should be funding a far higher percentage of tuition costs for EVERYONE, as they used to.  But it makes sense to add an extra level of scholarship to entice the best into certain programs... and also to motive high schoolers to work hard and learn well, for the chance to earn such scholarships and be able to afford college.

So you're right.  This ISN'T all about me.  And it sometimes can be "callous".  But in the same way as a boss who lets his new worker fail to learn a lesson is, not just to be cruel.  Refusing to subsidize bad decisions IS about the good of society.  And I fail to see what paying off every loan, for every reason, is EXCEPT subsidizing bad decisions at the expense of those to struggled through because they made responsible decisions instead.

Its_Not_A_Tax_LOL
Its_Not_A_Tax_LOL

There isn't a magical cash register in the sky that pays for all the free stuff.  By 'forgiving all student debt' you'd just pass the bill from those who borrowed the money to the taxpayers.  That isn't acceptable.

PaisleyBlackburn
PaisleyBlackburn

@Its_Not_A_Tax_LOL 

Wow you have really bought into what FOX News tells you, haven't you? Forgiving student debt means that those same students will be able to buy houses and cars and stimulate the economy instead of living in their parents' basement for the rest of their lives while they try to pay off a debt that cannot be paid off due to the way the interest is compounded and added to their principal. Perhaps if you had actually READ the article you would know this! You are just another judgmental creep in the world!

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 Actually, we're printing money like crazy people and raising the debt ceiling to the point of no return so it seems like there is a magical cash register for only certain people/corporations that will re-elect government officials, just not for the people who actually need it to keep the economy going.

If the entire government is unable to help with student loan debt, what makes you think that the 36 million who owe this debt can pay it off?  How about this - make the banks and the universities eat this debt.  They did it - now make them have some consequences for once.

PaisleyBlackburn
PaisleyBlackburn

@AshleyAllen79  

I think making the universities and banks eat the debt they created would be poetic justice.

marathag
marathag like.author.displayName 1 Like

 The Magic Cash Register is busy printing out paper for QE3

gracetoday
gracetoday

All money created in the current Federal Reserve is debt. This means that there is no money to pay the interest. Students, along with the other politically unconnected are simply the ones left holding the bag. Should have been born to a banker family

Its_Not_A_Tax_LOL
Its_Not_A_Tax_LOL

A banker family would be smart enough not to borrow money they can't pay back. A banker family wouldn't complain about repaying a debt that they agreed to. 

marathag
marathag

 Banker families got the Taxpayer to foot the bill, as Daddy worked in a place that was 'Too Big to Fail'

irrenmann
irrenmann

This whole thing is written like a victim narrative about people who owe money for their loans. "Epidemic" makes it sound like they just caught it from someone else. They BORROWED THE MONEY.

"For those with student debt but who are employed, a significant slice of their income is often going toward paying down their loans, rather than being spent in ways that do a better job of spurring economic growth."

Hey, it builds credit. If they didn't want to pay it back, they shouldn't have borrowed it. There's no "crisis" except the prevalence of students who borrow tens of thousands of dollars to go get some useless degree with a 2.2 GPA, then wonder why they aren't raking in hundreds of thousands of dollars per year. College isn't for everyone, kids. It's for smart, hardworking people. 

PaisleyBlackburn
PaisleyBlackburn

@irrenmann 

You sound like an uneducated city worker who CHOSE not to go to college and have a real chip on your shoulder. Perhaps if you did your research you would know that the taxpayers are the ones who are footing the bill for these ungodly student loans!

AshleyAllen79
AshleyAllen79

  I graduated from two different state universities with both bachelor's

and master's degrees.  I finished with a 4.0 both times.  I'm not sure

which degrees you deem "worthless," as most degrees, if judged by their

job market value, ARE worthless.  This would even include the vocational

STEM degrees.  I have read that engineering and law are two of the most

risky degrees to obtain these days as they are both expensive and their

markets are overly saturated.

Listen, when I began college, the

economy was booming.  I worked full-time, finished my first two years at

a community college, lived at home and finished my last two years +

graduate school at a state university.  I earned a grand total of two

pitiful scholarships and no grants.  I came from a middle-class, white

family.  My parents didn't think I'd need college because I was a girl

(so naturally, I'd grow up and magically marry a rich man who could

support me - this didn't work out the way they assumed).  My parents had

no college fund for me so I paid out of pocket AND took out loans.  At

the time, it was a sound investment.  By the time I finished school,

McDonald's wasn't even hiring... and I'm not opposed to working there,

either.  My loans capitalize and compound constantly.  I cannot find

work. 

I did everything I was supposed to do.  I guess someone

like you would say that someone like me shouldn't go to college.  I

can't say if you're right or wrong but what's done is done and trust me,

if I could give back my diploma to get my life back, I'd do it in a

heartbeat.  This country affords everyone a second chance.  Some

murderers even have shorter sentences than I do (mine is 30 years). 

Since dead-beat dad's who don't pay child support, shopaholics and

gamblers can get second chances, why can't I?  I didn't spend my money

on booze or anything non-essential.  Maybe I made a mistake by going,

maybe I didn't.  But I'm stuck now and for the next 30 years, I'll be

feeding greedy banks about $1,700.00 a month.  Times my scenario by 36

million (the number of people holding student loans) and you have

yourself a severely depressed economy.  Help these people, make

repayment reasonable, and we'll all get our lives back.  Which would you

choose?  Because it's getting pretty dang scary watching all of our

prices rise.  It's reminiscent of the Great Depression, if you ask me.

AshleyAllen79
AshleyAllen79

  I graduated from two different state universities with both bachelor's

and master's degrees.  I finished with a 4.0 both times.  I'm not sure

which degrees you deem "worthless," as most degrees, if judged by their

job market value, ARE worthless.  This would even include the vocational

STEM degrees.  I have read that engineering and law are two of the most

risky degrees to obtain these days as they are both expensive and their

markets are overly saturated.

Listen, when I began college, the

economy was booming.  I worked full-time, finished my first two years at

a community college, lived at home and finished my last two years +

graduate school at a state university.  I earned a grand total of two

pitiful scholarships and no grants.  I came from a middle-class, white

family.  My parents didn't think I'd need college because I was a girl

(so naturally, I'd grow up and magically marry a rich man who could

support me - this didn't work out the way they assumed).  My parents had

no college fund for me so I paid out of pocket AND took out loans.  At

the time, it was a sound investment.  By the time I finished school,

McDonald's wasn't even hiring... and I'm not opposed to working there,

either.  My loans capitalize and compound constantly.  I cannot find

work. 

I did everything I was supposed to do.  I guess someone

like you would say that someone like me shouldn't go to college.  I

can't say if you're right or wrong but what's done is done and trust me,

if I could give back my diploma to get my life back, I'd do it in a

heartbeat.  This country affords everyone a second chance.  Some

murderers even have shorter sentences than I do (mine is 30 years). 

Since dead-beat dad's who don't pay child support, shopaholics and

gamblers can get second chances, why can't I?  I didn't spend my money

on booze or anything non-essential.  Maybe I made a mistake by going,

maybe I didn't.  But I'm stuck now and for the next 30 years, I'll be

feeding greedy banks about $1,700.00 a month.  Times my scenario by 36

million (the number of people holding student loans) and you have

yourself a severely depressed economy.  Help these people, make

repayment reasonable, and we'll all get our lives back.  Which would you

choose?  Because it's getting pretty dang scary watching all of our

prices rise.  It's reminiscent of the Great Depression, if you ask me.

AshleyAllen79
AshleyAllen79

 I graduated from two different state universities with both bachelor's and master's degrees.  I finished with a 4.0 both times.  I'm not sure which degrees you deem "worthless," as most degrees, if judged by their job market value, ARE worthless.  This would even include the vocational STEM degrees.  I have read that engineering and law are two of the most risky degrees to obtain these days as they are both expensive and their markets are overly saturated.

Listen, when I began college, the economy was booming.  I worked full-time, finished my first two years at a community college, lived at home and finished my last two years + graduate school at a state university.  I earned a grand total of two pitiful scholarships and no grants.  I came from a middle-class, white family.  My parents didn't think I'd need college because I was a girl (so naturally, I'd grow up and magically marry a rich man who could support me - this didn't work out the way they assumed).  My parents had no college fund for me so I paid out of pocket AND took out loans.  At the time, it was a sound investment.  By the time I finished school, McDonald's wasn't even hiring... and I'm not opposed to working there, either.  My loans capitalize and compound constantly.  I cannot find work. 

I did everything I was supposed to do.  I guess someone like you would say that someone like me shouldn't go to college.  I can't say if you're right or wrong but what's done is done and trust me, if I could give back my diploma to get my life back, I'd do it in a heartbeat.  This country affords everyone a second chance.  Some murderers even have shorter sentences than I do (mine is 30 years).  Since dead-beat dad's who don't pay child support, shopaholics and gamblers can get second chances, why can't I?  I didn't spend my money on booze or anything non-essential.  Maybe I made a mistake by going, maybe I didn't.  But I'm stuck now and for the next 30 years, I'll be feeding greedy banks about $1,700.00 a month.  Times my scenario by 36 million (the number of people holding student loans) and you have yourself a severely depressed economy.  Help these people, make repayment reasonable, and we'll all get our lives back.  Which would you choose?  Because it's getting pretty dang scary watching all of our prices rise.  It's reminiscent of the Great Depression, if you ask me.

Reythia
Reythia

I have to agree.  I'm not saying that taking out college loans is bad, but people really need to be aware of how much they're getting for their money.  Right now, a lot of students are choosing to go to more expensive private schools rather than public ones, which tend to cost more (at least for those not smart enough to earn scholarships).  Additionally, I've known a lot of students who choose to take 12 credits a semester, rather than plowing through with the full 15-18 per semester that I took.  Is it any surprise that I graduated in 4 years, while it took them 5?  Sometimes that choice is rational, because the student needs to also work to pay bills -- but frankly, those aren't usually the students who end up with $50,000 of debt, either. 

Then there are people who go to grad school without having earned a fellowship, and somehow think they're going to make massive amounts of money to pay off their debts later.  As a PhD-holder myself, let me make a clear suggestion:  if at least your tuition isn't paid for by your grad school program, then DON'T GO.  Do the cost/benefit analysis first, folks, before diving right in.

AshleyAllen79
AshleyAllen79

 Reythia,

Your insights into this whole system are baffling to me.  Sometimes you make sense and then other times... you make my head spin.

Why do you think that you're so much better than other students because you blasted through undergraduate school at 15-18 credits per semester?  Are you better than me because I took 12 credits per semester so that I could work full-time and minimize my student loan burden?  I understand that you mention my method was "rational," but how can you be so sure that everyone who only takes 12 credits is partying?  Can you claim to know the personal lives of every college student in America?  Someone with your experience and credentials should certainly know that they shouldn't judge others.

As a Ph.D. holder "yourself," it surprises me that you're against helping these poor people who did what they were told to do when they were 18-years-old and then come out on the other end as debt slaves to society.  My husband has  Ph.D. and I have a master's.  Many of our opinions are different from yours.  Having the credential does not make you all-knowing.  Many people are first-generation students.  They don't have the advantage of knowing what financial aid options (besides loans) are available and frankly, if you're a white, middle-class person, you can pretty much bet on the fact that you're on your own unless you were a teen mom. 

Reythia
Reythia

1.)  If you took longer to graduate because you were working, went to a local state school, didn't "party", and generally lived frugally, then you probably didn't come out of college with overwhelming debts, did you?  In which case, you're clearly NOT one of those I'm talking about.  And being a responsible person, you'd have probably PREFERRED simply paying less in tuition and covering the costs yourself, than having higher tuition and having the government pay your debts later.

2.)  I would have no problem having the government pay down a limited amount of student debt today, as a one-time thing, IF, at the same time, we were doing something to prevent such debts in the future.  But we're NOT doing that.  Imagine if debt forgiveness was tied together with a general effort to lower tuition by increasing the percentage paid by government, inform potential students as to the benefits and costs of each major and university, increase the number of scholarships for top-tier students, regulate bank student loans so they don't intentionally screw over naive students, and generally improve the percentage of students who can come out debt-free or with affordable levels of student debts!  In that case, I could support a one-time "well, you missed out on our improvements to student financing, so we'll help you out in return" forgiveness deal.  Even if it meant helping a bunch of irresponsible people who don't particularly deserve the help, along with all those who do.

3.)  But since we're NOT putting in any effort to tie a loan forgiveness program together with a general college tuition reduction program, I don't see how the loan forgiveness by itself can possibly hope to work on a long-term scale.  Frankly, it's just going to cost too much, and it's going to cost a lot FOREVER.  Not just once, to correct an earlier mistake which hurt people.  I'm all for helping people, but let's do it in the "teach a man to fish" long-term way, not the "give a man a fish" short-term way.  Only a long-term view is sustainable -- which means it will help a lot more people over the years than just feeding them money after the fact will.

Its_Not_A_Tax_LOL
Its_Not_A_Tax_LOL

Our country is at a new record debt level of $16 trillion. That is more harmful than young adults having outstanding college loans.  Bottom line: If you cannot go to a $50k/yr college don't go, attend a junior college for 2 years then transfer.  Reality needs to take hold soon, fiscal reality.

AshleyAllen79
AshleyAllen79

 You DO realize that the banks borrowed this money from you, the almighty taxpayer at 0%, lent it to students, tacked on fees, then sent you the bill again at a higher cost, right?  I think you should be more upset with them than you are at some 18-year-old kid who's brain hasn't fully developed yet who did what his parents told him to do.

Reythia
Reythia

Yes...  and yet, you realize that most credits at 2-year schools don't transfer to larger universities, right?

austin87j
austin87j

HEY SEPH BAY: You can't just "create jobs" when you're wallowing in debt with a worthless degree.  Do you think the government or banks are jumping to loan anyone the start up money for a business when they make 30k a year and are trying to pay off 30k in student loan debt with interest?  I think it's funny how people like you just say "Go out and create jobs!"  Like it's the easiest thing in the world.  How detached from reality are you?

austin87j
austin87j

I graduated in May 2011 and still have the same bar-tending job I did while I was in school.  I've applied for over 50 jobs related to my degree and have had one interview.   All the while I'm trying to save up money to get my life going: I'd like to propose to my girlfriend, buy a house, have children etc. but can't because I'm still being forced to pay down $28,000 in student loan debt for a worthless degree! I keep waiting for something to change but it's clear that it's going to get much worse before it gets any better.  Basically my point is I like your story, and I hope stories like these resonate with more people around the country like they do for me; then maybe something would change.

kafir4life
kafir4life

What's your worthless degree in?  Is it worthless because nobody would ever hire someone for having that degree?  Or worthless because of the economy and it will take an economic turnaround (which we can't get with Stinks (BO) in the White House) to make it have some value?  Have you been able to find the criminals who forced you to borrow 28,000 for a worthless degree?  

PaisleyBlackburn
PaisleyBlackburn

@kafir4life  

I can just see the sarcastic smug look on your face right now, and I'm having the most beautiful fantasy of blowing if off your rotten face you judgmental prick!

Nonaffiliated
Nonaffiliated

Perhaps you lack experience in the field of your degree?  The best thing for you to do would be to take a job (any job) that's related to your degree, even if the pay is less than what you get as a bartender.  Consider working as an intern.  You need to get experience related to the profession.  Once you demonstrate your ability in the field, your degree will qualify you to move up to higher-paying positions.

marathag
marathag

 An unpaid Intern position will not alleviate the need for money now to to apply towards the current Student Loan payment

Clarence Swinney
Clarence Swinney

Obama capped all Fed student loan paymnets at 10% of income.

Work ten years in govt and balance is cancelled

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 Not really...

This only applies to federal loans, which are much safer than private loans.

Secondly, the debt is not really cancelled.  It's "written off," but the student must then pay taxes on the remaining, inflated amount.  Meaning that basically, rather than owing the DOE, they owe the IRS and if they can't pay, they go to prison.

Finally, just how easy do you think it is to secure a government job in this economy?  I've been trying daily for the last 4 years with no luck.  It also doesn't help that my debt-to-income ratio on my credit is strained thanks to student loans.

First we create the slaves, then we punish them.  It's the new American way.

PaisleyBlackburn
PaisleyBlackburn

@AshleyAllen79 

And so begins the Illuminati's New World Order. This is just the beginning, unfortunately.

Seph Bay
Seph Bay

Why do people call it "debt" when education is supposed to be an "investment for the future?" 

What part of entrepreneurship, creativity, imagination, innovation, initiative do these "graduates" not understand?

Sixty million items (books, videos, music, articles, newspapers, etc.) in the Library of Congress, more than 3,800 colleges and universities all over the US and their respective libraries, in the midst of the greatest period of wealth creation, in the biggest economy in human history (despite the so-called Great Recession),  in the land of opportunity, in the land of milk and honey (or endless soda and universal ketchup).American-born, American-bred, American-raised, American politicized, American-cultured, American-educated, full-blooded Americans of the 21st century, and you complain about "debt" and refer to it as a "crisis?"Is this the new American pride, relying on the government to create jobs instead of creating jobs for themselves?

Commentonitall
Commentonitall like.author.displayName 1 Like

You have no idea what you are talking about.  Did you read the article and how the student debt affects everything else in the economy?  Obviously not.  These "graduates" have inflated school loans with degrees that mean nothing because no one is hiring.  How am I supposed to make a company hire me out of college if all they want is someone with 6+ years of experience in my related field.  I try not to insult people but you have not the tiniest idea of what it is like and maybe you went to college and landed a job right away.  Well congratulations because that is not the norm.  MORON!

TBolt
TBolt like.author.displayName 1 Like

Agreed.  Reading through these comments has been sickening.  

Incorrect blame dropped on Obama's feet.  Recommendations by a 'doctor' to not go to school unless you're the most perfect human being on the planet, as she apparently is.  A typical conservative tendency to turn its cheek to a major problem, wash their hands of it until - years from now - when the problem has been allowed to fester and boil to the point of global collapse.

PaisleyBlackburn
PaisleyBlackburn

@AshleyAllen79 

Ashley,

I'm almost wondering at this point if prison would be a better option. If you think about it, American prisoners have it much easier than those of us struggling and trying hard to pay off these ridiculously inflated student loans that in reality are designed not to be able to be paid off unless you win the lottery. 

AshleyAllen79
AshleyAllen79 like.author.displayName 1 Like

 TBolt,

Thank you for this.  I agree with you regarding the alleged "doctor."  Obama has done one thing that has been positive for student loans and it is that he's eliminated the middle man, the crooked bankers, from federal loans.  However, under his administration, bad things have happened for students.

1. The elimination of the 6 month grace period after graduating

2. The elimination of subsidized loans for graduate students

3. IBR (Income Based Repayment), which is being touted as God's gift to student debtors.  This is not true.  It is a dangerous system in which students only pay a small percent of their income for 20+ years and receive "forgiveness" at the end of their program.  The problem is, interest continues to amass turning 6 figure debt into 7 figure debt.  At the end of the program, people have to pay income tax on the forgiven portion, which could be in the tens of thousands of dollars.  Basically, the balance is transferred from the DOE to the IRS, which shows no mercy when a citizen is unable to pay.  They simply throw you in prison.  IBR does not include private loans, and it's been reported that the payments are actually still too high for many to afford.

I don't think Romney is the solution, either.  We have a gigantic pink elephant in the room and someone had better address it and quick because it's suffocating us to death.

Seph Bay
Seph Bay

American beeee atchin is the new black....

Juno1721
Juno1721

Seph Bay's website explains it all about Seph - http://www.facebook.com/pages/...

Seph Bay
Seph Bay

It's called critical analysis. Read and parse. It is of tremendous help so that you can comprehend. After you do, hit me again so you know what I do. Until then, continue to judge a book by it's cover.... Literally.

austin87j
austin87j

So apparently Seph Bay actually is really detached from reality because he's not real! Just a disseminator of propaganda as it says on that site