Is the student loan crisis hindering America's economic recovery?

[Mai72]

http://blogs.marketwatch.com/capito...loan-debt-is-stopping-first-time-home-buyers/

Total U.S. student-loan debt now sits at $1.1 trillion, making it the largest kind of consumer debt after mortgages, according to figures issued Tuesday by the New York Federal Reserve. Total student debt climbed $114 billion in 2013 and it has doubled in the past eight years.

“A massive debt burden topping one trillion dollars possess crippling risks for the individual graduate but also, unaddressed, carries large consequences for the economy as well,” Piegza said.

What’s more, The New York Fed found that 11.5% of student loans are 90 days past due or in default.

It might be time for an Obama bailout! :'(

 

[z1ggy]

Of course it is. My g/f is going to have around $150k in debt when she gets out of school in May. Imagine if the government could give more grants & assistance to kids, or gasp....lower University tuition fees!!!!

I know people with $900 bucks a month in student loan payments. Imagine what a young 20 something could do with 900 bucks more a month? After a few years they could slap a nice down payment down on a house.

 

[nageov3t]

absolutely (which isn't to say that it's not the students' own faults)...

people busy paying off student loans aren't buying new cars or saving for a down-payment on a house.

 

[Mai72]

I love it when older people talk about how they worked and paid for college.

**NEWS FLASH** College costs a hell of a lot more then it did 20 years ago. I have friends who went to college in the 1990's. Times have changed.

I owe a lot in student loans. I don't blame the government. I blame the universities for their greedy behavior. We are paying for it in high student tuition.

How can this benefit our economy?

 

[Mai72]

Of course it is. My g/f is going to have around $150k in debt when she gets out of school in May. Imagine if the government could give more grants & assistance to kids, or gasp....lower University tuition fees!!!!

I know people with $900 bucks a month in student loan payments. Imagine what a young 20 something could do with 900 bucks more a month? After a few years they could slap a nice down payment down on a house.

$900 a month! How can avoid such an extreme payment? They must have great paying jobs. Still... $900 is still a lot of money. Have they looked into IBR? I had read a study a few months ago that stated most people aren't taking advantage of IBR because they don't know it exist.

 

[BurnItDwn]

I will get a lot of flak for this, but universities should all be publicly funded, and our taxes should pay for university level and postgrad education of American citizens.

people from poor and middle class backgrounds should not need to go into debt for the rest of their life in order to get an education.

Only accredited Colleges should be counted of course...

 

[z1ggy]

$900 a month! How can avoid such an extreme payment? They must have great paying jobs. Still... $900 is still a lot of money. Have they looked into IBR? I had read a study a few months ago that stated most people aren't taking advantage of IBR because they don't know it exist.

His job is pretty good. I work with him.

Elaborate on IBR, I have not heard of this either.

My current loan is $450 a month.

 

[Mursilis]

I owe a lot in student loans. I don't blame the government. I blame the universities for their greedy behavior. We are paying for it in high student tuition.

And the tragic fact is, there's only 2-3 universities in the entire country, so it's not like you can price shop them!

 

[ElFenix]

**NEWS FLASH** College costs a hell of a lot more then it did 20 years ago. I have friends who went to college in the 1990's. Times have changed.

much of that is because states have defunded universities. in 1984-85, the state provided the university of texas with $236 million in funding. in 2013-14, the state provided $322 million. that doesn't come close to keeping up with inflation ($529 million).

 

[Exterous]

Of course it is. My g/f is going to have around $150k in debt when she gets out of school in May.

Which is far beyond the average. If you want to discuss the problem at least keep it a bit closer to reality which is still under $30,000 (but likely won't be for 2014)

This is not to say there isn't a problem I just worry that the fix (if it happens) will go too far the other way as people get too focused on the sensationalist $150-250k headlines while ignoring reality

 

[fskimospy]

Which is far beyond the average. If you want to discuss the problem at least keep it a bit closer to reality which is still under $30,000 (but likely won't be for 2014)

This is not to say there isn't a problem I just worry that the fix (if it happens) will go too far the other way as people get too focused on the sensationalist $150-250k headlines while ignoring reality

This is a good point. Not all college grads have student debt, and the average debt for someone with it is almost exactly $30k. That's a lot of money, but the payments for that are much less than the $100k+ people.

Still, going forward this is a really big problem, especially for people who have fallen for unscrupulous universities that provide you worthless degrees for big bucks.

 

[nageov3t]

Which is far beyond the average. If you want to discuss the problem at least keep it a bit closer to reality which is still under $30,000 (but likely won't be for 2014)

This is not to say there isn't a problem I just worry that the fix (if it happens) will go too far the other way as people get too focused on the sensationalist $150-250k headlines while ignoring reality

in much of the country, though, $30,000 is probably just about a 20% downpayment on a house (I imagine... hereabouts, the average price of a decent house is $200-$250,000)

my impression is that right now, the housing market is basically being supported by investors, not long-term buyers. it could be an issue if people find themselves renting (or even living with their parents) for an extra 10+ years longer than they might have otherwise. those are people not hiring contractors, buying appliances/home goods, etc.

 

[mect]

much of that is because states have defunded universities. in 1984-85, the state provided the university of texas with $236 million in funding. in 2013-14, the state provided $322 million. that doesn't come close to keeping up with inflation ($529 million).

This. Universities used to receive most of their funding from the state. They are so heavily defunded now that most schools intentionally try to keep their percentage funding from the state low so that their funding doesn't get cut so much each time the state decides to further decrease support for Universities. This is causing big problems though for community colleges and small, regional universities where this isn't really an option.

The only place where university spending has increased significantly is in support staff. This sucks for students that already know what they want to do and how to get there, because they also have to pay for it, but it is helpful for students that need that support. Universities are evaluated based on the success of their students, and the support staff help to increase success rates, but it comes at a higher cost.

 

[Munky]

Screw bailouts. What we need is this educational bubble and its predatory lending to go bust. Yes, the cost of tuition has been skyrocketing, and continues to do so. The question I'm really interested in is "why are we allowing this to continue?" as opposed to "how do I get someone else to pay for it?"

 

[Paratus]

I refuse to give money to my alma mater. It feels to much like enabling a gambling addict. Besides I've got to save the money for my kids college funds.

There's no reason college should cost %250 more than when I went 20 years ago.

 

[Genx87]

Of course it is. My g/f is going to have around $150k in debt when she gets out of school in May. Imagine if the government could give more grants & assistance to kids, or gasp....lower University tuition fees!!!!

I know people with $900 bucks a month in student loan payments. Imagine what a young 20 something could do with 900 bucks more a month? After a few years they could slap a nice down payment down on a house.

What degree's are these people plopping down 150K on tuition?

 

[akahoovy]

What degree's are these people plopping down 150K on tuition?

I know a guy who has $80k in debt for a music/business degree. On another note, Full Sail makes a lot of promises to get people into programming/entertainment with its 2 1/2 year program and it's $100k to do that. Last guy I knew who graduated from Full Sail was doing wedding videos, and not glamorous ones...

 

[Doppel]

Gov backstopping these is the reason they are so high. If we stopped letting people borrow money to get toilet paper degrees like tourism management we wouldn't have this problem.