Student Loan Debt will surpass $1 TRILLION in 2011; 500% Increase since 2000

[karmakramer]

http://www.nytimes.com/2011/04/12/education/12college.html?_r=1&ref=homepage&src=me&pagewanted=print

 

Student loan debt outpaced credit card debt for the first time last year and is likely to top a trillion dollars this year as more students go to college and a growing share borrow money to do so.

While many economists say student debt should be seen in a more favorable light, the rising loan bills nevertheless mean that many graduates will be paying them for a longer time.

 

“In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” said Mark Kantrowitz, the publisher of FinAid.org and Fastweb.com, who has compiled the estimates of student debt, including federal and private loans.

 

Two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993. Last year, graduates who took out loans left college with an average of $24,000 in debt. Default rates are rising, especially among those who attended for-profit colleges.

 

The mountain of debt is likely to grow more quickly with the coming round of budget-slashing. Pell grants for low-income students are expected to be cut and tuition at public universities will probably increase as states with pinched budgets cut back on the money they give to colleges.

 

Some education policy experts say the mounting debt has broad implications for the current generation of students.

 

“If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very different than the generation before them,” said Lauren Asher, president of the Institute for Student Access and Success. “Things like buying a home, starting a family, starting a business, saving for their own kids’ education may not be options for people who are paying off a lot of student debt.”

 

In some circles, student debt is known as the anti-dowry. As the transition from adolescence to adulthood is being delayed, with young people taking longer to marry, buy a home and have children, large student loans can slow the process further.

 

“There’s much more awareness about student borrowing than there was 10 years ago,” Ms. Asher said. “People either are in debt or know someone in debt.”

 

To be sure, many economists and policy experts see student debt as a healthy investment — unlike high-interest credit card debt, which is simply a burden on consumers’ budgets and has been declining in recent years. As recently as 2000, student debt, at less than $200 billion, barely registered as a factor in overall household debt. But now, Mr. Kantrowitz said, student loans are going from a microeconomic factor to a macroeconomic factor.

 

Susan Dynarski, a professor of education and public policy at the University of Michigan, said student debt could generally be seen as a sensible investment in a lifetime of higher earnings. “When you think about what’s good debt and what’s bad debt, student loans fall into the realm of good debt, like mortgages,” Professor Dynarski said. “It’s an investment that pays off over the whole life cycle.”

 

According to a College Board report issued last fall, median earnings of bachelor’s degree recipients working full time year-round in 2008 were $55,700, or $21,900 more than the median earnings of high school graduates. And their unemployment rate was far lower.

 

So Sandy Baum, a higher education policy analyst and senior fellow at George Washington University, a co-author of the report, said she was not concerned, from a broader perspective, that student debt was growing so fast.

 

Indeed, some economists worry that all the news about unemployed 20-somethings mired in $100,000 of college debt might discourage some young people from attending college.

 

A decade ago, student debt did not loom so large on the national agenda. Barack and Michelle Obama helped raise awareness when they spoke in the presidential campaign about how their loan payments after graduating from Harvard Law School were more than their mortgage payments.

 

“We left school with a mountain of debt,” Mr. Obama said in 2008. “Michelle I know had at least $60,000. I had at least $60,000. So when we got together we had a lot of loans to pay. In fact, we did not finish paying them off until probably we’d been married for at least eight years, maybe nine.”

 

Even then, Mrs. Obama said, it took the royalties from her husband’s best-selling books to help pay off their loans.

 

In 2009, the Obama administration made it easier for low-earning student borrowers to get out of debt, with income-based repayment that forgives remaining federal student debt for those who pay 15 percent of their income for 25 years — or 10 years, if they work in public service.

 

But if the Obamas’ experience highlights the long payback periods for student debt, their careers also underscore the benefits of a top-flight education.

 

“College is still a really good deal,” said Cecilia Rouse, of Princeton, who served on Mr. Obama’s Council of Economic Advisers. “Even if you don’t land a plum job, you’re still going to earn more over your lifetime, and the vast majority of graduates can expect to cover their debts.”

 

Even believers in student debt like Ms. Rouse, though, concede that hefty college loans carry extra risks in the current economy.

 

“I am worried about this cohort of young people, because their unemployment rates are much higher and early job changing is how you get those increases over their lifetime,” Ms. Rouse said. “In this economy, it’s a lot harder to go from job to job. We know that there’s some scarring to cohorts who graduate in bad economies, and this is the mother of bad economies.”

 

And there is widespread concern about those who borrow heavily for college, then drop out, or take extra years to graduate.

 

Deanne Loonin, a lawyer at the National Consumer Law Center, said education debt was not good debt for the low-income borrowers she works with, most of whom are in default.

 

Unlike most other debt, student loans generally cannot be discharged in bankruptcy, and the government can garnish wages or take tax refunds or Social Security payments to recover the money owed.

 

Students who borrow to attend for-profit colleges are especially likely to default. They make up about 12 percent of those enrolled in higher education, but almost half of those defaulting on student loans. According to the Department of Education, about a quarter of students at for-profit institutions defaulted on their student loans within three years of starting to repay them.

 

“About two-thirds of the people I see attended for-profits; most did not complete their program; and no one I have worked with has ever gotten a job in the field they were supposedly trained for,” Ms. Loonin said.

 

“For them, the negative mark on their credit report is the No. 1 barrier to moving ahead in their lives,” she added. “It doesn’t just delay their ability to buy a house, it gets in the way of their employment prospects, their finding an apartment, almost anything they try to do.”

 

TLDR: Student loan debt has increased 500% in the last decade. America is fucked

 

some sound advice I read on another forum:

 

 

The key is to just stay in school and keep getting new loans. You don't have to repay the loans while being a full-time student. When you're 70 years old and have $40 million in student loan debt, and the banks finally ask you to repay it back, just be like:

 

 

[karmakramer]

[Guest Z_B_Z]

i accumulated a ridiculous amount of student loans at an expensive art school and ended up dropping out. ill be paying back that shit back for years and years and in the end have nothing to show for it. granted, no ones fault but my own, but my god it depresses the hell out of me. i might end up moving to some small third world country where the debt collectors cant find me (only half joking)

[karmakramer]

[Cryptowen]

I have no debt & I plan to keep it that way by having no money.

[Guest Z_B_Z]

good plan (not being sarcastic)

[Guest beatfanatic]

I am glad i paid my way through most of univesity even though I did not pursue a job in my field (finance, I have a business degree). I have like $4000 in student debt which is not too bad.

[Guest hahathhat]

at least with grade inflation, there's little chance of failing out any more.

[Guest Adjective]

a relevant doc on the business of education

http://www.pbs.org/wgbh/pages/frontline/collegeinc/

 

Even in lean times, the $400 billion business of higher education is booming. Nowhere is this more true than in one of the fastest-growing -- and most controversial -- sectors of the industry: for-profit colleges and universities that cater to non-traditional students, often confer degrees over the Internet, and, along the way, successfully capture billions of federal financial aid dollars.

 

In College, Inc., correspondent Martin Smith investigates the promise and explosive growth of the for-profit higher education industry. Through interviews with school executives, government officials, admissions counselors, former students and industry observers, this film explores the tension between the industry --which says it's helping an underserved student population obtain a quality education and marketable job skills -- and critics who charge the for-profits with churning out worthless degrees that leave students with a mountain of debt.

[chenGOD]

or work full time for a few years while living at home, save a bunch and then go to school in-state if you're in the USA or domestically if you're in Canada.

Additionally - easier admission requirements if you're a "mature" student.

[karmakramer]

or work full time for a few years while living at home, save a bunch and then go to school in-state if you're in the USA or domestically if you're in Canada.

Additionally - easier admission requirements if you're a "mature" student.

 

im not sure everyone can do this, with the current job market

[Guest yikes]

one of my lady friends had lovingly co-signed on a 20k loan for her now ex husband

he pays the bill when he feels like it which is not often and she picks up the balance…or else!!!

i advised her to take him to court asap and garnish his wages not hers

marriage and love are dumb and irrational

sallie mae is a thieving cunt

[chenGOD]

or work full time for a few years while living at home, save a bunch and then go to school in-state if you're in the USA or domestically if you're in Canada.

Additionally - easier admission requirements if you're a "mature" student.

 

im not sure everyone can do this, with the current job market

 

then work a couple of part-time jobs. Just remember it's a means to an end, not and end itself....

[karmakramer]

no yeah, its certainly good advice... just saying I don't think its a solution for everyone

[jules]

even state schools here in USA have gotten ridiculously expensive.

[Hautlle]

Or if you know you want to go to Uni. hit up a two year school first. The community college I went to was $75/credit hr, books included. Being a non-traditional student I got paid about $200/semester after tuition was deducted from my federal grants, which covered the cost of gasoline to get to said school. :sup:

 

Now im a senior in a 4 year Uni with only about $4000 of loans.

[jules]

^ that's the way to go.

[karmakramer]

indeed

 

hautlle :sup:

[chenGOD]

And for all you kids still in high school - do well in high school, then ace your SATs or whatever the fuck - and use the internet to look for scholarships/bursaries/whatever the fuck kind of free money - there's tons of it out there...

[lumpenprol]

all I can say is: bwahahaha.

[jules]

and then start an Internet music forum. its really easy and there's tons of money in it.

[Guest hahathhat]

i remember some douche bank would set up a table with those john belushi 'college' shirts and say want one free? just sign up for this credit card...

 

so what'd everyone do? write fake info on the form and walk off with the t-shirt.

[skotosa]

So is their goal to get every dumb fuck in college so they can start spending money and get every fucking person in debt so they can haz their slaves back?

 

Or do I have it all wrong?

[Guest hahathhat]

speaking of "them" as a cohesive group is not a good thought path. you'll turn into ET or troon.

 

the truth is that shady jerks figure out ways to game the system and profit at the expense of others. same as always.

[Guest yikes]

in this economy only an ivy undergrad degree barely means anything any more