The Elephant In The Room: National Student Loans Debt

[Cold Front]

As many of us begin to start families after dental school (or during school), some of us ponder if future generations will find the cost of education even harder than ours.

A week ago, I was in line to pay for my grocery at a local store, when I noticed the popular Consumer Reports magazine with a red cover that read... "I kinda ruined my life by going to College!". I picked it up and read the article that pretty much said what most students in this country say about student loans. With interesting stats... Almost 50 million people now carry a total of $1.4 trillion debt. To put that into perspective, Canada's GDP (the 10th largest economy on this planet) is about $1.4 trillion. So if the total student loans was a country, it will be approaching France, UK, Germany and Japan's GDP numbers within the coming decade or 2. Before the next generation even applies to graduate schools.

Many people may not have noticed, but recent first time home buyers numbers are down in the country. Most banks are pointing towards people who carry high student loans as a reason. The average household has about $50k in student loans. Meanwhile, college and professional schools are still raising tuition a year after year by 3-5% minimum.

70% of college students don't understand repayment plans, yet they will sign papers and take the loans. A growing numbers of those students live with their parents after they finish school.

Will the tipping point happen in our life time? How will this effect our families, friends, patients, neighbors, communities?

It is very troubling thought to say the least. The fact that a tsunami level problem is growing, but all we can do is ride this big wave and hope it doesn't crash. Does it sound familiar?

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[cmcner]

As many of us begin to start families after dental school (or during school), some of us ponder if future generations will find the cost of education even harder than ours.

A week ago, I was in line to pay for my grocery at a local store, when I noticed the popular Consumer Reports magazine with a red cover that read... "I kinda ruined my life by going to College!". I picked it up and read the article that pretty much said what most students in this country say about student loans. With interesting stats... Almost 50 million people now carry a total of $1.4 trillion debt. To put that into perspective, Canada's GDP (the 10th largest economy on this planet) is about $1.4 trillion. So if the total student loans was a country, it will be approaching France, UK, Germany and Japan's GDP numbers within the coming decade or 2. Before the next generation even applies to graduate schools.

Many people may not have noticed, but recent first time home buyers numbers are down in the country. Most banks are pointing towards people who carry high student loans as a reason. The average household has about $50k in student loans. Meanwhile, college and professional schools are still raising tuition a year after year by 3-5% minimum.

70% of college students don't understand repayment plans, yet they will sign papers and take the loans. A growing numbers of those students live with their parents after they finish school.

Will the tipping point happen in our life time? How will this effect our families, friends, patients, neighbors, communities?

It is very troubling thought to say the least. The fact that a tsunami level problem is growing, but all we can do is ride this big wave and hope it doesn't crash. Does it sound familiar?

It's a disaster. And somehow after Sander's left the race it became almost a nonissue, not that his plan was the best but at least a spotlight got put on it, meaning no one is likely to push back against it. The current candidate both have very weak plans for this issue and we will keep digging a deeper and deeper hole for future generations.

 

[Big Time Hoosier]

The liberal academics running universities have never operated a business, or probably ever had a real job for that matter, and so they have absolutely no sense of financial accountability (i.e. LSU's $100 million lazy river). Universities are on the verge of pricing themselves out of their very own market. Jackasses. Colleges blindly assumed that as long as Uncle Sugar is making loans to students without any regard for the students being able to pay them back universities could keep raising tuition ad infinitum (i.e. the Bennett Hypothesis). On top of that, many graduates are realizing that the degrees they were "sold" are worthless in the eyes of the private sector. Anyone thinking this situation is remotely sustainable is a jackass. Anyone who felt the Bern and thinks that college should be free is also a jackass. Yes, let's have the government pay for everyone's college education. The government has such an awesome record of controlling costs and spending. Jackasses. So, to sum it up, there're just too many jackasses in the world. End of rant.

Big Hoss

 

[Cold Front]

According to a recent Wall Street article, more than 40% of student loan borrowers are either in default, delinquency or have postponed repaying their student loans, raising fears they may never complete their payments. A lot of graduates are also simply refusing to pay, because they feel their degrees are worth nothing in the real world. Ultimately, if this trend continues, the tax payers will have to bail them out.

 

[kidsaremypassion]

As many of us begin to start families after dental school (or during school), some of us ponder if future generations will find the cost of education even harder than ours.

A week ago, I was in line to pay for my grocery at a local store, when I noticed the popular Consumer Reports magazine with a red cover that read... "I kinda ruined my life by going to College!". I picked it up and read the article that pretty much said what most students in this country say about student loans. With interesting stats... Almost 50 million people now carry a total of $1.4 trillion debt. To put that into perspective, Canada's GDP (the 10th largest economy on this planet) is about $1.4 trillion. So if the total student loans was a country, it will be approaching France, UK, Germany and Japan's GDP numbers within the coming decade or 2. Before the next generation even applies to graduate schools.

Many people may not have noticed, but recent first time home buyers numbers are down in the country. Most banks are pointing towards people who carry high student loans as a reason. The average household has about $50k in student loans. Meanwhile, college and professional schools are still raising tuition a year after year by 3-5% minimum.

70% of college students don't understand repayment plans, yet they will sign papers and take the loans. A growing numbers of those students live with their parents after they finish school.

Will the tipping point happen in our life time? How will this effect our families, friends, patients, neighbors, communities?

It is very troubling thought to say the least. The fact that a tsunami level problem is growing, but all we can do is ride this big wave and hope it doesn't crash. Does it sound familiar?

I am incredibly worried about this trend as well. I'm fortunate that I went to school in an affordable state, but even our state universities in Texas have slowly but surely been increasing tuition. Its staggering to think about how much it will cost to send a child to college 20 years from now...Especially if said child's parents are still paying off their own educational loans at that time. I'm a first generation immigrant, and the first in my family to take out this amount of student loans to pursue a professional degree. My parents were not educated here, and certainly did not take out anything close to what current students are doing, just to have a chance at a financially secure future. Its almost ironic, really.
The America that the world is sold, is quite differently from the reality; there are many nuances and clauses involved.

 

[Scumbag_Steve]

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[Cold Front]

A recent TED talk that spotlights this topic very well.

 

[Cold Front]

The America that the world is sold, is quite differently from the reality; there are many nuances and clauses involved.

To put the problem into a perspective, the total residential (1-4 member family homes) mortgages outstanding in this country is about $10 trillion. That number goes up about 1% a year, or about $100 billion a year from 2008-now. Before the 2008 recession, which was based on people who can't afford to pay mortgages qualifying for those loans, it was going about 10% a year, or about $1 trillion a year. The total residential mortgage debts in 2003 was $7.3 trillion, in 2004 was $8.3 trillion, in 2005 was $9.4 trillion, in 2006 was $10.5 trillion, in 2007 was $11.3 trillion, and then in 2008 a recession!

The total residential mortgage is now approaching the pre-recession debt, but at a much slower pace. It use to take 1 year for the debt to rise by $1 trillion, now it's taking closer to 8-10 years. Some would say we are still in a recession or another is around the corner of you look at certain economic data. But the trend that got us into the problem is clear.

The government lends $100 billion a year to students, which adds on to current $1.3 trillion total student national debt. That's about 10% increase year to year. At this compounding rate, the debt could more than double and pass $3 trillion in less than 10 years. By contrast to residential mortgage and the 2008 recession, this is a strong case of a bubble!