2014 March 17 Monday
Student Loan Debt Higher Than Credit Card Debt

While all the other major categories of consumer debt (mortgage, credit card, auto, etc) are down since the Great Recession the young are piling up education debt.

But the dollar value of outstanding student loans has surged, growing from 4% of GDP in 2007 to over 7% today.

The US government should not be encouraging debt peonage. The US Department of Education is going to deny loans to students for schools which have 30+% default rates. I would set the threshold much lower. 20% is still a ridiculously high number for loan defaults. The net taxpayers are funding this folly.

I would like to see the default rates by major and by school. Some schools have really high drop-out rates. The students do not learn anything useful before giving up. SAT/ACT scores, major, and school all ought to be part of the consideration for whether a kid gets a loan.

Share |      By Randall Parker at 2014 March 17 10:47 PM 


Comments
MarkMark said at March 17, 2014 11:45 PM:

I think that at some point student debt will be subject to a wide scale debt jubilee. The debt is owed to the Government and it would be open for it to just forgive the debt or a sizeable chunk of it. Over time more and more people will have large student debts and a jubilee will be extremely popular with those with student debts and their parents. A jubilee could be spun as a way to boost the economy.

The fact that a jubilee is unfair to those that have paid off their debt, sets a terrible precedent for future students, and is hurtful to the general tax payer won't matter. What's another couple of trillion on the national debt? The general consensus of the pundits seems to be that the national debt is not a problem and that the US government can essentially borrow indefinitely at low rates.

Hairybroness said at March 18, 2014 10:36 AM:

As much as I'd love to see a Jubilee, I tend to think the trend of bailing out the wealthy and further indenturing the poor will be pursued to it's bitter end.

Hairybroness said at March 18, 2014 10:42 AM:

While I would love to see a Jubilee, I think the current policy of bailing out the wealthy and further indenturing the rest will be pursued to it's bitter end.

Wolf-Dog said at March 18, 2014 2:32 PM:

During the last 30 years tuition fees have gone up much faster than the general inflation rate. This is because the national college capacity has not increased much compared to the population. But Germany did very well in the vocational training of their workers, as they have the best workers in the world for large industrial country, even though the Shanghai Academic Ranking of World Universities gave the top German university only the 50th rank in the world. Here is the Shanghai ranking of world universities:

http://www.shanghairanking.com/ARWU2013.html

As you can see, the top 19 universities in the world are American and British schools, and Germany barely has the 50th rank. So there is no question that with minimal changes in the system, the US can easily adapt its universities to train its workers even better than Germany, for less than half the cost of an average B.A. degree in the US. Within a decade online programs will become much better because the computers will be more advanced, and this will dramatically make education much more affordable. Even experimental chemistry will be more computational within 20 years and there will rarely be a need for an undergraduate student to mix test tubes to do a chemistry experiment.

Daniel said at March 18, 2014 4:25 PM:

>>> As you can see, the top 19 universities in the world are American and British schools, and Germany barely has the 50th rank. So there is no question that with minimal changes in the system, the US can easily adapt its universities to train its workers even better than Germany, for less than half the cost of an average B.A. degree in the US. Within a decade online programs will become much better because the computers will be more advanced, and this will dramatically make education much more affordable. Even experimental chemistry will be more computational within 20 years and there will rarely be a need for an undergraduate student to mix test tubes to do a chemistry experiment.

This is all contingent on overcoming the very powerful interests vested in the status quo. And those with interest in keeping the education system intact are not always evident on first glance. In addition to the huge mass of people employed by the education racket there are the elites who, despite the wasteful costs, see the current education racket as a gatekeeper, keeping out the rabble and preserving their status. Still I have hope.

Check it out said at March 19, 2014 5:57 PM:

About 85% of college students move back in with their parents. 1 in 2 recent college grads are jobless or unemployed. Government has allowed that higher education becomes unreachable for the lower and middle classes.

30 years ago there were universities that had credits at about 4 dollars. That is almost free and was so even 30 years ago. I continue to think that the U.S. has the obligation to provide free higher education to its citizens, just like so many countries do it as a matter of course. Poor and middle class students would be able to compete -with their outstanding GPAs- against spoilt, dumb, rich-ass daddy's kid who attends Harvard because he can pay for them to keep him. It's just common sense.

The Dude said at March 23, 2014 2:32 PM:

"During the last 30 years tuition fees have gone up much faster than the general inflation rate. This is because the national college capacity has not increased much compared to the population."

Correction: American students are no smarter now, nor are there more of them. There are piles of loans available now (government guaranteed) and a few million more Chinese with Daddy's Money, however.


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