STUDENT DEBT: America's Next Bubble?

The American student loan system makes me insanely glad I don't live there.

We have a hybrid system here that I actually don't mind. The government subsidizes some of the cost of higher education, with the rest being provided in the form of a loan. The interest on the loan is tied to inflation, so that in real terms it stays the same, and you pay it back as a higher tax rate once you pass an income threshold. Means that most of the money ends up getting repaid, without pushing people into financial difficulty in order to do so.

 

The whole system is engineered to "bid up" the price of education, effectively transferring large amounts of wealth to the educational (usually public) sector.

I'm not surprised a bubble is forming. It's government action that creates them.

 

On the other hand, the cutting of state funding has been a big driver of tuition hikes, which translate into higher loans. At the University of Washington the State used to cover 54% of the tuition, now it covers 17%.

 

On the other hand, demand has spiked, increasing price. :/

Out system is FUBAR.

 

They just changed the HOPE system in Georgia (funded primarily by lottery sales). Now the student has to have a much higher GPA than previously. My son is a good student but not great, so there's no way he can afford to go anymore without undertaking huge debt by paying out of pocket.

Thus, he's hopefully going to be joining the military soon, where they pay for your civilian college and have the GI Bill for when you do get out to continue your college. Hey, a man's gotta do what a man's gotta do.

 

I have an acquaintance. She is a couple years younger than me. I don't think she has an undergrad yet. But she is a student. She hasn't found a job, so she is taking a page from our government--you can keep running up debt and running a deficit as long as you never worry about having to repay it.

 

I'm so thankful I graduated with no debt.

 

Me too. I was broke, but I didn't owe anybody anything.

Got right to work and fixed that broke problem.

 

Yup. Every expert says you have to go to college to get a job now. Yeah, so you can make big money to pay off the loan, IF you can find work.

 

Between my wife and I we have over a quarter million in law school loan debt...It may be bigger than our mortgage.

 

The state governments in the US heavily subsidize the universities and colleges that they run.

 

Me too.

 

Same here. I also worked part-time all through college to pay for it.

 

Me Three. Trust fund.

 

At the moment we only have a couple thousand in student debt. This semester the Army is going to pay for my wife to take the classes needed to turn her Network Systems Tech Certificate into an Associates of Applied Science. After that she is looking at some kind of IT Administration BS. It's at Bellevue Community College, but is pretty highly rated. Bellevue is home to Expedia, T-Mobile USA and Microsoft has three towers downtown (Bellevue is between Seattle and Redmond, MSWWHQ) so it's a pretty techy town and according to our friends in the industry is a much better bang for the buck than the UW*. She is hoping to have a good FT job by then (taking classes nights and weekends) so hopefully we won't have to take more. But who knows, job might not happen and she just ends up going to school hyperfulltime and we borrow to make ends meet. Being a Community College though, the debt shouldn't be that bad.

*I on the other hand will be living high on the hog courtesy of the GI Bill so plan on going to the UW for my Masters.

 

$220,000 here.

 

It sounds like you'll have to pull a lot of teeth to get that paid off.

 

There were some weeks that I barely had $5 to my name, but I managed to finish school debt free. The only debt that I had was on my 1991 Escort. I loved that little car.

 

oh man, i'm gonna be up to my ears in debt by the time i'm done...probably just in time for socialized medicine so i won't make as much.

 

Chalk up one more for the "up to my eyebrows in debt".

 

I went all the way through my doctorate with no debt. It wiped me out but I'd rather be broke than in debt.

 

$20,000 here.

 

Hey, we could package all that debt up and sell the risk of you guys defaulting to investors and get rich!

 

You cant default on student loans, so that would be great!

 

Yes, you can (although there are ways in which it's harder than defaulting on other debts, such as in places where garnishment is legal only for a handful of types of debt, student loans among them).

 

Why the fuck do they need loans? Why can't they just work a part time job and go to school? The government has no business at all loaning teenagers thousands of dollars at tax payer expense.

 

Because, moron, most teenagers make minimum wage or close to it. Tuition runs into the thousands. Do the math, if you have the equipment for it.

And we are at the point where the only place you can get a student loan is from the guvmint.

 

You mean to say the government gave out grants and loans to all, thereby increasing demand, thereby raising tuition rates and lowering quality, thereby saddling students, whether they graduate or not, with a humungous amount of debt?

This just seems so damn familiar...