“By Walter Kurtz, Sober Look
The mounting debt from student loans is quickly becoming a national problem in the US. The statistics are staggering.
“The Huffington Post: Bernanke’s son’s case is a high-profile example of what is a nationwide epidemic: mounting debt from student loans. College graduates from the class of 2010 carried an average of $25,250 in student loan debt, and the nation’s total student debt almost reaches $1 trillion: This is a 14-fold increase from 15 years ago and dwarfs the country’s credit card debt, which is just shy of $800 billion.”
But what’s more alarming is that over a third of that is funded directly by the federal government. The chart below (from the Fed) shows the growth in student loans held by the US government. In fact the bulk of the growth in consumer credit we’ve seen recently comes from these increases in federally held student loans.
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| Student Loans Held by the Federal Governemnt |
The borrowers under these federal programs qualify for Income-Based Repayment, a system that allows repayment over an extremely long period of time – similar to a mortgage but with no assets to back it up. There are also provisions that allow for partial principal forgiveness.
Up-to-date student loan default rate data is hard to come by but the trend is not good.
It’ll be fun when this shit blows up too, and Ottnott and Co. come on to blame the eeevul bankers again?
Carrying Fed Gummn’t Water is one full time proposition, idn’t it?
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The bankers are just getting government-guaranteed spreads on the loans – that’s almost ho-hum given recent banking raids on the treasury.
I’ll mostly blame the eeevul for-profit “colleges” that employ an army of sales people locally and an army of lobbyists in Washington to keep the federal loan dollars flowing to “schools” that provide such a poor product that only a minority of their students are employable at the end.
And the remainder on the eeevul bankers who lobbied to make student loans a form of debt that can’t be discharged in bankruptcy.
But…but… without full recourse student debt, we would deny access to education to those who need it most!!! (lol, suckers)
It’s one or the other, Otts. Either you put tighter restrictions on who can get the Fed’l gummint gelt on the front end, or you make it a roach motel on the back-end. Otherwise the taxpayer gets screwed again.
My vote would be let both the schools and the banks stand on their own, without the feds backing them. Banks would very quickly demand a better end product of the Phoenix’s, et al, if they really are providing such poor outcomes.
Truth is, every college has become bloated, even the ones (especially the ones?) that could actually charge high tuition in the absence of federal assistance.
My own alma maters have become near- sybaritic paradise for it’s coddled chosen few. I mean, it was a fantasy land when I was going there… I would love to know how these lotus eaters are going to survice in the real world once they’ve been thrust from that cocoon.
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