The Coming Student Loan Debt Crisis: Cataclysm? or Catastrophe?

Fortunately for the overall financial system, the total amount of student loans is FAR below that of subprime loans a decade ago. That won't help the suckers who hold that debt, but it should limit the pain to those who are in some way involved, as opposed to the general economic problems that were caused by the 2007-08 mortgage meltdown.

 

I am more than willing to let Navient eat my outstanding balance

 

So higher rates for upcoming freshmen?

 

Fyp

 

Is TU still open?

Did shawn and Jaime sign up for classes?

 

Bump.

The case for forgiving all student loans:

http://amp.nymag.com/daily/intellig...yones-student-debt-for-the-economys-sake.html

 

As I look at my student loan balance, ******** yeah sign me up.

 

But.but,but-- if we start giving away more free stuff, even more Messican rapists will come here!



That there is a way of injecting money into a demographic that probably won't hoard it...

But you'd impact private institutions tremendously, though-- who'd go to a great private school if a good state school was free? So you might want to set up a system for allowing private school to get themselves annexed by state systems-- I'd hate to think of my alma mater, which is well endowed, has a great physical plant, and has gone need-blind, failing because a disproportionate mass of its potential student pool is diverted to SUNY-Bingy or something...

 

If I remember correctly, back when states actually put money on education, getting into a good public university was difficult and you’ve had to had good grades. That’s a way to ensure that money is not diverted to iffy institutions with horrible track records and poor credentials.

While we need to make sure everyone gets a good education, I think that at least part of the answer is improving our high school and elementary formation, and providing more technical education that does not require 4 years and a heavy investment.

And we also need to recognize that a lot of jobs will disappear in the next few decades. Improving the minimum wage and/or combining it with a universal basic income might do the trick.

Oh, and prestigious private institutions would probably survive with tuitions, donations and possibly some Federal grants.

IOW, the whole system has to be revamped and it is likely that fewer people will be applying for 4 year education and that good private institutions would still get enough money directly from their students and alumni.

 

By jumping into the need-blind deep end shortly after killing off its fraternities, my school in effect chose to define its future as quality students not "the quality" students.

It may not get the level of support directly from students and alumni for a while that it might need to make/complete the transition. It has, in effect rejected its White Privileged past and reached to a future serving All Mankind-- and it would be a sorry reward for courage if it dried up its own sources of money temporarily and its pool of future-affluent self-made alumni permanently in the two moves.

I know you can't make a cake without breaking eggs, but I've got some serious sentimental attachment to an institution that has justified my faith in it over time here...

 

My understanding was the opposite. I thought the debt associated with student loans was an order of magnitude larger than the housing market.

 

IIRC....

1.5 Trillion...
45 million debtors...
About a third are behind...

 

And I thought the housing market was only 10% default and $700 billion.

Somebody correct me. It has been a decade.

 

Are you serious? I just suppose that private school will need to learn to live within its means. They might find they will have to reduce tuition or eliminate some departments to stay competitive. Providing a solid estimate of how an education from the private school increases long term earnings potential post-graduation as compared to the free state school would be another selling point.

 

Not with my first line, no.

I doubt any responsible institution of higher learning truly "lives within its means" any more. I was just suggesting that it would be a sort of conservation move if traditionally private schools could be recycled into the proposed public system instead of going dark and new facilities being built up to fill their shoes.

"Fraid I can't see what would have gotten you in a snit about that...

 

I think your numbers are right. The main difference is that subprime mortgages were weaponized into privately held CDO2s, while most of the student debt is directly held and/or backed by the Federal government.

 

Going abroad could be an interesting and mind expanding way to go. Cost of living and day to day expences would be immediate concern but not the long term loan costs.

The staggering cost of higher education in the United States has many prospective college students wondering whether going to college is worth the expense. While conventional wisdom still points to the benefits of having a college degree, more students and their families are seeking alternatives to lower their college tuition bills. Some Americans are even looking abroad, as some countries offer free tuition to international students and programs of study entirely in English.

https://www.investopedia.com/articl...-countries-virtually-free-college-tuition.asp

 

Which means that the Federal government is profiting on the backs of (primarily) lower income students and workers.

 

But does that mean the threat of a bubble bursting is lower?

 

I’d think so. There’s no urging need for ROI and the default rate is already high. As long as enough people keeps paying back and/or the private lenders don’t have to eat their loses, the crisis looks unlikely in the near future.

 

I'm no economist, so here I go: Hold my beer.

A decade+ ago, The financial institutions sold junk for top dollar and then ownership of that junk got spread around so that nobody knew who owned what and what their exposure was. That caused the huge stock market crash, banks losing capital, and then them no longer being able to meet obligations because they were so leveraged on the BS investments.

As for student loans held by the govt, we can always print more money. There's little risk that the govt will default or crash, thereby wiping out your 401k.

 

All students. My dad's a retired lawyer and I have student loans. I don't know anyone whose family was worth less than $5 million that didn't have student loans.