I just read an article in USA Today about student loan debt, and it claimed, "The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year."
When I got in touch with a leading expert in the field, Mark Kantrowitz, founder of Finaid.org, by email and asked about this assertion, he confirmed it was accurate. Kantrowitz's site has a "Student Loan Debt Clock" with outstanding loan debt currently at $950 BILLION. Think of all the families being ruined because of this fraudulent system. We, as a country, have gone of the deep end when it comes to higher education. This is despicable, and I am receiving letters of support from people who live in other countries. They are aghast and shocked by this crisis.
So there are absolutely NO solutions to the student lending crisis, and we're going to be hitting $1 TRILLION this year! When will our politicians wake up and do something about this calamity?!? Time to organize, folks.
When I told Mr. Dollar that we'll be hitting the $1 trillion mark in 2011 instead of 2012, his mouth fell open (as you can see), and then he hit the floor. I think this might have killed him.
Related Links
"$1 Trillion," AEM (Feb. 7, 2011)
7 comments:
Cryn, at the current rate of increase, total student loan debt should surpass $1 trillion in March, April or May 2012.
The debt "stood" at $830 billion in June 2009. In mid-October 2011, it now exceeds $950 billion. In early September 2011, it was at $938 billion. I fail to see how it will increase by $50 billion in the next 2 and 1/2 months.
This is a HUGE figure. However, this data is not accurate. Did the article mean that it will exceed $1 trillion, within the next twelve months?
The article's title: "Student loan debt hits record levels"
Of course it's at record levels. The problem is that wages aren't keeping up with it and it's not dischargeable, making it a bubble.
"Taxpayers and other lenders have little risk of losing money on the loans ... 'It's going to create a generation of wage slavery,' says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers."
Um, no. The federal government stands to lose a fortune on Direct Loans because it doesn't take the loans' full market risk into account. That, and it's mandate is to ensure widespread prosperity, not to make money as a bank. If people are stuck paying money back to the government rather than buying things in the private sector, then that slows growth. This is what happens when the government nationalizes credit markets without taking on the risk.
Ungh I have spoken.
Hey Nando,
As I mentioned above, after I read the article, I wrote to Kantorwitz and ask him, "This article states that we'll hit the $1 trillion THIS year - so that means '11 and not '12, correct?"
He replied, "Yes."
Nando:
A possible explanation for the massive, sudden increase could be than in the recent past far more people than before are unable to service these loans; thus, interest and penalties could be adding up pretty quickly.
Also, because of the recession, perhaps parents are contributing much less; therefore, students could be being forced to take out more loans than before.
Hey Dudette!
hello, JDPainterGuy!
Just throwing it out there because no one talks about it.
The debt used for student loans was money retained within the US economy by buying one of the few marketable products/services still produced in the United States; school services. Argue what you will about your educational experience, but you still bought American.
At the same time, Credit card debt levels are reducing for two reasons 1. Debit cards are more popular now. 2. A reduction in consumer spending on goods/products.
Where are most of the consumer products bought in America produced? Mostly overseas.
So while everyone still hates student loans, we can see a shift away from the consumption of foreign made consumer products towards the consumption of US services, retaining a larger percentage of capital within our borders.
We despise those that some how earned income or created wealth as a result of this, but the capital is being retained within our borders and redistributed within our own economy one way or another. Instead of flying over seas.
It's easy to look now and say "OMG it's so much!" but if you graduated high school in the 1990's all the way through 2006, it was all about going to college, it was the number one priority, and the system provided college access to an unprecedented amount of people, and look at the end result.
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