Student loans outstanding will exceed $1 trillion this year

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Student loans outstanding will exceed $1 trillion this year
By Dennis Cauchon, USA TODAY
Updated 10/25/2011 1:23 PM

 
Students and workers seeking retraining are borrowing extraordinary amounts of money through federal loan programs, potentially putting a huge burden on the backs of young people looking for jobs and trying to start careers.

 
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. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York, the U.S. Department of Education and private sources.

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards.


Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can't be shed in bankruptcy.

The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.
Cost of education

Student loan amounts have doubled in the past decade (in billions*):

*Adjusted for inflation to 2010 dollars

Sources: College Board, Bureau of Labor Statistics

"Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children," says Mark Kantrowitz, publisher of FinAid.org.

"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.

Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What's happening:

•Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data.

•For profit-schools. The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation's largest, got 88% of its revenue from federal programs last year, most of it from student loans.

"Federal student loans are like no other loans," says Alisa Cunningham, research chief at the Institute for Higher Education Policy. "The consequences are so high for making a mistake."
http://www.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1

[Pepsi]

kids today are borrowing too much to be educated to do things (or do nothing at all) no one needs in the workforce.   Maybe they should do some sort of risk assessment of college loans.. engineer?  great, have the loan.   Philosophy?  hmmm, maybe not

[SufferedMoreThanJesus]

Modern Dance?  Uh, no.

Poetry?  Fuhgetaboutit.

Web Design?  ROFL!!!

[Pepsi]

Where I work we are starting our own internal school to train people so they can help us support our products and build the company.    We just cannot find enough skilled people in what we do.

[vel]

kids today are borrowing too much to be educated to do things (or do nothing at all) no one needs in the workforce.   Maybe they should do some sort of risk assessment of college loans.. engineer?  great, have the loan.   Philosophy?  hmmm, maybe not

It's a huge mistake to believe that the only purpose of education is to do things "one needs in the workforce." There is nothing wrong with education for the sake of education. Everything one learns can be put to good use in some way.

Our future and our national security depend on educating our kids. If you discard all of the useless "conservative" slogans and disinformation (which most educated people do) then what you're left with is the fact that there is no good reason and no justification for the cost of getting an education today.

It wasn't like that when I was going to college. My tuition was $450 a semester. One should not have to graduate, under any circumstances, with $200,000 plus in student loans.

That's just atrocious and speaks very poorly of our generation's judgment.

[ivanm]

kids today are borrowing too much to be educated to do things (or do nothing at all) no one needs in the workforce.   Maybe they should do some sort of risk assessment of college loans.. engineer?  great, have the loan.   Philosophy?  hmmm, maybe not

Is there a course on living within your means?  I ran short of money and dropped out of school, but in time when things improved for me I went back an finished my degree.

However, I had a lot of technical skills in electronics and some computer courses to back me up while I made the transition from the AF to civilian life. Something tells me that the only people gaining from college courses are those that teach them.  And the cost of books is just outlandish. 

So if the pnk assed students want to piss and moan and demonstrate they need to start with where the problem lies, our dysfunctional education system.  I suppose they will blame corporate America on that one too?

[ivanm]

Where I work we are starting our own internal school to train people so they can help us support our products and build the company.    We just cannot find enough skilled people in what we do.

I also learned the basic mainframe skills from in house training programs.  It is the most effective and efficient way to teach computing, do it as you learn.  I learned  more about on line programming from a pro in two days part time than I would have in two weeks in a stupid computer course taught by some math major that didn't know a
byte from a scratch.

[SufferedMoreThanJesus]

Where I work we are starting our own internal school to train people so they can help us support our products and build the company.    We just cannot find enough skilled people in what we do.

This is normal for just about all "professions" out there.  Let's say someone goes to 8 years of medical school, or 6 years to get their law degree.  You don't think the day they get that sheepskin is the day they start operating on a brain or show up at the courthouse and do a major trial; right?

No.  They join a firm/corporation that will "train" them how that firm does things, and they will coddle them for a few years so they can show them they have "the stuff" to cut it and are able to represent their clients and/or their patients.

This type of training motivates the employer to pay the employees more so they don't get trained and then go somewhere else...where amusingly, they have to be trained for that firm/corporation in how they do things there.

[Pepsi]

I also learned the basic mainframe skills from in house training programs.  It is the most effective and efficient way to teach computing, do it as you learn.  I learned  more about on line programming from a pro in two days part time than I would have in two weeks in a stupid computer course taught by some math major that didn't know a
byte from a scratch.

 I dropped out of a computer sci major.. graduated with a degree in Architecture (cause I could pass it while partying my ass off) picked it up again with a book and a home PC, have been on the job learning ever since.   

[ivanm]

I dropped out of a computer sci major.. graduated with a degree in Architecture (cause I could pass it while partying my ass off) picked it up again with a book and a home PC, have been on the job learning ever since.    

Things are much cheaper here in the sticks than they are in the big cities, but the wages are pitiful.  There are relatively few jobs in this area that command a degree and you would have to go to one of the larger towns to get one.   Tradesmen do reasonably well here and probably make from 10 to 20 bucks an hour depending on their skills and experience. Plus there is the lure of becoming self employed someday with a small business of their own.

Some things like food and new cars are probably the same price here as in many of the larger towns, but housing is a lot cheaper.  One can buy a livable old shack for maybe 60 to 80k and fix it up a little and get by.  I don't envy the young with low skills and low incomes because they have a rough time of it no matter where they live. And I think that prices are geared to those that can afford things and not to those that are really strapped for cash.  In other words, the young and the poor have to compete with the older and more affluent people for their goods and services, and they don't have much of a chance.

Here lately price inflation has really hit  the grocery store, and we are learning to experiment with the low price brands.  It is not that we cannot afford the brand name stuff.  I just am not so vain that I have to stand in line to get ripped off.  People also pay a ridiculous price for entertainment too but I am not about to pay what they want for a trashy movie when I can see the same stuff on TV for nothing.

My wife and I can go to a karaoke club and have a good time for about 25 bucks, including two big burger plates anda couple Coors Lites.  What can you get for 25 bucks in a dumb movie theater, stale cold popcorn? And in the club there is all the eye candy I can stand for an old fart my age.  My wife thinks it is funny to see me scoping out the hot bodies.  
I must be doing something right because sometimes when I finish a song I get some hearty hugs from the little honeys in my path.  Just call me daddy honey.   Ha.

[Pepsi]

My wife and I can go to a karaoke club and have a good time for about 25 bucks, including two big burger plates anda couple Coors Lites.  What can you get for 25 bucks in a dumb movie theater, stale cold popcorn? And in the club there is all the eye candy I can stand for an old fart my age.  My wife thinks it is funny to see me scoping out the hot bodies.  
I must be doing something right because sometimes when I finish a song I get some hearty hugs from the little honeys in my path.  Just call me daddy honey.   Ha.

Actually karaoke is my favorite fun activity.. wouldn't mind belting out a few tunes there myself after appropriate number of beers.