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Excellent. Which group of poor decision makers will I get to bail out soon (oh, students, superb!) while reading my daily "The Death of the Middle Class" article?
I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…
Earlier quoted context omitted.
Also, "per capita"?
Also no mention of "share of GDP". Basically, the article is rubbish.
Switch the graph to 10 year. We're significantly lower on the household side, not so on the government side.
http://www.tradingeconomics.com/united-states/government-deb...
I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…
From an outsiders (AU) perspective, it sounds very depressing for youngsters - massive student loans and then you need to jump on the mortgage treadmill (unless you're lucky).
It almost sounds to the point where individual students could pay for personal tutors with the amount of cash they're spending* (or borrowing then spending). Someone over there must be making bank on this... I guess the banks.
Edit: As in, if you took 100 ComSci students each paying $30k a year (or whatever it is), $3,000,000 should get you some pretty good educators for the year i.e. can the game be taken back from the uni's, and education started afresh with a new organisation?
For those who just read the title, the cause of this new high is ballooning student debt, not mortgages. Housing debt is still mostly declining.
Germany provides excellent educational opportunities in many fields for American citizens at close to zero out of pocket expense for the student. Google "Germany Erasmus".
However, they should look at German universities in general because they are practically free for anyone.
For those who just read the title, the cause of this new high is ballooning student debt, not mortgages. Housing debt is still mostly declining.
Whether US debt grows in the housing sector, student loans, revolving debt, etc is a function of internal, domestic dynamics (including laws, local economic structure, etc). But the total capital flow into the US exceeds the outflow; that money ends up on a balance sheet somewhere.
It's sort of the flipside to our conventional notion of trade balance, that the capital account must be equal and opposite. The difference is that capital flows are now 4-5x what's necessary to account for trade, so it's really capital movements wagging the trade dog.
The net effect of inbound capital flow into the US is people must consume more than they produce, to absorb the additional capital. That is debt. And that debt ends up somewhere, either on the government's balance sheet, in the corporate sector, or households.
Major hat tip to Michael Pettis for his work describing this. His writings are dense but very digestible (http://carnegieendowment.org/chinafinancialmarkets/).
[edited a typo]