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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#31

Post by yuhong »

ryandamm wrote: post #20

An alternative view, and one I happen to subscribe to: a balance sheet analysis shows that US debt must go up over time to support exogenous capital flows. 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 balanc…

The US economy has been based on debt since the 1970s. The more debt increases, more goods gets imported from other countries. One other important debt is government debt, which was one of the reasons we got off the gold standard in the first place. The more government agencies such as the NSA spends, the more money gets printed. Now you see why Medicare can't negotiate drug prices too. Of course, I suspect that things like derivatives was designed to take advantage of the growth through increasing debt.

Re: US Household Debt Surpasses 2008 High

#32

Post by dragonsky67 »

ericd wrote: post #22
bariereefwozere wrote: post #16

Earlier quoted context omitted.

> it feels nearly predatory what a good portion of private and out of state colleges are charging 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…

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

bariereefwozere's point still stands. A small group of people could get as good, if not better education by privately employing the lecturers. I'd say the lecturers would get a better deal as well. The only thing you would miss out on is the piece of paper from the hallowed institution.

I suppose in the end that is the point. It's the piece of paper that has the value/door opening ability, not the actual knowledge imparted.

Re: US Household Debt Surpasses 2008 High

#33

Post by dv_dt »

manacit wrote: post #10

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…

This combines with the other economic discussion on the front page today re: the decline of home sales. Other parts of the economy are scratching their heads on why millennials are less likely than previous generations to buy homes and cars, etc. at their age.

I'll leave it as an exercise to the reader to identify other contributing factors...

Re: US Household Debt Surpasses 2008 High

#34

Post by dragonwriter »

libria wrote: post #19
mdorazio wrote: post #3

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.

Why is student loan debt not dischargable in bankruptcy? If it were, banks would be far less likely to issue them, students would find cheaper education alternatives, and universities would be forced to provide greater assistance.

> Why is student loan debt not dischargable in bankruptcy?

Student loan debt is dischargeable in bankruptcy, though it has a higher bar than most other debt.

> If it were, banks would be far less likely to issue them

Banks issue less than 10%, by dollar value, of student loans; the vast majority are federal direct loans. Even if banks dropped out of issuing them completely, it wouldn't make the kind of difference you suggest.

Re: US Household Debt Surpasses 2008 High

#35

Post by subterfudge4 »

manacit wrote: post #10

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…

This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?

Re: US Household Debt Surpasses 2008 High

#36

Post by nnfy »

ericd wrote: post #22
bariereefwozere wrote: post #16

Earlier quoted context omitted.

> it feels nearly predatory what a good portion of private and out of state colleges are charging 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…

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

The prices have spiked because loans are guaranteed by the government and unforgivable, which creates a situation where loans are given to more individuals, which leads to a greater demand for college, and a resulting price increase.

This is a problem caused by government, not a lack of funding.

Re: US Household Debt Surpasses 2008 High

#37

Post by spenczar5 »

ryandamm wrote: post #20

An alternative view, and one I happen to subscribe to: a balance sheet analysis shows that US debt must go up over time to support exogenous capital flows. 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 balanc…

Help me understand: what does 'exogenous capital flows' mean? What does 'capital flow into the US' mean? Investment in stuff physically in the borders of the US, where the money comes from outside the US?

Re: US Household Debt Surpasses 2008 High

#38

Post by fwefwwfe »

manacit wrote: post #10

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…

You basically said it yourself. They could just go to instate public schools.

Re: US Household Debt Surpasses 2008 High

#39

Post by mljoe »

manacit wrote: post #10

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…

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished, it's a bit of a network effect really. Maybe people can get hired from Coursera certificates, I would certainly consider it if I was a hiring manager.

Re: US Household Debt Surpasses 2008 High

#40

Post by irrational »

subterfudge4 wrote: post #35
manacit wrote: post #10

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…

This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?

Because there are almost no jobs available that pay more than minimum wage that do not require a college degree.
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