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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#81

Post by caseysoftware »

theparanoid wrote: post #52
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…

University is about signalling not education (for the most part). University administrators are a large part of the cost increase.

We've had 30 (40?) years of educators looking down on blue collar jobs and gearing everything towards pushing everyone to university because it's a golden ticket to a successful life. What most people didn't realize is that university was an attribute of successful people, not a prerequisite to be successful.*

People who might have been totally successful in vocational school or a variety of other things have been directed towards college they can't afford, they struggle in, and come out with exactly zero new opportunities open to them but now $100k+ in the hole.

* In most fields.. some fields absolutely require a college education.. for now.

Re: US Household Debt Surpasses 2008 High

#82

Post by ryandamm »

yuhong wrote: post #72
ryandamm wrote: post #54

Earlier quoted context omitted.

Well, my point (and Pettis's) is that causality runs the other way: we have debt in the US because non-US entities (individuals, businesses, and governments) continue to invest money here. That investment results in spending in excess of production, i.e., debt. It plays out in government spending, household debt, corporate debt, and the exact distribution is a function of internal dynamics. But the entire amounts mus…

I like to think more in terms of the trade deficit and budget deficit.

While important, those are driven by capital flows (into the US), not the other way around. Because the US has open capital markets and a floating exchange rate, exogenous flows really dictate everything.

If the exogenous capital flow is held constant, then the budget deficit reflects the allocation of debt (driven by capital flows) to the government sector. But you could have a perfectly balanced budget, and the debt burden would fall somewhere else -- likely the household sector, via constant consumption but increased unemployment. (This is because government spending is consumption, and therefore stimulative; government cutbacks to enforce a balanced budget, or tax increases, would result in job losses elsewhere in the economy.)

I think it's easy to get lost in the weeds of how the capital flows are apportioned within the economy. What's appealing about Pettis's analysis is it's rooted in balance sheet arguments, which have really beautiful identities. The exact balancing mechanisms are complex and dynamic, but the overall balance is true by definition. It's a powerful framework to look at international economics.

Re: US Household Debt Surpasses 2008 High

#83

Post by austenallred »

fratlas wrote: post #79
austenallred wrote: post #70

Earlier quoted context omitted.

It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many. I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle cl…

Your last paragraph describes the Australian university system. Government foots the bill to invest in your education, you pay it back gradually (and not until you're earning enough for it not to hurt).

Makes a hell of a lot of sense, to be honest.

The problem in the US system is the government feels everyone has a "right" to an education, so it will underwrite an unlimited amount of loans regardless of what you do with them.

That pumps the system so full of cash no one is quite sure what to do. They just keep raising prices and people keep coming, because what are you going to do, not go to college? Even after funding slows, the prices are still sky high, and people keep paying.

Re: US Household Debt Surpasses 2008 High

#84

Post by Spellman »

thinkling wrote: post #69

$600B additional student debt over 10 years sounded high to me, so I did the ballpark check. $600B over 10 years is $60B/year. There are about 20 million college students [1]. That means $3000 per student per year on average. If loans are paid back over 10-20 years, this really says that students are borrowing $3000 more per year than they were 10-20 years ago. The article suggested that borrowing was about $600B tot…

Tuition and Room and Board are increasing way faster than inflation.

https://inflationdata.com/Inflation/Inflation_Articles/Educa...

CNBC has a fun infographic interactive from 2014 to look at where those increases are going.

http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high...

Re: US Household Debt Surpasses 2008 High

#86

Post by opportune »

runT1ME wrote: post #53
irrational wrote: post #40

Earlier quoted context omitted.

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

Except, you know...software engineer, IT, DevOps, Infosec, WebDev, etc.

This is true on an individual level but not a macro level. Not everybody can be a developer or IT professional. The market just can't support that.

Re: US Household Debt Surpasses 2008 High

#87

Post by LightskinKanye »

dv_dt wrote: post #33
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...

  I'll leave it as an exercise to the reader to identify other contributing factors...
Are you my professor?

Re: US Household Debt Surpasses 2008 High

#88

Post by lbearl »

conanbatt wrote: post #68
shriphani wrote: post #58

Earlier quoted context omitted.

I found this comment on Quora: Through 1992, the top 50 colleges in the USA got together each year to collude on: amount of tuition base salary for assistant professors preventing any bidding wars for applicants Then the Federal government sued and put a stop to that. However, by that point the tuition was way out of whack and the private elite colleges are still allowed to increase tuition at a rate that is above th…

> Gov intervention is probably needed. The government interventino has been the problem, as you just exposed. Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves.

I hear that argument all of the time, but in reality the colleges aren't the ones giving out loans. What will probably happen is that loans will start being more difficult to get, which in turn will make getting into college even more difficult for people who already struggle to pay for it.

Re: US Household Debt Surpasses 2008 High

#89

Post by jay-anderson »

fwefwwfe wrote: post #38
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.

Even in public state university tuition is quite high. Community colleges are more reasonable. I'm considering suggesting my kids go to local community college for 2 years and then university to finish their degrees. We'll see when we get there.

Re: US Household Debt Surpasses 2008 High

#90

Post by seoguru »

rrggrr wrote: post #21

Keep in-mind this household debt is above and beyond each household's share of their municipal, county, state and federal debt. If you live in LA County, CA: - about $4,200 in State Debt. - roughly another $4,000 or in LA County debt. - $161,000 in federal debt. - $16,000 in credit card debt on average. - Car loan, home payment, etc. And on average your savings are minimal. Most importantly, if this isn't you, its st…

$161K in federal "debt" AKA net financial assets of the private sector. The "debt clock" should be renamed the "private sector savings clock".

The monopoly issuer of the dollar is the federal government. https://www.youtube.com/watch?v=c4sD-JDVwwQ

and for the conspiracy theorists who deny the US government as the monoploy issuer: http://elliswinningham.net/index.php/2016/12/30/ridiculous-n...

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