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U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

financeography.com

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Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#11

Post by devoply »

dublinben wrote: post #8
meddlepal wrote: post #4

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

With automation how are they expected to even service that debt, much less pay it off? If you can't pay minimum interest on the debt and it keeps growing. What then? Will you have to service the debt out of your guaranteed income?

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#12

Post by knz »

paulddraper wrote: post #5

The Wall Street bailout was only...what, a trillion? If we bailed out real estate speculators, I wouldn't be surprised if something happened with college grads. Unfortunately. I hate assuming responsibly for monetary decisions other than mine, but judging the trend, that's where we're headed.

It'll never happen. They couldn't even agree to refinance Federal loans during the great recession - students were/are paying 6.8% when interest rates are at historic lows.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#13

Post by krisroadruck »

I'm curious why we treat student loan debt as being special. We don't make a huge deal out of people taking on other debt and then being unable to pay for it. I think probably if anything, what we should have are better controls for what types of degrees you are allowed to take a loan out for. If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up for it, rather than getting a loan, just like there are qualifications for other loans, like auto or mortgages which look at both the value of the asset vs its sale price, and your ability to pay. If some kid takes out $100K in debt to pay for a degree in finger painting how is that anyone but the borrowers (and possibly the bank who approved it) fault?

TL;DR - When handing out student loans, we should consider aptitude (how likely is the person to graduate) & the career potential of the degree as qualifiers.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#14

Post by Retric »

dublinben wrote: post #8
meddlepal wrote: post #4

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#16

Post by marklyon »

toomanybeersies wrote: post #6

Every time I read articles about student loans in the USA, the options are always presented as either the current state, or free tuition. Why are interest free student loans never floated as an option? Here in New Zealand, our student loans are provided by the government and are interest free as long as we reside in New Zealand. It means that people who don't do tertiary education, or who do a trade, don't subsidise…

Even just reducing the interest rate can have a significant impact. I cut my rate from just over 7% to 4.71% and slightly increased my payment, moving my final payment from July 2, 2038 to December 1, 2025 (ignoring any additional payments I make) [1]. Just doing that made attacking my massive loan balance much more manageable.

I don't expect (or want, actually) for my education to be free. I knew I was racking up debt and knew it would have to be paid. Being able to refinance, though, was a huge help.

[1] https://marklyon.org/2016/05/refinancing-student-loans/

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#17

Post by toomuchtodo »

dublinben wrote: post #8
meddlepal wrote: post #4

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

All those Boomers expecting to offload their family house on someone to unlock their retirement equity when they downsize to head into retirement are screwed. Turnabout is fair play I suppose.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#19

Post by GarrisonPrime »

toomanybeersies wrote: post #6

Every time I read articles about student loans in the USA, the options are always presented as either the current state, or free tuition. Why are interest free student loans never floated as an option? Here in New Zealand, our student loans are provided by the government and are interest free as long as we reside in New Zealand. It means that people who don't do tertiary education, or who do a trade, don't subsidise…

>Why are interest free student loans never floated as an option?

I suspect because then no one could make money. In the current system, they certainly make money. In a "free tuition" state, they'd still make money; it'd just come direct from the government rather than being filtered through the population and economy first.

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