Due to government involvement, there is a lack of a true market pressure when student loans are underwritten. Not surprising in the least that this bubble is starting to pop.
More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
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Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#12Have they actually investigated? I see a lot of speculation in this article, but if it's actually important to know, shouldn't they go find out?
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#13>unemployment is low Yes, but many people have been designsted as "having stopped looking for work", which means the statistic doesn't count them. Additionally, those who are employed perhaps are underemployed, working as an Uber driver or bartender or chipotle or etc. >the economy has improved For the top 6% of Americans that are millionaires, it absolutely has improved. Most of their income is from capital gains, d…
This, exactly. I don't know why you're getting down-votes. It's indisputable that both (1) the economy improving on average and (2) the distribution of those gains is highly skewed to the right-side of the income/wealth table.
Stories based on average numbers lose a great deal of the details that matter.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#14>unemployment is low Yes, but many people have been designsted as "having stopped looking for work", which means the statistic doesn't count them. Additionally, those who are employed perhaps are underemployed, working as an Uber driver or bartender or chipotle or etc. >the economy has improved For the top 6% of Americans that are millionaires, it absolutely has improved. Most of their income is from capital gains, d…
The amount of people I know with degrees who work in retail, or something completely unrelated is staggering. From my observations, I'd guess "underemployment" is the biggest contributor to the late payments.
This is just another example of why I urge any young people I know (high school age) to think long and hard before choosing to go to a 4 year college. When I graduated high school in 99', we were primed to think "college degree == good job". Of course, that is anything but the truth. And, it only serves to put someone in serious debt without any guarantees.
Hands on technical jobs like electrician, plumber, welder, are many times more lucrative than some bullshit business degree. A friend of mine's son is 22 or 23, and making a hell of a living welding. Granted, he's exceptional at it. But, that doesn't change the fact that his 2-year trade school investment was a good one.
Or, teach yourself a skill. Like lots of us on here, I'm a self taught programmer. It took years of doing small projects in the evenings, but I make a living from it now with $0 in student loan debt.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#15Is it possible that some graduates are realizing that for all that money, their education was not what they were promised, and a bit of resentment has led them to make the decision not to pay?
I feel like it might actually be somewhat socially related as well. If people see that their friends/coworkers with large student loans are simply deciding not to pay and nothing horrible is happening to them while at the same time they are living more extravagant lifestyles with the student loan money they're not paying, that's an encouragement to not pay yourself as well. Pair this with the last administration taking steps to limit student loan repayment responsibilities (William D. Ford Direct Loan program), and it starts looking like maybe not paying your loans off is a pretty decent option.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#16>unemployment is low Yes, but many people have been designsted as "having stopped looking for work", which means the statistic doesn't count them. Additionally, those who are employed perhaps are underemployed, working as an Uber driver or bartender or chipotle or etc. >the economy has improved For the top 6% of Americans that are millionaires, it absolutely has improved. Most of their income is from capital gains, d…
For further reading on this, look to articles about how the Phillips Curve (the theoretical link between inflation and underemployment) is broken (if it ever worked). e.g. http://www.cbc.ca/news/business/inflation-canada-outlook-1.4...
The Phillips Curve, at least in it's older formulations, was just a description of a certain regularity in the data. So it isn't a "theoretical" link, strictly speaking.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#17In a nutshell, as a generic reasoning, say that a few years ago the student loan was about US$ 100,000 and once you got the degree you had - on average - a higher pay of around US$ 10,000 per year (net).
You could repay it in 10 years time while living at the same level of your non-graduated friends.
Now say that the student loan averages US$ 150,000 and - still on average - the increase in annual wages is US$ 7,500 (net).
So you can either:
1) live as before BUT repay it in 20 years instead.
2) live at a 7,500 US$/year lower level than your friends and still repay it in 10 years.
3) live at a 7,500 US$/year (or 10,000 or 15,000) higher level and never repay it.
I suspect that besides the lessened "value" of the university degree on the labour market, there is also an increased number of people that choose option #3 over option #2 or #1 (whether out of need or because of other reasons doesn't really matter).
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#18The reason is that people have been spending absurd amounts of money on worthless degrees and can’t afford to pay them back.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#19Due to government involvement, there is a lack of a true market pressure when student loans are underwritten. Not surprising in the least that this bubble is starting to pop.
This is such a silly meme. Its not "due to government involvement." Its "due to the manner of government involvement."
Loans that are guaranteed by the government, for all students, that can't be discharged by bankruptcy, is an idea clearly put together by lenders.
If we wanted government subsidies for private education, there are plenty of alternatives. Here's one: government guaranteed loans for all students; but repayment of those loans is capped as a percentage of the person's income, and interest rate is capped well beneath that. This would allow the government to subsidize students to go to college, while providing market pressure against universities raising their tuition yearly. It would also allow students who went to expensive institutions to pursue careers that aren't at the top of the financial spectrum, like, say, teaching.
Re: More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why
#20>unemployment is low Yes, but many people have been designsted as "having stopped looking for work", which means the statistic doesn't count them. Additionally, those who are employed perhaps are underemployed, working as an Uber driver or bartender or chipotle or etc. >the economy has improved For the top 6% of Americans that are millionaires, it absolutely has improved. Most of their income is from capital gains, d…
> Yes, but many people have been designsted as "having stopped looking for work", which means the statistic doesn't count them. Additionally, those who are employed perhaps are underemployed, working as an Uber driver or bartender or chipotle or etc.
Yes. In most countries I know of, employment statistics are more about making economy/government look good and hitting targets, and less about giving any real numbers that people can use to understand the big picture.