College Student Loans Will be the New Sub-Prime Crisis
In the same way that Democrats ruined the housing market by insisting anyone should be able to buy a house, they are now on the road to ruining higher education.
Chriss Street of the Testosterone Pit has the story.
College Graduates Are The New Debt Slaves
With the average cost of attending college in America at $120,000, a family of four should expect their children’s college to cost more than a home. Yet, optimism about the value of education provided justification for students to borrow $42 billion from the US this year. And many of them will end up as student-loan debt slaves.
With the estimated cost of attending a four year state college in America at $120,000, the average family of four should expect their children’s college to cost more than buying a home. Even though only 24% of Americans believe college is affordable, 97% still believe getting a college degree is financially important to improve your life. This optimism regarding the value of education has provided the justification for 60% of the 20 million students in college last year to borrow $42 billion from the United States government this year to stay in school. But with the reward for a college degree falling and default rates sky-rocketing, many students and their parents will end up as the student loan debt slaves.
College tuitions since 1986 have risen by a breath taking 498%, compared to 115% for general price inflation. The main driver for this hyper-inflation was the dramatic expansion of the Federal Stafford Loans since 1992, following Congress’ elimination of requirement that government-backed student loans be subject to parental income restrictions. The most enticing aspect of these sub-prime loans is that repayment is deferred while a student is enrolled as at least a half-time student, then are subject to a grace period for six months after the student leaves school either by graduating, dropping below half-time enrollment, or withdraws. The sudden access to billions of dollars in “free money” allowed highly unionized colleges to dramatically increase tuition rates without fear of driving away financially strapped under-graduates.
Comments
This is the reason why I’m so very thankful that my student loans were paid in a period of only nine years.
Sure, The Duke and I had to bite the bullet, and bite it big, for a long time. He showed me in a Quicken chart what would happen if I consolidated the student loan payments – I’d be paying my loan forever, even with my Social Security check! So, he said, “Bite the bullet now and relax later.” Just a few years later, we paid the last of my Perkins loan, and the payments became less. Then, we noticed the Stafford loan payments began to shrink, as the principal became more than the interest.
Then, The Duke’s company was bought by someone else, and made him sell his company stock, which was a huge amount of money for us at that time. The first thing he thought of was “The student loan.” He made that last check as I watched on. Sure, he could have spent it in a new boat of a Ferrari, or even an exotic vacation for us, then-childless. But he chose to get rid of the loan that had dragged me – and him! – for the first years of our marriage. It was a huge relief.
We did wait a long time to have children. But when we finally did, we were debt-free. We are now late-in-life parents while some our our acquaintances and friends have kids in high school or college, and some are even grandparents now. We don’t regret that a bit.
The student loan was mine – for a degree in a liberal arts major that did very little for me in life. The Duke, by contrast, went for Marine Engineering, one of the degrees least taken by students – and one of the most profitable in the long run. More often than not, you need to go to a Maritime college and sign up to serve in the Naval Reserve.
The Duke went to USMMA at Kings Point, NY. He took a student loan – the amount is unknown to me. But the day after he graduated, got his US Coast Guard license and his Naval Reserve commission, he was already leaving the country inside the engine room of an oil tanker. When he returned home after four months at sea, he paid the entire student loan debt he had incurred – to the total astonishment of the student loan company. He had to talk to three different people up in that hierarchy in order to pay his student debt. (Yep, they were that shocked.)
To this day, he has never lacked a job in his field, and his compensation has been quite generous. In contrast, the jobs I had could barely cover my own student loan debt. He pitched in every single time – every single month. I must say I am a very lucky gal. We fell in love after he had finished college and I had started, and we married just as I graduated from college. Otherwise, I’d be totally broke and in debt servitude to this day. Not all college grads are this fortunate.
My experience with this student loan taught me what I should have known when I chose a college and a major when I was 17.
If you can’t afford a college, don’t go there.
If it will take you more than ten or fifteen years to pay back an education that took you four or more, and it is for a major that is un-marketeable and unreliable in the real word, don’t go for it.
Sure, follow your dreams, but be realistic. Tell yourself the truth. Truth makes prosperity. Lies and delusions destroy it. This marks the difference between going for a degree that will pay huge dividends and give you lots of freedom in the long run and the degree that will put you in debt servitude – nah, here’s the word that truly applies here: SLAVERY – for a lifetime.
It’s that simple.
There must be more work done by guidance counselors and others in high schools across the country. Too many students pick majors that don’t do anything for them during their lives.
Also, there must be a major push to educate high school students in financial and economic literacy. A generation that doesn’t know how to manage a piggy bank or a checking account, or how a business works while you mop the floors, manage the cash register or stock the shelves, is a generation that doesn’t know how the world truly works, one that stays in debt slavery – and one that will fall for every Marxist scam that comes from truly slick and deceptive politicians – like “The One.”