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January 7, 2013


Replies: 442

The Student Debt Crisis (this affects most of us)

Poopgoblyn Featured By Owner Jan 7, 2013
If you are like me and in your mid to late 20s, you were raised with the notion that Education is the key element of getting you ahead in this rat race we call life. We were told time and time again by our parents, the media, our own peers, and our teachers that to get anywhere in life you must have a college education. We were thrown statistic after statistic showing how college-graduates make tons more than high school graduates.

From personal experience, when I was in 11th grade it was actually near social taboo to say that you have no urge or real want to go to college. You'd be looked down upon by your peers, and often viewed as a loser or a slacker for having such views.
And now we, as 20 something year olds, and recent graduates of this belief are facing the harsh reality of no jobs, extremely low paying jobs, and debt.

And so we come to the heart, and the terror of the coming bubble. The Student Debt Bubble. We cannot sit on the peripheral on this one. Our parents' may have lost their homes, and we saw what it did to them, but now it is our turn, and our bubble is much, MUCH worse. So how bad is it?!

Some key facts:
The Education Department in September released the first ever student default article. [link]
Some more links and info: [link]
-Of the 914 Billion dollars worth of student loan debt, over 122 Billion in federal student loans are in default. And growing.
-Private institutions have a 22% default rate as opposed to the public institutions at 14%. And growing.
-11% of student debt is over 90 days (3 month) deliquency. It rose 2% in one quarter. And growing.
-The above figure is also probably half the real amount since nearly 40% of student loans are in deffernment.
And this is only in reference to FEDERAL student loans. Not private student loans.
When you are in so much debt, a smart thing to do would be to declare bankrupcy. In fact, many people have done just that, to get over their own personal housing bubble crisis. However, we are not so lucky.
You CANNOT get rid of student debt through bankrupcy unless extremely special circumstances are present. That's right. This debt you have on you, you have to repay, no matter what. Welcome to true debt slavery.


Big Government is here to rescue us all! From the Wall Street Journal: [link]
"A new federal program should make it easier for some recent college graduates to keep their student-loan payments manageable.
The new option, known as the "Pay as You Earn Repayment Plan," lets eligible borrowers sharply lower their monthly loan payments and qualify for loan forgiveness quicker than they might otherwise.
"It's a very good safety net for students who borrow too much," says Mark Kantrowitz, publisher of the financial-aid site "If your debt exceeds your annual income, you will probably benefit."
Pay as You Earn, which took effect on Dec. 21, "is designed to help offset the effects of the recession for student borrowers most likely to take a hit in this tough job market," says Lauren Asher, president of the Institute for College Access and Success, which has pushed for the creation of income-based repayment plans."
Ahhh the blissfuly wonderful safety net that would make it so much more palapable to get that stinkin' loan.
"The new program comes at a time when rising student-loan balances—amid a still shaky job market—have weighed heavily on many families.
Typically, federal student loans must be repaid within 10 years. At current interest rates, that can work out to a monthly payment of roughly $300 for a borrower with $26,000 in debt.
Pay as You Earn, by contrast, limits student-loan payments to 10% of "discretionary income" as defined by government formulas. Borrowers who make regular payments could have the remaining unpaid amounts forgiven after 20 years."
Oh me oh my! You are telling me that I can go ahead and take out a loan of 140,000 for education (which also can be used for a lot of neat things like drugs, tattoos, and even an occasional Ipad), and pay less than 100 bucks a month and after 20 years the rest is paid for by the tax payer?
Oh it get's even better.
"In some cases, borrowers with low incomes could be required to make a zero-dollar payment and would still be considered current on their loan. Monthly payments can increase or decrease each year based on the borrower's income and family size."
SO I don't even HAVE to pay!?
And if 20 years is too much for us to bear, come work for Big Government!
"Borrowers with public-service jobs may qualify for loan forgiveness after just 10 years."
But what are the constraints?
"To be eligible for the program, borrowers must have taken out their first federal student loan after Sept. 30, 2007, and received at least one federal student loan after Sept. 30, 2011. Borrowers also must meet eligibility cutoffs based on the size of their debt, their discretionary income and family size."

We've all been swindled.

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Devious Comments

Novuso Featured By Owner Jan 28, 2013
Here is a article to add to this: Nearly half are overqualified for their jobs [link]

The Study is based on 2010 Labor Department data, says the problem is the stock of college graduates in the workforce (41.7 million) in 2010 was larger than the number of jobs requiring a college degree (28.6 million).

That, he says, helps explain why 15% of taxi drivers in 2010 had bachelor's degrees vs. 1% in 1970. Among retail sales clerks, 25% had a bachelor's degree in 2010. Less than 5% did in 1970.

"There are going to be an awful lot of disappointed people because a lot of them are going to end up as janitors," Vedder says. In 2010, 5% of janitors, 115,520 workers, had bachelor's degrees, his data show.
Debit Featured By Owner Jan 28, 2013  Hobbyist Traditional Artist
This sort of overqualification is more visible in places like South Korea where its economy is considerably smaller than the US but there is an intense pressure to get college degrees regardless of everything else. Almost a decade ago, I happened to see a documentary on South Korean college graduates having tough time getting jobs. One extreme case was a man who actually had a Ph.D. but ended up making a living as a milk deliveryman. Even for other postgraduates who were more fortunate were not that much better off; tenured academic positions were in a scare supply and many of them had to get by with positions like non-tenured part-time teaching jobs in colleges and cram schools.

I would not be surprised to see a similar trend in the US.
Poopgoblyn Featured By Owner Jan 28, 2013
Oh man. I wonder if I can edit original post I would have loved to include this.
sydnerella Featured By Owner Jan 11, 2013   Writer
I think the main problem with student debt is actually coming from for profit schools. The Government Accountability Office did a report on this actually, these schools only enroll 10% of students nationwide, but this 10% takes out a quarter of federal student loans and make up almost half of the student loan defaults in the nation. That means 10% of the students in the nation, going to a very specific type of college, are resulting in a massive amount of the statistics we're all hearing on the news.

It doesn't mean the students are really to blame either. The GAO report found that a lot of the recruiters at schools they were investigating were either being deceptive, or outright committing fraud. Basically exaggerating how job outlooks are after completing a program, and in the extreme cases, having students unknowingly falsify financial aid forms.

This is because recruiters earn a commission on the students they persuade to enroll. These schools make the majority of their profit on federal loans, but they do not lose money when a student defaults on a loan.

It's actually a huge problem. It's not to say these schools can't be beneficial to some people, but that in a lot of cases they are unsuccessful. If the government is going to keep basically providing the profit for these private industries, then I think the government has every right to step in. Yet they have not.
RestInMotion Featured By Owner Jan 11, 2013
tl;dr. Don't get student loans. Problem solved. Get a job, apply to every scholarship and grant, go to community college for your general studies, don't pick a major that won't make you money if you know you can't afford the major.
sydnerella Featured By Owner Jan 11, 2013   Writer
I'll agree with you on community colleges and scholarships. I have been able to avoid any debt due to this. I also understand that a job can definitely help, but most college students will not find jobs that are able to pay for college completely.

There is a point you are missing with the grants though. If you have parents who are middle class, chances are you will not qualify for any government assistance. Unless, of course, you are legally independent, but for most people (save those who get married, have a child, join the armed forces, etc), this is not legally possible until you are 26. Despite living on my own, without any financial help from my parents, for a year, I could not qualify as independent because the parameters for doing so have become very strict. It mainly comes down to your parents tax bracket, and unfortunately that stops some who need assistance from getting it.
RestInMotion Featured By Owner Jan 12, 2013
I'm not missing that point at all. I simply said apply, I didn't say that'll even work. My parents are below middle class and I didn't receive any financial aid when entering college at all. It's just a good idea to apply anyway. It's free money. Worst case scenario, you waste five minutes.
Ragerancher Featured By Owner Jan 11, 2013
Not everyone can find a job to pay for it. For example with me I don't own a car and live in a rural area. I can't get a car because I don't have a job and I don't have a job because I am limited in how far I can realistically apply for jobs (also there are only buses through my village).
RestInMotion Featured By Owner Jan 12, 2013
I am completely aware of that. But if you're having that much trouble with Step 1, why take out a bunch of student loans that will screw you over later in life?
Ragerancher Featured By Owner Jan 12, 2013
Because I want to be an engineer and I need the degree to do that job and you need a masters if you ever want to become a chartered engineer. If I become chartered then the salary I can get should cover the costs of Uni + more (about £50k median or 60k mean)
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