Student Debt Not A Bubble But Still A Problem

Jordan Weissman from the Atlantic on the J P Morgan's exit from the student loan game and why it doesn't signify a debt crisis of the scale and magnitude of the U.S.'s bygone subprime bubble era:

"But there's also a greater point here. For the most part, it's not helpful to think of student lending, circa 2013, in terms of bubbles at all. Rather, as Chadwick Matlin has put it at Reuters, it's more of an anvil weighing on a large but discrete group of very unfortunate borrowers. In all but the most rare circumstances, it's impossible for former students to discharge their bad debts in bankruptcy. That means the government is mostly protected from defaults. So are the banks, to a degree.

Young adults, however, are on the hook for debts they can't handle, but which they'll likely continue to take on so long as college costs stay high. There won't be a moment where the market goes "pop." But there's still a crisis that needs to be addressed.

Student Loan Repayment Tips for College Dropouts - US News and World Report

Three tips to help with loan repayment for College Dropouts. Including:

1. Pay Soon
2. Be Knowledgeable
3. Part-time May Be Best

Huff TV: Arianna Discussed Youth Unemployment With Fareed Zakaria On CNN's 'Your Money' (VIDEO)

Links: Student Loans, What To Do?

How to Fix the Broken Student Loan System - ABC News

This!

(Seriously though. This an interesting look at the student loan climate and solid ideas on how to fix it.)



SoFi Will Crowdsource Your Student Loans | Co.Exist: World changing ideas and innovation

This?



Stop Handing Out Student Loans Like Candy, Or Else You’ll Get Sued Like Sallie Mae « Above the Law: A Legal Web Site – News, Commentary, and Opinions on Law Firms, Lawyers, Law School, Law Suits, Judges and Courts

More loans=higher tuition costs=more loans=higher tuition costs= more... Anyone else sees a catch-22 here?





Communities of color lose more wealth, carry higher student loan debt | North Dallas Gazette

Like so many other things it seems the loan problem may have a racial overlay.

Should You Have to Pay Taxes on Forgiven Student Loan Debt?

Bucks readers weigh in on whether forgiven student loan debt should come with a fat tax bill from the Internal Revenue Service.

(Above from the NYTiimes blog.)

Bankruptcy on Student Loans

Encourage bankruptcy, not forgiveness, for student loans (essay) | Inside Higher Ed

I'm not sure which sounds better, but Inside Higher Ed does make a very pointed case for reactivating the ability to discharge student loans in bankruptcy over either student loan forgiveness or the current situation.

Highlander – Dead and still buried in college debt: let’s forgive student loans

This article makes a interesting and sensible point regarding how we should deal with student loans when they don't provide a return on what we invest, as in when a loan holder passes and the loan holder's parent are stuck with the bill. It's interesting to think of a school loan in a more concrete way. That's one difference between education loans and housing loans; you can't repossess someone's education as you would their house, or car. Education is an abstract object, but what if, especially in circumstance of death we are able to "return" what we invested in considering if we do continue to pay we are paying for something that's going unused. This isn't a broken toy here, you break it you bought it shouldn't apply. 

Note To Self: No National Economic Problem Doesn't Mean There's No Problem

Why not to fear a student-loan bubble - The Tell - MarketWatch

I've seen it argued a few times that there's nothing to worry about as far as U.S. debt bubbles go because there's not really one. I don't know if that's true or not, but whether it's either or, student borrowers should still take time to get acquainted with the loaning system. We should know how much money we need to pay for school and if the pay off after is worth the debt we accumulate during. Also we need to know whether we believe we'll have the ability to pay off the debt in the long-run. Paul Dales, the guy quoted in the piece linked above says that now this dept bubble (blip?), "just needs to be monitored," so we probably won't see any huge changes in the system anytime soon if others find this student loan thing to be more of a blip than a bomb.

For example, debt relief is like taking gummi bears to treat Ebola. Without institutional change, debt will reload within a decade.

Umair Haque , tweet (@umairh)

A Few More Important Articles Regarding Student Loans...

Election will affect student loans, Pell Grants - News - Daily Campus - Southern Methodist University

When heading to the polls, which candidate is right for economy? What about education? Because, you know, those two things are highly related. What will President Obama do if he's reelected in the current election? Governor Mitt Romney? Is either plan right for you?

Speaking of...



Which Candidate Has Good Student Loan Plan? Neither - US Business News - CNBC

It turns out no matter which of the two candidates you pick, you've picked the wrong one on education...



Complaints may presage student loan crisis - The Washington Post

When are we going to take the "debt bomb" seriously? Maybe we can preempt the looming catastrophe and prevent four or more years of slog the way we didn't with the mortgages. Or maybe it's all just a bunch of hoopla...



Don't buy myth of student loan 'crisis' | The Columbia Daily Tribune - Columbia, Missouri

See? Hoopla.



Lastly,

Don't take on new loan debt | Recordnet.com


Because Michelle Singletary is doing an excellent job over at the Washington Post writing about student loans. Plus the advice of the above article, though aimed at recent graduates, is a universal one: Look before you leap (or better yet, considering the clear evidence of the currenct educational/economic problem, it's probably better to just not leap while you look).

Nick Gidwani: Obama and Student Loans: Income-Based Repayment


In 2010 we started an overhaul on healthcare with Obamacare. I think it's time to do something similar with our education system. The Huffington Post article by Nick Gidwani, linked above, starts the conversation off and points us in a direction. In it he describes our current detrimental situation and steps that have been taken by the president to rectify the situation.

The steps basically is a tighter form of student loan forgiveness--a cause I believe in for obvious personal reason, but one that I realize is rife with problems; the largest being where would we get the money to do that and what lesson do we learn by doing it. The latter of the two problems is what Gidwani caps his article off with and he's right.

Student loan forgiveness, or leniency as the College Cost Reduction and Access Act referenced in the article would closer resemble, would only relieve the immediate problem and only a narrow slice of it at that. The immediate problem is that college cost is getting high, and that's not including the fact that it has become harder to pay for college due to stagnant pay and rising cost of living. The article suggests that making it somewhat easier to pay loans back and cancel them decades down the line causes them to also look more attractive to potential students. This is bad because isn't out problem that too many college students and graduates are saddled with debt that they are struggling to repay. Not only that I've seen several articles connecting rising college tuition with the increase of loan acquistion. Again Gidwani is right. This is "a conversation n we need to have."

Note To Self: No Loans Unless You Have Money To Pay Back, Quickly

Sallie Mae Assists 2.2 Million Student Loan Customers to Avoid Default - DailyFinance

Sallie Mae Tops Student Loan Complaints - Business Insider

I have problem with Sallie Mae too, but I know in my case it's not at all their fault, and in a general sense I don't believe it's entirely their fault. Fact of the matter is personally I should have never done business with Sallie Mae. I knew nothing about loans and took the advice of people that didn't realize I knew nothing about loans. It was kind of a Catch-22 situation. If I knew more about loans I probably would have been able to asked the right question, but not need to. Since I didn't know anything about loans I didn't know the right questions to ask when I really needed to.

I believe loan company try to help and more specifically their employees. I talked to the really nice guy named R__ recently. He did his best to help, it's just that the means the company provides to help is kind of like a Catch-22 situation. If I were able to pay you $3000 to bring my payment up-to-date you would so not be calling me right now because surely I would have been making the, what, $50 or $100 payments all along. But sometimes policy trumps people. That's not the company's fault, completely. They service upwards of 2.2 million people (I'm using the figure in the article cause I don't have the actual one right now in front of me.), so they have to protect their interests to keep operating and providing loans to the needy.

That's tough.

I just wish there was an easier way to individualize the process. Really give people who can't options and ways to payback the loan. I'm sure not everyone who borrows money is looking for a way not to pay you back. If they had the cash flow, the payment surely would be flowing the way of the lenders. At least that's the way I feel about my personal situation compared to how I must look to the Sallie Mae, (etc.), computers.

Crushing debt: Students finding solutions to avoid or survive loans | Deseret News


From Deseret News, a hefty chunk of information about student. It amounts to get as much information as you can throughout the process. "Knowledge is power," is basically the key to stopping further problems with indebtedness due to student loans and is almost a carry-all when it comes to most problems faced. The more you know the more information you have to deal with what comes next.

Student Loan Debt Slavery, Is College Worth It? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website


It's a little bit too ranty for me, but I agree (and experienced) some of the points being made in the article.




Edit/add:

Also Part 2 and 3 of the NYTimes blog student loan Q&A.

Answers to Your Questions About Student Loans, Part 2 - NYTimes.com

Answers to Your Questions About Student Loans, Part 3 - NYTimes.com

On Higher Education: Student Loan Q&A, Value of a College Degree

Grad cap by katagaci
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Answers to Your Questions About Student Loans, Part One

Answers to questions about public service loan forgiveness, options for people with private loans who are struggling with their debts and the impact of student loans on debtors' credit score.

Answers to Your Questions About Student Loans, Part One - NYTimes.com

This is a pretty good Q&A overview of student loans and how to go about getting and/or attending that type of financial assistance for school.

Finding the Value in a College Degree By EQUAL JUSTICE WORKS

Finding the Value in a College Degree - Student Loan Ranger (usnews.com)

This brings up the good question of whether the degree a prospective college student is going after is worth the debt. According to the article a degree is still a very valuable asset in this economic climate, but it suggests maybe to get the most out of your college education assessing whether your time and money is being utilized well might be pertinent. 

Even More on Student Loans

Feds shouldscrap/reduceinterest onstudent loans - Columns - The Guardian


I really think America should, along with Canada, take a serious look at forgiveness in regard to student loan interest. The article makes some great points. The main one would be insuring for the future. People forgiven of loan interest, or at least people with highly reduced interest, have one less thing to worry about. Spirits are pretty low because of a slow healing economy and job market. These are a heavy load to bare, adding student loans to that load doesn't help to lift spirits at all. These spirits are the spirits of people investing in their futures and subsequently the future of our country. Relieving borrowers--relieving us--of the mounting interests takes the heft out of a heavy load and brightens borrowers toward the future. It makes what's ahead feel a little bit more manageable. So I agree hardily with Wayne Young, but in regards to America as well.

More On Student Loans

Dollar by jayofboy
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The rising problem of student loan debt has been in the news a bit lately. Not enough I believe, but that's more owing to the number of problems (and trivialities) being addressed in the news and the fact that the problem isn't at a DEFCON1 threat level yet. It's also a catch-22 situation, before the bubble pops (student debt bubble, housing bubble, what have you...) everything that's spoken, no matter how sure we are of the potential looming disaster, is speculation. That's why we can easily fall back on pondering on what needs to be done rather than taking action.

I realize there are people in congress trying to get bills passed* based on this issue and that it's hard to come up with a viable solution that we all can agree on, but all this doesn't defeat the fact that many people, like myself, need some kind of help now. 

* Like Richard Durbin, who seems to highlight my point well with the many things he's fumbling on his plate. (Contrast here, here and here.)

"Knowing then what I know now,[...]"

When reading about the student debt crisis I see that we have at least four culprits being mentioned regularly. 

• The first is colleges. This is due to the rising tuition costs and a mediocre offering of financial counseling. 

• The second is the lenders themselves, especially private lenders. Lenders are said to have a similar failures in financial counseling as colleges and universities. They're too quick to lend money to less than knowledgeable applicants and hard on providing flexible repayment options. Not only that but private student loans can't be discharged in bankruptcy since 2005, says the Huffpo article linked above.

• The third offender is congress. Based on the same Huffpo article congress passed the 2005 reform bill that disabled the student borrower's ability to discharge student loans in bankruptcy. 

• The last, and you probably guessed this from the article quote headlining this section, is the borrowers ourselves. Knowledge is power and without it, it is easy to end up looking helpless. Plus sometimes you can't count on the institutions, like the ones mentioned above, to do what you thought they were suppose to do. You are your own back up plan, just in case they do fail you.  

So I urge those college bound students, parents of college bound students, and people going back to school to better themselves to research thoroughly all aspects of higher education before making any one decision on anything. Understand, not just the college you plan to attend, but loans if you're getting them, and/or financial aid in general. Everything. Try to have as few blind-spots as possible.

 If I knew back then what I know now, that's one of the things I would have done better. 

No Note, Just More on Student Loans

market movements 1 by svilen001
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I talked about the student loan situation before and today I still wanted to address it a bit further. Let's see where to start...

Like Infomercials 

Most reports about student loans and the problems there in is chucked-full of examples of students and former students wrestling with expensive student load debt for too long. There usually is one super debtor, a person that works an expansive amount of jobs to pay off unexpectedly high student loan debt. It's a teacher in this PBS report. It's a great report, covering myriad problematic aspects to the growing student loan crisis in America: from the starry-eyed high school graduate signing promissory notes without reading to the college graduate years obtaining that degree (and racking up debt), applying for a third job to finally start paying off that debt, wondering all the while if higher education was really worth it. There's got to be a better way, is the exclamation at the end of the report. The responding question is, is there...

A Care Call

I personally don't know. If I did, I wouldn't be just another statistic right now, but I did find a few articles that seem to suggest some solutions to this problem. Did you know that there are ways ARM can help? Well, there are and I have to say I do believe Mr. Rudd has some great suggestions. In particular, the first two suggestions:

1. Student loan specialists: This would definitely help with some of the other bullet points, especially the second.

2. Treat them with respect (self-explanatory)

Help! He's Homeless.

Keith's story is about where the "worst that can happen" lie. He's homeless and in debt. This is the worst situation, the ultimate nightmare of a person in debt. The article says Keith believes Congress should, "return the "Truth in Lending" policies and procedures to all student loans," and allow, "the ability to discharge student loan debt through bankruptcy."

I don't even know what "Truth in Lending" policies are or how bankruptcy could help me with my loan. If these options should, or could, be on the table they should actually be discussed more fully at colleges and in homes. Though it's not a key issue in this election yet I'm glad some people care about education and more light is being shed on the issue by those people.

You're Suing Me, Mommy? 

No, she's not. Thank goodness according to Dr. Don from Fox Business, it might be a little harder to get sued by your parents if they co-sign on a loan. Damned if that doesn't fill me with mixed feelings though. Parents shouldn't have to carry a burden so heavy when all they're trying to do is help better their children's future. It's kind of horrible and makes that bankruptcy thing Keith was talking about, if what it does is wipe the slate clean, sound like a downright euphoric prospect to elevating a lot of people's debt troubles. The mom in the Dear Abby is disabled and her daughter is a lazy good-for-nothin' (kinda like me) without a job. Again, that's a horrible situation and too much overlooked.

Kinda Like AllState, Right? 

I'm going to leave you with these two thoughts because writing takes a lot out of you, even if you're not doing it very well (probably, especially if...). 1. This situation isn't very simple, as stated in the ARM article above, not even from the perspective of the borrower. There's barely anything put in place to help ordinary loan accumulation, so what happens to our people out there with bloated debt and Asperger's? 2. And maybe a combination of the National Service Corps and the Student Loan Forgiveness Act--If done right. (Anybody ever try to get hardship deferment? The joke is, it's hard.)--could help get this runaway debt train on the right track.

Note to Self: When You Go to College, Double Down

"Can't Do Nothin' Thout No College"

I've been holding on to Adam Davidson's New York Times article, The Dwindling Power of a College Degree, for a while now. It's a subject that's important to me because I've been in a very dangerous limbo stage pertaining to higher education, for too long. The article basically says, this is fast becoming an economy driven by specialization. (That particular type of economy may already be here, hence the U.S.'s possibly forthcoming financial troubles, "the next debt bomb," as they say.)

The point of the article is that it's becoming harder to skate by in life on simple credenttials, with an unimpressive degree. Our cultural attitude is becoming what Rick Santorum would probably call snobbish. I'm apt to agree, though I'm agreeing in a far different tone. I would be elated at the prospect of a country full of hoity-toities, if only it wasn't to our detriment. We're moving entirely too fast. In the long run, let's say a hundred years from now, the speed might not matter so much, but the problem is we're operating right now. How can we affect a change, that doesn't topple our economy, right now?

My story goes, the kid (me) gets to the university, with stars in his eyes, prepared to live the college life, but unprepared for what that entails. New singer, old song. There's no overt blame to place on the way the system is run, most of my problems were personal. I'm pretty sure if everyone went to college and followed a strict plan they'd be 'in and out' in no time. I didn't follow that plan, went in and prematurely came right back out. Now I'm facing many more problems than before: I'm buried up to my neck in student loans, it's more than difficult for me to get a job, and it's not any easier for me to get back in school to get my degree. Life's hard and the sad part about it is, at least right now, all I can do is live through it.

"I Thought The Cold War Was Over"

This student loan "debt bomb" thing is outrageous, The Real Meaning of $1 Trillion in Student Loans. I agree with Jordan Weissman, one trillion dollars in student loans very well may be "a sign, partly, that more students are going to college," but I believe there should a big emphasis on the word partly. There might be more important factors going into the boom in student loan debt.

One of these factors is the rising cost in tuition: Mississippi, California.

Students have to do more to pay for tuition. Hold down a couple of jobs while studying. Things I was told about consistently while I was in school. " So-and-So is a mother and she works part-time at a pharmacy while going to school", "Whatsit-Whosit works full-time at Wal-Mart, took a year off, and still went back to school--two years, then four years--for a degree in psychology" etc. etc. There are a number of them, mostly the lady folk--as if they have anything to prove*, but they're only a few of the nearly 2 million graduates a year (2,350,000 enrollees). What's the story after they graduate? Or the story of the ones that don't graduate? Mine is above.

Second the cutting off of aid to college goers: Is HOPE on or off? Not without mentioning, the difficulty involved in attaining aid if it's out there.

Then after we get through with that we can consider the good news of more students attending post secondary school, which I'm sure is caused by the culture change Adam Davidson talks about in his New York Times article.

The very fact that the culture is changing and more importantly how it's changing, is a big problem. The reason more high school graduates are making the decision to go to college is most likely because of our over arching cultural conditioning. Davidson talks about the increase in productivity at jobs with a dwindling need for workers.  The fact that there are fewer total jobs out there isn't helpful. It doesn't take as many employees as it use to to create and run a billion dollar business. Specialization moves us toward this. We saw it through the Industrial Revolution and continue to talk about it today regarding the billion dollar, consumer supported tech companies.

Specialization, by it's very nature means there won't be as many positions out there to supply the growing need for jobs, and/or, there at least won't be enough people to fill the positions. If our economy is supported by these types of jobs, shouldn't it be obvious why the recession hit so hard? Also, specialization entails a difficulty in obtaining the credentials. Now, of course, anyone who sets their minds to it, can accomplish anything, but that doesn't mean everyone will. This new cultural evolution, as well meaning as it may be, values quality while preaching a quantitative message. We feel college education is the pinnacle of success, but the problem with that is we send our kids through this academic bottle-neck all willy-nilly because of these values/ideals. We seem to be all dreams with no substance. Not good at all.

"Ultimately,..."

I believe this thing is a little bigger than facts and figures. Sometimes, when we overload on numbers and forget to add nuance to the information, we render data useless. Just a bunch of numbers on a screen.

But if I ever get another shot at a college education, I gotta remember to double down.


*Women are historically smarter than men. I'd write more, but you know, nuff said.

[Edit/add: Another article on student loan debt--Student Loans Weighing Down a Generation With Heavy Debt - NYTimes.com, and 5 important fact from said article--5 mindblowing facts about student debt. | ThinkProgress.]