Thursday, October 18, 2012

Student Loan Debt Hits Another New Record

The average college student who graduated in 2011 had $26,600 in student loans, according to a new report, which estimates two-thirds of last year’s college graduates had student loan debt, reports CNBC.

The average debt is the largest since the Institute for College Access and Success began compiling the figures in 2005, and it comes amid soaring college costs, record loan defaults and a persistently difficult job market for college graduates.

The study also found a stunning 37.8 percent of recent graduates are working in jobs that do not require a college degree. The study says that means wages are depressed, making the situation for graduates even more difficult.

 The report cites recent U.S. Department of Education Data which show the federal student loan default rate at its highest level in 14 years. The New York Federal Reserve recently reported more than five million student loan borrowers have at least one loan past due.

Overall, student debt in the United States recently topped $1 trillion.

Of course, this is all a government created situation, since it is only government backing of these loans that result in the loans being made in the first place---which creates more bidding for college "education" and thus higher prices and even more loans required. It's all a big bubble. Students are mini-Greek nations, most have no chance of paying the money back (unless Bernanke inflates the money supply) and will be allowed mini-defaults, with the majority of the money still owed and required to be paid back.

5 comments:

  1. Student loan is life time commitment, and cannot be discharged by bankruptcy. I guess that means you cannot default on the loan. They can send FBI agents to collect the debt. If you cannot default, where is the risk? if you think in the same logic, The homeowners cannot default, and turn the keys in, then they will be no forced selling of homes. There will be no massive crash of housing. what am I missng here?

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    1. Default is simply the act of failing to pay on the loan. So people can (and are) defaulting on student loans at increasingly high levels -- you just can't squeeze money out of a non-existent paycheck. Whether that debt can be forgiven or dismissed is an entirely different question.

      Bankruptcy court can dismiss student loans for "extreme hardship." It will be interesting to see whether judges consider this exception more going forward. And, as Wenzel said, congressional/executive action could wipe out some of this massive student debt.

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  2. $27K is about the cost of an average new car. The way people fret over the terrible burden of student debt, you'd think everyone owed $300,000. Something tells me that lots of these underemployed grads working at Staples will have no problem paying off a $18K Hyundai in 5 years. But paying off $27K in 15 years is onerous?

    Don't go to school for basket weaving.

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    1. If the average includes two year technical colleges then that will bring down the average. And what about the worthless online colleges? At least a car gets people to and from work and has some resale value. Then once you factor in 30 percent or more of college grads that have full time jobs that do not require a degree and grads who cant find work you begin to see the entire picture more clearly.

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  3. Students who actual graduated with loan debt is the tip of the iceberg imo. They forgot to add up all the debt from students who never graduated after a couple years of school.

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