Education has been tied tightly to the American Dream. Go to college, get a job and live the good life. But increasingly that dream has a lot of baggage in the form of student loans.
The Wall Street Journal recently laid out how U.S. student loan debt rose $42 billion in the third quarter to make a total of $956 billion.
“President Barack Obama championed easy-to-get loans during the campaign, calling higher education 'an economic imperative in the 21st century,'” wrote The Wall Street Journal. “A spokesman for Education Secretary Arne Duncan said the goal is 'to make student loans available to as many people as possible,' and requiring minimum credit scores would block many Americans from going to college.”
Eleven percent of those loans were at least 90 days behind in payments.
Since the end of 2007, The Wall Street Journal says, student debt has grown more than 56 percent (adjusted for inflation).
The Zero Hedge blog looked at the numbers back in September and concluded the next sub-prime loan crisis is already here with at least $122 billion in federal student loan defaults: “(O)ne question that has always evaded greater scrutiny has been the very critical default rate for student borrowers: a number which few if any lenders and colleges openly disclose for fears the general public would comprehend not only the true extent of the student loan bubble, but that it has now burst. … Broken down by type of education, and using the new, improved, and much more realistic benchmark, for-profit institutions had the highest average three-year default rates at 22.7 percent, with public institutions following at 11 percent and private nonprofit institutions at 7.5 percent.
“In other words, more than one in five federal student loans used to fund private for-profit education is now in default and will likely never be repaid!”
Bloomburg's Businessweek says this is a tragedy.
“For the first time on record, the delinquency rate on student loans has jumped above the rate for credit cards, car loans, or any other kind of consumer loan,” said Businessweek. “The tragedy? Many of those loans will default, with stunningly harsh consequences, even though there are many good options for debt relief — deferment, forbearance or reductions in monthly payments.”
And when they default it isn't pretty, Bloomberg says. “The federal government can garnish up to 15 percent of a borrower's wages, Social Security disability, and Social Security retirement income without a court order. Unlike other debt, student loans can't be discharged in bankruptcy. Collection charges of up to 20 percent can be skimmed off the top of payments — enough to turn a 10-year loan into a 19-year loan.”
While the ability to discharge a student loan after a person gets it is next to impossible, getting the loans is as easy as pie, according to CBS News: “Most student loans are made through the federal government, which only vets borrowers in the most cursory of ways. In fact, the government doesn't seem to care whether you are a liberal arts major, with little chance to earn enough to keep pace with your loan payments or a software engineer, who should easily make enough money to carry the debt load.”
- Stretches and exercises for carpal tunnel syndrome
- The best Major League ballparks have their own personality
- Comparing the best regular seasons: The '96 Bulls and '16 Warriors
- 3 Arizona road trips and the vehicles to get you there
- Colon cancer is preventable. Check these signs and symptoms to stay healthy.
- 6 of the biggest skin cancer myths
- Affordable small home makeover ideas
- Locals helping locals: 6 success stories you need to know about
- Sunscreen facts that could save your life
- 6 energy saving hacks for your home
- 5 tips for choosing a company to end your timeshare
- Overlooked water tips to save you money
- 5 of the most adored gentlemen in professional sports today
- The real danger of sitting at your desk
- Most surprising NBA playoff performances of the last 40 years
- 11 classic baseball movies you must see again
- Finally getting rid of fat: 3 methods that actually work
- 4 reasons cancer survivors should focus on food
- 5 spring cleaning spots everyone forgets
- 5 reasons to look forward to watching the D-backs this season
- Common virus attributed to spike in head and neck cancers
- 5 signs it’s time to end your timeshare ownership
- 3 most overlooked ways to keep your home healthy
- 6 ways the air in your home could be making you sick
- CrossFit dangers: 5 common injuries and how to deal with them
- Today's radiation treatments offer better success, fewer side effects
- Tips to make watching TV on the patio even better
- What really happens when you donate to a community college?
- Sun and skin cancer: Separating fact from fiction
- 5 critical lifestyle changes for a healthy colon