A trillion dollars of housing debt has been replaced by a trillion dollars (or more) of student and auto loan debt. Delinquency rates are increasing for student and auto loans, while other loan types have seen a decrease in delinquency. Finally, the value of both the university education and the automobiles people are buying don’t seem to justify the amount being borrowed and spent.
The total value of student loans in America today is LARGER than the total value of subprime loans at the peak of the financial bubble. And just like the subprime mortgages, many student loans are in default.
Just days after reports emerged that student loan defaults are soaring, the Trump administration has revoked rules put in place by Obama that barred student debt collectors from charging penalty fees on past-due loans...that should take care of that pesky 'moral hazard' problem...
"This is another example of the damaging impact this tax is having on Philadelphia families. It’s ironic that a tax the mayor sold on the basis of expanding educational access is now going to be making higher ed less affordable for students."
Despite Obama's efforts to establish "Income Driven Repayment" plans for student debt (which more or less simply defers principle repayments until some point in the future when they can be taken over by taxpayers), a record amount of student debt fell into default in 2016...shocking.
The two graphs show the percentage of the population with a credit score below 660 in each U.S. county in 2009 and 2016. Comparing 2009 and 2016, we see that the percentage of the population with a subprime credit score has decreased.
Jimmy McMillan III may be the most vocal critic rising rents as the head of the "Rent Is Too Damn High" party in New York City, but the Big Apple isn't the only place where a significant portion of the population is struggling to meet monthly rent payments.
With Millennials piling in and Barrons bashing it, Snap Inc's shares have plunged this morning after opening up over 4%. The stock is now down 14% from its spike highs on Friday and volume is heavy as spec longs cover into shorts' T+3 'borrow' availability tomorrow.
For many young people, the decision of whether to extend their education careers and attend university is a tough one to make. With soaring costs, Statista's Martin Armstrong notes, not all that choose to do a bachelor's degree graduate with the feeling that it was all worthwhile.