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What Most Americans Don't Know About Student Debt

Tyler Durden's picture




 

Now that student loans, well over $1.1 trillion, are hitting fresh record highs as... well... daily as the S&P500, the Fed is finally getting concerned about the latest debt bubble it has blown (not so much in equities). So concerned, in fact, the New York Fed recently added questions about student loans in  its broad survey on consumer expectations to find out what people knew, or rather, did not know about this record debt mountain. We hope it was not shocked to learn that once again the bulk of Americans are taking on unprecedented amounts of debt without having a clue what the conditions are: accordint to the analysis, people don’t fully comprehend the ramifications of taking on student debt.

As Bloomberg summarizes, the survey covered 1,029 people, including those with and without debt. The shocking findings:

  • Only 28% of respondents knew that if student loans aren’t repaid, the U.S. government can garnish wages, withhold Social Security payments and tax refunds, and report the debt to credit bureaus.
  • Even more people—35%—incorrectly thought the government couldn’t do any of those things or said they didn’t know what the government could do.
  • Only 37% of those surveyed knew that students loans are extremely hard to shed in bankruptcy, a reality that differentiates student loans from other debts, such as mortgages and credit cards.
  • The survey found that people who have student loans know more about the consequences than those who don’t, and that’s even truer of those who have high debt loads. But about half of those with higher-than-average student debt didn’t have high comprehension of the issue.
  • The survey also found that fewer than one in five people under 55 years old were “highly literate” on the topic, even though they make up most current and future borrowers.

The findings should hardly come as a surprise: in 2012, Young Invincibles, an advocacy group, and the economic consulting firm NERA found (pdf) that 40 percent of current or recent graduates who got financial aid said they didn’t receive any counseling about their federal student loans, as required by law. Of those who did receive counseling, only a little more than half found it informative.

All of the above, naturally, is a pivot to the moment just after the student debt bubble bursts: then, just like with the housing bubble, the excuse will be the Americans, hardly with a gun against their head, did not understand what the "implications" of burying yourself to the neck in debt are. Which is why they did it. Which is why the entire system had to be bailed out. Or something like that.

It is good to see that nobody has learned any lessons from the recent past, as usual.

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Sun, 06/08/2014 - 12:55 | 4834362 snodgrass
snodgrass's picture

Serfs for life.

Sun, 06/08/2014 - 13:29 | 4834442 Pool Shark
Pool Shark's picture

 

 

Funny how these students are 'qualified' to attend college yet don't even have a basic understanding of the loans they're taking out.

Although I went to good (though public) schools from Kindergarten through undergrad, I never received a single lesson in how to balance a checkbook. But they did teach me 'social studies' and all about respecting foreign cultures. That was back in the 'bad old days.' I shudder to think what they're teaching (and not teaching) nowadays...

How about if we teach students a few basic life skills?

 

Sun, 06/08/2014 - 13:31 | 4834453 I am Jobe
I am Jobe's picture

Basic Understanding is not a qualification in Amerika. Get real will you.  Look around and you will see.  

Sun, 06/08/2014 - 13:37 | 4834468 Pool Shark
Pool Shark's picture

 

 

Sad, but too true.

Common sense has become an oxymoron...

 

Sun, 06/08/2014 - 13:43 | 4834482 Chris Jusset
Chris Jusset's picture

Student Loans are a MAJOR part of the fraud that is BUBBLE-USA ... why would this surprise anyone?

Sun, 06/08/2014 - 14:49 | 4834533 Stackers
Stackers's picture

GWBush made it where you could not write off student debt in bankruptcy court. Like IRS back taxes, student loan debts can not be written off unless you are basically homeless, unemployed and destitute. The Government and the Mafia always get their money in the end - one way or the other

Sun, 06/08/2014 - 14:53 | 4834627 CH1
CH1's picture

GWBush made it where you...

No! The Fedguv beast did that during the years when GW was the figurehead.

Bush, Obama, Nixon, Carter... tweedledee, tweedledum.

Mon, 06/09/2014 - 03:12 | 4836300 Doofus
Doofus's picture

It was the Carter administration that first excluded some student loans from bankruptcy protection, however it was Ronald Reagan who made the bulk of student loans exempt from bankruptcy protection in 1984.  

Sun, 06/08/2014 - 14:53 | 4834629 HenryHall
HenryHall's picture

THE SOLUTION IS EMIGRATION.

Even if the USA debt is pursued overseas, a bankruptcy overseas discharges the debt in the new country of residence.

Sun, 06/08/2014 - 16:34 | 4834812 pagan
pagan's picture

You hiding in the Amazonas.. The US gov. write your debt off with a drone.

Sun, 06/08/2014 - 14:53 | 4834630 americanreality
americanreality's picture

Its been that way ling before Bush.  Bush did authorize the garnishment of social security for S.L.s and made everyday bankruptcy that much more difficult.  Throw a saddle on the student body and crack that whip.

Sun, 06/08/2014 - 14:59 | 4834644 CheapBastard
CheapBastard's picture

"I didn't know that."

 

"But I know how to Tweet 24/7."

 

 

Sun, 06/08/2014 - 15:19 | 4834681 Never One Roach
Never One Roach's picture

They can garnish my 0.01% savings account yield.

Sun, 06/08/2014 - 18:29 | 4835114 I need Another Beer
I need Another Beer's picture

U r correct. I was in college from 09-12. I talked to the losers[people who could not pass a class]. They told me " They were living much better on student loans". It was a form of welfare they could not pass up.

Sun, 06/08/2014 - 18:31 | 4835119 I need Another Beer
I need Another Beer's picture

U r correct. I was in college from 09-12. I talked to the losers[people who could not pass a class]. They told me " They were living much better on student loans". It was a form of welfare they could not pass up.

Sun, 06/08/2014 - 14:23 | 4834566 nufio
nufio's picture

Logged in to comment. Americans should stop blaming schools for everything and start taking responsibility for teaching their kids. I am not saying the school system is the best, but what is lacking more is good parenting.

Sun, 06/08/2014 - 14:59 | 4834635 CH1
CH1's picture

Americans should stop blaming schools for everything

Nope!

The school system takes those children from their parents BY FORCE. You don't send 'em, large armed men show up.

You take the kids by force, you own the results.

Sun, 06/08/2014 - 15:55 | 4834739 NidStyles
NidStyles's picture

This is why reasoning with statists is almost impossible because they approve of using force to get what they want, and to them force equates to being right. 

Everyone here should look carefully at the comment you replied to. That way of thinking is why all of this criminality exists.

 

Sun, 06/08/2014 - 15:57 | 4834742 NidStyles
NidStyles's picture

You can not have good parenting when the most basic parenting concept is denied to them, education.

Sun, 06/08/2014 - 14:40 | 4834600 DanDaley
DanDaley's picture

That was back in the 'bad old days.' I shudder to think what they're teaching (and not teaching) nowadays...

 

About 80-90% of teachers and professsors are liberal-progressive-socialist statists, so they teach what they were taught and don't question. I tease a young social-studies teacher that I know with questions such as:

Who owns the Fed?

What is the petro-dollar / reserve currency?

When was the US Constitution overthrown?

How long can you be held in government detention without legal recourse?

 

He thinks I'm a conspiracy nut; I tell him he's brainwashed by 16 years of education.


Sun, 06/08/2014 - 14:57 | 4834638 americanreality
americanreality's picture

80-90 percent, huh?  Why is that do you suppose?  So we just need more "conservatives" in higher education.  That will fix things.  

Sun, 06/08/2014 - 15:34 | 4834699 DanDaley
DanDaley's picture

Why is that do you suppose?

 

For one thing, statists have a symbiotic and fetishistic relationship with public unions -something most conservatives find repugnant and therefore shy away from. Many conservatives would prefer not to work in education if they have to work in one of the gun-to-your-head-non-right-to-work states.

 

Another thing is that most liberals/statists are Democrats going way back, but these people have scant knowledge of the evil that their party has promulgated through the decades. One simple example is segregation, i.e., American apartheid, which was started by the US Supreme Court decision Plessy vs Ferguson in 1896, in which 7 Democrats overruled 1 Republican (Harlan of Kentucky), and thus began the 70 year nightmare for blacks. (Of course, then they finally had to "fix" the problem that they themselves had created -reading the writing on the wall in the '50s that they could be shut out of political power for a long time if they didn't find a way to pander to blacks and get them back on the plantation. Hence LBJs famous comment about the Great Society: "I'll have the n*****s voting Democrat for the next 100 years." Thus began the Free Shit Army and the destruction of the black family.)

 

When you tell liberals these things they can't/won't believe it -and find some bullshit way of absolving themselves and their hideous party of all wrongdoing. (Don't misunderstand, Republicans aren't much better now days, but at least hold to a defense of the 2nd Amendment in most states.)

 

In short, the statists in education suffer largely from hubris born of an ignorance in which emotion trumps reason just about every time.

Sun, 06/08/2014 - 15:59 | 4834746 NidStyles
NidStyles's picture

Just as many of you statists are Conservatives as well, or whatever you call that BS these days where you pretend to be part of something. 

Sun, 06/08/2014 - 22:32 | 4835833 StychoKiller
StychoKiller's picture

Have him search for "The Mandrake Mechanism..."

Mon, 06/09/2014 - 09:07 | 4836650 DanDaley
DanDaley's picture

Yes, it all begins with debt. Griffin is a great resource.

Sun, 06/08/2014 - 16:23 | 4834793 G-R-U-N-T
G-R-U-N-T's picture

"How about if we teach students a few basic life skills?"

Can't do that because then they may develop critical thinking skills which would interfere with the States ambitions of total totalitarian control!

As long as they remain dumb shits allowing the State to run their lives, Statists don't have to worry about dissent!

Sun, 06/08/2014 - 13:32 | 4834457 dobermangang
dobermangang's picture

Here's a sampling of some student loan horror stories:

http://www.businessinsider.com/students-loan-debt-horror-stories-2013-6?...

http://www.bankrate.com/finance/student-loans/student-loan-horror-storie...

http://www.denverpost.com/opinion/ci_20808441/student-loan-horror-storie...

Hard to feel sorry for a guy that takes out 100k worth of loans for a Jazz Guitar degree.  

Mon, 06/09/2014 - 01:40 | 4836230 SilverRhino
SilverRhino's picture

Wow those guys are fucked.

It would cheaper to just emigrate, build a new I'D and come back to the USA as an illegal immigrant.

Sun, 06/08/2014 - 13:47 | 4834492 TrustbutVerify
TrustbutVerify's picture

Just as they want to be.

Sun, 06/08/2014 - 14:30 | 4834582 Smegley Wanxalot
Smegley Wanxalot's picture

Serfs maybe, and student lones suck, but thinka all da smartz deyz gotz 4 da money!

Sun, 06/08/2014 - 15:26 | 4834694 Kirk2NCC1701
Kirk2NCC1701's picture

Do they have college classes for this issue?

;-)

Sun, 06/08/2014 - 12:58 | 4834367 foodstampbarry
foodstampbarry's picture

Serfs up bitchez.

Sun, 06/08/2014 - 13:00 | 4834371 LetThemEatRand
LetThemEatRand's picture

“If you think nobody cares if you’re alive, try missing a couple of [student loan] payments.”

-Earl Wilson (paraphrasing)

Sun, 06/08/2014 - 13:00 | 4834372 dobermangang
dobermangang's picture

If you don't understand the ramifications of the student loan agreement, you're probably not college material in the first place.

Sun, 06/08/2014 - 16:01 | 4834750 NidStyles
NidStyles's picture

Yeah that's right, let them get eaten as long as it isn't you right?

Sun, 06/08/2014 - 13:01 | 4834378 Greenskeeper_Carl
Greenskeeper_Carl's picture

My wife has a good bit of student loan debt, before we met. She only works part time now, and my concern is that they come after my assets at some point in the future.

Sun, 06/08/2014 - 13:05 | 4834391 LetThemEatRand
LetThemEatRand's picture

Some states protect joint marital assets from collection of pre-marriage student loan debts, others don't.   

Sun, 06/08/2014 - 13:34 | 4834460 I am Jobe
I am Jobe's picture

Leave the USSA

Sun, 06/08/2014 - 15:33 | 4834706 Kirk2NCC1701
Kirk2NCC1701's picture

I give the same advice to "commoners", that expensive lawyers give to the Rich or Famous:  "GET A PRENUP!"  Else you and your money will soon be parted.

Ignore this advice (for emotional rather than rational reasons) at own peril. - Kirk out.

p.s.  If you REALLY want to know if that girl truly loves you for yourself, just try floating a prenup and watch her reaction:  Watch her body language first (eyes, face, body) and then her words (tone, pitch, attitude, content).  She'll tell you everything you need to know, but maybe not what you want to know.

Sun, 06/08/2014 - 13:02 | 4834379 q99x2
q99x2's picture

That is why it is important to turn your homework in on time and get good grades.

So your scholorships and EBT pay for everything. And then when a banker asks you for a loan you can spit on the low dwn stinkin creature.

Sun, 06/08/2014 - 13:12 | 4834402 ElvisDog
ElvisDog's picture

I don't think you're living in the now. Here is situation in 2014 (and I know first-hand because I have a child in college).

The price of college as skyrocketed, but the amount of most scholarships has not. Most scholarships are in the $500-2000 range. That's better than nothing, but doesn't really make a dent in annual college costs (tuition + room and board) that probably average $25-30K a year. To pay for college with scholarships, you would have to get a lot of them.

Second, the income cut-off for need-based financial aid is low. Basically, they expect you to contribute 25% of your pre-tax income to the cost of tuition. So if you earn $80K a year and your child's college tuition is $20K, you get nothing in terms of need-based financial aid. And that 25% doesn't count room & board, books, etc.

So, it's basically impossible for middle-class families to send their kids to college without taking out student loans. In fact, the entire higher-education system is built to force people into debt if they want to send their kids to college.

Sun, 06/08/2014 - 13:22 | 4834429 fzrkid
fzrkid's picture

Ok so here is a thought. If all the middle class families decide not to send their children to college because it is too expensive then the colleges will lower the tuitions costs.

 

But instead like most other uhmarikahns just borrow the money which in turn raises the prices.

 

Pathetic really, a student is supposed to be college material but cannot understand the basic principles of funding their education with debt..

Sun, 06/08/2014 - 13:36 | 4834465 I am Jobe
I am Jobe's picture

Must support the stupidity , you know keeping up with the Darshians and all. 

Sun, 06/08/2014 - 16:06 | 4834762 NidStyles
NidStyles's picture

You honestly think market principles would be allowed to work here? The .guv types would just push for subsidizing those tutions even more than they already do, unless you seem to have forgotten what these student loans actually are, subsidies for the academic priesthood that speaks for the state..

Sun, 06/08/2014 - 14:12 | 4834547 l8apex
l8apex's picture

How about some specific numbers?  And assuming they're so high, why did your kid go to that school?  

I went to the University of Utah.

Annual 2014-2015 resident undergrad full time tuition and fees = 7166, room/board 10,746, books = 1280, misc = 3996, transport =1098.  Total = $24,360.  And of that total, less than 8500 are direct school costs. 

Put the kid to work through the summer, save up about $5k...

 

Sun, 06/08/2014 - 16:07 | 4834764 NidStyles
NidStyles's picture

So only $19K of debt they can't find work to pay it off with..

Sun, 06/08/2014 - 20:14 | 4835387 ElvisDog
ElvisDog's picture

Right, but it's really the total that is meaningful. Don't know what your income is, but you have to come up with $24K a year to go to college. Even if your (or your parents') income is $100-150, it's hard to come up with $24K cash every year.

Plus, Utah is an outlier, I live in WA. The University of WA for residents of WA is about $12.5K for tuition. Add in $15K for room, board, and everything else and your're talking $27.5K and if you make more than $50K a year, you get no need-based financial aid.

And that's an in-state tuition rate. If you go anywhere out of state, you can pretty much count on $30-40K for tuition alone.

Sun, 06/08/2014 - 13:04 | 4834383 29.5 hours
29.5 hours's picture

 

 

Most Americans have no idea how vicious the American government can be. This is the basis for the ignorance we have on this issue. Anyone faced with these facts wants to reject the possibility.

If our government can act with such ruthlessness and stupid brutality towards its own youth in normal times, how much worse can we all expect when the government begins to feel threatened?

 

 

 

Sun, 06/08/2014 - 15:15 | 4834675 jerry_theking_lawler
jerry_theking_lawler's picture

If people would simply figure out that these CEOs, politicians, and other leaders are wealthy for one reason only (that is fleecing them and the system) then they would stop participating in the system. The .gov is just part of the game that, on the university level, includes federal grants/loans/etc and has overtaken the entire system.

I know it may be tough for a parent but I would advise a 2 year technical degree for anyone that can't get a full scholorship. Learn a skill or trade and get them a job. If they want to 'spread their wings' and learn or do something else...then they are free to do it....on their own dime or credit.

Stop the madness. Don't participate.

Sun, 06/08/2014 - 13:05 | 4834385 Cognitive Dissonance
Cognitive Dissonance's picture

The (ignorant) silence of the lambs........to slaughter.

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