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Ballooning Student Debt Levels will Usher in New QE
.......Written by Nathan McDonald for Sprott Money
The average American student graduating with a bachelors degree leaves with approximately $28,400 of debt to be repaid over the course of their career. In fact, over 70% of students graduating will be in this position, making it the norm.
Of course, that is simply a bachelors degree, which in today’s world will get you a management position working at McDonald’s. Let’s face reality. Most of those starting their post-secondary education today, will not find a job that is related to what they studied at university after graduation. At best you can chalk it up to a grand social experiment, although a costly one.
The student debt category has been one of the biggest culprits of debt accumulation in American history. Loans backed by the government have led to runaway inflation in secondary education, as the universities know that they can charge more and more every year and the government will simply issue students larger loans.
(Chart Source, FRED)
The fact that so few people can understand this, is truly mind boggling. Get the government out of education and the loans will dry up. The massive risk of exploding student debt levels will naturally disappear over time as universities are forced to restructure and reduce cost, or face plummeting student enrollment.
Gone are the days when a student could work a part-time job and graduate without debt. Unless students have wealthy parents, or parents who don’t mind taking out a second mortgage on their house, then you are in the debt slave camp for 10-15 years of your work life.
The only saving grace, or curse, depending on how you look at it, that has allowed for this Ponzi scheme to go on for so long is the fact that student loans cannot be defaulted on. Although that may be changing.
President Barack Obama will speak this coming Tuesday to students at Georgia Tech. The topic of discussion, none other than student debt management and repayment.
Obama and his administration know that this is an issue that affects a large segment of the American people. If there is a way for a politician to buy votes, they’ll find it. Not only is this a great political move, but it is also becoming a growing issue within the banking system.
It is estimated by the Treasury that there is $1 trillion in student loan debt. This is a staggering number, which exceeds even that of American household credit card debt. The most shocking fact is the rate of expansion that this debt is about to undergo.
As previously mentioned, universities know they can raise tuition fees, therefore they will. This will cause an explosion in student debt, even greater than the rapid rise we have already witnessed. Levels are set to hit $3 trillion by 2024.
What has the government now looking at taking action and changing the rules of the game is the fact that 9% of all student debt are currently in default, 12% are in deferment and 11% in forbearance. This means that almost a third of student debt is going unpaid!
Given current estimations, this means that over the next decade, the Treasury is looking at over $1 trillion for student loans going unpaid. Amplifying the fact that secondary education has become increasingly unaffordable for a large majority of Americans.
The White House’s solution is to revisit bankruptcy laws surrounding student debt. It is looking like a new bill will be passed, one that will restructure student debt laws and allow for students to better “manage” debt levels (i.e. default).
Who will be left holding the bag in the end? You guessed it, the American taxpayer. Get ready for the next wave of QE, the next wave of money printing. QE to infinity continues.
.......Written by Nathan McDonald for Sprott Money
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Most of the kids or parents I talk to admit that they owe a lot more than that. Most of the are over 100k and some over 300k. Two of the work at Enterprise and live at home. Not sure how they will ever pay this back or get married etc.
This is criminal.
I wonder if the student loan fiasco is the same as when I signed up. Here's two examples of my experience.
Late 80's, UC Irvine: got my application in that summer, approved, everything ok, paid tuition & fees out of pocket, signed up for 20 units. The money didn't show up. I got through the quarter with all A's, borrowing from friends, living on top ramen, working part-time, visiting the financial aid office every day. "Nope, not yet, sorry." FML. The money finally showed up 2nd week of February. I deposited it in the bank, paid off all of my long-suffering friends, canceled all of my classes for 2nd quarter for a full refund and went to work full time. WTF.
~1990 UC Davis: application approved that summer, everything looks good. Got a call on Friday first week of class - the bank needed my signature on a new form by 5pm that day, or else the loan wouldn't go through. Had to skip class & drive to downtown Oakland (~200 miles round trip) on a moment's notice during rush hour to sign a piece of paper. WTF. Lucky I had a car & gas money.
Mmmmmmmy attitude since then has been rather sort of, "Oh hey, fuck these guys."
The current petition on the WH website calls for Obama to forgive all student debt, public and private.
If you need any further proof that his worshipers believe he has unlimited power, the fact that they think he can abnegate private contracts ought to do it for you.
Don't worry: Common Core will render all students too stupid to qualify for college.
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Smart enough to graduate but not smart enough to pay it off? I think they need to get a refund...
"Man is born to live, not to prepare for life." Pasternak, Dr. Zhivago
So everyone is bought-in to the big white collar lie; that the best deal you can find for yourself in this world is a cubicle-bound, rent-seeking 'knowledge' type of job. And the endless extensive preparation for these kinds of employment demands expensive years of 'education' at a university that is structured and scheduled along the lines of a medieval monastery.
Assume everything goes well, your 28 years old and 'voila' there you are in your precious cubicle, getting your paycheck and benefits. You still don't actually own anything. The corporation which owns you starts wanting to offload you almost as soon as you start. It's DEAD END CITY. No wonder so many americans are hooked to drugs and alcohol.
Meanwhile, away from the stifling confines of the ivery tower, the world and the landscape are crying out for MAKERS, PRODUCERS. The outlook has NEVER been brighter for farmers, mechanics, designers, builders of USEFUL stuff. The corporate boxes are rotting all around us, now is the time for bright alive laughing young people to make build dream.
Average student loan is about same as average savings at time of retirement. Both college loan Ponzi and preparedness for retirement are facing major problems as well as public and private pensions not meeting growth assumptions. Either face reality or print, print, print until a Black Swan appears.
The longer You stay in school the less intelegent You become.
I think inntelegent has two Ns
Common Core says you can use as many "n"s as you feel right in doing...
My sister in Michigan has just been told the rest of the year (mid-March and on) is to be spent teaching students to pass the Common Core test. She is in a K-8th grade public school. Forget regular curriculum goals, it’s all about the test. She is furious at the impact this will have on students, and she protested, but was told 'don't shoot the messenger'. Is it any wonder so many students graduate without a good foundation?
The whole "standardized test" industry is a corruption bloated boondoggle. THIS MUST END!!! NOW!!!
Coaching and prepping for "the test" is not learning. Studies have shown for years that this type of learning is forgotten quickly. Basing teacher pay on "the test" is where we are at. Fucked.
$30k debt upon graduation? Should not be a problem with the millions of new jobs being created....
Get a McD job, obtain a sub-prime home loan, HELOC that treasure trove, use funds to pay for the BA in Training H-1B Techs, declare Ch.7
Da Gubamint subsidizes the commies in their unaccountable white tower perchs. What could go wrong?
Indoctrination camps where the Marxists fill your kid's heads with crap.
I wonder how many Feminist Studies Majors default and put the cost of their marxist indoctrination onto the backs of the taypayers?
Student loans, car loans , and now even subprime loans are back ... all out of control lending. Add that to one of the dumbest and most obese citizenry on the planet and it could turn out much worse then they expect with zero growth and more then one more QE. Problem is, QE's only help bankers and a select group on Wall Street, and does very little for the Middle Class private sector so I suspect we'll continue to have negative GDP in real terms for a long time.
That "obese citizenry" is going to be very hungry one day. Best not let your muscles show when that time comes around. You will be seen as walking protein.
Slavery without chains or whips. America what have you become?
Instead of freeing the slaves, Lincoln enslaved the free?
Pretty much put everyone on Uncle's plantation.
The loans are a symptom of an out of control education industry that only cares about filling seats and collecting the cash. College should only be for those that have the smarts and talent to be there but since the industry wants to admit any and all to keep the golden goose alive, and fill your brain with propaganda mush, a degree is now a joke. We keep shoveling money to the same people who brought us this failed system hoping for better results. If it keeps going the way it is the standards for getting into college will be so low even a dog could get in. Until we cut the cash and put better heads in charge, you know people who live in the real world not in the secluded ivory tower of academia where ideas and debate trump plain talk and reality, the system will never improve. Most of the grads get a decent job but we're supposed to give them a free ride so they can take that 28 grand and buy a Bimmer or Tesla instead of an Impala? Start giving loan forgiveness and the amount and size of the loans will increase as even the most stupid will see what a great deal they will get as they flunk out spending the money on parties and junk. Bankruptcy papers will be passed around like candy and on graduation or expulsion day they will be filed. Every single student will file for bankruptcy.
"....degree is now a joke"
"Most of the grads get a decent job........"
What????
well...its about time I got some benefit from all this QE nonsense.
Hallelejuah !11111
Robert Durst did it. He's worth $100,000,000. LOL
We are the victims.
Use credit card skimmers and get yours.
All of us being rich is built in. Take it.
If I have to choose between sending 12 trillon to the Jews of Wall Street for abysmal failure, to save their sorry asses from bankruptcy and worse, and having student debt of 1 trillion forgiven, there is no contest.
Like wise reimbursing the Social Security fund, and MEdicare, that been used by the Democrats' for 40 years to pay for their great society, exacerbated by republicans with no guts to call them on it.
Until the human beans are at least given as much as the Wall Street primary dealers, there is no reason to oppose so-called taxpayer bailouts of any kind.
It's just unfortunate that what passes for education of the higher sort in this country is for the most part a 5 yr or more vacation for 90% of the children of the masses.
It's not a taxpayer bailout. The banks aren't going to bail out the human beans who can't pay back there loans. The banks will be made whole and taxpaying human beings pay the price whether it's increased or reallocated taxes...or by dealing with the consequences of fiat dollar expansion.
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- Money Rules all Men's lives.
- Bailouts are Corruption
- People that want to help you are taking your money or country or sovereignty
- US Bankruptcy Rate is 50% if you live to 85 years old
- Most Federal Activity is an Intelligence Operation against citizens
- We don't need Federal Secrets except for about Weapons
- Money & Gift Giving in Politics, Universities, Justices is Hugely Corruptive
- There is a Free-For-All Fight going on for Federal Money, it is all going to the Elite, except for Welfare Programs
- Federal .gov is self perpetuating Machine, build small empires
- Loss of Justice, No Bench Marks, No Simplification, No Streamlining, In Court, the Wealthy win with money and resources, We need Laws that are indelible, permanent, and affordable to the common people, the poor must stand a Chance against the Wealthy, Benchmarks in Court Judgements is the Way to preserve the Poor and Middle Class in Civil Cases
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Bail-Outs are Corruption -
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All bailouts benefit the corporations that were bad Capitalists.
Kapitalismus Totet oder Toten.
Capitalism where Corporations and Banks are Protected is probably an old Europe thing that just came to the USA in 2009. But it is not Capitalism.
It is Fascism, Inverted Totalitarianism, or Corporate Socialism.
Bailouts are for the Elites. Start a business you are a target of the Banks and Wall Street. You don't get a Bailout.
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Bail-Outs are Corruption -
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Spend all that money just to get dumber, good going US.
what we need is public-supported free-tuition community colleges
It's not student debt that will cause more QE but total debt. Explained perfectly here. Starts slow but a great read:
http://debtcrash.report/entry/history-and-introduction
All his posts are good
Good article but the major flaw I see in that negative interest solution is when other countries dump the dollar completely and possibly cut the US out of CIPS (which will likely replace SWIFT)......then no matter what currency you create it still lacks market confidence. Electronic currencies are coming soon but I doubt the US will get away from all its debt without any repercussions.
We already have it - the Internet. What is the point of building multi million dollar brick and mortar campuses so that we can pay $50,000 +++ per year to send a kid to watch a lecturer on a screen. Let them watch it in the parent's basement where they will end up living anyway. The overall structure of higher education totally ignores today's technology. Great for the teachers and admin people - doesn't make sense for the students or the parents trying to fund it.
This is part of the answer. Kids need real experiences too. Go to businesses. Real businesses where things are made, and that are profitable. See how things are done. Go to some farms. See how they work. Do real world internships at these kinds of places. They will learn more this way than in a classroom, most of the time. But we can't accelerate this until there is accountability, and there won't be that til we expose the FED, and end this farce.
What we need is to quit teaching garbage in K-12 and give kids real skills instead of keeping them in school from age 3 to 18 and have them graduate with none. Go to school for 15 years to quote some dead authors or debate the merits of Snoopy Vs Dilbert but have no real skills for a job. In the current system every child is left behind. The whole system is a money pit of wasted resources and we're sacrificing our kids mental and physical health to an industry that politicians and so called intelligent people refuse to challenge. The ones that do challenge the real issues, not the crazy ones, are ridiculed and belittled and get no support.
everytime this topic comes up, i post this:
http://www.amazon.com/Free-Learn-Unleashing-Instinct-Self-Reliant/dp/046...
Its clear what is going on. very productive admin