It appears the concept of no consequences is now deeply embedded in the American society. As Student loan debtloads surge ever higher - and opportunities grow ever lower - NBC News reports a rather stunning 24% of Millennials said they expect their loans will ultimately be forgiven, according to study released Wednesday by Junior Achievement and PwC US. That helps to explain why delinquency rates are at record highs - aside from the massive debtloads and no high-paying jobs - as students see bankers rigging every market in the world with little to no consequence, one can only imagine the lessons being learned.
Heavily delinquent student loans hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter.
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NBC explains...
As NBC News reports, [12]
That could be a lot of accumulated debt, considering the average amount of cumulative student debt for undergraduates in the class of 2012 was $26,885, according to a recent Pew Research report. The average debt for 2013 graduates is expected to be even higher.
"It's a scary statistic," said Jack Kosakowski, president of Junior Achievement, which co-sponsored the Ypulse survey. The survey conducted for Junior Achievement, "Millennials & College Planning," did not address why the students thought their loans would be forgiven, and it was the first year the question was included in the survey.
The report also found that 60 percent of millennials surveyed said financial aid is a deciding factor in their school choice and 21 percent said the cost of college was their family's main financial problem.
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Given the following, it is hardly surprising they hope and expect for forgivness... [13]
The following are 18 sobering facts about the unprecedented student loan debt crisis in the United States…
#1 According to the Wall Street Journal, the class of 2014 is “the most indebted ever [14]“…
As college graduates in the Class of 2014 prepare to shift their tassels and accept their diplomas, they leave school with one discouraging distinction: They’re the most indebted class ever.
The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago.
#2 In 1994, less than half of all college graduates left school with student loan debt. Today, it is over 70 percent [14].
#3 Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures [14].
#4 At this point, student loan debt has hit a grand total of 1.2 trillion dollars [15] in the United States. That number has grown by about 84 percent [16] just since 2008.
#5 According to the Pew Research Center [17], nearly four out of every ten U.S. households that are led by someone under the age of 40 is paying off student loan debt right now.
#6 The median net worth of young households that have student loan debt is 20 percent lower [17] than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education.
#7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher [17] than the median net worth of young households that do have student loan debt.
#8 In 2008, approximately 29 million Americans were paying off student loan debts. Today, that number has ballooned to 40 million [16].
#9 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined [14]…
The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.
#10 According to CNN [18], 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.
#11 Even after accounting for inflation, the cost of college tuition increased by 275 percent [19] between 1970 and 2013.
#12 Debt for law school students has risen dramatically over the past decade or so [20]…
J.D.s certainly don’t come cheap. It’s almost unheard of to attend law school without taking out significant loans. What’s more, the average debt load is mounting [21]: in 2001-2002, JDs borrowed on average $46,500 at public law schools and $70,000 at private law schools; by 2011, those numbers rose to $75,700 and $125,000, respectively.
#13 Last year it was being reported that 34.9 percent [22] of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments.
#14 One survey found that 27 percent [23] of those with student loan debt moved back in with their parents after college.
#15 Another survey found that 70 percent of all college graduates [24] wish that they had spent more time preparing for the “real world” while they were still in school.
#16 Student loan debt is causing many young Americans to delay getting married. The following is from a recent NBC News article [15]…
While there is no specific data on student debt-related delays to marriage, a recent study [25] by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men.
#17 Many Americans are not even using most of their student loan money to pay for college. Instead, many are using much of that money to pay bills or stock the fridge [26]…
Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.
…
Tommie Matherne, a 32-year-old married father of five in Billings, Mont., has been going to school since 2010, when he realized the $10 an hour he was making as a mall security guard wasn’t covering his family’s expenses. He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.
“We’ve been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don’t have to worry about food,” says Mr. Matherne, who owes $51,600 in federal loans.
Some students end up going deeper into debt. Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh’s online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable.
“Obviously, it’s better not to use it that way if you can help it, because you’re just going to owe that much more later,” says Ms. Merritt, a former bookkeeper.
#18 Only 28 percent [27] of Americans know that the U.S. government can garnish wages and withhold tax refunds if student loan debts are not repaid.
It should come as no surprise that the delinquency rate on student loan debt in this country is far higher than the delinquency rate on mortgages, auto loans and credit card debt.
This is a financial bubble that gets worse with each passing year, and if we continue on our current course it is going to end very, very badly.
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Now where would they get the idea that forgiveness will happen? [28]
"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation," notes the always astute White House... and so it's time to do something about that... by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the 'easily available' credit is soaring [29] with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama issued an executive action in June aimed at making it easier for young people to avoid trouble repaying student loans [28]. [28]
A Federal Government bailout...?
As Reuters reported, [30]
President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans, a White House official said on Sunday.
The president will sign an order directing the secretary of education to ensure that more students who borrowed federal direct loans be allowed to cap their loan payments at 10% of their monthly incomes, the official said.
Federal law currently allows most students to do this already. The president's order will extend this ability to students who borrowed before October 2007 or those who have not borrowed since October 2011, the official said.
The administration says this action will help up to 5 million more borrowers, although it will not be available until December 2015.
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Welcome to the real world, debt serfs... [31]
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