Student Loans now Relegate Graduates to Lower Standard of Living

http://www.mlive.com/lansing-news/index.ssf/2014/05/student_loan_debt_makes_gradua.html

The average household net worth for a young college graduate with student loan debt is only $8,700,while graduates without student loan debt have an average seven times higher,a new Pew Research report shows.

The report looks at households headed by a college graduate under age 40 and finds that households with student loan debt also tended to owe an average of $137,000,almost twice as much debt overall as households without student loan debt.

"Specifically,student debtor households are accumulating less wealth, in part,because they tend to owe relatively large amounts of other debt as well,from car loans to credit card debt," senior economist Richard Fry wrote.

Household incomes are roughly the same for college graduates, whether they borrowed or not,the Pew report states.

The relatively low net worth of households with student loan debt poses additional challenges in the event of financial hardship,the report argues,because it limits the options available for young adults.

"About 4-in-10 college-educated student debtors possess total debts exceeding the value of their assets,hence asset liquidation will not entirely meet their outstanding debts in the event of job losses and other unforeseen economic shocks," the report states.

A recent analysis by economic researchers with the Federal Reserve Bank of New York found home ownership rates for young college graduates are extremely low,and the Pew report finds that even graduates who do manage to buy a home aren't doing well.

"A minority of young adult households own their primary residence. But,when they do,student debtors are more likely than households without student debt to be 'underwater,' i.e.,the outstanding mortgage balance as well as other loans secured by the primary residence exceeds the value of the residence," the Pew report states. "For example,21 percent of college-educated student debtors are underwater on their primary residence,compared with 11 percent lacking student debt."

Since 2001,the median debt-to-income ratio for young households headed by a college graduate has grown from 108.3 percent to 204.6 percent in 2010,the last year for which data is available.

The ratio represents the percentage of annual income that would be necessary to pay off a household's entire debts.

Idiots refuse to work during college.

Kids don't understand how much that student loan bought pizza and beer is going to cost them in the long run.

The price of higher education is out of control. The best and brightest are being saddled with enormous debt.

There's a price to be paid for society as a whole by this trend. It will economically steer education and then occupations.

http://mobile.nytimes.com/2014/05/19/education/study-links-growth-in-student-debt-to-pay-for-university-presidents.html?_r=0&referrer=

http://www.kansascity.com/2014/05/16/5023657/interest-rates-rising-on-federal.html

http://m.nydailynews.com/news/national/americans-owe-1-2-trillion-student-loans-article-1.1796606

Americans owe $1.2 trillion in student loan debt, a number that has tripled in the last decade. New York State residents hold $60 billion of that debt, and college grads in the state owe on average $27,310 in student loans, according to the Federal Reserve Bank of New York.

Student loans have passed credit cards and auto loans to become the second biggest source of personal debt in the U.S., trailing only mortgages.

Sorry m, but the costs are high because these kids have to have that college experience of staying in dorms, parting et al. Grad classes at UWF are 1100 per class. Undergrad is much more affordable. They should work to pay some of their expenses up front. They charge it all, every freaking dollar trying to maintain a lifestyle mom and dad provided for them. SPOILED.

Too many kids aren't even college material either. Many should be going the technical school route or military instead of warming a seat at college.

There's a local college, Virginia College, charging more in tuition for a registered medical assistant job than I am paying for my grad degree from UWF.

That's asinine.

Student loans, grants and other giveaways have been made far to easy to obtain. Not at all unlike the loans being made that led up to the housing/mortgage/financial crash in 2008.

I was able to work my way through the University of Miami working full time, going to school full time and having zero social life except some in the summer. I also got a little lucky. Loans were almost unheard of at the time. With the cost of public and especially private colleges, I doubt I could do it today.

With loans, grants and other means available, schools have been able to radically increase their tuition and still have more applications than places.

SOME of the students are also getting themselves into schools where the resulting degree or jobs available are low paying or non-existent. That's not the fault of the school but rather the lack of foresight on behalf of the student/borrower.

This happens to be an area that Elizabeth Warren is addressing. I also worked part-time every semester and full-time every summer, and I was able to pay my tuition and books while still living at home. Those days are gone.

This is creating a bubble... just like easy loans for housing did. It would be nice if we starting recognizing patterns again.

Floridatexan wrote:
This happens to be an area that Elizabeth Warren is addressing.  I also worked part-time every semester and full-time every summer, and I was able to pay my tuition and books while still living at home.  Those days are gone.

Exactly how is Elizabeth Warren addressing the issue. Promising to pay those bills with taxpayer money thus exacerbating the problem?

http://www.masslive.com/politics/index.ssf/2014/05/sen_elizabeth_warren_introduci.html

WASHINGTON — U.S. Sen. Elizabeth Warren is introducing legislation in the Senate on Tuesday that tackles two of her policy priorities - college debt and the tax rate paid by the wealthy.

Warren, a Massachusetts Democrat, is poised to introduce a bill which, in part, would allow people holding student loans financed at rates higher than today's interest rate to refinance those loans, similar to the way one refinances a home mortgage or car loan.

"When interest rates drop, people can refinance their home, they can refinance their business debt. It's regarded as a smart move for any consumer or business. But student borrowers are prohibited from doing that under most programs," Warren told MassLive.com. "This bill says we're going to change that and let them refinance that down to current low rates."

Warren said the measure, which would also allow those with privately held student loan debt to refinance their debt under the Federal Direct Loan program, equals savings for the consumer, which would be funneled back into the economy. It would also take a crack at the statistic showing that one in seven borrowers defaults on their student loans within three years of beginning repayment.

"There are more than 40 million people currently dealing with student loan debt. When their interest rates are cut, many will save hundreds of dollars a month and many more will save thousands of dollars a month," Warren said. "That's money they can use to build an economic future and to strengthen the economy."

Warren pointed to a report released by the Government Accountability Office in January which determined that based on the loans issued between 2007 and 2012, the federal government stood to profit to the tune of $66 billion from the interest. In her eyes, the government profiting to that degree off the backs of people trying to better themselves is "just plain wrong."


"This is $66 billion on just the loans issued during that period. That is insane," Warren said. "This (bill) brings that down. Instead of taxing students who can't afford to pay for college up front, it says we are investing in those students."

But since cutting something that has generated such a huge profit over just five years will place a hole in the already-stretched federal budget, Warren is proposing a solution, albeit one that is bound to be viewed as being as political as it is practical.

Warren is proposing the government make up the anticipated shortfall by enacting the so-called Buffett Rule, which is derived from a statement made by billionaire Warren Buffett, who suggested that he shouldn't be taxed at a lower rate than his secretary.

Enacting the Buffett Rule, which Republicans in the Senate voted to kill in 2012 calling it a "political stunt," would increase the income tax rate of Americans earning more than $1 million annually. The money generated through that move, according to Warren, would make the difference and send a message about the nation's "values."

"The act covers the full budgetary cost of refinancing by implementing the Buffett Rule. Basically, the way I see it, there are billions of dollars here that flow out of the U.S. Treasury to a tax loophole, that are available to millionaires and billionaires. This bill says to use that money to reduce the interest rate on student loans," Warren said. "So it's a pretty direct choice - should America be investing billions of dollars in tax loopholes for billionaires or investing that money to help young people who are trying to get an education? I think spending should be consistent with our values."

When asked if the political nature of how the mass refinancing would be paid for hurts the bill's chances of becoming law, Warren said that she crafted it using the same interest rates Republicans voted to approve in the summer of 2013, so a choice would have to be made.

"I start with the fact that nearly all of the Republicans voted to reduce the interest rate on new loans last summer. This bill picks up exactly the same (interest rate) numbers they voted for and says let's use this to refinance all loans. The Republicans have already voted to say an interest rate above the current lending rate is too high, so what about the $1.2 trillion that is outstanding?" Warren said. "If the Republicans feel like it's more important to keep the tax loopholes open, then they are making their values very clear, and that will be a sharp difference between the two parties."

---------------------

Yup just another government generated bubble like the housing bubble only these loans are collected by federal SWAT teams.

What we're seeing from obama is gimmickry... the real issue is the skyrocketing cost of college.

http://m.huffpost.com/us/entry/5315840

The problem has been around at least a decade, but the bankruptcy reform act created indentured servants. If student loans were mostly dischargeable, real interest rates would apply and the risk would properly be shifted. This is a complete subsidy for colleges which have popped up in the last twenty years and are for profit organizations. It is a racket which would make the mob blush.

Floridatexan wrote:
http://www.masslive.com/politics/index.ssf/2014/05/sen_elizabeth_warren_introduci.html

WASHINGTON — U.S. Sen. Elizabeth Warren is introducing legislation in the Senate on Tuesday that tackles two of her policy priorities - college debt and the tax rate paid by the wealthy.
---------------------

This is what I asked, NOT KNOWING how you respond. Your response was EXACTLY what I said it would be. No solution, just SPEND MORE OF OTHER PEOPLES MONEY.

To remind you, without you having to go to another page, here is my statement.
"Exactly how is Elizabeth Warren addressing the issue. Promising to pay those bills with taxpayer money thus exacerbating the problem?"




You only had to post this much of the rant from Sen. Warren.  What do you expect?  She is a proven liar and a Socialist.  What else would you expect?  Punish the TAX PAYERS and REWARD THE TAX RECEIVERS.

I asked for a solution that is a solution and NOT merely TAKING MORE TAXPAYER MONEY.

I knew you could not provide a solution, you proved me RIGHT as did Sen. Warren.

THANK YOU!

I edited the rest of her rant here because all she had to say was in the first line of the article. Which is what I predicted.

http://www.nytimes.com/2012/03/24/opinion/for-profit-education-scams.html?_r=0

EDITORIAL
For-Profit Education Scams

Attorneys general from more than 20 states have joined forces to investigate for-profit colleges that too often saddle students with crippling debt while furnishing them valueless degrees. The investigations have just begun. But it is already clear from testimony before a Senate committee that Congress must do more to rein in the schools and protect students.

For-profit colleges are typically more expensive than public colleges, which means students graduate owing more. They account for nearly half of student loan defaults, even though they enroll a little more than 10 percent of higher education students.

State prosecutors are uncovering unconscionable examples of fraud. Lisa Madigan, the attorney general of Illinois, testified this week that she had recently filed suit against a for-profit school that had saddled individual students with up to $80,000 in loans while promising employment with law enforcement agencies that do not recognize the school’s credentials as valid.

Jack Conway, the attorney general of Kentucky who leads the multistate group, has identified two schools that went bankrupt, leaving students with loads of debt and worthless credits and still on the hook for those outstanding loans.

A bill introduced by Senator Richard Durbin, a Democrat of Illinois, would permit students to discharge their private student loans when they declare bankruptcy. Congress should also allow borrowers to have their private loans discharged when a school closes, preventing completion of the degree. (The federal loan program already allows this.) Lastly, Congress should require private lenders to make every effort to see whether students are eligible for affordable federal loans before trying to sell them more expensive private loans.

---------------------------

Floridatexan wrote:
http://www.nytimes.com/2012/03/24/opinion/for-profit-education-scams.html?_r=0

EDITORIAL
For-Profit Education Scams

---------------------------

So they spend whatever they want, graduate, declare bankruptcy and TAXPAYERS pick up the bill.

Always the same, when progressive sees a problem, the solution is ALWAYS SPEND MORE TAXPAYERS MONEY.

So they spend whatever they want, graduate, declare bankruptcy and TAXPAYERS pick up the bill.

Always the same, when progressive sees a problem, the solution is ALWAYS SPEND MORE TAXPAYERS MONEY.



Ok, we have learned that you have trouble with some conceptual issues. I am always here to help you. First, when a person files bankruptcy on a car loan, please tell me how the secured note holder has the taxpayers paying the deficiency when the repossessed vehicle is sold? That is an absurd lack of knowledge on how personal loans are made. Now with loans guaranteed by the government, we most certainly do have exposure with those guarantees......You know the 85 billion a year of loan guarantees for banks too big to fail.

The concept which you miss is that when I talk about discharge of a portion of the loans, I am talking about limiting the guarantees. Those amounts over the guarantee are now subject to market forces in both interest setting and collections. Private colleges across America will close in five years once these policies are adopted.

Now in regard to your attack on Warren. You seem to have no problem on the big banks getting subsidy at a half point cost of money and lending the same to students at four and five percent. She is talking about gutting the subsidy and giving direct loans. Direct loans from the government like SBA loans are not dischargeable in bankruptcy. So if you have some questions in your confusion, I will certainly assist you. I just am always here to lend a hand if somebody stumbles a little bit.

2seaoat wrote:So they spend whatever they want, graduate, declare bankruptcy and TAXPAYERS pick up the bill.

Always the same, when progressive sees a problem, the solution is ALWAYS SPEND MORE TAXPAYERS MONEY.



Ok, we have learned that you have trouble with some conceptual issues.  I am always here to help you.  First, when a person files bankruptcy on a car loan, please tell me how the secured note holder has the taxpayers paying the deficiency when the repossessed vehicle is sold?   That is an absurd lack of knowledge on how personal loans are made.  Now with loans guaranteed by the government, we most certainly do have exposure with those guarantees......You know the 85 billion a year of loan guarantees for banks too big to fail.

The concept which you miss is that when I talk about discharge of a portion of the loans, I am talking about limiting the guarantees.  Those amounts over the guarantee are now subject to market forces in both interest setting and collections.  Private colleges across America will close in five years once these policies are adopted.

Now in regard to your attack on Warren.  You seem to have no problem on the big banks getting subsidy at a half point cost of money and lending the same to students at four and five percent.  She is talking about gutting the subsidy and giving direct loans.   Direct loans from the government like SBA loans are not dischargeable in bankruptcy.   So if you have some questions in your confusion, I will certainly assist you.   I just am always here to lend a hand if somebody stumbles a little bit.

As you probably don't know is that the government, Sallie Mae is making all the student loans. They regulate everything. Remember, we were supposed to save so much money by cutting out the "middle man".

As you probably don't know is that the government, Sallie Mae is making all the student loans. They regulate everything. Remember, we were supposed to save so much money by cutting out the "middle man".


I have never agreed with President Obama on Student Loans. I think guaranteed loans should be limited to 10k a year and market forces should set interest rates on any amount above the same. However, that portion of the loan will be dischargable.

I do not think that more kids in college is the answer if the trade off is debt for those students. The President does not get it. In his life experience, he had loans and then a six figure salary.......most kids.... 90% never come close to his income. They become indentured servants. He simply does not get it.