America’s growing student-loan-debt crisis

[marmar]

(MarketWatch) It’s getting harder and harder to graduate college without taking on student loans.

Nearly 70% of bachelor’s degree recipients leave school with debt, according to the White House, and that could have major consequences for the economy. Research indicates that the $1.2 trillion in student loan debt may be preventing Americans,from making the kinds of big purchases that drive economic growth, like house and cars, and reaching other milestones, such as having the ability to save for retirement or move out of mom and dad’s basement.

This student debt crisis has become so huge it’s even captured the attention of presidential candidates who are searching for ways to make college more affordable amid an environment of dwindling state funding for higher education and rising college costs. But meanwhile, the approximately 40 million Americans with student debt have to find ways to manage it.

.....(snip).....

Over the past few decades a variety of factors coalesced to make student debt an almost-universal American experience. For one, state investment in higher education dwindled and colleges made up the difference by raising tuition. At the same time, financial aid hasn’t kept up with tuition growth. In the 1980s, the maximum Pell Grant — the money the federal money gives to low-income students to attend college — covered more than half the cost of a four-year public school, according to The Institute for College Access and Success, a think tank focused on college affordability. Now, it covers less than one-third the cost.

A college degree has also become more necessary than ever to compete in today’s workforce at the same time that Americans’ wages have remained stagnant. That means more students are going to school with less money to pay for it, resulting in an uptick in student debt. ...................(more)

http://www.marketwatch.com/story/americas-growing-student-loan-debt-crisis-2016-01-15

[KingCharlemagne]

1. Of course, we could instead tax the rich to fund free post-secondary education for all. - nt

[librechik]

9. HA HA HA HA HA!!! And how does that help my bottom line?

never mind, the rich don't care what you want their money for. They just want you to go away and die.

[FLPanhandle]

2. As the father of two college age girls, it's sad.

I was the first in my very poor family to go to college, but I was able to do it with a full time job and a couple of work study jobs to pay my way through without debt (back in the early 80's). It was hard, very hard, but doable.

Now, it's impossible to work your way through college. The costs have skyrocketed.

Luckily for my daughters, I am paying for their education and they will finish with a clean slate, but the opportunities for them after college are much less than I had.

Looks like I'm the last generation to live the American Dream and it's sad.

[KentuckyWoman]

3. So basically they'll blame the next "great recession" on college students.

The banks are already doing their best to squeeze blood out of people with student debt. At some point it's not going to possible for people to pay the money back regardless of how much money banks throw at Congress trying to get laws in their favor.

Maybe I'm too optimistic but I'm pretty sure Congress won't agree to round up all the folks owing student debt and ship them all off to Gitmo to be waterboarded until they pay up in blood. So at some point in the not too distant future taxpayers are going to end up on the hook for the loans... because no way do bankers take their own losses.

And I have yet to have a congress critter adequately explain why it's OK for the taxpayer to eat corporate losses but not OK for taxpayers to enjoy the benefits of the profits......

[BlueJazz]

4. The best words of the day! >>

"And I have yet to have a congress critter adequately explain why it's OK for the taxpayer to eat corporate losses but not OK for taxpayers to enjoy the benefits of the profits......"

[eppur_se_muova]

5. "taxpayers are going to end up on the hook for the loans... "

Already happening. My loans were sold from one lender to another for years, and finally sold to ... the Department of Education. So the banks are off the hook, presumably having been paid the full payoff value of the loan. If I never hold a permanent job again (which seems pretty likely, at this point) those who do hold jobs will have paid off those loans through their taxes. Losses are for little people, not banks.

I have no idea when Congress passed legislation authorizing the DOE to buy up defaulted loans, but I can see absolutely no justification for it, other than to enrich lenders.

[Luciferous]

10. My loans have also been bought by the DOE

[CanonRay]

6. I'm sure that all student loan debt will be cancelled

when the market crashes again and the banks have to be bailed out again.

[MissB]

7. My kid has been offered nearly $500k in scholarships.

And he still has a few more schools to hear from, so that total will likely rise. All of his offers so far are full-tuition (or nearly so) and that means we get to cover room/board/books/fees. Several of the full tuition offers may turn to full-rides where everything is paid - we will wait and see what happens in the next couple of months.

For those that have been out of school for a bit, the cost of covering everything but tuition is astounding. The remaining costs at the schools he has been accepted at vary between $15k and $30k per year. One of state flagships is in that mix - and the net price isn't that lowest cost of $15k/year after their scholarship offers.

I should say that he's a top student too- which helps to cover some of the costs certainly. It's weird to have a school offer your kid $47k/year for four years - how awesome that sounds until you realize you're still on the hook for the remaining $18k/year.

Our income puts us in the upper middle class range, so we can afford to take advantage of things like 529 plans, and actually self fund the remaining balances. We've been able to provide our kids with advantages and experiences that many middle class families cannot. I recognize how all-around unfair that is. He's getting the reward of simply being born to us (yeah there is hard work on his part but there is also privilege that I can't deny.)

The one thing that I really like about our state is that this is the first year that we've offered two years of 'free' community college to high school graduates. They still have to pay for books and those not eligible for Pell grants have to pay some fees, but Oregon kids that graduate this year have an affordable path forward. Some will point out that kids can attend certain schools - like the Ivies- for free or nearly free if your family has a low or middle class income. That's true, but that's true really for those kids that are tippy top students too and that are aware those opportunities exist. But for kids across the nation that aren't tippy top students or come from a family with not enough income, the costs of college today are putting them in a position of either massive debt or no higher education. That has to change on a national level.

[librechik]

8. After 25 years, my 190,000 loan was forgiven last year. Guess what?

Apparently this is reported to the IRS as income. For 2015. Only.

Stay tuned for my crazy train of 2015 tax calculations. I'm now on SSDI. How do I pay that off?