Student loan debt is over $1.6 trillion and hardly anyone is paying down their loans (CNBC)

[bronxiteforever]

Student loan debt is over $1.6 trillion and hardly anyone is paying down their loans
PUBLISHED THU, JAN 16 20201:17 PM EST
By Jeff Cox

The rapid increase of student has slowed over the past few years, but individual borrower balances aren’t going down mostly because hardly anybody is paying down their loans.

Total indebtedness over the past year or so has stopped its meteoric rise, according to a study that Moody’s Investors Service released Thursday. Nevertheless, the study showed a number of factors are constraining borrowers from lightening their loads. Outstanding loans total more than $1.6 trillion, more than doubling over the last decade and tripling since 2006.

Since the explosion of student debt following the Great Recession, annual repayment rates, or the amount of existing balances lowered, have been just 3%, Moody’s said. Just 51% of borrowers whose took out loans from 2010-12 have made any progress at all in paying down their debt.

“Increased reliance on student debt crowds out an individual’s access to other forms of household credit, which likely delays business formation and homeownership, important drivers of economic growth and wealth creation,”...In the meantime, the burden of student loans continues to be felt with an 11% default rate that is the highest of any debt category. Education also is now second only to mortgages as the highest form of debt for all Americans.
More here

https://www.cnbc.com/2020/01/16/student-loan-debt-is-over-1point6-trillion-and-balances-arent-going-down.html

[Warpy]

1. All that debt is being laundered into "investment instruments."

Meet the new crash, just like the old crash.

When they shovel wealth to the already rich and unlimited credit to everybody else to compensate for the loss, crashes are inevitable. The problem is that nobody has ever been able to nail the timing down all that well.

[Farmer-Rick]

2. It's because of compounded interest.

The original price of the loan has been paid off years ago but the ever accumulating interest, interest on interest some as high as 10%, keeps growing so that unless they win they lottery, student will never be able to ever pay off their ballooning debt.

We give banks negative interest rates but our students we compound and compound and compound their loans growing by leaps and bounds even if they are attending grad school or other programs. A student who borrows $10,000 and defers their loan for 5 years will owe over $16,105‬ when they get out of grad school.

This is no way to get an educated populace.

[MichMan]

3. As I recall the federal student loan program was part of the ACA legislation

The payments were supposed to offset the cost of the ACA to ensure it was under 1 trillion.

Never made any sense to me what student loans had to do with a health care bill

[progree]

4. I sure would like a link to that -- I read the book on the ACA

"Landmark: The Inside Story of America's New Health Care Law and What It Means for Us All" and they listed all the new sources of revenues / taxes to pay for it, and there was nothing like student loans mentioned.

The student loan myth was originated by right-wing greedbangers
https://www.factcheck.org/2014/10/student-loan-stretching/

[bronxiteforever]

5. +1000 exactly. Right wing talking point.