US student debt impact likened to subprime crisis

[alp227]

Source: Financial Times

US university students and graduates are facing a double whammy of ballooning debt loads and high unemployment, raising worries that a potential delinquency crisis could bleed into the wider economy.

Student debt has increased nearly sevenfold from $80bn in 1999 to $550bn at the end of June 2011, according to the Federal Reserve Bank of New York. Other estimates from the Department of Education put outstanding student loans as high as $805bn.

But the unemployment rate for 20- to 24-year-olds is nearly 15 per cent – higher than the overall 9.1 per cent rate – compromising the ability of graduates to pay off their growing debts.

Student loan delinquencies have risen from 6.5 per cent in 2003 to 11.2 per cent in June 2011, nearly as high as the 12.2 per cent rate on credit cards.

Read more: http://www.ft.com/cms/s/0/6ae7dfc4-ef78-11e0-941e-00144feab49a.html

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Google the title for full article.

[bluestateguy]

1. Much of this is driven by the sleazebag for profit schools

Whose students graduate right into unemployment or burger flipping jobs, tens of thousands in debt. And then the school CEO, administrators and investors laugh all the way to the bank, largely on our money. Student loans, much of which won't be repaid, make it possible for these schools enrollment to grow and grow.

[badtoworse]

3. So it's the school's fault if you decide to major in something for which there are no jobs?

And what makes a school "sleazebag"? What is wrong with being for profit?

[bluestateguy]

5. There are places where the profit motive does not belong

Education is one of them. Just like we don't have for profit police departments and for profit fire departments.

I would add health care to that to.

For profit is fine for making cars, furniture, electronics, clothing, and construction. Just not education.

As for the majors question, that is always dicey and impossible to predict. A few years back people were told that there would be many jobs in pharmacy. As it turned out there were not. Back in the early 90's we were told that academia would be chock full of new jobs as baby boomer professors retired. So go get a Ph.D! That windfall too, never materialized. Who knows how the market will change as the years go by or even from the time you start school to the time you graduate? These for profit schools are just taking advantage of people, and it is our tax dollars that are paying for it because those loans are federally guaranteed.

[XemaSab]

6. Here:

http://www.nytimes.com/2007/02/11/education/11phoenix.html?pagewanted=all

[banned from Kos]

7. There are diploma mills like Phoenix University that prey on

students that no one else will take. They aggressively recruit, set up the loan, provide a lesser education (often on-line) and leave the student with a lot of debt.

[girl gone mad]

8. Yes, in many cases it is the school's fault.

They make false promises about post-graduation employment prospects. They also often lie to students about the nature of the student loans they are signing on to.

Some of these schools need to be shut down.

[SammyWinstonJack]

9. You think higher education should be For Profit? Do you also think that health care should be

For Profit?

[glinda]

2. There are people in their 50's-60's still trying to pay off their loans. Add that in.

[woo me with science]

4. Strong K&R nt