<p>For the first time on record, the delinquency rate on student loans has jumped above the rate for credit cards, car loans, or any other kind of consumer loan. The tragedy? Many of those loans will default, with stunningly harsh consequences.</p>
<p>See: The</a> Needless Tragedy of Student Loan Defaults - Businessweek</p>
<p>I have railed against high student loan debt for undergraduate studies for years! Hopefully, people will take this problem seriously.</p>
<p>Taxguy,
That article stresses how “needless” the default rate is. Did you read it?</p>
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<p>These are scofflaw students who take advantage of the system, leaving you and me to pay for them. I do not feel sorry for them.</p>
<p>Bay, sorry don’t agree. If they are legally allowed to utilize these strategies, they aren’t “scofflaws.” Frankly a promise is a promise. These kids/families promised to pay back the loan. I see nothing wrong with doing what they can within the law to pay back the loan . I do agree with some basic issues in the article, to wit:</p>
<ol>
<li><p>Student loan debt is a catastrophe waiting to happen. It will probably be the next major economic melt down.</p></li>
<li><p>The consequences of defaulting on student loans are very bad.</p></li>
<li><p>Students should try to do what they can not to default, even if that means joining the military or spreading the loan out over more time, as much as I don’t like the latter choice.</p></li>
</ol>
<p>I think that Bay means that those who don’t bother to seek deferments or repayment plans but just default are the scofflaws. Of course many of these students are also carrying excessive private school loans which makes it impossible for them to manage the total load no matter how flexible the feds are.</p>
<p>from the article</p>
<p>"… Also, research shows that many borrowers consider their student loans illegitimate and don’t feel they should have to pay them back. In fact, default rates are four times as high for dropouts, who presumably feel they didn’t get their money’s worth…"</p>
<p>wonderful</p>
<p>Yes, MommaJ is right, I was referring to the defaulting students as ‘scofflaws.’</p>
<p>I am not opposed to student loan debt or debt in general, so long as consumers manage it properly. Borrowing is the only way that many (or most) people can make important improvements to their lives.</p>
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<p>I wonder why the writer made this assumption. If they dropped out, most likely their earning potential is much lower and they have less means to repay the loans. This seems like a more plausible explanation.</p>
<p>We need to push Congress to crack down on the less reputable for-profits that pressure students to take on too much private student loan debt. So far, the US House has obstructed efforts to deal with the problem.</p>
<p>Way too many federal dollars are being wasted by those institutions, which could go to more cost-effective education. lThose for-profits typically have ridiculously low graduation rates. Those rip-off artists often spend all of their money on marketing to attract new students, and almost none on career counseling or job placement. </p>
<p>The Wall Street Journal yesterday had a feature front page article on students with huge loan debts but no degree. </p>
<p>Many students with high debt from the less reputable for profits are also amazed to find out that many other colleges will not accept the credits that they already paid for.</p>
<p>
Maybe he has interviewed or at least spoken to some of these people. As a tax advisor, in a city where I see the full range of clients form upper-middle class to dirt poor, I know some of these scofflaws. They do this with student loans and judgements for child support, among other things. Some of them are able to work, and could find work if they wanted, but instead choose not to work (or work under the table). One particular one owes thousands in back child support and student loans. He lives with his girlfriend, and their 2 kids, and stays at home watching the kids. They don’t get married because then the IRS would take her tax refund to pay his back loans and child support, and the state and feds would garnish his wages.</p>
<p>I can live with those who take advantage of the system as it is designed, but those who default really ARE scofflaws.</p>
<p>I have warned many lower income clients away from for-profit schools for their kids, who think it’s the only option because they didn’t do well in HS, but want to go into a trade. We have a few good local for-profits, but even those are hardly worth the price. I expect to see the number of students at those schools drop once the American Opportunity Credit goes sunsets.</p>
<p>hard to pay back your loan when there aren’t any jobs</p>
<p>I know someone who, as an adult, went back to school to get her bachelor’s degree. She took out a lot of student loans. As soon as she was supposed to start paying them back, she started grad school. She is deferring them and taking out more loans. She told me she intends to continue this trend and get multiple degrees so that she never has to pay them back. She and her husband make good money together. Oh wait. They divorced but still live together in the same household and have the same relationship, but she could get more aid and loans if they were divorced. She’s just working the system. This is a scoffaw.</p>