Everyone has their own bucket of money and they decide how to spend it.
Some people borrow money to put in their bucket and spend it on college educations. They decide they are going to spend part of their future bucket of money up front on education.
Then they get a job. They now have to use part of that money on their loan. They have already contributed to the economy by buying their education.
They will have to buy a smaller house or not buy a car etc. because they have already purchased something else in the past.
My point is that college educations are also part of the economy. They are purchased.
We all get to buy what we want. But we all have to pay for those things too.
Want more money to spend on other things? Don’t borrow so much for school.
For those of us describing the good old days of 7% interest, it’s important to note that back then, it was possible to discharge student loan debt in bankruptcy; not anymore, as it is specifically exempted. Back then, the news cycle revolved around physicians who financed their educations with students loans and then declared bankruptcy. It was always amusing to watch the “gotcha” interviews with the doc driving the BMW.
There were other professions involved in this financial dine and dash, but physicians caught most of the heat since they had most of the debt. And no doubt very few student debtors sought bankruptcy protection, but it made for good TV and wonderfully outraged editorials.
So whether it’s right or wrong, the students mentioned in this article would have been eligible to file bankruptcy back in the good old days.
< College-educated students make more money and compete more effectively internationally. >
This is a myth !!! Somebody made an interesting analogy: If one stands up in a movie theater, he will see better. However, if everyone stands up, most will not see a movie.
Imagine that everyone went to college and got medical degree. Do we need that many doctors? Would they find jobs?
Our recent secretary has a law degree! The secretary, who works in our office for 20+ years, has GED , and she has more than enough skills to do her work. You really don’t need law degree to become a secretary.
If College-educated students make more money, why can’t they pay off $30K debt? Because they do NOT make more money. We replace middle-class employees with high school diplomas (previous generation) by middle-class employees with college degrees (millenials). Next step is to expect advanced degrees from all entry level employees. There is not enough jobs to accommodate all these college grads. The job market is not big enough. If everyone would get college degree … some will still work in Wal-Mart at minimal wage jobs.
Do you want to live in a society, where to need college degree to get minimal wage job at Wal-Mart?
All student loans were subject to being discharged in bankruptcy until the mid 70s (not sure how far back people consider the “good old days”). There have been some limits on that since. Trend of those limitations has been against the student debtor though.
ABSOLUTE MAJORITY of whom have never had a paycheck in their lives! Many of these teens never had credit cards or bank accounts. It is like a free party for teenagers.
I am not an economist. I don’t understand, how could an economy spend, spend, spend, if it is not producing something, in the first place? If you just print money, and cycle them, you have an inflation, not an economic growth. Again, I am not an economist.
What will all these “service providers” with college degrees produce? They would not work in agriculture. There is little manufacturing left. Where is the original product, that everyone will be redistributing?
Why don’t services have value? The US is second in the world in terms of dollar value of manufacturing output (which doesn’t seem to bad for a country we often hear “doesn’t make anything anymore”). Just that we do so with a lot less manpower than in the past.
I would love to see the data that the absolute majority of teenagers who get student loans have never had a paycheck in their lives.
I know very few teenagers who go off to college who have not had paid employment along the way. I think you guys live in a bubble where it’s easier for mom and dad to hand their kids $20 bills than insist on employment. My kids had jobs (and no loans… so theoretically we could “afford” not to have them work in HS) because part of growing up is answering to a boss, being on time, having to deal with the public, and punching in and out at the end of a shift.
[quote:The US is second in the world in terms of dollar value of manufacturing output (which doesn’t seem to bad for a country we often hear "doesn’t make anything anymore]
[QUOTE]
: The US is second in the world in terms of dollar value of manufacturing output (which doesn’t seem to bad for a country we often hear "doesn’t make anything anymore
What is USA manufacturing? I can hardly find anything in the stores that is “made in USA”. Military equipment, probably. It is very expensive, and very, very good - it is exported all over the world. What else?
This isn’t only a problem for young people. It is a problem for older people who wish to sell their houses. They need someone who can buy them when they are ready to cash out.
In fact, this applies to consumerism generally. The messages that bombard us to spend are driven by others’ desire for our money, generally without any interest in OUR long term well-being. This is why America has a severe problem with indebtedness and absence of savings. One of the most important things to know no one will tell you - because it is in THEIR interest that you stay ignorant, beguilable by their mousetraps. BUYERS BEWARE!
or
Fabricated Metal Products
Medical Equipment, Sporting Goods & Miscellaneous
Primary Metal
Food
Petroleum and Coal Products
Computer and Electronic Products
Machinery
Chemicals
Transportation Equipment
What is meaningful employment? One of my kids worked nights at a fast food joint. Had a polyester uniform which needed to be clean for each and every shift- so after a late night at work, job 1 was to do laundry. One of my kids was a receptionist in a medical office and was responsible for cleaning up the examining rooms at the end of the day. Also- learning to code for insurance. Also- learning that people in pain can be really, really rude.
Was this to “buff” some college application??? What is “meaningful”? They learned that it is really, really important to be on time when you have a job. You need to follow stupid rules “just because” the boss says so. No, you can’t leave half an hour early because you are meeting friends. Your paycheck won’t be the number of hours you worked times your payscale- FICA? What’s that?
Now that they are adults and “meaningfully employed” in their professional lives, the lessons learned at these menial jobs are really powerful. You can be the big shot in your field with the stellar resume and the fancy colleges but people are still impressed by a colleague who shows up on time.
And guess what- early lessons at handling a cash register-- like learning that if you overcharge a customer $3 and they don’t notice it, you DON’T get to keep the money- and you’ll get “written up” for an overcharge even though it was in the company’s interest to keep the $3-- also powerful.
In my area, teenagers work. They babysit when they are too young for a real job. They walk dogs, they do odd jobs for neighbors. Then some of them “graduate” to being lifeguards and camp counselors, or being cashiers or folding sweaters at Old Navy (always something to fold at Old Navy).
I’d love to see your source California that the “majority” of kids taking out student loans have never had a paycheck. Cite your source. If you live in a town which is affluent enough so that teenagers don’t work all summer- bravo. But that doesn’t make your community typical.
If the parent plus loans go away maybe it will drive down the price of tuition. At least at public universities for in-state students. I really wish the price of yearly tuition at public universities matched the amount of the pell grant. That way low-income and full pay students would always have an affordable option.
"If the parent plus loans go away maybe it will drive down the price of tuition."This is assuming the student loans are driving the rising of tuition & fees.
@twoinanddone Did Governor O’Malley pay back his loans for his children? As far as I know, he hasn’t defaulted on any of his loans . Why is it a problem that he took out student loans to allow his children to attend the schools of their choice when thousands of others do the same thing every year ? Is it because he’s in public office? His salary paid for his loans just like anyone else who is employed. I’m not sure why this is such a sore spot for many people .
