https://www.bloomberg.com/news/articles/2018-10-19/america-s-student-loan-debt-crisis-deepens
A symptom of the trend of college education’s increasing tendency to be allocated based on parental wealth rather than student academic merit.
When publications roll out the scare numbers, I wish that they would at least clarify that $40% of that debt number ($) is grad/professional school, and, more importantly, its that number that has been growing rapidly. And the obvious reason for that growth is the Grad+ Loan that cover up to COA.
The poor undergrad is still poor, but the undergrad debt per person ain’t growing all that fast since the feds cap how much they can borrow.
Debt for medical school and other health professions contributes to the high cost of health care, including the “need” to charge higher prices and oversell procedures that may not be needed.
That’s an untested/unproven theory. (Not saying I disagree, but it ain’t that simple.) Docs were over-selling procedures back in the dark ages when med schools were a whole lot less than they are today, relatively.
And don’t forget, that some of those six figure loans to health professionals are dischargeable after working at a non-profit hospital for 10 years. (A good friend gradated from Vandy Med with $300k in debt, and worked for a research eye lab for x years and is now interviewing with the VA so she can get her ten years in. Since she got into a top school like Vandy, she had several cheaper alternatives, some with small merit money. But she followed the rules for ‘free’ loan money and the higher-ranked prestige.)
And if parents are foolish enough to cosign mega private loans so their kid can go to their dream school then that is a hole they are digging for themselves.
This situation is much like the housing crisis. Blame falls on both sides. The borrowers and the lenders. The lenders offer too much to the students. The students taken on too much debt. You have to have a plan when that amount of debt is taken on. For the lenders just because you can get the parents to co-sign doesn’t mean it should happen.
^^just to be clear, gpo, the feds is the lender, i.e., us taxpayers. The US guarantees ~90% of all student debt.
Debt is really just shifting around since 2008. Instead of home equity loans, it’s car loans and private student loans. And yes, a student debt crash can throw us into a recession, but the effects would be much more gradual. In fact, we’re already in the first phase. Instead of a housing market crash like 2008, the high debt is simply preventing people from buying houses in the first place, despite low interest rates. This causes a rise in rental prices in high cost areas, and the poor are priced out of the market. Graduates with high student debt can’t move to lower cost areas, because of the inflated student loan balances relatively to the salary. They are forced to rent in high cost areas.
with all due respect, education debt is a small portion of the average family’s debt. See average debt by type of Borrowers.
btw: auto debt is increasing (slope) as fast as education debt. Perhaps we do need Oprah to run: “you get a car, and you get a car, and you…” hahaha