Student loans aren't the problem people claim?

[Yossarian]

People have been claiming student loans are harder on recent grads or causing all kinds of problems. Interesting data:

http://www.nytimes.com/2014/06/24/upshot/the-reality-of-student-debt-is-different-from-the-cliches.html?_r=0

Starting From Behind
The Reality of Student Debt Is Different From the Clichés

JUNE 24, 2014

David Leonhardt

The deeply indebted college graduate has become a stock character in the national conversation: the art history major with $50,000 in debt, the underemployed barista with $75,000, the struggling poet with $100,000.

The anecdotes have created the impression that such high levels of student debt are typical. But they’re not. They are outliers, and they’re warping our understanding of bigger economic problems.

In fact, the share of income that young adults are devoting to loan repayment has remained fairly steady over the last two decades, according to data the Brookings Institutions is releasing on Tuesday. Only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000.

“We are certainly not arguing that the state of the American economy and the higher education system is just great,” Matthew Chingos, a Brookings fellow and one of the authors of the new analysis, told me. “But we do think that the data undermine the prevailing sky-is-falling-type narrative around student debt.”

[Lainey]

Interesting - how do they define "young adult households"? Average student loan debt for 2011 grads is $26,600.

Imagine if they could put that monthly fee amount into their retirement savings instead. Of course there are several first world countries where that problem doesn't even exist.

[CeciliaW]

Except of course that they did actually borrow the money and promise to pay it back.

If the degree they got doesn't pay enough to do so the problem is with the college, not the bank, and perhaps them and their advisers.

[iris lilies]

That's very interesting. But if I'm doing the math right, 83% of young adult households have education debt. That's a lot of people with debt, debt that I didn't have when their age. 58% should be able to knock out their debt by driving a clunker car for a few years, which is what I did anyway after college.

But you are right, it's not a lot of debilitating debt.

[ApatheticNoMore]

It's not a lot of debt if you get the middle class job you probably to some extent went to college expecting. A new car will easily be that much (yea I know, I've never owned a non-used car either, but someone somewhere must be buying and taking loans on new cars and it can't ALL be rich people). But if 83% are carrying about that much college debt - no way salaries are high enough for a full 83% of the population to pay it off.

[sweetana3]

The info only says "of the young adult households with education debt" the following is true. The article says around 36-40% of young adult households have any education debt. Therefore, 7% of 40% or 3.5% appox. have debt in excess of $50,000. 58% of 40% or around 29% has debt less than $10,000 and 9% has debt between $10-20,000. I hope I have this approx. correct.

Somehow, talking about 3.5% as if they were all the people and it is a horrible problem makes the article more sensational. It is not good, but it is not the end of the world and the data still manages to make a U shaped curve.

[bae]

Interesting - how do they define "young adult households"? Average student loan debt for 2011 grads is $26,600.


In Seattle you now get paid $15/hour for flipping burgers at McDonald's. That's $30k/year at our new minimum wage here. $26.6k doesn't seem like a loony amount of debt for a college education...

[Teacher Terry]

I just read that amount is being phased in slowly over a number of years and depending on how many employees you have. I may have it wrong but I think it is a range of 3-7 years.

[bae]

By contrast, tuition, room, board and expenses at the university my daughter will be attending this fall runs about $60k/year.

The university has a no-loans policy - if you have demonstrated financial need, they make up what you require with grants, no graduate walks out the door owing on loans.

[iris lilies]

The info only says "of the young adult households with education debt" the following is true. The article says around 36-40% of young adult households have any education debt. Therefore, 7% of 40% or 3.5% appox. have debt in excess of $50,000. 58% of 40% or around 29% has debt less than $10,000 and 9% has debt between $10-20,000. I hope I have this approx. correct.

Somehow, talking about 3.5% as if they were all the people and it is a horrible problem makes the article more sensational. It is not good, but it is not the end of the world and the data still manages to make a U shaped curve.

Thanks for doing the math right, clearly I could not! haha. Yes, painting this 3.5% of the population's debt problem as constituting a national emergency is just more noise from the leftist media.

[Lainey]

Total student loan debt in the U.S. is nearly a TRILLION dollars. But, sure, no big deal.

[freein05]

I believe that the easy availability of student loans are a major factor in the increase in the cost of college education. Plus unlike other loans you can not include a student loan in a bankruptcy filing and are guaranteed by the government lenders basically don't care who they lend to.

[creaker]

I believe that the easy availability of student loans are a major factor in the increase in the cost of college education. Plus unlike other loans you can not include a student loan in a bankruptcy filing and are guaranteed by the government lenders basically don't care who they lend to.

I think they found a bubble that can't pop (at least not for awhile) - people can default on standard loans and mortgages, discharge them in bankruptcies, but student loans you have to carry regardless of your situation for at least 20 (25?) years. There are retired folk having their SS garnished for student loans. And not just the students - cosigners, all the parent loans being taken out are on the hook as well.

And definitely, if people could not so easily enhance their resources with student loans to pay for classes, prices would drop.