U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

There seems to be a strong sentiment in this thread that the only value provided by education is the contribution to career (e.g. that loans should only be provided for financially viable courses, that studying arts is as useful to one&#x27;s career as studying finger painting, etc).<p>This just seems <i>so</i> wrong.<p>Optimising for vocational training means you&#x27;re effectively tuning out the abstract arts and sciences and... oh, the humanities. These fields don&#x27;t usually&#x2F;directly translate into a financial success, but they broaden our perspective and deepen our experience. And in doing so provide the tools and language to more effectively analyse and engage with human culture.<p>And to a certain extent, &quot;true&quot; art is antithetical to capitalism, in a similar way that &quot;true&quot; journalism is antithetical to surveillance (honesty&#x2F;transparency vs main-stream popularity), and I&#x27;d argue equally as important. For that reason these fields <i>absolutely</i> should be subsidised, otherwise art becomes about marketing, journalism becomes about propaganda, and science becomes about start-ups...

This is another example of the law of unintended consequences.<p>While the idea of helping people become more educated is obviously beneficial to both individuals and the society as a whole, government loans - which are supposed to &quot;help&quot; - are a huge factor fueling ever-raising costs. The loans, in effect, subsidize the higher-education complex, rather than students.<p>Many of us have been brainwashed to think that higher education <i>has</i> to cost a lot of money. But it need not: all that great education requires are wise, passionate teachers and a bit of infrastructure: a whiteboard, a few books, and a laptop computer (with a couple of outliers).<p>We don&#x27;t need football&#x2F;hockey teams with coaches paid $3-4M&#x2F;year. We don&#x27;t need armies of &quot;Deans of Diversity &amp; Inclusion&quot; (and other phony administrative positions), who make $400K&#x2F;year, we don&#x27;t need manicured lawns and Olympics-quality sports facilities (these salaries are from the Univ of California - a state school!)<p>If a good private university cost &lt; $20K&#x2F;year and a state university &lt; $10K, we would not have endless discussions wrt who should pay, who should study what, etc.

Every time I read articles about student loans in the USA, the options are always presented as either the current state, or free tuition.<p>Why are interest free student loans never floated as an option? Here in New Zealand, our student loans are provided by the government and are interest free as long as we reside in New Zealand.<p>It means that people who don&#x27;t do tertiary education, or who do a trade, don&#x27;t subsidise those who go to university. It also means that there&#x27;s a disincentive to go to university if you don&#x27;t need to, which I think is a good thing, however everyone is able to go to university if they want to&#x2F;need to, without worrying about how it&#x27;s being paid for.<p>Our student loans are also paid off proportional to our income, I think at a rate of around 8% (and no repayments required if you earn less than $19k per year). This means that you only pay what you can, it&#x27;s essentially another tax, rather than in the USA where you get people struggling to make payments on their student loan.<p>Obviously, we also have the advantage of cheaper tuition, although it is rising. It costs around NZ$7,000 (~US$5,000) per year to go to university, it&#x27;s not cheap, but it&#x27;s not cripplingly expensive.

This is so obviously a scam that I don&#x27;t see how it can hold up. Tuition has gone to sky high levels, and who is getting that money?<p>Not the professors, let&#x27;s get real. They have probably gotten sweet raises, but nowhere near the growth rate of tuition.<p>The armies of &quot;administrators&quot; are getting huge salaries, but the main point of the whole bubble is that it is a great way to proactively enslave a whole new generation before they even have a chance.<p>It&#x27;s so obviously a &quot;sold my soul to the company store&quot; situation that I can&#x27;t believe everyone doesn&#x27;t see through it right away.

I think the solution is ending loans for college. I don&#x27;t think an 18-year-old with no assets, or even a stable job or no job at all should be given that much money for college. No bank would give them a loan for a house. At least you can foreclose on a house and take it back. You can&#x27;t take back someone&#x27;s education.<p>Plus every time the department of education gives out more money, colleges raise prices.<p>Imagine how much a television would cost if the government said everyone must have a television. They&#x27;re older people who tell me back in their day they could work at a restaurant and pay for college debt free. Get the government out of the student loan business and let the free market decide.<p>If no money is being printed for students to go to colleges, fewer people will go to college and therefore the schools will be forced to compete for student&#x27;s business. Therefore college will be much more affordable for the people who wish to go.<p>I totally agree with our President-Elect about getting rid of the DoE, along with Common core. Let things be up to the states.

Speaking from a purely market-driven position, the Student Loan Debt market has one issue that prevents colleges from not raising tuition prices: its the incapacity to default on loans.<p>Its obvious a huge part of the loans are used for careers that will never make its money back, and the loans only collateral are the person itself(not his parents assets). So if someone had an arts degree that cost him 150k, and never made that money, he should be able to default on that loan. As he does that, colleges have a strong incentive to keep tuition matched with the income produced by that degree.<p>My understanding is that college loans have a special protection by the government that makes them undefaultable. Dont subsidy college loans! Dont take more money from all(including under represented poor people) to put it in the pockets of colleges. Just make the loans defaultable, and you will see such a massive movement of defaults that colleges will never put unpayable debt ever again.

I&#x27;m curious why we treat student loan debt as being special. We don&#x27;t make a huge deal out of people taking on other debt and then being unable to pay for it. I think probably if anything, what we should have are better controls for what types of degrees you are allowed to take a loan out for. If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up for it, rather than getting a loan, just like there are qualifications for other loans, like auto or mortgages which look at both the value of the asset vs its sale price, and your ability to pay. If some kid takes out $100K in debt to pay for a degree in finger painting how is that anyone but the borrowers (and possibly the bank who approved it) fault?<p>TL;DR - When handing out student loans, we should consider aptitude (how likely is the person to graduate) &amp; the career potential of the degree as qualifiers.

We don&#x27;t need student debt reform (and I say that as someone who has a lot of student debt). Student loan debt is a middle&#x2F;upper middle class problem. 2&#x2F;3 of millennials don&#x27;t have a college degree, disproportionately in the lower and lower middle class. The majority have no student debt. Public money spent on college or debt reform would be a regressive benefit to those who are already better off than the median person. It would be better to spend that money figuring out how to improve the plight of working class people for whom college isn&#x27;t in the cards.

I can&#x27;t begin to express the disgust I have over ever-increasing tuition. From what I can tell, a lot of it goes towards pointless fancy buildings, costs for other activities other than learning and the ever present college textbook scam.<p>There was an interesting episode on Planet Money why college textbooks cost a ton but not high or middle school.

The thing that worries me most is the delinquency rate. It is at 11%[1]. For comparison the housing market delinquency rate went from 1.6% in 2006 and went to 11.26% in 2010 (height, 2008 went from 3% to 8%[2]). That&#x27;s where I see the real bubble indicator. I really wonder how much more it can expand. And I don&#x27;t hear serious talk about what to do WHEN it bursts. Because it is really a matter of when and not if.<p>[1] <a href="https:&#x2F;&#x2F;studentloanhero.com&#x2F;student-loan-debt-statistics&#x2F;" rel="nofollow">https:&#x2F;&#x2F;studentloanhero.com&#x2F;student-loan-debt-statistics&#x2F;</a> [2] <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;DRSFRMACBS" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;DRSFRMACBS</a>

The system here in Israel is roughly as follows:<p>The gov sponsors universities almost to 100%. The means going to university is almost free for me as a student - about $2500 per year. I can acquire a law degree and become a lawyer for less than $8000. The government is involved in the way the public universities are run so as to keep the subsidies manageable. Total government funding for university education in Israel is about $1.5B [1]. Since universities have high admission standards, many colleges have sprouted to service those who can&#x27;t or don&#x27;t want to go to one of the public universities. However, since university prices are so low, even private colleges are forced to operate with tuition fees of roughly $5000 per year, which means they are also very manageable for students. Even so, the quality of education in Israel is amongst of the highest in the world, especially when considering its tiny population. Hebrew University, Israel&#x27;s best institution, has been ranked 26th in the world [2].<p>This system has attracted a lot of snark here in Israel, but from what I gather it&#x27;s actually pretty effective. Israel is the 2nd most educated country in the world, with 46% of its population possessing a university degree [3]. :-)<p>Sorry for the Hebrew sources!<p>[1] Hebrew: <a href="https:&#x2F;&#x2F;he.wikipedia.org&#x2F;wiki&#x2F;אוניברסיטאות_בישראל#.D7.9E.D7.A1.D7.9C.D7.95.D7.9C.D7.99.D7.9D_.D7.9E.D7.99.D7.95.D7.97.D7.93.D7.99.D7.9D" rel="nofollow">https:&#x2F;&#x2F;he.wikipedia.org&#x2F;wiki&#x2F;אוניברסיטאות_בישראל#.D7.9E.D7....</a><p>[2] Hebrew: <a href="http:&#x2F;&#x2F;www.calcalist.co.il&#x2F;world&#x2F;articles&#x2F;0,7340,L-3693018,00.html" rel="nofollow">http:&#x2F;&#x2F;www.calcalist.co.il&#x2F;world&#x2F;articles&#x2F;0,7340,L-3693018,0...</a><p>[3] Hebrew: <a href="http:&#x2F;&#x2F;mako.co.il&#x2F;special-mako-news&#x2F;Article-6489f432bb2f931006.htm" rel="nofollow">http:&#x2F;&#x2F;mako.co.il&#x2F;special-mako-news&#x2F;Article-6489f432bb2f9310...</a>

If you&#x27;d choose a more social system where the students costs are paid directly from taxes, taxes are higher, yes but you omit banks. The only thing banks do is collect interest because the people have decided, or have been told, that they can&#x27;t collectively invest in the education of the next generation. And so their kids pay interest, to banks who do nothing but print the money and write down &quot;you have dept&quot; in return.

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

The Wall Street bailout was only...what, a trillion?<p>If we bailed out real estate speculators, I wouldn&#x27;t be surprised if something happened with college grads.<p>Unfortunately. I hate assuming responsibly for monetary decisions other than mine, but judging the trend, that&#x27;s where we&#x27;re headed.

The article is made suspect, in my view, by promoting this Credit Sesame thing. There&#x27;s a service called <a href="http:&#x2F;&#x2F;annualcreditreport.com&#x2F;" rel="nofollow">http:&#x2F;&#x2F;annualcreditreport.com&#x2F;</a> that provides access to credit reports from the three major agencies without trying to sell anything, or using any black-hat user experience design to trick people into signing up for services.

I wonder how much money could be saved if the US got rid of its general education based system.

The consumer finance &quot;reform&quot; act of 2005 made it very difficult to discharge student debt in bankruptcy. It&#x27;s time to undo that reform.<p>It had a disastrous unintended consequence, by completely shifting the risk of an uncollectable loan away from the lender and onto the borrower. How so?<p>When a lender carries risk, they underwrite those loans. That means they study them before making them. They pay attention to all kinds of things, including the borrower&#x27;s ability to pay and the value of the thing being bought with the borrowed money. Underwriters are (usually) knowledgeable about the field they work in. They understand the value of both vocational and liberal education. Some of them even understand the value of giving under-served people a chance.<p>So, when a school gets calls from underwriters saying &quot;we&#x27;re having a hard time justifying loans of US$100K to your students taking bachelor&#x27;s degrees&quot; the school takes notice. They restrain growth in tuition and fees. Maybe they even offer discounts, also known as &quot;scholarships.&quot; Those calls, coming from skilled underwriters, are far more effective than student demonstrations against tuition increases.<p>The 2005 reform made it possible for the lenders to be much lazier. Their underwriting is much more sloppy. The reform freed up a lot of tuition money that the educational institutions were happy to soak up. And their students are stuck with the bill for a lifetime.<p>I&#x27;m aware of the libertarian view which emphasizes individual responsibility, and I have a lot of sympathy for it. I have a young friend who looked at the cost of her first-choice college (Syracuse, it was) a few years back, and wrote them a letter saying &quot;sorry, you&#x27;re too expensive. I regret that I must decline your offer of admission.&quot; That too puts downward pressure on educational costs. But she&#x27;s rare: she has great presence of mind and forward-thinking parents. Plus, she listened to me. -:)<p>Most high-school seniors get caught up in the mostly fake competitive admissions system. They aren&#x27;t in a position to behave like hard-nosed underwriters.<p>So, let&#x27;s put some of the loan risk back on the lenders, and bring back the underwriters.<p>This situation is analogous to the mortgage crisis, which shifted the risk of bad loans away from the mortgage originators. In that case the risk got shifted onto anonymous buyers of securitized mortgages, and onto AIG. In the case of educational loans the risk gets shifted onto the poor schlemiel who wants to be a schoolteacher.

A healthy and future ready society needs an educated and literate population. From that it becomes a social goal and a social good with multi generational run off effects that can&#x27;t be measured in pure short term economics.<p>That one of the richest countries in the world should shy away from this responsibility is a bit galling, more so because it seems to be purely so that bankers can make some money.<p>You can&#x27;t have a country purely of corporations and workers and the US has been moving in this dubious and dystopic direction for decades now. You need to build a society or everyone loses, eventually.

Welcome to cheap guaranteed federally backed money. Private institutions will continue to jack up education prices, because they know kids will be able to get loans from the government to pay for them. It&#x27;s too late for me, and millions of others paying back enormous loans, but I dream of the day school becomes affordable. There was a time, you could work you way through college washing dishes. Schools existed WAAAAAY before federal assistance.

&gt; Officially, the nation owes $1.26 trillion in student loan debt.<p>The nation doesn&#x27;t owe anything, I would rather said past students who still have loans owe this money.

Free (1) tuition is an interesting option, but it&#x27;s not the end all answer.<p>We have basic tuition in Uruguay, and, while people don&#x27;t leave university with crippling debt, we still have the problem of people spending 4 or 5 years of their lives and leaving with a worthless degree (as in, they cannot get a job in what they studied). And they do end up in debt because they have to pay for food and housing while they study.<p>I feel very sad whenever I see a working class family breaking their backs to send their child to become an architect or a psychologist, because I know they won&#x27;t be able to get a decent job (there&#x27;s one architect per 400 citizens, and one in twelve in the workforce is a psychologist, they usually end up earning less than a store clerk if they don&#x27;t set up a succesful practice).<p>Another problem is the strain on infrastructure, in the Engineering faculty they only have capacity to train about 300 to 400 students but over 2000 enter each year. The solution is to have extremely hard and cruel first year courses so at least half drop out in the first year and another half in the second year (I dropped out in second year and enrolled in a private university).<p>Another country with free university is Venezuela, and a problem I&#x27;ve noticed is that the quality of education is very uneven, there are graduates with titles that aren&#x27;t worth the paper they&#x27;re printed on. This doesn&#x27;t happen in Uruguay that much because they force them to drop out (not a great solution either).<p>(1) here in Uruguay it&#x27;s not entirely free, it&#x27;s deferred - graduates from the public university have to pay about half a normal salary each year from 5 years after they graduate until they retire, so it often ends up more expensive than a private university.

“He who works with his hands is a laborer.<p>He who works with his hands and his head is a craftsman.<p>He who works with his hands and his head and his heart is an artist.”<p>— American trial lawyer, Louis Nizer [1]<p>[1] <a href="https:&#x2F;&#x2F;lawlessstruggle.wordpress.com&#x2F;2014&#x2F;11&#x2F;13&#x2F;a-laborer-a-craftsman-or-an-artist&#x2F;" rel="nofollow">https:&#x2F;&#x2F;lawlessstruggle.wordpress.com&#x2F;2014&#x2F;11&#x2F;13&#x2F;a-laborer-a...</a>

Has there been extensive research or trials of corporate sponsorship (or are there any startups exploring this idea)? There are probably some principal&#x2F;agent issues but by and large why can&#x27;t Google sponsor some CS students and they sign a 4 year deal with them in return (somewhat similar to sports?). In some fields, big corporations already compete for talent, why not start the competition a level earlier (internships could be integrated as well).<p>I can think of a lot of problems and reasons why this won&#x27;t work...which makes it interesting :) Apart from &quot;won&#x27;t work for not highly competitive degrees&quot; and &quot;figuring out who to sponsor is as hard or harder than just hiring&quot; and &quot;how do you grantee the people actually stay with the company and are motivated&quot; there&#x27;s probably a lot more. I think the principle of reciprocality can make it work in principle though.

So total student loan debt is something like 10% of the cost of the Iraq &#x2F; Afghanistan war. Tell me again how it&#x27;s not affordable to make college free, when it&#x27;s affordable to spend so much money on an unnecessary military intervention?

There is something really flawed in a system that puts progress under bank&#x27;s interests. The advancement of the whole society is beneficial for us all, so I dont see why it should not be subsidiced.

I am sure more education can fix this problem as well. Just a few more degrees and we&#x27;ll be able to afford interest on that debt, that the government will be paying because the students are broke.

Tuition is very expensive in the U.S.. People take loans because they are banking on the future. They think that Even with debt they will come out ahead.<p>I&#x27;m new on this site, but I assume that most people on this site are computer programmers or are tech savvy enough to get a job that pays a decent wage.<p>I&#x27;m Canadian, but you should also look at the bright side Of US education. There is no Canadian Caltech. If you step out and start a business in America, it is Considered entrepreneurial and a good thing.

Queue the political debate over whether this is a failure to provide secondary education to our citizens, or an artificial inflation in its cost by attempting to do so.

This is a quick read in case anyone is unfamiliar with student debt &quot;onwership&quot;:<p><a href="http:&#x2F;&#x2F;www.investopedia.com&#x2F;articles&#x2F;personal-finance&#x2F;081216&#x2F;who-actually-owns-student-loan-debt.asp" rel="nofollow">http:&#x2F;&#x2F;www.investopedia.com&#x2F;articles&#x2F;personal-finance&#x2F;081216...</a>

Education makes extensive use of debt factoring for risky loans.<p>Factoring is selling client debt at a discount for instant cash. The financial institutions that buy the debt are usually responsible for collecting unless they decide to pass it around again.<p>So in a sense, universities are sort covered against losses from that kind of debt, not students.

I was lucky to get out without any debt due to athletic and other scholarships. However the last two-three girls I&#x27;ve dated had 15K-25K in student loans. They all said, &quot;At least I dont have <i></i>K like my friend...&quot;<p>I cant believe do much is being lended to college students.

&quot;While an educated populous is a good thing, the number of those not making payments on their student loan debt as soared.&quot; - what language is that? Sounds like written by an undereducated populous...

Is this news? The global elites harvest young people for profit just as they do older people with subprime mortgages, etc. Sorry for sounding cynical, but that is just the way I think the world works.

This is an advertisement for &quot;Credit Sesame&quot;.

Does nobody care that the person holding a debt is the one that gets paid?

Debt expansion is no way to run a money supply.

The government-enforced student loan system is the problem. Universities know they can charge whatever they want for tuition, they will get their money up-front, and the students will be on the hook for it for life (and it can&#x27;t be declared in a Bankruptcy).<p>We need to revamp the system so universities can&#x27;t charge us these ridiculous rates.

Congrats to all the students and recent grads out there.

Im glad I got someone with the shock value. Its clear you have a very unique perspective that I appreciate you sharing.<p>Female in lower income bracket - I believe this. I think this is a rather heartbreaking reality so I am a ok not going into this. What I do know is that Ive met a few peoples whos moms work 16 hour days as much as possible.<p>- chronically ill - the college educated are competing with the chronically ill for jobs<p>- mentally ill - the college educated are competing with the mentally ill for jobs.<p>- unable to afford - so they are working but cannot find housing. I believe it.<p>I dont think &#x27;bail out&#x27; is the solution. Its &#x27;salvage and prevention&#x27;. Ensuring that future generations dont fall into the trap and if they do it is an educated risk. And salvaging multiple generations lives who were chasing after the american dream.<p>Im all for helping those that cant help themselves. But Im also interested in getting those 60% there to 100%. If the &quot;prividged&quot; are having are hard time post graduation. The under privlidged have it even worse. We are talking about the future of basically educated children not just &quot;foolish rich kids&quot;

In real world this debt cascades to rest of the world bloom.bg&#x2F;1O04ymn