It’s easy to get student loans thanks to the aptly named “Parent Plus” program, a subprime loan trap that ensnares parents plus their college-age children. The program was enacted by Congress in the 1980s, but president Obama promoted it heavily.
The results speak for themselves: Nearly 40% of the loans are subprime. The default rate exceeds the rate for U.S. mortgages at the peak of the housing crisis.
Kids graduate from college with useless degrees, plus parents and kids are stuck with massive bills that cannot be paid back.
It’s Easy for Parents to Get College Loans—Repaying Them Is Another Story.
Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than three million Americans. The problem is the government asks almost nothing about its borrowers’ incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times.
As of September 2015, more than 330,000 people, or 11% of borrowers, had gone at least a year without making a payment on a Parent Plus loan, according to the Government Accountability Office. That exceeds the default rate on U.S. mortgages at the peak of the housing crisis. More recent Education Department data show another 180,000 of the loans were at least a month delinquent as of May 2016.
“This credit is being extended on terms that specifically, willfully ignore their ability to repay,” says Toby Merrill of Harvard Law School’s Legal Services Center. “You can’t avoid that we’re targeting high-cost, high-dollar-amount loans to people who we know can’t afford to repay them.”
The number of Americans with federal student loans, including through programs for undergraduates, parents and graduate students, grew by 14 million to 42 million in the decade through last year. Overall student debt, most of it issued by the federal government, more than doubled to $1.3 trillion over that period.
The financing fueled a surge in college enrollment. Between 2005 and 2010, enrollment grew 20%, the biggest increase since the 1970s. The Obama administration supported such lending in an effort to widen access to college education.
Nearly four in 10 student loans—the vast majority of them federal ones—went to borrowers with credit scores below the subprime threshold of 620, indicating they were at the highest risk of defaulting, according to a Wall Street Journal analysis of data from credit-rating firm Equifax Inc. That figure excludes borrowers, such as many 18-year-old freshmen, who lacked scores because of shallow credit histories. By comparison, subprime mortgages peaked at nearly 20% of all mortgage originations in 2006.
Roughly eight million Americans owing $137 billion are at least 360 days delinquent on federal student loans, nearly the number of homeowners who lost their homes because of the housing crisis. More than three million others owing $88 billion have fallen at least a month behind or have been granted temporary reprieves on payments because of financial distress.
Joint Effort
In 2005, president Bush signed the bankruptcy reform act of 2005 making student loans not dischargeable in bankruptcy.
President Obama came along next and encouraged parents who had no idea what they were getting into to sign loans to put their kids through college.
Parents plus their kids are mired in debt that cannot be paid back. Thank you Congress, President Bush, and President Obama.
Surefire Way to Discharge the Loans
There is one way to get rid of these loans. Die.
Stop the Madness
Wherever government meddles, costs rise dramatically.
The solution is to stop the meddling: Stop all the loan programs, stop all the aid programs, stop insisting that everyone needs to go to college, and start accrediting programs and course offerings from places like the Khan Academy.
Not a single student aid program aided any students. Rather, escalating costs went to teachers, administrators, and their pensions as student debt piled sky high.
Mike “Mish” Shedlock
Net result: though I have an engineering degree, and use it, my kids (starting with my 18-year-old will NOT be going to college.
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So what are you advising him for his future?
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Driverless car service tech
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Electric vehicle battery swap tech
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Self-driving car crash test dummy. Runaway drone hunter. Sexbot programmer/alpha tester (better than sexbot cleaner).
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Oh, I forgot rapper and YouTube star. And reality show writer.
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Plumbing and welding are very lucrative.
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Nope — both plumbing and welding require skills. And doing actual work.
Snowflakes are only skilled at whining, and they definitely don’t do work
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We had to listen to eight years of nonstop whining by all the Republitards so now you can listen to it too. What do you even know about “snowflakes”? I have seven kids all of them liberal Democrats who all have careers in STEM fields and every single one of them makes over six figures. One of them served in the US Army for seven years and one in the US Navy for five years. So STFU!
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If your bright enough for engineering, you can probably get a decent scholarship, and grad school is free, with scholarships, so engineering is probably still a good choice., especially if you don’t want to get bored.
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But it’s 20 to 1 immigrants to Americans. It’s not worth it. Incredibly toxic racist work environments. I’ve been in tech R&D for 25 years. It was pretty good then. I would never recommend it to someone today.
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Half of them never graduate, but still carry the debt. The worst of both worlds.
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The whole thing is completely criminal. A disgusting exercise in exploitation which is completely unnecessary, since the Fed does not spend your taxes and so can take over from the banks, who also don’t need the money.
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Looks like the ‘education’ lobby is working overtime these days.
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Judging by Berkley’s latest activities, you’d have to assume there’s a high Phi Beta ANTIFA membership there. Those probably ain’t cheap either.
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I have been predicting that this was going to be the next big crisis, along with Pensions. Congratulations on bringing it to light. You are exactly right, the answer is to stop these student longs, period, and stop insisting that everyone go to college. The biggest result of all these student loans has been the phenomenal growth in college expenses. Colleges and Universities have been largely immune from real world financial issues for years, and the the result has been skyrocketing costs, and along with them, skyrocketing tuition. Who cares how high tuition goes, right? No one has to pay it, they can just get an easy student loan.
But, the piper has to be paid. These people can’t ever get rid of the debt, even in bankruptcy, only by dying. Thus, these loans will be a burden on GDP for years to come as debt saddled students and parents have to make payments, and thus have less spendable income. Basically we have taken from future GDP, and moved it to current GDP (as things like professor salaries are paid today.)
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the ponzi must go on, there is no other way…
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I don’t even think the debt is extinguished by death. The estate of someone is still going to be on the hook. Now, if both parents and the kids who took the loans are dead there is a possibility that might work. But if there is a dimes worth of property remaining, this creditor is probably going after it.
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3 ways that will work, at least over some time:
Convert whatever you own to anonymized bitcoin, or gold buried safely. Then stop paying.The more people do this, the more fluid the boundary between official cash and anonymous cash becomes. Helping to make it easier to drift back and forth across the boundary, so you never have any more official money than that required for immediate needs. Hence noting to shake you down for.
Divert some of the funds to guns and ammo, and once enough of your peers are sensible enough to do that, the erstwhile debt collectors will find things with better risk/reward profiles to do with their lives. Like for example, hold up the banksters they formerly worked for, instead of armed-to-the-teeth destitutes with nothing left to lose. The banks are where the money is, after all….. If you’re going to rob a cotton plantation, it’s lots more lucrative to hold up Massa and his family, than a bunch of niggers working under the whip.
Convert to Islam, for real. And become a Muslim of good enough standing that you get to participate in their Hawala network. Again, you have no money for the banksters to shake you down for. And if the banksters drag out their favorite “you’re supporting terrorism” hobgoblin, just inform them “Dude! I don’t own any New York sky scrapers. Nor anything else worth blowing up. So what the heck do I care?”
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Seems like some shoddy numbers here.
“The number of Americans with federal student loans, including through programs for undergraduates, parents and graduate students, grew by 14 million to 42 million in the decade through last year. Overall student debt, most of it issued by the federal government, more than doubled to $1.3 trillion over that period.”
Going from 14M to 42M is about 3 times as many with loans but if the overall balance of debt only doubled that implies the *average* student loan balance has become smaller. If so what’s the problem?
“Nearly four in 10 student loans—the vast majority of them federal ones—went to borrowers with credit scores below the subprime threshold of 620, indicating they were at the highest risk of defaulting, … By comparison, subprime mortgages peaked at nearly 20% of all mortgage originations in 2006.”
But student loans are not quite like house, car or credit card loans. They can be killed in bankruptcy. A foreclosed house or repo’d car may not yield enough at auction to pay off the loan. But student loans are essentially lifetime loans except under some limited and extreme circumstances.
“More than three million others owing $88 billion have fallen at least a month behind or have been granted temporary reprieves on payments because of financial distress”
Yes but they are again nearly lifetime loans so most will be paid off unless you are talking about cases where the student will never take any job ever again or work under the table for the rest of their lives.
Which brings me to the ‘horror table’ showing the average parent plus loan is trending up to….wait for it….$14,000.
Ok all things considered even at a lower working class income $14,000 is not an unmanageable loan. A car loan will probably end up costing most of us much more than $14K in our lifetimes. Unlike car loans, though, you do get to stretch the payment out over your working life AND you can get forgiveness periods to suspend payments AND the interest rate is somewhat capped (not low enough IMO but at least capped). You can say the degree is ‘worthless’ and this is a problem for some of the fly-by-night ‘private colleges’ advertised on TV but the fact is the average income of college grads is much higher than non-grads and the variance has increased, not decreased.
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Re-read that line. “Went up by” doesn’t mean from-to. If it went up “by” 14m, it means it stood at 28m. So that means loan size is NOT smaller.
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Good catch, 28M to 48M is an increase of 1.5 times. If loans outstanding doubled that’s growing loan size but still somewhat less dramatic than just saying doubling.
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Don’t read too well, do you?
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Guess not. Where is my statement incorrect? Went up by 14 million is not the same as went from 14 million.
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The chart says “annual loan”. It at $14K PER YEAR, not a $14K total loan.
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Create your own infographics
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Helpful but wouldn’t it make sense to also see average lifetime income next to those bars of borrowing?
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For the few remaining middle-class homeowners, roll your family’s student loans via a cash-out refi and pay them off. Then those student loans become dischargeable in bankruptcy. Voila.
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Were it that simple. I remember reading an article a few years back that made the point that any loan taken out and used to pay off a student loan then became non-dischargeable itself, that somehow that feature of the student loan carried forward. I wasn’t able to find this in a recent search, but perhaps another reader has some info.
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Found something here:
http://www.foxbusiness.com/features/2013/07/01/using-plastic-to-pay-off-student-loans-bad-idea.html
and here:
http://www.nolo.com/legal-encyclopedia/can-i-discharge-private-consolidation-loan-bankruptcy.html
Apparently a pure student loan refi still retains non-dischargeability but a mixed-use refi might have a chance.
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You have to cover your tracks a bit. Devote your income to pay off student debt. Live off refis.
Regardless of whether the loans don’t get paid back due to people wising up, or because they accept life as the fashionably destitute playthings the progressives aim to turn everyone else into; the important part is for the Federal government, nor the Fed, NOT to bail out the lenders. No matter what. And if that causes “The syyyystem” to collapse and tanks in the street? Treat it like a bonus.
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Shhhhssshh. Don’t tell Sallie Mae that I did a cash-out refi back in 2004 and extinguished my student loans and those of my wife in one fell swoop. Of course, never had to deal with bankruptcy court so….
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The sad part is, if the student dies the parents are on the hook. Need to take out life insurance. But the government in all their wisdom has done to higher education what they did to the housing industry. By giving everyone a loan it has increased demand without any price accountability by the universities. They have been able to raise tuition rates much higher than the pace of the CPI. Furthermore none of the increased income has gone into education, it has gone into non academic areas. The inflation rate of college education has exceeded everything else in the economy including healthcare. I read that if you took the cost of a year in Harvard in 1970 and applied the normal CPI to it, a year at Harvard would be 15k now. Instead it is over 50k. It also doesn’t help that students make very poor choices in degrees and where they go to school. By going to a community college and then transferring to a local university would dramatically cut their education bill. However, like in the housing bubble you can’t stop people from being idiots. The solution is as Mish stated get government out of it and let free market capitalism find a solution. One could cobble together online courses from all over the country and get the skill or degree that way. I hope one day universities will go the way of shopping malls, they deserve it. They did it to themselves.
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The average parent plus loan listed above is $14,000. Most students won’t die but if it’s an issue it is almost nothing to buy a life insurance policy on a young 20-something.
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We did have a system before the big loan programs. They use to have things called “Pell Grants”. That + some work got me through college. That was a system where the government wrote you a check (no loan) and you paid your college. Since the amount of the grant was fixed, colleges couldn’t just raise prices because students wouldn’t be able to afford school anymore.
Lots of people hated other people getting free money, so the system was removed and guaranteed student loans was put in place instead. That way bankers could make a lot of money, American kids could be in debt, and taxpayers could be on the hook. So we really taught them a lesson!
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It sounds like Tax Payers were on the hook in the old system. You can’t do it both ways. If kids are indebt then taxpayers are off the hook, if kids aren’t then it’s the taxpayers who are. Someone is going to pay for colleges one way or the other.
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Scholarships is a traditional way. So is working part time. But, because of student loans, there has been unlimited ability for colleges to raise tuition, and so paying your way by working part time is not even remotely possible. Take away the loans, the colleges will have hard times…but…then they will become more fiscally responsible, and tuition will become more reasonable.
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And to add to the joy, the jobs students used to do are now done by illegals. Win Win Win.
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Yep. You won’t hear a peep about it on the campaign stops either.
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“in the decade through last year. Overall student debt, most of it issued by the federal government, more than doubled to $1.3 trillion over that period.”
…
Being kind. Very kind.
“Overall student debt, most of it issued by the federal government,”
Last I read 90% of student loans issued thru fedgov …. for one simple reason. A student can obtain a fedgov loan WITHOUT a cosignor. No Way would a private issuer make that deal.
https://www.edvisors.com/college-loans/federal/stafford/unsubsidized/
….
“more than doubled to $1.3 trillion over that period.”
More like NINE TIMES
https://fred.stlouisfed.org/series/FGCCSAQ027S
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“President Obama came along next and encouraged parents who had no idea what they were getting into to sign loans to put their kids through college.”
…
Students can sign without parents. Even so, does not take much imagination to guess what happens during the pow wow in the guidance counselor’s office. Financially clueless student (and parents) listening to the new car like sales pitch. Everything rosy … uh, just don’t read the pages of boilerplate “gotcha” too closely …
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I guess I just got lucky-my daughter told me her junior year that she did not wish to waste time or money being indoctrinated in college. She joined the Navy, made it through NNPTC (Naval Nuclear Power Training Command), did a total of 6 years, came out with a BIG pile of US Savings bonds and has a $75k job with spectacular benefits in a non-nuclear field. Parents need to be aware of this option, even if the education cabal’s “guidance counselors” hate it!
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you didn’t get lucky.
you did a good job with your daughter, and she looked into other options.
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I did the Navy Nuke thing after high school (1979), but did go to college after getting out. Back then it was still affordable. I think many (most) would be better off doing something like the military (something skilled that comes with schooling) or a trade skill. Later, if they see a need for college they can do that.
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To a kid sounds like free money (years before payoff start) … what percentage of loan goes to Apple? Papa Johns? Star Bucks? etc
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I know from watching a few “millennial” dumb-dumbs that rip-off the Pell Grant scheme, they give about 100% of that money to the aforementioned — smart phones, laptops, coffee, Chippolte, Sephora, Target, any Mall…etc. The scam is easy…get your grant (sent to the school)…sign up for classes….then drop the classes and end up with credit in your student account…intermingle with some state grant money and other free aid programs, and whoala…ding ding ding…”you’ve got cash”
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You should see some of the housing “choices” kids have these days. We have a developer putting up student housing next to the University of Central Florida in Orlando. This place has 4 bedrooms to an apartment, and separate dining and living rooms. Amenities include infinity pool overlooking the Big Econ river, on-site restaurants and “downtown” area for shopping, and, of course, weekly maid service.
Price? $1200/month/kid. Money comes from student loans.
In my day it was $80 month, 4 dudes to a room, and weekly fist fights over who stole who’s half eaten sandwich.
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yeah… but those are great memories. “Ok, who threw up in my sneakers!”
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Of course the better joke was:
“4 dudes to a room, and weekly fist ”
So you went to Yale?
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University of Florida. Number 1 party school in the country in 1980. So the “who threw up in my sneakers” was very appropriate. And absolutely great memories.
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Yes, great party school. You could afford to make a mistake or two as a young person. Today, it is costly beyond reach of most.
It’s not fair at all, but what is fairness?
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For once I can’t agrgue with anything in this blog post…pretty much nails it…I know soooo many folks who kids (err….I mean children (not baby goats)) have spent $200K + and have NOTHING TO SHOW FOR IT. Engineer/MBA’s, like myself, usually make out OK…but “the arts”…”history”…”communications”…are you serious. Comp Sci and Robotics should fair quite well…as should all the “Engineerings”…also anything in the health related sciences.
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There is a reason why nearly all college professors are left wing and are violently pro democrat…
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The bankers and the college professors can’t lose on the student loan scam. If the kid can’t pay the loan is federally guaranteed. The banker takes no risk. He’s nothing more than a salesman. He’ll get his loan money back one way or the other. I guess they can chase the kid down. But you can’t squeeze blood from a turnip. The college president won. He got his seat filed. IT’S THE TAXPAYER WHO GETS SCREWED ABOUT HALF THE TIME!
If I had a kid college aged I would refuse to finance his or her education unless I agreed with the course of study and received his or her grades in the mail after every semester. I would expect a 3.0 minimum GPA. Otherwise I simply wouldn’t pay the costs unless some black robed lawyer put a legal gun to my head and said “Pay up or else”.
When I was in college I would say at least HALF of the students had no business being in college. Few knew what they really wanted to do. The others were just not college material. They enrolled to be with their friends and party. I had friends who stayed home most of the day and watched ESPN. It took them 8 years to get a 4 year degree.
The college counselors fooled the psych and sociology and liberal arts majors that there were lots of good paying jobs waiting for them after graduation. They lied to the kids and to their parents. IMO such deception should be made criminal.
Student loans are the biggest con game going in this country. How is some kid wet behind the ears going to create a life for himself with a $50,000-$70,000 debt coming out of school? Talk about an albatross tied around one’s neck!!!
But nobody can force anyone to take a loan. You make your bed. You lie in it!!!
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– Disagree. As long as the government (and the taxpayer) is able to cough up the money there’s no downside to this kind of loans for the banker. But somewhere in the near or distant future even the government will be forced to renege on those guarantees.
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An item Mish didn’t mention. Fedgov student loans are considered an “investment” for accounting purposes. So excluded from (on budget) deficit number.
If you are one of those who look at the debt number and wonder why annually seems to go up ~ $1 trillion, but deficit only $600 billion or so … part of the reason (overseas military operations and natural disaster aid a couple of other items that don’t show in official deficit).
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– So, the bank still gets paid (say every year) when e.g. I fail to make a payment on that loan (never needed a student loan) ?
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The loans are federally guaranteed.
The bankers ALWAYS recoups the principle and interest on his borrowed money,
What do you think “federally guaranteed loan” means???
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So where exactly do you “disagree” w/ me?
You just took the argument one step further by claiming at some point the money will run out and the government will not pay for loans that default. That is pure speculation on your part. You don’t know that.
I stayed in the here and now by stating the FACTS of the problem TODAY. That the bankers and the colleges win. A significant percentage of the students lose. And taxpayer lose once the kid default’s on his loan TODAY. Where exactly do you “disagree” with that?
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Hard to tell your kids no: It’s like you’re sentencing them to hard labor. But instead of a 4 year program, try another approach – a plumber can make really good money, as can an electrician or other worker in “the trades.”
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hot daughter.. tell her to be a porn star…
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LIfetime Movie: Sugar Daddies
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So if this is correct… https://www.bls.gov/opub/ted/2015/median-weekly-earnings-by-education-gender-race-and-ethnicity-in-2014.htm
For white male – average annual difference for college vs high school was close to $26,000 a year. Do the NPV on that over 30 years at current rates and it’s kinda a no brainer.
That’s just averages… It leaves out ease of being hired and most importantly chance of extreme upside. w/o degree that extreme upside chance goes out a few decimal places of a percent.
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BLS publishes another interesting number – participation rate
https://fred.stlouisfed.org/series/CIVPART
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Of course this conflates STEM and medical grads with music and theater appreciation grads. I think the issue is more about kids graduating with useless degrees from expensive private colleges than engineers graduating from State U.
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I couldn’t agree more. My parents had one rule. Do whatever you want but if your grades drop, you’re out!
FYI.. one of my best friends went to U of F. Visited a few times during football season. Don’t remember a damn thing!
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C’mon! I think Wayne Peace was their QB or was it Kerwin Bell?
Maybe I’m the one who can’t remember. I was a little bit later than that period, I was in the military before doing the college thing,
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STEM grads have horrible job prospects. Only 1/3rd of them can actually find STEM jobs. STEM used to be good before the H-1B visa, but H-1B visa abuse has pretty much wiped out the prospects for most US citizen STEM graduates.
Meanwhile people keep electing dumb politicians which allow some of the best jobs in the economy to be given away to foreigners without even consideration of US citizen talent.
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You are not comparing like with like, are you. A huge proportion of those who do not go to college, couldn’t.
The issue is : How do college eligible kids who choose not to go, compare with the average college kid. You know, folks like Steve Jobs.
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The real problem is that while the number of students is about the same, the number of adminstrators has tripled since 1980. Ten years ago when I revised a class for the department the chair just said “Knock yourself out, Mark” and I created an excellent class. This past year I had to revise the same class but this time I had to answer to two deans, a “facilitator” and a couple of penpushers whose title I’m not sure of. Wasted an immense amount of time and hundreds of emails. In the end, students paid the bill.
Also, now the dean wants me to return homeworks via an online ‘dropbox’ as opposed to just giving the kids their homeworks back by hand, or email. Why? So the dean can track who’s doing their homework. Um, that’s my job, bit I guess she has to justify her six figure salary somehow.
So…. that’s why college is so expensive. Kids have no idea of the trouble they’re making for themselves but on the other hand they have no choice. Alot of people in my day worked their way thru college, impossible now. The student loan program is just an enabler for prolific spending by colleges, almost all of it going to superflourous staff.
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People are generally gullible and stupid. This is no different from giving home loans subprime to people and then watch them suffer when they could not pay. The only difference is we now have generational loans. Next thing you know they will have loans where the children are responsible for their parents and grandparents debt.
I think I will buy a big house or get an expensive college degree. No problem, my kids and grandkids can pay for it. We are doing that now with our national debt.
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Government requires ten percent of university degrees be granted to people with mental disabilities. Universities respond with remedial reading degrees pompously named Fine Arts, Sociology, or Hospitality.
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So what everyone seems to be saying is that America’s college/university education system is as broken as the health care system? That is not a good sign for America’s future. Successful countries need an educated workforce. This is more important today than in the past since STEM (science, technology, engineering, math) are crucial to the majority of future jobs.
I’m sure that President Trump will fix all this. He talks like a well educated guy.
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Only problem is, there is extremely high unemployment of STEM professionals. STEM hiring of US citizens has been scant since the 2000-2001 crash of the tech sector, and most businesses have cleaned out their STEM staff and replaced them with H-1Bs whenever possible. Or outsourced.
Jobs of the future appear to be in low-skilled personal services. Bum wiping. Massage therapy, etc. Definitely not STEM.
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An interesting look at (and irrefutable proposal for) the H-1B racket.
http://www.unz.com/imercer/why-the-h-1b-visa-racket-should-be-abolished-not-reformed/
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There isn’t much future in the jobs you mention. The future is definitely STEM. If Trump stops the H-1B’s as he recently promised, wouldn’t that provide jobs for your home grown STEM graduates? It sounds like you must have a lot of them. All those highly talented, intelligent, foreign STEM grads that currently get into your country with H-1Bs will just have to go somewhere else I guess, like Europe, Canada, Mexico. The danger though is that US tech companies would set up more businesses in those countries. I’m not sure why they won’t hire all that home grown talent?
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Mish,
Thank you for this. Our son is a sophomore in college this year, and we’ve already taken out two Parent Plus loans, but I’ve always wondered how we qualified or how it was so easy. My son gets student loans through FAFSA, but I’ve always wondered how they determine how much money students get (hint: it’s not enough to cover full tuition or room and board). It seems we’re always (well, twice so far), borrowing enough to pay almost everything and have no idea how much he is eligible for each year.
Hopefully, our younger son (in high school) will live in the basement and play video games. Probably a lot cheaper in the long run. 🙂
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This, along with all debt, will be extinguished by stealth inflation. For the time being, the Student Loan process is just another way for the Fed/Banks to inject more credit into the system, while keeping young folks off the unemployment rolls and out of the street. Also keeps money flowing through state and local (government) education institutions.
Another way they are doing this is with Social Security Disability. Keeps the prols out of the workforce, ie; out of the unemployment statistics,,,,,and out of Molotov Cocktail chucking activities.
But, .gov doesn’t default outright. It has a printing press, and brags about knowing how to use it. The debt will be paid. Just down the road, and in worthless dollars.
What ever it takes….they really mean that.
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Debt = Serfdom (April 2, 2013)
http://www.oftwominds.com/blogapr13/debt-serfdom4-13.html
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CREDIT KARMA – Give yourself some credit!
LOL! Talk about ironic
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” Screw Parents and Kids”…my safe search flagged this
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The result of free money to universities from accepting any fog a mirror student is the growth rate of “administrators”. I wonder how many of these administrators have political connections.
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Bankers are printing outrageous service inflation. Anything done manually is to the moon. Education is very labor intensive. Its not just college, K-12 inflation is also to the moon. Printing is slowly turning the country into a banana republic In addition, bankers using the printing press to confiscate people’s stuff for relending is making the nation debt slaves to bankers.
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If I had it to do over again I’d take a trade and master it. Electrician, plumber, aircraft mechanic, medical sonographer, web developer, heavy equipment operator, etc…
Good money and limited politics. Just be very good at what you do and the rest takes care of itself. After you’ve got some experience under your belt you can own your own business if you can handle more stress.
Screw a 4-year degree unless you’ve got the brains to be a neurosurgeon.
Stick it to the banker and the college president.
College is WAY overrated!
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There are only so many trades jobs available (though those are mostly pretty good jobs). The best jobs in the future will require STEM education. Its difficult, though not impossible, to get this training without College. Even high paying finance jobs are being automated now. If you are going to invest in a college education, make sure you are getting usable skills. Think STEM.
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Joining the military is another way to repay college loans. It’s the GI Bill in reverse. The military is glad to do this because they get a better quality enlistee or officer candidate than someone fresh out of high school.
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Your comment piqued my curiosity.
I’m under the impression that GI Bill financed future education for the military member or the veteran.
I’ve never heard of the GI retroactively paying for education obtained in past years.
Is that a new program or something?
Thanks in advance for an explanation.
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“Heavily promoted by Obama.’
Hope & Change…..
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Mish, well said. Time to get rid of student loans. Time to take down the castles and kingdoms of higher education. Time for education K thru college to be for the people. For the administration and teachers to live in reality with us.
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Why they don’t offer something honest to prepare people for the real world I don’t know. Here are my suggestions, degrees in :
Free thought (don’t charge me for tuition)
Counterfeit and engraving ( top bank positions )
Sedition ( essential political training)
Corruption ( ditto and useful in any bureaucratic setting)
Hacking ( NSA fast-track)
Fantasy application ( modern journalism)
Smuggling ( CIA)
Bicycle repair ( duh)
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Cannon fodder is the most in demand job for snowflakes. And you might as well clean out the minimum balance in their bank accounts first
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Well that course is actually labelled ‘Emotional Conviction’. It is a very clever lesson in personal psychology, where the student witnesses first hand how he/she is overjoyed to go into debt, all the way through to the depth of disappointment experienced on the graduation trip to Venezuela. Highs and lows are super accentuated throughout the learning period by promoting a gradually amplifying sense of worthlessness and then superiority in a sequence that is then later pursued as a normal. However in our course you are actually shown first hand the mechanism and have your own weakness explained, so allowing the student a maximum benefit in being able to navigate the political apparatus and achieve total profit from it with little risk to self.
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No denying that college was an excellent investment years ago.
Also no denying it has become an overpriced political indoctrination camp for sissies today.
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INDENTURED SERVITUDE, contrary to Mish’s wish, will NOT go away overnight. For the same reason pensions are slow in the reform arena…..many of our friends and neighbors are sleep walking during their lifetime. A repetitive loop of absurd chatter cycles in their brains.
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School loans are no joke. I am 22 years old and well over 40k in debt because of school loans. I just had one of the loans defaulted and am witnessing first hand how impacting such debt is, mostly when it is of such large amount. Personally, my debt is well over 50% of my income, if not well over my annual income in general. I cannot buy property until it is paid down and I cannot get a personal loan to try to and combine it all into one payment to make it easier on myself either because I am so young and my debt is already so high. It is definitely an eye opener and quite scary to think that trying to achieve a higher education is in a sense quite damaging.
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Thanks for sharing
Mish
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This is totally fair but a balanced perspective is to ask what your lifetime income is like due to you having a degree. I suspect your degree, over the long run, has added well in excess of $40K to your lifetime income.
My wife brought a condo and rented it out. She gave up a lot of spending money to make the down payment, fix it up etc. Only over time gradually does the benefit build up (like an extra $200 a month after paying the mortgage). Long game it’s a winner but short game it feels like you lost relative to others.
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I actually never got to finish and get my degree. It became too financially struggling to continuously take out personal school loans with the help of a family member to afford to cover on top of trying to balance enough money to pay the extra 700+$ out of pocket for books and materials. I am lucky if I bring home 40k a year with my current position. I just make 40k to be quite fair, but it is only due to strenuous amounts of extra hours at work in order to get by financially and it still is a struggle to do so. I work up to 50 hours a week and I just afford enough for all of my bills and rent and necessities not including my school loans.
Though it may be better for some who have since in the long run began earning more; for those of us like myself who did not get to finish due to whatever circumstances, it ends up being a bigger struggle than anything.
Me Personally, I feel it to be quite disheartening. I feel like my debt is trapping me because it is so large and that I cannot move forward until I find a way to get it paid down or off completely which i feel is almost impossible right now.
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Sadly I think my response got lost.
First, I think you might be underestimating yourself. Even with a little bit of college is there absolutely no way you can leverage that into a slightly better paying job? If not tomorrow then maybe take a year to concentrate on searching, networking, getting a good mentor to help you develop? The median income in the US is about $52K so even if you just achieved that you would see a $12K increase in income per year…enough to quickly retire your student debt in less than half a decade and then enjoy a 25%+ increase in your living standard.
Second, I can think of some policies that might help you and many in your boat:
1. After a long period of time with low income (say 15-20 years), allow student debt to be forgiven. For those who just never work out or those who put a lifetime into low paid non-profit type work this would help a lot.
2. Cap student loan interest to the Federal Treasury rate. This will not magically eliminate burdens but a slightly lower payment per month adds up over time.
3. Crack down on for profit schools that load up their students on debt but don’t leave them with training that helps them get decent jobs. If large % of their students do not see improved incomes, then such schools should have to either dramatically lower their tuition or stop accepting gov’t backed student loans.
4. Make 2 year college free. 2 yr colleges cost a fraction of 4 year colleges and they are a great way to get a degree fast OR transfer into a 4 year school while dodging the cost of spending a full 4 years there. They also offer vocational programs that are just as good as trade schools or better at lower cost. Since they compete with both 4 yr and trade schools this would be a good way to put a lot of competition to the overall system. I did a 2 year school myself and I had grads that went onto Ivy League schools.
Now ask yourself what did you do in the last election? There was a party that supported policies like the above and there was a policy that offered 0 support to such policies. Did you support the first or did you support the one that promised you an exciting new job in a coal mine?
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