Unpaid Student Loans Top $1 Trillion

[G_j]

http://www.commondreams.org/headline/2011/10/19-4

Published on Wednesday, October 19, 2011 by Politico.com

Unpaid Student Loans Top $1 Trillion
by Tim Mak

Giving validation to Occupy Wall Street protests over the increasing burdens of student debt, a new report indicates that the amount of total amount of outstanding student loans will exceed $1 trillion for the first time ever this year.

In addition, the amount of student loans taken out last year was greater than $100 billion, another new record, according to USA Today, citing the Federal Reserve Bank of New York.

The $1 trillion of outstanding loans means that Americans now owe more on student loans than on their credit cards. While students have been racking up educational loans, American consumers have been paying down credit cards and home loans.

The average full-time undergraduate student borrowed $4,963 in 2010, up 63 percent from a decade earlier, even after adjusting for inflation, the report says.

Meanwhile, with a greater loan burden, the percentage of borrowers that defaulted on their student debts also rose - from 6.7 percent in 2007 to 8.8 percent in 2009.

..more..

[frazzled]

1. It's their parents who are in bigger trouble.

The amount a student can borrow has yearly limits. The parents have to cough up or borrow the rest. And they are often in really vulnerable positions if laid off (50 year olds and up are the most unhireable.) Besides PLUS loans that parents took out, I bet many were tapping the so-called equity in their homes during the rah-rah 2000s to pay the difference on skyrocketing tuitions. Now, they're laid off and their houses aren't worth anything, and they have huge loans to pay back.

[Blue Meany]

2. The latest bubble - caused largely by prviate for-profit

colleges lending huge amounts money to to unquallified students for with promises that they would mkae big money once they graduate from these 3rd rate institutions. It's a shame that so many big money investors aren't willing to make a reasonable profit producing useful products and services, but instead dream up legal schemes to extract wealth from the American people.

[badtoworse]

4. Can you substantiate that?

Just because a school is private does not mean it's for profit.

[RaleighNCDUer]

5. How about this.

http://homeworktips.about.com/od/preparingforcollege/a/diplomamills.htm

Of course, not every private school is a fraudulent operation, but many are - students get the loans, are obligated to pay them back, then find out their degrees are worthless. Particularly bad with on-line 'universities' and small unaccredited 'community colleges'. Some of these places are no more than a post box #. While the operation is a fraud, the loans the students get are legitimate and it is on THEM to pay off.

[badtoworse]

7. I know these scams exist.

What I'm questioning is the extent to which they are causing the bubble. It seems to me that a very large portion of the debt would be for education at legitimate colleges.

[RaleighNCDUer]

8. Of course. But it is the illegitimate operations and unsupportable loans

that are pumping it up - not to mention the accelerating costs. Back in the day, the only people who wound up with 30-40K in student loan debt were those going to the very top tier institutions - Harvard, Yale, etc. My first three years of college I took out short-term loans, worked through the semester and paid them off before the next semester started. That's impossible today unless your p/t job is pole dancing.

So legitimate loans at legitimate institutions are a part of it, but it is vastly inflated by the scammers whose victims will never be able to pay off the loans. That's the loan debt that stays on the books forever.

[badtoworse]

9. I find that hard to accept

There are lots of students graduating from legitimate schools that can't get jobs. Many have substantial debt and I believe they are the biggest part of the bubble.

A friend of ours just graduated from Emory Law School and was lucky to get a low paying job as a paralegal. I know she has substantial debt and won't be able to pay it until she finds a better job. As far as I know, Emory University is a good school.

[Liberal_in_LA]

3. kick

[WCGreen]

6. I believe there is a correlation between the ease of getting loans

the increase in the cost of education.