Student Loan Debt Could Cause the Next Financial Crisis

• BobYoMeowMeow wrote on 2011-08-14 06:50

  Student loans may be a financial bubble that’s about to burst, warned Moody’s Analytics in a report released in July. As students graduate with greater debt and fewer job prospects, these “speculative” loans, which are based on the expectation that an investment in education will enable the student to repay his or her debt, are increasingly dangerous. The average 2011 college graduate carries $27,000 in debt, and that number is only likely to increase as tuitions rise and states slash funding for colleges and universities.“Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place,” Moody’s warned.
  
  This certainly contradicts the mantra that I heard throughout college: study what you love, and you’ll be able to find a job afterward. That’s how I ended up majoring in Religion and Gender Studies, two fields that are not likely to make me a millionaire anytime soon. But as a recent graduate, I can understand how difficult the job market would be to navigate if I carried as much debt as the average ex-student. Living on an internship stipend would be much harder if, among rent, food and cell phone costs, I had a monthly debt payment to make.
  
  The question is, what’s the solution? I was able to graduate without debt because my university chooses to offer financial aid grants instead of loans. But I know that I attended one of the few schools that kept this option open, even after the recession hit. Andrew Hacker and Claudia Dreifus ask some difficult questions in a piece for The Chronicle of Higher Education, explaining that universities need to be more culpable for the choices that result in higher tuition costs.
  
  “Claudia recently attended a faculty meeting at a well-known school where a series of expensive projects and a 5-percent tuition increase were announced,” they write. “Not a single professor rose to question those decisions, nor did anyone seem to give a thought to how their students would pay.” Professors’ salaries, they add, have remained mostly untouched as tuitions skyrocket.
  
  But is it possible that some students are attending four-year colleges and racking up mountains of debt when they would rather attend two-year vocational schools? The overwhelming emphasis on a liberal arts education may be blinding us to the fact that a) this education is becoming prohibitively expensive and some people do not benefit from such an education. Massive cuts to vocational and technical schools could result in the same need to accrue debt.
  
  A less educated workforce would place the United States at an undeniable disadvantage. But that may be
  

  
  
  http://www.care2.com/causes/student-loan-debt-could-cause-the-next-financial-crisis.html
  
  first the dot com bubble
  then the housing bubble
  and now, the student loan bubble
• Sedia wrote on 2011-08-14 06:59
  So....I might not go to College? I don't think manga artists and graphic novelists are in demand right now,and in this day and age,where will I find a job to pay off the loan? Well my highschool does award students with a bit of money to whatever college they're going to. I hope I'm one of them that recieves financial aid.
• Fynl wrote on 2011-08-14 07:12
  I blame high school
• Yoorah wrote on 2011-08-14 07:14
  I was watching an interview on CNN about this today. Basically, it's FUD. Key thing to keep in mind here is that despite the crazy high average unemployment rate in the US atm, the unemployment rate for college grads is only 4%. This 4% includes lazy people who don't wanna work, people who can't work, and people with useless degrees. Given this fact, a college education gives the average grad an obvious advantage. The key here is not to go to expensive schools if you cannot afford to do so without raking up huge debt. Go to community college instead. Live at home, rather than on campus. etc
• Sedia wrote on 2011-08-14 07:18

  Quote from Yoorah;551485:

  I was watching an interview on CNN about this today. Basically, it's FUD. Key thing to keep in mind here is that despite the crazy high average unemployment rate in the US atm, the unemployment rate for college grads is only 4%. This 4% includes lazy people who don't wanna work, people who can't work, and people with useless degrees. Given this fact, a college education gives the average grad an obvious advantage. The key here is not to go to expensive schools if you cannot afford to do so without raking up huge debt. Go to community college instead. Live at home, rather than on campus. etc

  
  
  That's what I'm planning to do. I only live a mile away from RIC and I can take an art course there and be able to stay home with my mom and dad.
• Fynl wrote on 2011-08-14 07:29
  I think another big part of that is that high schools drum into you how much you have to go to college no matter what. Some people aren't cut out for it and some people might not even need it. What's the point of going for 4 years if you want to be a carpenter or mechanic?
  
  Also, it's not just the grads that get piled under debt. It's also the people that drop out after takin on loans.
  
  I don't about the general population but a huge number of people at the university I went to just went because they wanted to draw anime or play in a rock band. A huge waste of money imo, especially seeing where they ended up after college.
• BobYoMeowMeow wrote on 2011-08-14 10:27

  Quote from CurlyBrace13;551464:

  So....I might not go to College? I don't think manga artists and graphic novelists are in demand right now,and in this day and age,where will I find a job to pay off the loan? Well my highschool does award students with a bit of money to whatever college they're going to. I hope I'm one of them that recieves financial aid.

  
  manga artists and graphic novelists will find a very hard time anywhere to be honest
  
  it takes luck and good marketing for someone to earn a living from it.
• Adelynn wrote on 2011-08-15 03:29
  I'll have 20K in loans by the time I'm out.
  
  Considering that the total for 4 years is 120K, I guess I got it pretty easy compared to other people. Still, it scares me. Hurray for required financial course.
• Akemii wrote on 2011-08-15 03:31

  Quote from Yoorah;551485:

  I was watching an interview on CNN about this today. Basically, it's FUD. Key thing to keep in mind here is that despite the crazy high average unemployment rate in the US atm, the unemployment rate for college grads is only 4%. This 4% includes lazy people who don't wanna work, people who can't work, and people with useless degrees. Given this fact, a college education gives the average grad an obvious advantage. The key here is not to go to expensive schools if you cannot afford to do so without raking up huge debt. Go to community college instead. Live at home, rather than on campus. etc

  
  
  You think a community college degree would look good if one were to move to Brazil? :S
  
  Don't think i can afford college to be honest.
• BobYoMeowMeow wrote on 2011-08-15 03:46

  Quote from Akemii;552134:

  You think a community college degree would look good if one were to move to Brazil? :S
  
  Don't think i can afford college to be honest.

  
  
  depends on what you want to do
  but with honesty, U.S. state universities and higher have international recognition
• Akemii wrote on 2011-08-15 03:49

  Quote from BobYoMeowMeow;552148:

  depends on what you want to do
  but with honesty, U.S. state universities and higher have international recognition

  
  
  I'd still look better than the average graduate there though.
• BobYoMeowMeow wrote on 2011-08-15 03:54
  Well yes,
  You would look better educated than a majority of people at your age group in Brazil
• Fynl wrote on 2011-08-15 04:10

  Quote from Akemii;552134:

  You think a community college degree would look good if one were to move to Brazil? :S
  
  Don't think i can afford college to be honest.

  
  
  A negative stereotype that I notice high schoolers (at least around here in the northeast) have is that community colleges suck and are only for flunkies, druggies, and people with no hope of a future. It's not true, a community college degree will get you a job just as good as a private school. Employers judge you based on you and if they don't like you or don't hire you because of what school you went to, then you're better off not even working there.
• Kingofrunes wrote on 2011-08-15 04:14
  If you want my opinion on college after doing 5 years of it myself. It's mostly useless. You're better off teaching yourself programming and learning it on the job. I've learned more from on the job experience/training than I ever did in college. Most of the stuff colleges force you to learn I found to be 100% useless and I remembered it to pass the course and then set aside in my mind to be sent into the forgotten information lane where I'll never use or recover it later.
• Akemii wrote on 2011-08-15 04:20

  Quote from BobYoMeowMeow;552164:

  Well yes,
  You would look better educated than a majority of people at your age group in Brazil

  
  
  And being able to speak english+portuguese fluently is a plus.
  
  
  And Fynl, yeah that is a bad stereotype. I just wanted that "college experience" y'know? But I'll make due.