by Robert Wilkinson
While there is some debate whether the obscene level of student debt is going to be the next financial bubble in the US, there is no debate that current levels of student indebtedness will financially cripple many lives for decades to come, given stagnant wages and predatory corporate hiring practices.
Today’s topic comes courtesy of a story that asks the question Will Student Debt Be America’s Next Financial Bubble? In the piece we read that “The last two decades have been marked by sharp increases in student debt... and the average debt per student is now $30,000.” Since wages have stagnated over the past several decades, that leaves many graduates unable to pay off the debt and still have any lifestyle at all, let alone home ownership or new cars.
I’m not sure that people refusing to pay down skyrocketing debt constitutes “a bubble” that will impact the economy, since it’s only the banksters who would take any hit at all, and they’ll just write it down against profits while screwing the credit of those who cannot pay. These are not commodities in wide demand that a few are hoarding while trying to maximize profits, since loans are readily available for students to receive. The banks are more than willing to offer loans they know graduates will not be able to pay down for years, yielding huge profits off the interest payments.
This is a bankster scam that relies on tuition being obscenely high at most colleges, but wages being obscenely low for most workers. This won’t yield a bubble, as much as indentured servitude for years, depending on how much debt is taken on.
Some who don’t want to stay broke for life will just walk away. Walking away from a piece of paper is different than walking away from a mortgage, since the banks can resell a house, but cannot resell a piece of paper except to some collection bottom feeder.
Here I’ll note that there are other, less expensive, educational pursuits to explore than those that leave you in debt for life. Some college degrees just aren’t worth it. There are plenty of skills our world needs that don’t require anyone going into tens of thousands of dollars in debt to banks.
This is offered in the article: “Professor Robert Archibald from The College of William and Mary does not see the connection between student debt and a looming bubble... (explaining that) student debt is different from debts of the recent past, since bubbles occur when an overpriced product suddenly drops in value. Instead, Professor Archibald contends the price will never come crashing down; students will simply be burdened with ever-growing debt and tuition costs each year.”
There are other questions and speculations in the article, so if student debt is one of your concerns, you might want to go to the article and read the whole thing. My take on debt is the same as it has been for years – don’t go into debt if you can help it, don’t spend money on things that are worthless, and if you do have debt, pay it down as fast as possible. You’ll do better over the long run to the degree you are not indebted to banksters, who are merciless parasites on society.
Since I composed this, Rolling Stone has come out with an article by Matt Taibbi on this exact subject titled Ripping Off Young America: The College-Loan Scandal. It's a long article, but worth the read if student debt is any concern for you or anyone you know and love.
© Copyright 2013 Robert Wilkinson
Perhaps US legislators should look at the policy for student loans in Australia?
Regarding university degrees, the government pays for your degree and you don't have to pay it back until you earn above 50K per annum. Then the repayments are deducted via the taxation system.
Posted by: RodJM | August 17, 2013 at 08:36 PM