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Article posted Mar 09 2012, 5:17 PM Category: Economy Source: The Economic Collapse Print

Ben Bernanke Says That His Son Will Graduate With $400,000 Of Student Loan Debt

by Michael Snyder

Who ever imagined that Ben Bernanke would become a poster child for the student loan debt problem in America?  Recently Bernanke told Congress that his son will graduate from medical school with about $400,000 of student loan debt.  For most Americans, such a staggering amount of debt would almost certainly guarantee a lifetime of debt slavery.  Unfortunately, Bernanke's son is not alone.  According to the Federal Reserve Bank of New York, approximately 167,000 Americans have more than $200,000 of student loan debt.  The cost of a college education has increased much more rapidly than the rate of inflation over the past several decades, and most students enter the "real world" today with a debt burden that will stay with them for most of their working lives.  In an economy where there are so few good jobs for college graduates, it can be incredibly difficult to get married, buy a house or afford to have children when you are drowning in student loan debt.  It would be hard to overstate the financial pain that student loans are causing many young adults in America today.  The student loan debt problem is a national crisis and it is not going away any time soon.

The Federal Reserve Bank of New York says that the total amount of student loan debt in America now exceeds the total of all credit card debt in the country.  It also exceeds the total of all auto loans.

The New York Fed says that there is a total of $870 billion owed on student loans in the United States right now.  Other sources claim that the total amount of student loan debt in the United States will soon exceed one trillion dollars.

Either way, we are talking about an extraordinary amount of money.

Sadly, approximately two-thirds of all U.S. college students graduate with student loan debt these days.  The average amount of student loan debt at graduation is approximately $25,000.

That might not be so bad if the economy was full of good paying jobs for college graduates, but that simply is not the case.

As college tuition continues to soar, the student loan debt problem continues to get even worse.  U.S. college students are borrowing about twice as much money as they did a decade ago after adjusting for inflation.

That is not a good trend.

The truth is that it has simply gotten way too expensive to go to college.

Back in 1952, a full year of tuition at Harvard was only $600.

Today, the price tag is $35,568.

So why is a Harvard education 59 times more expensive than it used to be?

Somebody is getting rich off of all this, and it isn't the students.

In fact, many students are looking at a life of debt slavery for decades to come.

The following is a quote from one recent graduate from a recent Politico article....

"I pay almost $1,000 a month just in student loan repayment. I will have to do so for the next 30 years. How will I ever afford to buy a house, have children or save for the future?"

After working so hard all the way through school, is that any kind of a "future" to look forward to?

The system is failing our young people.

Many young college graduates have found themselves unable to make their payments or have simply decided to quit making payments.

Officially, the student loan default rate has nearly doubled since 2005.  But a new report from the Federal Reserve Bank of New York says that things may be even worse than that.  According to the New York Fed, approximately one out of every four student loan balances are past-due at this point.

But it isn't just young people getting into trouble with student loan debt.

These days, financial institutions are increasingly targeting parents.  Federal student loans often do not cover all of the expenses of college in this day and age, and so increasingly loans are being made to parents to make up the difference.  Student loans made to directly to parents have increased by 75 percent since the 2005-2006 academic year.

Unfortunately, what students and parents are getting in return for all of this money is not that great.

I spent eight years of my life studying at U.S. colleges and universities.  The institutions that I attended were supposed to be better than most.  But most of the classes that I took were a total joke.  A 6-year-old child could have passed most of them.

Almost everyone agrees that the quality of college education in America is in a serious state of decline.  The goal is to get these kids through the system and to keep collecting the big tuition checks.

When I was in school, I could hardly believe how little was being required of me.  But being as lazy as I was, I certainly did not complain.

If only more parents realized what was really going on.

The following are some facts about the quality of college education in the United States from a USA Today article....

-"After two years in college, 45% of students showed no significant gains in learning; after four years, 36% showed little change."

-"Students also spent 50% less time studying compared with students a few decades ago"

-"35% of students report spending five or fewer hours per week studying alone."

-"50% said they never took a class in a typical semester where they wrote more than 20 pages"

-"32% never took a course in a typical semester where they read more than 40 pages per week."

Are you starting to get the picture?

If you are in college right now, enjoy the good times while they last, because when you graduate you will find that there are very few good jobs available for the hordes of new college graduates that are pouring into the labor market.

For a new college graduate, things can be rather depressing.  Just consider the following statistics....

*About a third of all college graduates end up taking jobs that don't even require college degrees.

*In the United States today, there are more than 100,000 janitors that have college degrees.

*In the United States today, 317,000 waiters and waitresses have college degrees.

There are millions of college graduates that are unemployed in America today.  There are millions of others that have been forced to take very low paying jobs because that is all they can get.

It is no coincidence that incomes for households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation since the year 2000.

Young people in America are under intense financial pressure right now.

Many are unable to make it at all and have moved back in with Mom and Dad.  As I wrote about recently, approximately 25 million American adults are living with their parents at this point.

The system of higher education in this country is badly broken and it desperately needs to be fixed.

So do you have a solution to these problems or do you have a student loan debt horror story to share?





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Comments 1 - 5 of 5 Add Comment Page 1 of 1
Keudo

Posted: Mar 10 2012, 11:53 AM

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Heh, I'm up to my neck in student loans. My degree - Bachelor of Arts in Historical Interpretation - has gotten me zip. I recently got back from training for my class A CDL, and I start driving dry freight here in less than a week. I will be on the road for upwards of 35 days before I get a couple days off to see family, and this is just to pay for my loans and bills. College is one of the worst decisions a young person can make anymore. If you aren't going to be a lawyer or successful politician, or maybe a doctor of some sort - don't go to college. You won't get anywhere in life but f*cked.
Chris

Posted: Mar 10 2012, 2:06 PM

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I remember when Peter Schiff had a young college grad on she had something like 200k student loan debt, he said she should think about just moving to another country and working overseas rather than pay it back. ( Source: http://www.youtube.com/watch?v=VTNFfzUsptI )

I'm not positive, but I think the Schmobama administration did some executive order a while back lowering people's student loan repayments:

"The plan, to be implemented by executive authority alone, allows some 1.6 million students to cap their loan payments at 10 percent of their discretionary income starting in 2012. It also forgives the balance of student loans after 20 years of payments. Current law allows students to limit loan payments to 15 percent of income, forgiving debt after 25 years of payments, though few students are aware of this option."

( Source: http://news.yahoo.com/obamas-student-loan-debt-relief-plan-too-good-234242818.html )

I don't know if he did that or not, I remember he nationalized the student loan debt and guaranteed the banks the gubmint will pay the debts off, but I don't know if he did that plan.
North Carolina

Posted: Mar 11 2012, 3:14 PM

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9869 <i>"...Back in 1952, a full year of tuition at Harvard was only $600. Today, the price tag is $35,568."</i>
I'm not even disagreeing that college tuition is too high (though it is still heavily subsidized by all workers including those who can't afford to go). But if a 4 year degree from an expensive ivy-league school like Harvard costs $35,568 x 4 = $142,272, then a 4 year degree from an ordinary state university in one's home state probably costs at most 1/3 of this, ~$47,424. It is ridiculous to claim that $200,000 is a normal debt.
No one is stopping these college students from getting a part time job while at college. Most colleges even assist students in finding jobs.
I'm all for eliminating interest payments on college debt, but college is a choice, and if a student incurs a debt for the advantages that a college education brings, then that student needs to repay the loan.
Anonymous

Posted: Mar 12 2012, 1:41 AM

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70180 N.C. why are you all for eliminating interest payments on college debt? Loans need to have interest applied else the lender is giving away money with no profit in return.

The issue this article is illuminating is that college has become a joke. We push more and more kids to attend college, allowing colleges to raise rates without caution b/c parents/society will tell kids to attend no matter how expensive. Then as costs have gotten prohibitive, the gov't has come in and pushed more and more gov't backed loans out, making debt extremely easy to acquire...but it's proving as hard as ever to pay back - well actually proving harder as inflation is costing expenses to rise, but wages aren't keeping pace thus college graduates finish and move back in with mom and dad.

The solution isn't to have gov't pay for loans, it's to have people find less expensive ways of educating themselves. Waiters, janitors, daycare workers, assembly line workers, etc...should all have zero student debt b/c they don't need college degrees to carry out their careers. I'm all for education, but the average American can learn more from reading 10 issues of national geographic (or several other mags) at their local library than they will in a 100 level course at their state college and they'll save $1,000's while they learn.
Keudo

Posted: Mar 13 2012, 2:06 AM

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Chris - the plan that was passed did in fact lower payments to 15% of income with loan discharge after 25 years of payments. The issue being - this only applies to federal stafford and any FFEL loans subsidized by the government through private lenders. Any private loans not originating from the gov or not being subsidized by such are unaffected. Which means my federal stafford loans are very low payments - I pay less than $100 a month there - but my private loans (which I actually have less in full private debt than my federals) are almost $400 a month. And they won't reduce them despite my being unemployed. I can afford my federal payments at the moment with what little money I have left from my last job, but I will go on forbearance for next month until I'm employed again and earning money.
Comments 1 - 5 of 5 Page 1 of 1


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