patrick.net

And for anyoen who doubts the existence of a student loan bubble, jsut read this gem:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/30/MN4G1J8PRR.DTL#ixzz1LJFiq0xI

A friend of mine in Chicago is paying for her daughter to attend acting school in Los Angeles. Very pricy school. Not to mention living in SoCal for the next three or four years.

http://aada.org/home/home.html

My guess is that by the time she gets her acting "degree" (???), it will have cost well over $150K. Then what does she do? Get a job working fast foods?

I'm amazed her parents are funding this scam. No telling how many loans are involved. The Dad's (Bio and Step) I'm sure have been told to stay out of it.

My suggestion to my friend is that maybe her daughter should look into serving in the military for three years. Then she would have some educational benefits in which to pay for school. Assuming this "school" is approved by the VA.

Suggestion did not go over well.

HousingWatcher says

NEW YORK — The average college graduate leaves school with $24,000 in debt

That's it!? I'm surprised it's not more considering....

HousingWatcher says

Over the past 25 years, college tuition and fees have risen three times as fast as individual family income. And over the past decade, tuition has increased at a rate of 5.6 percent per year beyond the rate of general inflation.

Not everybody is ignoring it anymore. On a flight a few months ago I watched a 1 hour news special on the topic - one of the major news networks forget which.

I'm not sure "bubble" is the right word, but the ever rising levels of debt being offered to students to cover ever rising education costs are a large part of the CAUSE of those rising education costs, much like with the housing bubble.

SF ace says

you can default and file bankrucpcy as many time as possible, but students loan can almost never be discharged. It’s 99% risk free to the lender and 100% risky to the borrower. Of course, because the loan cannot be discharged is also the reasons the rate of interest is so low and access is easy.

= Bailout guaranteed?

That $24,000 can quickly grow during deferments when the bororwer has no job for several years. $24,000 is what they have in debt on the day of graduation. PLus, in many cases, those students will go on to grad school where their loan balance will quickly skyrocket. Law school will add $120,000 to that balance. Med school will add $250,000 to that balance.

klarek says

People seem to think I’m harsh towards those who bail on their mortgage obligations. Fact is that if you’re using a loan to pay for school (and very few these days CANNOT avoid this), you’re married to that debt for life.

Out of the blue... know anyone who used mortgage debt to pay off their student loans?

terriDeaner says

klarek says

People seem to think I’m harsh towards those who bail on their mortgage obligations. Fact is that if you’re using a loan to pay for school (and very few these days CANNOT avoid this), you’re married to that debt for life.

Out of the blue… know anyone who used mortgage debt to pay off their student loans?

No but there are allegedly people who have paid off student loans with credit card debt then bk'd.

shrekgrinch says

So watch the Feds turn it into a ‘public service’ scam for those who can’t pay.

They already have (nytimes):

Obama Signs Overhaul of Student Loan Program
http://www.nytimes.com/2010/03/31/us/politics/31obama.html

Students who borrow money starting in July 2014 will be allowed to cap repayments at 10 percent of income above a basic living allowance, instead of 15 percent. Moreover, if they keep up payments, their balances will be forgiven after 20 years instead of 25 years — or after 10 years if they are in public service, like teaching, nursing or serving in the military.

terriDeaner says

or after 10 years if they are in public service, like teaching, nursing or serving in the military.

thats terrible favoritism. Obama is really a big socialist after all. Way to stick it to the private sector.

ChrisLA says

terriDeaner says

or after 10 years if they are in public service, like teaching, nursing or serving in the military.

thats terrible favoritism. Obama is really a big socialist after all. Way to stick it to the private sector.

I think the point has been made before, but these are not particularly well paying jobs at the entry level. And depending on where you end up in the hierarchy of these career fields, those 10 years of debt slavery could end up being pretty rough.

Somebody says

Way to stick it to the private sector.

LOL.

http://research.stlouisfed.org/fred2/series/UNRATE

Troy says

terriDeaner says

Way to stick it to the private sector.

I didn't write that - Chris did.

Correct me if I am wrong, but I think that the term "bubble" is being thrown around a little fast and loose here.

Don't get me wrong I think there is a big problem with the debt people are taking on to get a degree, and yes tuition inflation has been going crazy.

But, don't you need a "greater fool" to have a bubble?

As stated by others the debt is not dis-chargeable, and there isn't going to be another "consumer" buying someone's education (hopefully an employer will, but I hope you get the point). Pretty much the only person screwed is the indebted student. Yes I understand the greater economic implications of this, but no one else is left "holding the bag" so to speak.

shrekgrinch says

The student loan indentured debtservitude scam is the ultimate vehicle to getting people into debt slavery, in my view.

Wow, shrek something that we are in total agreement on. I did not think I would live to see this day.
shrekgrinch says

And the federal government just took over most of it (the banks just originate the loans for the Feds with the exception of one public bank because a high-powered Dem is on that bank’s board). So watch the Feds turn it into a ‘public service’ scam for those who can’t pay.

Yeah, seems to be the direction it is going, and I don't know if I would call it a "scam"...

... not sure what the mention of an unnamed "high-powered Dem" helps with this point.... but... I guess OK...

shrekgrinch says

And watch those ‘public service volunteers’ end up working Democratic party phone banks around election time, too.

Oh, shrek... oh no... we were so close buddy...

This was just a lead in for another conspiracy theory? Oh, shrek...

Sigh...

Oh, well....

so...

close...

Education is an investment in ones future. Like with most things in life there are no absolutes. Jobs are not guartneeded. And situations change over time. That said, there is a difference between spend 150k for an "acting" degree vs. spending $250k to get your JD and pursue a legal career. One can make a sound investment or one can make a poor one.

I think the biggest problem with education is the fact that almost every high schooler in the country is told "you need to go to college" the focus is put on what schools they can get get accpeted into, not how to make sound career choices.

Although I agree it may not be a bubble per-se, but certainly the if the cost of a degree continues to escalate, a time will come when its cost far outweighs what it "should" when you look at the benefits of having said degree. Much as in a bubble prices rise far beyond what is sustainable. But that said the crash - that is to say people refusing to go to college, or refusing to go to the higher cost colleges - we're nowhere near that point yet.

shrekgrinch says

One futurist blogger has defined a ‘Misandry Bubble’ and its coming collapse. It is fascinating reading…but if you have feminist bone in your body, you’ll be pissed off (fair warning). http://www.singularity2050.com/2010/01/the-misandry-bubble.html

this is one of the most underreported problems in modern western societies. Men are absolutely discriminated against.