The Student Loan Debt Bubble Is Creating Millions Of Modern Day Serfs

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Michael Snyder, Contributor

Every single year, millions of young adults head off to colleges and universities all over America full of hopes and dreams. But what most of those fresh-faced youngsters do not realize is that by taking on student loan debt they are signing up for a life of debt slavery. Student loan debt has become a trillion dollar bubblewhich has shattered the financial lives of tens of millions of young college graduates.  

When you are just starting out and you are not making a lot of money, having to make payments on tens of thousands of dollars of student loan debt can be absolutely crippling. The total amount of student loan debt in the United States has now surpassed the total amount of credit card debt, and student loan debt is much harder to get rid of. Many young people view college as a "five year party", but when the party is over millions of those young people basically end up as modern day serfs as they struggle to pay off all of the debt that they have accumulated during their party years. 

Bankruptcy laws have been changed to make it incredibly difficult to get rid of student loan debt, so once you have it you are basically faced with two choices: either you are going to pay it or you are going to die with it.

The Next Bubble Is About to Burst: College Grads Face Dwindling Jobs and Mounting Loans

Today's graduates face miserable job prospects, and experts say the student loan crisis could be worse than the credit card or housing bubbles.

Sarah Jaffe
AlterNet

It's the beginning of summer: warmer weather, longer days, the end of the school year. And that means graduation for thousands of young people across the U.S.; graduation with more student debt than ever before, and into a job market that is anything but promising.

Young people between the ages of 16 and 24 face an unemployment rate nearly twice that of the rest of the population, according to data from the Economic Policy Institute. 2010's 18.4 percent rate for youth was the worst in the 60 years that economists have collected such data. ColorLines notes that in 2010, 8.4 percent of white college graduates were unemployed, 13.8 percent of Latino graduates, and a dismal 19 percent of black graduates.

Bad Education: College Debt No Longer Economical

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Malcolm Harris
N+1 Magazine

The Project On Student Debt estimates that the average college senior in 2009 graduated with $24,000 in outstanding loans. Last August, student loans surpassed credit cards as the nation’s single largest source of debt, edging ever closer to $1 trillion. Yet for all the moralizing about American consumer debt by both parties, no one dares call higher education a bad investment. The nearly axiomatic good of a university degree in American society has allowed a higher education bubble to expand to the point of bursting.

Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation. To put that number in perspective, housing prices, the bubble that nearly burst the US economy,  then the global one, increased only fifty points above the Consumer Price Index during those years. But while college applicants’ faith in the value of higher education has only increased, employers’ has declined. According to Richard Rothstein at The Economic Policy Institute, wages for college-educated workers outside of the inflated finance industry have stagnated or diminished. Unemployment has hit recent graduates especially hard, nearly doubling in the post-2007 recession. The result is that the most indebted generation in history is without the dependable jobs it needs to escape debt.

Newly Graduated And Drowning In Six Figures Of Student Loan Debt

College Graduates Wikimedia Image

Amanda M. Fairbanks
Huffington Post

NEW YORK -- Hardly a day goes by where Ashley Angello doesn’t fret about her student loan debt.

Angello thinks about it at night, when packing tomorrow's lunch means a few saved dollars. And she worries about it the next morning when deciding what to wear to work, since she hasn’t been able to afford any new clothes since starting her job.

“I used to joke when I was in college that I’d be paying off these loans for the rest of my life,” says Angello, 22. She graduated nearly a year ago from Ithaca College, where she majored in communications. “Little did I realize that I actually will be.”

Angello is on the hook for about $120,000. With six-figures in debt, she has little choice but to save every little bit that trickles in. And still, it's a struggle.

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Revealed: Crippling 30-year graduate debt trap will see parents paying installments as their children go to university

James Coney and Liz Phillips
Daily Mail

Graduates on modest incomes face an effective tax rate of 45 per cent and crippling debts for most of their working lives, a Money Mail investigation has discovered.

Radical reforms to the level of tuition fees and the way loans are repaid will leave many in debt until their mid-50s - by which time they'll be wrestling with putting their own children through university.

Tuition fees are set to rise to as much as £9,000 a year while living costs can be up to £8,210 a year, according to the NatWest Student Living Survey.

That's £17,210 a year or £51,630 over three years. The maximum government loan is likely to be £43,500.

Debts to the government will be reclaimed by deducting 9 per cent from any salary above a £21,000 threshold, but interest will be added to the debt. This will range from the retail prices index (RPI) to RPI plus 3 percentage points, with higher earners paying the most.

For those on modest and middle incomes, the amount of interest is likely to be greater than the amount they repay, meaning the debt will balloon through their life until, after 30 years, it is written off by the government. 

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4 Reasons to Change the Way We View Education

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Why Did 17 Million Students Go to College?

Richard Vedder
Chronicle

Two sets of information were presented to me in the last 24 hours that have dramatically reinforced my feeling that diminishing returns have set in to investments in higher education, with increasing evidence suggesting that we are in one respect “overinvesting” in the field. First, following up on information provided by former student Douglas Himes at the Bureau of Labor Statistics (BLS), my sidekick Chris Matgouranis showed me the table reproduced below (And for more see this).

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

I have long been a proponent of Charles Murray’s thesis that an increasing number of people attending college do not have the cognitive abilities or other attributes usually necessary for success at higher levels of learning. As more and more try to attend colleges, either college degrees will be watered down (something already happening I suspect) or drop-out rates will rise.

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RELATED ARTICLE:

4 Reasons to Change the Way We View Education

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Live Superfoods It is time to Wake Up! You too, can join the "Global Political Awakening"!

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