US student debt reaches $1.5 trillion

tomar

Ad Honoris
Jan 2011
14,394
As always , there are some variations in numbers, but overall the debt is fairly large (more than the yearly GDP of Spain and somewhat lower than the yearly GDP of Italy) and growing.

Of course there is a large variety of situations: from doctors with high debt, who will make a yearly salary in the hundreds of thousands of dollars and will be able to repay it quickly to students with dubious degree who will make barely enough to pay the interest.

Still the question remains whether asking students (and their parents) to fully bear the cost of higher education is the better choice for society...

One of the issues is that people who are young (18 or 19 year old) with little financial and life experience are asked to take on a liability that may be too much for them....At the same time they are taking a risk by assuming a potential carreer choice based on fairly little info + projections on the future (who knows what jobs will be in demand 10 years from now)... The assumption that parents will provide the right guidance is not always right as parents themselves might be financially challenged even if they are not, teenagers are generally not willing to listen to their parents advice and think they know better.....




Americans have racked up a total of $1.5 trillion in student debt, and they’re having more trouble paying it off. More than one-third of all severely delinquent debt in the country is the result of the growing pile of derelict student loans, which topped $89 billion by the second quarter of this year, compared to $38 billion in the same period of 2013, according to the Federal Reserve Bank of New York.


Among 2018 graduates, 69 percent took out loans and graduated with an average of $29,800 in debt, according to the Federal Reserve Bank of New York. In addition, 14 percent of those students' parents took out another $35,600 in loans, on average.

Borrowers numbered 44.2 million and owed $1.5 trillion in student loan debt in the United States, as of the end of the fourth quarter of 2018, according to the St. Louis Federal Reserve. In the first quarter of 2008, a little more than a decade ago, the amount of outstanding student loan debt stood at $619 billion

As of the first quarter of 2018, 10.7 percent of student loan debt is more than 90 days delinquent or in default


 
Jun 2017
739
maine
Still the question remains whether asking students (and their parents) to fully bear the cost of higher education is the better choice for society
Probably not: society benefits from an educated workforce and a college degree is no longer a luxury but a work requirement.
 

pikeshot1600

Ad Honoris
Jul 2009
10,137
Do not be surprised if student debt becomes a bubble that will cause the next financial crisis. It will then become another tax payer bailout. That is if there is anything left from servicing the ongoing trillion dollar deficits we have become addicted to.
 

AlpinLuke

Forum Staff
Oct 2011
27,749
Italy, Lago Maggiore
In Italy university is public and so almost free.

Anyway, in US, even in the perspective of a private educational system, there is something wrong:

economically, education is an investment. If the return of this investment cannot pay the investment itself ... it's not economically convenient to keep such a system.

Technically US government should intervene or the EI [Educational Investment] will produce social losses, not social gains. And this is not functional. May be this is why Italian students graduated in Italian Unis [almost for free!] become professors in very expensive American universities ...
 
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AlpinLuke

Forum Staff
Oct 2011
27,749
Italy, Lago Maggiore
A bit of humor apart, private universities mean business and costs of high level education are higher and higher [actually in Italy public Universities are a few and not a lot of young Italians obtain a degree], so that there such a tremendous debt has got its rational roots: in US High Schools tend to prepare for the college, in Italy High Schools give a professional preparation making teens ready for a profession. In Italy you've got more possibilities to find a job after the High School than after the Uni [probably this is why a lot of Italian graduated students fly to US ...].

It's possible it's a cultural matter: Italians prefer artisans to scientists, carpenters to engineers ... and so on.

In any case, what I can say is that in US they have been underestimating this problem, they should begin to deal with it.
 
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May 2019
262
Salt Lake City, Utah
If the debt looms as great as stated in the OP, a graduated debt forgiveness program would energize the economy with money being spent on goods and services instead of a loan elimination.
 

Dan Howard

Ad Honorem
Aug 2014
5,271
Australia
What is more scary is how quickly it has ballooned. Student debt first topped a trillion dollars in 2012. So it has increased by 50% in only seven years.

According to this How did the US reach $1.6 trillion in student debt?

Students are graduating from private, for-profit schools with less debt than those graduating from public and private non-profit institutions, which is the opposite of what one would expect. Those who graduated from public institutions also take the longest to repay their debt.
 
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Isoroku295

Ad Honorem
Jan 2009
8,534
In the Past
If the debt looms as great as stated in the OP, a graduated debt forgiveness program would energize the economy with money being spent on goods and services instead of a loan elimination.
Doubtful.

Either you are removing the debt without paying it, which would cause massive issues for the financial sector, or you are simply having the government pick up that tab, which doesn't remove the debt, it just hides it behind tax receipts.