College is Getting Worse and Far More Expensive

June 3, 2013 at 4:19 am Leave a comment

Back in the day,  I remember that Cal State Fullerton was $2,000 a year.   I graduated without any loans or student debt to worry about.  My merger $9.00 hour job at Home Depot was able to foot the cost of my books  However, the price of education has gotten progressive worse over the years.  

Today, people are the prisoners of debt as discussed in NY Times blog today

Unless Congress can overcome its partisan differences, interest rates on federally guaranteed Stafford loans, an important means of paying for college, will double to 6.8 percent in July.

With the Bank on Students Loan Fairness Act, Senator Elizabeth Warren, Democrat of Massachusetts, proposes to reduce this interest rate to the same level that large banks pay for loans from the Federal Reserve Bank — 0.75 percent — for at least one year, during which longer-term remedies could be explored.

The bill, one of many aimed at addressing the scheduled interest-rate increase, seems unlikely to win passage. But it highlights the double standard that puts the interests of banks and other businesses well ahead of those of students and ordinary people when it comes to debt relief.

As Robert Kuttner explains (both in The New York Review of Books and in his new book “Debtors’ Prison”), bailouts and bankruptcy proceedings both provide a means for businesses to get out from under bad debt. The obligations of a college loan, by contrast, “follow a borrower to the grave.”

The rolling thunder of accumulating student debt sounds a lot like the perfect storm of mortgage liabilities that threatened major financial institutions and precipitated the Great Recession in 2007″

It gets worse as illustrated by this blog post from Business Insider

At 44 years old, Nicole Jackson says she has bigger concerns than the six-figure student loan debt that has shadowed her for the last 20 years.
Jackson, a Miami, Fla.-based family law attorney, gave up on ever paying off her $186,000 federal student loan balance years ago. At $1,600 per month, her monthly loan payments eclipsed her $1,200/month mortgage and she and her husband are raising three teenage daughters.
“The way I see it, I’m already screwed,” Jackson told us. “I’d rather make sure my kids are OK. Unless I start making significantly more money [my situation] is not gonna change.”
With the nation struggling under a $1 trillion student debt crisis, stories like Jackson’s are nothing uncommon. For the first time ever, the national student loan default rate exceeds the credit card delinquency rate, and so long as student loans remain one of the few types of debt that can’t be discharged in bankruptcy, chances are the situation won’t improve any time soon”

$144,000? That is ton of debt.  No wonder why young people struggle to buy a house or other things.  The cost of student loan prevents young families to buy new housing and therefore, is preventing a number of first-time homebuyers from buying into the market.

In addition, the storm of debt is another thing that bring the house of cards done.  I do not know if it is going to drag down the entire economy, but another major financial crisies compounded with the student debt debacle would torpedo the country into a major depression.

Steps needed to be taken now to reduce student indebtness before the economy faces another major disaster.   Such a economic disaster who reign hell on this economy and threaten to generate youth unemployment to the levels of Greece and Spain as I pointed out in my last post.


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