28 August 2011

The explosive growth of student loans

From an article at The Atlantic:
The growth in student loans over the past decade has been truly staggering. Here's a chart based on New York Federal Reserve data for household debt. The red line shows the cumulative growth in student loans since 1999. The blue line shows the growth of all other household debt except for student loans over the same period...

Obviously the number of students didn't grow by 511%. So why are education loans growing so rapidly? One reason could be availability. The government's backing lets credit to students flow very freely. And as the article from yesterday noted, universities are raising tuition aggressively since students are willing to pay more through those loans...

All this college debt could put the U.S. on a slower growth path in the years to come. As Americans grapple with high student loan payments for the first few decades of their adult lives, they'll have less money to spend and invest. All that money flowing into colleges and universities is being funneled away from other industries where it would have been spent in future years.


  1. I know that there are a million things I would like to be able to do if not for student loans. I know the easy thing to do is save back $100 each week for my loans so I won't have to pay $400 all at once (just for one loan), but when it's taking every last dime to live, it's hard to save any back. Sometimes I think it would be easier if I didn't have a job because then I wouldn't have to worry about where the money is coming from- there would be no money.

  2. A whole generation of college graduates who will not be able to afford a pot to piss in until they are well into their 30's sure isn't going to do the economy much good.

  3. I work in education and I'm seeing the other end of this. Many of the people who are taking student loans now are not doing so to get an eduction but, it's a way for them to get money to survive as there are no jobs at the moment. They're not looking at the long term repercussions. All they care about is if they get their check on time. It's a really bad problem for everybody and is going to haunt us for a long time.

    There seems to have been a push over the last 20 years or so to keep people in education longer to keep them out of the work force. I don't know if there's an actual agenda to hide the loss of jobs or just a perfect storm of circumstances. Maybe we've just finally hit the point where the job losses can no longer be swept under the rug.

  4. Interesting viewpoint; thanks, ReaperD.

  5. All these professional students hoping to get some head-in-the-clouds dream job... when I can't find someone willing to just stick with a simple labor job, painting, that will in a few months start paying them more per day than their "dream" job would in a few years.

    It's psychotic. Start learning a skill, and get a job. Within a few years you could just pay for more education, if you so desired, with cash. Assuming you actually try to master the skill and work diligently.

  6. @anonymous

    I'm a student doing both shitty labor and full time upper level academia at the same time. Your clever way to repair the student loan problem while also hindering the dreams of millions isn't gonna happen.

  7. One big reason why at least public colleges and universities have been raising tuition by so much is because the state money that they have been using for years is disappearing.



  8. From my experience, paying outright for your education is also a scam. Especially when the Texas Dept of Education shuts the place down from misappropriation of student loans...
    They were out of money and paying salaries and commissions with student grant money - which makes me wonder what student money is for if not to run the school.
    "don't worry, your loans will be prorated so they won't be that much". 'but I paid cash'. "Oh, than I am very sorry"

  9. I agree that tuition costs and student debt is growing out of control, I also found an explanation for why this chart is so difficult to understand.


  10. A large part of the increase comes from the growth in for-profit or technical colleges, that appear to exist only to rope students in and get them student loans. The graduation rate at these "colleges" is abysmal, as expected, but the loans live on.

  11. I also expect student loan debt to reflect the trend for people to take longer to get their degree. It is amazing how fast the debt grows if it takes you 5 or even 5.5 years rather than the normal goal of 4.

    Paying on by 60K debt for the next 30 years!

  12. @abby

    I think you missed the entire point of my post. You actually help pinpoint the overall problem.

    I don't know what you do, but notice your attitude towards it... Most times learning a new skill can feel like that at first. But you need to have determination to make something of it. Notice the last sentence of my first post.

    There is nothing clever about what I said, that's the exact opposite. "Go ahead and get into big debt, then hopefully later make big money, just fill out this paperwork" falls under "clever". This is simple. Work, do your best, reap the benefits.

    And what dreams are being hindered? If you want a big expensive education, then fine, save up for it. That's not hindering, that just makes sense. Debt is not cool or helpful. Paying for anything on near 100% credit because you absolutely have to is silly, whether it be a car, education, etc.


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