Consumers owe more on student loans than they do on credit cards. That’s a lot of money. We’re talking $850 billion. And while loan debt is “good debt” — it also is subject to conditions that make it largely inescapable even in dire situations. Will higher ed have to be restructured as these debt loads increase, and we soon hit the limit of where full-pay families can afford our services? If tuition/fees keep going up at around 5-7%, that day isn’t long away.
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4 Comments
The student loans are like an anchor around a lot of people’s necks. The ability to get rid of a student loan through bankruptcy was taken away in the 1970s — I remember when it happened. Um, the ability of people to borrow this kind of money HAS to have been significant for the “good times” at universities. I think we academics have been paying way too little attention to just how our business gets financed.
The only way to eliminate student loan debt that I am aware of is through a total and permanent disability discharge, requiring a form from a doctor and three years of earnings below the poverty level. Even if one qualifies, the processes is complicated and the application can get rejected on procedural grounds.
Funny, I was just thinking about this, and plotting higher ed next to real estate prices: http://familyinequality.wordpress.com/2010/08/25/home-school/
Higher ed is related to the real estate bubble more than metaphorically, since its inflation is (was) bankrolled partly by increasing real estate values. The debt may be the first thing to collapse, but the rising cost of higher ed underlies it.
And there are also implications for the marriage market, as pointed out in this extreme example: http://www.nytimes.com/2010/09/04/your-money/04money.html?src=me&ref=your-money.