Yahoo Finance has published a good article on the student loan bubble-go-bust. Here’s an eye-opening snippet:
Secondly, defaults have soared amid a difficult job market. In 2008, the most recent year for which data are available, nearly 3.4 million borrowers began repayment, and more than 238,000 defaulted on their loans. The number of loans that went into forbearance or deferment (when borrowers receive temporary relief from payments) rose to 22 percent in 2007, from 10 percent a decade earlier, according to The Chronicle of Higher Education. Over a 15-year period, default rates range from 20 percent for federal loans to 40 percent on loans to students who attend for-profit schools, The Chronicle found.
The article highlights a student at Northwestern who graduated in 2009 with a degree in sociology and $200,000 in student loan debt. At 23 years old, her payments will be $1,600/month, which is way more than my mortgage and utility bills combined. Her life is ruined, thanks to her insistence on having a 4-year party away from home. Surely, the peer pressure to attend college – for any degree – was put on her by a bunch of pinhead adults with no empathy for the reality of others and the long term affects of decisions based on the here-and-now. Student loan debt has grown four-fold in the last decade, and still, people keep on insisting that everyone must go to college because that is the only way to “experience life.” What a sad way to view the world, and then to pass that credo on to youngsters who may not know any better.