The Student Loan Debt Bubble Is Creating Millions Of Modern Day Serfs

Every single year, millions of young adults head off to colleges and universities all over America full of hopes and dreams.  But what most of those fresh-faced youngsters do not realize is that by taking on student loan debt they are signing up for a life of debt slavery.  Student loan debt has become a trillion dollar bubble which has shattered the financial lives of tens of millions of young college graduates.  When you are just starting out and you are not making a lot of money, having to make payments on tens of thousands of dollars of student loan debt can be absolutely crippling.  The total amount of student loan debt in the United States has now surpassed the total amount of credit card debt, and student loan debt is much harder to get rid of.  Many young people view college as a “five year party“, but when the party is over millions of those young people basically end up as modern day serfs as they struggle to pay off all of the debt that they have accumulated during their party years.  Bankruptcy laws have been changed to make it incredibly difficult to get rid of student loan debt, so once you have it you are basically faced with two choices: either you are going to pay it or you are going to die with it.

But we don’t warn kids about this before they go to school.  We just endlessly preach to them that they need a college degree in order to get a “good job”, and that after they graduate they will easily be able to pay off their student loans with the “good job” that they will certainly be able to find.

Sadly, tens of millions of young Americans have left college in recent years only to find out that they were lied to all along.

As I have written about previously, college has become a giant money making scam and the victims of the scam are our young people.

Back in 1952, a full year of tuition at Harvard was only $600.

Today, it is over $35,000.

Why does college have to cost so much?

At every turn our young people are being ripped off.

For example, the cost of college textbooks has tripled over the past decade.

Has it suddenly become a lot more expensive to print books?

Of course not.

The truth is that an entire industry saw an opportunity to gouge students and they went for it.

The amount of money being spent on higher education in this country is absolutely outrageous.  One father down in Texas says that he will end up spending about 1.5 million dollars on college expenses for his five daughters before it is all said and done.

Unfortunately, most young adults in America don’t have wealthy fathers so they have to take out large student loans to pay for their educations.

Average student loan debt at graduation is estimated to be about $28,720 right now.

That is a crazy figure and it has absolutely soared in recent years.  In fact, student loan debt in America has grown by 511 percent since 1999.

And student loan debt will follow you wherever you go.

If you do not pay your loans when you graduate, you could end up having your wages, your tax refunds and even your Social Security benefits garnished.

In addition, your account could be turned over to the debt collectors and they can be absolutely brutal.

The student loan debt bubble is the best thing to happen to debt collectors in ages.  The following is what one professional who works in the industry said in a recent article that he wrote for a debt collection industry publication….

As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February, I couldn’t believe the accumulated wealth they represented – for our industry.

It was lip-smacking.

At my right, to graphically display how she was debt-burdened, was a girl wearing a t-shirt emblazoned with the fine sum of $90,000, another with $65,000, a third with $20,000 and over there a really attractive $120,000 was printed on another shirt.  Guys were shouldering their share, with t-shirts of $20,000, $15,000, $27,000, $33,000 and $75,000.

There is no way that our young people can afford to take on those kinds of debt loads, and that is one reason why student loan delinquency rates continue to surge.

In fact, the student loan default rate in the United States has nearly doubled since 2005.

Today, one out of every six Americans that owes money on a student loan is in default.

One out of every six.

And it is going to get a whole lot worse.

At this point there are about 5.9 million Americans that are at least 12 months behind on their student loan payments.

So could the bursting of the student loan bubble do tremendous damage to our financial system?

Don’t worry – Federal Reserve Chairman Ben Bernanke is promising that the student loan debt bubble won’t cause a crisis.

And you can trust him, right?

For those living with the burden of unpaid student loan debt, life can be really tough.  Some try to avoid the debt collectors, but it is easier said than done.  The following is from a recent article in the New York Times….

Hiding from the government is not easy.

“I keep changing my phone number,” said Amanda Cordeiro, 29, from Clermont, Fla., who dropped out of college in 2010 and has fielded as many as seven calls a day from debt collectors trying to recover her $55,000 in overdue loans. “In a year, this is probably my fourth phone number.”

Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms. Ms. Cordeiro has already had two tax refunds seized, and other debtors have had their paychecks or Social Security payments garnisheed.

The biggest problem, of course, is that there are not nearly enough jobs for the hordes of college graduates that our system produces each year.

During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.

So without a good job, how are those young people supposed to service their student loans?

Once upon a time, a college degree was a guaranteed ticket to the middle class.

Sadly, those days are long gone.  Today, millions upon millions of college graduates have taken jobs that do not even require a college education.  The following is from a recent CNBC article….

In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).

You probably know young people who have experienced the “wake up call” that comes as a result of entering the “real world” in this horrible economic environment.

It is not easy out there.

And this can be extremely disappointing for parents as well.  How would you feel if your daughter got very high grades all of the way through college and ended up working as a waitress because she couldn’t find anything else?

Even those that pursue advanced degrees are having an extremely challenging time finding work in this economy.

For example, a Business Insider article from a while back profiled a law school graduate named Erin that is actually on food stamps….

She remains on food stamps so her social life suffers. She can’t afford a car, so she has to rely on the bus to get around Austin, Texas, where she lives. And currently unable to pay back her growing pile of law school debt, Gilmer says she wonders if she will ever be able to pay it back.

“That has been really hard for me,” she says. “I have absolutely no credit anymore. I haven’t been able to pay loans. It’s scary, and it’s a hard thing to think you’re a lawyer but you’re impoverished. People don’t understand that most lawyers actually aren’t making the big money.”

And the really sad thing is that the quality of the education that our young people are receiving is very poor.  I spent eight years attending U.S. universities, and most parents would be absolutely shocked at how little our college students are actually learning.

Going to college really has become a ticket to party for four or five or six years with a little bit of “education” thrown in.

But our society has put a very high value on those little pieces of paper called “diplomas” so we all continue to play along with the charade.

Some college students are finding other “creative” ways to pay for their educations other than going into tremendous amounts of debt.  For example, an increasing number of young women are seeking out “sugar daddies” who will “sponsor” their educations.  The following is from a Huffington Post article about this disturbing trend….

On a Sunday morning in late May, Taylor left her Harlem apartment and boarded a train for Greenwich, Conn. She planned on spending the day with a man she had met online, but not in person.

Taylor, a 22-year-old student at Hunter College, had confided in her roommate about the trip and they agreed to swap text messages during the day to make sure she was safe.

Once in Greenwich, a man who appeared significantly older than his advertised age of 42 greeted Taylor at the train station and then drove her to the largest house she had ever seen. He changed into his swimming trunks, she put on a skimpy bathing suit, and then, by the side of his pool, she rubbed sunscreen into the folds of his sagging back — bracing herself to endure an afternoon of sex with someone she suspected was actually about 30 years her senior.

Of course that young woman will probably deeply regret doing that later on in her life.

Once graduation comes, millions upon millions of our young people are discovering that it is really hard to be financially independent if you are drowning in student loan debt and you can’t find a good job.

So what are they doing?

They are moving back in with Mom and Dad.

One poll discovered that 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.

Ouch.

So what do you think about all of this?  Please feel free to post a comment with your thoughts below….

Student Loan Debt Hell: 21 Statistics That Will Make You Think Twice About Going To College

Is going to college a worthwhile investment?  Is the education that our young people are receiving at our colleges and universities really worth all of the time, money and effort that is required?  Decades ago, a college education was quite inexpensive and it was almost an automatic ticket to the middle class.  But today all of that has changed.  At this point, college education is a big business.  There are currently more than 18 million students enrolled at the nearly 5,000 colleges and universities currently in operation throughout the United States.  There are quite a few “institutions of higher learning” that now charge $40,000 or even $50,000 a year for tuition.  That does not even count room and board and other living expenses.  Meanwhile, as you will see from the statistics posted below, the quality of education at our colleges and universities has deteriorated badly.  When graduation finally arrives, many of our college students have actually learned very little, they find themselves unable to get good jobs and yet they end up trapped in student loan debt hell for essentially the rest of their lives.

Across America today, “guidance counselors” are pushing millions of high school students to go to the very best colleges that they can get into, but they rarely warn them about how much it is going to cost or about the sad reality that they could end up being burdened by massive debt loads for decades to come.

Yes, college is a ton of fun and it is a really unique experience.  If you can get someone else to pay for it then you should definitely consider going.

There are also many careers which absolutely require a college degree.  Depending on your career goals, you may not have much of a choice of whether to go to college or not.

But that doesn’t mean that you have to go to student loan debt hell.

You don’t have to go to the most expensive school that you can get into.

You don’t have to take out huge student loans.

There is no shame in picking a school based on affordability.

The truth is that pretty much wherever you go to school the quality of the education is going to be rather pathetic.  A highly trained cat could pass most college courses in the United States today.

Personally, I have had the chance to spend quite a number of years on college campuses.  I enjoyed my time and I have some pretty pieces of parchment to put up on the wall.  I have seen with my own eyes what goes on at our institutions of higher learning.  In a previous article, I described what life is like for most “average students” enrolled in our colleges and universities today….

The vast majority of college students in America spend two to four hours a day in the classroom and maybe an hour or two outside the classroom studying. The remainder of the time these “students” are out drinking beer, partying, chasing after sex partners, going to sporting events, playing video games, hanging out with friends, chatting on Facebook or getting into trouble. When they say that college is the most fun that most people will ever have in their lives they mean it. It is basically one huge party.

If you are a parent and you are shelling out tens of thousands of dollars every year to pay for college you need to know the truth.

You are being ripped off.

Sadly, a college education just is not that good of an investment anymore.  Tuition costs have absolutely skyrocketed even as the quality of education has plummeted.

A college education is not worth getting locked into crippling student loan payments for the next 30 years.

Even many university professors are now acknowledging that student loan debt has become a horrific societal problem. Just check out what one professor was quoted as saying in a recent article in The Huffington Post….

“Thirty years ago, college was a wise, modest investment,” says Fabio Rojas, a professor of sociology at Indiana University. He studies the politics of higher education. “Now, it’s a lifetime lock-in, an albatross you can’t escape.”

Anyone that is thinking of going to college needs to do a cost/benefit analysis.

Is it really going to be worth it?

For some people the answer will be “yes” and for some people the answer will be “no”.

But sadly, hardly anyone that goes to college these days gets a “good” education.

To get an idea of just how “dumbed down” we have become as a nation, just check out this Harvard entrance exam from 1869.

I wouldn’t have a prayer of passing that exam.

What about you?

We really do need to rethink our approach to higher education in this country.

Posted below are 21 statistics about college tuition, student loan debt and the quality of college education in the United States….

#1 Since 1978, the cost of college tuition in the United States has gone up by over 900 percent.

#2 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.

#3 Approximately two-thirds of all college students graduate with student loans.

#4 Americans have accumulated well over $900 billion in student loan debt. That figure is higher than the total amount of credit card debt in the United States.

#5 The typical U.S. college student spends less than 30 hours a week on academics.

#6 According to very extensive research detailed in a new book entitled “Academically Adrift: Limited Learning on College Campuses”, 45 percent of U.S. college students exhibit “no significant gains in learning” after two years in college.

#7 Today, college students spend approximately 50% less time studying than U.S. college students did just a few decades ago.

#8 35% of U.S. college students spend 5 hours or less studying per week.

#9 50% of U.S. college students have never taken a class where they had to write more than 20 pages.

#10 32% of U.S. college students have never taken a class where they had to read more than 40 pages in a week.

#11 U.S. college students spend 24% of their time sleeping, 51% of their time socializing and 7% of their time studying.

#12 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor’s degree within four years.

#13 Nearly half of all the graduate science students enrolled at colleges and universities in the United States are foreigners.

#14 According to the Economic Policy Institute, the unemployment rate for college graduates younger than 25 years old was 9.3 percent in 2010.

#15 One-third of all college graduates end up taking jobs that don’t even require college degrees.

#16 In the United States today, over 18,000 parking lot attendants have college degrees.

#17 In the United States today, 317,000 waiters and waitresses have college degrees.

#18 In the United States today, approximately 365,000 cashiers have college degrees.

#19 In the United States today, 24.5 percent of all retail salespersons have a college degree.

#20 Once they get out into the “real world”, 70% of college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

#21 Approximately 14 percent of all students that graduate with student loan debt end up defaulting within 3 years of making their first student loan payment.

There are millions of young college graduates running around out there that are wondering where all of the “good jobs” are.  All of their lives they were promised that if they worked really hard and got good grades that the system would reward them.

Sometimes when you do everything right you still can’t get a job. A while back The Huffington Post featured the story of Kyle Daley – a highly qualified UCLA graduate who had been unemployed for 19 months at the time….

I spent my time at UCLA preparing for the outside world. I had internships in congressional offices, political action committees, non-profits and even as a personal intern to a successful venture capitalist. These weren’t the run-of-the-mill office internships; I worked in marketing, press relations, research and analysis. Additionally, the mayor and city council of my hometown appointed me to serve on two citywide governing bodies, the planning commission and the open government commission. I used to think that given my experience, finding work after graduation would be easy.

At this point, however, looking for a job is my job. I recently counted the number of job applications I have sent out over the past year — it amounts to several hundred. I have tried to find part-time work at local stores or restaurants, only to be turned away. Apparently, having a college degree implies that I might bail out quickly when a better opportunity comes along.

The sad truth is that a college degree is not an automatic ticket to the middle class any longer.

But for millions of young Americans a college degree is an automatic ticket to student loan debt hell.

Student loan debt is one of the most insidious forms of debt.  You can’t get away from student loan debt no matter what you do.  Federal bankruptcy law makes it nearly impossible to discharge student loan debts, and many recent grads end up with loan payments that absolutely devastate them financially at a time when they are struggling to get on their feet and make something of themselves.

So are you still sure that you want to go to college?

Another open secret is that most of our colleges and universities are little more than indoctrination centers.  Most people would be absolutely shocked at how much unfiltered propaganda is being pounded into the heads of our young people.

At most colleges and universities, when it comes to the “big questions” there is a “right answer” and there is virtually no discussion of any other alternatives.

In most fields there is an “orthodoxy” that you had better adhere to if you want to get good grades.

Let’s just say that “independent thought” and “critical thinking” are not really encouraged at most of our institutions of higher learning.

Am I bitter because I didn’t do well?  No, I actually did extremely well in school.  I have seen the system from the inside.  I know how it works.

It is a giant fraud.

If you want to go to college because you want to have a good time or because it will help you get your career started then by all means go for it.

Just realize what you are signing up for.

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