This article about the impending collapse of the student loan bubble is a complicated read. It’s not that the subject matter is difficult; it’s that this issue strikes right to the core of my being, and fills me with such emotion that I can hardly contain it.
RTFA: http://www.forbes.com/forbes/2009/0202/060_2.html
The proportion of students who graduate with more than $40,000 in debt jumped sixfold during that period, to 7.7% of the 1 million grads in 2004, or 77,500 people. Most will struggle for more than a decade to work it off, assuming relatively low 6.8% interest rates, the Project on Student Debt says.
For many, the terms are far worse. A decade ago nearly all student lending was of the low-cost, federally guaranteed variety, most of it with 6% to 8% interest kicking in only after a student left school. As costs outpaced such financing over the past decade, the share of student loans from “private” lenders rose from 7% to 23% of the market, or $20 billion in the 2007–08 academic year.
The rise of private student lending closely paralleled the subprime mortgage boom, which went from 8% of home loan originations in 2003 to 20% in 2006, before the housing meltdown sent that mortgage sector over a cliff. Private student loans resemble subprime mortgages in other ways, too. As banks and brokers did with subprime home loans, colleges and the lenders in cahoots with them commonly market private student loans alongside lower-cost alternatives, blurring the differences.
Let me be specific: reading this article makes me absolutely homicidal. The dystopia of Harrison Bergeron is my life; I live with artificial weights on my brain and lead in my wallet.
Without a doubt, college debt is the single most worrisome burden in my life, and several nights a month, I am awake all night ruminating about how I will pay it back. It’s particularly frustrating to me that I am forced to choose between making capital investments (in tools and goods that will help me earn more) and debt payments, almost 50% of which is interest expense. Over the past 6 years, I have paid more than $7000 in interest alone, and I’ve barely paid down the principle by half a semester worth of tuition.
Maybe this is small potatoes when compared with the dumbass moves pulled by subprime debtors who purchased million-dollar houses, but we’re not talking about “irrational exuberance” and a pool in the backyard. We’re talking about college, and getting crippled for staying in school until you’re 21 years old… the very thing that was considered “responsible” and … even patriotic? After all, how else will the great U. S. of A. stay economically competitive, if not for the masochistic brainiacs who will grow up to work in the cubicle farms of Silicone Valley?
As a legal adult, I was debt-free for a single week of my life, during the brief period of time between my 18th birthday and the beginning of college orientation. Seven days. Seven fucking days. I had a job year-round during all four years of school, in one case working from midnight until 8am switching data backup tapes. During that timeperiod, my grades dropped significantly, which is clearly related to my twisted work patterns. I wore my clothes until they literally fell off my body, I aggressively scavenged or begged for free food at every opportunity, and I went dumpster diving for computer equipment several times a week.
To add insult to injury, my own family ridiculed me for investing in computer hardware instead of clothes and food, but the choice was not mine to make due to the nature of the degrees I was earning. They called me greedy, selfish, and entitled for wanting to talk about how we could restructure my loans based on the family’s home equity. (By the way, my home town didn’t experience a housing bubble, so the equity is intact, even today.) To anyone who wants to diminish my achievement, this pseudonymous blog isn’t the place for expressing my sentiment. The bottom line is that I worked longer and and scavenged harder than most people I know.
By the time I graduated, just over 2.8 years out of a 4-year degree had been paid for, with the remaining debt being enough to purchase a very decent luxury car, all the while accruing interest at rates as high as 8.5%. I distinctly recall the propaganda of the 1990s, which proclaimed that anyone could afford college. While I can’t vouch for the people who claim to be paying 15% and up, I can say that I’ve seen credit cards with lower interest rates, and that’s pretty twisted. If anyone thought purchasing a luxury car with a credit card was a good idea, then they would have no problem accepting the myth that college is affordable. I think that pretty well explains why this country is completely fucked, financially. …the fact that people are doing this to their own kids is downright heartless, almost like wombats eating their own newborn babies…
I can also say that as a result of this big scam, I’ve been forced to learn a lot about finances and accounting, and I’m better off for it. The experience has left me bitter and cynical, psychotically vengeful, and almost single-mindedly focused on this issue. When I stay up all night, thinking about this bullshit, I end up wandering around like a zombie for several days as I get back to a normal sleeping schedule. It’s no stretch to say that this interferes with my life, and that some of the best years of my youth have been pissed away as I frantically tried to work my way out of debt.
Please: let me hear more about bailing out these banks, and the billions-dollar bonuses being paid to Merril Lynch investors. This whole criminal enterprise makes me violently angry. I’m really fucking glad Bush was so aggressive about bankruptcy reform (in 2005), specifically preventing students from restructuring their debt during bankruptcy. Please remind me that I was born into the peasant class, and that I’m doomed to a life of long days and tiring labor. Please do.
…and raving about this problem on some blog is a huge consolation… Fuck! I need to destroy something. ROAR!
