Record Surge in Past-Due Student Loans Adds to US Debt Burden

[Pew]

When I went to school we had to goto a big room to sign up for classes And then go another day to pay your bill and or receive your financial aid checks. This was in the 90's before online signup, etc. Most of the students I saw were receiving checks because their financial aid was more than their bill. Tell me any of this made sense? I'm sure this is still happening.

Yes. Fafsa granted [Pell Grant] me the max $5.5k as a full-time student per year. Any of that $5.5k that was not used was given to me as a check. Today's highest Pell Grant is $7.5k; so regardless of how much the college costs that can either cover an entire year...or that can barely cover textbooks.

The government has no money. It's taxpayer money, I don want to fund anyones school. I have my own kids that I took care of. Furthermore the doctor shortage was created by the government in the first place. Factual information on this but I am posting this one source.

But to be fair would we be able that about all funds that get pooled together? Things such as social security (why is my money going to somebody else's retirement), medicaid/medicare (why am I paying for somebody else's cancer treatment or an obese's triple bypass surgery), or social services like a library or community center if I never use them? (Not saying I'm against what I mentioned above).

 

[tmorris1]

So, if a university gives you a loan that they are not supposed to you the borrower is responsible for their fraud? University's do that all the time to boost their $$$.

They can't just give you a loan without the student consenting to it and signing off.

 

[rijndael]

Things such as social security (why is my money going to somebody else's retirement)

Ponzi schemes require it.

 

[PWMDMD]

Monkey see, monkey do. I'm not stating this as a means of letting anyone off the hook--but if the parents are clueless about money, then why would the kids be better?


Ouch. I know I'm looking at something like 9% on my kid's loan at the moment. To me that seems ridiculous--thing is, it's an unsecured loan. It carries risk, right? Shouldn't it carry a higher APR as a result?

Or does this go back to the issue of, since this loan cannot be canceled in bankruptcy, there is no (or very little) risk for the fed? If so... then yeah, it's stupid. Bring back reasonable rates.

[I'm a bit miffed as our first loan had a 4% fee. I'm not shocked at that as much as... at 9% interest they are more than making bank here! Should be like $100 for paperwork, if that, since it's all automated. If the wife makes enough over the next year I'm hoping to avoid future loans, between the two it seems unreasonable to me.]

Most of the reason people fail to repay is because the interest rates. The person I know who pays $33,000 per year in interest had a higher balance than I did but $300 vs $33000 is insane.

 

[KrisZ]

Most of the reason people fail to repay is because the interest rates. The person I know who pays $33,000 per year in interest had a higher balance than I did but $300 vs $33000 is insane.

I’ve never had student loans, so forgive my ignorance, but are they structured like a mortgage by any chance? The interest gets paid first with very little going to the principle and it slowly shifts towards the principle?

If so, it only makes sense to to make extra payments that would go directly to the principle, therefore reducing the overall interest by a lot. Those first five-ten years are quite critical. But it’s also the time when an average student would struggle the most with income.

In other words, quite an effective trap for the youngsters without guidance and knowledge.

 

[alarmguy]

...

But to be fair would we be able that about all funds that get pooled together? Things such as social security (why is my money going to somebody else's retirement), medicaid/medicare (why am I paying for somebody else's cancer treatment or an obese's triple bypass surgery), or social services like a library or community center if I never use them? (Not saying I'm against what I mentioned above).

I dont disagree with some of your statements. I actually agree with some of the medicaid statement.

However regarding social security and medicare everyone pays into it and everyone has a chance to get a monetary benefit from it, including you. Assuming you or your spouse lives long enough. You dont have to worry about having money for food or health care when you get older. Americans are not going to let the elderly without these programs die in the streets (medicaid is an example) so we would pay anyway. Forcing everyone into the system buffers the cost to everyone.

Giving 18 year old kids free money to spend as they wish for 4 to 8 years is foolish to me. There is no value or need. I mean that, no need for it. Anyone can work a living wage if they want, with or without school.

 

[Hohn]

I’m pretty sure the lending and bankruptcy laws were the same during the time you were brought up. But I do know boomers like to pat themselves on the back quite a lot.

 

[dishdude]

Ouch. I know I'm looking at something like 9% on my kid's loan at the moment. To me that seems ridiculous--thing is, it's an unsecured loan. It carries risk, right? Shouldn't it carry a higher APR as a result?

Federal student loans are backed by the government, the least risky type of loan out there. Private student loans are a different story.

 

[SC Maintenance]

.

I’ve never had student loans, so forgive my ignorance, but are they structured like a mortgage by any chance? The interest gets paid first with very little going to the principle and it slowly shifts towards the principle?

If so, it only makes sense to to make extra payments that would go directly to the principle, therefore reducing the overall interest by a lot. Those first five-ten years are quite critical. But it’s also the time when an average student would struggle the most with income.

In other words, quite an effective trap for the youngsters without guidance and knowledge.

Oh no, the predatory gets even worse at payment time.

Just helped someone with this. Each year - or maybe semester - is a different "loan". Each loan has a different interest rate = Prime + whatever on the year taken. The first thing the servicers encourage you to do is to roll all the loans together in one lump sum, with some average rate they made up. They push this in all their literature.

Obviously the smart thing to do is make the minimum payment on all the loans - I think it works out to a 20 year term, then pay the highest rate one off as fast as you can. Then the next highest. And so on. Results in the least interest over time.

 

[BMWTurboDzl]

Record Surge in Past-Due Student Loans Adds to US Debt Burden​

https://finance.yahoo.com/news/record-surge-past-due-student-150000573.html


These people need to repay all their student loans and debt.

You borrow money….. you pay it back.

This is because they were previously deferred and/or forgiven but the new Administration recently reversed that decision so there's going to be an adjustment period to the new normal.

 

[SC Maintenance]

View attachment 293823

You have a source for this - because I don't think thats correct.

Here is a source. Only goes to 1963. https://educationdata.org/average-cost-of-college-by-year

Public tuition 1963 - $243, private $1011 - adjust for inflation = public = $2578, Private = $10,728

2022 - Public = $9750 - 4X increase, , Private $35,248, 3.5X increase.

CPI calculator. https://www.bls.gov/data/inflation_calculator.htm

I can confirm the current data is approximately right - I just got done paying for 2 degrees - but they were STEM which they charge a bit more.

Here is even more data from govco themselves, but its quite an eye chart. https://nces.ed.gov/programs/digest/d22/tables/dt22_330.10.asp

Never trust data you haven't manipulated yourself.

 

[supton]

Federal student loans are backed by the government, the least risky type of loan out there. Private student loans are a different story.

Hmm, I signed up for a Direct Plus as a parent. Google indicates that it is federally backed... but maybe the rules are different?

 

[Hohn]

When my eldest started school a couple years ago, it was an eye-opener for me.

Higher education funding in the USA to me seems to resemble Communism in microcosm. If we paid for groceries the way we pay for college, there would be nice price tag on anything, because a gallon of milk for a professional making 150k a year would cost several times what it cost for an hourly wage worker making 80k. Make a lot of money but blow it all on eating out and depreciating assets like new cars and such? You'll have low net worth end your kid will get more FAFSA discount because you are "poor". But make less money and be responsible with it? Save and invest and accumulate some assets? Well then screw you, your kid will pay thousands more per year because shame on you for saving for college and living modestly. I'm paying more to send my kid to school because I saved for it. And I'm paying more because she is white like me. So it's not just communist, it's racist, too.

You want to know where all the money is going? Visit a campus sometime. All those palatial facilities and the incredibly bloated administration with diversity coordinators and such? Yeah, that's powered by the indentured servitude of student loans.

College was originally supposed to be for very intelligent students to further studies and perhaps work in high skill careers like medicine and law. But over the years, especially once government stepped into higher education, the costs rose and the quality dove. Just like our medical system, but I digress.

The number of college professors per capita has roughly quadrupled since 1950. The increase in administration is proportionally about quadrupled also.

Higher "education" is big business, and essentially a money laundering operation now where in return for piece of paper of ever-less value, a student agrees to period of indentured servitude to generate money for universities and fund the bureaucracy and all the various apparatchiks feeding at its trough.

Don't get me started and the rank corruption that is college sports, the NCAA and the money aspect of college sports in higher education. But I ask myself: why it the state of Indiana paying a Purdue football coach 5.6 million a year? Heck, why are my tax dollars going to pay assistant lineman coaches $400k/year?

And Indiana is not even close to the worst of states in these areas.

 

[ATex7239]

What these student loan companies (backed by the government) are doing to young people is predatory lending, plan and simple. Do I believe the loan should be paid back? Absolutely yes. Do I believe these companies (again back by the government) should be allowed to continue to do this and continue to put multiple generations into seemingly insurmountable debt slavery? Absolutely not.

The borrower should be held accountable, and the lender should be held accountable as well.

 

[BIGROCCO]

Why stop at student loans? Why not forgive all debt? Let's open the borders back up and make everything free for everyone!

 

[SubieRubyRoo]

Record Surge in Past-Due Student Loans Adds to US Debt Burden​

https://finance.yahoo.com/news/record-surge-past-due-student-150000573.html


These people need to repay all their student loans and debt.

You borrow money….. you pay it back.

Purdue has figured out how to keep in-state tuition at $9912 for over 14 years now, even while adding hundreds of millions in technology investments to keep their education at the leading edge.

There’s no reason private (and public!) schools can’t create a similar model.

 

[KrisZ]

Why stop at student loans? Why not forgive all debt? Let's open the borders back up and make everything free for everyone!

Show me one post here where loan forgiveness was suggested?

 

[ecotourist]

When I took my first degree, tuition was cheap, I lived in room and board homes (for the first 2 years), earned large scholarships and had well paid summer jobs (well paid, but living in not very nice conditions doing heavy physical work). I didn't have very much spending money, but no-one else did either. When I graduated (in 1971), I had no debts, money in the bank and started a high paying job. That was a different time.

Today's young people expect more. Few would consider staying in room and board (if there even is such a thing any more), and renting an apartment or living in residence really runs up their costs. I would not have dreamed of taking an expensive vacation while in university, but that seems fairly routine today. And everyone seems to have lots of spending money.

But there are costs they cannot avoid and opportunities not available to them. They do pay much much higher tuition and don't have the same opportunities to make money during their summer vacations.

A "normal" post secondary education today can lead to back-breaking debt without much opportunity to pay it off later.

I don't think those old times will be coming back any time soon. And I don't think post secondary education should only be for rich kids. So perhaps its time for a different way to fund post secondary education.

 

[KrisZ]

I don't think those old times will be coming back any time soon. And I don't think post secondary education should only be for rich kids. So perhaps its time for a different way to fund post secondary education.

The first step should be to get the gov out of the loans. They caused this mess and cannot be expected to fix it. Once it’s in the open market, it will largely correct itself.

 

[ATex7239]

Purdue has figured out how to keep in-state tuition at $9912 for over 14 years now, even while adding hundreds of millions in technology investments to keep their education at the leading edge.

There’s no reason private (and public!) schools can’t create a similar model.

There never seems to be enough money for public education despite how much we pump into it. Fundraisers, federal, state, and local taxes, grants, endowments, bonds, tuition yet somehow it’s never enough and the quality isn’t keeping up with inflating costs.