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Student Loan Debt Could Cripple Economy For Decades

February 5, 2013 by  

Student Loan Debt Could Cripple Economy For Decades
PHOTOS.COM

The price of a college education has been climbing at a substantially higher rate than inflation for years; meanwhile, the value of a college degree has been falling. That’s why thousands of debt-laden college graduates are facing the worst economic bust to plague the United States since the housing bubble burst.

A recent report from the Center for College Affordability and Productivity, entitled “Why Are Recent College Graduates Underemployed?”, refutes the oft-repeated theory that college educated Americans have the potential to earn substantially higher lifetime incomes than their uneducated peers. In fact, the report indicates that many college-educated Americans are woefully underemployed because “the growth of supply of college-educated labor is exceeding the growth in the demand for such labor in the labor market.”

From the report:

  • About 48 percent of employed U.S. college graduates are in jobs that the Bureau of Labor Statistics (BLS) suggests requires less than a four-year college education. Eleven percent of employed college graduates are in occupations requiring more than a high-school diploma but less than a bachelor’s, and 37 percent are in occupations requiring no more than a high-school diploma;
  • The proportion of overeducated workers in occupations appears to have grown substantially; in 1970, fewer than one percent of taxi drivers and two percent of firefighters had college degrees, while now more than 15 percent do in both jobs;
  • About five million college graduates are in jobs the BLS says require less than a high-school education;
  • Comparing average college and high-school earnings is highly misleading as a guide for vocational success, given high college-dropout rates and the fact that overproduction of college graduates lowers recent graduate earnings relative to those graduating earlier;
  • Not all colleges are equal: Typical graduates of elite private schools make more than graduates of flagship state universities, but those graduates do much better than those attending relatively non-selective institutions;
  •  Not all majors are equal: Engineering and economics graduates, for example, typically earn almost double what social work and education graduates receive by mid-career;
  • Past and projected future growth in college enrollments and the number of graduates exceeds the actual or projected growth in high-skilled jobs, explaining the development of the underemployment problem and its probable worsening in future years;
  • Rising college costs and perceived declines in economic benefits may well lead to declining enrollments and market share for traditional schools and the development of new methods of certifying occupation competence.

Meanwhile, over the past five years the average amount of student loan debt accrued by college students has risen by 30 percent to $23,829. More than half of student loan holders have currently deferred student loan payments, which is only a temporary solution for struggling degree holders.

Some economists expect the American economy to struggle for decades under massive student loan debts because student loans are almost impossible to discharge in bankruptcy and the government will collect by garnishing the paychecks and tax refunds of those who fail to pay. Furthermore, being underwater on student loans can harm a person’s credit score, making it more expensive for them to get loans for homes or vehicles.

As more and more Americans struggle to pay back student loans while underemployed, the economy as a whole will suffer, since the purchases of first homes and other durable goods are put off indefinitely.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Corkey

    Journalist Dr Gary North wrote about the high cost of education over 10 years ago. One of the best suggestions he ever offered was the utilize the regional community colleges to get your first 2 years completed “on the cheap”. Get straight A’s and then transfer to where you want to go and do what you want. Many times you will find related part time work or get scholarships this way while saving a ton of money. Great advice

  • rendarsmith

    The next bubble to burst. Anytime the government gets involved in some market, that market crashes.

  • jdn

    Hey someone has to pay for these billion dollar football programs .

    • Bob W.

      At most schools the football program pays for itself and the other athletics also.

  • Dad

    Too bad the pseudo-grads couldn’t be worthy of respect… like farmers.

  • rvncibeib1sgret

    Ever wonder why we are demanding high tech visas from India and abroad elsewhere?
    A degree is preparatory for the professional world but work is less available here. How
    are visas from abroad justified when higher educated work forces are slimming down.
    Our entire labour force is outsourced in the manufacturing and engineering sector.
    I guess we have NAFTA, GATT, and WTO to thank for that.

  • tony newbill

    Once the currency wars break out and the division starts between Elites of the nations that will not continue to accept the dollar as the settlement currency thats when the Game gets bad for people in the USA and Obama has to nationalize the markets here !!!!!

  • FreedomFighter

    Under employed and over educated…with huge loans…and corporate entitys shipping jobs to other countries, what could go wrong?

    Laus Deo
    Semper FI

  • Randy G

    Especially since they do not hire people who know what they are doing. Most of the college kids pay for the course & collect a diploma & can not do a job. I do not think they could take out the trash without an instruction book.

  • ibcamn

    What?no one wants to say it?!,it’s in the name,if this young man here is twice as smart and is well dressed and comes from a family that has 1 million a year income,went to school then to a kinda name collodge,nerdy type,but smart,now you have a snotty party time charly who went harvard,they both go to the same company for the same job same day and arrive same time….the harvard lush gets the job,but guess what,the lush had bad grades and the nerd got top honors and great grades,head of his class!sound familiar?it’s a name and who you know.you can say the same for a guy and girl going after the same job!take the degree and wipe your butt with it, sometimes,it just don’t matter what you spend,it’s where you spend it and ellitist know it!they charge more for the name on your degree!you as an employer get what they pay for,sub standard educated kids in the world,but you know that story. it happened to my friend in chicago,thank god some people see the errors of their ways and fired the a$$ and hired the brain!the debt comes from some kids and parents biting off more than they can chew,and some people just have grown up thinking(for real)that they don’t have to pay back a loan ever!some think they don’t have to pay for it,but they have to graduate so as to not pay,you don’t graduate you pay,oops,i didn’t know that,please help me pay my bills,i can’t afford the payments on my school loan,as they talk on a 500 dollar i-phone with a thousand downloaded songs and all apps driving around in a Benz and whipping off truffle sauce on their dry clean only 1200 dollar lambskin jacket with matching 2000 dollar goochie sunglasses and a matching 2200 dollar gold diamond watch!get my drift?priorities!this new bunch of idiots(students)think just like Obama wants them too,do what you want and you(taxpayer)can pay for it!forget that these kids have no thoughts of their own for invention or independent thinking,or the proper attitude or respect,they have no morals or priorities or sense of loyalty and no screwples!that’s why the colladge bills are going insane,to me,it’s their own fault,upbringing or values or whatever,it’s their fault!they need to pay,(flipping burgers,at least their working)

  • Vigilant

    “About five million college graduates are in jobs the BLS says require less than a high-school education.”

    Did it occur to the mavens who put the study together that many of today’s college graduates are educated only to high school level compared to the graduates of 50 years ago?

    Four years of partying (and they even publish lists of the best party colleges), diluted curricula dumbed down just to get the student through, exceptionally liberal grading criteria, and majoring in non-math, non-science, non-engineering “disciplines” will qualify you to prepare food at Burger King.

    But of course students and parents believe that buying a degree entitles you to a top-paying job upon graduation. Not only are we graduating the most ignorant classes in history, we are increasing the presence of anti-capitalist programmed automatons in the electorate every year.

    And then we wonder how socialists like Obama can be elected.

    • Bill

      Very well said, Vigilant
      And they wonder why China is out producing us.

      • tony newbill

        Bill the only way we can compete with china in dollars and sense not cents , but sense , in this so called free market WTO trade Agreement that was a flawed policy from the get go 18 years ago is by being valued the same in wages and cost of production , are you ready for that Bill ?

        And Bill have you ever heard of Greshams law of the 14th Century where the trade tariff was originated from that is designed to support a sovereign nations currency value based off Domestic production that sustains a Independence in a societies ability to supply their own needs so they do not become SERFS to anothers Control over those Vital human Needs ????

    • Ted Crawford

      Somewhere in the neighborhood of 300,000, who hold “Advanced Degrees” including thousands of holders of Ph.D’s currently recieve Food Stamps! Oneline Collages.net

    • momo

      You hit the nail on the head, Vigilant.

      • http://gravatar.com/cbgard Carlucci

        Friends of mine have done what Gary North suggested – attended a community college for a couple of years and then transferred to a university. They saved lots of money doing this.

        As far as college graduates, the current crop that I have met in the workplace cannot spell or punctuate properly and use poor grammar, yet they love to brag about their “education” – ! And they are in huge piles of student loan debt. Even if they pass away, their parents will be held responsible for that debt.

        As Mr. T. used to say…”I pity the fool”…….

  • Carl C

    People make their own problems. My adult life started when having children was not rationed. So, my wife and I had and reared five children. My offer to them was if they attended a local Junior College, then they could select any four year college that the family could afford. Why should a child attend a college that costs beyond the family’s means?

  • Skptk

    “Furthermore, being underwater on student loans can harm a person’s credit score, …” making it harder for them to get loans for vehicles or homes, and incidentally, harder to get a job.

  • Jim B

    At age 19 to 21-22 you pay 60 Thousand dollars for an additional 4 years of government indoctrination (this on top of their original 12 year sentence). Between 21 and 28 you attempt to find a job in your field and move up to a respectable wage, approximately 20 thousand of the 60 thousand government school loan is paid off (all of it if mom and dad lend a hand). Relationships enter into the picture at this point and marriage 25 to 32 years of age, the combined outstanding school loan debt is now 20 to 60 thousand between you and your significant other. Between 28 and 35, some money is coming in, more debt is needed for housing, between 30 and 40 a kid, maybe two, but no more (born or purchased) to complete the circle of life. Debt from school, house, insurance, diapers and formula (an estimated cost to bring up a single kid today 0-18 is 250 thousand dollars) is somewhere near 200 thousand and will remain at that level for approximately 20 to 30 years or so. Retirement has been nonexistent during this time, somewhere between 40 and 50 alerts are going off but there has been no discipline to save and prepare for the future, government debt and taxes have ensured this outcome. It gets worse, the government is at 17 Trillion in debt, they need more from you, me, us. New CBO figures have the US debt at 26 Trillion in less than ten years. The government will take by force all that you have to give, between 50 and 65, your retirement, if you have any, is worthless because the US dollar can no longer hold off hyperinflation. If you don’t hate the government at this point for ruining the economy and your life you will now. Back in your teens and twenties when they suckered you into huge student loans to pay for the extravagance of luxury colleges (their ability to raise tuition based on guaranteed government student loans) goes unabated. I pity you, you will be taken for a ride of government dependence for the rest of your lives.

  • Victor Gaw

    Please Sam Rolley; Your claim that “Student Loan Debt Could Cripple Economy For Decades” is entire bogus. Just compare the magnitude of the U.S. economy in the order of trillions of dollars in GDP which amount to insignificance in billions of dollars in student’s loans outstanding. You are debunked. So how can it cripple the economy. Even the billions of dollars in real estate bubble collapse did did not collapse the overall economy.

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