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Recent college graduates who borrow are leaving school with an average of $34,000 in student loans. That's up from $20,000 just 10 years ago, according to a new analysis from the Federal Reserve Bank of New York.
In that report, out this week, the New York Fed took a careful look at the relationship between debt and homeownership. For people aged 30 to 36, the analysis shows having any student debt significantly hurts your chances of buying a home, compared to college graduates with no debt. The cliche of "good debt" notwithstanding, the consequences of borrowing are real, and they are lasting.
The report paints a mixed picture of how student borrowing has evolved over the last decade, since the financial crisis. There are some bright spots: For example, student loan defaults peaked five years ago and have declined ever since.
And repayment seems to have slowed down among high-balance borrowers —those who owe $75,000 or more. Meaning, after 10 years, they have paid down only one-quarter to one-third of what they owe.
On the face, this isn't necessarily good. But taken alongside the decline in defaults, Fed president William Dudley said in a press briefing Monday, it reflects something good. That is, graduate students, in particular, are signing up for government programs intended to help make payments more affordable.
Source: NPR
(Score: 5, Insightful) by khallow on Wednesday April 05 2017, @06:25AM (5 children)
Point 4) follows from nasty federal regulations that make student loan debt nondischargeable in court. In a somewhat more rational world, bankruptcies would help reduce the burden of enormous student loans on a graduate without the capacity to pay off that debt.
So the two big problems, high college costs and nondischargeable debt aren't due to "free market" approaches.
(Score: 0) by Anonymous Coward on Wednesday April 05 2017, @01:14PM
Those problems are due to governmental approaches; those problems are due to anti-free-market approaches.
(Score: 0) by Anonymous Coward on Wednesday April 05 2017, @04:16PM (3 children)
As many have pointed out it isn't the ideal "free market" which is the cause of problems, it's the various entities that abuse their power to manipulate the market. Free markets are like standard communism, in an ideal world everything would be peaches and cream, but n the real world you get people abusing their positions of power to enrich themselves and their friends.
High costs and nondischargeable debt are 100% due to the "free market" because those controlling the market used their positions of power to lobby for specific legislation which would enrich the universities (higher tuition) and the bankers (owners of debt). They colluded, something which a "free market" can not stop, and BAM they got a captive market to exploit. Socialized programs fail hard when you introduce a significant profit motive: see US education and health.
Ideally the free market would allow competition to easily pop up and drive prices down, but like broadband internet there are a lot of barriers to entry. Just getting accreditation so students trust your programs is hard enough!! *If our glorious leader can't successfully compete in the education market what then?
* I didn't intend to bring up Trump politics, but it was such a perfect example that popped into mind!
(Score: 0) by Anonymous Coward on Wednesday April 05 2017, @05:25PM (1 child)
A free market is a market that is free from coercion.
Note that the very foundation of a government is coercion—what makes an organization a "government" is the fact that said organization allocates resources through dictate rather than agreement; any activity that involves collusion with a government is activity which is not allowed in a free market.
A free market implies that interactions are voluntary, as determined by well-defined contracts upon which every party has agreed ahead of time; enforcement of these contracts is again a service that co-evolves in the market along with everything else.
(Score: 2, Insightful) by Chrontius on Thursday April 06 2017, @04:16AM
I fear that if there is not a monopoly on coercion, there will be a free market in coercion.
(Score: 1) by khallow on Wednesday April 05 2017, @09:27PM
As many have pointed out it isn't the ideal "free market" which is the cause of problems, it's the various entities that abuse their power to manipulate the market. Free markets are like standard communism, in an ideal world everything would be peaches and cream, but n the real world you get people abusing their positions of power to enrich themselves and their friends.
High costs and nondischargeable debt are 100% due to the "free market" because those controlling the market used their positions of power to lobby for specific legislation which would enrich the universities (higher tuition) and the bankers (owners of debt). They colluded, something which a "free market" can not stop, and BAM they got a captive market to exploit. Socialized programs fail hard when you introduce a significant profit motive: see US education and health.
Notice the difference here. You're equated the deliberate sabotage of free markets with "standard" communism set up as advertised.