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from the I-owe,-I-owe,-it's-off-to-work-I-go dept.
Another day, another record broken.
The debt held by US households has surpassed its pre-2008 record, several financial outlets note. A peculiar spotlight in the associated numbers falls on student loans, where delinquencies are multiple times higher than for other debt types: 10 percent is the norm.
That's some pretty troubling news for the economy [and wider society], notes Rana Foroohar at sister outlet the Financial Times. First off, there's the association between the rise in student debt, and a decrease in home ownership for young people. This connection is exacerbated by them millennials increasingly turning towards income-based repayment programmes, which spread out the debt over more years.
Secondly, the level of student debt delinquencies ain't changing: the 10 percent figure is a near-constant over the past 4-5 years. People who've ever had a delinquency -- even if they recover -- have a much lower rate of home ownership at age 30 as compared to their non-defaulted compatriots. Not having a home means not filling it with stuff, and filling with stuff is kinda what the economy is based on.
Then, thirdly, it's not only students that are hit by student debt: increasingly, their parents are taking on debt too, to help out. Fuel for that debt sandwich is something peculiar: the rate of inflation in college admission costs is three times higher than the consumer price index. Must be that college professors wages have increased a lot, then.
Given that boomers and their millennial offspring are the two largest voting blocks in the US, a snappy future president-elect might consider raising the issue a bit.
(Score: 0) by Anonymous Coward on Friday May 19 2017, @06:46PM
Debt terrifies me, and people who don't take it seriously frustrate me. So it confuses me greatly that people treat credit cards as a separate account rather than (forgive my terms) a delayed debit to your real account in the first place.
I used to think like this, and to a large extent I still do. However, I think that is to my, and your, detriment.
The way to think about it is that debt is a vehicle to transfer money from your future self to your past self. For example, would you rather have $100 when you are 20 years old (in college with effectively no income), or would you rather have $200 when you are 50 years old (and earning an income of $100k a year)?
Like any other money transfer, this can be a good idea or this can be a bad idea: Giving somebody $200k to get a house is probably a good idea, whereas giving somebody $200k because they claim to be a Nigerian Prince is probably a bad idea. Borrowing $500 to buy a nice suit for your first job interview is probably a good idea, whereas borrowing $500 to buy that "plane ticket to Florida for Spring Break because, like, EVERYBODY is going to be there" is probably a bad idea.
Debt itself isn't bad: it's a powerful tool, and it's really easy to shoot yourself in the foot, but so is root access on your computer.