The topic of student loans generates a lot of reaction. It remains one of the biggest debts for any household today, and it is crippling millennials, particularly those who sought out useless degrees.
Although student loans are horrific in Canada today, it is much worse south of the border in the United States. A student loan is the biggest form of non-mortgage debt: $1.3 trillion, and there are no signs of it slowing down (it has gone up for 18 straight years).
You can thank the government and its intervention into the education sector for this mess.
Over at Liberty Nation, I went into the basic economics behind the student loans mess.
Here is an excerpt from the piece:
For eighteen consecutive years, U.S. student loan debt has risen, and there are no signs of it slowing down. Since the financial crisis nearly a decade ago, student loan debt has surged 170% to $1.3 trillion, according to a new study by the Federal Reserve Bank of New York. Student loan debt is now greater than auto loans ($1.2 trillion) and credit card debt ($1.0004 trillion).
But the numbers are even more terrifying when you begin to dig beneath the surface.
Forty-four million Americans have some type of student debt, and eight million of those borrowers are in default. Today’s default rate remains higher than before the Great Recession. It is expected to get worse as college education prices continue to soar; tuition and fee prices have jumped between 9% and 13% in 2016.
The study found that the average graduate leaves school $34,000 in the red, up 70% from ten years ago. Meanwhile, 10% of borrowers are at least ninety days behind in debt repayment, and this is causing the credit scores of numerous graduates to tumble.
The present financial situation of college graduates is leading many to delay adulthood and is also having a significant effect on the overall economy.
You can read more here.