Student-Loan Delinquencies Surpass Credit Cards, 37.5% of Graduates Work in Jobs Requiring No Degree; Who is to Blame? What About Solutions?

As costs of college soars (with thanks to absurd union salaries and benefits, as well as absurd administrator salaries and benefits), those attending college have increasing trouble paying back loans.

The fully expected consequence is Student-Loan Delinquencies Now Surpass Credit Cards.
The proportion of U.S. student loan balances that are in delinquency — that is, unpaid for 90 days or more — surpassed that of credit-card balances in the third quarter for the first time, according to the Federal Reserve Bank of New York. [no link provided]

Of the $956 billion in student-loan debt outstanding as of September, 11 percent was delinquent — up from less than 9 percent in the second quarter, and higher than the 10.5 percent of credit-card debt, which was delinquent in the third quarter. By comparison, delinquency rates on mortgages, home-equity lines of credit and auto loans stood at 5.9 percent, 4.9 percent, and 4.3 percent respectively as of September.



Since the NY Fed’s data began in 2003, the share of student debt which is delinquent has nearly doubled, from a starting level of 6.13 percent, while credit-card delinquency has steadily drifted lower since peaking at 13.74 percent in mid-2010 in the wake of the financial crisis.

Moreover, the actual rate of student loan delinquency is far higher than the official tally suggests. According to the New York Fed [no link provided], “these delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle.”

In other words, the real delinquency rate for loans in the current repayment cycle is “roughly twice as high,” per the Fed — which would put it north of 20 percent.
37.5% of Graduates Work in Jobs Requiring No Degree

In its article Student Loan Debt Hits Another New Record: Study, Senior CNBC Correspondent Scott Cohn cites a study noting these facts.

    1. The average college student who graduated in 2011 had $26,600 in student loans
    2. Two-thirds of last year’s college graduates had student loan debt
    3. 37.8 percent of recent graduates are working in jobs that do not require a college degree
    4. State budget cuts, which have led to large tuition increases, fewer grants, and an increasing need for college students and their families to borrow money to finance their education
    5. 96 percent of graduates from four-year, for-profit colleges took out student loans, borrowing 45 percent more than graduates of other types of colleges.

      Cohn mentioned the word "study" fourteen times without once providing a link to the study, or even mentioning the name of the study. I suspect this is some kind of record, just not one anyone should be proud of.

      Such semi-plagiarism is quite frankly inexcusable.

      Who is to Blame?

      I receive emails from readers all the time blaming the problem on point number four above, state budget cuts.

      Nonsense.

      Taxpayers are overburdened too much already.  States have cut back on the percentage of money to education out of sheer necessity as education costs have risen far faster than anything else including health care and energy.

      Here are some charts and comments from my post What Role Does Government Play in Price Inflation?

      Inflation Comparison - Select Components Since 1978


      Inflation Comparison - Current CPI Components Since 2000


      The above charts are from Doug Short at Advisor Perspectives. Doug creates excellent charts every month on various CPI components. Rather than reinvent the wheel, I asked Doug for a set of custom charts.

      Specifically, I had asked Doug to go back to 1971 for both charts.

      Unfortunately, data for components in the first chart only goes back to 1978, and in the second chart not even that far.

      The reason I asked for a starting year of 1971 is that's when I started college.

      Tuition at the University of Illinois in Fall of 1971 was $250 a semester for engineers (My degree is in civil engineering). Current University of Illinois Tuition is $8,278 per semester for Illinois residents, $15,349 for non-residents.

      Note that tuition difference: $250 in 1971 vs. $8,278 today.

      Note Areas of Highest and Lowest Price Inflation

      The least government interference is in apparel and recreation. The most government interference in the free market is education and health care.

      Education is rife with "no child left behind" madness, free tuition for veterans, and for-profit school scams that flourish only because student loans cannot be discharged in bankruptcy.

      Chasing the American Dream, Gone Bust

      I have talked about this many times before. One key post is Trading Caps and Gowns for Mops; Why Go to College If There Are No Jobs? Chasing the American Dream
      Some People Do Not Belong in College

      Pelletier perpetuates the myth everyone belongs in college. Many don't. Arguably at least half don't. In Portland Oregon, ACT scores show less than half of test-takers are ready for college math

      Useless Degrees

      Pray tell what good is a degree in English, history, PE, or political science other than teaching English, history, PE, or political science? And how many of those teaching jobs are even available?

      Yet colleges churn out thousands of graduates, year after year, with perfectly useless degrees.
      Debt Slaves

      President Obama promotes education as the answer to the unemployment problem. Other presidents have done the same thing. However, throwing money at the problem has done nothing but raise the cost of education for everyone, leaving many graduates debt-slaves for life, with totally useless degrees.
      Whenever government sticks its nose into solutions, costs escalate. We saw it in housing, with hundreds of affordable home programs artificially increasing demand, and with Bush's "Ownership Society" artificially increasing demand, etc., etc. We see the same thing now in health care.

      Expect such problem to grow until they blow sky high, which appears to be right at hand.

      Mish's Six Point Education Proposal?

      1. Increase competition by certifying more online schools
      2. Make student debt dischargeable in bankruptcy
      3. Abolish the student loan program
      4. Abolish Pell Grants
      5. Get rid of unions driving up costs
      6. End all support for for-profit colleges

      I assure you that if those actions were taken cost of college education would crash. But no one really wants that, any more than they want affordable housing.

      Politicians gain far too much in campaign contributions from unions, from for-profit schools, and from banks wanting to make kids debt-slaves, to really address the problem.

      Legislators would rather pretend they want to do something rather than actually doing something because it suits their purpose (getting reelected). Unfortunately, millions of students will pay the price as debt-slaves for life.

      Mike "Mish" Shedlock
      http://globaleconomicanalysis.blogspot.com

      "Wine Country" Economic Conference Hosted By Mish
      Click on Image to Learn More

      Blogroll

      News for factory,Allied Cash Advance,Photography,Beach Water Park,Educational Leadership,Vacation And Travel,Wedding Dress,Family Vacation Packages,Casino and Gambling,Health Insurance,Best Auto Insurance ( BAF ),Web Hosting Professional,Home Design And Remodeling,Information Property For Home,Wireless TV Networking,Business Plan Guide,Educational Guide,Custom Essay Writing Service,Plumber Service And Repair,Property House,Architectural House Plans,Car Auto Services,Computer service and repair,Computer Networking,Business Planning Strategies,Womens Giving,Healthcare and Medical Jobs,Retail Inkjet Solutions,Online Casino Games,Alcohol Drug Treatment,Web Designers,Apollo Amatuer Night,Public School Performance,Kanza Museum,Cap Inter Entereprises Emploi,Culinary Tourism,Business Traveller,Bridal Expo,Container Atlas Architecture,Culinary Tours - Packages and Travel,Dancing Ink Productions,Defend Automotive Group,Real Finance Group,Business Consulting Services,Home Design Audio,Health Projects International,Health Resources,Health Effects of Alcohol,History of education,Vietnam travel guide,Westland Foundation,Lighting Business,Networking Business Professionals,Housing Decoration,Future Business,Health and Beauty Tips,Hotel Cafe and Restaurant,Enhancing Education,Home Improvement Projects,Political Philosophy,Healthy Grieving Process ,Unique Weddings in New Orleans,Art Plus Science ,Advantage Business Media,Mutual Financial Services,Adventure Travel and Holidays,Alternative Medicine Treatments,Web Design and Marketing,Electronic Payment Solutions,Life Success in Business,Devium Car Interiors,Easy Divers Academy,Water Treatment Process,Software Development Company,MSDS Translation Language,Orion International Technologies,Refreshing Summer Wine Guide,Learn Technical Writing,Health Spa and Resort,Creative Book Publishing,Positive Business Mentality,Charter Healthcare,Discount Hotel Rates,United Industries,Warrior Insurance,County Tourism and Vacations,Wedding Ring Jewelry,Studio Design Decorative,Journalism Careers,Gaming Accessories Computing,Business Strategy Consultant,Cefori Technologies Information,Physics and Astronomy,News Fashion,Business Online,Michigan Apartments,Legal Information Institute,Guide Fashion Shipping,Home Insurance Quotes,Web Design Trends,Musical Instruments and Gear,Travel and Leisure,Importance of Education,Auto Financing Loans,Contractor Business Systems,Business Travel,Importance of Sex Education,Education Classroom,Creative Idea Laboratory,Luxury Paradise Vacations,Healthiest Alcoholic Drinks,Sports Betting,Business Environment,Business Directory,Internet Services,Top Styles,Architecture and Design,Discovery Travel and Tourism,Drug Abuse Treatment,Cheap Auto Financing,Business and Technology,Online Trading,Casino Gambling,Easy Online Shopping,Education Games,Social Media Networks,Online Dating,Luxury Honeymoons,Media and Entertainment,Home Decorating Ideas,Insurance Services,Payday Loans Online,Beechwood Travel Guide,Paradise Garden,Business Trends Consulting,Expert School Consulting,Latest Fashion Trends,Alternative Health Care,Technology Trends In Society,Health Technologies Resources,Island Wedding Services,Network Society,Gambling Experts,Medical Insurance Expert,Home Repair and Remodeling,Sexual Health Services,Education Resources,Automotive Solutions,Michigan Trade Associations,Luxury Fashion and Accessories,Theoretical Physics,Financial Advice,Adult Online Dating (Escorts),Pets Health Insurance,Better Homes and Gardens,Avastone Technologies,Discover Student Loans,Sports Authority,Vitamins and Supplements,Business Systems Online,Food Network Recipes,Business and Government,Smart Legal Strategy,Occupational Health Care,Music Education,Online Dating Tips (Expert),Online Marketing Lexikon,Citizens Council Network,Economics and Finance,Fashion Entertainment News,Luxury Travel Destinations,Online Auto Insurance,Home Improvement Loans,Building Business Foundation,Human Resource Consulting,Educational Media pay day loans
      life insurance quotes
      Credit Loans (finance)
      Foreign Auto Parts
      Health and Fitness
      Drug abuse effects
      Destination hotels and resorts
      Professional Financial Marketing
      Personal Finance
      Computers and Technology
      Auto Insurance
      Real Estate Property
      Computer Graphics Technology
      Home Improvement
      Arts music schools
      Online Education Classes
      Hotel and Travel
      Security development program
      Business auto loans
      Medical And Public Health Organizations
      Land and Homes
      Better Health Kids
      Engineered Heating
      Trade Finance Services
      Switzerland Tourism
      Casa Travel
      Clothing Accessories
      University of Technology
      Best Law Schools
      Marketing Technology
      Vacation Tour and Travel
      Insurance Agents and Insurance Brokers
      Construction Engineering
      Healthy Home Economist
      Masters Home Improvement
      Michigan Web Design
      Personal Online Banking
      Health Education Foundation
      Travel Pack
      Real Estate and Home Ideas
      Museum Vacations Travel
      Free Statistical Software
      Blog Free Statistical
      Buying and Selling Real Estate
      Educational Play
      Big Top Business
      Alternative Health
      smooth skin
      Products and Services
      Construction Project Management
      Northside Car Service
      Online Essay Writing
      France Health
      Europe Program Modernization
      European Travel Destinations
      Science and Technology Project
      Online Store Marketing
      Law Society Consulting
      Business Networking Company
      Motivation to Study
      Metropolitan Hotel
      Technological Innovation
      EAP Business
      Travel Guide and Virtual Tours
      The Business Partnership
      Accessible Accommodation
      Entertainment News
      Medicines Agency
      Carpet Cleaning
      International House
      VIP Shop
      Online Clothing Shop
      Institute Education Religion
      Ford Escort Team
      Shop Engine Part
      Computer Hardware
      Medical Career
      Paris Construction
      Professional Translation
      Streaming Wizard
      Alcoholism and Drug
      Medical Laboratory
      Commerce Business
      Educational Kids Play
      Space Education
      Home Repair Volunteer
      Fashion Talent
      Health and Safety Executive
      Play Web Games
      Travel and Surfing
      Property and Estate Agents
      Technology Group Solutions
      Student Service Center
      Construction Industry
      Media Center Computer
      Teny Fashion
      Home Remodeling Services
      Inspector Network
      Car Rentals
      Leader Dogs
      Rise Health Systems
      Business Strategy Consultant
      Personal Life Coaching
      Company Business Coaching
      Entertainment News
      Physics and Astronomy
      Science and Technology
      Cheap Vacation Packages
      World Business Academy
      Planets Project
      Travel and Leisure
      Prevent Drug Abuse
      Education Certified
      Play Kids Games
      Legal Defense Fund
      Real Estate Strategies
      Isolation Globale
      Insurance Coverage Law
      Rock Hotel and Resorts
      Medical Insurance
      Healthy Mind and Body
      Marjahaan Autokatsastus
      Free Sports Authority
      Auto Insurance Coverage
      Global Technics
      Advitium Manufacturing
      Professional Core Education
      Special Finance Services
      Bergen County Contractors
      Great Children's Art
      Health Supply Company
      Social Media Power
      Texas House Restaurant
      Carbon Consultant
      Carbon Expert
      Low Carbon
      Reset Carbon
      Healthcare Commissioning
      Virtual Job Tryouts
      Ethos Academy (Education)
      Intrinsic Schools
      Attorney General
      Technology Software
      Business Plans
      Digital Media
      High School Resources
      Adult Resources
      Gamblers Anonymous
      Ecuador Real Estate
      Software Development
      Festival Fashion
      Drugs And Alcohol
      Business Intelligence
      Food Network Recipes
      Journal Human Resources
      Games and Technology
      Technology Development
      Web Resources Express
      Payday Loans Bad Credit
      Art and Craft
      Business and Finance News
      Ecological Sciences
      Education Resources
      Web Design
      Music Education
      World Resources Institute
      Business Health Guide
      azplanningforwildlife.com m2tvchannel.com bapedaldaprovjambi.com kreis-dl.net news-1212.com landratsamt-doebeln.net landkreis-doebeln.net canadiangoldreserves.net chicagohearse.com tattooremovalessex.com braziltrade-uae.com 333asia.com calliemacdesigns.com gemdoc.net simplefoodjuiceplus.com postabortionstresssyndrome.com descendingpath.com casadopinhole.net myspeechandlanguage.net sezambook.com rerecognition.info bebetsy.info carsoncitybraces.info summitcardiology.info sanfojiangsi.info trailheadgeararchery.info immigrationconnect.info nhhomeless.info tundradialogues.info ibexretail.com kreis-dl.com agiles-eam.com bestbcgolfcourse.com niittyneito.com yenikapimevlevihanesi.com hnr100.com eplogin.com richard-wagner-festival.com landratsamt-doebeln.com lra-doebeln.com terrecatalane.com thesmarterhybrids.com