Smart Students Crushed by Dumb Debt

We have created at least two generations of highly educated people who are unwillingly being crushed by student loan debt.  The housing crisis will look like nothing compared to the massive hit our economy will take if these student loans are ever called in or forced into default.

The dirty little secret that is keeping these loans in play — and always ready to tip on the borrowers with the slightest nudge — is the ability to “forbear” and “defer” in a vicious circle where you don’t have to pay what you owe, but what you owe gets compounded and pummeled and jacked back into what you already owe.  Every day you live, you dig your financial grave just a little bit deeper until you know what you’ve always known: There’s no way out; so give in to that punishing reality and live with your ruined financial debt, but never give up.

How do smart people get put into such financial ruin?  They were brought up believing that higher education was the only way to live a right and promising life.  You had to “pay to play” in the world and if you didn’t have any money or connections, you could still make your way by making yourself smarter and working harder.

Unfortunately, none of that is true today.  Yes, you can still go deeply into student loan debt, but you won’t ever be able to live a good life with a smarter mind because the system is set against you never being able to pay off your loans.  You’re a slave to the education of your own mind and you’re smart enough to know your end is doom.  Not even bankruptcy can save you from that infernal debt that follows you around — both up and downhill — like Sisyphus’ rolling rock.

From The Atlantic:

How does the housing bubble debt compare? If you add together mortgages and revolving home equity, then from the first quarter of 1999 to when housing-related debt peaked in the third quarter of 2008, the sum increased from $3.28 trillion to $9.98 trillion. Over this period, housing-related debt had increased threefold. Meanwhile, over the entire period shown on the chart, the balance of student loans grew by more than 6x. The growth of student loans has been twice as steep — and it’s showing no signs of slowing.

From the Washington Post:

The amount of student loan debt has skyrocketed in recent years to a total of $867 billion last year — or more than the $704 billion in outstanding U.S. credit card debt, according to the Federal Reserve Bank of New York. Of the 37 million borrowers who have outstanding student loan balances as of third-quarter 2011, 14.4 percent have at least one past-due student loan account.

During the 2010-11 academic year, students and families borrowed $104 billion in loans from the Education Department, a 50 percent increase over three years. Private education loans fell by 65 percent in that time, to $7.9 billion in 2010-11.

From The New York Times:

With more than $1 trillion in student loans outstanding in this country, crippling debt is no longer confined to dropouts from for-profit colleges or graduate students who owe on many years of education, some of the overextended debtors in years past. As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden.

About two-thirds of bachelor’s degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates; the total number of borrowers is most likely higher since the survey does not track borrowing from family members.

Is there any hope to solving this student loan debt crisis?

I bet not.

The GOP hate higher education; they want followers, not free-thinkers. The Democrats won’t help because they don’t want to be put in the position of “forgiving” debt to “elites.” Things will continue on as they always have — with more and more people choosing to defer and forbear and sink deeper into the abyss of what has become a national shame: “Home of the Free, Land of the Stupid.”

The one salvation we have is that smart people who know they’re being purposely ruined by an unfair system that requires massive debt in order to brighten the mind, have the ways and means and the guts to stand up and fight back against any future unfairness that seeks to punish them for bettering their thinking — and that’s the great and grave danger for the current political system and their banker backers — furious, but educated, minds know how to win a knife fight against authority when their very livelihoods are being fatefully and purposefully threatened.