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What If Your Daughter Ran Up Credit Card Debt of $160,000?

Written by Gary North on July 9, 2012

You would be horrified. You would ask: “What bank would allow this?” Answer: lots of them.

It’s credit for college. Students cannot declare bankruptcy to escape college debt. They are trapped for life.

So are the men who marry them.

Kathleen Bijas, 27, lives at home with her parents. She makes monthly payments of $1,608. She has a job as a nurse in an emergency room. The monthly fees eat up half of her pre-tax income. But then she pays taxes. The interest payments are not deductible.

“I won’t be able to buy a home. I can’t buy a car. The idea of getting married and getting kids is frightening. If I can’t afford to move out of my parents’ house, how can I afford to raise someone? It’s all going right out the window.”

How long will parents allow their children to destroy themselves with college debt?

The rising cost of college far outstrips the rise in the Consumer Price Index. It has risen at 7.5% per year for over 30 years. That means it doubles in less than ten years, decade after decade. That is twice the rate of the CPI.

Educators blame the decline of taxpayer aid. They do not blame the real cause: higher education is a cartel created by state and federal laws.

The lady with the $160,000 debt says she had no choice. Nonsense. The degree in psychology she paid for was useless in the job market. She should not have paid over $15,000.

Then she got a nursing degree. She paid too much for that, too.

People need to buy smart. They must not pay retail for college.

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13 thoughts on “What If Your Daughter Ran Up Credit Card Debt of $160,000?

  1. junkbin says:

    there is a reason for the non bankruptcy clause in student loans. This is a case. Graduate, screw around, file bankruptcy and get out from under the debt would be the norm. Now it is as it should be, you borrowed it, you pay it back.
    There are ways to lower the cost but most will not put in the time and sacrifice graduate with little to zero debt.

  2. In many cases, a college degree is useless. A degree in fine arts, liberal arts, etc does nothing for your job prospects. Nobody tells this to incoming college freshmen. Most would do better with an apprenticeship or a technical school education. Even those who go to college to become teachers can not afford to teach because of the debt they amass. If you do away with the various government subsidy programs and mandates, the cost of a college education would shrink to what the market would bear, and incoming students would be more likely to select colleges and majors that would be worth paying for.(Yes I went to college in a worthless major and no debt-but had a succesful career inspite of this and am now happily retired)

  3. In most pre-employment cases, JDH, one has to provide evidence of completion of higher education in the field applied for or at least a degree that is associated with that field. Without the documents, you will be disqualified as a prospective employee—I have had to produce those requirements so know this first hand. You are now retired–great, I truly am glad for you. Unfortuntely, since the late '80s, tuition has risen dramatically every year to its current astronomical prices–either pay it or you do not get the job you want because you will not have the necessary documents. I agree that the Fine Arts and Liberal Arts degrees are no longer considered a valued asset for employment; as for teachers, depending on the State and school, a prospective teacher can have her indebtedness forgiven IF he/she will agree to teach in an area that is needy for teaching personnel.

  4. Addendum: Last I heard, for every year of teaching, 2 years indebtedness was forgiven; of course, the ratio may have changed and the program participants may be limited–a student would have to check it out. That same offer was made to those entering the medical and mental health fields. The problem: most students did not want to move to a rural area where the need was greatest; inner-city schools suffer because of their reputation for violence (and I couldn't blame a new teacher for not wanting to teach there).

  5. Gary North is wrong. In the first place, it is not unusual to find it costs $160k for the BA and MA degrees in Psychology; it is the BA alone that will not get you the job–you must have the MA that goes with it. Reason? Because the rudiments of psychological testing are not taught at the undergrad level. Secondly, the lady can request consideration for payments based on income from her creditors (usually this is Sallie Mae and Great Lakes); she can either call them or so this on line. And thirdly, her educational debt belongs to her, not a husband. Yes, the IRS can attach a married couples income tax refund, but they can only take HER share if she is in arrears and not HIS–unless he was also a student and is also in arrears. She can contact her school financial aid advisor or the agency holding her notes for advice–and I suggest that she do so.

  6. You are a dumb ass. The REASON you cannot file for bankruptcy with students loans is because of what DOCTORS did decades ago.

    The set up their medical practice and then filed for bankruptcy. In bankruptcy you cannot take away the means to earn a living. So those doctors not only received a new start they dumped their student loans and business costs onto us.

    Think about that the next time you read what a Doctor makes for an annual salary and ask why the got a free ride then along with the To Big To Fail banks of today but you the student can't get the same deal.

  7. But the military only gets debt forgiven for the TIME actually served in a COMBAT ZONE. Why is it that teachers, police, firepersons, etc get it forgiven for ALL years served.

    Oh dumb me…they are UNION. The military is prohibited by law from unionizing.

  8. Wrong…the IRS can take it ALL from a return filed jointly…..go read Title 26 USC….the IRS Code.

  9. flowers says:

    Lots of bartenders out there have BA's I hear. Best advice is to find something you love to do and if it doesn't require a college education all the better. You will need to have some skill to barter for the goods you want in the future because it's all coming down like a house of cards.

  10. Kathleen's monthly loan payment of $1,608 is 32%, not 50%, of her pre-tax income of $5,000 per month. Also, the loan interest she pays is tax deductible up to a maximum of $2,500 based on her modified adjusted income of less than $60,000. In fact, since the loan interest is an adjustment to her income she can deduct it even if she takes a standard deduction.

  11. Wiseman says:

    Hmmm, sort of like what Obamacare does is dumb the states that legislated laws that cause higher health care costs to be paid for by the people in the states that didn't. In otherwords, no consequences for electing commies like Obama.

  12. Wiseman says:

    It is pretty simple. If you want a degree in Psychology or whatever it is in, then you must also be willing to do the tradeoff.

    1. If you want to go to school right out of high school, you can work an pay the tuition for a couple of years in a Junior College in a state where that can actually be done (usually not a blue state either). Or if you choose to go to a college with $20,000 a year in tuition and don't have the money to pay up front, the trade off is that you owe the debt. Don't try to weasel out of the choice you made.

    That's really, in general, all that a person needs to know. You make the choice to go a college that costs that much money, you pay for it somehow. There are more options available now by taking online classes, but you do have to work without a structured daily schedule like in college. This means you can work a full time job and also go to school.

  13. Well, you have to think about costs BEFORE you pick a college. That's just common sense. I was accepted to NYU but even with a state scholarship, that only covered 1/4 of the tuition. But my family did not do debt, we did what we could afford. Debt is the biggest cause of slavery.