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Student Debt Bomb Fuse Is Lit: Just Like Housing Debt

Written by Gary North on September 5, 2012

The student loan level is now almost $1 trillion. How big a threat is it? Here is the assessment of the National Council of Consumer Bankruptcy Attorneys.

With student loan debt now topping U.S. credit card debt and few or no options available for distressed borrowers (including
unwary parents who co-signed loans and now face the loss of nest
eggs, retirement homes and other assets), America faces the very
real possibility of another major economic threat on a par with the
devastating home mortgage crisis.

The president of the association said this. “This could very well be the next debt bomb for the U.S. economy. The amount of student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans exceeded $1 trillion for the first time last year because of rising college costs.”

This is serious. It will get far more serious. There is no escape from these debts. Students cannot legally walk away from these debts.

So, they go home to their parents.

Jenni Guarascio took $30,000 in loans to earn a degree in textile and apparel design. She could have gotten this training and a salary as an employees. Instead, she studied with professors who were not in the industry.

The monthly payments are $00 a month. She could not get a job that could support her. She moved back with her parents. She now has two part-time jobs. She pays $11 a month on these loans. This is suicidal. They are building up, higher and higher.

Another young woman owes $80,000. She lives with her parents. She teaches retarded children in an elementary school.

She went back to grad school. Then she will owe $100,000. She plans on a higher salary — an M.A. degree.

What happens if the school fires her and replaces her with a lower-paid teacher with no graduate degree? It’s cheaper for the school. The retarded kids won’t notice.

She has an undergraduate degree in sociology, which is useless. She had to earn a special education degree to get a job.

She wasted all that time as an undergrad, earning a useless degree.

She can’t buy a home: too much debt. No man wants to marry $100,000 in debt.

Another woman went into debt $100,000 to get a job teaching high school English. She cannot afford to pay her loans, she says. The principal is building.

She is trapped. She knows it. “Have you ever read ‘The Pit and the Pendulum’ by Poe? It’s like that.”

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6 thoughts on “Student Debt Bomb Fuse Is Lit: Just Like Housing Debt

  1. Will E. Maykit says:

    The goal is to nationalize wealth. Why not? Look at the debt that is already nationalized. Take your cash out, now.

  2. This 1 Trillion student debt is peanuts with our national debt at 16 trillion dollars. This no problem, all we need to do is shut the dam Senate down for a while since thay cost 1 Trillion dollars a year to run and all they have done in the last Four years is promote SODOMY and BESTIALITY for the military, they cannot ever produce a budget in Four years, it other words, "THEY ARE WORTHLESS.

  3. It's so simple: get rid of the Federal Reserve System.

    When you have a private banking cartel issuing the public's currency as a loan at interest, this is the logical and inevitable outcome, every time, guaranteed. More debt than money with which to pay off the debt.

    Twice before in our history we had private central banks, and they were thrown off by leaders with the….gonadal tissue to stand up to the banksters. Charles Lindbergh Sr. was correct when he warned that if the FRS was allowed to stand, that depressions-recessions-panics would be "scientifically created" and the owners of the central bank would improverish the nation, as they are doing now.

  4. james w. johnson says:

    I have been betraid but consider myself lucky. one of our grandaughters needed a co-signer for her college student loan. her mother, father, paternal grandfather, aunts, uncles, and brother all declined to co-sign. she enrolled, was assigned a series of classes, bought all the required books, BUT she never attended a class or made a payment on her loan. We had already retired. Only cost $10,000 out of our retirement funds, which we are slowly rebuilding. After all, she was only 26 years old and not quite mature enough for college. As I say, I consider myself lucky’ she will not be moving in with us. James W. Johnson

  5. Texas Chris says:

    1) If you're going to get a north-campus degree, you better be rich or work your way through college.

    2) If you're going to get a math/science degree, get it at a cheap school, CLEP all you can, and work your way through. Employers don't care if you went to Tx A&M like me, or Podunk State, for a degree. But they DO care how much debt you're in, oddly enough.

    3) Student loans are like an STD with no cure. There's only one sure way not to get them: don't get in bed with shady charachters (like the government!!!).

  6. Classic Bubble and another example of "Unintended Consequences".

    If the Educational Industrial Complex had lived within its means the price increases would pace inflation. Instead they built and bought and built and bought, added useless eaters to the University Payroll, gave away stipends to "friends", gave away scholarships to kids in order to "broaden campus diversity', rather than spending that money on remedial education for these same kids or using their Education Majors to help out in blighted school districts so that these kids would complete their degrees.

    I suffered through a Student Loan Default. while eeking a living in the "rust belt" on Temp Assignments. I bitterly oppose any blanket relief or "forgiveness" on student debt without concomittant cuts in "glamour" spending by Universities and other elements of the Educational Industrial Complex. If they won't cut their belts I'm not paying more in taxes or inflation to bail them out.