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Government Lures Naive College Students into Debt of $850 Billion

Written by Gary North on May 10, 2013

Average student debt for college is now $26,500. That is up 5% from last year.

As with almost everything else in life, Pareto’s 20-80 rule governs student debt. About 20% of students with debt carry 80% of this debt.

Median debt is half this: about $13,600. Half owe more; half owe less.

What the stories rarely tell you is this: of the $1 trillion owed by these students, $850 billion is owed to the United States government. The rest — $150 billion — is owed to banks.

What’s that, you say? You mean that the United States government lured these students into this tar pit of debt? That’s correct.

Then the solution is for the United States government to stop lending money to college students. But, of course, Congress will not admit this. The voters want the programs.

A government agency has issued a warning about the destructive effects of this debt on the overall economy. The agency is really warning the public about a problem created by the government. Conclusion: The right hand knoweth not what the left hand does.

Here are other little-known facts about student debt in the United States.

How many students are in hock? 37 million.

How many of these are under age 30? 14 million. So, debt is mainly a problem for mature adults, not kids.

What is the average (not median) starting salary for graduates? $44,000+.

What is the average unemployment for college graduates? 4.6%.

How many of these are minimum wage jobs? 280,000.

Conclusion: the media’s horror stories on the rotten job market for college grads are misleading.

What percentage owe under $6,000? 25%. This can be easily paid off.

What percentage owe $100,000 or more? 3%. So, the horror headlines apply to very few students.

Conclusion: to the extent that the student loan crisis really is a crisis, it is a government-created crisis.

It could be solved easily. First, the government passes a law allowing student loan bankruptcies. The private sector law would remain the same: no bankruptcy protection. That would eliminate 85% of the problem. Second, the government shuts down Sallie Mae and all other student loan programs.

Will the government take either step? Of course not. So, will the crisis go away? Of course not.

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14 thoughts on “Government Lures Naive College Students into Debt of $850 Billion

  1. MRSGUNNUT10 says:

    It would be nice if, the Banks and Federal Government, could/would tell us Tax Payers, just how much of these "Loan Dollars" were actually used for College Tuition. Remember all of those News Programs showing half naked men AND women at the so called Beach Partys chugin booze and doing the wild dancing on Live TV. I don't really mind helping those "young adults" complete their Educations. However using my hard earned Tax Dollars for B. & B. P.'s (Booze and Beach Parties" is outrageous. Being 80 Years old this Month, (May 15) , I can certainly find a better place to spend my Dollars on myself. Thank you for your time. TSgt., USAF Retired.

  2. I agree with you, sir. I managed to pay for college and any "extra's", by working. Yes, I had a job. In fact, I never had any help except a few hundred dollars in scholarships. After I got married, I farmed full time with my husband, and carried a full class load, and drove 45 minutes each way…I had friends who had their way paid for by their parents, who also took on huge loans. They sure had a lot of fun, and spring break was super. Of coarse, after school, yeah…no more spring break. In fact, no more money for anything, debt sucks. Do without when you're young, or you will pay later.

  3. I went to night school in the 80's (16 months 3 nights a week) and paid back a $5000+ student loan with interest in a couple of years….BUT, I hasten to add, that was a time when there were plenty of good jobs available with which to PAY BACK that loan. Today, inflation has caused the cost of a college degree to go through the roof, which I do NOT blame on the kinds that are straddled with what amounts of a lifetime of debt servitude.

    Young people have been LIED to, especially by colleges and Uncle Sam, told that there would be good paying jobs awaiting them upon graduation, so "No problem! Run up that debt! You'll be making the BIG BUCKS when you get out!" All of it LIES.

  4. Dave from Texas says:

    I went to Rutgers University in Newark in the 80’s. We were not wealthy, but tuition was low, only $500 a semester, not including books. No loans, no debts. I’d like to know what the hell happened to the tuition rates? Somewhere, lots of money is being wasted. Really sad.

  5. What happened to tuitions? What happened to Medical expenses?

    The Government provided subsidies… sellers raised their prices.

  6. HadEnuf says:

    I seriously have to think that this ploy was part of the strategy of these NWO-ist communist bastards. They want to have most of the dumb-downed, drugged-up, indoctrinated useful idiots in bondage to this communist regime and the new Hitler so that he can let them off free if they join his brown shirts, you know, the "civilian army" that this Muslim-Marxist jihadist had informed everybody, at least those that paid attention to this Godless ghoul while he was campaigning for DICTATOR-IN-CHIEF! They will join the Obaa-baa-minites, illegal aliens, recruited prisoners as Muslims and now the indebted (students?) as his private army! WAKE UP, WISE UP, RISE UP!

  7. I was in college studying to get a teaching credential in 1957 when the Russians launched the first space satellite. All the usual Big-Government ideologues – including my Education professors – seized that moment to clamor for Federal Aid to Education. Of course the law passed – and the Student Loan program is an inevitable outgrowth from that.

    The irony is, College tuition was reasonably affordable in 1957 and jobs for students were easy to come by. Working one’s way through college without accruing debt was common. But, not today! Tuition costs have increased about 30% faster than the rate of inflation, and jobs are scarce – thanks entirely to the government’s “help.”

  8. And the TAX PAYER will pay for it!! That is the next Democrat bubble to burst!!!

  9. Seymour Kleerly says:

    Hitler was a Nazi not a Commie! Could you possible be any dumber?

  10. Margaret. Jacobson says:

    That's right !! Riot all depends on what you study too !! Study hings like documentary film making, drama, dance !! Done people study speech ( worked with a person who did). I had a cousin that studied "art". !! No job !!

  11. Margaret. Jacobson says:

    You are right!! A lot f these dumbed down stupid people are slower at thought recognition than a 6th grader of 50 years ago!! Example: last ay I was at the main branch of the library in Baltimore city. I left my cell phone home . I asked a young girl (from alto more leadership academy, uniformed )."do you know what today's date is ?? ". She said"no ma'am I dint ". I asked " what is the date of the newspaper you are reading"?? She politely said " this won't help it is yesterday's paper??" She was absolutely clueless!!

  12. Margaret. Jacobson says:

    Anytime government intervenes we have a mess up !! Education no longer exists !! Un education exists!!the students are just dumbed down!! They are un creative idiots !! I remember a time an enterprising person could babysit !! Now you need to go to school and be licensed by the state for a babysitting job !! Think government daycare !! The government has overtaken all aspect of our lives , to our detriment !! We are supposed to be dependent on their largess !!

  13. Everhen says:

    For one, OSU president is paid in excess of TWO MILLIONDOLLARS/YEAR, NOT TO MENTION ALL THE EXTRA PERKS!!!!

  14. Bryon Harrelson says:

    If I was in HS I would go to a Community College and wouldn't worry about a 4 year college.