Student Debt and the Crushing of the American Dream

Student Debt Is Almost Impossible To Discharge In Bankruptcy Proceedings.A certain drama has become familiar in United States (and some other advanced industrialized countries): the Bankers encourage people to borrow beyond their means, and preying especially on those who are financially unsophisticated. Use their political influence to get favorable treatment of one form or another. The debts mount. The journalists record the human toll. Then comes bewilderment: How could we let this happen again? The officials promise to fix things. Something is done about most egregious abuses. People move on, reassured that the crisis has abated, but suspecting that it will recur soon. The crisis is about to break out involves student debt+how we finance higher education. Like housing crisis that preceded it, this crisis is intimately connected to America’s soaring inequality, and how, as Americans on the bottom rungs of the ladder strive to climb up, they are inevitably pulled down, some to a point even lower than where they began. This new crisis is emerging even before the last one has been resolved, and the two are becoming intertwined. In the decades after World War II, homeownership and higher education became signs of success in America. Before housing bubble burst in 2007, banks persuaded low- and moderate-income homeowners that they could turn their houses and apartments into piggy banks. They seduced them into taking out home-equity loans, and in the end, millions lost their homes. In other cases, the banks, mortgage brokers and real-estate agents pushed aspiring homeowners to borrow beyond their means. The wizards of finance, who prided themselves on risk management, sold toxic mortgages were designed to explode. They bundled the dubious loans into complex financial instruments and sold them to unsuspecting investors. Everyone recognizes education is the only way up, but as a college degree becomes increasingly essential to making one’s way in a 21st-century economy, education for those not to the manner born is increasingly unaffordable. Student debt for seniors graduating with loans now exceeds $26,000, about a 40% increase (not adjusted for inflation) in just seven years. But an “average” like this masks a huge variations. According to the Federal Reserve Bank of New York, almost 13% of student-loan borrowers of all ages owe more than $50,000, and nearly 4% owe more than $100,000. These debts are beyond students’ ability to repay, (especially in our nearly jobless recovery); this is demonstrated by the fact delinquency and default rates are soaring. Some 17% of student-loan borrowers were 90 days or more behind in payments at end of 2012. When only those in repayment were counted, not including borrowers who were in loan deferment or forbearance, more than 30% were 90 days or more behind. For federal loans taken out in the 2009 fiscal year, three-year default rates exceeded 13% (…..)

Link: http://opinionator.blogs.nytimes.com/2013/05/12/student-debt-and-the-crushing-of-the-american-dream/

Acerca de ignaciocovelo
Consultor Internacional

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