From tomorrow’s paper:
The hunger for yield is driving investors to snap up securities backed by student loans, even as borrowers are falling behind on their payments at a faster clip.
Sadly, I cannot figure out who these investors are. I don’t understand how we can publish a story on this and not discuss who is buying this. If investors want yield but are also aware of this, what is encouraging them to take these risks? Are these pension funds? State municipal pools? Insurance companies? Who? And of course they couldn’t be investing in these with an understanding that should the loans go bad they’d ever get a handout, you know, to stem the systemic risk that such losses would present. And are these being purchased with leverage? How much?
Here is something that should not be surprising:
Private lenders such as SLM, known as Sallie Mae, make loans that aren’t backed by the federal government. They lend based in part on borrowers’ credit history, and have tightened their lending standards since the financial crisis. By contrast, the federal government, which makes more than 90% of student loans, doesn’t check credit records for most student loans.
Or try this on:
People under 30 are struggling the most. The delinquency rate jumped to 35% last quarter from 26% in 2008, according to the Fed report.
Ethan Sjolander, 26, graduated in 2007 from Houghton College in Houghton, N.Y., with a degree in business administration and about $24,000 in student loans. Mr. Sjolander said he never missed a student-loan payment, but racked up about $11,000 in other debt in part by paying for food, car repairs and gasoline with his credit card.
Mr. Sjolander, who now works as an administrative assistant, says his debts have forced him to delay plans to buy a nicer car, and put off going back to school for another degree.
There’s too much packed into that last paragraph to comment in such a short post. Indeed, college has been oversold.
I don’t see the problem with the last paragraph, to be honest. He may have 24k in debt, but clearly 11k of that has nothing to do with college. He chose to borrow to pay for living expenses, which is probably the number 1 reason why people take on too much debt. But that is due to two reasons: easy to get government loans which require no justification for taking on, and pathetically stupid kids (and parents). Both these problems are quite independent of “college”, or whether college remains a worthwhile investment. Of course, any good investment can be made bad, if financed improperly.
That being said, the fact that he can’t buy a new car isn’t exactly evidence of some greater burden placed on him. We don’t know whether the actual education received is/will be worth while, since we don’t know how much he is earning compared to what he would have been earning without that degree.
I would certainly agree that SOME sorts of college degrees and types have been oversold. After all, the majority of delinquencies on student loans are not from the 4-year colleges, but the 2-year colleges and trade schools. Furthermore, there are many different types of “colleges” and many different types of degrees one can get. Some have become too “attractive” to get due to easy lending and due to government-sector demand for such degrees; I’m talking about things like education, social work etc, which probably attract a good 50-60% of female college students. But of course comparing the “worth” of investing in an education degree, vs. an engineering degree, isn’t straightforward.
There are lots of contributing factors and problems, but sometimes we libertarians/right take it a bit too far when we accuse “college” of being at fault. Becker and Posner have a couple of good thoughts on this issue on their blog.
“He may have 24k in debt, but clearly 11k of that has nothing to do with college. He chose to borrow to pay for living expenses, which is probably the number 1 reason why people take on too much debt.”
Actually, what the article didn’t make clear was that I racked up that debt to pay for living expenses because I did not want to default on my student loans, which were $300 a month upon graduation, and I was making $10 an hour because I was working a job that didn’t require my degree.
The article also didn’t make clear that the “another degree” I wanted to get was in a completely different field that I wished I had entered first… but I was pushed into going straight to college after high school because “that was how to get ahead in life”. I would have been better served by getting into the work world first and figuring out my interests before dropping huge money on a degree I ended up not liking.
But I’ve been luckier than many of my peers – I finally got a good job I liked, and at 30, my college loans are now paid off and my credit card debt is a small fraction of what it once was.
There is a hunger for yield, to pay the bills.
Every month the Fed buys $85 billion or so of 10-year Treasurys and junk loans from banks to stimulate a narrow segment of the economy in the hope that bulldozer operators, plumbers, and carpenters will find work and push the stubborn unemployment index, a lagging indicator, down. In effect, our dollar is not a gold dollar, but rather a labor dollar. How stupid is that?
In exchange, we get a mountain range of future inflation to repudiate debt, and in the meantime rob savers, including me and my mother-in-law of tens of thousands of income. They should be rioting in Florida.
Instead, financial advisors (brokers, and insurance and mutual fund salespersons) are pushing people into higher yield, which means more principal and credit risk. The smart money is in cash, waiting for everybody to run for the door.
This is a dismal picture, the reverse of a situation where interest rates decline because the dollar is sound.
It is the picture of the debtor as king, and the producer as the serf.
I just caught the part about postponing plans for getting another degree. That is mind blowing.
658594 218400brilliantly insightful post. If only it was as straightforward to implement some of the solutions as it was to read and nod my head at each of your points 898734
Hello! I know this is kinda off topic but I was wondering which blog platform are you using for this website?
I’m getting sick and tired of WordPress because I’ve had issues
with hackers and I’m looking at options for another platform.
I would be fantastic if you could point me in the direction of
a good platform.!
830996 815910I think you did an awesome job explaining it. Certain beats having to research it on my own. Thanks 40700
570453 36098A actually exciting examine, I may possibly not concur entirely, but you do make some actually legitimate points. 669601
Hi! Do you know if they make any plugins to help with SEO?
I’m trying to get my site to rank for some targeted keywords but I’m not seeing very good results.
If you know of any please share. Many thanks! You can read similar art here: Warm blankets
599544 60513All you require to know about News data to you. 884361
207961 62754Youre so cool! I dont suppose Ive read anything such as this before. So nice to get somebody with some original thoughts on this subject. realy we appreciate you starting this up. this fabulous web site are some issues that is required on the internet, somebody with a bit originality. beneficial work for bringing a new challenge on the world wide internet! 238839
175481 632777Hi there! I could have sworn Ive been to this site before but soon after reading via some of the post I realized its new to me. Anyhow, Im undoubtedly glad I identified it and Ill be book-marking and checking back often! 885178
I could not resist commenting. Perfectly written.
488511 881074Quite very good post, thanks a great deal for sharing. Do you happen to have an RSS feed I can subscribe to? 885796
Learn how to adapt to changing dynamics by
exploring Sustaining Success in a Changing World: The Power of Adaptability.
After looking at a number of the articles on your website, I seriously appreciate your way of writing a blog.
I bookmarked it to my bookmark site list and will be checking back soon.
Please check out my web site as well and tell me how you feel.
Hello my family member! I wish to say that this article is amazing, nice written and include
almost all significant infos. I’d like to look more posts like this .
It’s a shame you don’t have a donate button! I’d certainly donate to this fantastic blog!
I suppose for now i’ll settle for bookmarking and adding your RSS
feed to my Google account. I look forward to fresh updates and will talk about this site with my Facebook
group. Chat soon!
magnificent issues altogether, you just gained a new reader.
What might you recommend in regards to your put up that you just made some days in the past?
Any certain?
It’s impressive that you are getting ideas from this article as well as
from our dialogue made at this time.
Heya i’m for the primary time here. I came across this board and I in finding It really
helpful & it helped me out a lot. I hope to give one thing back and aid others such as you aided me.
Good day! Do you know if they make any plugins to assist with SEO?
I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good success.
If you know of any please share. Many thanks!
Undeniably believe that which you stated. Your favorite reason seemed to be on the
web the simplest thing to be aware of. I say to you, I certainly get annoyed while
people consider worries that they plainly don’t know about.
You managed to hit the nail upon the top as well as defined
out the whole thing without having side-effects , people can take a signal.
Will likely be back to get more. Thanks
I’ve been browsing on-line more than three hours these days, yet I by
no means discovered any fascinating article like yours.
It’s pretty price sufficient for me. Personally, if
all site owners and bloggers made just right content as you did,
the web will likely be much more helpful than ever before.
What’s up it’s me, I am also visiting this web page daily, this
web page is genuinely fastidious and the people are truly sharing good thoughts.
Hello there! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me.
Nonetheless, I’m definitely happy I found it and I’ll be bookmarking and checking back often!
I’m really enjoying the design and layout of
your site. It’s a very easy on the eyes which makes it much
more enjoyable for me to come here and visit more often. Did
you hire out a designer to create your theme? Excellent work!
you are actually a excellent webmaster. The website loading pace is incredible.
It sort of feels that you are doing any distinctive trick.
In addition, The contents are masterwork.
you’ve performed a great task on this topic!
You are so awesome! I do not believe I have read
through anything like this before. So great to discover
somebody with a few unique thoughts on this topic.
Seriously.. thanks for starting this up. This web site is something that is needed on the web, someone with a bit
of originality!
Hi there to every single one, it’s really a nice for me to pay
a visit this site, it contains helpful Information.
fantastic points altogether, you just received a new reader.
What would you suggest about your put up that you
made a few days ago? Any sure?
Its like you learn my mind! You appear to know so much approximately this, such as you wrote the e-book in it or something.
I feel that you can do with some % to force the message house a little
bit, but instead of that, that is great blog. A fantastic read.
I will definitely be back.
I think everything published made a bunch of sense.
But, what about this? what if you added a little content?
I mean, I don’t want to tell you how to run your website, however suppose you added something to possibly grab people’s
attention? I mean Headlines I Wished I Hadn’
t Seen, A Continuing Series « is a little vanilla.
You could look at Yahoo’s home page and see how they create news titles to get viewers interested.
You might add a video or a related pic or two to get readers interested about
what you’ve got to say. In my opinion, it might make your blog
a little livelier.
Way cool! Some very valid points! I appreciate you
writing this write-up and the rest of the website is very good.
magnificent post, very informative. I’m wondering why the
other specialists of this sector do not realize this.
You should proceed your writing. I am confident, you
have a great readers’ base already!
753609 505864A really informationrmative post and lots of actually honest and forthright comments created! This certainly got me thinking a lot about this concern so cheers a whole lot for dropping! 933845
Good day! Do you use Twitter? I’d like to follow you if that would be ok.
I’m absolutely enjoying your blog and look forward to new updates.
I have been surfing on-line more than three hours nowadays, yet I never discovered any attention-grabbing
article like yours. It is beautiful value enough for me.
In my view, if all site owners and bloggers made excellent content as you did, the web can be much more helpful
than ever before.
Unquestionably consider that that you said. Your favorite reason appeared to be at the net the easiest thing to be mindful
of. I say to you, I definitely get irked while other folks think about worries that they plainly do not recognize about.
You controlled to hit the nail upon the top and also outlined out the whole
thing without having side-effects , people could take
a signal. Will likely be again to get more. Thanks
It’s awesome designed for me to have a site, which is beneficial
for my know-how. thanks admin
After I originally commented I appear to have clicked the
-Notify me when new comments are added- checkbox and now whenever a comment is
added I recieve 4 emails with the same comment. There has to be a way you can remove me
from that service? Cheers!
An outstanding share! I’ve just forwarded this onto a colleague who had been conducting a little homework on this.
And he actually ordered me breakfast due to the fact that
I discovered it for him… lol. So allow me to reword this….
Thank YOU for the meal!! But yeah, thanks for spending the time to discuss this
matter here on your site.
In the pursuit of comfort and convenience, technology has revolutionized the way we experience warmth and protection from the elements.
my blog … Online Voltex Heated Vest
It’s in point of fact a nice and useful piece
of information. I’m glad that you simply shared this helpful information with
us. Please keep us informed like this. Thank you for
sharing.
The http://g-friend.co.kr/bbs/board.php?bo_table=free&wr_id=210234 is a cutting-edge piece of personal protective equipment (PPE) designed to provide smart thermal protection for outdoor workers.
Hello there! I know this is kinda off topic but I was wondering which blog platform are
you using for this site? I’m getting tired of WordPress because I’ve had issues with hackers and I’m looking at alternatives for another platform.
I would be fantastic if you could point me
in the direction of a good platform.
Excellent beat ! I wish to apprentice while you amend your website, how can i subscribe for a blog web site?
The account helped me a acceptable deal. I had been a little bit acquainted of this your broadcast offered bright clear idea
370133 814265Some genuinely amazing weblog posts on this internet web site , thankyou for contribution. 837362
First off I want to say wonderful blog! I
had a quick question that I’d like to ask if you do not mind.
I was curious to know how you center yourself and clear your head prior to writing.
I’ve had trouble clearing my thoughts in getting my
thoughts out. I do take pleasure in writing however it just seems like the first 10
to 15 minutes are usually wasted just trying to figure out how to begin. Any ideas or hints?
Thanks!
Superb, what a blog it is! This blog gives valuable facts
to us, keep it up.
Nice post. I used to be checking constantly this weblog and I’m inspired!
Extremely useful info particularly the closing section 🙂 I deal with such info a
lot. I used to be seeking this certain information for a long time.
Thanks and good luck.
Why people still use to read news papers when in this technological globe everything is existing
on net?
Hi there just wanted to give you a quick heads up.
The words in your post seem to be running off the screen in Ie.
I’m not sure if this is a format issue or something to do with browser compatibility but I thought I’d
post to let you know. The style and design look great though!
Hope you get the issue resolved soon. Kudos
If you would like to take a great deal from this article then you have to apply these techniques to your won weblog.
Truly no matter if someone doesn’t understand then its up to other viewers that they will help, so here
it happens.
I am regular visitor, how are you everybody? This piece of writing posted at this site
is truly good.