Student Debt

Student loans have soared in popularity over the past decade, with the aggregate student loan balance, as measured in the FRBNY Consumer Credit Panel, reaching $966 billion at the end of 2012. Student debt now exceeds aggregate auto loan, credit card, and home-equity debt balances—making student loans the second largest debt of U.S. households, following mortgages. Student loans provide critical access to schooling, given the challenge presented by increasing costs of higher education and rising returns to a degree. Nevertheless, some have questioned how taking on extensive debt early in life has affected young workers’ post-schooling economic activity.

As a result of tighter underwriting standards, higher delinquency rates, and lower credit scores, consumers with educational debt may have more limited access to housing and auto debt and, as a result, more limited options in the housing and vehicle markets, despite their comparatively high earning potential.

Young Student Loan Borrowers Retreat from Housing and Auto Markets,” Meta Brown and Sydnee Caldwell, Liberty Street Economics

Along with the minimum wage increase, national health care, and the expansion of social security, student debt forgiveness has to be high on any Democratic Socialist or progressive agenda. It’s stayed below the radar so far but I suspect that may be changing. The quote, above, isn’t from a left-wing economics journal, it’s from the Federal Reserve Bank of New York. I first went into debt in this way in the 1980’s, after my Dad died and I had to find a way to pay for the rest of my undergraduate degree and an M.A.

IF I had lived in somewhere other than Texas, or now, the debt might have been at least partly forgiven when I served in the Peace Corps. The real problem came later, in the 1990’s, when I went for my Ph.D. at U.T. Austin, which had no tuition waiver, and paid so poorly for teaching that unless you had parents with money you had to go into debt. I’ve been paying that debt steadily for nearly 15 years and the last time I checked it won’t be paid off until I am around 85 years old. It’s nothing but welfare for the banks.

About Ray Watkins

I was born in Baton Rouge, Louisiana, at Our Lady of the Lake Hospital. I grew up in Houston, as a part of what we only half-jokingly call the Cajun Diaspora. At a certain point during the Regan administration, I had to leave, so I served in the Peace Corps, Philippines, from 1987-89. I didn't want to return to the United States just yet, so I moved to Paris, France, where I lived for three years or so. I then moved back to Austin, Texas, where I had received my Masters Degree, and (eventually) began a Ph.D., which I completed in 1999. I spent a year at Temple University and then accepted a position at Eastern Illinois University where I worked until May of 2006. I now work exclusively on line (although that may change) for Johns Hopkins, the Art Institute Online, and I can be reached most easily via email: raywatkins [that 'at' symbol]

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