STUDENT LOANS: A profitable federal slush fund based in Washington DC, which is triggering skyrocketing tuition fees and rents.
Obsessed with the next ‘kegger’, or frat party on Friday, most college students are clueless as to what this all means.
Imagine graduating with $100K in student debts, only to find there is only one job for every 5 graduate applications. That’s 80% forced to work in catering, or do telesales on commission. Was it worth it?
‘Worse than the real estate crisis…’
The real estate loan bubble massively distorted the economy. Because of ridiculously easy money, real estate prices were inflated beyond all reason. This was great for banks who receive interest on real estate loans and great for local governments who tax real estate based on “value.” But it was disastrous for everyone else. Huge amounts of people’s income was being drained away by high real estate costs, income that could have been spent on other areas of the economy, including savings. Bad as it was, the real estate bubble is not as bad as the student debt bubble. Why? Three reasons:
1. People can choose to rent without a major drop in their standard of living. It’s hard to choose not to receive education or professional training.
2. Student loans are put on the young who are the least able to pay them and who normally would be a high spending part of the economy. Young adults need everything: cars, furniture, appliances, the expenses related to raising children. By beggaring this element of society, you’re doing real damage to the economy as a whole.
3. Unlike real estate loans, students loans cannot be discharged.
The whole system – created for the benefit of private lenders – is a disaster for society. But it can be fixed and fixed very easily. Watch…
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