Despite the far left propaganda here:
Direction of Country
The people think the country is moving in the wrong direction..
And this will defeat all far left propaganda:
Bureau of Labor Statistics Data
Nonsense. Complete nonsense. You have to have some understanding of the scale of the problem. Not nearly big enough to be a real bubble. But nice try.
"
The growth of student loans is quite important, and in some sense, if anything, that's the only similarity to the mortgage crisis," says Roger Aliaga-Diaz, a principal and senior economist at Vanguard Investment Strategy Group. "The mortgage crisis then was growing at about the same rate per year, but that's pretty much where the similarities end."
One important
distinction between the two, Aliaga-Diaz says, is that the size of the problems are completely different. At the peak of the housing crisis, mortgage debt represented nearly two-thirds of the country's gross domestic product, whereas student loan debt makes up about 7 percent.
That's not to say, however, that student loan debt isn't putting a drag on the economy in some ways. The Consumer Financial Protection Bureau last year analyzed more than 28,000 public comments, finding the rising amount of student loan debt can have a "domino effect" on society. Student loan borrowers are less likely to save for retirement, take out home and auto loans or start a business, the report found.
[
ALSO: Obama Sidesteps Congress to Expand Student Loan Repayment Program]
Still,
student loan debt is much smaller in scale than mortgage debt. The average student loan debt, depending on who's calculating, can run anywhere from $25,000 to nearly $30,000. While Vanguard's calculations put the average student debt balance at $25,000, that amount is much smaller than the average mortgage debt in 2007: $93,000.
The average monthly payments toward a mortgage also made up a larger percentage of a person's income at 36 percent in 2007, compared with 4 percent for those paying back student loan debt. More student loan borrowers are also enrolling in income-based repayment plans, according to the latest data from the Department of Education. About 4 percent of borrowers are enrolled in the Income-Based Repayment plan, while 0.7 percent (about 260,000 individuals) are enrolled in the Pay As You Earn program. That's up from 2.4 percent and 0.1 percent, respectively, at this time last year.
There are
also far fewer student loan borrowers than mortgage borrowers (98 million versus 40 million) and fewer backed securities riding on student loans, Aliaga-Diaz says. And unlike those with mortgages, student loan borrowers can't walk away from their payment obligations. If mortgage payments become too much to handle, the borrowers have the option of foreclosure, through which banks can't pursue them for remaining payments. Student loan borrowers would have to file for bankruptcy to have their debt forgiven, which is more difficult to do.
So while the student debt crisis is nothing to sneeze at, it's
not putting the country in danger of a systemic crisis, he says.
"It's
far from comparable," Aliaga-Diaz says. "That's basically the biggest misconception with this, whether it's a drain on the economy or not."
Generally, loans can be good for the economy, Aliaga-Diaz explains. And while student loan debt might have a slight impact on the housing market, the benefit of earning a college degree – even with debt – is better than having no degree.
Why Student Debt Won't Cause the Economy to Collapse
The political battle is between dems and republicans, with Obama going around congress to get relief for students in paying back loans.
