College loan debt exceeds credit card and auto loan debt in United States

If someone asked you about total college loan debt as compared to credit card and car loan debt, would you know that college loan debt was highest?

Rick Green at the Hartford Courant points us over to Liberty Street Economics, the blog of the New York Federal Reserve.

The outstanding student loan balance now stands at about $870 billion,surpassing the total credit card balance ($693 billion) and the total auto loan balance ($730 billion).

If colleges keep raising tuition rates – UCONN has guaranteed tuition increases of 6 percent (about) per year through 2016 – the amount of total student loan debt will only increase in our current economy.

So what has the government do about the rising cost of tuition and expanding student debt?

Student loans have received considerable media attention in recent months as researchers and policymakers voice growing concern about the heavy debt loads assumed by students and their parents. In addition to worries about the volume of outstanding student debt, there is concern about having enough federal aid to support the large number of students taking up postsecondary education. Federal and state governments are deeply involved in the student loan market, either directly originating student loans or indirectly guaranteeing them. The Health Care and Education Reconciliation Act, signed into law last year, ended private lending of federally subsidized loans, approved expansion of Pell Grants, and appropriated funds to invest in institutions that serve minority and low-income populations. Still, advocates for students clamor for more to be done to increase the availability of student loans. Further, state budget cutbacks to higher education amid tight fiscal circumstances may result in higher tuition.

Let me state this plain and simple for everyone. BailoutPresident Obama wants to wipe out at least one-half of all student debt. At least that is how it will be presented to you, but in reality he would be simply transferring the debt from students to future generations of Americans.

You see, trillion is the new billion. When you’ve run $1.4 trillion deficits at the federal level for year after year you’ve set the new “normal” standard. The next step will be to take $500 billion (or more) of student loan debt and wipe it out; charge it to the federal government over a five year period, claim victory, and keep going.

Who pays? Future generations.

Who gets to keep their pay raises, increase tuition and guaranteed pensions?

14 replies
  1. stinkfoot
    stinkfoot says:

    Cheap government money is one way to ensure an oversupply of college enrollment which helps to maintain the disincentive to control costs.? That would be a hint as to why it’s costing so much more than it used to to pursue a degree and why the generation that would otherwise be fueling economic growth with spending are otherwise chained to enormous debt to begin with- perpetuating the crisis for which the government undoubtedly has a ready remedy… at everyone else’s expense.

  2. Tim-in-Alabama
    Tim-in-Alabama says:

    Thank goodness we have a president like Barack Obama who will “save” students from the loan monster he and others like him helped create. Obama 2012!

  3. sammy22
    sammy22 says:

    Costs for college (as well as health care), have been escalating for years, as we all know. Nobody is willing to tackle cost containment. It’s far easier for all sides of the political spectrum to find someone to pin the blame on. We’re a nation addicted to debt.

    • Steve M
      Steve M says:

      I agree to a certain point, but I think we have a collection of politicians – both GOP and DNC – who are addicted to the power they wield especially at the federal level since so much of it is “hidden” from view. Government-sponsored and secured loans are a big part of the issue, as is the mantra that “everyone has to go to college.” A right start would be to dissolve the federal government from anything to do with education.

      • stinkfoot
        stinkfoot says:

        Perhaps they should quit their addiction- cold turkey.
        Since it’s almost a universal expectation that “everyone must go to college” please explain the actual value of a college degree if the aim is for “everyone to get one”?? The government needs to get out of the loan business because they’re inflating a bubble that is going to take down way more than the housing bubble did when it burst.? If they really cared about students they wouldn’t be destroying the value of an education while doing everything in their power to skyrocket its price.

  4. Dimsdale
    Dimsdale says:

    Government loans simply exacerbate the problem: if the money is available, and you can “pay it off long term”, the price naturally goes up as a result.? With no guarantee of finding a job that can help you pay off the loan.
    ?
    As a related aside, look at the price of research supplies: companies like Fisher etc. charge outrageous prices for commonly available items, because they are paid for from grants.?? Need more money?? Write a bigger grant.? Watch what will happen with “free” gov’t healthcare.
    ?
    The other side of the coin is also apparent: the government, by “forgiving” said loans with a requirement for government “service”, merely increase the ranks of groomed government workers, ready for gov’t unions or endless unemployment/welfare.
    ?
    Look at the message that comes from politicians: “Everyone should be able to go to college!”, which progresses (deliberate pun) to “Everyone has a RIGHT to go to college”, lowering standards, and turning a B.A. into the equivalent of a high school diploma, if everyone has one.
    ?

  5. RoBrDona
    RoBrDona says:

    A substantial percentage of college graduates should never have gone.? They get no real benefit in the current economy. I link this to the demise of the traditional “tech” high school which pointed the right kids in the right direction.? I am reminded of the preference tests they used to give us, which were routinely ignored – sometimes to your peril.?

  6. sammy22
    sammy22 says:

    Getting the federal government out of education (if it can be accomplished), still does not? “solve” the cost containment issue. If politicians have a hand in cost escalation (by whatever means) so is the rest of the society. It’s not only the politicians who say:”Everybody should be able to go to college”. Even the barely literate HS graduates expect access to college.

    • Lynn
      Lynn says:

      It must be the huge solar flare, but I am agreeing with Sammy constantly. Great point. Another silly story from my past. When I was in Kindergarten (yes, I remember some things from Kindergarten) the principal came in and asked us, how many of us wanted to go to college after we graduated from High School! I was surely barely literate then, but if the Principal said it, I was darn sure I “expected access to college”.

    • JBS
      JBS says:

      One of the greatest problems with college is that access had become too easy. I hope this has changed of late.
      It was always galling to be in a college class with individuals who got little out of high school. There clearly are many people in college who don’t belong there for various reasons. Prior preparation and intellectual capacity are two important determinants. Unfortunately, instructors were often loath to address sub-par students and direct them to other pursuits.
      Colleges and universities have had to institute required remedial courses to winnow the unprepared from upper level courses.
      College is NOT the answer for all. Connecticut has wonderful trade high schools. Many people enjoy excellent careers without any college.

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