According to this new CNBC article, citing a Credit Karma survey, 56% of people polled who owe student loans say they will have to choose between paying student loans and buying food and paying their rent. The article goes on to say that 45% of borrowers expect to get behind on their payments, and to become delinquent, at some point. The article says that even many people with incomes of over $100,000 a year will have trouble making student loan payments.
Pure and simple, the federal government is going to eat most of the $q.4 trillion or more of the government owned student loan debt. Most people can't afford to pay it. It's just that simple. But no one wants to admit that. Think about it, you're not considered responsible enough to buy an alcoholic drink at age 18, but you can sign a contract for $40,000 to $100,000 in debt when you have no means to pay it at the time. Think about that one.
The smart people that can't afford it simply won't pay it, and will take the hit to their credit. What are they going to do? Repossess their brains? There are over 40 million Americans with student loans, over $1.8 trillion in total student loan debt now, and the average payment is estimated to be about $400. Around 37% of student loans weren't being paid on time in the spring of 2019, a year before the pandemic (the Nerd Wallet article with that info has since been updated to more current stats, but I read it myself in 2020).
Honestly, I'm 57 years old and currently homeless, though I'm a working artist and blogger. I just don't earn enough to rent a place to live. I'm GLAD that I didn't go to college. While my economic life got off track for several reasons in recent years, not going to college is one of the best decisions I ever made. I didn't have the money to go, not even close, when I graduated from high school. My parents didn't save money, because of the dynamics going on in our house. I didn't have a strong direction in life at age 18, so I probably would have been on the 5 or 6 year plan, bouncing between majors, if I had gone to college. I knew I wanted to have my own business at some point, and I didn't need a degree to hire myself. There was nothing I was really interested in that required a college degree. So for me, avoiding college was the right decision. That's just me.
But today, in 2023, it's a much different world than it was when I was 18. A college education does not guarantee people a high paying job when they graduate anymore. It's a coin toss, at this point, depending on a whole range of factors. Some people with degrees will make millions more over their lifetimes, and many other graduates will struggle with their student loan debt for decades. This issue is just beginning to hit a crisis point, and I believe it will be one more reason college enrollment will continue to drop in the next several years. Young people who are not from wealthy families will see their parents, aunts and uncles, and other adults struggling with student loan debt, and huge numbers will take alternative paths in life. I believe the coming recession, and its lingering aftermath, will be another reason that will force a complete restructuring of not only student debt, but the entire college and university system.
I've been predicting a "College Apocalypse" since a chance conversation led me to do about 20 minutes of research, back in 2017, and I learned what SLABS (Student Loan Asset Backed Securities) were. After learning about SLABS, I knew then the whole higher education system would reach a crisis point within 5 to 10 years. The can got kicked down the road for three years, due to the pandemic, but it's now becoming apparent there's a HUGE crisis in higher education coming. Student loan payments are supposed to start again in October. Most people with those loans can't afford to make the payments, pure and simple. Like commercial real estate, this is another major crisis we are heading for, and it won't end well.
I'm doing a lot of my writing on Substack these days, check it out:
Steve Emig The White Bear's Substack
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