Over three years ago, when the full extent of the student debt crisis was becoming apparent, the Treasury Borrowing Advisory Committee released a startling analysis and long-term forecast which showed two things: i) up to a third of all student loans are likely to end up unrepaid…
And ii) the total amount total student loans, which currently amount to $1.48 trillion (nearly 50% more than all the credit card debt in America), is set to hit a whopping $3.3 trillion by 2024.
Fast forward to this week, when a Brookings Institution report offered a new set of dire observations suggesting that “the looming student default crisis is worse than we thought.”
The analysis “suggests that nearly 40% of borrowers may default on their student loans by 2023,” a staggering number if one assumes the TBAC’s forecast that there will be roughly $2.5 trillion in student loans outstanding by 2020 (see chart above). It would mean that no less than $1 trillion in student loans will be in some form of default in two years, an outcome which will necessitate another indirect, if ultimately taxpayer funded bailout from the US treasury: recall that the vast majority of student debt is currently issued by the US government.
But while the overall rise in student loan defaults in coming years is hardly a surprise, a more troubling observation made by author Judith Scott-Clayton is that debt and default among black college students “is at crisis levels, and even a bachelor’s degree is no guarantee of security: black BA graduates default at five times the rate of white BA graduates (21 versus 4 percent), and are more likely to default than white dropouts.”
The Brookings study also found that the worsening default pattern is most acute at for-profit colleges: out of 100 students who ever attended one, 23 defaulted within 12 years of starting college in 1996 compared to 43 of those who started in 2004. This contrasts with an increase from just 8 to 11 students of 100 among entrants who never attended a for-profit, the report said.
But the most notable finding from the report is the stunning racial divergence in default rates, with black students a clear outlier, and expected to default at nearly double the rate as all other students, and 5 times as much as white college graduates.
The new data underscore that default rates depend more on student and institutional factors than on average levels of debt. For example, only 4 percent of white graduates who never attended a for-profit defaulted within 12 years of entry, compared to 67 percent of black dropouts who ever attended a for-profit. And while average debt per student has risen over time, defaults are highest among those who borrow relatively small amounts.
According to the author’s conclusion, “the results suggest that diffuse concern with rising levels of average debt is misplaced. Rather, the results provide support for robust efforts to regulate the for-profit sector, to improve degree attainment and promote income-contingent loan repayment options for all students, and to more fully address the particular challenges faced by college students of color.”
Whether that happens is debatable, however what is clear is that the coming default avalanche concentrated among former black students, one which will necessitate another broad taxpayer-funded bailout, the debt-busting taste of which we got this past July, will soon emerge as the root cause for the next racial crisis to sweep America, a nation which already finds itself on the edge of extreme polarization when it comes to race, ethnicity, political ideology and, of course, income.
100 Americans Owe $1 Million+ In Student Loan Debt
Astronomically high college tuition facilitated by a bottomless ocean of student loans has saddled Americans with a record $1.48 trillion in non-dischargeable debt – an amount which has more than doubled since the 2009 lows.
As we reported in January, nearly 40% of student loans taken out in 2004 are projected to default by 2023 according to the Brookings institute.
While in March we noted that debt-laden millennials were set back an average of $140,000 vs. their parents – a problem compounded by the fact that students aren’t just borrowing money for tuition; their student loans cover rent, food and other bills, leaving them with massive interest payments and in many cases, little prospect of getting ahead – much less saving for retirement.
Enter the million-dollar-debtors
While millions of Americans are drowning in student loans – 101 people have the ultimate albatross around their necks; student loan balances exceeding $1 million, according to the Wall St. Journal. Five years ago, there were just 14 people with loans that large.
Utah orthodontist Mike Meru, 37, is one of them. After graduating from Brigham Young University with no debt and a new marriage, Meru borrowed $601,506 debt to attend USC’s orthodontics program – while his new wife Melissa finding work as a USC administrative assistant to save on tuition. After a few years, his student loan had swelled to $1,060,94.
Judge Allows UC Berkeley To Face Lawsuit
(Reuters) – A federal judge rejected the University of California at Berkeley’s bid to dismiss a lawsuit claiming it discriminated against conservative speakers like Ann Coulter by imposing unreasonable restrictions and fees on their appearances.
In a decision late Wednesday, U.S. District Judge Maxine Chesney in San Francisco said two conservative groups could pursue claims that the school applied its policy for handling “major events” and an earlier policy for “high-profile speakers” in a manner that unfairly suppressed conservative speech.
But the judge also said she was “unpersuaded” by claims by the plaintiffs that the school engaged in intentional viewpoint discrimination, and that the major events policy was too vague. She said the plaintiffs could not seek punitive damages.
The Berkeley College Republicans and the Young America’s Foundation, a Tennessee group, had sued after the university canceled Coulter’s scheduled speech last April 27, citing security concerns.
Janet Napolitano, president of the University of California, was also named as a defendant.
UC Berkeley is known as the birthplace of the student-led Free Speech Movement of the 1960s. Like other schools, it has tried to welcome different views without jeopardizing safety or its educational mission.
The major events policy was adopted in July, and gave school officials discretion to take various steps to ensure security.
Chesney said the plaintiffs may pursue an equal protection claim over a security fee charged for an appearance by conservative commentator Ben Shapiro that was well above a fee at the same venue for Supreme Court Justice Sonia Sotomayor, part of the court’s liberal bloc.
Teacher Couldn’t “Read or Write” For 17 Years
In an very in depth story by the BBC, a man who was a New Mexico teacher ended revealing a secret that may or may not surprise you, he could not read or write for 17 years of his teaching.
The entire article reveals how John Corcoran gamed the system without ever learning how to read or write and achieved teacher status at the same time.
BBC: When I was taking a test I would look at someone else’s paper, or I’d pass my paper over to somebody else and they’d answer the questions for me – it was fairly easy, amateur cheating. But when I went off to college on a full athletic scholarship it was a different story.
I thought, “Oh my gosh, this is way over my head, how am I going to be able to get through this?”