Category Archives: Debt

Austerity, Banks, Debt, Youth and students

This Chart Is The Fate of Housing In America As Student Loans Bankrupt A Whole Generation

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By Wolf Richter

Beaver County Blue via Naked Capitalism

May 19, 2014 – A friend of mine is suffering from excruciating anticipatory pain. He’s heading to New York to attend his daughter’s graduation, which should be a glorious moment in life. But her commencement speaker is Fed Chair Janet Yellen. “Gotta find some thorazine to take before the ceremony,” he muttered. He paid for his daughter’s education. Not many students are that lucky.

Student loan balances soared 362% to $1.1 trillion since 2003, during a period when mortgage debt – including the effects of the current Housing Bubble 2 – rose “only” 65% to $8.2 trillion and credit card debt actually declined by 4.2% to $660 billion (chart). The burden of servicing that increasing pile of student loans is eating into other forms of borrowing and spending, such as the American classic, reckless consumption on credit cards, or the purchase of a home. And so the proportion of first-time buyers – the single most important sign of a healthy housing market – has been shrinking for years.

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Banks, Debt, Youth and students

Banksters Devouring Our Future: Student Loan Crisis is Coming to a Head

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BY JESSE JACKSON
Beaver county Blue via Chicago Sun-Times

May 13, 2013 – The student loan burden is reaching crisis proportions. Young Americans are being saddled with unsustainable debts. A New York Federal Reserve Bank study found that a stunning 43 percent of 25-year-olds had student loan debts in 2012. Debt now averages over $25,000 for graduates of four-year colleges.

Student loan debt now is about $1 trillion. The only kind of household debt that continued to rise through the recession, student loans now exceed credit card debt and rank second only to mortgages. The percentage of borrowers who are more than 90 days delinquent has risen to 17 percent, up from 10 percent in 2004.

These are the young people who’ve done everything we told them to do. They worked hard, stayed out of trouble, got admitted to college and sacrificed to succeed. Then they graduated, burdened with staggering debt, into the worst economic crisis since the Great Depression. Many can’t find jobs; those who do often end up with low-wage and part-time work and debts they can’t repay.

Student debt is itself a huge obstacle to the recovery. Unless their parents have money, young Americans who achieve the most can’t begin to save for a down payment on a home, start a business or save for retirement.

This crisis stems from the successful conservative efforts to starve government. Cash-strapped state governments cut the contributions made to public colleges and universities. The cost of college was slowly privatized, with more and more left to the student. Those with affluent parents had no problem; those with working parents had to take on debt.

Now the crisis is coming to a head. The sequester and other budget cuts are forcing further cutbacks.

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budget crisis, Debt, Poverty, unemployment

Philly Worst Big City for People in Deep Poverty, with Pittsburgh Not Far Behind

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Labor Day protest for minimum wage hike. Philadelphia has the highest rate of deep poverty of any of the nation’s 10 most populous cities. The annual salary for a single person at half the poverty line is around $5,700; for a family of four, it’s around $11,700. Philadelphia’s deep-poverty rate is 12.9 percent, or around 200,000 people.

By Alfred Lubrano
Philadelphia Inquirer

March 19, 2013 – Philadelphia has the highest rate of deep poverty – people with incomes below half of the poverty line – of any of the nation’s 10 most populous cities.

The annual salary for a single person at half the poverty line is around $5,700; for a family of four, it’s around $11,700.

Philadelphia’s deep-poverty rate is 12.9 percent, or around 200,000 people.

Phoenix, Chicago, and Dallas are the nearest to Philadelphia, with deep-poverty rates of more than 10 percent.

The numbers come from an examination of the 2009 through 2011 three-year estimate of the U.S. Census American Community Survey by The Inquirer and Temple University sociologist David Elesh.

Of the 4,300,000 people living in the area around Philadelphia, there are nearly 160,000 in deep poverty – a rate of 3.6 percent – in Bucks, Chester, Montgomery, Delaware, Salem, Gloucester, Burlington, and Camden Counties as well as New Castle County, Del., and Cecil County, Md., Elesh’s analysis showed.

Nationwide, more than 20 million people live in deep poverty, according to the Center on Budget and Policy Priorities.

These deep-poverty numbers don’t include noncash benefits such as food stamps, which help families survive, experts said.

The Philadelphia deep-poverty figure wasn’t a complete surprise for antipoverty advocates, since the city already has the highest poverty rate – 28.4 percent – of any of America’s biggest cities.

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Debt, Economy, unemployment, Wall Street, Youth and students

Usurious Credit and Debt as Our Prison Cages

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Breaking the Chains of Debt Peonage

By Chris Hedges
Truthdig.com

Feb 3, 2013 – The corporate state has made it clear there will be no more Occupy encampments.

The corporate state is seeking through the persistent harassment of activists and the passage of draconian laws such as Section 1021(b)(2) of the National Defense Authorization Act—and we will be in court next Wednesday to fight the Obama administration’s appeal of the Southern District Court of New York’s ruling declaring Section 1021 unconstitutional—to shut down all legitimate dissent.

The corporate state is counting, most importantly, on its system of debt peonage to keep citizens—especially the 30 million people who make up the working poor—from joining our revolt.

Workers who are unable to meet their debts, who are victimized by constantly rising interest rates that can climb to as high as 30 percent on credit cards, are far more likely to remain submissive and compliant.

Debt peonage is and always has been a form of political control. Native Americans, forced by the U.S. government onto tribal agencies, were required to buy their goods, usually on credit, at agency stores. Coal miners in southern West Virginia and Kentucky were paid in scrip by the coal companies and kept in perpetual debt servitude by the company store. African-Americans in the cotton fields in the South were forced to borrow during the agricultural season from their white landlords for their seed and farm equipment, creating a life of perpetual debt. It soon becomes impossible to escape the mounting interest rates that necessitate new borrowing.

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Banks, Debt, unemployment, Youth and students

Strangling the New Working Class in Its Crib

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College Dropouts are Drowning in Debt

By Suzy Khimm
The Washington Post

WASHINGTON, May 29, 2012 — As the nation amasses more than $1 trillion in student loans, education experts say a vexing new problem has emerged: A growing number of young people have a mountain of debt but no degree to show for it.

Nearly 30 percent of college students who took out loans dropped out of school, up from less than a quarter of students a decade ago, according to an analysis of government data earlier this year by think tank Education Sector. College dropouts are also among the most likely to default on their loans, falling behind at a rate four times that of graduates.

That is raising new questions about the wisdom of decades of public policy that focused on increasing access to higher learning but paid less attention to what happens once students arrive on campus. And some education experts have begun to argue that starting college — and going into debt to pay for it — without a clear plan for a diploma is a recipe for disaster.

"They have the economic burden of the debt but they do not get the benefit of higher income and higher levels of employment that one gets with a college degree," said Jack Remondi, chief operating officer at Sallie Mae, the nation’s largest private student lender.

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