Volume 2, Issue 14- April 1-7, 2011
International Tribune
There is another bubble being predicted to burst the US economy. And this one is a killer. It will affect this generation and generations to come. It could even downgrade one of America’s most effective soft power weapons in the world and it will be a real threat to the nation’s competitiveness. The sleeping giant that economists and politicians alike are dreading is the college education loan crisis that is about to wreak havoc in the US economy.
Besides buying your dream home and a nice car, going to college and getting higher education is a principal factor of the American dream. They are all part of the package. Regardless of the costs of the college tuition, whether you go to a public or private university, parents will do whatever it takes to make sure their children receive the proper education to pursue their ambitions. In the past, this was just a parental burden, but since student loans evolved from the traditional tuition fees and books “I owe you” loans have expanded in different layers. These days, parents are no longer required to be co-signers; young adults at the age of eighteen are allowed to be the sole debtors. After all, they are the one working on their diplomas. So here we are, in this modern student-loan credit era, private banks are now targeting these young adults to ensure they all get the real college experience. Thanks to the banks flexible credit lines, college students are now able to finance their expenses today to include meals, shopping sprees, and even their annual spring breaks. Go ahead and do the math, can you imagine how much loans will be accumulated once a college student graduates. Your guess is as good as mine: it really sounds like a lot. And with these burgeoning debts, I just hope these college students will be able to find a job to pay for their loans on time. Because not too long ago, for some households, mom and dad are too occupied trying to keep up with their mortgage- especially after the mortgage bubble busted that brought the US economy to a brink of collapse. Do you get the pattern here now?
Student loans are inevitable to Americans. Compared to Europe, where public education up to the university level is free for all, higher education is a trillion-dollar industry in the US. And today, two-thirds of American college students will graduate with sizeable debts; for the class of 2009, the average debt was $24,000 according to CNBC polls. Statistics say that Americans now owe more on their student loans than they do on their credit cards—a first, according to FinAid.org. The organization also stated that America’s student loan debt is growing at a rate of $2,853.88 per second. At this pace, it will surpass $1 trillion in 2012.
It would be a different scenario if there are plenty of jobs for today’s newly grads to grab. Well-paying jobs are in short supply. America is still facing its worst unemployment rate (at 9 %) since the Great depression. Student loan defaults have doubled in the last five years, according to the U.S. Department of Education, and are now approaching nearly a quarter-million defaults a year. What ends up happening is that, "The schools keep the money, the students keep the debt, and the taxpayers lose," said Sen. Tom Harkin, D-Iowa, who chairs the Senate Education Committee.
Brace yourselves, this seems like another default and bailing out that the nation must face. We are not even finish solving the predatory sweet-home packages by private banks that killed the US economy almost three years ago. How can the nation cope with its national debt, bank defaults, company bailouts, and now, the youth has been thrown in to the vortex as well. Is this a corporate conspiracy? Indeed, we have another big economic killer coming up.
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