2013년 11월 29일 금요일

About 'american debt crisis'|American Debt Crisis: The Black Swan Is Circling Washington







About 'american debt crisis'|American Debt Crisis: The Black Swan Is Circling Washington








               COMMENTARY               |               The               recent               deal               struck               by               the               Senate               to               keep               interest               rates               for               subsidized               Stafford               Loans               from               doubling               to               6.8               percent               has               received               a               tremendous               wave               of               media               attention               over               the               last               few               months.

As               congressmen               scrambled               to               get               a               deal               in               place               to               avoid               a               tidal               wave               of               criticism               from               the               American               public,               the               real               danger               in               the               looming               student               loan               crisis               remained               oddly               absent               from               conversations               on               Capitol               Hill.

As               a               college               student               myself,               concerns               about               interest               rates,               while               important,               are               not               nearly               as               threatening               as               the               skyrocketing               burden               that               is               being               placed               on               families               due               directly               to               reforms               established               by               President               Obama               in               his               first               term.
               Student               Debt               Statistics               Hide               True               Costs
               Although               no               one               in               the               Obama               administration               is               bragging               about               the               average               graduate               debt               rising               to               $27,000               in               2013,               up               12.5               percent               from               when               the               president               took               office,               the               true               student               loan               debt               problem               extends               far               beyond               the               scope               of               such               often-cited               figures.

For               instance,               a               recent               Fidelity               survey               of               750               college               graduates               revealed               that               actual               personal               student               debt               was               closer               to               averaging               $40,000               when               agreements               made               with               family               members,               credit               card               debt,               and               spent               savings               were               taken               into               account.

Even               this               data,               however,               fails               to               capture               the               true               cost               of               a               college               degree,               because               it               ultimately               tells               us               nothing               about               the               growing               and               new               burdens               placed               on               families               to               pay               student               costs.
               Parents               Now               Forced               to               Take               on               Student               Debt
               Prior               to               reforms               made               by               the               Obama               administration,               students               would               traditionally               shop               around               for               private               student               loan               lenders.

Under               the               current               system,               however,               students               are               only               eligible               to               loan               out               a               government-set               figure               that               amounts               to               a               fraction               of               the               actual               cost               of               attendance.

The               difference               remaining               is               then               made               up               by               parents               or               family               members               through               federal               student               loans               know               as               Parent               Plus               Loans.

These               loans               belong               wholly               and               completely               to               the               parents               and               students               hold               no               responsibility               for               them               whatsoever,               which               is               a               major               departure               from               the               student               loan               system               previously               in               place.
               Even               more               troubling,               the               federal               government               allows               most               eligible               parents               to               borrow               virtually               any               amount               needed,               thus               encouraging               parents               to               lend               out               money               they               can't               afford               to               pay               back               and               incentivizes               colleges               to               increase               tuition               costs               knowing               that               parents               are               willing               and               often               required               to               foot               the               bill.

According               to               a               2012               report               published               by               the               National               Association               of               Consumer               Bankruptcy               Attorneys,               most               parents               under               the               new               system               end               up               paying               an               average               of               $50,000               in               student               loans               per               child               attaining               a               4-year               degree,               bringing               the               real               average               total               cost               of               a               college               degree               to               roughly               $90,000.
               The               Unintended               Costs               to               the               Obama               Reforms
               Additionally,               the               reforms               bring               unintended               and               detrimental               consequences               for               student               lenders               and               families.

For               instance,               problems               arise               when               students               need               to               lend               out               more               than               what               the               government               now               determines               is               necessary.

If               a               student               suddenly               needs               money               for               transportation,               travel,               medical               bills,               or               some               other               unforeseen               costs,               neither               the               parent               nor               the               student               may               be               eligible               to               loan               out               additional               funds               beyond               the               cost               of               attendance               set               by               the               school               in               conjunction               with               the               federal               government.

In               the               past,               students               could               loan               out               any               amount               they               needed               so               long               as               a               private               lender               was               willing               to               agree               to               the               terms.

This               now               leaves               families               responsible               to               cover               costs               once               accounted               for               by               student               loans.
               Student               Loan               Reforms               Have               Caused               Higher               Tuition               and               Costs               for               Families
               The               reforms               put               into               place               by               the               Obama               administration               to               address               problems               in               student               lending               have               not               only               failed               to               alleviate               the               rising               costs               of               higher               education,               they               have               ultimately               turned               the               student               loan               crisis               into               a               family               loan               crisis.

Although               parents               can               choose               not               to               take               out               loans               for               their               children,               such               a               decision               makes               it               virtually               impossible               for               many               students               to               pay               for               tuition               and               housing.

This               places               many               families               in               the               horrible               position               of               choosing               to               take               on               debt               they               can't               afford               or               telling               their               eager               children               that               college               just               isn't               possible               for               them.






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