Student Loans and Debt

The media has been so preoccupied with acute symptoms of the debt crisis – sliding home prices, foreclosure abuses, ongoing Euromarket bank/sovereign debt stress, ongoing battles over financial regulation implementation, unhappiness over the Fed’s QE2 – that lingering problems are not getting the attention they deserve.

High on the list is the how the weak job market is affecting new college and advanced degree program graduates. We have an unspoken social contract: young people who get an education, particularly a “good” education (which means more elite universities, more serious courses of study, graduate degrees) are supposed to be rewarded by higher lifetime earnings. And the prospect of higher lifetime earnings in turn makes it rational to borrow to invest in education.

But this whole premise has started to go awry, and the huge uptick in unemployment has started to make matters worse. A guest post at Baseline Scenario by UMass-Amherst students Mark Paul and Anastasia Wilson outlines the grim conditions facing new graduates:

With a monstertruck there's always a parkingspot
Creative Commons License photo credit: digicla

Take note: half the recently-minted college grads are in jobs that do not require a college degree.

Now if these graduates were going to college for the mere love of learning, and didn’t mind working at Home Depot because they could work on a novel in their garret, this picture might not be quite as terrible as it looks. But I sincerely doubt that anyone in the US goes to college to become a working class intellectual.

Is Student Debt the Next Front in the Consumer Debt Crisis?” by Yves Smith, November 21, 2010

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