How? It keeps indebted college graduates from purchasing homes, starting businesses, or investing in the market. Plus: With the federal government pouring taxpayer $$$s into higher education, that’s caused tuitions to skyrocket—since 2009, up 76% to ~$1.2T—potentially making college unaffordable, thus eventuating a slowdown in higher education, and a less-educated workforce, to boot.
Yawn. “Please pass the coffee.”
Check out this chart:
Jorge Villalba was a construction worker when the housing market began slowing in 2005, so the Glendale resident changed jobs and decided to invest in his future by going to college. [Note: Jorge is one pretty astute guy! He was reading the signs of the times, thinking about providing for his family, and preparing for the future!]
So far, the investment hasn't paid off.
Villalba, 34, owes $158,000 in student loans for his four-year degree in multimedia, 3-D animation and graphic design at ITT Technical Institute. [NOTE: What a great idea! Getting in early on a growth industry!] He isn't earning enough to keep up with the payments, so the amount keeps rising with interest. [NOTE: Yep, that’s how it works. It’s all about making sure you have “positive cash flow” or the debt will grow exponentially.]
He figured he’d get a great job and pay off the loans. [NOTE: Isn’t that the way it’s supposed to work?]
“It hasn’t happened that way,” said Villalba, who is married with two young children but can’t afford to move from their cramped one-bedroom apartment.
Prior to 2008, as sources of household debt, total outstanding student loans ranked far behind mortgages, auto loans, credit cards, and home equity lines of credit. By 2014, total outstanding student loans came in second only to mortgage debt. In 2015, ~40M consumers have at least one student loan with an average debt of $29k.
Forget purchasing homes, starting businesses, or investing in the market. With the federal government backing most of those loans, it’s the taxpayers who will have to cough up the $$$s to pay off the unpaid debt, thus negatively impacting the economy even more.
Thank you, President Obama. So much for “free” college tuition. And, to think that Hillary and Bernie are now touting an expanded version of the same idea!
For Jorge Villalba, the story only gets worse.
Villalba graduated from ITT Technical Institute—a for-profit institution of higher education—only to find that most companies don’t value his degree. As a restult, he’s earning $15/hour as a graphic designer, trying to figure out how to pay off his student loans, including some private ones with interest rates of ~20%. He said:
I’m looking at 30 to 40 years to pay it off. It’s a huge burden. [NOTE: It sure is, especially with a wife and two children! But note: Jorge isn't asking for a handout. Good for him!]
Oopppsss! Congress will then have to raise taxes. Just who’s going to pay those taxes? Jorge Villalba!
Retrospectively, perhaps Jorge Villalba should have remained in construction. Had he done that, he’d be way ahead of the game today.
Let the discussion begin…
To read the Los Angeles Times article, click on the following link: