1194% Incrase in Student Loan Debt over 15 Years; Why has this not been front-page news?

From the Rochester Democrat and Chronicle:

Shannon Chaudhry knows what it's like to be saddled with student debt.

The Victor native, who graduated from Rochester Institute of Technology with a degree in business administration, limited her undergraduate debt to about $16,000, but borrowed another $166,000 to earn a degree from Albany Law School.

"I'm hardly putting a dent in what I owe," said Chaudhry, 30, who now practices law in Washington, D.C., and uses a sizable chunk of her income — $921 a month — for payments, most on a 20-year plan.

A 30-year-old lawyer has a whopping 11k in annual take-home pay in one of the most expensive metro areas in the country. It should be earth-shattering given TV- and film-fueled perceptions, where even the grubby lawyers wear $500 suits. How are folks still blind to what is going on out there?

Nationwide, student borrowing is estimated to have mushroomed to $931 billion — for the first time eclipsing the estimated $798 billion in credit card debt.

"We are going to hit the $1 trillion mark this year," said Mark Kantrowitz, who publishes two websites focusing on financial assistance for college students.

Total student debt 15 years ago was about $72 billion, according to Kantrowitz's estimates.

Student loan borrowing has increased 1194% in 15 years. Our media has ignored this to the point of irresponsibility.

When borrowing suddenly increases that much, it's a signal that something is terribly, terribly wrong.

After the housing crisis, people look in hindsight with scorn at those lower-middle class people who borrowed six figures to houseflip in mid-level suburbs and upstart exurbs, and give even greater scorn to the people who approved the loans with no inquiry into payback.

And yet, we have an even greater problem going on right now in the student loan industry, and very few people want to acknowledge that it's a potentially bigger problem than the housing bubble. I realize the two, and that housing is about ten times greater in raw number, but because of our "go get it" attitude towards higher education, an entire generation of lower- and middle-class students are being saddled with non-dischargable debt at levels that will delay or prevent them from contributing to the economy.

Mortgage debt doesn't really do that, at least not at the same level. Generally, mortgage debt only comes into existence for those above certain income thresholds. It also can be discharged if there's a housing price fall and the property value plummets. Parties have ways of protecting their income and wiping their hands clean.

Student loan debt does not work that way. It's given out like candy to students on the pure hope - unsupported by any type of empirical proof - that they'll have the income to cover the debt later.

There could be a few "checks" on the situation that would ensure more reasonable lending standards. Private lenders could have to bear the risks as they would with other unsecured debt, like credit cards; yet, our spendthrift stupidity has the federal government back-stopping these economically foolish trainwrecks. The students' payback prospects could be more carefully scrutinized, but yet schools are allowed to spread marketing myths that would get a private company hauled into court immediately. Those schools with their hands on the faucets could be more tightly regulated to ensure that they're not abusing their power, but yet they admit sub-par students and ensure that socially-worthless professors make six figures.

A 1194% increase in student loan debt in fifteen suggests that none of these things are properly happening. And because student loan debt is non-dischargable, an entire class is going to be disabled in purchasing homes, having children, spending discretionary income, etc.

Although people complain more about credit card debt, student loan debt is a far bigger problem, and potentially as big as mortgage debt. It's happening right now.