We’ve been hearing presidential rhetoric for months now – and it’s all been irrelevant and frankly, embarrassing. It’s frustrating to know there are real problems in the country and the candidates are spending all of their time and financial resources on things like who deserves credit for bringing bin Laden down. There are real problems – and they’re here already. Unfortunately, it’s only been in the past week the American people have even heard anything come out of either Romney’s or Obama’s camps on what might be the biggest threat to the economy.
A few posts back, I asked the question whether or not ivy league college educations were worth it. I stand by my original thought that in this environment, it’s not realistic. Those folks who are coming out of college with impressive degrees from even more impressive colleges aren’t finding jobs any faster than those who are graduating from the rest of the schools. In fact, those with ivy league degrees might be having an even harder time because companies just can’t afford the salaries these graduates are asking for (and deserve, I might add).
Now though, there are three dynamics on a collision course and if you take a step back and brace yourself, you’re about to see a catastrophe that has the potential to wreak as much havoc on the American financial system as the mortgage meltdown of 2008.
Most financial analysts are in agreement: an overwhelming amount in student loans could be the next major problem for Americans. But that’s not all. There are now bankruptcy statistics that are further cementing the concerns of those analysts. Delinquent student loans are climbing really fast as graduating seniors are entering a job market that can’t support them.
Despite the 2009 CARD Act President Obama signed into law that should have put into place guidelines for credit card companies’ efforts of marketing to college students, most are also graduating with an average of $3,000 in credit card debt – along with their average $29,000 in student loans each student leaves his dorm room with.
Even though most of these college students who are filing bankruptcy can’t include student loans in their discharges, they’re still feeling as though it’s the only way to get out from under the rest of their debt. In short, we have young adults who are already facing financial disaster due to overwhelming bills and they’ve yet to work a single day in the career they chose.
2010 was the first time in history that the total amount borrowed in student loans surpassed the $100 billion mark. Those numbers are rising every year too. If you can stand it, here’s another tid bit of alarming news: In 2011, the total amount of money outstanding in student loans was more than $1 trillion.
If you’re wondering why the presidential candidates have been relatively quiet on this front, consider President Obama’s speech earlier this week to a group of college students as he explained the legalities of a rising interest rate if Congress fails in its efforts to pass the extension. Instead of telling these kids that a solution is being worked out by their elected leaders, he instead encourages them to “speak out against rising interest rates”. And what is the preferred vehicle for speaking out? Twitter. He even suggested a hashtag: #dontdoublemyrate.
This is the problem with this administration. Instead of doing its job the past 3 1/2 years, it has encouraged the taxpayers to do their job for them. “Call your elected officials” “Tweet your demands” “Do it now”. This is exactly with the president did during the weeks when the government was divided on balancing the federal budget. He told us to call our leaders. That was his solution. Is it not enough taxpayers- who he’s burdening with doing his job- are already financing this ridiculous nonsense? Apparently not. He ended his speech with, “And the time to act is right now, and I’m going to need your help getting that message out.” To hell with the message – how about getting back to Capital Hill and earn your salary?
So will the Direct Subsidized Loan, designed to not begin accrual until six months after a student graduates college, soon become the next Achilles heel? If Congress doesn’t act on this soon, the interest rates will double on July 1. Yeah, that deadline’s quickly approaching. I guess we all need to head over to Twitter with our hashtags.