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by eastbayjake 3906 days ago
Student loan debt won't create a crash, it has just been an enormous brake on the US economy for almost a decade now and we've grown so used to its effects that we don't really notice it anymore.

Imagine how many young people would start a company or take a risky-but-educational job except that they need the liquidity and stability to make a student loan payment every month? You could get living expenses close to zero by living with your parents for a while, but student loan payments require you to have some cash coming from somewhere each month.
2 comments
learc83 3906 days ago
>You could get living expenses close to zero by living with your parents for a while, but student loan payments require you to have some cash coming from somewhere each month.

Not with federal student loans. They have income based repayment plans. If you have no income, you don't pay. After 20 years the debt is forgiven.

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eastbayjake 3906 days ago
Unfortunately the cap on maximum borrowing with federal student loans is quite low compared to the total cost of many colleges, so there's lots of private loans that come due six months after graduation and don't really care what your income level is -- they just want to be paid.
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learc83 3906 days ago
That's true. But of the total student loan debt of $1.2 trillion, and $1 trillion is federal student loan debt. Private loans are a comparatively small problem.
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eastbayjake 3906 days ago
WOW, thank you for posting this. That is astounding and I had no idea it was that magnitude when I wrote my previous post. If anyone wants a source, the $1 trillion number is from the federal Consumer Financial Protection Bureau[1] and CFPB has even made available a detailed breakdown of the federal government's student loan portfolios[2]

[1] http://www.consumerfinance.gov/newsroom/student-debt-swells-...

[2] https://studentaid.ed.gov/sa/about/data-center/student/portf...

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rhino369 3906 days ago
For federal loans (private loans are hard to get these days) the law is actually very reasonable.

You pay 10% of your (Income - 150% of poverty level). That's less than 10% of your income. And nearly zero for a lot of people. You pay it for 20 years and they wipe out the debt.

One huge problem is that people don't sign up for this system or instead just default. It's shocking that so many college graduates are sticking their head in the sand. It's a simple process. I've done it twice.

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