In Debt

By Hank Silverberg

Do you or someone in your family have student loan debt?

Americans owe more than $1.49 TRILLION in student loans. That’s much more than credit card debt ($850 million). Credit.com says the average student (or former student) owes $31,172 with an average payment of $393 a month, if they are paying it. There are 44.7 million such loans out there and it can take between 10 and 30 years to pay off that debt.

https://www.credit.com/personal-finance/average-student-loan-debt/

Many students were told taking a loan for college would help them get a better credit score once they started paying it back. Trouble is, many can't start paying it back on their first or second job because their salaries are not high enough. All of this is a drain on our economy. Much of that debt is held by people in their 30’s and 40’s, and it often hinders their effort to get other credit later on for things like car loans and mortgages.

This is not just about young people. Even those 62 and older have 67.8 billion dollars in student loans, either their own, or loans they took out for their children.  AARP says 31% of those between 54 and 72 were forced to stop saving for their retirement in order to pay off student loans.

(Courtesy of Credit.com)

As you would expect, the delinquency rate is high. A study by the Federal Reserve indicated 19% of those with outstanding student debt are behind in payments or are not paying anything off. And not paying off those loans can have significant financial implications for those who owe.

 https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-student-loans-and-other-education-debt.htm

So, what is the solution? Some of the candidates for president have made student loan "forgiveness" part of their platform and have received substantial support for doing so. But that might not be a good idea.

It is a general economic and moral principal that people who borrow money should pay off their debt. Interest free loans for current and future students would be a more politically acceptable strategy. Eliminating the interest (which now stands at 4.7%) on all outstanding student loans and requiring that only the remaining principal be paid off, would uphold the concept of repaying a loan while freeing up billions of  dollars for other things like cars, furniture, homes and much more.  

(Courtesy of  College and financial aid.com)

Part of the problem of course is the actual cost of college. According to the College Board, the average cost of tuition and fees this school year is $34,740 at private colleges, $9,970 for state residents going to public colleges, and $25,620 for out- of-state residents at public universities. That's just tuition and fees. It doesn't include living expenses or books. (The cost of college textbooks is outrageous and the subject for another blog.)   
  
There would also be a problem with taking interest off student loans. The banks would be less enthusiastic in participating because they could lost billions in interest even with a government guarantee of no loss. The taxpayers would have to foot the bill for the loss of interest payment or provide more government paid loans.  And those who HAVE paid off their loans or have been trying to, might slam the idea as unfair.  I’d like to see the presidential candidates focus a bit on student loans.  Carrying all that debt is as big of an issue for our economy, and larger than the $419.2 billion trade deficit with China that has gotten much attention this election cycle. Eliminating interest on student loans could be a very practical, though expensive, way to stimulate the economy.

News Notes:

The attack this past weekend on an Aramco oil production facility in Saudi Arabia highlights once again the

vulnerability of the world’s oil supply and the complex politics of the Middle East.  The immediate impact is a 5% reduction in the world’s oil supply. It could take weeks for the facility to get up and running again, raising the likelihood of a spike in the price of gasoline at the pump. The Saudis have a substantial quantity of oil stored in tanks that could prevent that, but any interruption in the flow of oil seems to hit you and me at the gas pump.

Just who fired as many as 10 drones which hit the oil complex is not clear. Iranian backed Houthi rebels in Yemen claimed responsibility, but it’s likely they had help and approval from Iran.That will surely heighten the tensions between the United States and Iran at a time when the Iranians have moved forward with their nuclear weapons program. And it will surely increase the rhetoric between the Trump administration and the Mullahs in Tehran. All of this is also likely to hit the stock market, which always responds negatively to any instability in the Middle East.

And then there is this:

A new study conducted by Propeller Insights for Bospar, a market research firm, found over 95% of the respondents were “troubled by the current state of the media."

53% said they were concerned about the President’s “fake news” claims, even though most of them are ridiculous.
 https://poststar.com/blogs/michael_goot/blog-concerned-about-the-state-of-the-news-media/article_67c5a6ce-51fe-5652-8c77-16d3ad2ebf38.html



*49% said they worried about the media reporting gossip. 

*33% worried about “gotcha journalism.”

*34% were concerned about left wing agendas.

*32% were concerned about right wing agendas.

*36 % were concerned about the use of celebrity opinions (I am with them in this category. 

But most notably, 48% were concerned about spokespeople who lie (which would include those who work in the White House Press Office). 

 Around 60% also said today’s media climate fuels inaccuracies, incites hate and creates fear.

They only talked to a thousand people for this survey, but that’s usual for such polls. The numbers are alarming, but not totally unprecedented. There have been a number of times in our history that the news media has been under fire for aggressive journalism  (Nixon during Watergate in the 1970’s), and less than fair in promoting causes (western expansion and the Spanish

American War in the 19th Century).

But the instantaneous nature of the internet and its worldwide reach has changed the rules. Pressure to get the story first is no longer the 9:30 p.m. print deadline for the morning paper, or the 6:00 p.m. deadline for the evening news. Accuracy and fairness often suffer from the competitive need to get it out there immediately.  That has damaged journalism as a profession. (Remember all the news generated from the President's 3 a.m. tweets.)

There is also the plethora of so-called “pundits”  or "analysts" who spout off their opinion and call them facts. Though I practiced journalism for four decades and load this blog with facts, as it says on the masthead at the top, the words here are my opinion, not balanced reporting.   

There are too many people on line, on the air or in print, who express opinion based on hot air, but call them facts and then work hard to blur the difference. That, and the partisan fueled attacks on the media, leads to poll results like those cited above.

     (Your suggestions and comments are welcome)


         (Copies of my novel , which could have been written from today's headlines, are available at BN.com, Amazon.com or by emailing me at hanksilverberg@gmail.com for a reduced price)