A few weeks ago, I wrote about how America’s broken healthcare industry was bankrupting families. Well, the cost of college has jumped WAY more than the cost healthcare.
The cost of a four-year degree has shot up 15X in the past 40 years, as you can see here:
If car prices jumped as much as tuition, a base model Toyota Corolla would cost $90,000 today.
As costs have zoomed higher, kids are burying themselves under bigger and bigger piles of debt. Student loan balances have snowballed over 400% in the past 15 years. Last month, they hit $1.5 trillion:
If student debt were a stock, every Wall Street analyst would be screaming “bubble.”
And get this… Americans now owe more for student debt than they owe for credit cards and auto loans... combined!
In fact, the average kid takes out $35,000 in debt… a 75% jump in 10 years. That’s a deep hole to dig out of before you’re legally allowed to drink beer.
And student loans are the only type of debt you can’t escape, no matter what.
Declaring bankruptcy can wipe away your mortgage, your credit card debt, and even stop IRS wage garnishments. But it won’t take a penny off your student loans.
Turn 65 and haven’t paid off your student loans? They’ll raid your Social Security check each month.
What Do Healthcare and College Have in Common?
The government’s dirty fingerprints are all over both.
As you may know, the Federal government practically owns the student loan market.
More than 94% of all student loans come directly from the US government. And the small 6% slice that doesn’t come from the government is still fully guaranteed by the government.
If you’ve applied for a mortgage lately, you know it’s a painful process. You fill out stacks of paperwork, pay steep fees, and hand over a full accounting of your family’s finances.
But thanks to Uncle Sam, trillions of dollars in student loans get handed out to 17-year-old kids like candy on Halloween. This free money has warped the whole system and pushed college costs far beyond all reason.
Think about it this way: When banks were handing out no-money-down mortgages in the early 2000s to anyone with a pulse, what happened to house prices?
They SOARED.
Well, colleges know Uncle Sam is bankrolling students, so they hike fees year after year. A recent New York Fed study found for every new dollar of federal student aid, colleges hike tuition by 65 cents.
The cost of a four-year degree has shot up 15X in the past 40 years, as you can see here:
If car prices jumped as much as tuition, a base model Toyota Corolla would cost $90,000 today.
As costs have zoomed higher, kids are burying themselves under bigger and bigger piles of debt. Student loan balances have snowballed over 400% in the past 15 years. Last month, they hit $1.5 trillion:
If student debt were a stock, every Wall Street analyst would be screaming “bubble.”
And get this… Americans now owe more for student debt than they owe for credit cards and auto loans... combined!
In fact, the average kid takes out $35,000 in debt… a 75% jump in 10 years. That’s a deep hole to dig out of before you’re legally allowed to drink beer.
And student loans are the only type of debt you can’t escape, no matter what.
Declaring bankruptcy can wipe away your mortgage, your credit card debt, and even stop IRS wage garnishments. But it won’t take a penny off your student loans.
Turn 65 and haven’t paid off your student loans? They’ll raid your Social Security check each month.
What Do Healthcare and College Have in Common?
The government’s dirty fingerprints are all over both.
As you may know, the Federal government practically owns the student loan market.
More than 94% of all student loans come directly from the US government. And the small 6% slice that doesn’t come from the government is still fully guaranteed by the government.
If you’ve applied for a mortgage lately, you know it’s a painful process. You fill out stacks of paperwork, pay steep fees, and hand over a full accounting of your family’s finances.
But thanks to Uncle Sam, trillions of dollars in student loans get handed out to 17-year-old kids like candy on Halloween. This free money has warped the whole system and pushed college costs far beyond all reason.
Think about it this way: When banks were handing out no-money-down mortgages in the early 2000s to anyone with a pulse, what happened to house prices?
They SOARED.
Well, colleges know Uncle Sam is bankrolling students, so they hike fees year after year. A recent New York Fed study found for every new dollar of federal student aid, colleges hike tuition by 65 cents.
Image: RiskHedge/Bureau of Labor Statistics
