Thursday, 21 July 2022

What Everyone's Getting Wrong About Student Loans in 2022

  Ahamed       Thursday, 21 July 2022

Wrong About Student Loans Let's Fix it

If you've been watching the news lately, you've heard about the student debt crisis. Americans owe $1.4 trillion in student loan debt. This debt is making it difficult for students to get into the housing market, purchase vehicles, and even start families. Student loans are being called "the next bubble to burst." But everyone is getting wrong that this is not a student debt crisis---it's a student loan crisis. It's a crisis that the student loan system is creating. Here are some of the things that everyone is getting wrong about student loans.  and also if you like to read how to Get a Flexible Personal Loan read this article.


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So I’m making a video about it. Some flat decontextualized numbers for you. There are 1.75 trillion dollars of outstanding student debt in America held by around 45 million students.

That is roughly 39 thousand dollars of debt per student. And what you would imagine given those numbers, and what most people do imagine, is the average college graduate headed out into the workforce with 39 thousand dollars of debt.

And this is entirely wrong.

First, let us not forget about the 35% of people who get a degree and do not have student loans. That number was a lot bigger than I expected it to be, and I think it’s important to say it exists, and that those people have, like a leg up on the 65% of the students who graduate with debt. 

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Second, this won’t surprise you, but you may not have noticed it. The average student debt holder didn’t just graduate. They graduated a while ago, and they have either been paying down their student debt or they haven’t been, in which case it’s actually gone up due to interest.

So the 39 thousand dollars isn’t what they come out with, it is what is left after being paid down. But even weirder, the average student graduating from a four-year college or university has about 28 thousand dollars in student debt, so, strangely, the average student debt holder has 39 thousand dollars of student debt. What’s going on here? Graduate school is mostly going on here. And here’s the weirdest plot twist in all of this. People who take out more student loans are less likely to default on their student loans.


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Much less likely. In fact, as you take out more and more student loans, you become less and less likely to default on them. So I guess we figured it out, students need to take out more student loans and everything will be better.

No. Something weird is going on here and we have to figure out what it is.

What is the weird thing that’s going on?

Well first, people with a lot of student loans tend to be doctors and lawyers. The bigger, more surprising, and the more upsetting reason this is the case, is that 40% of people with student loans dropped out without getting college degrees. This is a wide variety of kinds of people, but they’re more likely to be Black and Hispanic, and they are more likely to have gone to a high school in a low-income area. They’re more likely to be older when they start college.

And they’re more likely to be first-generation students. And their loans tend to be smaller because they tend to go to cheaper schools for not as long. Loan delinquency for this group is quadruple loan delinquency for people who graduated.

And there are a lot of reasons people might be in a bad situation concerning loans and it's often not because they didn’t graduate. But this seems to be a cohort that we don’t talk about and a problem that we don’t interface with very much.

And it is a very big problem. I’ll say it again, 40% of people with student loans are not going to get a degree.


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And this all happens for predictable reasons, the biggest ones being financial pressure. College doesn’t just cost the money you’re spending, but also you’re near-term lost income which is vital to many people and the support that they have to give to their families.

And the second biggest cause, academic disqualification is caused by students not getting a good enough high school education, being underreported, or overcommitted during school.

There are a lot of hard parts and failures in higher education, but taking billions and billions of dollars per year of financed money from students who aren’t going to end up with a degree, like that’s astounding, and it is infuriating to me.

This is the exact problem that Crash Course and Arizona State University are trying to take on with our partnership, providing structures to help students make good decisions early in their higher education process so they don’t end up making expensive mistakes, and also helping them learn information that they may not have taught well in high school or may have forgot since.

This is a very common outcome. At some schools, it is the most common outcome and I do not understand why we do not talk about it more.

Because the result of not talking about it is understood entirely incorrectly. When we forgive debt 40% of the people’s debts are forgiven are people who didn’t end up with a degree. Students who didn’t fail, but failed.

And on average people who have debt and no degree have around 13 thousand dollars of debt. We need to take on the student loan crisis and we also need to take on the dropout rate crisis. Not just with one-time debt forgiveness, but by supporting students who are working to make their lives better.

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