Actually, people taking out student loans is not a “massive student loan bubble” anymore than people taking out car loans is a massive car loan bubble. Individuals decide what has value to them, for what they may be willing to go into debt— and for what they may not be willing to go into debt. Citing one example where one company (Navient) may have overcharged individuals is not an “institutional crisis.” Attacking me personally by telling me my “head is in the sand” because I have a different opinion than you only reveals a flimsy argument on your part. Encouraging people to take personal responsibility for their decisions is the first step towards individual freedom.
I see the ballooning student loan crisis as follows:
X+Y=Z
X = poor individual financial choices
Y = profit-driven predatory lending
Z = the resulting student loan financial crisis
I think we can all agree that avoiding Z is in the best interest of the financial health of our nation. We saw Z in full effect in 2008.
Where we diverge is your seeming refusal to acknowledge that Z even exists; that there is no student loan crisis despite mounting evidence to the contrary.
- $1.6T in student loan debt (exceeds auto loans and credit card debt combined)
- Projected to grow to $3T over the next decade
- 40% of student loans are projected to be in default by 2023
- Student loan debt affects other areas of the economy; delaying children, car purchases, home purchases, consumer spending, etc.; all things that contribute to a healthy economy
Your refusal to acknowledge there is even the existence of a mounting student loan crisis, and instead treating something that will effect our entire economy as a "personal choice" is puzzling.
I agree with you 100% that there needs to be a concerted effort to educate borrowers and eliminate X. Without X there would be no Z. If every last borrower in this country were educated and took personal responsibility in identifying the pitfalls of student loans, there would be no financial crisis.
But the crisis exists. Wishing it away, or framing it as "individual" choice doesn't make it go away. Acknowledging that a system exists that led this situation might avoid the next Z.
You seem to also refuse acknowledging that Y exists, or that corporate malfeasance/greed that led to the financial crisis is real.
There are 27 states in court against Navient for its predatory lending practices. The discovery process continues to unearth more and more internal communications that demonstrate a clear and concerted effort to make bad loans that lenders know will result in default. The guarantee of those loans by the federal government removes any risk by the lender and places the full burden on you and me as tax payers.
Internal communications also demonstrate a practice of Navient/Sallie Mae colluding with schools to increase the applicant pool. Schools benefit as it allows them to continue to raise tuition costs, with students paying for that tuition with federally guaranteed money. Loan representatives posed as financial aid office employees in colleges. (By the way, Navient isn't just "one company" Navient constitutes over 25% of loans serviced). Lenders no longer had any skin in the game and profits just continue rising.
If this sounds familiar, it's because it's straight out of the mortgage lending playbook that led to the financial crisis. Sub-prime loans, repackaged-loans derivatives, huge corporate profits against insulated risks, and yes, uneducated borrowers making poor choices (or educated borrowers making greedy choices in the case of the mortgage crisis).
X + Y = Z
I worked two jobs after college including a lowly job bagging groceries at night after my 40-hour job to pay off my student loans. At age 20 the realities of compounding interest scared the hell out of me. But regardless of whatever responsible choice I make, the student debt crisis will cost me as a tax payer. That's the sad reality.
There is plenty of blame to go around, but you seem to be ignoring all of that and focusing only on X. When the crisis comes to roost, you'll change your position instead to X = Z.
Failure to acknowledging that Y plays a part, dooms us to repeat Z. Refusing to believe that Y even exists is nothing other than keeping your head in the sand.
But don't take my word for it. Given you're a disciple of Dave Ramsey, you may find the following of interest:
https://www.daveramsey.com/blog/student-loan-crisishttps://www.daveramsey.com/blog/sallie-mae-is-not-your-friendhttps://www.daveramsey.com/askdave/debt/student-loan-crisis