Student Loan Debt

04 Apr
Student Debt problem

Student Loan Debt

Gold Market Discussion

Student debt is a ball-and-chain for the economy

People with homes in forested areas know to remove dry brush from around their homes during fire season.

There’s a lot of dry tinder, fuel to feed a conflagration, around the US economy now.  

And it’s not being cleaned up.  

It’s growing.

One of the biggest dangers now, a candidate for sparking an inferno, is student debt.

We haven’t written about it since September, when we suggested that the student debt crisis was worse in many ways than the mortgage meltdown.  

At least there was a house behind all that mortgage debt.

student debt forces tough decisions

Today 11.4 percent of student loans are 90 or more days delinquent.  What’s behind all the student debt?  Many are “backed” by degrees of questionable market value.

Student loan debt is more than $1.56 trillion today. More than the value of subprime loans that led to the Great Recession.  A half-trillion dollars more than total US credit card debt.

Like other guarantees and promises it makes so cavalierly, the government can only make good on its student loan guarantees by printing money.  That’s because it doesn’t have an extra trillion dollars laying around anywhere.  

Everything about student loan debt is bad economics.  All the easy money flowing the way of colleges and universities has led to a doubling of the cost of higher education over the past 20 years.  It’s made the schools rich.  They’ve become palatial in some places, top heavy with administrators and bureaucrats everywhere, although nobody insists that their graduates are better educated.

Tucker Carlson on Fox News thinks the schools should co-sign for student loans.  If they had some skin in the game the might not offer useless classes like Underwater Basket Weaving, or The Wit and Wisdom of Brittany Spears.  If the institutions were on the note, they’d make sure students learned things that could produce wealth and help assure repayment.

At the same time, the debt loads they stagger under have many millennials unable to afford homes or to start families.  

44.7 million people are carrying student debt.   

That’s about 14 percent of the population.  It’s enough to start a movement.    

We don’t know what exactly will spark the next economic forest fire.  It could be a stock market crash.  It could be the trade war or the next hot war.  It could be unpayable student debt.

No matter where the spark comes from, we think owning precious metals is a wise precaution.  

Like people clearing the dry brush away from their homes during fire season.