Student Loan Debt Surpasses Credit Card Debt in the U.S.

This should be one of the biggest stories in the news right now.  There should be outrage and panic amongst the American people that higher education is either no longer affordable or else America's youth are being take advantage of by predatory lending in the college loan banking industry.

You can find an article here about the report and you can see the "Student Loan Debt Clock" here.

The unemployment rate in the United States is 10% and new graduates cannot find jobs that will afford them the ability to repay their student loans.  The result is the lowering of standard of living for an entire generation, indebting these people forever.  I managed to escape college with $24,000 in student loans.  I should consider myself lucky now.

I have actually met people teaching here in Korea who have said they have recently graduated from undergraduate with around $100,000 dollars in student loans.  This should not be possible.  Banks would never give a $100,000 home mortgage loan to a person without a job and no possible way to pay for it.  Why are banks giving extraordinary sums of cash to teenagers during college and expecting them to be able to repay them starting six months after graduation?  Why are these universities allowing this happen?  Are they charging their students for tuition whatever the maximum amount banks have agreed to give their students in private student loans?  Are they themselves trying to profiteer of their students?  Lives are being ruined and this is just creating another economic bubble that will blow up in the face of America.

Let's have some fun with the math!

We can just use a simple credit card calculator to determine what repaying these loans would be like.

The graduate in the video clip said she had close to $120,000 in student loans, but that is pretty extreme.  Let's just round that to an even $100,000.  According to some industry experts, an interest rate on these loans of 7.25% is competitive and reasonable.  I have seen rates worse than this, but some private lending rates might be better.

-- If a person makes a payment of $500 a month, it is impossible to repay the loan.  The interest accumulated outpaces the payments applied.

-- If a person makes a payment of $600 a month, it is impossible to repay the loan.  The interest accumulated outpaces the payments applied.

-- If a person makes a payment of $700 a month, it would take 330 months (or over 27 years) to fully repay the loan and the amount repaid to the bank would be $231,000.

-- If a person makes a payment of $800 a month, it would take 234 months (or over 19 years) to fully repay the loan and the amount repaid to the bank would be $187,200.

-- If a person makes a payment of $900 a month, it would take 185 months (or over 15 years) to fully repay the loan and the amount repaid to the bank would be $166,500.

-- If a person makes a payment of $1000 a month, it would take 154 months (or over 12 years) to fully repay the loan and the amount repaid to the bank would be $154,000.

I will stop there.  I cannot imagine anyone... in any occupation right out of college, that could afford to pay more than $1000 a month towards their student loans every month for their first tens years of working after college.  It is reasonable to assume that once people reach their prime income earning years after achieving some seniority in the workforce that this might be possible, but nowadays people are considered "lucky" just to find an internship out of college that pays anything at all.

Yikes... forget about ever buying a house or being able to afford a family.