Student Loans are Expected to be the Next Bursting Financial Bubble

12 Aug

black wealth, african american wealth, student loans

by Kirsten West Savali, Your Black World

As worries over the astronomical debt held by the United States reaches a fevered pitch, college education may be the next cut on the spending chopping block.

Moody’s Analytics released a report in July that suggests that continued high unemployment rates among college graduates — compounded with increased federal student loan debt accumulated by graduation — equals the student loan economic “bubble” being the next one to burst.

“Unlike other segments of the consumer credit economy, student loans have not demonstrated much improvement in performance despite some improvement in the broader economy. … [T]here is increasing concern that many students may be getting their loans for the wrong reasons, or that borrowers — and lenders — have unrealistic expectations of borrowers’ future earnings,” said the report.

Though tuition and fees has more than doubled since 2000, according to Consumer Price Index data, the real elephant in the room is the proliferation of “For-Profit” institutions, which specifically target students of color and low income.

According to USA Today, about 2,000 for-profit colleges eligible for federal student aid enrolled nearly 1.8 million students in 2008 — an increase of 225% in 10 years.

With the housing bubble burst being blamed on the predatory lending practices of banks –primarily lowering credit approval standards to be more inclusive of African-American borrowers, while charging them higher interest rates — the sub-prime premise of federal financial aid is also likely to take the blame for a second financial crisis.

With unemployment rates among youth under the age of 24 remaining high, due in large part to workers with college and post-graduate degrees being forced to take entry-level jobs, receiving a non-traditional education is often the only means of competing in these recession level times.

Instead of treating the symptoms – increased default on student loans, necessity of entitlement programs – with cuts to domestic spending further jeopardizing the livelihood of millions of U.S citizens, the politicians in Washington should address the illness: Continued disproportionate unemployment rates in vulnerable communities throughout our society.

Kirsten West Savali is a staff writer with YourBlackWorld.com

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2 Responses to “Student Loans are Expected to be the Next Bursting Financial Bubble”

  1. ADRIAN HARRIS OF GRAMBLING STATE UNIVERSITY August 13, 2011 at 5:39 am #

    HAIL!!!! YAWEH ALYON(LORD MOST HIGH)!!!! HAIL!! SEPIA PEOPLE OF THE RAINBOW SPECTRUM!! 25 YEARS AGO I KNEW THIS QABOVE AS A FACT WHEN I GRADUATED GRAMBLING STATE UNIVERSITY. PRESIDENT JOHNSON CALLED US TOGETHER AND TOLD US ABOUT THE COMING REPUBLICAN ASSAULT AND WHAT WOULD NEVER BE THE SAME AND WOULD NEVER HAPPEN AGAIN. “NEVER BEFORE AND NEVER AGAIN” BOOK BE EDDIE G. ROBINSON OF GRAMBLING STATE UNIVERSITY WINNINGEST COACH IN THE HISTORY OF COLLEGE FOOTBALL. WHEN I GRADUATED AND WENT HOME WITH MY PARENTS, MY FATHER REALLY DIDN’T CARE IF I GOT A JOB OR NOT. I WAS HIS HERO HE SAID AND I JUST HAD TO SAY AND IT WOULD BE. HE TOLD ME JUST GETTING MY HIGH SCHOOL DIPLOMA WAS ENOUGH FOR HIM. HIS STATEMENTS WERE NOT FOUNDED IN STATS CONCERNING AFRICAN AMERICAN GRADUATING FROM HIGH SCHOOL OR GOING TO COLLEGE. JUST FROM HIS AFRICAN AMERICAN HEART. OF COURSE THE STATS WER NOT GOOD AND ARE MOSTLY EXCEPT HERE AND THERE WORSE. I CH0OSE TO GO ADVENTUREING AROUND FOR JOBS AND FOUND TAHT EVEN THOUGH IN THE SOUTH I WAS OUT NUMBERED 99 TO 1 WHEN IT CAME TO DIPLOMA VS DEGREE, I HARDLY NEVER GOT EMPLOYED AND FIRED OFTEN. AND I GRADUATED FROM A SENIOR UNIVERSITY IN THE SOUTH. SO THAT’S IT FOR ME AND MORE FUN BECAUSE I HAD AND HAVE OTHER RESOURCES. ONLY GOD(ABBA) DOES THAT AND BELIEVE ME I THANK HIM ON MY NEEDS IN HIGH SELF ESTEEM AND STRENGTH. NEST IS POWER. WEIGHTS–GOOD FOR YOU. FIGHT ON Y’ALL. WE DID AND WE CAN DO IT AGAIN. BYE Y’ALL, LOVE YE ONE ANOTHER!!

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