With student loan debt sitting at approximately $1 trillion, Federal Reserve Chairmen Ben Bernanke, an adult know-it-all of sorts, thinks it poses no threat to financial stability.
“I don’t think it’s a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government,” Bernanke said yesterday at a town hall meeting with teachers at the Fed in Washington.
Perhaps Bernanke can be excused of sugarcoating reality for his audience of teachers. The point remains, however, that student loan debt, at $1 trillion, is a very real problem. With the economy still in the doldrums, and American universities still pumping out graduates into a virtually non-existent job market, the debt total is only going to go up. It’s difficult to pay of student loans when one is unemployed or underemployed, and even more difficult to contribute to an economic recovery.
Student loan debt probably will not cause the damage of, say, the sub-prime mortgage and credit default swap fiasco, but it cannot be good for the long-term economic health of the country. That the federal government guarantees the debt is irrelevant: it still needs to be repaid. Students saddled with lots of debt and no job can’t spend much money to kickstart the economy, and neither can parents who are taking over the loan repayments. Indeed, those families whose debt contributes to that $1 trillion figure won’t be contributing to the economic recovery any time soon.
Bernanke needs his fuckin’ head examined.
August 08, 2012 at 2:28 pm, Lunchtime Links - The Daily What said:
[...] Cray: Ben Bernanke, who thinks student loans are not a problem [...]
August 08, 2012 at 7:42 pm, Alan Martinez said:
Good article DJ PANGBURN.
If they kept the price of advanced education high and awarded less money in loans it would teach everyone a lesson in life. There are so many complex debates within this subject. What about erasing the value of an American education by allowing anyone and there Mom to go to school here? Bernanke has a complete different perspective of life in America. He is a high level banker. He has no understanding of how we live down here on the bottom. I think this article could easily transition into "Audt.
August 08, 2012 at 7:44 pm, Alan Martinez said:
Good article DJ PANGBURN.
If they kept the price of advanced education high and awarded less money in loans it would teach everyone a lesson in life. There are so many complex debates within this subject. What about erasing the value of an American education by allowing anyone and there Mom to go to school here? Bernanke has a complete different perspective of life in America. He is a high level banker. He has no understanding of how we live down here on the bottom. I think this article could easily transition into "Audit the FED" type of talk. I believe this is where all the MOJO is. Who ever coontrols the money controls the contry.
August 08, 2012 at 8:59 pm, Alan Martinez said:
Good article DJ PANGBURN.
If they kept the price of advanced education high and awarded less money in loans it would teach everyone a lesson in life. There are so many complex debates within this subject. What about erasing the value of an American education by allowing anyone and their Mom to go to school here? Bernanke has a complete different perspective of life in America. He is a high level banker. He has no understanding of how we live down here on the bottom. I think this article could easily transition into "Audit the FED" type of talk. I believe this is where all the MOJO is. Who ever coontrols the money controls the contry.
August 08, 2012 at 7:09 pm, StarWatch Consumer | Credit card usage drops; late mortgage payments hit low – Kansas City Star | Mortgage Credit Services said:
[...] of borrowers who have fallen behind to a three-year low. Still, the rate of decline remains …Ben Bernanke thinks student loan debt is not a problemDeath and Taxesall 629 news [...]
August 09, 2012 at 1:28 am, Mac Zeff said:
"Bernanke needs his fuckin’ head examined." You got that right.. it says it all.
August 09, 2012 at 1:32 am, Mac Zeff said:
Lets have a test of the results of restoring just limited bankruptcy to the economy, by first restoring bankruptcy to those of us who had it, when we got our loans. These would be the loans obtained before 1990. Restore our bankruptcy protections for 1 year, and see what effect is has on the economy when 25,000 people file for bankruptcy on loans that are 4 to 7 times bigger than the original amounts borrowed. If it does not effect the economy, then give bankruptcy protections to all students. If it does effect the economy, maybe the fed should take its head outta its ass, and rethink the way it treats people who are in default.
August 09, 2012 at 1:40 am, Damien Hegger said:
Yeah, I would probably say that Bernanke is probably NOT trying to pay off a student loan while being unemployed… Just a thought… lol But on a more serious note: I had a friend who came from Poland (Polish jokes aside, please.. lol) who was talking to me about how they dealt (not sure if what he said is still true today) with all this… He said that the first four years of college were completely paid for (of course, this happens due to the amount of taxes that are paid by each citizen). I asked him about the qulaity of the education if just anybody could go. He said the education standards were still maintained because in order to even get into a University, you had to take entrance exams based on what degree field you were going after, and if you didn't pass the exams, you weren't allowed in. Seriously, I think I would be okay with paying higher taxes if it meant not being in debt for the next 12 years. I know this model isn't for everyone, but just thought I would bring it up.
August 09, 2012 at 3:59 am, Jesse Belanger said:
No, no, $1,000,000,000,000 in student loan debt isn't a problem at *all*.
August 13, 2012 at 2:56 pm, Senator Sanders DESTROYS Ben Bernanke – WHERE IS THE MONEY? « Hidden Agendas said:
[...] Ben Bernanke thinks student loan debt is not a problem (deathandtaxesmag.com) [...]
October 06, 2012 at 9:39 am, Patrick King said:
Bernanke is a stupid freak as was Greenspan before him. The whole Fed is a gambling abomination playing with the delicate threads of our economy and finances…
October 06, 2012 at 1:40 pm, Andrew Musselman said:
I think what he meant as far as student loan debt not being a problem based on what was cherry picked to be put in the "article" (if you can call it that). Probably more of a blog post. Nonetheless, when you read the article, it is talking about systematic risk to the U.S. Economy and comparing student loan debt to mortgage debt. Mortgage debt is held by financial institutions and student loans are held by the Government. The loans are not a risk to the economy because they are held by the government. Further, it's not like you can repossess someone's degree and put them out on the street. Perhaps what should really be done is restrict what majors student loans can be approved for so we don't have basketweaving majors wondering why they can't get a job. In fact, if you check the bureau of labor statistics data releases, the unemployment rate for people with a bachelors degree or higher is around 4.1%.