Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.
The United States has over 4,000 college institutions many which have been raising tuition and fees far faster than the overall rate of inflation. Combine this with a younger and poorer population and you have a recipe for massive debt serfdom. As the recession drags painfully on, being the deepest and longest economic contraction since the Great Depression many people are questioning once deeply held mantras of economic prophesy. A home never goes down in value. You can’t go wrong with a college education. Of course these hollow statements mean little without further examination of the details. Buying a home isn’t necessarily a bad decision but it can be a bad decision if you over leverage yourself like a Wall Street investment bank. A college education is useful if you go to a quality institution but how many of the 4,000 are for-profit paper mills simply looking to steal money from unwitting students? The young are facing a challenging future but this pain is also leaking into the balance sheet of their parents.
The young and the broke – 37 percent of young households held zero or a negative net worth in 2009. The median net worth of those 35 and younger is $3,600.
It is hard to imagine a future generation of Americans were those moving forward are actually poorer than the current generation. Yet that is precisely the world we are diving into. Those that purchased homes in the pre-bubble days and also attended college in less inflated times have a massive head start on the current younger generation that is contending with a bursting housing bubble and a financial system that might as well be a roulette wheel. One startling figure from a recent Pew Research report shows that 37 percent of young households hold zero or a negative net worth. This is not a good way to build a healthy financial future. The wealth gap between previous generations is also becoming increasingly large. This narrative ties into the overall systemic pilfering of the middle class.
The economic treadmill is throwing millions out of the middle class and into poverty. In 2010 75 percent of unemployed received unemployment benefits while today it is down to 48 percent. From unemployment to food stamps.
The economy is being pulled apart from the center as if two mighty horses on both sides were set to run in opposite directions of the financially strapped middle class. This seems to be the current trajectory of our economic progress. The ranks of the poor continue to grow while the financial sector continues to strive based on government favoritism and a strong form of corporatacracy. Take this startling fact under consideration that last year 75 percent of the unemployed received some form of unemployment benefits. That figure is set to fall to 48 percent this year. Part of the main reason has been the long-term structural unemployment in our economy. The current economy resembles two different worlds and most Americans are still feeling the pangs of the recession that began in 2007. The main question many are asking is where will this country be heading if the same financial sector that created rampant disorder in the last decade is still at the helm of the ship? We can look at current trends and the results do not look promising.
Un-preparing the future with the higher education bubble – graduating students with more debt and with degrees that have little demand in the marketplace. For-profits now account for nearly 10 percent of all undergraduate enrollment when in 1997-98 they accounted for 3 percent.
The higher education bubble only continues to spiral out of control because the profits are so good for the massive banking industry that is pushing student loan debt to the trillion dollar level. At the same time the return on investment in education has been slowly diluted as more for-profit degrees enter the market place and water down what it once meant to have a bachelor’s degree. If you can get what is the equivalent to a piece of paper and claim you have an education then the marketplace is going to add more scrutiny to those that graduate. On a bigger scale is the fact that our country is largely run by gambling bankers that are exploiting the population in every facet from housing, education, and even healthcare. Our financial system is a predatory mess and this can be seen in the form of the higher education bubble. What is more troubling is the subject areas students are studying in and the amount of debt they are going into for these degrees.