You may have misquoted me and probably did not understand the history behind student loans.
Prior to Bush's second term in office, most student loans were privately financed so they were not capped at the 10 year treasury rate plus 2%. The lenders had to consider the risks of defaults and forbearance and get insurance against those losses, so even when the 10 year treasury was around 5% (not that it mattered as the rates were not tied to the 10 year), we were still paying a 10% interest rate, which was completely reasonable given the fact that I had no collateral and no credit history. The rates also used to be variable.
Now, if my understanding is correct, federal student loans are based off of the 10 year treasury at the time of borrowing and set at a fixed rate that is 2.05% higher. That is a phenomenal deal on a loan with no collateral and no insurance.
And on Gen X in general, they did not present any of these issues. The cost of education was higher in real terms, when the graduated they made less in real terms than people graduating now in real terms, yet the tax brackets that they went into took more of their income. They paid higher interest on the loans, and when they went through the recessions of 1990s and 2000, there was no help given to them. There was no stimmy checks or loan deferrals or extended unemployment benefits. There was no giant tax credit for first time home buyers or for having kids in day care. They were expected to be adults and handle their affairs.
Everyone always knew that the baby boomer retirement crisis was coming and entitlements would grow to cover the costs of the growing elderly population. But I don't think anyone saw the giant entitlement class that would grow in young people as they sought to delay adulthood for as long as possible. Our entire civilization is built on the idea that young people are supposed to grow up and bear the mantle of responsibility because they are young, strong, and their minds are still sharp. I am not aware of any time prior to recent history where the young generation entered the workforce and expected to receive government entitlements. I am honestly not sure if this ever happened in human history prior to now. And honestly, this is what I think so many people actually find revolting about the whole idea. It's not just the overall cost, it is the fact that we are giving this away to the people that are healthiest, have contributed the least to society at this point in their lives, and have their whole adult life ahead of them. Most of us would kill to go back in time and be in their shoes, debt and all.
Malarkey.
Good grief, malarkey.
The 6.8% rate I mentioned – as I mentioned – was set in 2002 by Congress during the Bush administration with the 8.25% cap to take place in 2006 (when I started law school).
You might be the only person who has ever conceivably made that claim about the cost of education being higher “in real terms.” That’s wrong. My source: literally every article talking about the cost of education over the years along with common sense. Look at how the cost of education has trended. Also, I don’t really think you have much of a point when it comes to starting salaries. The average starting salary (adjusting for inflation from the baseline) was $48,832 compared to $50,219.
https://www.naceweb.org/job-market/...ting-salaries-for-new-college-graduates/The average debt at graduation in 1990 was $6,760 ($14,061 in today’s dollars). It was $31,100 in 2021.
https://educationdata.org/average-student-loan-debt-by-yearBut, hey, everyone wants to be in their feelings about how bad millennials are, so have at it.
One other thing to consider is that the value of a four-year college degree has also gone down. College is basically the new high school. If you got a college degree in 1990, that’s great. Now? Let’s see that MBA/JD/Masters/PhD/etc because education has become over-valued, in large part due to the massive amount of loans that are given out. When I graduated from law school, there were 9 law schools in Ohio churning out 100-200 grads each. It would have made more sense to have gone into a skilled trade. Honestly. Much more sense. Any room full of professionals that you walk into, probably a handful of them can write a will while maybe 1-2 could plumb a house.
Oh, and I, a millennial, graduated law school in 2009, at the height of the Great Recession, and clawed for a job where I was underpaid and treated like garbage, but, yeah, I “entered the workforce and expected to receive Government entitlements.” Pffffttt… A lot of us millennials were in that boat.
I also find it interesting that millennials are talked about as the culprits, which makes sense, because it was us who took this country from being the world’s largest creditor to the world’s largest debtor, right? Oh wait…….. I mean, it was basically millennials that received all of the Great Recession bailout benefits, right? Or the PPP loan benefits, too? Hmm…
At least we have our pension plans to rely on. Oh wait… Well, at least our generation avoided constituting being a major fighting force in the two longest wars in U.S. history. Wait…
It’s okay, though. I have two siblings who are technically boomers, and three who are Gen X who make the same gripes…right before they ask me for all kinds of advice on legal matters, investing, marital dilemmas, estate planning, etc. I guess they just forgot I’m an entitled millennial, and they should be telling me what to do.
