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Monday, June 09, 2014

What Most Americans Don't Know About Student Debt

Now that student loans, well over $1.1 trillion, are hitting fresh record highs as... well... daily as the S&P500, the Fed is finally getting concerned about the latest debt bubble it has blown (not so much in equities). So concerned, in fact, the New York Fed recently added questions about student loans in its broad survey on consumer expectations to find out what people knew, or rather, did not know about this record debt mountain. We hope it was not shocked to learn that once again the bulk of Americans are taking on unprecedented amounts of debt without having a clue what the conditions are: accordint to the analysis, people don’t fully comprehend the ramifications of taking on student debt.

As Bloomberg summarizes , the survey covered 1,029 people, including those with and without debt. The shocking findings:
Only 28% of respondents knew that if student loans aren’t repaid, the U.S. government can garnish wages, withhold Social Security payments and tax refunds, and report the debt to credit bureaus.
Even more people—35%—incorrectly thought the government couldn’t do any of those things or said they didn’t know what the government could do.

Only 37% of those surveyed knew that students loans are extremely hard to shed in bankruptcy, a reality that differentiates student loans from other debts, such as mortgages and credit cards.

The survey found that people who have student loans know more about the consequences than those who don’t, and that’s even truer of those who have high debt loads. But about half of those with higher-than-average student debt didn’t have high comprehension of the issue.

The survey also found that fewer than one in five people under 55 years old were “highly literate” on the topic, even though they make up most current and future borrowers.

9 comments:

  1. No problem.. The King is going to forgive the subjects debt. Of course, they must forever worship at the alter of King Barry.

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  2. I was not aware that anyone could eliminate student debt through bankruptcy period,under any circumstances.

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  3. Only 7 more years, and mine will be paid off! At least the interest rate is below the real rate of inflation.

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  4. If they borrowed it, they need to pay it back!

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  5. whats to know ? they go to school, they take out loans, they finish school, they pay back the loans... whats the freakin' mystery ?

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  6. Going to college doesn't guarantee you a good paying job anymore. For some it's not worth it to go to college.

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  7. "Anonymous said...
    I was not aware that anyone could eliminate student debt through bankruptcy period,under any circumstances.

    June 9, 2014 at 1:32 PM"

    If you can prove hardship you can. An example would be if someone sustained a permanent injury or acquired a disease preventing them from working or only working a job paying potentially limited wages for the foreseeable future.
    Now if you choose to or do get minimum wage employment with no hardship attached and you can barely make ends meet, the student loan isn't dischargeable.

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  8. People under 55 make up most current and future [student loan] borrowers.

    Surprised the heck out of me.

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  9. "People under 55" are most of the people. Why is it surprising that the majority of the people are most likely to have/need/get student loans?

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