The real student loan crisis

By Robert Hiltonsmith
August 1, 2013

A month has passed since Congress allowed interest rates on federal student loans to double for some borrowers, increasing the cost of their college educations by as much as $4,500. While the debate continues to focus on the interest rate for future borrowers, it is ignoring the larger problem with student debt: the more than $1 trillion that had already been borrowed before the interest rate debate. This existing debt will continue to drag down borrowers’ financial security, which in turn drags down the entire economy. By how much? Demos, the public policy group where I work, has just released a study that estimates the economic impact of the existing student debt burden, and finds that it may cost the country more than $4 trillion in lost economic activity.

This economic drag happens because student loan payments take a significant bite out of many borrowers’ incomes, causing them to delay or forego important purchases or investments. A recent study by the American Institute of CPAs found that 75 percent of student debtors had made personal or financial sacrifices because of their student loan payments. Forty-one percent have postponed contributions to retirement plans, 40 percent have delayed car purchases, and 29 percent have put off buying a house. The effects of delaying making these crucial investments early in borrowers’ lives, in turn, are magnified because of the amount that the lost home equity and investment returns would have compounded over their entire working lifetimes.

Our study tries to estimate just how much delaying saving for retirement or purchasing a home will cost borrowers over their lifetimes. We use data from the Federal Reserve’s 2010 Survey of Consumer Finances (SCF) to determine the average salary, retirement savings, and liquid savings of an average, young, dual-headed, college-educated household both with and without education debt. We then project their salary and assets over a lifetime using generally-accepted values for salary growth, savings rates, investment returns, etc. We reduce the savings of the indebted household by their monthly student loan payment while they are repaying their loan, and observe the difference in net worth between the debt-free and indebted households as they approach retirement.

The model finds that a dual-headed, college educated household that graduates with an average amount of debt ($53,000) will lose more than $200,000 in retirement savings and home equity from paying off their student loans, compared to a similarly educated household without student debt. Nearly two-thirds of this lost wealth is due to the indebted household’s lower retirement savings while paying off their student loans, while more than a third is from lower home equity. (Our model does not factor in any reduction in spending that the couple makes aside from what they spend on a home and retirement savings.) The lower home equity was primarily due to the finding, calculated from the SCF data, that indebted households bought less expensive houses than similar debt-free households. They also put less money down and paid a higher interest rate. These lost returns and appreciation on the foregone retirement savings and home equity are magnified because they occur so early in borrowers’ lives. And this is exactly why I argue that the existing student debt burden already weighing on nearly 40 million Americans is the greater crisis: because student debt causes borrowers to delay making investments at the very time when making those investments is so crucial to their future financial security.

The impact of student debt on financial security will be even greater on many borrowers, however, because our brief’s calculation of the wealth loss caused by student debt is, in many ways, a best-case scenario. The $200,000 estimate for lost wealth is for an average dual-income household where both partners graduated from four-year public universities and are never unemployed and always save thereafter, but the large number of graduates from less-ideal circumstances face even greater losses. As our brief highlights, students who graduated from private not-for-profit schools, students of color, and students from low-income families graduate with larger average debt burdens than the average public school graduate. Seventy-five percent of students from families with incomes less than $60,000 graduate with student loan debt, a higher share than the 66 percent of graduates overall who do. More students at private not-for-profit colleges graduate with debt, and more of it: as of 2008, an average of $27,650, about a third more than public school grads. But the hardest hit by student debt are for-profit college students. Not only do they graduate with the highest average debt ($33,050) but they’re also less likely, for various reasons, to find a job after school. The wealth loss from their student debt is so large that some for-profit graduates are effectively “underwater” on their college investment: they will actually have a lower lifetime net worth than if they hadn’t gone to school at all.

This “debt-for-diploma” system is clearly unsustainable, both for students and the country as a whole. The wealth losses caused by heavy student debt burdens are eating away at the income gains from a college degree, thus eroding the last secure pathway to the middle class in this country. And though student debt won’t cause an economic crash like mortgage debt — largely because of unfair laws that prevent discharging student debt in bankruptcy — its impact on the economy will still be catastrophic. If we spread out our estimated $4 trillion in lost economic activity from student debt over ten years, we can predict that student debt may directly reduce GDP growth by as much as 2 percent per year, not even accounting for student debt’s indirect effects on the economy. And let’s not forget about the millions of borrowers at risk of defaulting on their student loans. Thirty-five percent of borrowers under 30 currently repaying their loans are more than 90 days late on their payments; many will default, and thus have their credit ruined and be unable to buy a house, among other consequences. So, after Congress fixes student loan interest rates, it shouldn’t stop there. It needs to enact larger legislation that will give relief to borrowers already weighed down by debt, or the entire country will pay the price. 

PHOTO: Graduating students arrive for Commencement Exercises at Boston College in Boston, Massachusetts May 20, 2013.   REUTERS/Brian Snyder | CHART: Courtesy of Demos

30 comments

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This article expects that things will, or are supposed to, go back to “normal”. Well they won’t. We can’t turn back time. The idea or dream of getting a college education, good job, a single family home, sending your 2.5 kids to college, then retiring between 60 and 70 is just plain gone forever. Please stop whining about it and try to come up with a new dream. Corporate America has replaced a persons expected mortgage with rent and college loans. Jobs are disappearing faster than Twinkies at a fat farm, and no one is doing anything to change it. Globalization and automation are great things, but have devastating affects when left to capitalist corporations. Notice I did not say greedy. They are just doing their jobs. That’s what the capitalistic system of America does. It’s built that way now. We need to change it quickly before our inattentiveness and denial allow it to destroy the economy. It is a complex set of problems that do not have a simple, one subject answer that so many people want, and the media tries to supply.

Posted by tmc | Report as abusive

Is Mr Hiltonsmith proposing that student loans, in part or whole, be forgiven? I certainly hope not, as such a move would contribute to future irreponsible behavior relevant to home purchases, credit card debt, etc.

I certainly understand the impact that a student’s education debt has on his/her purchasing power and, consequently, on his/her standard of living. But that also applies to any debt that an individual commits to pay.

I also understand the issue of too many graduates for too few well paying jobs. But this should put parents and young adults on notice. Fully understanding that education is good for the individual and for society, perhaps a bit of research relevant to future job opportunities should be conducted before anyone assumes a large debt that is based more on a hope and a prayer than on reality.

Posted by bald1 | Report as abusive

If only this country cared more about it’s kids than the profits of their cronies we could have used those trillions spent on war the last decade to pay off everyone’s student loans…

Posted by anarcurt | Report as abusive

College, when I went in the seventies seemed to me to be about learning, about education. Today it’s generally a profit center.

Nothing in the article surprises me. Unlike kids today I was able to work my way through college. Decent entry level positions were available, with pensions as a reward for the hard worker who stayed loyal to the firm. Unlike today, senior members of a firm were valued for their skills.

Having no debt enabled me to begin saving for retirement as a young man in his early twenties. Debt free, I was able to take a bit more risk in my investing and it paid off handsomely. Aside from a home I could afford, I stayed debt free all of my life. Forget retirement at 60 or 70, I left the full time workforce at 48.

Why? Because life is very short and before you realize, it’s over.

A side benefit of my early retirement was that by leaving the firm I saved the job of a capable younger co-worker. Had I been forced by debt to continue working, that young man would have lost his job in a reorganization.

I understand that not everyone would want to or be able to “check out” prior to age 50. For the young though, every day older workers must stay on the job means less opportunity for the young to be hired by a firm or be promoted if they are lucky enough to have gotten their foot in the door.

Posted by Missinginaction | Report as abusive

Colleges are a profit center. No they aren’t! They’re BIG BUSINESS. My alma mater, spends multi-millions on new athletic centers and parking garages. It built a multi-million dollar, three-floor library that is so sprawling, it’s hard to find your way to the front door, and the ratio of space to actual BOOKS is astronomical. But it’s beautiful to be sure; lots of glass and art hanging on the walls.

The school gobbles up surrounding real estate like a Pac Man and rents out space to Starbucks, fashion clothing boutiques, shoe stores. It has the equivalent of a mini-mall now.

The student health center however, still has 1950′s industrial linoleum floors with just-as-old orange plastic chairs and the paint is peeling off the walls. The school bookstore, where they sell the actual textbooks, is still a tiny box you can barely walk around in with threadbare carpet.

They won’t add to the number of English, History, Math or Foreign Language teachers and they keep part-time professors at arms length for years and years with no benefits and barely-above-poverty-level salaries, because they “don’t have any money”. They do however, continue to add to the administrative staff with sky-high salaries.

They raise the cost of tuition every year, then they have the nerve to send me letters asking for money for all the wonderful ways they want to improve education. They won’t get a dime from me until they begin to invest in (dare I say it) actual EDUCATION. Their online curriculum continues to grow as well.

I feel for students in today’s economy. We’re told we need an education to achieve the “American Dream”, which is nothing more than a decent home, two cars and the ability to send your children back into the higher educational system, but they spend decades of their adult life after college paying for tennis courts and athletic centers with fewer and fewer job opportunities, and now Congress first raises their loan interest rates and then, realizing that went over like a lead balloon and they’ll lose the youth vote, grace the American student with interest tied to our wonderful, healthy, honest capitalistic free-market rates. (How’s THAT been working for us?)

@tmc, in some ways I agree with you 100%, but to imply that we should learn to live with it and “come up with a new dream” is, in my opinion totally wrong. We should expect MORE, and vote for it at the polls. What other dream should citizens of the most powerful and (at least in the past) richest nation on the planet come up with? A home, two cars, a decent job and the ability to send our kids to college is too much to dream for?

Posted by JL4 | Report as abusive

Bankruptcy protections, at a minimum, must be restore if this situation is to be stabilized. This is critical.

Please email and tell Congress as much at hea.reauth@mail.house.gov today if you agree (today is the last day to make comments).

Posted by alan_collinge | Report as abusive

@JL4, “A home, two cars, a decent job and the ability to send our kids to college is too much to dream for?” It’s not “to much” to dream for, but it’s not the right dream anymore. Single family homes are, and should be, a thing of the past. We and the rest of the world cannot afford the suburban sprawl anymore. It’s as simple as that. I know you only said “home” but the meaning of the American dream is well known to include a white picket fence. We need better urban centers to handle the huge population that we have and expect to have in the near future. “two cars” nope, that fits with the pervious statement. The world cannot afford every family having two cars, even if they were “green electric” cars. “ability to send our kids to college” absolutely!! Education is needed for all humanity. So how about changing the dream to “A safe community and apartment to live in, a good job, and to educate our kids to highest degree possible.”. Not to catchy but I think you get the point. By the way, I usually agree at least to some extent with your comments. Please keep them coming.

Posted by tmc | Report as abusive

JL4, let’s agree. Many colleges have become big business profit centers. How ’bout that?

Colleges can’t pay out all that money that you correctly point out they pull in. Can’t pay dividends. Can’t buy back stock, there isn’t any. So, money gets spent on frivolous non-educational expenses like huge athletics programs, arenas, entertainment facilities. And administrative salaries and benefits of course. It’s really all the same thing though. Poor allocation of resources.

Posted by Missinginaction | Report as abusive

@JL4, tmc

“A home, two cars, a decent job and the ability to send our kids to college is too much to dream for?” It’s not “to much” to dream for, but it’s not the right dream anymore.”
You got it! Here’s my “take”.

Americans need to change their expectations to meet a sustainable model of urban renewal. Too many want (and still expect) four bedrooms, three car garages with “space” (so they don’t have to rent storage space for excess possessions); personal pools and jacuzzis. Please.

John Kerry recently announced that Americans have a right to be stupid. I disrespectfully disagree. We don’t have a right to be obnoxious either. Time to get off the hamster wheel and work for a polite, interconnected and interdependent society that values the “common good”.

America has run the “everyone goes to college” mantra into the ground. The bloom is off the rose. Every mom and dad has hopes of their offspring becoming the doctor, the lawyer, etc. It’s time America started understanding we don’t need people with Masters and PhDs flipping burgers, doing plumbing, etc.

For the same or less public investment Germany turns out vocationally competent citizens in proportion to their country’s needs. America’s high school graduates are today prepared for NOTHING. 75% are unsuitable for military service! Dropouts are a waste of air and skin.

A safe community of environmentally sustainable townhomes pleasant to live in close to work that is fulfilling is an achievable dream. It would require half the land and expense of current fashion and expectations, and half the fire stations, ambulances and police.

For that matter, why presume everyone wants kids? Terrible hobby (can’t return or sell if parenthood isn’t your thing). Statistically the world’s poorest return on invested time and money. If you want love, adopt a dog. If you want companionship (and tranquility), adopt a cat.

Taxing residential property at a rapidly increasing rate as “inside square footage” per resident rises would make for infinitely more efficient “shelter” decisions. Taxing non-commercial vehicles at a rapidly increasing rate for both weight and “horsepower per pound” might pry half our population out of Humvee sized SUVs, vans and pickups.

We should learn to value quality and longevity in products and kick our “habit” of economically coveting and chasing the “latest and greatest junk”. They who die with the “most toys” aren’t “winners”, but poor prioritizers.

There is satisfaction and contentment in carefully choosing purchases…living with and liking what you have rather than forever chasing what you don’t. Try it, you’ll like it.

Posted by OneOfTheSheep | Report as abusive

Tuitions too high, too much student debt, not enough jobs, young people can’t afford to live by themselves, older workers getting laid off before they can retire, our health care system is a mess and too complicated for most people to understand. We have many large problems to solve, yet our elected leaders are unwilling to even initiate discussions
about the issues. And then there is this … when you go to a major league baseball game, why does a beer cost $9, and a hot dog $4 or $5? That is after paying $50 for a ticket, and $15 to park.

Posted by PhilliesIn2013 | Report as abusive

” why does a beer cost $9, and a hot dog $4 or $5? That is after paying $50 for a ticket, and $15 to park.”??
Because that is the form of capitalism we have created. And I’m betting that you would defend it vigorously too. Most people do, even though common sense and even logic dictate differently. Propaganda and psychology are truly stronger than independent thought.

Posted by tmc | Report as abusive

OOTS is describing the way I live. I don’t think he is, because in past arguments I’ve had with him he was proud of his orchard of fruits trees in the Arizona dessert that had it’s own well. He reads wine magazines for history lessons.

He also has no consistency at all. Chameleons who go with the popular zeitgeist tend to work that way.

So many people use college as a road to what they think will be entry to the “elite” and that is still the case in spite of the fact that there is no elite entry for most of them. The elite is still a matter of having enormous family wealth and those kids don’t really have to study at all. They have to know how to socially dominate and control. Bush II was a perfect example. Social networking is the stuff of college that never gets into the college literature. Whatever one thinks about Obama or Clinton – they were both po-boys who had to study and were good students. So was Gore.

My father and I have had a long, not so subtle, argument about whether it was better to go to school for solid courses – something I thought I was doing – or whether it was better to go to a more expensive “finishing school” as he calls the small and almost unknown college my sister went to where she barely made any kind of grade but made some wealthy friends and has been bound and determined to emulate in consumption and lifestyle choices ever since. It worked for her – she makes big money (but spends it like water) and the girl writes like a high school student and very little of that. She knows how to use the social system and social status symbols, to “dress for success” and to “kiss the right a–es”.

One could also examine the quality of the courses- something that was never obvious when I attended undergraduate school. The brochures and visits don’t say what they don’t want to admit until you are there and it’s too late. But a kid out of High School can’t be a cynical post middle-aged person with that kind of world knowledge and a young student, with little lifetime experience, at the same time.

The standard of living will probably shrink here but not in terms of consumption. It is a society destined to imitate the pattern of historic world cultures where the mega wealthy occupy all the positions of control and influence and the rest are reduced to commoner or peasant status, we call them “consumers”. Most historic societies tended not to educate more that the upper tier and those who occupied support positions like clergy, attorneys and judges, physicians and teachers.

If you consider how often “icons and pictograms” are used on the computer it is possible that the future of this country could easily start to look like a more hi-tech version of the past when fewer people were literate. The icons and symbols are easily understood by anyone regardless of their native language. It’s almost a subliminal language and might someday take the place of more advanced literacy for a severely stratified society.
The upper strata will have the old language skills and understand the subtleties of their culture while the rest, lower down the social pecking order, will be living on a diet of inexpensive consumer goods, popular entertainment, and mass political spectacles designed to keep the illusion of voter participation alive.

Health and fitness have always been a sign of class distinctions in Europe and even in this country. Wealthier people of the “elite” don’t tend to be as over weight or have many obvious signs of ill health. I live in a town that is stratified by income and education and those at the bottom tend to show it. I see people walking around with visible tumors and bad teeth or no teeth. They can’t afford to be too fussy or squeamish about their appearance and I tend to follow them now. They can’t get the best care so they wait and get what they can. Money still means access and being first in line. And the lower down the social economic scale one falls the harder it is to live and the greater and more numerous are the shooks that having money tends to cushion or make less traumatic.

This country is heavily armed, both in the private and public sector, has wall-to-wall surveillance and is paranoid about what the population is doing because it is a class dominated society and they are afraid for their own welfare and safety. They know that social turmoil can strike like madness and wipe everything away in its path. It’s happened repeatedly throughout recorded history.

BTW – I lost my lower false teeth last summer while working around the yard. I took them out because the gums always shrink and they never fit well after a few months and have to be relined and I may have mistakenly thrown them out with a wad of paper towels I was using to wipe my hands of glue to make repairs around here and than stuffed in the same pants pocket. I’m not going to replace them because they were never comfortable and I now understand how it is that some of the people I know who don’t have teeth, or many of them and they can be decades younger than I am – can continue to eat at all. The gums toughen up. I also understand now how cooking food was the greatest boon to extending man’s life expectancy. The hardest things to eat without teeth are uncooked vegetables. Cooked meats are actually the easiest things to eat. But potato chips and hard bread crusts are the foods that bring tears to my eyes and I just can’t eat them. Cooked food means one doesn’t really need strong teeth and old people can live longer.

But not having teeth means I look old and not at all affluent. That’s death for any job prospects in a world that likes new finishes and hates anything that looks like it is old, frail, worn or poor. The finishing school type says “OOOH poverty”!

OOTS – you really don’t understand the modern world and talk like an affluent person how dresses down, somewhat like me. The less affluent don’t have to chase after anything. That is the game of the upper income groups. The less affluent can never catch up. Your comfy nostrums don’t mean squat until you say how big a house, how much acreage you own, how old or expensive a car you drive, your income and family wealth and how much education you were able to acquire. You are also an idiot if you think people have kids as a “hobby”. But I forget, Alzheimer’s patients can be happy in your world too.

This country needs conspicuous consumption or its economy seizes up and starts to die. That is the trap it built but also the only aspect of its life that is truly democratic, or at least looks like it is. Debt sees no class distinctions.

Posted by paintcan | Report as abusive

It’s not only the frills that are breaking the bank at colleges, it’s the gravy jobs professors get as well as the staffs. Contract teachers are not getting the gravy, but their wages are hardly poverty wages. They are undoubtedly unhappy when they see what could be had if they were so lucky. Colleges and universities are dysfunctional because the employees pick their boss and fire him if he gets out of line. If the president plays along he’s rewarded with a cushy job and massive yearly salary, along with plenty of praise from the “employees.” The results are entirely predictable, and we are seeing it play out right before our eyes.

Posted by Calfri | Report as abusive

It’s always nice to hear from you @paintcan, teeth or not.

Posted by tmc | Report as abusive

When are these bleeding-heart liberals going to realize that the nation’s interest in creating an educated populace is no longer a priority. As long as the Plutocracy has access to high-priced education, who cares about the 99% of Pee-Ons? The Members of the One Percenters Club have been getting richer and richer as our economy and workforce has declined during this depression that never seems to end.

Oh, they’re the “job creators”! Really? They’re not the profit-takers derived from gambling operations of the entitled Wall Street Casinos bailed out of their multi-trillion-dollar gambling losses with taxpayer funds? Seems fair…

Posted by ptiffany | Report as abusive

If you borrow money to get a master’s degree in comparative literature and therefore spend the next 30 years working at various coffee shops and retail establishments because that’s all you’re really qualified to do….. you SHOULD have financial problems. That was a stupid move. What did you think was going to happen? You and the other 200 people in your class were going to someday….. teach the class? That math don’t work.

Posted by AlkalineState | Report as abusive

@AlkalineState.

Sure, but if everybody got a business degree then there would be a lot of BBAs who would be serving coffee for a living as well, and same thing with engineers. Aside from the issue of whether society would or should want all engineers and BBAs, there are still only so many jobs for those people. Also, in your analysis you leave out the factor of connected friends, relatives and other social connections as the avenue to better work. This is true regardless of your formal education.

Posted by Calfri | Report as abusive

Calfri, the whole system needs to be re-thought. The education we receive from 4 years of high school and 4 years of college could be easily done in 6 years (3 years high school, 3 years college). I have found that the first 2 years of college now are largely review for all the old people going back to school. Their old minds should not drag everyone else down. College needs to be harder, and they need to actually fail people who fail. Those who fail high school should be ineligible for further study until they study on their own and pass a re-entry exam. Then college would actually mean something and it would be much more lean and cheaper to operate.

Posted by AlkalineState | Report as abusive

ptiffany, why the rant about liberals?!? I’m a liberal and agree with you completely. Jail the plutocrats and Wall Streeters, or at least tax their a$$es at 90% and we can start over.

Calfri, I don’t know what university you work for, but the one I work for certainly doesn’t let me pick my own boss, and firing someone is next to impossible for anything other than insubordination or a felony charge, and we’re not unionized. I think you better offer a few more specifics along with your broad, incomprehensible generalizations.

A decade or two ago all universities started hiring adjunct professors without a tenure track. They didn’t renew contracts just hired different adjuncts, and thus they saved money over the long term. They promoted teachers to full professors who brought in big money through research grants and those that secured permanent funding from the DOD and NSA through robotics, cryptography, computer and advanced weapons systems programs, etc. At least that’s how we have always done it here at CMU.

Also, about this same time we cut back on scholarships and aid to U.S. citizens while recruiting more foreign students (Chinese, Koreans, Indians, Pakistanis, Arabs primarily). Less paperwork and more cash up front for the university. So today 25 to 30% of the incoming freshman are foreigners.

The president and board of trustees cried hardship back in 2008 and 2009 and said there would be a hiring freeze and no raises for a while. But building the Gates/Hillman Center continued, and building projects have never really stopped. That’s where our money goes, not to salaries for staff or a new library, but new engineering and science buildings, and the DOD funds something in the neighborhood of 80% of our budget. Yet tuition goes up at least every other year, and the economic burden for the individual student becomes more pronounced.

Universities and hospitals (essentially a monopoly here in Pittsburgh) shouldn’t have non-profit status, nor should any established religion. (The Catholic church is still one of the richest landowners in the U.S.) In fact, non-profits are a sham that should be done away with altogether. The cities tax base continues to shrink as UPMC, the University of Pittsburgh and Carnegie Mellon expands their corporate empires.

These are the real problems, not chasing something called the American Dream. Death to Corporations, should be our rallying cry. They’re what’s strangling the middle class and destroying this country.

Posted by Andvari | Report as abusive

@paintcan,

I live that which I advocate. The home I designed (presently under construction) has a “daylight basement” level of 660 sq. ft. 12′ x 32′ is a single-car garage/storage area. There is an air-conditioned exercise room, clothes storage closet, an under-stair tornado shelter, and an unconditioned laundry room.

The first floor level (4′ above ground level) is also 660 sq. ft. with 8′ x 32′ porches on East and West sides. It has one bedroom of modest size (with a tiny dressing/shower area, individual closets, a bay window and hall with a half-bath, an L-shapes Living Room/Kitchen with fireplace and high, open cathedral ceiling and a hall/dining area off to one side.

There’s a Loft/studio for my wife’s crafts/etc. It has a box window that should be a wonderful observation place for our rip-roaring local thunderstorms. The exterior will be a (six different colors) California “Stick Style” Folk-Victorian “Painted Lady”.

I don’t live in Arizona but have a few immature personal fruit trees. You’ll have to show me that well some time. I do have two man made ponds. Had the larger one (under an acre) dug to keep the other (in front of the house) full at all times (and water the greenery). The roof area o my aircraft hangar, Barn and house-to-be will collect rainfall for a 6,000 sq. ft. water storage cistern. 24 years’ rainfall records suggest we will be independent of public systems, even with no rain for four straight months.

I buy my wine (not a lot) at Trader Joe’s. Their “Two buck Chuck” is great with holiday Turkey, goose or ducks. My “cellar” is electrical (from Home Depot) and holds perhaps two dozen bottles. Like you, I enjoy the internet; and rather stumbled across the information about Imperial Rome’s fundamental ignorance of the dangers of lead poisoning (later shared with you).

My wife and I own our 14-year old Chevy Metro, acreage and outbuildings free and clear, owing no one. We traveled in our youth and don’t have to go on cruises, trips to Disney World or Branson with others now. Most days we dress in shorts, flip-flops and T-shirts. Our house progresses as funds are available.

I’m almost disgustingly consistent. Up most mornings around 11 am, grind my coffee beans, brew my own coffee, and sit down with my wife for a bit as we review personal priorities for the day.

With a full fridge and freezer you may deem us “affluent, but our income is primarily from Social Security. As poster people of “conspicuous consumption, you could do lots better.

Posted by OneOfTheSheep | Report as abusive

You’re an interesting character OOTS. I like your architecture.

Posted by tmc | Report as abusive

@OOTS, you didn’t get your aircraft hangar and man-made ponds on Social Security.

There is nothing wrong with living in an urban apartment, but there is also nothing wrong with wanting an acre in the suburbs, or a small orchard with a few personal fruit trees, or 500 acres of land to grow corn, or a high rise loft in the middle of New York City.

Basically, what you’re telling us is that you’ve already had the opportunity to live the American Dream, and now, in retirement, you have the luxury of living any way you wish, (even on Social Security) because you came from a generation when the cards weren’t so desperately stacked against you.

I’m not criticizing the way you live, it sounds lovely, and however you achieved it is none of my business, but paintcan is right when he observed:

“OOTS – you really don’t understand the modern world and talk like an affluent person [who] dresses down…”

The thing I really don’t like about your posts is not only how you “dress down” but “talk down” or outright insult people. For example, when you and I agreed on ONE topic (Social Security – which of course, you’re invested in personally; you must have it now because as you reveal here, it’s your only source of income) you were relatively friendly, although patronizing and condescending. But when I disagree with you, you blast me with “that’s typical female thinking” and call me a “moron”. I’m not the only poster you do that to, either.

Now I find out you have lots of luxuries: the luxury of time, the luxury of hobbies such as fruit trees and personally designed housing and water conservation systems, compliments of an American Dream that is now in grave peril. And you tell us to lower our sites.

Some of us are arguing, fighting, etc., so that our children (mine is NOT a “hobby”, thank you) can have some of the same opportunity you and I did. Will they all achieve it? Nope. Should they have the chance? Of course.

But you, and others, say that because our economy is so rotten we should just suck it up and aim lower. I choose to not give the bully my milk money everyday.

And I will defend as best I can your right to every dime of your Social Security money so that you can wear flip-flops, sleep until 11 a.m., and water your trees from your ponds.

Corporations, in bed with Wall Street, in bed with Congress are consistently undermining the American lifestyle, American strength, individualism, creativity, intelligence, education and character.

But that’s okay with you, because you’ve already gotten yours, right?

I read this line in the poem “Easter Morning” by Jim Harrison, taken from The Writers Almanac with Garrison Keillor, May 18th 2008 online publication:

“that when there’s lightning the rich /
think that God is taking their picture”

Reminds me of you.

Posted by JL4 | Report as abusive

@JL4,

I am 72 years old, purchased my property 23 years ago, designed and built my hangar twenty years ago, dug my new pond not long after, and enlarged the one next to my homesite a decade ago, before the “Great Recession”. In order to accrue the assets to do these things over time I HAD to “understand the modern world…”.

In any debate of values it is entirely legitimate to point out logical lapses or flaws in reasoning or any position based on values one does not recognize or share. If that makes you or your position look bad, you have the right to present more facts or to withdraw. Most of the time you choose the latter.

We have some very intelligent people contributing ideas and opinions here and we also have those whose thinking and expectations are unquestionably moronic. That said, it is not my style to call anyone a moron.
There are more than a few with whom I agree on some subjects and disagree on others. That is as it should be.

Yes, I prefer to agree, when possible, and work towards collective consensus than to disagree. When someone debates well for an opposing view I grant them due respect and “agree to disagree”. Those who pop up here and there with blatant silliness, unable to give credibility to their verbage, do get the “back of my tongue” for good reason.

As an example, you believe “Corporations, in bed with Wall Street, in bed with Congress are consistently undermining the American lifestyle, American strength, individualism, creativity, intelligence, education and character.” Please. You thus attack everything and nothing. That’s just silly.

A corporation is but one form of business. “Business” is commerce, the very foundation of economic success everywhere in the world. And yet you speak of this vehicle your children MUST harness or serve with contempt and disrespect. Such ignorance and prejudice is offensive in those who seek to pursuade.

“Wall Street” is a market in which the great majority of participants, directly or indirectly are individuals (or their pension funds or 401Ks, etc. try to preserve or enlarge financial assets they would put forward for a better future rather than spend today or sit back and see our government inflate and thus reduce it’s purchasing power. Yet you paint this venerable institution with a wide black brush just because it exists. That’s just silly.

Those who manipulate that market inappropriately steal from all of us. They are few, but powerful; and I agree that at present they seem utterly untouchable and unaccountable. These people should be dragged from their pedestals ignobly and conspicuously in public, brought before appropriate courts, prosecuted for their crimes and thrown in jail to serve long sentences.

But to do that, you have to perceive the “real world”, identify the actual villains, and go after THEM. You can’t just complain in general, take the few “little people” they will offer up to you, and go about business as usual (which is the usual result).

I agree that the incestuous relationship of our collective Congress and individual politicians and the major parties with lobbyists are an increasing obscenity, again accountable today to no one. But we do not change that by climbing the hill and shooting a shotgun in every direction of the compass. One must choose specific targets believed responsible, and bring them down one by one such that others become aware they are similarly vulnerable if they do not change their ways.

If you would advocate for your children successfully you must do so honestly. In a world of SEVEN BILLION they are NOT necessary. All who are growing up today will live a life totally different from that of you and I whether they “lower their sights” or not. Denial is not a strategy.

America remains a “work in progress more than two centuries after it’s founding. More and more complain because it’s progress towards sustainable perfection is not faster and not complete. They don’t want to WORK to bring perfection about, they just WANT IT, NOW!

What “undermines” the American lifestyle, American strength, individualism, creativity, intelligence, education and character is today’s desire for “instant gratification”. Our schools DO NOT reward “individualism, creativity, intelligence…and character”.

They instead force feed young minds “uninspired factual formula” to be regurgitated into multiple choice blanks on a test page. They actively discourage individuality or individual creativity or thinking, or innovative application of assimilated facts. Most emerge from the process believing that profit is a bad thing. Garbage in, garbage out.

I have worked my way up in design, then construction supervision, then construction paralegal, and finally founded, ran and sold a successful business. If I cannot enjoy my “luxuries” at 72, then when?

If you (and those like you) would appropriate my accumulated assets and expend it on future generations, don’t expect my meek and willing compliance. Teach you children to fish for themselves, not just take mine.

Posted by OneOfTheSheep | Report as abusive

I’m not retreating, OOTS. I read what you respond to me with – I just choose to ignore you more often than you like.

Posted by JL4 | Report as abusive

@ AlkalineState

I agree with the part about being able to graduate from high school/college in six years, though not for the same reasons. If people simply weren’t given all summer off, but expected to study through most of that time, then it could be achieved. It would be a big savings for everyone. High schoolers would be less bored through the summer and wouldn’t forget what they’d studied already, and college students could get into the work force sooner or whatever they’re going to do after their bachelors.

Posted by Calfri | Report as abusive

Very well answered @OOTS. I also berate corporate America (The USCA) but I do understand that it is what we the people made it. They are doing exactly what they are supposed to do. We can’t punish ALL of it, just those that did actually commit crimes. And that ain’t many. Just trying to find and prosecute them is like hunting needles in a hay stack. Instead we need to change the system. I think I’ve stated how that needs to occur many times. Term limits etc..
@JL$, I am one of those “kids” of yours and OOTS. And I too agree with him that we need to change the American dream. We can’t have what you had. It’s just not possible anymore. the world changed while you were diligently working towards your dream. I want my generation not to set its sights lower, but to set them higher in different ways. I don’t want to worry about retirement. That word means little to me, it’s something from a by-gone era.

Posted by tmc | Report as abusive

@tmc,

You got it! Thanks for the kind words. And I give due credit to FlashRooster for his patience and persistence in bringing me to perceive that “the system” as it has become today is having adverse effects on our society that MUST be better understood and mitigated. i.e. it “must be changed”.

Yes, in recent years it is increasingly apparent that most American’s “cheese has been moved”. And yes, different goals need not be lower. But you, too, will grow old and step or be thrown aside so others can “carry the torch”.

It would be tragic indeed if, at such time, there is no “financial floor” to support you with some dignity until your demise. If “golden years” are no longer possible, America should promise and deliver more than “hunger and poverty years”.

If this country rolls out the welcome wagon to twenty million illegal alien fence jumping squatters and their every living relative from third world countries south of the Rio Grande, all bets are off for the future. America owes more to IT’S OWN than what this will bring.

Posted by OneOfTheSheep | Report as abusive

There are many interesting words and personal anecdotes, but not a lot of solutions above.

First, let us try a little divide and conquer on the problem. There are loans being made for students at often worthless for-profit schools, loans being made to students pursuing degrees (e.g., STEM majors) that contribute to the national good, and loans being made for degrees that the student hopes will be to their personal benefit but not society so much (advertising, BBA, etc).

I will propose a nice solution for the for-profit category. The for-profit school must guarantee payment of all student loans made for study at their school. If the student is involuntarily unemployed, the school must make the payments. If enacted, this would shut down the current racketeers. If debated at all, you will quickly find out which politicians are in the pockets of the for-profit school racket.

Posted by QuietThinker | Report as abusive

The problem is quite simple, remove undue hardship and the Brunner test and allow dischargeability in student loans. As long as student loans continue to have no statue of limitations, predatory lending, lack of fair debt collection practices, and no bankruptcy protections the problem will get worse.

Posted by McAwesome | Report as abusive

The “Free Lunch” crowd is alive and well among the Reuters readers.

The Capitalist system has made the United States the envy of the world. Now, the younger, “skulls full of mush” think socialism is the answer. Please identify where in teh world, anywhere in the world any economy has come close to the success of the United States?

Central planning societies ALWAYS FAIL!

Gimmie, gimmie, gimmie – the cry of those that haven’t earned much of anything, but want everything, NOW, just like they behaved at home, with their parents.

SPOILED BRATS!

Posted by DonRS | Report as abusive