Home
In this issue
April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

A rebuttal to student loan horror stories

By Morgan Housel






JewishWorldReview.com | Education seems to be our next buy-at-any-price obsession. Student loan debt now totals more than $1 trillion. For many students, it will take backbreaking effort to pay back this debt. And they have little choice: Most student debt can't be eliminated in bankruptcy.

But like any emotion-laced issue, the student-debt story can be prone to hyperbole. My biggest peeve is that most stories covering the issue profile a student with $100,000, or even $200,000, of debt. Read enough of these stories, and you'll think graduating with six figures of debt is the norm.



RECEIVE LIBERTY LOVING COLUMNISTS IN YOUR INBOX … FOR FREE!

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". HUNDREDS of columnists and cartoonists regularly appear. Sign up for the daily update. It's free. Just click here.


But it's not -- by far. While journalists can find students drowning in six-figure debt, they are a small minority. As the Federal Reserve writes, as of 15 months ago (emphasis mine): "The average outstanding student loan balance per borrower is $23,300 ... The median balance of $12,800 is roughly half the average level, which indicates that a small fraction of people have balances significantly higher than the median. About one-quarter of borrowers owe more than $28,000; about 10 percent of borrowers owe more than $54,000. The proportion of borrowers who owe more than $100,000 is 3.1 percent, and 0.45 percent of borrowers, or 167,000 people, owe more than $200,000."

Hmm. Almost 75 percent of those with student loans owe less than $28,000. Ninety-seven percent owe less than $100,000. The median student loan balance -- the middle level where half owe more and half owe less -- is $12,800.

I don't wish to trivialize $12,800 of debt, or even the mean average of $23,300. If you're unemployed or in low-income work, debts that size can be a big burden.

But let's put these figures into context. The average auto loan amount in 2012 was $19,492, according to credit rating agency Equifax. For a new car, the average loan amount is $25,714.

Why, then, is there so much uproar about the student debt crisis when the average new-car loan is greater than the average student loan? No one ever talks about the "Nissan Altima loan crisis." Plus, the benefits of an education will last a lifetime, and on average demonstrably increase your employment and earnings potential. A car loses value as soon as you drive off the lot.

A few people I've posed the question to have offered reasoned rebuttals. They note that you have to have a car to get to work. True. But a degree dramatically increases your odds of having a job to drive to. The unemployment rate for those with a bachelor's degree is almost two-thirds lower than it is for those with only a high school diploma.

They also note that an auto loan is collateralized by the vehicle. If you can't afford the loan, you can sell the car to help repay the balance. True again. But a car requires expensive upkeep and repairs as it ages. The benefits of a degree compound over time as career opportunities open new doors to promotion and higher wages. College graduates will, on average, earn far more in their 40s and 50s than they did in their 30s, while workers without degrees see much more stagnant (and lower) wages throughout their lifetimes. The "collateral" of a student loan can't be sold, but it tends to appreciate over time.

I think what the student loan crisis comes down to are issues between anecdotes and averages. As long as there are anecdotes of people graduating with six-figure debts and flipping burgers, journalists will write about them with so much passion that you'd think they're the new normal. But they're not. The average college grad is more employable and earns far more than those without degrees, and the average student loan is less than the average new-car loan -- a debt few seem bothered by.

But I won't pretend to understand all sides of this debate. I can just look at the numbers and tell you what I see.

Sign up for the daily JWR update. It's free. Just click here.

Interested in a private Judaic studies instructor — for free? Let us know by clicking here.

Comment by clicking here.

Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



© 2013 The Motley Fool. Distributed by Universal Uclick for UFS

Quantcast