Fed Student-Loan Focus Recognizes Threat to U.S. Economy

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http://www.bloomberg.com/news/2014-01-15/fed-student-loan-focus-recognizes-threat-to-u-s-economy.html

Tiffany Roberson works for the state of Texas as a parole officer, teaches part time and is living with her parents after finishing a master’s degree. She’s held off marrying her boyfriend of four years and starting a family because she owes more than $170,000 in federal and private student loans.

“I’ve never gone into default,” the 30-year-old said. “What really hurts is people say I’m a bum for living at home.”

Federal Reserve economists are trying to determine whether people like Roberson represent a trend that will damage U.S. growth, partly by restricting sales of houses and cars. Student loans are one of the only deteriorating pockets of consumer credit, with balances and delinquency rates rising to record highs even as a strengthening economy allows Americans to reduce total borrowing.

Outstanding education debt exceeded $1 trillion in the third quarter of 2013, and the share of loans delinquent 90 days or more rose to 11.8 percent, according to the Federal Reserve Bank of New York. By contrast, delinquencies for mortgage, credit-card and auto debt all have declined from their peaks.

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1. $170K for that type of Masters degree is insane

In Iowa without working any when going to school, the fully loaded cost would be about $120K (before any scholarships, grants etc). That is not working a day in the 5-6 years you are in school. At least in Iowa anyone can get as many hours as they want to work. Where her majors more demanding than engineering majors? My daughter currently works 10 hrs/wk while taking what is effectively a full engineering load as a high school senior.

That being said we need some rationalization as a country about higher education - it is too expensive and a bunch of money is wasted (both for useless for profits ineffective public institutions).