Debt clouds students' future
By Morris R. Beschloss
The shocking news that outstanding college student educational loan balances have exceeded $1 trillion becomes even more unsettling when putting this enormous deficit into context.
For instance, not unlike other out-of-control federal expenditures for the past five years, this amount has grown by 70 percent over the past five years.
Even with today's national Treasury debt approaching $17 trillion, as late as the Carter era, 1977-81, the nation's overall deficit amounted to no more than what debt-ridden college students owe on government loans.
Worse, the pace is accelerating as the federal government is encouraging recently graduated college students to opt for advanced degrees, due to the record high unemployment. That has bedeviled this group holding degrees in liberal arts, or specialized areas of expertise for which no job openings are now available.
In a way, this disproportionately high incidence of unemployment is the result of vital standards that have degraded vocational and/or technological education, integrated with a bias toward affirmative action as if this would remove the barriers of opportunities to those of all races, creeds or ethnicity.
This mindset seemed to indicate that the "crafts" such as mechanical, plumbing-heating-air conditioning specialists, or even engineering, were not as socio-economically desirable as banking, investment advising, or associating with elite charitable institutions.
To ease the burden of this metastasizing burden, both relating to debt causes, as well as the federal loans at stake, the current administration has lowered the interest on this gargantuan debt to an irreducible minimum.
This is following the government's populist theme of stemming the flood of residential building foreclosures, and extending unemployment compensation indefinitely, along with a string of expanding entitlements for the qualifying recipients.
There are murmurs among "progressive" extremists to either forgive these debts eventually in total or in piecemeal stages.
This would follow the direction of policymakers that have in the past decade failed to come to grips with government-backed super loan agencies Fannie Mae and Freddie Mac, which continue to accelerate their loan losses; and the Postal Service, which is hemorrhaging in ever greater amounts.
It is highly doubtful that there will be any pressure for this "millennial" group to cough up, even ever so slightly, especially with the mid-term elections beckoning in November 2014.
Morris R. Beschloss is a global economic analyst, award-winning long-term top business executive, and avid blogger for all aspects of worldwide financial, geo-political, and economic happenings.