Friday, November 18, 2016

Janet Yellen: Student Debt Affecting Millennial's

Janet Yellen was asked about the growing amount of student debt yesterday on Capitol Hill. According to her "We have been very attentive to trends in student debt, and as you say it really has escalated to an extraordinary degree" I'd say that's an understatement.

She stated this crisis is having a BIG impact on
housing formation with younger people. By that she means Millennials between the ages of 18-35 are not getting married and having a family. This has a big impact on the housing market as there is less demand. Also not mentioned is it has a big affect on the amount of a persons disposable income, or income they can spend on other items such as food, transport, and clothing.

Fortunately for everyone MAD Consulting offers Debt Management. We help you tackle your debt and aggressively eliminate it. It's included as part of my industry leading unlimited and starter package. Please take advantage of this affordable service. Don't let your education loans get in the way of living the life you want.

If you recall I highlighted our STUDENT DEBT BOMB in August. Much of the problem with today's student loan crisis was started with the Clinton Presidency(highlighted in my original article), and was furthered by Barack Obama as they managed to increase government involvement(not in a good way). Remember the Clinton's made it nearly impossible to get rid of your student loans in bankruptcy, and made it possible for your parents to be on the hook if you passed away. One bright spot from Barack Obama was that he made it possible for your loans to be forgiven if you worked for an approved non-profit, or government. While I'd say it's unfair to have included nearly all government workers in the forgiveness program, it nonetheless will help out some good-hearted civil service personnel working mediocre paying social service jobs for state and local entities.

President-Elect Donald Trump has given some details on his plans which you can read here. Some highlights include capping everyone's debt payments at 12.5%* of income, and making it possible for the debt to be forgiven in 15 years instead of 20.

Overall he hasn't released a ton of info on this subject. His website is light on details too other than some overall statements his reforms will help ensure college remains affordable. Hopefully whatever is decided will be a step in the right direction since he understands debt more than anyone we've had in office.

 What I found disturbing is the article stated 43% of borrowers are behind, or not paying, on their federal student loans. I couldn't substantiate that statistic, but I found overall nationally it appears 11.3% of borrowers are in default on every type of student debt. The way this info is calculated makes it tough to find apples to apples stats so that's all I have unfortunately.

Either way these are both frighteningly high numbers, and hints maybe the bomb is about to go off sooner than we think. If that's the case it won't matter what Trump does since most of the damage is already done.

*students with loans before July 1 2014 have payments capped at 15%, and those after have loans capped at 10% of income.

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