Do we really need to be worried about yet another bubble-crisis-economic disaster. I think so.  The American Dream – graduating college- getting a good job – buying a house – having a family – is all but gone.    According to varying reports between 45-54% of college graduates are either not working, or working in a low-end job that does not require (or reward) a Bachelors Degree.  This is up in the last 12 years from 41 percent.  Different however, is that now fully half of them are unemployed – no income at all.

There is a ripple effect here as well – Its hard to pay back your student loans (averaging now $24,301) working for tips at the coffee shop, Starbucks and Wild Wings.  And for every Bachelors degree working in those jobs, they are displacing a less educated worker in many cases – evidenced by the high number of High School Graduates completely out of work.

Student Loans now total more in this country ($867 billion) then Credit Card Debt ($704 billion).  10% of graduates have payments that exceed 25% of their income, and the average payment is $250/month.   It is small wonder that the delinquency rate for student loans is around 12% in the 40-49 year old age group.  That rate is only 6.2% for 20-somethings, mostly because they use their 38 month deferral when not working.

Yet, despite these facts, the continued bad economy, unemployment projected to be in the 7 % range for the next 3 years – education costs are up 20% in the last five years, and projected to go up another 33% by 2020!

All things considered, it is small wonder that such a large number are now questioning the value of a college education – why run up a huge amount of debt that I cannot pay back, because I can’t get a descent job, ruining my credit rating.  Student loans are one of those things that don’t dissappear with bankruptcy.

And, obviously, that does not bode well for the hosing market if we don’t find a solution as a country.


Sources-  The Week 12/14/12; The Atlantic, 4/23/12, “53% of recent college grads are jobless or unemployed“; Huffington Post 12/18/12 “student Delinquency Rate Highest among forty-somethings