2 Nov 2014
Probably not, but some of the articles I’ve read recently have certainly been quite frightening, so grab a torch and hide yourself under the duvet before reading what the #SmartMoney has been talking about this week.
To start us off, Pippa Stephens at the BBC told us the horror story of a $1.2 trillion debt market ($18 billion of which is owed by the over-65s) which grows daily and which preys on the young.
If you guessed that we’re talking about the US student loan problem (a situation which will soon be mirrored by the rapidly increasing student loan debts in the UK) then ring-a-ding-ding, come on down, we have a winner!
There are an estimated 40 million people with student loan debt in the US and in some cases the sheer size of the debts incurred during their college years makes the loans impossible to repay: one 49-year-old single mom from Illinois with a $177,000 student debt is quoted as saying,
“There is no relief, other than death.”
Wow! It doesn’t get much more desperate than that.
Fortunately, for a lucky few, a group called Rolling Jubilee have begun a campaign to buy student loan debts and to pay them off. Many of the loans are in default so they can be bought for pennies on the dollar, but as Laura Hanna, one of the group’s organizers points out, you cannot re-negotiate your own loans in the same way you would be able to if you had unmanageable mortgage or credit card debt.
The group also notes that selling education as a commodity reinforces inequality and that single mum’s on low incomes in particular end up worse off by going to university and have no better chance of getting work than if they simply finished high school.
It is still widely assumed that college / university is the next logical step after high school. Maybe we need to start encouraging our young people to stop and think before taking that obvious next step: before signing them up to a lifetime of debt, perhaps we owe it to them to explain that there are alternatives and that college is not for everyone.
Another scary story comes from Holly at ClubThifty who talks about the high cost of health insurance and the anxieties of trying to afford ObamaCare (ironically known as the Affordable Care Act) and how, rather than the costs going down as they were supposed to, they have actually increased.
And they’re set to increase again next year too.
Are you seeing a pattern?
Holly and her family are arguably in a very comfortable position (a family of four earning over $94k) but as a result her $400-per-month premiums are about to be replaced by a $900-per-month plan which also comes with a hefty $12k deductible, meaning that healthcare costs for the family could be $23k per year (not including dental). And when you also have student loans to pay and you’re trying to save for your kids’ college fund, eventually something has to give.
What I don’t understand is why healthcare costs so much more in the US than anywhere else in the world. You can get first rate healthcare worldwide these days and nowhere will it cost you as much as in the States. To tackle the affordability problem, first you need to find out why healthcare is so prohibitively expensive, because you would be paying less for your premiums if healthcare didn’t cost so much: follow the money.
Finally, I came across an article by Yojana Sharma, published earlier in the summer on the BBC website, which discusses the millions of university graduates in China & India who cannot find jobs: with record numbers of students graduating university each year (over 7 million each year in China alone), unemployment is rife, and whilst we’re not seeing unrest in the aspirational youth, it wouldn’t take much of an economic downturn in either country to trigger an angry backlash from the over-educated unemployed.
Apparently experts are now talking about it in terms of a “gargantuan national crisis“, a ticking time-bomb of unemployed and under-employed youth unable to contribute to the economy…
Now THAT’s scary!