WHITE HOUSE: Student debt is good for the economy

[MillsT_98]

http://finance.yahoo.com/news/white-hous...41193.html

Quote:WHITE HOUSE: Student debt is good for the economy

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(Occupy Wall Street demonstrators protest against the rising national student debt in Union Square in New York on April 25, 2012.REUTERS/Andrew Burton) 
President Barack Obama's top economists think that you have the explosion in student debt all wrong.
The massive increase in student debt has caused quite a bit of worry from economists concerned that it is driving down spending from these borrowers and stunting economic growth.
The Council of Economic Advisers, which conducts economic research on behalf of the White House, wrote in a massive 77-page research paper released on Tuesday that the opposite, in fact, is true.
"Federal student loan programs help expand access to high-quality education, which has long-lasting benefits to individuals as well as the overall macroeconomy through higher labor productivity and faster GDP growth," said the report from the CEA.
The basic thinking here is that by allowing access to more college education — which has been shown to correlate with higher income and economic stability — the increase in student debt has provided the US economy with better-equipped workers and spenders, driving growth.
Student debt has increased from $200 billion for all Americans in 1996 to $1.3 trillion at the end of 2015. Additionally, said the report, the number of people holding student debt increased from 23 million in 2004 to over 40 million last year. Despite this boom, the CEA said that there are benefits to the increase.
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(Council of Economic Advisors) 

The CEA argues that the premium businesses paying for college graduates compared to noncollege graduates is also at an all-time high, making the access to higher education paramount for Americans who want a secure economic future.
The report said:
"In 2014, the median full-time, full-year worker over age 25 with a bachelor's degree (but no higher degree) earned roughly 70 percent more than a worker with just a high school degree.
"Moreover, people with a college degree are more likely to be employed—facing both lower unemployment rates and higher rates of labor force participation."
Based on wages and the difference between college graduates and noncollege graduates, the CEA calculates that the economic benefit of a degree to an individual was $500,000 for a bachelor's degree and $180,000 for an associate degree. Both of those are well above the average student debt load of $17,900.

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(Council of Economic Advisors) 

The CEA also rebuked the idea that the increase in student debt is the same as the growth of mortgage debt that led to the financial crisis. The basic argument by the CEA is that the degree that comes out of student debt is different than the material good that comes from a mortgage.
"Unlike borrowing to pay for current spending, student loan debt is an investment in human capital that typically pays off through higher lifetime earnings and increased productivity," said the report.
On the other hand, studies have shown a number of negative outcomes from increased debt, including but not limited to:

• Young people are delaying buying a home, a highly stimulative move for the economy, because of student debt.
  
  
• The rising student debt may be slowing small-business formation.
  
  
• The average head of the household under 40 spends more on student debt than groceries.
  

The CEA did acknowledge some issues, saying that public investment to ease the growth of student debt was important. Also, the report acknowledged that students who fail to complete college do not receive the same wage benefits and often struggle to repay loans.
In the end, the CEA said that the benefits to the US economy and the personal economies of every student borrower outweigh the costs of taking on more student debt.
"College remains an excellent investment overall, and the majority of dollars in the student loan market continue to fund investments with large returns to student borrowers and the economy," concluded the CEA.
Check out the full report here »

I don't know how you guys feel about this, but I'm wondering if student loan debt is actually good for the economy, especially for Millennials like Tara and myself. Feel free to post your opinion here.

[pbrower2a]

The college graduate with a huge student loan has no room for taking on other debt, like mortgage debt or debt to establish a business, that really is good for us.

Let's recall that much of the rising cost of student debt is costs loaded onto college students. College education used to be available at modest cost -- so modest that college education was about as expensive as a hobby. It's obvious that states abandoned their once-generous subsidies of college education. States also used their state universities into show projects, including athletic venues.

Quote:BATON ROUGE, La. – Louisiana State University is taking heat for a $84.75 million “lazy river” taking shape on campus as the university faces “financial exigency.”

Funding for the massive lazy river – which will be in the shape of letters L-S-U – is funded by student recreation fee increased approved by students in 2011, and is part of a larger overhaul of school facilities that also include swimming pools, a sun deck, a 40,431 sq. ft. cardio and weight room, eight lane lap pool, 35-foot climbing wall, nine tennis courts and a fitness assessment center.
“The entire project will be used in recruiting and retaining students,” Laurie Braden, LSU’s director of recreation, told NOLA.com. “The impact of physical activity and play on the brain and students ability to learn is well documented by neuro-biologist and researcher John Ratey and Stuart Brown.”
Construction on the new facilities started in November, and is expected to take two years, according to the news site.
The project is under construction as university officials are working to save the university from financial ruin. Louisiana lawmakers are struggling to fund the state’s universities, and state aid could decrease from about $3,500 per undergrad to $660 if lawmakers can’t find more funding.
That reality prompted LSU President F. King Alexander to announce a plan to declare financial exigency if things don’t change.
“Being in a state of financial exigency means a university’s funding situation is so difficult that the viability of the entire institution is threatened,” NOLA reports. “The status makes it easier for public colleges to shut down programs and lay off tenured faculty, but it also tarnishes the school’s reputation, making it harder to recruit faculty and students.”
The whole situation is prompting some at LSU to question how the university can declare bankruptcy while building an unnecessary $84 million lazy river theme pool.
“The fact that we can build this pool on one budget while the university is sinking on another shows that overall there is a problem with the way universities finance their work,” LSU Faculty Senate President and professor Kevin Cope told 103.5 FM.
“To build a swimming pool in the form of the letters L, S, and U is ugly, kitsch, ridiculous, and rather childish.”
Student body president Andrew Mahtook, however, defended the massively expensive pool and said the financial argument doesn’t hold water because student fees and state funding are two different account.
“It doesn’t touch the funding that goes into teachers salaries, funds courses, or anything like that,” Mahtook said. “The funding for ‘lazy river’ was voted on by the student body as an approved self-assessment fee.”
He said Cope is looking at the project all wrong.
“That’s not how the money flow works at LSU. That’s not how student government money flow works,” he said. “So all these kinds of arguments about that and about how we’re spending our money, they’re totally unrelated and really don’t stand up.”
Nearly all taxpayers who commented about the situation on NOLA, however, seem to side with Cope.
“I must be missing something. I have been reading for weeks about LSU having to file for bankruptcy, slash faculty, and classes … yet there is money for a lazy river?” tigerjeffrey questioned. “Sorry, my simple brain just cannot compute. I read the line, ‘state tax money not being used,’ but still, something is amiss.
“There is no way it makes any logical sense that LSU is supposedly in jeopardy, yet there is money for a lazy river. Sounds like rearranging chairs on the deck of the Titanic to me.”
Poster BrainDrainScab was on the same page.
“The theory that a lazy river will entice better quality students to LSU is ludicrous,” BrainDrainScab posted. “Better students are looking for better courses and instructors. If the students voted to pay more fees for a better pool, I think it speaks toward the caliber of student at LSU already. YOLO brah!”

http://eagnews.org/lsu-builds-84-million...ankruptcy/

I don't deny that college students need some vigorous physical activity to deal with the stresses of college life. I certainly did. Few people can live as pure cogitators. But who needs a show project? The people who make money off the show projects.

This is Louisiana, a state that does a horrible job in turning tax revenues into good economic results for most of its people. I can think of far better uses of nearly $85 million than a swimming pool shaped like a school logo and utterly worthless as a pool. Keeping the cost of college down for college students in Louisiana would be a better use.

[Anthony '58]

Student debt is good for the economy?

This is the most ridiculous thing I have heard since liberal Republican senator Edward Brooke of Massachusetts stated, when I was about 10 years old, that deficit spending is good for the economy because it increases the gross national product.

[David Horn]

(07-27-2016, 03:15 PM)Anthony Wrote: Student debt is good for the economy?

This is the most ridiculous thing I have heard since liberal Republican senator Edward Brooke of Massachusetts stated, when I was about 10 years old, that deficit spending is good for the economy because it increases the gross national product.

Brooke was right.  Deficit spending is why we had a glorious economy until the green eyeshade misers took charge.  Student debt, on the other hand, is a drag on the economy.  Unlike Uncle Sam, students don't create money out of thin air, nor do they drive inflation.  No inflation is bad, and deficit spending helps to create inflation.

[Anthony '58]

Brooke's remark was asinine at the time he made it - in the middle of a K-summer.