Charles Hugh Smith has another excellent post over at Of Two Minds about the “Pretend Economy”. Specifically, he exposes the student loan debt bubble that will create a whole generation of debt slaves.
Groovygirl strongly urges all young people to run screaming from all debt, especially student loans. Pay cash for everything. It is the only way you will have any freedom in the next 30 years. If you pay cash for everything in the next 10 years, you will be light-years ahead of your fellow Americans.
If you pay cash for everything and save money in inflation-adjusted investments for the next 10 years, you will be able to buy tangible assets and income-producing assets at fire sale prices. People who will be caught in the debt trap will be begging you to buy their assets for pennies on the dollar.
The student loan bubble is far worse than the housing bubble, because there is no tangible asset to cover even a part of the debt and student loan debt is exempted from bankruptcy laws. You can NEVER walk away from student loan debt.
Banks and colleges couldn’t care less if you are trading 15% (or more with penalties) of your income over the next 30 years for a few dollars now. They will get bailed out, you will not.
Please, don’t be a sucker.
Think about it. Can you afford a family and a mortgage on 15% less than what your peers are making, those that actually have jobs? If you become a debt slave, you will have to choose a house or a family or perhaps, neither. You will have to take a job based on pay, not what you like to do.
You think you are stuck now? Wait until the bank starts demanding payments. Try to get a mortgage or a business loan in the future, when you have fallen behind on student loan payments.
It is gg’s opinion that in this economic environment, personal debt will always limit you more than not having a college eduction. Work now and save the money for college.