Student Loans: The Anti-Dowry
Student loans are getting a nasty reputation. But until I read this in The New York Times I had never heard them referred to as an "anti-dowry." It's a clever description.
The basic argument is that kids today leave college owing so much money that they must put their life on hold until they get their debts under control. This may mean boomeranging home with parents for years, or forestalling any kind of serious relationship with a potential life partner. Says The Times:
"In some circles, student debt is known as the anti-dowry. As the transition from adolescence to adulthood is being delayed, with young people taking longer to marry, buy a home and have children, large student loans can slow the process further."
In other words, where once upon a time young couples were given a push into adulthood through land, money or other assets in a bride's dowry, today this transition is retarded by the presence of so much student debt, or, well, anti-assets.
Student debt now surpasses outstanding credit card debt, and the balance will reach $1 trillion sometime next year. The aggregate student loan balance is growing $2,853.88 per second, according to Finaid.org. Check out the organization's student debt clock here. It's not as dramatic as the national debt clock. But the idea is the same. We're digging a fast hole.
So fast, in fact, that there's been a lot of talk about student loans as the new debt bubble. Certainly, ballooning college loan balances have characteristics similar to, say, the sub-prime mortgage fiasco. Both were built on easy credit terms and made widely available to folks who may not be able to afford them in the long run.
Yet it's hard to see how the student debt bubble will burst with similarly disastrous consequences anytime soon. Most of these loans are not dischargeable in bankruptcy court. So while they may, and often do, go into default -- they do not go away. Lenders have decades to collect. That's unlike mortgages where banks with a pile of bad loans can be forced to eat them in short order, which spreads pain throughout the economy.
With two in college, what I worry about is the impact that boomeranging kids would have on my ability to retire. There's the rub. Parents with young adult children need to be single-mindedly focused on that last push to financial security -- not ponying up to support a 27-year-old grad with an anti-dowry. I'm okay with working until I'm 70. I just don't want to work forever.
Photo courtesy Flickr user alancleaver.
My recent series on student loans:
· Part One: How One College Turned the Student-Debt Tide
· Part Two: How College Debt Limits Career Options
· Part Three: 3 Surprising Ways Debt Diminishes Campus Life
· Part Four: Abusing Student Loans and 11 Other College Money Mistakes
More on MoneyWatch:
· 8 Ways to Wipe Out Your Student Debt
· Student Loans: How They Changed One Life for Decades
· Student Loans: How They Changed Another Life for Decades
· Student Loans? First Pass This Test
· College: The Flawed Case Against Getting a Degree
· The Top Reason Kids Don't Learn Money at School
· Teaching Kids About Money, What We're Up Against