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Business School driving more debt and bigger loans

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Business School driving more debt and bigger loans  [#permalink]

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New post 13 Jul 2016, 12:11
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Fortune has a reprint of the John Byrne's article/post, talking about how there is more average debt being borrowed by MBA students.

I thought it would have been an interesting article to learn some details but it does not actually help much (anyone else has this data) - yes, the schools are reporting that the debt level of students has increased on average but it does not report a distribution of debt - is it due to tuition increasing and everyone who used to borrow 90K has to borrow 100K or is it because a few people have increased borrowing and others are not using student loans?

I think the outcome is fairly natural and logical and frankly is boring:
  • Applicants who are graduating/enrolled at the moment are the children of the last recession who have gotten their first jobs in the worst time and likely have not saved a whole lot due to lack of wage growth
  • Recently companies such as Prodigy Finance have started offering loans to international students without a co-signer for up to 80% of the tuition and sometimes living expenses cost. That has not been possible for more than a few select schools in the past and likely bringing in students who could have only attended with a full scholarship, thus skewing the stats
  • The tuition costs have gone up
  • Interest rates are so low that there is really very little downside to borrowing, which I think many finance-minded people do to balance their budget instead of using 100% savings

Anyone else thinks this is news or am I crazy?

http://fortune.com/2016/07/12/mba-grads ... dent-debt/
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New post 23 Jul 2016, 20:58
doesn't surprise me a lot.
Looking at numbers: total cost: 200k, international students: 33-40%. % of loan international students typically take: 60-80%, % of loans others take: X. For an average loan of 107k, X comes out to be ~45%. That's a mildly high number.. Maybe has been going higher because of the reasons stated, but still doesn't look TOO high to me.
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New post 24 May 2017, 09:10
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New post 27 May 2017, 22:54
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It is going to have to be dealt with in the next 5 years or sooner. I just saw a chart of US Consumer debt over the last 9 years (since the start of the crash).

At first I thought it was fake numbers since Student and other types of debt actually have different qualifications and repayment obligations (in the US anyone who is a US citizen and I am guessing permanent resident can borrow money from the government for education; no matter how bad your credit history is, you are unlikely to be denied). Other loans are much more sensitive.

Anyway, these numbers are in absolutes and they are pretty messed up. On one hand, i understand that a lot of people may have gone back to school between 2008 and 2012 to get at least some kind of employment or do something about their career, but the trend continued in years to come. There is $700 Billion worth of new student load debt out there.... and it is getting harder and harder to pay it back.


This will help for perspective: The New York Fed report said total household debt rose by $149 billion in the first three months of 2017 compared with the prior quarter to a total of $12.725 trillion An increase of $700B seems like a lot but when the total is 12 or 13 Trillion, what's another few billion, right?


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Re: Business School driving more debt and bigger loans  [#permalink]

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New post 28 May 2017, 04:08
Is this gonna be a controversial topic for arguments?
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Re: Business School driving more debt and bigger loans   [#permalink] 28 May 2017, 04:08
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