The student loan bubble is starting to burst

  1. 4 From: CNBC
    9/5/13


    The student loan bubble is starting to burst



    The largest bank in the United States will stop making student loans in a few weeks.

    JPMorgan Chase has sent a memorandum to colleges notifying them that the bank will stop making new student loans in October, according to Reuters.

    The official reason is quite bland.

    "We just don't see this as a market that we can significantly grow," Thasunda Duckett tells Reuters. Duckett is the chief executive for auto and student loans at Chase, which means she's basically delivering the news that a large part of her business is getting closed down. ...

    ...JPMorgan's actually the second big private lender to step away from the business. Last year US Bancorp exited the business. That leaves Wells Fargo & Co., Discover Financial Services Inc., PNC Financial Services Group, SunTrust Banks Inc., and various credit unions as the largest private student lenders. Oh, and of course, Sallie Mae, which was privatized in 2004.
    Last edit by NRSKarenRN on Sep 7, '13
  2. Visit  NRSKarenRN profile page

    About NRSKarenRN, BSN, RN

    NRSKarenRN has '35+' year(s) of experience and specializes in 'Home Care, VentsTelemetry, Home infusion'. From 'RN Spirit from Philly Burb'; Joined Oct '00; Posts: 26,686; Likes: 12,609.

    46 Comments so far...

  3. Visit  besaangel profile page
    0
    OMG I just posted a thread relating to this... All my RN friends are pushing me to do the BSN vs the RN (ADN) despite knowing Id be in 30k debt... I don't get it... Shouldn't we be encouraging each other to make smarter decisions?!
  4. Visit  umbdude profile page
    4
    In order for the student loan bubble to burst, there must be an enormous number of default on student loans. The problem with student loans is that they cannot be erased through bankruptcy. Therefore, people who cannot pay these loan continue to have interests pile on the loan and have an enormous loan balance by the time they could pay. Essentially they become indenture servants 'til the loan is paid off. That is why I think the bubble will continue building without a burst until something changes.
  5. Visit  besaangel profile page
    0
    It pains me to even think of it... I dont want any part of loans until my Masters; if possible
  6. Visit  umbdude profile page
    7
    Quote from besaangel
    It pains me to even think of it... I dont want any part of loans until my Masters; if possible
    Actually $30k loan for a BSN is not that excessive. You have to do whatever you feel financially comfortable and take a hard look at pros and cons of each option and think long term. People always tell others what to do but very rarely do they understand the background of the people they give advice to. So in the end only you can make the best decision.
    llg, imintrouble, SE_BSN_RN, and 4 others like this.
  7. Visit  Mandy0728 profile page
    0
    Nowadays, you have to look at what you're going to school for & decide if the job availability will be there. One of my friends owes $60 g in debt from her bachelors & is doing something completely different because she couldn't find a job. To me, that's a huge waste! Nursing is a promising career field. I've heard a lot of people say it's not the case in their area, but it is in mine!
  8. Visit  Esme12 profile page
    3
    The next financial crash....sigh
  9. Visit  MrsStudentNurse profile page
    0
    This all just baffles me in the sense that there are jobs maybe menial but a ton of jobs nonetheless and there are still people who feel they can just default? My generation namely. If only these people knew the damage at such a young age they are doing to their credit and essentially lives. As for the rest of us who pay our bills and work our butts off to do so, no need to worry about a thing.
  10. Visit  ArrowRN profile page
    2
    well people were losing their jobs, so what did they do? go back to school, hoping its was the easy way out. notice how many "fly by night" private nursing schools popped up between 2008 and 2013 promising that nursing is a great stable field...now even that bubble popped.
    brandy1017 and applewhitern like this.
  11. Visit  Esme12 profile page
    18
    Quote from Carley77
    This all just baffles me in the sense that there are jobs maybe menial but a ton of jobs nonetheless and there are still people who feel they can just default? My generation namely. If only these people knew the damage at such a young age they are doing to their credit and essentially lives. As for the rest of us who pay our bills and work our butts off to do so, no need to worry about a thing.
    It sounds so simple....just get a job..any job....while default maybe some people's way out....the others desperately trying to save their homes, buy food and attempt to avoid homelessness it is just not that simple.

    For many who default on their nursing loans they cannot use their nursing license....without their nursing license they can't work. With their nursing license they can't find work. There is an entire section of the population that was sold a bill of goods about the road to the hospital being paved with gold and $100,000.00 worth of debt for a degree isn't that bad when the potential for making money is so great....I mean really why not??? "There is a nursing Shortage!!!"

    GIVE ME A BREAK... nursing shortage my behind.

    These for profit schools that promised the moon. The accelerated BSN programs for the laid off college grad....in some cases can cost as much as $140,000.00 (this school specifically in CA). There are jobs a plenty!!! No there is not....the unemployment rate of new grads is 47% in CA. These laid off workers who went back to school and borrowed school loans to help with living expenses now find themselves jobless, penniless, with empty bank accounts from using their rainy day funds struggling to try to keep their homes.

    These are not irresponsible kids...these are adults that were trying to reinvent themselves find themselves in dire circumstances and Mickey D's really doesn't cut it ....it doesn't even pay for gas....at least jobless they can get food stamps.

    By the time you are defaulting...your credit is LONG GONE!!!!!! You are so far in the hole that even if you get an interview .....they run a credit check (in the states that allow this) and see that you, on paper, are the LAST PERSON they are going to hire as a good risk for their company.

    Case in point. I know of a successful RN. Long distinguished career. Invested well. Had a substantial savings account and a 401K........ Who became suddenly unemployable due to a diagnosis of a chronic debilitating disease....... LONG before she became physically disabled...she was dumped by every facility that caught wind of her disability....for various reasons of course none had anything to do with her disease......so she stayed in the shadows...until discovered again and moved on until she could move on no more.

    Her 401K was hit hard in 2008 when the market crashed lost a substantial amount of her retirement/college funds. She was once again laid off/downsized yet again but no severance was offered. She filled out application after application after application...she was no longer offered positions....her reputation of being ill preceded her..... she was of the "age" that hospitals no longer hire in a bad market.

    AGEISM IS ALIVE AND WELL IN NURSING!!!

    She ran out of unemployment.....but knew that she really couldn't take it anymore for it was clear she was becoming disable enough to need accommodations. Even Phone triage didn't want this sick talented smart RN of over 30 years.....they were "perusing a better candidate".....better candidate??? she was devastated.

    It became clear that she needed to seek disability. With her multiple jobs in the last few years she never got up to and vested benefit at the facility that offered them and was promptly let go from those that offered them if you were employed. She got a lawyer with her extensive MD list blessings and was finally given SSDI 4 years later (even though she had contributed to it for almost 40 years) while her savings/401K/college funds were used to live on as her income (with substantial personalities/taxes) was gone, in what is seemed, over night.

    Thank GOD she had such a substantial rainy day fund......but it is now GONE

    She tried to get help...she tried to get her loans modified. Important bills like her house payment had to be paid....albeit late. Her husband drives 100 miles round trip to work.....she is 5 years short of paying off her home, but because there is no choice.....she is in danger of defaulting on her loan and trying to imagine how to live disabled and homeless with her children.

    Do you think this nurse defaulted by choice? Do you think she is lazy and just not working hard enough while she lets others hard working Americans pay her way? I know her and nothing can be further from the truth.

    I am sure there are many of these college students who had NO INTENTION on defaulting on their loans who have graduated from college......thousands of dollars of debt....with at least HALF of them being unable to find work in an economy that in the midst of a depression and a government TRILLIONS OF DOLLARS IN DEBT.

    My friend's story is not unique...there are many in her shoes.

    Do I think the defaulted as the easy way out? NO.....but it will cause another financial crisis like that the housing market and those shady home loans caused. JPMorgan Chase ....who by the way got their ass bailed out by the American people for shady stock market dealings and speculative housing loans....is pulling out of the student loan business
    The largest bank in the United States will stop making student loans in a few weeks.
    JPMorgan Chase has sent a memorandum to colleges notifying them that the bank will stop making new student loans in October, according to Reuters.

    The official reason is quite bland.

    "We just don't see this as a market that we can significantly grow," Thasunda Duckett tells Reuters. Duckett is the chief executive for auto and student loans at Chase, which means she's basically delivering the news that a large part of her business is getting closed down.

    The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.
    .......the crack in the dam has widened......get your money into a IRA/T-Bills just out of the market. We are heading down the path of 2007 just before the market crashed in 2008.


    We are pretty much at the bottom it scares me where we will go from here.
    Carlalily, Irish_Mist, davettashy, and 15 others like this.
  12. Visit  twigszoo profile page
    8
    Quote from Carley77
    This all just baffles me in the sense that there are jobs maybe menial but a ton of jobs nonetheless and there are still people who feel they can just default? My generation namely. If only these people knew the damage at such a young age they are doing to their credit and essentially lives. As for the rest of us who pay our bills and work our butts off to do so, no need to worry about a thing.
    Thats a pretty narrow view to have. I'm sure nobody wants to default on their student loans. Say somebody took your advice to get a menial job (if they didnt have one already) how much do you think they make? Working part time as a cashier (and almost no place thats a "menial" job will offer full time) I make maybe $400 a month depending on how many hours I was given and if we are in season or not. I make $8.00 an hour. Do you think I can pay for any student loans I have with that money? I have no idea where that money even goes to, it is such a small amount. At the end of the month, with all my bills to pay (gas, food, rent, medication) I have absolutely nothing left over.

    These people that default on their loans arent lazy. They were told from a young age that if you dont go to college then youre a failure at life and you will never get a good job, so hurry up go to college, only self respecting people go to college. So thats what they did. Guess what? Those jobs that they were guaranteed aren't there.

    This is such a big issue, with so many facets and variations, that it is extremely ignorant to suggest that just finding any ol' job can fix this crisis that our nation is going through right now. If that were the case, this wouldnt be happening right now.
    Carlalily, Irish_Mist, davettashy, and 5 others like this.
  13. Visit  Elizabeth Renee profile page
    1
    Quote from besaangel
    OMG I just posted a thread relating to this... All my RN friends are pushing me to do the BSN vs the RN (ADN) despite knowing Id be in 30k debt... I don't get it...Shouldn't we be encouraging each other to make smarter decisions?!
    Ah, so all of us on your previous thread giving you advice as to why it may be the better way to go despite the 30k (which as several said, in the broad spectrum of things, is not much and is do-able) are dumb now? Sounds like we're clearly not giving you advice to make a "smarter decision." Hmmm, that's nice.

    There is a reason why many are giving you that advice. If you're so gung-ho about ADN-BSN and think it's the "smarter decision" then I don't know why you bothered to post your thread, other than to seek validation for what you already believe in the first place.

    I think this response from you is rude. You're the one freaking out over what school to go to, people gave their two cents, and yet you're not even listening and now going around proclaiming, "I don't get it! Shouldn't we be encouraging each other to make smarter decisions?!" Like THAT isn't a slap in the face to all of us trying to help you that think maybe the 30k COULD potentially be worth it.

    I don't understand what's not to get anyway. It has all been spelled out for you in black and white what the pros/cons are of each choice. Be mature and make a decision rather than whining about the advice given to you.

    At the end of the day, it's just advice, not law.
    Last edit by Elizabeth Renee on Sep 7, '13
    Irish_Mist likes this.
  14. Visit  besaangel profile page
    0
    Quote from Elizabeth Renee

    Ah, so all of us on your previous thread giving you advice as to why it may be the better way to go despite the 30k (which as several said, in the broad spectrum of things, is not much and is do-able) are dumb now? Sounds like we're clearly not giving you advice to make a "smarter decision." Hmmm, that's nice.

    There is a reason why many are giving you that advice. If you're so gung-ho about ADN-BSN and think it's the "smarter decision" then I don't know why you bothered to post your thread, other than to seek validation for what you already believe in the first place.

    I think this response from you is rude. You're the one freaking out over what school to go to, people gave their two cents, and yet you're not even listening and now going around proclaiming, "I don't get it! Shouldn't we be encouraging each other to make smarter decisions?!" Like THAT isn't a slap in the face to all of us trying to help you that think maybe the 30k COULD potentially be worth it.

    I don't understand what's not to get anyway. It has all been spelled out for you in black and white what the pros/cons are of each choice. Be mature and make a decision rather than whining about the advice given to you.

    At the end of the day, it's just advice, not law.
    Thanks for misinterpreting my post. Im sorry u took it as me being rude because that was not my intention. The point is with so many people having a hard time finding jobs (despite what field) they are more often than not told to "get a loan" without the advice to seek out ALL their options. All too often this notion gets thrown around before the whole point gets evaluated. Like very few people suggests grants, scholarships or tuition reimbursements, the first answers are usually, get a loan to finance what you want. I think that should be the last resort (depending on the circumstance) I know 30k is more than worth my future career, that is/was only part of the problem I was inquiring about so don't get me wrong.

    P.S. I'm not freaking out about what school to go to. I don't freak out or get anxious and just because I don't 100% agree with your method of thinking does not mean I am not taking your advice or haven't considered your opinion. Once again, I was not being rude.

    Sent from my iPad using allnurses.com

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