Soaring student debt

The Walls Street Journal had an unbelievable and scary article on the state of student debt in this country

A record $89.2 billion of student loans was in default at the end of June, New York Federal Reserve data show. Of the $1.48 trillion outstanding, 11%, or $160 billion, was at least 90 days behind on repayments—and the true rate is likely double that, because only half the loans are currently in repayment.

Source: WSJ
Source: WSJ

It never stops amazing me how students in this country can get into so much debt by trying to acquire education and the means to make ends meet. A high school friend of mine has a 6-figure student debt with monthly INTEREST payment of $500. I personally know people from my university in Omaha who accumulated debt and struggle to find jobs. Jobs may wait to meet us, but the bills and interest usually can’t wait to break us.

There is a proposal from some politicians to wipe out student debt. It’s impractical and what problem does it solve? The debt will fast pile up again for the next generations. I don’t think anything will change unless there are solutions to the issues:

  • Ridiculously expensive tuition fees for degrees that fast decrease in value
  • Laughable expensive books that benefit no-one but publishers and professors who work with them
  • Lack of knowledge on personal finance by students

Of course, the reality is highly complicated. Yet, I believe it would be hard to think of a worse scenario than what we currently face. Real solutions should be in place, yet the graph above shows that none has been since 2004. Else, the amount would have gone down instead of going up. If other countries such as those in Nordic countries, France or Germany or many other in Europe can get it done, why can’t the US?

Weekly Readings – 6th July 2019

Rising U.S. Inequality: How We Got Here, Where We’re Going

How Costco gained a cult following — by breaking every rule of retail. Costco is Charlie Munger’s pick as Amazon’s biggest threat. He may have a point here.

Student Loans Are Not A National Crisis. I am a bit reluctant to add this story to the post as I don’t really like the headline. However, his points are valid. So why not? In the summary, I agree with him that wiping out college debt does nothing to address the root issue. It’s about the system that leads to the current debt situation and the lack of personal finance knowledge.

The rise and rise of a Vietnamese corporate empire. FT pulled the curtains on one of the biggest corporations in Vietnam. Both the good and the bad.

Amazon in-sourcing nearly half of its parcel transportation needs. A look at Amazon’s transportation capabilities

Understanding Financial Statements. A very good primer on the fundamentals of financial statements.

Global App Revenue Reached $39 Billion in the First Half of 2019, Up 15% Year-Over-Year. A great study on app revenue and downloads in the first half of 2019 from Sensor Tower.

Global Entertainment & Media Outlook 2019–2023. An interesting and informative report on global entertainment and media by PwC.

Making 5G pay. A look at how 5G can be monetized, how much consumers are willing to pay (an estimate) and how different 5G packages can be introduced for different needs.

All about Direct Listings. A great overview of direct listings by a16z