Thursday 8 December 2011 | Blog Feed | All feeds
Sign in or register
By Richard Blackden Economics Last updated: December 7th, 2011
Comment on this Comment on this article
The Occupy Wall Street movement is a big tent of concerns and deliberately so. Keeping the flaps open draws in as many people in as possible, even if it does prevent the movement from issuing a list of demands.
But a visit to its Manhattan base in Zuccotti Park quickly reveals that a binding hardship for many of the younger protesters is their student debt. It's an impression strengthened by " We are the 99 Percent", a slogan invented by the movement, and the address of a website that's an online home for hundreds of people's stories. Debt taken on to pay for a university education is a common theme and complaint.
We know how disastrously Americans' love affair with mortgage debt ended. Three years and an anaemic recovery later, questions are being raised about an accumulation of student debt that some forecast will exceed $1trillion (£637bn) for the first time next year. The New York Fed put the total at $845bn at the end of the second quarter.
It's not just those in the Occupy Wall Street movement asking the questions. Student loan delinquency, or late payments, has been climbing this year and was at 6.10pc in October, according to data from Equifax and Moody's Analytics. Although default rates have eased over the past couple of months, economists at Moody's expect them to rise again next year as jobs remain hard to come by.
Though few are suggesting that student debt is another time bomb ticking under America, there's concern that a rise in defaults will prove another drag for the recovery. A survey by Rutgers University earlier this year of people who graduated between 2006 and 2010 voiced the anxiety that a university degree may no longer pave the way to relative prosperity in the way that it has done for the past half- century. Although a very small proportion of those questioned regretted getting a degree, under half expect to be better off than their parents.
While the finding is hardly shocking given the current level of unemployment, it underlines the degree to which this downturn is making people question conventional wisdom. After all, all the data suggests you're better off with a university degree. According to the Bureau of Labor, the unemployment rate for those with a bachelor's degree was 5.4pc last year, compared with 10.3pc for those who left education after graduating from high school.
Carl Van Horn, a professor at Rutgers University, believes that we are seeing a "temporary lull" in the ability of degrees to create opportunities for people in America. In other words, it's the weak economy rather than the quality of degrees that should shoulder most of the blame.
What shouldn't be ignored, though, is the concern among employers over the lack of candidates with the science and engineering backgrounds they need. The downturn is likely to force students to scrutinise more carefully whether what they choose to pay tens of thousands of dollars to study finds some demand in the wider economy when they leave university. With few reasons to believe that unemployment will fall much in the next couple of years, there will be more disappointed graduates. And, quite possibly, higher defaults on the almost $1trillion of loans.
The bigger danger remains that more people decide against pursuing any type of education after high school. An announcement this week from pharmaceutical company Merck that it will be opening a research centre in China underlined that large US companies can locate skilled jobs almost anywhere. It's also a reminder that life for those without any qualifications after high school is only likely to get harder.
Recent Posts
Search the blogs Search for: --> Finance bloggers Ambrose Evans-PritchardAndrew LilicoIan CowieJeremy WarnerPhilip AldrickRichard BlackdenRowena Mason Our Finance Blogs Economics Business Your Business Energy Retail and consumer Your Money Broadcasting and media Finance Tags Bank of England banks budget Chancellor china coalition government david cameron debt EU euro eurozone financial crisis financial services authority George Osborne Germany Gordon Brown government greece Hargreaves Lansdown HMRC HM Revenue & Customs house prices inflation Interest rates investors Mervyn King mortgage mortgages pension pensioners pensions property quantitative easing recession retail prices index retirement RPI savers savings stock market tax treasury Financial services Telegraph Investment ServiceFund SupermarketInternational money transferWealth management ON THE FINANCE BLOG Anaemic recovery risks America's appetite for degrees If one EU bail-out fund flops, create two Cameron's threat to veto treaty change is just hot air Home buyers who need mortgage help may be forced repay state Foreign sportsmen big winners from Finance Bill as more British families must pay IHT Archives Select Month December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 February 2007 January 2007 August 2006 Finance Topics Energy Retail Financial Crisis Recession Interest rates Budget Gordon Brown George Osborne
Back to top
News Politics World News Obituaries Travel Health Jobs Sport Football Cricket Fantasy Football Culture Motoring Dating Finance Personal Finance Economics Markets Fashion Property Crossword Comment Blogs My Telegraph Letters Technology Gardening Telegraph Journalists Contact Us Privacy Policy Advertising A to Z Tickets Announcements Reader Prints Follow Us Apps Epaper Expat Promotions Subscriber Syndication© Copyright of Telegraph Media Group Limited 2011
Terms and Conditions
Today's News
Archive
Style Book
Weather Forecast
//'); })(); //]]> document.write(tmgAdsBuildAdTag("ftr", "1x1", "adj", "", 2));© Copyright of Telegraph Media Group Limited 2011
Terms and Conditions
Today's News
Archive
Style Book
Weather Forecast
Read Full Article »