Millennials are not owned by credit cards

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Data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989, when the Fed began collecting data in a standardized way…

Some older Americans have also been shedding credit card debt since the financial crisis that began in 2008. But for no other age group has the decline in the proportion holding credit card debt been more rapid than it has been for young Americans…the data from the Survey of Consumer Finances shows.

Their reluctance could have lasting repercussions for millennials, as well as for the financial system and the economy. Early use of credit cards has, in the past, helped young Americans develop a comfort level with credit that can last a lifetime and lead to a succession of big purchases financed by debt. Without a substantial credit history, it is much harder to take out a home mortgage, for example…

The resurgence of overall credit card use in the United States over the last year or two has been driven largely by subprime borrowers, according to the Federal Reserve…

But it is clear to economists who study payment patterns that millennials are gravitating toward payment methods that skirt both cash and credit. Why carry cash when you can whip out a debit card for the smallest transaction — a sandwich or a bottle of soda — or use an app like Venmo or an online payment service like PayPal? All of those typically draw funds directly from a bank account…

Recent data has also suggested that millennials are using credit cards less than people of a similar age did in the past — and that they are taking on fewer auto loans and mortgage loans than people of similar age did before the financial crisis.

Many young people carry burdensome loads of student debt, making it hard for them to take on any more debt — and giving them a sour taste in their mouths when it comes to credit of any sort. The average American under 35 now has $17,200 of student debt, 182 percent more than Americans of the same age had in 1995…

Then there are the young professionals who are able to get a card, but have seen the strain that debt put on their families and friends during the financial crisis.

There just may be another quality involved. I have no study at hand to prove it – but, I’m beginning to believe in what I call the George Carlin effect. That is, lots of young people already feel they have enough “stuff” without owning a car or a house.

Guess I’ll have to suggest the question to someone reliable – like the Pew Foundation. Maybe they’re already asking the question?

Elizabeth Warren, Progressive Democrats battle for student loan refinancing

College students joined six Democratic senators on Capitol Hill Wednesday to press for the passage of a measure that would allow for the refinancing of student loans.

In introducing the legislation last week, Sen. Elizabeth Warren, D-Mass., said it had twin goals of driving down the $1.2 trillion in student loan debt, and shrinking the profits the federal government pulls in from the interest payments on those loans.

She was joined by Sens. Tammy Baldwin of Wisconsin, Chuck Schumer of New York, Al Franken of Minnesota, Richard Blumenthal of Connecticut and Jack Reed of Rhode Island, five of the bill’s 27 co-sponsors.

We need to let students refinance their loans like others do with their homes,” Franken said. Added Reed: “We need to give people a fair shot at a better life, a better America.”

If passed, the measure would allow borrowers holding current loan debt to refinance their interest rates down to the same rate available to new borrowers — 3.68 percent, a figure passed by Congress last year — the same way a home or car loan can be refinanced if interest rates drop…

Any idea what silly-ass excuse Republicans will come up with to basic aid for students like this? We all know they would prefer folks be kept as ignorant as possible. That helps keep them in office.

Prison term for woman who hustled fraudulent student loans to pay for plastic surgery

A Pennsylvania woman was sentenced to 15 months in prison after fraudulently soliciting $600,000 in student loans mainly used to pay for cosmetic surgeries.

Meredith Shuster, 36, of Cranberry, Pa., a suburb north of Pittsburgh, used her parents’ identities to solicit the loans. She then used about half the money on a series of cosmetic surgeries to alter her appearance, prosecutors said. The other half went toward myriad personal expenses…

Shuster’s lawyer argued she suffers from a condition called “body dysmorphic disorder” that caused her to feel compelled to constantly change her appearance.

Federal prosecutors said because nearly half the money went toward other expenses, the diagnosis wasn’t relevant and Shuster deserved to serve prison time.

U.S. District Judge Mark Hornak ordered the prison term, $632,613 be paid to the federal government in restitution and a 5-year probationary period upon Shuster’s release.

Gotcha!

The student loan shuffle

Senator Elizabeth Warren, a Democrat of Massachusetts, spoke up for poor and middle-class Americans last week when she excoriated the federal government for making money on the student loan program. She also criticized Republicans for killing bills earlier this month that would have prevented interest rates on subsidized student loans from doubling. Rates on those loans have jumped from 3.4 percent to 6.8 percent, further burdening one-third of all college students who use them to pay for an education.

During the last decade, Congress sensibly replaced a system of variable-rate loans with fixed rates that allowed families to know what their loans would cost. It set the rate on both subsidized and unsubsidized loans at 6.8 percent, but later ordered the rate on subsidized loans — two-thirds of which go to families with incomes under $50,000 — to gradually decline by half. The refusal of Republicans in both houses to renew the lower rate means that students who start college this fall and finish in four years will be saddled, on average, with an extra $4,000 in debt.

This increase in costs comes at a time when college debt has already reached record levels, damaging the economy and hobbling young graduates. It also draws attention to the fact that the federal government is making quite a lot of money from the loan program. An analysis by the Congressional Budget Office estimated that the new, higher rate would earn the government about $184 billion over the next decade, after taking into account program costs, including potential defaults…

The government should not be making money off the backs of struggling student borrowers. In the long term, the loan program needs to be restructured so that the loans are closely linked to the government’s actual cost of borrowing, which could reduce rates for students.

A Senate compromise bill that is supposed to address the harmful rate increase falls well short. The bill, supported by the White House, would temporarily lower interest rates, while raising rates in future years to make up for lost federal revenue…Ms. Warren got it exactly right when she said the bill pits students against one another, requiring future college students to pay for the financial break enjoyed by students who precede them. “I think this whole system stinks,” she said, summing it up.

The Senate bill should pass only if it includes a provision, offered by Ms. Warren and Senator Jack Reed, a Democrat of Rhode Island, that would cap most loans at the rate of 6.8 percent. If Republicans resist that, the Senate should leave the loan rate exactly where it is. Congress should not make matters worse than they already are.

Bad enough the whole of Congress doesn’t revolt over the idea of government making profit from a service that benefits the whole nation. There is nothing this land needs more than education. A quality that has only continued to diminish over the past half-century.

Elizabeth Warren has it right and the scumbag Party of NO is guilty as ever of trying to keep down ordinary American families and their children. Lay some heat on your elected representatives in Congress and make it clear to these layabouts that we need more than lip service to lead the fightback against the Great Recession. Let’s do it with an educated generation.

Plan to change student lending upsets Republicans, banks


Daylife/AP Photo used by permission

The private student lending industry and its allies in Congress are maneuvering to thwart a plan by President Obama to end a subsidized loan program and redirect billions of dollars in bank profits to scholarships for needy students.

Snort! How unAmerican can you get?

The plan is the main money-saving component of Mr. Obama’s education agenda, which includes a sweeping overhaul of financial aid programs. The Congressional Budget Office says replacing subsidized loans made by private banks with direct government lending would save $94 billion over the next decade, money that Mr. Obama would use to expand Pell Grants for the poorest students.

Because it would make spending on Pell Grants mandatory, limiting Congressional control, powerful appropriators are balking at it. Republicans say the plan is proof that Mr. Obama is trying to vastly expand government. Democrats are divided, with lawmakers from districts where lenders are big employers already drawing battle lines.

At the same time, the private loan industry, which would have collapsed without a government rescue last year, has begun lobbying aggressively to save a program that has generated giant profits with very little risk

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