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Student Debt: Onerous for the young, a drag on society – and a major future problem

Summary: While the nation focuses on the concerns of old white people (which dominated the election), our young — our future — have different problems.  Such as rising inequality of wealth & income.  Starting different children at different rungs of the ladder generates positive feedback (like a pebble thrown down a rocky hillside, with the avalanche growing as it rolls down). Today we have the crack analysts of the Liscio Report look a rapidly worsening aspect of this national illness: rising student debt.  Rising education costs block many from even getting on the opportunity ladder; large student loans will keep many on the lower rungs.

Contents

  1. “Student Debt: Onerous, and a Drag”
  2. About the Liscio Report
  3. More about student loans
  4. For More Information

(1)  “Student Debt: Onerous, and a Drag”

From The Liscio Report, 20 May 2012.
Reposted here with their generous permission.

Introduction

We have heard from a number of sources that researchers at the New York Federal Reserve Bank are worried that without some form of mortgage debt relief we may face a crisis in a couple of years that eclipses the one that took place in 2008. In line with such worries, the New York Fed has started collecting previously unavailable data on student debt, a form of indebtedness that’s a major burden on the young, and also more of a macroeconomic drag than many analysts realize. Here are some details on all that.

Runaway Inflation

The rise in college tuition has been relentless, far outpacing the famous rise in the cost of health care (see graph, below). Since 1980, the overall CPI is up 194%. Its medical care component is up 436%, more than twice as much. But its college tuition component is up 829%, more than four times as much.

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How clearly do we see the rising inequality in America? How do we feel about it? Much depends on these answers.

Summary: Among the serious problems eroding the Republic’s foundations, rising inequality of wealth & income must rank high. It’s the worst kind of problem, generating its own positive feedback (like a pebble thrown down a rocky hillside). Today we have the crack analysts of the Liscio Report look a seldom-discussed aspects of this national illness: how we see it, how we feel about it.

Contents

  1. Today’s reading: “Recent work on income disparity”
  2. About the Liscio Report
  3. About the rugged individualists who built America
  4. For more information about inequality

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(1) “Recent work on income disparity”

From The Liscio Report, 28 March 2012.
Reposted here with their generous permission.

Setting the stage

UC Berkeley Economics Professor Emmanuel Saez recently updated his income-share spreadsheets through 2010, using data from the IRS’s Statistics of Income Division. This series includes capital gains, which results in more dramatic swings than one sees in series that exclude them.

Including capital gains real incomes fell 17% between 2007 and 2009, the largest decline since the Great Depression. Within that the incomes of the top 1% were down 36%, largely the result of the 74% decline in realized capital gains between 2007 and 2009, while those of the lower 99% were down 12%.

Painful for all, indeed, but skewed to the upper income groups, a trend that had more than retraced itself by the end of 2010, the most recent year of IRS data. Between 2009 and 2010 the incomes of the lower 99% rose only 0.2% while the incomes of the top percentile rose 12%, meaning that close to all the over-the-year improvement in income, when adjusted for population, was captured by that top percentile, 93% of it to be exact. (See links below for more data.)

That puts some numbers on why the recovery is experienced so differently by ordinary wage earners and by elite income groups, which in turn has surely heightened public awareness of our growing income disparity.

But there’s another big question out there. Whether you’re rooting for the upper or lower percentiles, if you spend a lot of time looking at income distribution tables, you can’t help but wonder why there is so little popular support for redistribution toward the middle classes, especially as the share of income going to the wealthiest citizens has risen toward levels last seen in the Roaring Twenties:

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Piecing together what people think

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