I Am The Toxic AssetO
This was originally posted on 2/28/12
There comes a certain risk involved with divulging one's personal troubles all over the internet where potential employers could read it and make all sorts of judgement. However without some risk, there is no return as everyone on here should know by heart. That being said, I'll take the risk to make the larger point.
I'm possibly getting sued over my student loans.
The specific details aren't what I want to get into, but know this -- I went to college, majored in finance, and after college couldn't find a finance job. I took a non-related job to just get by and got laid off right around the time those loans came due. Like Gecko said in Wall Street 2, I become a "NINJA", No Income, No Job, No Assets" and staggering student loan debt for a degree I dreamt would eliminate all of those problems even if I knew the risk that debt entitled.
High risk; high return.
Within the deep crevice of my own despair I've come to reflect on that high-risk decision with every nano-fiber of my being. To the point where I look at the world I live in and ask "why?" How many people are there who struggle with their student loans? I hear I'm not alone. I'm not the only one. It's systemic.
It's not you kid, it's your economy!
Our economy is based on people producing goods and services in order to sell to other producers. Steve produced more apples than he needs, so he sells them to bob who has more wood than he needs, which he sold to have money to buy apples. The more useful you are to others, generally the more money you find yourself having. You have the apples everyone NEEDS or more importantly, FEELS they need. Anyone who gets a college degree understands this on some level, whether they came to it through direct personal observation or instilled through the guidance of others, they know they have to be useful in some way.
And we are told or -- sold-- on the thought that you can't be useful to society without a college degree. You can't get a good thing called "a good job" and a better life, without going to college. Your teachers didn't tell you to make something of yourself by flipping burgers at McDonalds. Your friends didn't come back home telling you crazy stories about the party the assembly line guys threw.
Zuckerberg didn't make Facebook to help connect Wal-Mart cashiers.
So if you're eighteen and have an kind of ambition whatsoever college should be the your goal like any rational teen at the time. However whenever you're eighteen, they is a highly likely chance that you haven't necessarily come up with the tens of thousands of dollars it's going to take to fund those college dreams on your own. You can't even legally earn money until you're sixteen or casted on The Mickey Mouse Club. You've got two years to earn funding for those four, on minimum wage. Now if this doesn't happen for whatever reason, there is still hope, someone else could always pay your way. If you have two parents who saw this happening and planned accordingly, they might have your back. If not -- scholarships, grants for solving equations and throwing balls are all around and if all that isn't enough (and there is not enough for everyone) ... there is still hope for our ambitious youngsters.
You can always get a loan.
Always. Always because the federal government is even a provider of funds, as well as the major banks which employ much of this board. There is money in someone else's pocket who's willingly to take a risk on you. You take the risk of soul crushing debt; someone tasks the risk of losing money if you don't achieve you're dreams and a $40,000 write off isn't as bad as a $40,000,000 one so how much risk can there be?
College graduates always earn more income just like housing prices always go up!
It's a win/win right? No child left behind! If you're young, it's a pretty legitimate option to realize you're dreams; if you have millions of dollars to invest or create out of thin then it's a good return for yourself. Give a man a fish, feed him for a day. Teach a man how to fish, feed him for life. Tell a man in order to fish he needs to go through four years of fishing school he can't afford and loan him the money and charge him interest regardless if gets a job fishing or not... feed yourself for life.
According to Smart Money (http://www.smartmoney.com/spend/family-money/why-college-aid-makes-college-more-expensive-1330033152060/?zone=intromessage) states there is an "assumption that a college education is a good financial risk for lenders." However, "student loans recently eclipsed credit card debt" which should be chilling in and of itself, but "If costs outpace the ability of graduates to find jobs with good pay, and repayment rates on these loans slide, taxpayers could end up feeling the crunch." A crunch? What are we feeling now exactly? A crunch. What am I feeling? A crunch!
Just like with the housing crises, there is tons of easy money flowing into the hands of people who may not be able to continue paying it back. So what happens when they don't or can't? Unlike a mortgage, default isn't an option. The graduate who doesn't get the job they needed-wanted now owns an invisible, intangible car that he can't drive and still has to make payments on; the creditors can't seize that car so they seize their soul and anything else they can get their hands on instead. The horror stories are abound, CNBC did a documentary on it.
At what point does this all collapse like the housing market? When is the bubble going to burst? Maybe my inner bear is roaring on shorting this, but I smell another crisis in the air while fumes from are still fresh from the recent one. I fear for our cubs. As I reflect on my shared dilemma tonight, one question is going to ravage my dreams...
When did I stop being a young, ambitious student and start becoming a toxic asset?