Day: February 4, 2019

How The Student Loan Bubble Affects The Economy

Surpassing the market value of media giants Microsoft and Facebook combined, the national student loan debt ceiling is coming up on crisis levels. The United States is no stranger to financial disasters; the Great Depression still within living memory, the mistakes of the past are perhaps going unheeded as we approach yet another potential crisis.

Reaching $1.4 trillion, millions of Americans from recent grads to Gen X continue to struggle to make monthly payments. To make it worse, there’s only a lifetime ahead for this to go on.

What’s The Problem With All This Debt?

money management

College graduates leave their hallowed halls of learning with more than just a degree to show for it. On average, recent college grads are in the hole for nearly $30,000 and just ten years to pay it all back.

Monthly payments come out to around $400 a month, not a small amount for fresh-out-of-college graduates. The burden of an extra, hefty bill every month doesn’t just put pressure on an individual’s bank account, it also has huge ramifications for the economy at large. This is especially true since many Americans struggle to make payments.

Millennials are spending less and less on discretionary purchases every year. Average daily spending by 18 to 34-year-olds is down by $19 since 2008. By the time they reach age 30, millennials are less likely to start their own business. 42% are citing that they do not have the financial means to enter entrepreneurship.

It takes a recent college grad, on average, 12 years to save enough for a down payment on a home. Over 80% of people aged 22-35 that have not yet purchased a home blame their student loan debt. On the other hand, 47% of Americans are putting off buying a car. One in seven American couples are waiting to get married as a result of financial roadblocks

From A Drag On The Economy To The Next Bubble

So, how are we going to manage this bubble that’s about to burst?

how to manage money effectively

For those living and struggling with student loan debt, there are options to help make repaying these loans easier and faster. Income-based repayment, rather than fixed repayment base on loan amount plus consolidation options means lower interest rates, lower monthly payments, and avoidance of deferring loans. Deferment rates are highest amongst young and recent graduates, with 26% of millennials and 77% of Gen Zers choosing deferment.

Additionally, American graduates are given just one-third of the time to pay back their student loans in comparison to other countries. Extending the period of time in which to repay loans helps in the short term by lowering monthly payments. It also gives young people more options for saving money and stimulating the economy.

In 2013, Congress made moves that actually lowered the general interest rates for student loans, but these changes were not made immediately available to individuals who had taken loans out prior to the change.

  • Repayment period in the US is ten years; in England, it is 30 years
  • Extending the time provided to pay back loans will lower monthly payments, but may increase interest
  • The pre-2013 rate was 7%; 2018 rate was down to 5.05%. Lowered interest rates even by just a few points can help save the borrower thousands of dollars over time and potentially help pay off loans quicker.

However, some experts agree that it will take more aggressive and even “radical” changes to make lasting progress. This calls for a massive overhaul to not only loan policies but educational standards as well. The outright cancelation of loans, while not entirely unheard of, is rare and only available to certain careers.

Nurses and public school educators have the option to cancel their loans after a period of time. However, canceling all student loan debt could change the game completely. Loan forgiveness would encourage consumers to spend more of their money on economic goods and services, rather than on repaying on debt and interest, to stimulate the economy. On the other hand, it could increase taxes for everyone.

How Could Less Student Loan Debt Affect The Overall Economy?

A step further from loans canceled outright, some experts suggest hitting the issue right at its source is the most effective solution: free public college. Existing in several European countries, the precedent for free college has already been set and acts as a living, working “experiment” in Germany and Denmark.

From Senator Bernie Sanders’s proposed 2017 College for All Act, it was estimated to cost $47 billion per year to manage free college and states. Things are looking up in such states as New York and Tennessee as they’re already working on free tuition for in-state students in public colleges.

Canceling student loan debt would increase GDP by up to $108 billion per year for the next decade. Canceled student loans would add up to 1.5 million jobs into the economy. No tuition costs would dramatically reduce the financial burden of earning a college degree, influencing the economy as a whole.

Learn more about the student loan bubble from this infographic.
Student Loan Debt
Source: Student Loan Review

The post How The Student Loan Bubble Affects The Economy appeared first on Dumb Little Man.

Elon Musk shows off SpaceX’s Starship Raptor engine firing


Who knew seeing a rocket fire up close could be so pretty?

On Sunday, SpaceX CEO Elon Musk shared photos and video of the company’s Starship Raptor engine firing in its first ground test.

A still shows a kaleidoscope of colours streaming from the engine, although that could be just the camera not quite keeping up with the fire’s intensity.

“Green tinge is either camera saturation or a tiny bit of copper from the chamber,” Musk added in a tweet.

First firing of Starship Raptor flight engine! So proud of great work by @SpaceX team!!

— Elon Musk (@elonmusk) February 4, 2019 Read more…

More about Space, Science, Elon Musk, Rockets, and Spacex

Hulu teams up with that world record Instagram egg to raise awareness of mental health

Remember that egg that became Instagram’s most-liked post? It used its recently-acquired fame to shed light on mental health and the pressures of social media.

The account now has 10 million followers — its record photo has over 52 million likes — and it put that audience to use with a 30-second video that aired on Hulu around the Super Bowl. The account had teased a major revealed in recent weeks, and it proved to be the short spot with Hulu that promotes mental health awareness, particularly around the context of using social media.

“Recently I’ve started to crack… the pressure of social media is getting to me,” the video reads as the egg’s shell begins to crack before breaking into pieces.

“If you’re struggling too, talk to someone,” the egg says before it is resurrected with a full shell once again.

The video closes with a link to the Mental Health America website.

Hulu’s Egg reveal is a mental health PSA which I love 🥰

— Alexandra Able (@AlexandraAble) February 4, 2019

The video received praise from Mental Health America and many others on Twitter, but plenty of its Instagram followers expected more or don’t have a Hulu account, according to comments.

We’d like to thank #TalkingEgg for shining a limelight on #mentalhealth tonight with an important message. Not everyone chooses to #fightintheopen for mental health, but you did for the 1 in 5 Americans living with a mental health condition. Thank you, #EggGang! 💚🥚

— Mental Health America (@MentalHealthAm) February 4, 2019

At the same time, the creators of the account — three advertising executives in South London — revealed background on the project, the egg is called “Eugene,” in an interview with the New York Times.

The trio — Chris Godfrey, Alissa Khan-Whelan and C.J. Brown — explained that they had been approached by Hulu, which had paid to develop the video which aims to take advantage of the hype and online chatter around the Super Bowl to raise its message. Given that the account is followed by a large number of children, as its creators acknowledged in the interview, a positive message like this rather than a commercial sell-out is a pleasant surprise, particularly when it is estimated that brand deals could fetch $10 million.

Hulu is the first to get a crack at the egg, but it remains to be seen if its appeal to brands will endure and whether its future messaging and partners will also be health-related.