The Student Loan Crisis Isn't a Crisis at All

Here's how a tiny investment could slash student loan debt by more than 11%.

Jul 26, 2014 at 8:49AM

Student Loan Crisis

In 2014, the average graduate with student loan debt left school owing $33,000. Under typical repayment terms, that amounts to a monthly payment of roughly $380, or about as much as it costs to lease a new luxury car.

Student loan debt is a big problem, and it continues to grow. But solutions may be simpler than they seem.

Students are completely out of the loop
Last year, Indiana University decided to send its students a message. It was a simple letter that detailed the amount the student planned to borrow in the upcoming year, and that student's total borrowings over his college career.

The letter also included an estimated monthly payment.

It turns out that the modest investment of little more than a postage stamp per student saved millions of dollars in the aggregate. Students borrowed 11% fewer dollars as a whole, even though enrollment and tuition increased year over year at Indiana University's campuses. Eyes opened wide to the true cost of a college education, students realized that cutting back, working more, or dipping into savings, might be a better way to fund their studies.

A crisis that isn't
If a few thousand postage stamps and a few reams of paper can cut borrowing by as much as 11%, perhaps student loans aren't the problem we've made them to be. The problem might just be that students are completely incapable of tracking just how much they borrow, and just how much they'll owe -- a problem that could be fixed with a very minor investment.

Maybe, just maybe, before discussing foregiveness or deferral programs, we should attack the symptoms at their source: too much borrowing.

Student Loan Originations By Year

After all, in 2012, Federal Student Loan origination topped $100 billion. An 11% reduction would result in immediate savings of $11 billion in the very first year. And that doesn't even begin to include the additional cost of interest, fees, and finance charges that could be so easily avoided.

Perhaps we could go even one step further and include another page from another government agency, the Bureau of Labor Statistics, which tracks income and employment trends for virtually every occupation under the sun.

When combined, students will not only have a reasonable expectation of what they'll owe, but also what they'll earn, and the ease or difficulty with which they'll find a job. And it comes all at a cost of pocket change per student, which, compared to the average tuition at even the least expensive of state schools, is a mere drop in the bucket. "Crisis" averted. 

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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