3000-Word White Paper on Consumer Debt Victims in the USA

The future of student debt in the U.S.
A ticking time bomb 

Debt Overview 

 

The changing face of borrowing 

                            In just two generations we have changed from a ‘pay today’ to a ‘pay tomorrow’ society. Where our grandparents would only ever consider taking out a loan for a major purchase, such as a house or a car, and that loan would be taken out with great consideration, today we don’t think twice about buying even the smallest things on credit as, after all, that is exactly what a credit card enables us to do. 

The deciding factors today on whether a major purchase can be made or not are less influenced by sensible budgeting and rationale, but are instead governed by the ability to obtain, or not to be able to obtain credit for the purchase. Today, being in debt is normal, to the point where being heavily in debt is becoming the new norm, especially for the younger generation. For the younger generations, saving can begin later in life; today, life revolves around borrowing money and managing your debts. 

Up until 2010, the volume of credit card

debt and debt for auto loans individually exceeded that of student loans. Between the last fiscal quarter of 2009 and the first fiscal quarter of 2010, that changed. 

Student loans are a major growth area in the finance industry 

Between 2004 and 2015 the amount of money owed on credit cards has remained relatively static at between US$0.7 trillion and US$0.9 trillion*.

                 Between 2004 and 2010 the amount of money owed for auto loans again remained relatively consistent at between US$0.7 trillion and US$0.85 trillion*. 

                 At the beginning of 2004 the amount of money owed for student loans was US$0.263 trillion. By the beginning of 2010 that figure had risen to US$0.758* trillion. It had virtually tripled within six years. 

By 2015, the amount of money owed for student loans had risen to a staggering US$1.23* trillion.  

In the second quarter of 2018, student loan debt increased by US$29 billion** 

                   As of June 2018, the amount owed for student loans stands at US$1.5 trillion, which is owed by 44 million students with an average debt of US$37,132**. 

 

(Data source: * Federal Reserve Bank of New York, ** Forbes) 

More student loans equals more bad debt

                     As of June 2018, the loan delinquency or default rate on student loans stands at 10.7% for 90+ days** 

New delinquent balances on student loans (30+ days) stands at US$32.6bn** 

                    (** Source: Forbes) 

Student loan defaults are on the increase 

                   Analysis of recently released data indicates that approaching 40% of borrowers who entered college in 2004 and who took out a student loan may default on that loan by 2023**. A study of student loans by Judith Scott-Clayton, non-resident senior fellow at Brookings Institution, has revealed that for students who took out a loan in 1996, the rate of default has continued to increase in the period between 12 and 20 years after taking out the loan. 

                  (** Source: Forbes) 

Areas of Particular Concern
   

         Black students 

 Please note that the following figures are provided purely as observation. The intention is in no way to be critical of black students and, if anything, the intention is to highlight the problem so that black students can be offered greater levels of support. If one thing can be inferred, it is that challenges facing black students and repayment of their student loans needs to be addressed and greater support provided. 

Higher levels of borrowing among black students and lower levels of repayment now see that 12 years after graduation, black students owe an average $43,372 more than white students. 

Consequently, the default rate among black graduates is over five times that of white graduates (21% compared with 4%) and is still higher than that for white college dropouts (18%). 

This is a continuing worsening problem: while 25% of black students who entered college in 1996 have defaulted on their student loan, for 2004 entrants that figure was nearly 38%. Projections for 2004 entrants already indicate that as much as 70% of black borrowers may default on their student loans by 2023. 

Students attending for-profit institutes 

 Judith Scott-Clayton’s study also looked at the disparity in loans taken out and loan defaults between students attending public two-year universities and for-profit institutes. While just under 50% of students attending public universities take out a student loan, over 90% of those attending for-profit institutions take out a student loan.  

This disparity is compounded by the default rates, which run at 26% for students attending two-year public universities and 52% for students who enroll in a for-profit institute. 

The question that is raised here is whether degrees at for-profit institutes hold the same weight as those obtained from universities as, on the surface, there is little else to indicate why such a disparity exists. The increased default rate would lead one to believe that students who attended for-profit institutes were unable to obtain work that, on average, was as well paid as that obtained by students who went to public universities. 

Understanding Why Student Debt Has Boomed 

Secured loans can be more easily repaid if you default on them 

If you default on a loan for a car, it is not unusual to have the car repossessed and once sold, you become responsible for any outstanding debt remaining. In relative terms, the balance owed, if any,  is small in relation to the sum originally borrowed and can usually be paid off over a relatively short period of time. 

If you default on your mortgage, once again you can either surrender the property, or have it repossessed. Either way, the mortgage company or bank can sell the property and you become liable for any outstanding debt. With the volatility of the property market during an economic crisis, such as that witnessed in the Great Depression of 2008, property values can fall through the floor, while interest rates can double or treble. Discharging yourself from the total amount of money borrowed for a house purchase if you default on 

your loan can take more time as outstanding balances can be substantial, particularly in cases where there has been a high loan-to-value mortgage. However, the final amount owed in relation to the original size of the loan is usually greatly reduced 

In both instances where you may find yourself falling behind with repayments, there are also opportunities available for refinancing, often as a means of reducing monthly payments to a more affordable level, even if the cost of refinancing is appreciably greater in the long term. 

As a last resort, if a debtor finds themselves in a financial situation where they are going to struggle to pay back any outstanding loan, are swamped with debt – such as credit card debt, domestic bills, utility bills, etc. –  then there is the option of filing for chapter 7 or chapter 13 bankruptcy as a means of discharging the majority, if not all financial responsibilities, the most noteworthy exceptions being taxes and student loans. 

Student loans are not low-risk loans, but are provided as if they are 

A 50% loan-to-value mortgage where the size of the loan is only twice the annual income of the borrower is seen as low risk. As a consequence, and while interest rates are low, the average interest rate for a fixed-interest 30-year mortgage according to ABC News on July 26, 2018 is 4.54 percent. 

According to edvisors, for interest rates on new federal Direct Stafford student loans taken out for the 2018-2019 school year, undergraduate students will pay a 5.05% interest rate and graduate students a 6.6% interest rate, both fixed for the full term of the loan. According to credible.com, the average rate for parents and graduate students taking out a PLUS loan is 7.44%. These interest rates are relatively low for borrowing that is not secured on a fixed asset, especially when you consider borrowing on major credit cards, which is unsecured on any assets, attracts an average interest rate of 16.96% according to Creditcards.com. The rate of interest for student loans is low when one considers the following: 

         • There is no guarantee of a specific level of income after the student graduates, yet the level of borrowing can run into many tens of thousands, and even hundreds of thousands of dollars. 

         • There is no guarantee of long-term full-time employment for the borrower after they graduate.

         • There is no guarantee the student will remain in full health throughout the term of the loan. 

         • There is no guarantee the student will graduate.

         • There is no guarantee that the for-profit college will remain in operation – its closure can see 

federal loans adjusted accordingly, but private loans are not adjusted. • Higher interest rates create a vicious cycle of increasing the level of repayment, thus increasing the likelihood of default. 

Thus, in looking at the consequences of taking out a student loan, the chances of students finding themselves in a financially difficult position in the longer term are appreciably higher than those who take out loans for a car or house purchase.  

Once again this plays nicely into the hands of the ‘profiteers’ whose business it is to make money from people who are struggling to service, among others, their student loans. 

Why do student loan default rates increase over time? 

A student loan is not like a five-year car loan, for many it is a loan that will be with them well into their adult life and can and will last up to twenty years, even though for federal student loans the borrower is expected to pay off their debt in under ten years with a standard repayment plan. 

For those students who are unable to pay off their student loan in under ten years, there is every likelihood that during the period of that loan, they have taken out other loans, such as for a car or to buy a property – many who get married and start a family still have outstanding student loans. The cost of raising a family when combined with a loan for a car, a house and outstanding student loans can create a crisis point. 

The National Association of Realtors released figures in 2017 revealing that 40% of first-time home buyers still had outstanding student debt, despite the fact that most first-time homeowners defer buying their first home for an average seven years. The greater the level of debt you are in and the longer you are in substantial debt, the greater the chances you will default on your borrowing, especially today when there is no such thing as a ‘job for life’ as was more the case two generations ago. Redundancy is more relevant today than it was for our parents’ or grandparents’ generation. 

The amount of money being borrowed for a student loan has also increased substantially because, even allowing for inflation, college fees are rising more rapidly 

College fees are continually rising, and at a level above inflation. There has also been a surge in the number of for-profit educational institutes which, by their very nature, require greater borrowing levels to attend. According to Jennifer Ma, policy research scientist at the College Board and co-author of a number of reports in 2017: “Despite the moderate increases in average published prices, there were considerable increases in net tuition and fees over the past few years. These increases, combined with stagnant incomes for many families, raise concerns about ensuring educational opportunities for low- and moderate-income students.” 

Allowing for inflation, the cost of a college education for a student in full-time education at a public institution four-year course rose 16% between 2008 and 2018. Between 1988 and 1998, the cost rose only 4% and between 1998 and 2008 it rose 4.4%, according to a Collegeboard publication on trends in higher education. 

According to Marketwatch, the cost of an undergraduate degree in 1987 (in today’s money and adjusted for inflation) was US$39,643. In 2016, that figure had jumped to US$103,616. 

College fees have risen dramatically over the last thirty years, but salaries haven’t.

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Sample of My Non-commercial Writing

Splitting Up Today Means More than Just a Broken Heart –Add Total and Very Public Humiliation

If you are of the same generation as me – too old to be a credible virgin, too young for gray hairs– unless we married our childhood sweetheart, most of us have experienced that calamitousend-of-the-world moment when we discover that the love of our life doesn’t feel the same wayabout us,and a parting of the ways ensues. In a case of the biter bit, I have been both the giver and recipient of such stomach-churning news, and while both are wholly memorable occasions, albeit for different reasons, neither is a pleasant one.

However, breaking up also involved growing up. The “we need to talk” moment would, for many of us, be the first time we have had to take full responsibility for our actions. For a young man, this was the time to ‘grow a pair’ and extricate themselves from a situation as best they could, but with little or no past experience to call on and at best “It’s not you, it’s me” would come to the rescue like a knight astride an unruly white charger.For young women, being the harbinger of this particular type of bad news would reveal a new facet to their character, that of being a bitch. One way or another, this would be a less-than-life-defining rite of passage, but memorable and influential nonetheless, wherenobody comes out of it looking good.

For the ‘biter’, guilt would fleetingly enter the frame, but soon be evicted by heartfelt and frequently lustful thoughts pertaining to a new love of their life. For the ‘bit’, aside from the histrionics and period of self-loathing that usually ensues rejection of an extremely personal nature, much time would be spent alone, immersed in a world of self-pity and introspection at microscopic level. Emphasis here is on the word “alone”, as being able to grieve in private for the death of a relationship was critical to coping with all the associated angst.

Along the well-trodden path of relationship break-ups, there were only two other hurdles to overcome before you could get your life back on track. Seeing your ‘ex’ again and seeing your ‘ex’ with their new girlfriend or boyfriend. On both occasions, once you have experienced this newer and more profound sense of pain, you become equipped to handle pretty much anything else the world can throw at you other than the pain of childbirth. If you are a woman, then you may well know what I am talking about, if you are a man, then you will be reminded of this fact on innumerable occasions throughout your life.

Today’s break-ups tend to follow a different path where the younger generation is concerned, and for the ‘bit’, humiliation tends to play a very big part along the way.

The first sign that all is not well in paradise is when you gothrough the daily ritual of scouring your other half’s social media posts and profiles, only to discover that “In a relationship” has mysteriously changed to “I’m single”.Were this not bad enough, all your friends have also spotted this ‘anomaly’, and suddenly your personal humiliation becomes public humiliation. All messages you receive for the next few hours will begin with “OMG!”, “WTF?” and “ICYMI”, and any possible opportunities for your friends to display genuine sympathy will be heavily overshadowed by the ‘media frenzy’ they have stirred up when sharing the news of your change in relationship status among the 1,453 friends they have on Facebook. Do you really need to be trending on Twitter when your heart is breaking and the only place you can find sympathy is in a dictionary nestled somewhere betweenthe words “shit” and “syphilis”?

The humiliation continues as you text the ‘biter’ to find out what they are playing at – a strange concept when this is done using your phone and yet you both presumably have the power of speech – only to then spend the next three hours checking your phone every two minutes to see if they have replied, and they haven’t and probably won’t. In the meantime, you’ve tried to message them on Facebook, only to find youhave been subjected to the ritual humiliation of being‘unfriended’, an action that has also not gone unnoticed by all your friends too.

Of course, you won’t have to worry about that awful moment when you bump into your ex with their new partner, because with a day or two, as you wistfully check their social media posts in a form of masochistic punishment, the selfies begin to appear of the two of them together, new BBFs, and your ex’s status has once again reverted to “In a relationship”. 

And so, life goes on…

I fear for the next generation of kids who are growing up in a society where everything can be done ‘remotely’ and where those tough-to-face situations can be avoided thanks to social media and smartphones. This goes way beyond the break-up of relationships, but extends itself into the workplace, where more and more frequently employees are being made redundant via a text message than a face-to-face meeting.

As the size of men’s testicles and levels of women’s bitchiness diminish, replaced instead by a complicit willingness to allow modern technology to take their place when faced with an uncomfortable situation, I fear for the mental state of so many who will have to suffer the indignity and humiliation, whether personal or public, of being made to feel unworthy, worthless, or just too plain insignificantto merit a face-to-face conversation when trouble looms.

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WHAT IS FOOTINGS ?

Introduction:-

Every R.C.C. structure can be divided into two parts:

         i) Portion which is above the ground, called super structure.

        ii) Portion below the ground level, called sub-structure or foundation.

The purpose of foundation in a structure is as follows:

         i) To safely transmit the loads and moments from the super-structure to the soil, so that the pressure on the soil dose not exceed bearing capacity at any point.

        ii) To ensure safety with respect to permissible settlement, tilting in one direction, overturning, uplift pressure etc.

Classification of Foundation:-

        Different types of foundations are provided depending upon the type of structure, distribution of load, type and capacity of sub-soil, presence and level of water-table etc. Following are some of the common types of foundation :-

         i) Isolated footings.

                (a) Square footings.

                (b) Rectangular footings.

                (c) Circular footings.

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What is Tunnel Engineering ?

Introduction :

Tunnel Engineering:

• The branch of Civil Engineering which deals with the  design, construction and maintenance of tunnels is known as Tunnel Engineering.

            So for as the subject of 'Tunnel Engineering' or 'Tunnels' is concerned it also includes the study of  necessity of tunnels, history of development of tunnels, classification of tunneling and lining, ventilation and drainage of tunnels etc.

Tunnels:

• The underground passages which are constructed without removing or disturbing the ground surface are known as Tunnels.

Elizabeth River Tunnels

        These are engineering structures in the form of artificial galleries, passages or communication routes beneath the ground , under the bed of a stream or through a hill or mountain.

Uses of Tunnels:

i) They are used for transportation of men, material and goods.

ii) They are used for conduction of water to generate power in which case they are known as hydro-power  tunnels.

iii) They are also used for carrying oil, sewage, gas etc.

Necessity of tunnels:-

          It is always desirable to achieve economy in the cost of construction and maintenance of road and railway projects. Considering this factor and safety of the traffic and other public utilities, the provision of tunnels becomes necessary under the following circumstances :-

i) When the surface route of railway track or road for reaching the other side of a hill is much longer and, therefore, costlier in construction than a tunnel.

ii) When depth of open cut for reaching the other side of a hill is more than 20 m and it is costlier to construct and maintain it than a tunnel.

iii) When there is necessity of carrying public aminities like water, oil, gas  etc.

iv) When damage to transportation system of strategic importance is to be avoided and safty to traffic is desired during aerial warfare.

v) When the two terminal station, separated by a mountain, are to be connected by the shortest route.

vi) When acquisition of valuable land and property for railway or road project is to be avoided.

vii) When there is necessity of conduction of water for the generation of power.

Advantages and disadvantages of tunnels:-

          The advantages and disadvantages of providing tunnels are discussed below:-

Advantages:-

i) They carry railway lines, roads and public utiltils like water, oil and gas etc., across streams or mountains economically.

ii) They eliminate excessive cost of maintenance of an open cut, subjected to land slides.

iii) They connect the two terminal stations by the shortest route.

iv) They provide protection to communication routes against damage during aerial warfare.

v) They facilitate conduction of water to generate power.

Disadvantages:-

i) They may be costlier in construction as compared to open cut.

ii) They require more time in their construction as compared to open cut.

iii) They require special equipment and methods for their construction.

iv) They require skilled labour and supervision in their construction.

v) They may cause suffocation if not properly ventilated and thus, result inconvenience to the passengers.

Approaches in Tunneling Method:-

There are two approaches based on the open cuts on the either ends of a slope. They are short approach and long approach. The approach is said to be short, when the hill slope is very steep in nature, as shown in figure.1.

The approach is said to be very long, when the slope of the hill is very flat, as shown in figure.2. The cost of this mainly depends upon the topography of the considered area. In high altitudes, these approaches will be bounded with snow or may be blocked by the heavy landslides. These are the factors that would cause the decision of open cut or tunnel method.

Fig.1: Short Approach in Tunneling

Fig.2: Long Approach in Tunneling

Alignment and Grade in Tunneling Process:-

Certain factors that must kept in mind in the tunneling procedures are:

• The best and economical alignment was chosen must be straight in nature
• Tunnel should have a grade, which is less than the outside. It is observed that in the railway tunnels, constant slipping of the wheels takes place due to the wetness of the rails. This reduces the hauling capacity of the locomotives.
• 0.2% gradient must be provided to ensure proper drainage.
• When it comes to long tunnels, two grades at the either ends must be provided (That rise from each end then towards the center as shown in figure-3).

Fig.3: Surface Alignment and the provision of grade for the tunnel

• If the grade is provided on one side, instead of either side, the effectiveness of ventilation can be increased.

Dust Prevention in Tunnel Construction:-

The dust accumulation within the tunnel is the after effect of conduction the blasting, drilling mucking operations. If the dust accumulated amount is beyond the permissible limit, it creates harmful effects for the people working and to the surrounding environment.

The blasting of rocks as a part of tunneling operation will emit a high amount of silica in the environment. The intake of same will cause a disease called the “silicosis” which is fatal.

Dust Control Methods in Tunnels

1. Wet drilling

1. Use of vacuum hood

1. Use of respirators

The methods used to control dust accumulation are:

Now modern drilling machines are available, that make use of water to drill. Here the area that is to be bored is made wet, resulting in a reduction of dust emission.

The figure below shows a vacuum hood that is used in tunneling work. A hood is fitted to a drill face. This is at the rock face. This is connected to an exhaust pipe. The exhaust pipe takes in the dust formed by the drilling process and that is taken safely out of the tunnel. This reduces no flying of dust to outside.

Another common and efficient method to prevent dust inhalation is using respirators. These are well designed units that are worn by the miners and workers, who are highly exposed to the dusty environment.

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