Media Denial Porn: CNN Says "There Is No Student Loan Crisis"

Great news, America! Just because the total value of student loans recently topped (cue Dr. Evil) One TREEEEELION Dollars, and the rate of student loan defaults has been skyrocketing, there is no student loan "crisis." So says CNN, the so-called, "Worldwide Leader in News," which back around 2005 or so was, like the rest of the mainstream media, just as confident that there was no so-called "housing bubble." Here is the story in all of its denialist glory:

Total student loan debt has topped $1 trillion ... but there's no need to panic.

Most borrowers have a reasonable amount of debt, and the total balance is not likely to cause major damage to the economy like the mortgage crisis did, experts say.

Wow, I am so relieved that the "experts" have chimed in. Because the "experts" the mainstream media consults about the issues it chooses to report are ALWAYS right. It is perfectly evident by just how fantastic the economy has been preforming in recent years, how cheap energy prices have remained and also how swimmingly that whole Iraq War thing they were cheerleading for turned out. Damn, I might as well just end this article right here.

"I don't think it's a bubble," said Mark Kantrowitz, publisher of Finaid.org, a financial aid website. "Most students who graduate college are able to repay their loans."

So exactly which orifice did you pull THAT factoid from, Mr. Kantrowitz? Yes, it is technically true that the vast majority of student loans are not in default. But it is also true that the majority of student loans were issued to those who completed their educations before the financial crisis hit and got into the job market before the doors slammed shut. In fact, your idiotic statement is directly contradicted by the very next paragraph in the article:

This is not to say that there aren't problems with student loans, which now exceed the amount of credit card debt and auto loans. Students are taking on more debt, on average, and more than a quarter of borrowers are behind on their payments. And a hefty debt load could delay recent graduates' purchase of a home or starting a business.

Given how few high paying jobs are now being created during the "recovery," that sure sounds like a building crisis to me. Kind of like the housing bubble circa 2006 when the first signs of distress started to appear.

But all the talk of a crisis or bubble in the student loan industry is exaggerated, experts say.

Damn, there they are again. Those nebulous "experts." Gotta love those guys.

Nevertheless:

What's raising red flags is that the default rates on federal loans are climbing. They hit 8.8% in 2009, nearly double the rate five years earlier, according to the most recent Department of Education figures.

This jump is being fueled in particular by for-profit colleges, which have default rates of 15%, prompting federal officials to put in new rules. Now, schools with excessive default rates can lose their eligibility for the federal loan program.

Still, heavy debt loads can make it tough for young adults to establish themselves, especially these days. The Great Recession has made it tougher for young adults to find a job.

The unemployment rate for those age 16 to 24 with bachelor's degrees stood at 8.1% in February, up from 4.6% four years earlier. Many others find themselves underemployed.

"Having a lot of student debt can make a person's life very difficult," said Lauren Asher, president of the Project on Student Debt.

It is really hard not to get the feeling that CNN decided what the editorial slant on this article was going to be before they even conducted any interviews. So ultimately, what is the reasoning for claiming that that there is not student loan crisis?

But workers with bachelor's degrees earn about $650,000 more over their lifetime than their peers who only have high school diplomas, a recent Pew Research Center analysis found.

"It's an economic investment," said Sarah Turner, professor of economic and education at the University of Virginia, Charlottesville. "It's not going to work for everyone, but on average, it has a high return."

Kantrowitz expects defaults to climb for another year, before starting to decline. That's because the economy is slowly strengthening and unemployment rates are coming down.

"The defaults are not unexpected, considering the aftermath of the downturn," he said.

Ah-ha! There it is! The tired old "business-as-usual" argument that says things will get better just because they have always gotten better before, spewed forth by a university professor who has every economic incentive in the world to deny that there is a student loan crisis. There is also no consideration given to the fact that the era of cheap oil-fueled economic growth is over and that we have entered a new paradigm of permanent economic contraction.

It's incredible how CNN allows blind faith to override all of the various facts presented right in in their own article. Since this is what passes for "journalism" in America these days, no wonder so few people out there truly understand our real predicament.


Bonus: "Everybody knows these are rock hard times...I gotta make it through...these are rock hard times"