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One in 4 Student Loans Delinquent

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    Radio host Dave Ramsey discusses whether student loans could be the nation’s next financial crisis.

  • Duration 6:46
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At -- could be a new debt crisis on the horizon one in four student loans is delinquent.

And the government now holds a record 453.

Billion dollars -- all of -- student debt.

That's -- -- increase the 143%.

In just two years.

Joining us now is our personal finance guru if he doesn't mind that label he's name is Dave Ramsey it is a host -- of the Dave Ramsey show.

-- calling this the next and the next possible debt crisis what's that you today.

Well it it really could be the next sub prime crisis you know people talk about credit cards being that the differences credit cards are owned by banks.

The student loans are federally insured.

Translation you and I guarantee -- That those students would repay their loans if they don't UN die.

Repay the loan for them to the bank that's what a federally insured student loan is that's who Sallie Mae issues actually your -- and she lives in years for -- -- -- -- right by the way.

40%.

Of all Americans under the age of thought you between twenty and 3040%.

Of my -- some kind of outstanding student debt and the average is 23000.

Dollars.

For every single one of those 40% under the age of such it.

Now all day to blame.

For making a bad decision to go on -- all the money for the education.

Or all the colleges to blame for enticing them in a making promises about a great job -- gonna get -- this credits.

Or is the government to blame for dishing out money without any.

-- any guidelines whatsoever I mean if you're breathing you can get a freaking student loan.

And you know and we have ensured that and so it does go in those worrying to the sub prime crisis.

Are the big greedy banks that loan broke people money for their houses to blame are the broke people to make stupid decisions to blame -- the government that said -- buying a house is always a good thing to blame the answer is.

Yes all of the above.

And so here's the problem we have made the student loans too easy to -- yet and we've told a couple of generations now -- -- And the lie is is that your degree guarantees you success success is not guaranteed based on your degree success is guaranteed based on your knowledge.

That you gained while getting to that degree and your character to apply that knowledge in the marketplace.

We forgotten to teach children that the free enterprise system is alive and well.

And if you are bad at your job regardless of how -- degrees you have here but we'll get fired.

You know I didn't most people -- that I have a pretty large family and I wanna tell you that I often one of my children a deal.

I'll give you X number of dollars to start to small business all you can go to college.

Wish you choose to think -- a bad parent for offering that kind of choice.

Well Bill Gates and Michael Dell and young gentleman has started a thing called FaceBook might agree with you.

Because all of those started and basically quit school to go in and and you know pursue an entrepreneurial endeavor.

I don't think -- bad parent I think what we can all pretty much universally agree that.

Hey having some tools in your belt the -- meaning some knowledge of got a good accounting class and your -- good marketing class and your -- going to business that's a good thing so knowledge is not a bad thing I'm not against education.

I'm against this idea that a degree automatically -- -- success.

And what we tell people that long enough that we get the reaction of the Occupy Wall Street folks which was you lied to us and in a sense we did.

I just feel.

That all those millions of people in their twenties.

Saddled with a very big chunk of debt and it is debt full life because you could declare bankruptcy you still -- that student loan you still I would -- debt full life.

That's what I feel bad about that that that that generation.

That's emerging saddled with debt and a lousy job market to boom that's my point.

Well I do agree with that and it has to do with college choice it has to do with decisions.

Mean the number of people army -- got a 140000 dollars in debt to get a Ph.D.

an underwater basket weaving.

Or German -- history is ridiculous.

I mean we've done a bad job of parenting our children.

And so you know my children Ramsey children all three of them are successful adults all three of them went in state schools and space and we pay in state tuition.

Can Ramsey family afford to pay more.

Yes do you get more for what you pay.

Very seldom.

I'm with you on this one although I have six children okay so doing -- on to the London school of economics I did good.

What do you mean by that Poland's second I -- I -- really legendary eruption from a Democrat you know I got to believe education you did to -- became an entrepreneur you've had great success I think there's a lot to -- -- education.

When properly offered that and powers and enhances the overall quality of -- society -- not let me bring him back you don't -- that's don't have debt.

That's an interesting point but the actual research says that it's not true.

And there are more people graduating from colleges.

State -- setting a CEOs of fortune 500 companies.

Then graduated from elite colleges -- personal stayed close -- -- -- Ivy -- college get a hold -- a second let me just jump into this for second back in the day when I went to a very good school in Britain.

I was paid to go to that school I got a government grant.

And the government was able to do that back in the 1960s because in Britain at that time we only educated 2%.

Of the population to the university level they what educating and -- -- So there's a huge difference too in that situation forty odd years ago -- what you've got today last what do you Dave Ramsey.

Well here's here's the situation and there's nothing Rome Italy -- on the matter league colleges and if you've got the money to go there that's fine.

But don't tell me that going 300000 dollars in debt to get your undergraduate degree in -- college.

Verses going to a good state college -- and paying cash makes sense for that student it doesn't make sense.

Vanderbilt University wonderful university right here in my city of Nashville 52000 dollars a year.

The University of Tennessee right here in my state 7000 dollars a year.

Now there's a value proposition you've got to balance out here for the typical person.

Hitting the marketplace with those job skills and you know can you justify that level of student loan debt and you and -- the taxpayers be on the hook.

No possible way no research to back that up out there anywhere I -- I -- appreciate you having me.

What notice there's a -- good to have you I think the economic decision the economic equation.

Of the of the cost of education has shifted and shifted radically in the last few years that's what position.

Dave -- what -- -- with thank you very much for being on the show you already -- we appreciate -- being with us today thanks that if that.

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