User Error – A Student Loan Story

Student Loan Industry Crash

Momentum remains very negative. Since we had our signal largely move us to cash on January 17, I don’t think that it requires a significant amount of time and analysis repeating what I’ve said about the markets for two weeks.

Inflation numbers are rising, consumer spending is mixed, and overvalued tech stocks have cratered. People are wondering when it’s time to call the bottom on Teladoc (TDOC), Palantir (PLTR), Robinhood (HOOD), and Tesla (TSLA). I’m waiting for the executives at companies – the INSIDERS – to make a move…

Until then… pass. If the CFO doesn’t like his stock enough to buy it after a more than 70% dive in the stock… Why the heck should I?

Student Loan Industry Crash

While everyone is focused on the crash in the tech sector, I’m focusing on another crash today – and one that is flying under the radar. Americans are more skeptical than ever about one of the most significant lending businesses in the United States.

The student loan industry.

A new report from Acorns said that 81% of Americans have delayed one or more life milestones due to their student loan debt. I’m certainly one of them. I did three rounds of graduate school, and paid for all three of them. I certainly delayed buying a home.

According to that survey, about 33% of people have done the same. The same survey shows that 40% of people delay investing (which is a huge problem), 38% put off retirement savings, 16% delay starting a family, and 12% delay taking a new job. 14% of people say they put off marriage.

These numbers are serious because at a macroeconomic level – they will certainly impact a large swath of Americans in the future. Retirement and housing are two big issues that will likely affect our economy and stability in the future.

Is College Loan Debt Worth It?

But there’s another element to this. More Americans are waking up to the fact that taking out student loans from THE GOVERNMENT – the only college lender in town – isn’t worth it. I couldn’t agree more. The reality is that education is FREE. We have more free courses online, more resources available, and more access than any point in human history.

So what are people really paying for when they take out six figures? Some might argue an adult vacation – but the real payment to schools like Harvard, Northwestern, Yale, or even University of Georgia is CERTIFICATION.

According to the Bureau of Labor Statistics, the cost of college is up more than 1,412% since the late 1970s. That’s the highest level of inflation of any major purchase among Americans during that time. It outpaces the Consumer Price Index by a factor of nearly four.

I expect that a paradigm shift will continue on the cost and usefulness of education. Not only should the cost COME DOWN due to technology and abundance, but it will redefine the future as we know it in this sector. Yes, there are ample ways to profit from what I believe to be the end of college.

The first is taking aim at the service providers in the student loan lending space. The second is on the technology that drives the next educational revolution. We’ll dig into them next week.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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