As Poor Americans Drown In Student Debt, Affluent Are Feeling Better About Finances

The plain and very frightening facts for many poorer Americans. The promise of finding a way to a better life through education may be sputtering, just as the cost of taking the gamble has become onerously expensive for people who can't afford the promise unless it pays off.
Two new reports once again starkly illustrate the different experiences of the struggling poor and the comfortable affluent in America.

Whereas the least wealthy 20% of Americans now hold 13% of the student loan debt in the USA, the richest Americans report they feel much better about their financial situation.

A new Pew research study on social trends in the USA concludes that, even though the student loan debt amounts were higher for wealthier Americans, poorer households were much harder hit by even modest student loan debts:
"In 2010 outstanding student debt was nearly a quarter (24%) of the household income of the lowest fifth of households by annual income. By comparison, households in the ninth decile of household income owed only 7 cents of student debt for every dollar of household income received, and those in the tenth decile (90 percent and higher) owed just 2 cents of student debt for every dollar of household income."
Meanwhile, a new Merrill Lynch survey of "the goals, values and complex financial needs of affluent Americans" has determined wealthier Americans are feeling better about themselves—just in case anybody was worried about them.

The Merrill Lynch Affluent Insights Survey (words like "poor" don't appear in it) concludes:
"Our latest survey reveals that the affluent view today's economic uncertainty as the 'new normal.' Many are taking steps to gain greater control of their financial lives, including more conservative spending habits and lowering their debt. These actions may be among the reasons why more than half feel a greater sense of stability in their financial lives today than they did one year ago – and why many are cautiously optimistic about the year ahead."
The ability to lower debt is just one advantage having a lot of money versus being poor obviously provides to the affluent. In fact, the Affluent Insights Survey reports a "vast majority" of the affluent who believe that current economic conditions (of greater uncertainty and higher volatility) represent a "new normal", also believe they are "better prepared today to cope with economic uncertainty."

Again, just having money, as opposed to mainly or only having debt, enables a person to feel able to cope, even when times are uncertain.

At no point during the current crisis were most wealthier Americans facing anything but a temporary decline in their fortunes, and many have actually prospered at record levels—just look at the current stock market recovery—while millions of their fellow citizens have stayed unemployed and gone on food stamps and other forms of welfare in desperation.

The extraordinary inequality in the USA is at a level many experts think will lead to long-term damage to the society, as the perception grows amongst most Americans that the elite strata of extremely rich and powerful Americans form a special class of super-citizen that ignores or worse feeds on the suffering of the poor, while insuring its own position through the use of its wealth to influence political decisions favorable to its class.

The student debt crisis is now a lurking timebomb, which, if the federal government does not act to ease the burden of so much debt on so many poor people, could explode with even more disastrous effects—on poor people. As this Wall Street Journal analysis of the student loan situation points out, unlike the subprime mortgage crisis:
"The bulk of any burden from a student-loan debt bubble bursting is likely to fall on the borrowers themselves. While that means the broader economy can avoid a systemic crisis, it will struggle with a younger generation whose spending power is constrained limiting growth for years."

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