What Student Loans Are Really Spent On

Tyler Durden's picture

There was a time when student loans, now almost entirely funded by the US government, and thus a general obligation of all US taxpayers who however have no recourse to ever collect on any collateral, were spent on such trivial things as, well, higher education. Sadly, it appears that that is increasingly no longer the case. To wit: "feds accuse Newport man of using school loans on drugs, motorcyles, games and tattoos." At least no iPhone 3, 3S, 4, 4S or 5 was purchased using private and taxpayer cash.... in this case.

From PennLive

Robert Thomas Price Jr. borrowed about $105,000 for his tuition at Harrisburg Area Community College from 2005 and 2007, federal authorities say. It doesn’t cost anywhere near that much to study at HACC, though.

So Price, 45, of Newport, is facing federal student loan fraud and mail fraud charges.

 

A U.S. Middle District Court indictment alleges that Price spent much of the loan money on crack cocaine, cars, motorcycles, jewelry, tattoos and video games.

 

U.S. Attorney Peter J. Smith said today that Price secured about $92,000 in private student loans and around $13,000 in federal PELL grants and Stafford loans. Price was aided in the alleged scam by his ex-wife, a former HACC employee who is not charged or named in the case, Smith said.

 

He said that if convicted Price could receive up to 20 years in prison and $250,000 in fines.

 

Tuition for 12 credits of study at HACC currently costs $2,022 per semester for students from sponsoring school districts and $2,748 for those from non-sponsor districts.

And now we know.

Of course, another curious place where as we pointed out in the past there is an odd correlation, is between federally funded student loans and the cash holdings of a certain fruit-shaped stock...

... as well as its stock price.

But don't worry: correlation never implies causation. What causation there is, will be apparent in a few short years, when the Fed, having failed with QE8 (just like the BOJ last week), proceeds with QE9 - monetizing student loans... and the bad debt held by Apple Bank of course.

And for those curious what other 'fringe benefits' exist for banks as a result of cheap student debt, and the willingness of student to take on more, more, more debt, here is an interesting infographic

Courtesy of OnlineDegress.com, h/t @Cate_long

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moskov's picture

The Fed is too stupid not to introduce a shopping loan for average citizens to create more demand!

drivenZ's picture

that's called a credit card. 

Pladizow's picture

Moral of the story: Dont steal from theives!

redpill's picture

Don't steal at all! (the government hates competition)

 

Might as well blow your loan on blow, there won't be a job for you once you're done with your edumacations anyway.

 

MillionDollarBonus_'s picture

I am once again appalled at the level of verbal reasoning skills displayed in the comments sections of this site.

Reasoning 101:

An argument consists of two parts

  1. Proposition
  2. Reason and evidence for  the proposition

For example, students would be unable to attend college without student loans from the government (proposition) because college tuition fees are too high (reason) as documented in college brochures (evidence). I find it pitiful that silly ZH readers can’t even construct a coherent argument. The lack of well formed arguments on this site is a stark testement to the simple mindedness and an inferior intellect of the zerohedge readership.  

crusty curmudgeon's picture

Thanks for the lesson!  I was going to say, "I like lint" but now the new edumucated me says, "I like lint 'cause it's got colors and it's all fluffy and stuff."

Chris Jusset's picture

ZH should hold a competition as to when the Fed will begin monetizing student loans.

 

My guess is September, 2013.

CPL's picture

Do it like a draft season pick board with spreads.

Pure Evil's picture

So who's a bigger retard, the idiot that looks down his nose at all the intellectually inferior ZH readership, but yet continues to stick around because its the only way he can feel superior over the simpletons, or the silly ZH readers unable to construct coherent sentences.

MDB, if you don't like crawling around with trash, pick yourself up out of the gutter.

The Alarmist's picture

Or go to Cancun, the town practically built on Student Loan money.

crusty curmudgeon's picture

Why would the Fed monetize student loans?  The slaveowners need slaves.  It's not like the Fed doesn't already give the banks far more than they ever lose in bad loans.

Vampyroteuthis infernalis's picture

I am glad someone wisely used the student loans on various drugs and tattoos instead of indoctrinated Marxism.

A Nanny Moose's picture

Tat's and blow? Smart money is on boats in which to have unfortunate accidents.

nope-1004's picture

Problem here is that he stole from the Government.  Had he stole, oh..... say $1.3 Billion from private, it would go unnoticed.  The amount matters NOT, but who got fleeced.

 

CrimsonAvenger's picture

You're missing the most beautiful point here. Since he stole $100K from the government, we're going to jail him for 20 years, at a cost to the government of at least $100K/year. If we forgave the debt we'd come out ahead by $1.9 million.

Ptero9's picture

Yes, and when he gets out we'll set him up with another loan so he can pay the $250,000 fine.

Pure Evil's picture

Who's stupid enough to pay $2,748 per semester to go to a Community College?

Must be one of MDB's extended family members.

The Alarmist's picture

Sounds like he didn't actually go to community college, just used it to funnel loan funds to other purposes.  Not so stupid after all (except for the getting caught part.)

As for the costs of incarceration, don't forget that he will probably be used as prison labor for a few cents per hour, helping to on-shore yet another value adding job.  This has gotta be good for us, right?

CrimsonAvenger's picture

At the rate the Fed is going, he won't need a loan in 20 years to pay $250K - that'll be pocket change.

BurningFuld's picture

Thank God I live in Canada. A judge here would actually say: "You think people want to pay to keep you in jail? You should be ashamed of yourself! Now go home. 3 months house arrest." End of story. But then our government would not be stupid (corrupt) enough to lend that amount of money in the first place.

The USA really really needs a third political party. Come on you guys!

Cathartes Aura's picture

amrka has enough party-ing already. . .

agree with the * 0.o * at a COMMUNITY COLLEGE charging over $2k per semester - but there's where one might start the investigation. . . it will no doubt end up at a for profit prison complex. . . circle jerk all round!

just like JPM's SNAP cards funneling monies to prop up corporate fud-stores and fast fud drive-thru hot spots, student loans are keeping "colleges" in the employment business, not to mention the new buildings these places offer all their new students, so construction jawbs, etc. etc. etc.

ponzi e-CON-o-me - come git u sum.

SubjectivObject's picture

Towards making a distinction between our country and the rest of America, Canadians may refer to the US as Amerwrecka.

merizobeach's picture

I call it the USuckAss.

Canada is such a sad story.  Like America, it's a big, beautiful land that's made absolutely intolerable by the people who live there.

Winston Churchill's picture

Alas,poor Bernie Maddoff already found this out.

If he had just stuck to ripping off sheeple,why.he could be the next chairsatan.

knukles's picture

 

 

"Never relint; QE until it works"                      

Booyah Bitchez!

 

MillionDollarBonus_'s picture

"I like lint" is a subjective truth, not a universal proposition. This is yet another example of a zerohedge reader who fails to demonstrate even simple elementary reasoning skills.

crusty curmudgeon's picture

BoooYaaaah!!

MDB, it's me, Jim Cramer.  Back up the truck and load up on FB!

MisterMousePotato's picture

I.e., "[Lint is good] 'cause it's got colors and it's all fluffy and stuff."

See? Simple.

Pure Evil's picture

Of course MDB likes lint. He especially likes to pull it out of his navel and stuff it between his ears.

El Viejo's picture

MDB

I love your twisted humor, but you misspelled "testament" in your previous post.

Pure Evil's picture

Golly Sergeant, looks as if Mr. Superiority has a chink in his armor. 

redpill's picture

I think I speak for all of the ZH readership when I say we're simply in awe of your careful reasoning.  You should start a hedge fund.

crusty curmudgeon's picture

This crazy world is getting too much for me.  Give me the blue pill.

Peter Pan's picture

Preferably a hedge fund for politicians.

Badabing's picture

Reasoning 101:  face book LOLOLOLOLOLOLO 

knukles's picture

Guy spent Obama's stash on the wrong shit.

Now this is CE certified (approved by the EU!) and he might need it in Soledad

http://www.x4labs.com/

MDB, would help your focus.... an argument consists of 3 parts...proposition, reason and big fucking club to beat the dumb asshole to death when he continues to spew useless tripe

Son of Loki's picture

Colleges should have some stake in the loan sprogram. In other words, they must "keep" 20-40% of the loan...or the loan losses if the student defaults. This would incentivize them to choose more carefully who gets the loan and how it is being used. (Of course, house lenders should have the same requirement).

 

I'm not sure how  much an education is worth but I guess it depends on your major. My friends was on a HR panel for two new hires. 468 MBAs, lawyers and other applied for the two positions! How did they choose?

 

One was chosen b/c they were from a well-connected, super wealthy family...the 1 other was chosen based on his merits. The best majors may still be hard science---you will not be billionaire but you will make a decent living.

resurger's picture

"An honest troll is one who, when hes bought, stays bought" Simon Cameron

 

semperfi's picture

While reading this, the image that formed in my mind was that of the Blazing Saddles scene at the end where the brawl busted thru the studio wall into the boys-dressed-in-tuxes production

Darth Rayne's picture

I have a friend who is forever borrowing money, defaulting, borrowing more. I used to think he was stupid.

Unfortunately, I now think it is me who is stupid. I do nothing to help create money. I never borrow.

It is a great pity that there aren't more like my friend and the gentleman this story revolves around.

Both are creating vast amounts of money.

I don't even know what money is. I am into a collectible, gold.

I can't apologise enough.

I ought to swap my gold for bits of paper with numbers on. Use that paper as a deposit on a house that is 2 - 3 times more expensive than the market can bear. Then smash all its windows. I am sure there must be more I can do but as I stated earlier I am stupid.

RSloane's picture

Its 'testament'. But I know you did that on purpose.

JPM Hater001's picture

"students would be unable to attend college without student loans"

If you summed up all the dumb shit your trolling has laid out the need for a student loan to attend college would be the result.

Oh wait, it is.

_SILENCER's picture

Tuition wouldn't be so goddamned high if Government and the corrupt loan industry wasn't involved.

You don't really think there's 30K in actual scholastic costs in order to send a spongy young brain to UC Santa Cruz to be traumatized and brainwashed by modern mainstream dummy liberalism, do you?

 

disabledvet's picture

"I hear this guy leads direct to the the folks who caused your state to overspend and lead it into bankruptcy." is that the type of argument you were trying to make?

mrdenis's picture

If the gubment never got into loans ,the cost would be 1/10 th what it is ....same wit healthcare...same with housing  

dolly madison's picture

I was actually just pondering on this subject a short bit ago.  I home-school my children, so I was thinking about how writing is taught in such a structured way:  topic sentence, 3 supporting sentences and closing sentence.  The closing sentence restating the topic sentence is an irritant to my daughter and me.  It is too formulaic, and so is not good writing.  This formula for writing, and your formula for argument are too stifling.  It keeps people in the box too much.  It leaves no room for intuition or camaraderie.  Zerohedge is not the debate team.

Badabing's picture
What Student Loans Are Really Spent On

 

a hard hat that can hold two beers?

Skateboarder's picture

Thing's no bueno if you don't have a year's supply of Natty Lite to throw in it. Don't forget the handle of Hennessy every Friday, the handle of Stoli every Saturday, and bottomless mimosas (for recovery, of course) every Sunday.

WHERE'S ALL THAT MONEY GONNA COME FROM? TREES!?