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Student Loan Bubble Update: "This Situation Is Simply Unsustainable"

Tyler Durden's picture




 

The last time we looked at the most underreported debt crisis sweeping the land, which is nothing short of the second coming of subprime, namely the student loan bubble, we posted "the scariest chart of the quarter" in which the Fed had finally caught up with our prior data showing that student loan delinquency had soared to some 11% from the 9% reported in the previous quarter, even as the Fed disclosed it had issued some $42 billion in Federal student loans in the same quarter, and a cumulative $956 billion, a number which as of December 31 is certainly over $1 trillion. This number was lower than the one we had shown previously, or a default rate of some 13.4%, sourced by the DOE. As it turns out both we and the Fed were optimistic.

According to just released data from Fair Issac:

Research by FICO Labs into the growing student lending crisis in the U.S. has found that, as a group, individuals taking out student loans today pose a significantly greater risk of default than those who took out student loans just a few years ago. The situation is compounded by significant growth in the amount of debt that new graduates are carrying.

 

The delinquency rate today on student loans that were originated from 2005-2007 is 12.4 percent. The comparable figure for student loans that were originated from 2010-2012 is 15.1 percent, representing an increase in the delinquency rate by nearly 22 percent

And since there is always a lag between getting the full cohort remittance and delinquency data, the real bad loan percentage is likely in the 20%+ category. So $1 trillion in federal student debt now, 20% delinquency, means $200 billion in loan defaults with zero collateral. And rising fast.

This is on par with the amount of subprime loans that was expected to end in foreclosure, yet another number that was vastly optimistic and would have been far worse had the Fed not stepped in to bailout the entire financial system.

And it gets worse. According to FICO:

While the delinquency rate is climbing, the average amount of student loan debt is increasing even faster. In 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years. By contrast, the average credit card balance and the average balance on car loans owed by U.S. consumers actually decreased during the same period.

 

In a related finding, FICO’s quarterly survey of bank risk managers conducted in December 2012 found that nearly 60 percent of respondents expected delinquencies on student loans to increase over the next six months. The same respondents expected delinquencies on all other types of consumer loans to decrease, putting the pessimism around student loans in sharp relief.

So not only are loans accelerating, but the actual amount of any given loan is rising exponentially.

Some of FICO's scary charts which nobody will pay attention to until it is far too late.

The total percentage of US population with 1 or more student loans has increased from 12.1% in 2005 to 19% in 2012.

The consumer may be deleveraging... in everything but student loans that is: a 58% increase in the average student loan notional in seven years.

And nearly 1% of the population has over $100,000 in student loans!

* * *

FICO's assessment is round in line with outs. "This situation is simply unsustainable and we’re already suffering the consequences,” said Dr. Andrew Jennings, FICO’s chief analytics officer and head of FICO Labs. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default. There is no way around that harsh reality.

Yes there is: PRINT!

full FICO report below  

 

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Tue, 01/29/2013 - 14:56 | 3195614 Thomas
Thomas's picture

How does one unsustain it? Seems to me contract law will block some solutions. I would like to see the government simply say to the banks, "It's your problem collecting this debt. Don't look to us for any help."

Tue, 01/29/2013 - 15:00 | 3195651 camaro68ss
camaro68ss's picture

hahahaha,this S*** storm is getting better and better by the day. all you can do is laugh lolz

Tue, 01/29/2013 - 15:08 | 3195702 Thomas
Thomas's picture

The carnage inflicted upon an age bracket that really didn't fully grasp the subtleties is enormous, however. Academic studies (that's code for studies from clueless academics that are somehow supposed to know what they are doing) show that those who enter adulthood into this kind of limited job market never fully recover. Throw on top of that student loans and you have a scarred generation.

I was talking to an opthamalogist. She's living the American dreams--successful as hell--except she cannot even  afford a starter house. If the doctors can't afford houses, don't gloat; be afraid, cause something is wrong.

Tue, 01/29/2013 - 15:20 | 3195756 Manthong
Manthong's picture

You cannot slow student loans or entire sectors of the economy will collapse..

alcohol, spring break hospitality, tattoo and piercing salons, college town law enforcement, planned parenthood clinics, venereal disease clinics, smart phone and Internet services, the rap music industry, reality television show entertainment.. and there is even some marginal benefits to colleges and staff.   

These industries are vital.. they’re about all we have left in America.

Tue, 01/29/2013 - 15:22 | 3195776 SilverIsKing
SilverIsKing's picture

So do you recommend that the banks continue to lend money to those who have no chance to ever pay it back?

Tue, 01/29/2013 - 15:30 | 3195810 Manthong
Manthong's picture

They cannot herd everybody to the destination on the road to serfdom if they don't.

Tue, 01/29/2013 - 16:11 | 3195978 Muppet Pimp
Muppet Pimp's picture

If history is our guide, Sallie Mae S:SLM (the Student Loan GSE) has a long way to fall from 16 and change to the pink sheets like siblings fannie and freddie.  Wheee!

Tue, 01/29/2013 - 16:26 | 3196038 SafelyGraze
SafelyGraze's picture

the solution is as simple as it is obvious: in order to pay off large loans in a down economy, students must aim at higher rungs of the employment ladder.

to do that, they should continue their schooling to earn MS, PhD, and professional degrees, and to take multiple (unpaid) internships overseas.

employers will be snapping up students with those credentials and paying them top dollar

Tue, 01/29/2013 - 16:41 | 3196108 Manthong
Manthong's picture

Geezus.. I forgot to mention the video gaming industry.. if student loans are cut back not only will a huge chunk of the software and hardware business go down, but we would lose tens or hundreds of millions of valuable man hours of informal special ops, fighter pilot and drone operator training.

Tue, 01/29/2013 - 18:10 | 3196489 caconhma
caconhma's picture

Lately in America, education became a business enterprise combining educational & banking institutions backed and supported by the government. It main goals are to indoctrinate and defraud their customers and clients.

Tue, 01/29/2013 - 21:25 | 3197223 Stares straight...
Stares straight ahead's picture

These "kids" ( one I know is 33 years old) are using the loans to subsidizetheir income. They may not even really intend to achieve a degree. They just sign up for the loans and a few classes and this allows them to live above their means. It's sickening.

Tue, 01/29/2013 - 18:08 | 3196483 TheFourthStooge-ing
TheFourthStooge-ing's picture

SafelyGraze said:

they should continue their schooling to earn MS, PhD, and professional degrees, and to take multiple (unpaid) internships overseas.

employers will be snapping up students with those credentials and paying them top dollar

must...stop....laughing...can...hardly breathe.....

         .....gasp..........

Please don't tell me that you've quit your job to become an Herbalife distributor.

Tue, 01/29/2013 - 18:22 | 3196531 Parrotile
Parrotile's picture

Herbalife's so "Last Year". Keep up with the market - go for Craze

http://www.nutraplanet.com/product/driven-sports/craze-238-grams.html

In two exciting flavours too!!

Tue, 01/29/2013 - 15:30 | 3195812 Thomas
Thomas's picture

I think he was being facetious.

Tue, 01/29/2013 - 16:13 | 3195988 knowless
knowless's picture

http://en.wikipedia.org/wiki/Irony_punctuation

the idea just never catches on for some reason..

Wed, 01/30/2013 - 11:57 | 3197421 SafelyGraze
SafelyGraze's picture

testing:

backward ? copy/paste from wikipedia link   

html copy/paste from same link    "⸮"

"?"

Tue, 01/29/2013 - 15:31 | 3195820 Fleecer
Fleecer's picture

$200 billion in loan defaults with zero collateral.

 

... what about eternal wage garnishment, or ultimately a reduction of SS benefit?  Thought student loans were the only loan you truly can't walk away from in bankruptcy?

Tue, 01/29/2013 - 15:58 | 3195941 lemonobrien
lemonobrien's picture

slave for life bitch; now suck it.

Tue, 01/29/2013 - 17:25 | 3196285 Groundhog Day
Groundhog Day's picture

Their is another way out.  When the next war starts, they will offer these students debt forgiveness for being a good patriotic citizen.  I can see the advertizement now.  "Play call of duty live and win a chance to have your debt forgiven"

Tue, 01/29/2013 - 18:17 | 3196512 wisefool
wisefool's picture

Service means citizenship! Would you like to learn more about the planet Clandathu?

Tue, 01/29/2013 - 18:26 | 3196551 Parrotile
Parrotile's picture

Seeing as it's populated with very large bugs farting plasma bolts, I'll give this one a miss if that's OK by you!

(I'm sure there are better venues locally - just checking my updated version of "The Hitch-hiker's Giude to the Galaxy")

Tue, 01/29/2013 - 21:58 | 3197332 trollin4sukrz
trollin4sukrz's picture

WTF troops, do you want to live forever? CHARGE!

Tue, 01/29/2013 - 16:01 | 3195948 AustriAnnie
AustriAnnie's picture

Who needs bankruptcy?  Everyone gets to walk away from whatever they still owe after 20 years.  (Or 10 if you work in public "service".)

The trick is just to pay as little in until then as possible.  Student loan payments are just another form of income tax now, you pay a certain percentage of your income, according to your "ability".  Interest paid on student loans just decreases your regular income taxes, so you are really just trading student loan payments for taxes.  And this way, the banks and retailers get a cut out of the deal.  

They are now socially engineering by controlling student loan payouts and payments, just as they have already socially engineered through the income tax system.  (With social security probably next on the list: If you do A, B, and C, you get more social security than if you do D, E, or F)  

Its just another way of bringing consumption forward to engineer profits for banks and corps, while paying public servants to administrate/regulate it all.  The responsible students pay it back and forego consumption for decades in order to make their payment on a frozen or falling wage, while others who check the right box on a form get the money back through entitlement programs or government sector pay increases.

 

Tue, 01/29/2013 - 16:55 | 3196156 Doomer
Doomer's picture

Exactly.  The idea that this is unsustainable is just wishful thinking by people who long for the good-old-days when the goverment didn't back-stop everything and money printing was taboo.  The goverment will just pay off the bad loans and add that debt to the national debt.  People will work until they die, paying the interest via their taxes, as long as the TV stays on, the cheap beer is on the store shelves, and the pizza gets delivered.  This is the Matrix folks.  The time when it collapses on its own is so far out, it can't be predicted.  It will take some kind of epic ecological disaster  or massive computer sabotoge kill the system.  There is plenty of fuel and grease to keep this machine running.  Only a monkey wrench in the works will stop it.

Tue, 01/29/2013 - 21:05 | 3197145 SeattleBruce
SeattleBruce's picture

"The time when it collapses on its own is so far out, it can't be predicted."

We may not be able to predict it exactly, but I doubt it's as far out as you think.  I will say this, the world's debt problem via the paper money from nothing ponzi scheme, has gotten way worse, since they plugged it up a bit in 2008, and they're scrambling around plugging holes all over the world, papering it over, and busily creating outrageous economic hyperboles that have no basis in reality, but are still basically believed by the sheeple.  At some piont 'way worse' will become 'exponentially worse.' 

Also, all TPTB in the many developed nations that want to maintain the ponzi can't seem to agree on just how to do that, evidenced by Germany and others desire to repatriate gold, and the paper currency war that's flaring.  At some point in the not too distant future, one of the many plugs in the dam will break, causing many others to crack and break under the massive strain, and the rushing flood will be upon us.  Prepare.

Tue, 01/29/2013 - 16:58 | 3196182 anti-reifist
anti-reifist's picture

"responsible students pay it back and forego consumption for decades in order to make their payment on a frozen or falling wage"

Including this kind of moral rhetoric in debt conversations does nothing but play into the hands of the banks and their government backers.  You might as well classify those students as 'gullible'; it's not any more or less accurate. 

Tue, 01/29/2013 - 17:29 | 3196305 AustriAnnie
AustriAnnie's picture

I can't decide whether I agree with you or not.

The way I see it, the moral aspect matters.  I can't decide where the line is.   And this is part of the problem.  Is it "responsible" to pay into a system that was forced upon me?  

Those of us who refuse to walk away from a debt and put a taxpayer on the line for it, end up paying for our debt as well as the debts of others who do walk away.  The alternative is to say fuck it and refuse to pay to support the system, and if someone else is dumb enough to pay then its their problem, I'll get mine.   Its hard to walk the line and neither be a net taker or a net giver.  You can't be self-sufficient because you have to live in the world as it is -- all you can do is choose between various paths within the same corrupt system.

Tue, 01/29/2013 - 21:40 | 3197267 Dingleberry
Dingleberry's picture

I'll make it easy for you as I spent a ton of time talking to kids trying to get them from going into debt bondage. Here is the deal: you won't just be fighting the kids, you will be fighting their parents, too. Parents do not even know how to spell the word "no".

In their collective minds, tomorrow never comes. And certainly not with interest.

Tue, 01/29/2013 - 16:12 | 3195983 Whiner
Whiner's picture

Statute will again be amended to make these funny money debts dischargeable. The more recent loans were never intended to be collected. Uncle Sam Obammy: "I...uh... Just put this on my tab. Thanks." "Oh I gotz not more credit? Datz yo problem now."

Tue, 01/29/2013 - 17:14 | 3196244 Yardstick of Ci...
Yardstick of Civilization's picture

Just move to place where local law doesn't allow for wage garnishment (thank you, Texas). Of course, you can kiss tax refunds and any hope of social security goodbye. But hey, it's something . . . .

Tue, 01/29/2013 - 17:19 | 3196259 Lugnut
Lugnut's picture

Exactly, which is why I don't know why the powers that be worry about it, Sure the loans can be defaulted upon, but they can't be escaped from through bankruptcy. The money was created from nothing, and will be repayable to the grave.

Do a bundle wrap up and sell it as a AAA CDO. Guaranteed revenue stream bitchez. Until its not.

At least our generation confined itself to just getting upside down on their credit cards at school, buying booze raman noodles, and spring break trips.

Tue, 01/29/2013 - 15:35 | 3195836 NoDebt
NoDebt's picture

Where do you get that it's the banks doing these loans?  What little involvement they had in this process years back was eliminated completely a couple years ago.  It's all straight-from-the-government on this stuff now.

Don't worry, no actual bank will be harmed during the making of this tragedy.  Only taxpayers.  And, really, who gives a fuck about taxpayers at this point anyway?

Tue, 01/29/2013 - 15:55 | 3195930 youngman
youngman's picture

You said it...the TAXPAYERS will be harmed....the Producers...the TAKERS...will have no harm..no foul..no problem...just more welfare

Tue, 01/29/2013 - 16:09 | 3195973 NoDebt
NoDebt's picture

Exactly.  It'll just sit there as a big negative on the government balance sheet (or probably off-balance-sheet like Fannie and Freddy do now) and suck on the taxpayer's teat for who knows how long.

The real horror of this is that big government is the winner here.  In such a situation they can decide if they want to make it a benefit to you (welfare- writing it off or never pursuing collection) or your worst nightmare (aggressive collection, prosecution for "fraud", whether real or imagined, etc.)  Imagine if they did that on a case-by-case basis?

THEY OWN YOUR ASS.  You will do as government commands or suffer the consequences.  No escape possible.  Couple trillion of defaulted loans is a small price to pay for the control that accrues to the government.  And it's not even the government paying it.  Taxpayers do, of course.  But government gets all the control to use as the adminsitration and bureaucrats see fit.

If you're a big government fan that is the ultimate win-win.

Tue, 01/29/2013 - 16:08 | 3195976 New_Meat
New_Meat's picture

another step towards collapsing the "system"

stick it to the man!

Tue, 01/29/2013 - 16:59 | 3196188 anti-reifist
anti-reifist's picture

Oh they're involved--they get plenty of profits from many types of loans.. when the system works.  Only the losses are socialized.

Tue, 01/29/2013 - 17:39 | 3196359 caShOnlY
caShOnlY's picture

So do you recommend that the banks continue to lend money to those who have no chance to ever pay it back?

Q: did they ever stop? because if they did this country is down the shtter in a hurry.  It runs on EZ credit - we don't need money anymore, this is the new improved america.

The american dream is 10 credit cards and a new chevy.

Tue, 01/29/2013 - 18:06 | 3196478 Strider52
Strider52's picture

My friend's brother just got another tranche of Student Loan. He got $6,000, bought a bicycle, tons of Oxycodone, bottles of alcohol, weed, etc. He is NEVER going to pay it back, and has no intention of ever doing so. Never did.

Wed, 01/30/2013 - 07:56 | 3198134 Cap Matifou
Cap Matifou's picture

The "not paying back" is encoded into the money system. It is a musical chairs game, where somebody will be not able to bring up the "money" plus interest.

As an early FED director has put it:
http://quotes.liberty-tree.ca/quote_blog/Robert.Hemphill.Quote.CA66
"Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is."

 

Tue, 01/29/2013 - 16:16 | 3196002 Larry Dallas
Larry Dallas's picture

This and those who show the prowess and discipline to become personal injury attorneys. That's about it in this fine land.

And burger flippers.

Everything else is finance based.

Tue, 01/29/2013 - 16:55 | 3196162 aerojet
aerojet's picture

Don't forget car sales and leasing, motorcycles, and all kinds of other leisure products as well.  Video games! 

Tue, 01/29/2013 - 23:33 | 3197640 natty light
natty light's picture

You forgot overpaid coaches and staff.

Tue, 01/29/2013 - 23:43 | 3197668 Navymugsy
Navymugsy's picture
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

? Albert Einstein

Wed, 01/30/2013 - 01:04 | 3197834 ToNYC
ToNYC's picture

We'll always have hooking! Who's not to like there?

Tue, 01/29/2013 - 15:21 | 3195757 Bicycle Repairman
Bicycle Repairman's picture

This is a game of chicken.  Students, your opthamalogist friend especially, think that .gov will blink.  And .gov will blink.

Tue, 01/29/2013 - 15:20 | 3195759 camaro68ss
camaro68ss's picture

I said F*** collage, started working after high school, Im now 26, have a nice house, 20k in the bank and 700 ounces of that shiny silver stuff that only cost $5 to dig out of the ground.

 

I don’t have one friend that went to collage that has a house or is even close to where im at now in life. Hell, most of them don’t even have jobs yet or are flipping burgers.

Tue, 01/29/2013 - 15:24 | 3195786 jimmytorpedo
jimmytorpedo's picture

And they probably can't spell college either.

Tue, 01/29/2013 - 15:33 | 3195798 camaro68ss
camaro68ss's picture

+1

haha, you got me there.

I should have spent 40k to learn how to spell better. haha

Tue, 01/29/2013 - 15:34 | 3195835 jimmytorpedo
jimmytorpedo's picture

At least we can agree on what a nice car is/was.

ps reading is a good way to learn how to spell

save your money for the camaro!

Tue, 01/29/2013 - 15:46 | 3195889 camaro68ss
camaro68ss's picture

lol, already have the camaro, remember i said F*** "collage" and started making money young. hahaha

Never was a good speller, nor was einstein, not saying im einstein.

Tue, 01/29/2013 - 16:18 | 3196009 Whiner
Whiner's picture

That's okay, Camaro. A college degree don't mean nuthin' no more. I have five kids. Only one did not get advanced degrees. He has a greater net worth than the four sibs combined. You are plenty smart, Dude. Keep stackin', and keep on truckin'

Wed, 01/30/2013 - 09:01 | 3198210 jerry_theking_lawler
jerry_theking_lawler's picture

well, it does matter about a "collage" degree if you are in math, science, or especially engineering. i could never hire people to run plants if they do not have a basic skill set....and this comes from an engineering college degree.

now some other stay-at-home, lay-on-the-couch, walk-around-in-pajamas type degrees are like toilet paper......also, i have noticed some engineering programs 'tweaking' their curriculum to dumb it down a bit......i have had some talks with certain schools telling them i am not going to recruit from them after they made these changes......its sad that post secondary education has become strictly a business.

Tue, 01/29/2013 - 15:30 | 3195808 SilverIsKing
SilverIsKing's picture

College would have taught you to spell college correctly and put an apostrophe in I'm.  Otherwise, you are correct, college is useless.

Tue, 01/29/2013 - 15:35 | 3195842 Thomas
Thomas's picture

It's not that simple. College is what you make of it. You can squander $200K or prepare yourself for a lifetime. The days of just showing up, checking the box, and then assuming the rest will take care of itself are over. One thing college does uniquely is provide a mechanism to transition to adulthood. Again, one can squander it, but you don't have to do so.

Tue, 01/29/2013 - 15:48 | 3195899 chalcedonite
chalcedonite's picture

"One thing college does uniquely is provide a mechanism to transition to adulthood."  ... sad

Tue, 01/29/2013 - 16:05 | 3195965 NotApplicable
NotApplicable's picture

College is where stupid people go to get a piece of paper that says it doesn't matter.

Tue, 01/29/2013 - 18:50 | 3196636 Parrotile
Parrotile's picture

Maybe the case for the Liberal Arts / Law Degrees, but you better hope that's NOT the case for Medicine and the "Hard" Sciences.

Don't know about you, but I'd prefer those I might have to rely on for critical services to be considerably smarter than the average shmuck - people somewhat above "The Reader's Digest Guide to DIY Surgery" level!

(and the same goes for Engineering systems - where consequences of failure can be quite catastrophic in the most literal sense!)

Tue, 01/29/2013 - 17:01 | 3196195 in4mayshun
in4mayshun's picture

Just to be fair though, my neighbor makes $315,000 per year for part-time work because he spent 7 years in college. I think the greater issue is not that degrees are worthless, but that the vast majority of degrees are meaningless in our current society. I mean c'mon, a 4 year degree in Lib Arts...

Tue, 01/29/2013 - 17:24 | 3196278 astoriajoe
astoriajoe's picture

slightly off topic, but is there any condition that would cause any ZH readers to send their diplomaback to their alma mater and renounce their degree?

Tue, 01/29/2013 - 18:02 | 3196458 ok
ok's picture

yeah, a refund

Tue, 01/29/2013 - 15:22 | 3195772 Cocomaan
Cocomaan's picture

I was talking to an opthamalogist. She's living the American dreams--successful as hell--except she cannot even  afford a starter house. If the doctors can't afford houses, don't gloat; be afraid, cause something is wrong.

Thanks for writing this. My wife and I, in our 20's, are by no means rich but we are pretty well off. Looking at houses, or hell, just land, has made me incredibly depressed. All this cheap credit means houses can be nice and overvalued in exchange for 30 years of your life. We want to do our own agriculture, but it's damn near impossible without going over a debt cliff.

Tue, 01/29/2013 - 16:42 | 3196112 knowless
knowless's picture

when i wasn't losing as hard as possible i tried to figure out how to get that land.

they won't let you have it unless you go all in. my favorite part is the realtors cartel, or whatever the fuck they are, suing property listing agencies(websites) so that expressed "market value" is still their racket.. real fun game.

they're as bad as the government as far as inefficiency and bureaucracy go, the MLS bullshit, horrible sites, difficult to navigate, no public oversite(being able to list and compare easily with real data).. totally on purpose 100%.

/priced out.

Tue, 01/29/2013 - 17:03 | 3196204 Cocomaan
Cocomaan's picture

Fuck, you're totally right. 

Tue, 01/29/2013 - 15:24 | 3195784 bugfixx
bugfixx's picture

The banksters conclude that nothing is wrong as long as the hamsters keep running on that debt wheel.

Tue, 01/29/2013 - 15:37 | 3195828 TrumpXVI
TrumpXVI's picture

Are you sure about your ophthamologist friend, Thomas?  She's successful, but can't afford a starter house?  That seems very strange.  Are you sure the real problem is that she cannot get a mortgage?  That would make much more sense.

My nephew-in-law is a neurosurgeon.  He is rolling in money.....cash money.  But he and my niece did have a lot of trouble getting a mortgage.  He is totally good for it....in spades, but the local banks are not willing to lend.

Tue, 01/29/2013 - 15:42 | 3195874 Thomas
Thomas's picture

Typical student loans out of med school are ballpark $200K. You spend a number of years not making all that much money. Your description of your neurosurgeon is pretty accurate: started slow and then picked up real speed. I have seen that the average surgeon makes $215K. That's a lot of money but you spend a ton to get there and you are in training for an estimated 14 years between high school and private practice. I once did the math on if I left my job at 29 and went to med school instead of simply taking another well paying job (at like Merck or Pfizer). With VERY optimistic assumptions--in retrospect, too optimistic--I would break even financially at 55. I think more realistically I would have never broken even. The opportunity costs were too high. The guys who hammer education are onto something in that a well-paying job that does not need college has a huge savings in opportunity costs (no tuition and accumulated years of salary.) I was lucky in that, despite too damned many degrees (five in all including high schoool) I managed to start working at 25. Opportunity costs not too bad.

Tue, 01/29/2013 - 17:26 | 3196289 Mrmojorisin515
Mrmojorisin515's picture

healthcare is a bubble

Tue, 01/29/2013 - 15:35 | 3195840 Political_Savage
Political_Savage's picture

"You didn't build that debt.."

Tue, 01/29/2013 - 15:44 | 3195885 Carl Spackler
Carl Spackler's picture

You're swinging and missing on the issue, Thomas.

The small, private student lending market is a contract law matter, when it comes to default and repayment. That will work itself out.

The big dollars and problems are in the government loan markets.  Used to be called FFELP and issued through Sallie Mae. 

Now, however, the federal government has taken this on-balance sheet, and it issues loans through the Department of Education directly to students.

Consequently, the real problems will lie with the federal government not getting repaid by the borrowers.

Two things can happen: 

1.) the government collectors chase dead beats like the IRS chases tax dodgers

2.) Obama tries to look like a hero saving the lives of young, over-levered and moronic, future Democrat voters by offering amnesty ("a new life" thanks to big government) in the form of torn up credit agreements and no more debt

At the end of the day, the real problem is not a bank issue but a political football, and honest, hard-working Americans will end up taking some form of shot to the groin, so the political class can look like saviors.

 

 

Tue, 01/29/2013 - 16:10 | 3195977 NotApplicable
NotApplicable's picture

I find it interesting that all of the bailout talk is only for loans taken out after 2007.

Tue, 01/29/2013 - 16:25 | 3196041 AustriAnnie
AustriAnnie's picture

"I find it interesting that all of the bailout talk is only for loans taken out after 2007"

Because they want to bring future consumption forward to today.  They know that they can't afford to bail out all the debts, old and new.  But they know that if they can get students to go out TODAY and take out a loan and spend it into the system, then they get their "aggregate demand" boost today, and won't have to worry about the bulk of the bailout burden till the next election cycle.

This also allows students to roll over debt.  If you have loans from prior to 2007 from your bachelors, this incentivizes you to go get a Masters/PhD, allowing you to defer payments from previous loan, use current loan to live on (since you are probably unemployable).  Now, you can take out unlimited loans today, use them to pay off the previous ones (or not), and get the second loan forgiven.  Thus kicking the can down the road for each borrower, so that the loans at least show up as not in default because they are in deferment.  Makes for happy statistics and pretty graphs.  (Added bonus: students going back to school because they couldn't get work no longer contribute to unemployment stats)

Tue, 01/29/2013 - 16:16 | 3195995 AustriAnnie
AustriAnnie's picture

It was never meant to be a loan program (implying something gets paid back).

Once the gov't started direct loans, it became another entitlement program.  Just add "students" to the list of those entitled to spend someone else's earnings (this one was for the teacher's union and the sellers of igadgets, as well as to secure the votes of an entire generation of people).

They CANNOT require students to pay full payments, because they can't.  Buried in debt, with nothing to show for it but an obsolete igadget, living at home with their parents (parents who are probably also buried in debt due to cosigning on their kids' loans and/or being underwater on their homes), can't get jobs because the baby boomers can't afford to retire, and with low wages if they can get a job.  And meanwhile the mountain of debt keeps growing and the plan is for these kids to foot the bill for it all?

The very definition of a ponzi scheme gone bust.  Those paying in are not covering those trying to cash out.

Tue, 01/29/2013 - 15:49 | 3195901 Groundhog Day
Groundhog Day's picture

New doctors can't afford houses until they are well into late 30's unless they were fortunate to have their parents subsidize part of their medical school costs.  If they took loans for the whole kit and kaboodle, they better be specilized surgeons if they ever plan on paying that loan and a home loan off in thier lifetime.  Maybe they should introduce a 100 year mortgage so they can pass it on their children one day....weeee Their i made Krugman and Bernanke blush

Tue, 01/29/2013 - 20:55 | 3197099 Buck Johnson
Buck Johnson's picture

I know people in your friends situation and it's pathetic.  They are just renting and having to pay the school loan off.  When the loan payment is as high if not higher than a mortgage payment then how in gods name are new professionals going to be able to buy the house, buy the two cars and have the 2.5 kids with dog on top of getting married.  They won't and so no one is truly buying houses.  What they need to do is allow student loans back onto banktruptcy and it will help get this debt off our backs and including the govt. back. 

Tue, 01/29/2013 - 20:19 | 3196962 Chuck Walla
Chuck Walla's picture

[gunny]I got your number, I got your ass,  you will not cry....[/gunny]

FORWARD SOVIET!

Tue, 01/29/2013 - 15:03 | 3195655 MachoMan
MachoMan's picture

Well, contract law doesn't have anything to do with prospective loans...  we have to stop the bleeding in the first place...  of course, that would require the entire educational complex to fold up the circus tent, which in turn would hurt the propaganda machine...  and leave hundreds of thousands of unemployed youngsters without indoctrination in an economic and political environment that is purposefully destroying them, but that's besides the point.

These are also highly regulated industries...  while you can't change a vested right ex post facto, you can change regulation that may have a negative impact on market participants, but not impermissibly violate a contractual right...  the analysis tends to depend which side of the bed the judiciary woke up on that morning...  (in case you were wondering how the two are practically different).

Tue, 01/29/2013 - 15:04 | 3195685 SmittyinLA
SmittyinLA's picture

Actually the US taxpayers guarantee most student loans, the banks are just tools of debt.

If the "students" stiff or simply disappear (you can bet there are millions of ghost students that disappear as soon as the first payment comes) Sally Mae steps in.

 

 

Tue, 01/29/2013 - 15:12 | 3195719 KidHorn
KidHorn's picture

I think more than 90% of the loans are sallie mae. So I agree that the gov't is already on the hook for the bad loans.

My bet is the gov't just eats the losses and once people figure this out, it will be a free college education for everyone.

Tue, 01/29/2013 - 15:39 | 3195863 NoDebt
NoDebt's picture

I've been running up and down this thread posting exactly that piece of info.  90% is what it WAS.  Since a few years ago it's 100% government on all new loans.  You can't get a private student loan any more unless your Great Aunt Ilene gives you one personally.

No banks here, guys.  No banks.  Just taxpayers on the hook.

Still feel like writing them off? 

Tue, 01/29/2013 - 15:53 | 3195922 Groundhog Day
Groundhog Day's picture

Students can not default on student loans.  It follows them everywhere unless they decide to work for cash thier whole lives or leave the country.  It will be tagged to their SS number.  If they ever find work the government will know about it and come after them for it

Tue, 01/29/2013 - 16:38 | 3196101 AustriAnnie
AustriAnnie's picture

In theory, yes.

In reality, not so much.

They can only get 10% of your income now (part of which is a tax deduction, reducing your income taxes owed). Then after 20 years, poof, the bulk of the balance is forgiven.

It is an illusion that you carry the debt burden for life.  Your debt just gets comingled with the collective debt of the nation and we all work as wage slaves for life, and leave the balance to future generations. And so on...till the ponzi collapses.

Tue, 01/29/2013 - 15:55 | 3195931 centerline
centerline's picture

Well, not entirely.  Most Universities have expanded and/or rennovated as the demand for college education soared.  Some significantly.  How where those expansions financed?  Who is the real beneficiary of this government spending?

Tue, 01/29/2013 - 16:17 | 3196003 NotApplicable
NotApplicable's picture

Gary North and others over at Mises.org have written about this extensively as it's just the latest example of mal-investment in higher levels of production. In this case, production of education with no market demand, which is unsustainable, as well as the increased staff/infrastructure it currently requires.

IMO, college campuses are merely FEMA camps for the young.

Tue, 01/29/2013 - 16:52 | 3196147 centerline
centerline's picture

In the end, it is still debt.  Credit creation and money velocity at any cost.

Tue, 01/29/2013 - 16:30 | 3196063 EscapingProgress
EscapingProgress's picture

Free as in worthless.

Tue, 01/29/2013 - 15:06 | 3195690 ParkAveFlasher
ParkAveFlasher's picture

I would like a skittle-shitting unicorn pony for xmas.

Tue, 01/29/2013 - 15:27 | 3195796 jimmytorpedo
jimmytorpedo's picture

I have one of those for you, if you don't mind all brown skittles.

Oh ya, and I cut of the horn and sold it to the chinese doctor down the street.

Tue, 01/29/2013 - 18:55 | 3196656 TheFourthStooge-ing
TheFourthStooge-ing's picture

When it comes to animal horns, doctors of Chinese citizenism are unprecedented glutoons.

Tue, 01/29/2013 - 15:11 | 3195718 ILikeBoats
ILikeBoats's picture

Contract law has been suspended - look what they did the GM bond holders.

Tue, 01/29/2013 - 15:31 | 3195819 LawsofPhysics
LawsofPhysics's picture

Right, is that the same contract law that allowed bankers to separate the note holders from borrower and create MBS?

LMFAO!!!!

Tue, 01/29/2013 - 15:37 | 3195855 bobnoxy
bobnoxy's picture

I hope this doesn't shoot any holes in Krugman's assertion that one man's debt is another man's asset. I guess he forgot to mention that as those debts grow, the quality of the offsetting asset falls?

Tue, 01/29/2013 - 16:16 | 3195998 Bunga Bunga
Bunga Bunga's picture

Isn't a slave an asset anymore?

Tue, 01/29/2013 - 15:40 | 3195865 Son of Loki
Son of Loki's picture

Grab any profits and pass any losses onto the innocent middle class taxpaxers who had nothing to do with this rip-off in the first place. Same with the zero-down mortgages.

Tue, 01/29/2013 - 17:04 | 3196209 rogeliokh
rogeliokh's picture

No wonder why.. Who can ever afford to pay 30-40k/per year for College, prices for education and Health care

beyond redicolous in this Country. Besides .GOV doesn't pay it's debt either, why should anybody else act diferently.

Spend $120k for education and have No job afterall? Just print the freaking money and give it to everyone

Let's spend, while it has some value..

Tue, 01/29/2013 - 17:14 | 3196245 Citxmech
Citxmech's picture

Changing the rules to allow for discharge in bankruptcy could/would fix the problem.  Fully consistent w/Contract law too (or at least it would have been if the agreements weren't made with non-dischargability as part of the consideration).

No - the lenders will get a bailout and the system will destroy more wealth in the process:

Winning!

Tue, 01/29/2013 - 20:03 | 3196907 Silver Bully
Silver Bully's picture

'I would like to see the government simply say to the banks, "It's your problem collecting this debt. Don't look to us for any help."'

Are you kidding? You know how easy it is for the government to get the money right now? Bill collectors don't get the debt. The IRS already does. When a borrower defaults, the State siezes up to 15% of your paycheck AUTOMATICALLY. You work for an employer who pays taxes? They WILL take the amount out of your paycheck and send it to the government. They WILL take keep your tax return. they WILL take up to 15% of your Social Security, if you make it to that age and still owe on the loan. Bottomline: you take out a loan with Uncle Sam and HE WILL GET HIS MONEY.

 

Look ma! It's so easy an IRS computer can do it!

Tue, 01/29/2013 - 20:59 | 3197122 Dingleberry
Dingleberry's picture

1-Basically these kids got access to insane amounts of credit.

2-90% of them voted for Obama (it reflects their "intellect")

 

 

Now I ask you, what logical course would combining 1 & 2 be?

"Hope 'n change"....allow me to introduce to you "Mr. Reality"

 

So youngsters, have a nice, debt-ridden life. You voted for it. 

 

Tue, 01/29/2013 - 14:55 | 3195615 Dr. No
Dr. No's picture

The big banks will dump risky debt to the feds.  Obama will order the debts covered since "everyone should have the RIGHT to go to college".  Defecit will soar.  Finally it will end when the FED decides they cant afford to carry the government's burden.  The fed gov will be forced to default on some promises and hopefuly one of those is college loans.  If that happens, Tuition can start to decline to more affordable levels.

Tue, 01/29/2013 - 14:56 | 3195630 Thomas
Thomas's picture

Indeed, that is what will happen. I, on the other hand, would start beating bankers like baby harp seals, but that is just my, admittedly lopsided, view.

Tue, 01/29/2013 - 15:14 | 3195668 camaro68ss
camaro68ss's picture

FEMA, camp freedom, for you with that attitude....

 Report for reeducation

Tue, 01/29/2013 - 15:21 | 3195762 Temporalist
Temporalist's picture

Reeducation is better than no education.  Right?

Tue, 01/29/2013 - 15:33 | 3195831 Political_Savage
Political_Savage's picture

Do I have to take out a student loan for re-education?

Tue, 01/29/2013 - 15:52 | 3195920 brak
brak's picture

is the re-education system as bad as our education system?

likely one in the same I suppose

Tue, 01/29/2013 - 16:38 | 3196093 Bunga Bunga
Bunga Bunga's picture

Your cell comes with an Orgasmatron. http://www.youtube.com/watch?v=t1shIHF0KJs

Wed, 01/30/2013 - 01:40 | 3197903 e_goldstein
e_goldstein's picture

Use a bat or a pipe. It tends to be easier on the hands.

 

Tue, 01/29/2013 - 15:34 | 3195834 LawsofPhysics
LawsofPhysics's picture

"Tuition can start to decline to more affordable levels"

------------------------------------------

Only if the cost to provide the service does. What planet are you on?  So colleges will adopt candle light and wood burning stoves?  All that power to keep the heat on and heat those northern schools cost a pretty penny.

Tue, 01/29/2013 - 16:22 | 3196035 NotApplicable
NotApplicable's picture

Community colleges, FTW! Thanks to realistic budget constraints, they do crazy things, like utilize EXISTING buildings! Locally one took over most of a vacant mall, where as the state land-grant university can't build without dozing any number of buildings.

Tue, 01/29/2013 - 18:36 | 3196569 mercenaryomics
mercenaryomics's picture

I actually just started teaching at a local community college (adjunct asst prof economics) and have kicked myself in the ass every day for not going to one my first 2 years, paying that cheap(er) tuition before transfering to my blood sucking debt-slave factory four year college. I also should have majored in something useful like physics or math, but that's another complaint. 

Tue, 01/29/2013 - 20:21 | 3196981 pursueliberty
pursueliberty's picture

CC is where it is at for most.  I booked around 1/3 of my hours for almost half the cost as the state university I graduated from.  I really should have taken my first 60 hours there but it didn't matter due to my pell grant.

 

How are more people not eligible for Pell, or did it go away?  I didn't pay tuition for my second of third year with a grant, and about half of my last year was covered.

Tue, 01/29/2013 - 17:27 | 3196298 Dr. No
Dr. No's picture

Lol.  You think colleges, when enrollments are reduced, will not cut costs and lower tuition?  I guess supply/demand does not apply to colleges....

Tue, 01/29/2013 - 14:55 | 3195621 sodbuster
sodbuster's picture

Not to worry- our Marxist- in- chief will make all contracts null and void- cause after all, we OWE everyone, everything they want!!

Tue, 01/29/2013 - 14:55 | 3195624 tickhound
tickhound's picture

Change it to an 8 year or 250 credit BA program?

Tue, 01/29/2013 - 15:00 | 3195642 Dr. No
Dr. No's picture

"Lots of people go to college for 7 years...."

 

"Yeah, theyre called Doctors..."

Tue, 01/29/2013 - 15:05 | 3195678 francis_sawyer
francis_sawyer's picture

Please God... Just get me thru to March Madness & Girls Gone Wild in Cancun on Spring Break...

Tue, 01/29/2013 - 15:09 | 3195709 MachoMan
MachoMan's picture

Fuck that, they're called normal...  college doesn't have a damn thing to do with learning anything other than how to improvise bongs, manipulate other humans into performing the sex act(s) you desire, wear stupid outfits to sporting events, bum rides, heat up pizza, fit all your dirty laundry into the car to take back home on break to have mom wash, win at virtually all video games, compete in the beer olympics, and schmooz to get passing grades every once and a while so you can pretend like you're supposed to be there for academic reasons.  It's a really awesome vacation for most folks...  where you have to wear your pajamas every once and a while to a class room and pretend to pay attention while you do crossword puzzles and sext...

If it was an investment, then kids would quit going...

Tue, 01/29/2013 - 15:17 | 3195745 koaj
koaj's picture

i roomed with engineering and physics guys. Every night after getting baked we would play "can you build a bong without leaving your chair using only whats in your arm's reach"

if my boys want me to spend 100k + each so they can listen to pink floyd, phish, and bob marley while getting baked, i'll do that at home, save the cash and get better weed

Tue, 01/29/2013 - 15:20 | 3195749 francis_sawyer
francis_sawyer's picture

Go STATE!... [figuratively]....

Tue, 01/29/2013 - 15:23 | 3195783 Bicycle Repairman
Bicycle Repairman's picture

I learned how to eat pizza, play beer pong and how to shower more than once a week.  Good enough for a BS.

Tue, 01/29/2013 - 15:31 | 3195824 francis_sawyer
francis_sawyer's picture

"Ben Shalom"?

Tue, 01/29/2013 - 15:52 | 3195918 Bicycle Repairman
Bicycle Repairman's picture

Not sure.  They gave me a diploma and I filed it somewhere without looking at it.  It could say "failed chess colloquium" for all I know.

Tue, 01/29/2013 - 15:30 | 3195809 Renewable Life
Renewable Life's picture

Perfectly Put!!!

I would add however, college has ALSO become a form of the extended welfare system we have employed to "take" bodies out of the unemployment system numbers, food stamps system, and welfare system! 

We have had real negative job growth in America for the last 5 years, but 5 million kids have graduated from high schools in that period of time, they are considered adults now and without the " college loan system", they would head straight to the welfare system!

Tue, 01/29/2013 - 16:50 | 3196144 jal
jal's picture

I would add ...

Expanding the Dream act so that foreign students can get their "path to citizenship".

Ohhhh!

More suckers to borrow money to keep the system going.

 

Tue, 01/29/2013 - 16:23 | 3196045 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

This is complete bullshit...there are many out there who benefit from college and actually learn things. Most decent paying jobs require degrees regardless of whether or not your job is related to the degree. This is the fact. The less education you have on paper, the worse off you will be. This isn't to say that those with more education are more intelligent(case: Krugman).

Tue, 01/29/2013 - 17:00 | 3196190 MachoMan
MachoMan's picture

Yep...  but if that was all that was out there, we wouldn't have a student loan bubble of epic proportions.  Res ipsa loquitur

Tue, 01/29/2013 - 17:12 | 3196242 knowless
knowless's picture

so jobs that don't require degrees require degrees... 

 

i really can't believe that you don't understand your own statement enough to make it.

 

spell it out for ya there lil fella: a degree from an institution of higher learning, in a specialised field, is applicable to another totally unrelated field, and yet that degree denotes SPECIFIC knowledge imparted? If the two(or infinite number i guess apparently) are interchangeable, then WHAT FUCKING KNOWLEDGE HAVE YOU GAINED?

 

what does your degree signifiy as to your skillset? 

if they are all interchangeable, then what are you?

'cause(der im dumb i say cause) i assure you, i could have graduated from a four year university, fucking easy. it was a moral dillema though, and in the end was not worth it in my reasoning at the time, especially given that i'm prone to make art or write poetry, you know, something that doesn't merit a fuckload of debt..

 

anyway, please resign yourself to facts eventually. i'm getting tired of waiting on people.

Tue, 01/29/2013 - 18:22 | 3196526 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

Your rant is all over the place. What is your point straight and simple?

  • Some, not all skills are interchangeable
  • Many jobs require those interchangeable skills
  • A degree shows more than anything, that you can work in a structured environment and progress towards a goal.

Well sure, if you are going to run around in the woods, eating crackers and writing poetry and painting then you shouldn't get a degree because I agree with you, it will not most likely not yield a high return. However if you have a specific plan for a professional career, then you should pursue that or related line of study.

Tue, 01/29/2013 - 19:18 | 3196744 Parrotile
Parrotile's picture

Whilst I cannot comment on Arts Degrees, most (if not ALL ) Science Degrees are structured to provide quite a range of skills. How do we know this? - the breadth of Postgraduate opportunities available to specific Undergrad. Degree holders.

This is how the system works - Undergrad. Degrees provide the widest breadth of experience to provide the best initial knowledge base. If you then choose to specialise further you can exploit particular sections of thie knowledge base in your future career path, should you choose to do so.

Tue, 01/29/2013 - 15:13 | 3195723 yogibear
yogibear's picture

Try 8 or more years. Many doctors have masters in other areas.

Bernanke's son has over $400k.

Ben Bernanke's Son Owes $400k In Student Loans. He knows they will be eaten by the taxpayer. 

http://www.loop21.com/politics/ben-bernankes-son-owes-400k-student-loans

 

Tue, 01/29/2013 - 15:32 | 3195765 francis_sawyer
francis_sawyer's picture

"a joobuck owed is a joobuck gained..."

Tue, 01/29/2013 - 15:22 | 3195766 insanelysane
insanelysane's picture

Love a good Tommy Boy reference!

Tue, 01/29/2013 - 14:55 | 3195625 JR
JR's picture

The stark reality comes from John Williams. 

May 2013 – End of the Road – John Williams |by Greg Hunter | LewRockwell.com

Anybody who thinks the U.S. is in a so-called recovery isn’t listening to economist John Williams. He contends, “We haven’t had a recovery and we’re not about to have one, and it’s getting worse.” Williams says it’s because, “The consumer is in very serious trouble. . . . The average guy is not making it. His income is not keeping up with inflation.” As far as Congress getting the budget and debt ceiling under control, Williams says, “Both sides are faced with devil’s choices.” If Congress does not get its financial house in order by the new deadline in mid-May 2013, Williams predicts, “It will be the end of the road . . . . They are not going to have another opportunity . . . they are pushing the limit as it is now.” Williams says he expects, “. . . a negative reaction in the next 3 or 4 months to the dollar.” Williams adamantly calls for hyperinflation to the U.S. dollar by the end of 2014. Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.”

Video – Dollar Selloff Within Four Months – John Williams:

http://lewrockwell.com/orig13/hunter-greg8.1.1.html

Tue, 01/29/2013 - 15:02 | 3195658 otto skorzeny
otto skorzeny's picture

the return to $4+ a gallon should help Johnny Six Pack out immensely

Tue, 01/29/2013 - 15:06 | 3195686 camaro68ss
camaro68ss's picture

I call for the reall S*** show to start mid July 2013, but who am i.....

 

FYI gas is 3.99 in Da BAy  (California)

Tue, 01/29/2013 - 15:07 | 3195694 ParkAveFlasher
ParkAveFlasher's picture

April.  $167/oz silver.

Tue, 01/29/2013 - 15:09 | 3195696 otto skorzeny
otto skorzeny's picture

of course the only people that can afford anything at all hold govt jobs-whether its a cop or TSA agent or a streets/san guy. we jumped 50 cents here this week.

Tue, 01/29/2013 - 15:10 | 3195714 blu
blu's picture

Shit gets real near the end of 2013. 2014 starts out on fire. Obama resigns end of 2014 due to health issues and heads for Costa Rica. And after that, things really go down hill.

Tue, 01/29/2013 - 14:57 | 3195631 Conman
Conman's picture

They already addressed this with pay as you earn program. So the incentive to work is even less now. lol.

 

http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn

 

Tue, 01/29/2013 - 15:02 | 3195664 Tyler Durden
Tyler Durden's picture

Pay as you earn deals with the discharge of obligations to debtors. Naturally the US would hardly have imprisoned any of those millions of insolvent "student" debtors, or even worse: made them work to pay off those loans.

The question of just how the loans on the federal balance sheet will be made money good however certainly remains, and that is where QE 7 will likely step in as Bernanke will have no option but to onboard those bad loans too which will likely hit some $500 billion when all is said and done.

Tue, 01/29/2013 - 15:08 | 3195708 ghostfaceinvestah
ghostfaceinvestah's picture

Yup, that is the endgame.  Eventually all excess debt will end up being funded by government deficit spending, and Bernanke monetizes the debt via QE.

Tue, 01/29/2013 - 15:37 | 3195838 francis_sawyer
francis_sawyer's picture

I always thought QE18 was the endgame... Moore's Law must be moving into a timewarp...

~~~

Blast from the Past [for neophyte ZH'ers]...

http://www.youtube.com/watch?v=ZTkTotl2CUo

Tue, 01/29/2013 - 16:22 | 3196034 NoDebt
NoDebt's picture

Tyler- it's worse than that.  When the mortgage bubble popped, led by subprime the banks at least stopped making those types of loans.

The governement is in NO WAY even slowing down on new student loans.  They aren't done piling up the bad loans yet, nor will they ever be.

$500B would be for openers.

Tue, 01/29/2013 - 14:57 | 3195633 Alcoholic Nativ...
Alcoholic Native American's picture

It costs money to jump through all those hoops.

Tue, 01/29/2013 - 15:01 | 3195650 Spastica Rex
Spastica Rex's picture

Obama says everyone has to go to college so that we can "innovate" and "compete" with the Chinese. I guess that means assembling plastic gadgetry requires "advanced" training. I don't know. Education "reform" is hard to understand for a simpleton like me. My several college degrees didn't change how stupid or worthless I am, I guess.

It all makes perfect sense, expressed in dollars and cents - pounds, shillings, and pence.

Tue, 01/29/2013 - 15:01 | 3195654 blu
blu's picture

"Going back to college on a student loan" is the new 99 week extended unemployment safety net. 0% of these loans will ever be repaid.

Tue, 01/29/2013 - 15:03 | 3195665 otto skorzeny
otto skorzeny's picture

took a few refresher courses at the local JuCo-alot of 40somethings taking courses

Tue, 01/29/2013 - 15:06 | 3195688 SeanJKerrigan
SeanJKerrigan's picture

Its possible yes, depending on when the inevitable erruption finally occurs -- but I'll tell you what, I have a friend more than $100,000 in student loan debt and she's working like crazy to pay it off.  It actually looks like she might succeed if she has a few years to do so. She lives at home and puts all available income toward paying it off... probably $20,000 a year toward the principle.  Of course, she's highly motivated since I think they might have a lean on the house if she isn't able to meet their demands.  It's her fault of course it got that bad, but there are responsible people out there.

Tue, 01/29/2013 - 20:23 | 3196986 three chord sloth
three chord sloth's picture

Go by any community college and you know what you'll see..?

You'll see a bunch of un/underemployed office workers taking welding/plumbing/electrical courses... they can't find decent work in an office anymore, but they heard there are good jobs to be had in the trades. And in the classroom next door you'll see a bunch of un/underemployed blue-collar guys taking computer/accounting/business courses... they can't make a living in the trades anymore, but they heard there are good jobs to be had in corporate America.

And the lies and the debt-machine rolls on and on...

Tue, 01/29/2013 - 20:46 | 3197068 object_orient
object_orient's picture

If I could give you more up arrows, I would.

Tue, 01/29/2013 - 22:04 | 3197351 blu
blu's picture

But if I had to place a bet, the trades are going to win this round. Maybe, for a couple hundred years. Corporate America is set to die.

Tue, 01/29/2013 - 15:02 | 3195656 SeanJKerrigan
SeanJKerrigan's picture

Some more Quotes for Times of Financial Instability (soon to be a book). Also, if you have the time, check out our websites here and my site here.

================

The social order today rests upon the mystification of consciousness, as does disorder as well." - Jean-Paul Sartre

“We retain the rhetoric of liberal democracy, but in concrete terms this supposed democracy gets enacted as the commodity culture, in which freedom of choice really means Wendy’s versus Burger King.” – Morris Berman

Deflation is not is a drop in prices caused by a technology-enhanced decline in the costs of production. That’s called progress. - Jim Grant

“Some, like most bankers, are so unfit for success they look like dwarves dressed in giants clothes.” - Nassim Nicholas Taleb, The Bed of Procrustes

The junk merchant doesn’t sell his product to the consumer, he sells the consumer to his product. He does not improve and simplify his merchandise. He degrades and simplifies the client. - William S. Burroughs, Naked Lunch

“The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels. For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all.” - H.L. Mencken

“From the Central State’s point of view, everything outside its control poses a risk. The best way to lower risk is to control everything that can be controlled.” – Charles Hugh Smith

 I will tell you now that what is coming next will be as awful as anything that has gone before, and quite possibly much worse. Poison is being offered as a cure, and if taken, will contribute to the suicide of the middle class. – Jesse, Jesse's Café Américain

"A belligerent state permits itself every such misdeed, every such act of violence, as would disgrace the individual." - Sigmund Freud

“Lonely dissent doesn't feel like going to school dressed in black.  It feels like going to school wearing a clown suit.” - Eliezer Yudkowsky

 

 

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