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Student Loan Bubble Forces Yale, Penn To Sue Their Own Students

Tyler Durden's picture




 

We have not been shy about exposing the massive (and unsustainable) bubble of credit being blown into the economy via Student Loans from the government. We have not been afraid to note the dramatic rise in delinquencies among these loans - and the implications for the government. However, as Bloomberg reports, it appears the impact of this exuberance has come back to bite the colleges themselves. In what can only be described as a vendor-financing model, the so-called Perkins loans (for students with extraordinary financial hardships) have seen defaults surging more than 20%. The vicious circle, though, has begun as the ponzi of using these revolving loan funds to 'fund' the next round of students is collapsing thanks to the rise in delinquencies. Schools such as Yale, Penn, and George Washington are becoming very aggressive at going after delinquent student borrowers. While financially hard-up graduates complain of no jobs, the schools are not impressed: "You could take a job at Subway or wherever to pay the bills ... It seems like basic responsibility to me," but perhaps that is the point - avoiding responsibility is seemingly rewarded in the new normal.

 

Via Bloomberg,

Yale Suing Former Students Shows Crisis in Loans to Poor

 

Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania with little choice except to sue their graduates.

 

The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.

 

Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans -- distributed and collected by the federal government -- Perkins loans are administered by colleges, which use repayment money to lend to other poor students.

 

“If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” said Deanne Loonin, an attorney with the National Consumer Law Center, a nonprofit advocacy group in Boston. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”

 

Perkins Pot

 

The increase in the amount of defaulted loans among poor students comes as President Barack Obama says he wants to expand access to college for working-class families and increase funding for the Perkins program. Under his proposal, the pot for Perkins loans would increase to $8.5 billion from about $1 billion. The Education Department would service the loans instead of colleges.

 

Aaron Graff, a farmer’s son from Denver, graduated from George Washington in 2010 with the help of $62,500 in scholarships over two years, according to his financial-aid award letters. He defaulted on $4,000 in Perkins loans.

 

Graff, 30, said he hasn’t been able to find a full-time job. He earns $800 a month from teaching high-school equivalency courses and restores basements for extra money. He said he is trying to pay off other student loans first because they were co-signed by his parents.

 

“I live on the bare minimum,” he said. “It’s not like I’m defaulting on my student loans to live the lavish life. I’m defaulting on my loans because I really don’t have it.”

 

...

 

Student Obligations

 

“Perkins loans are issued from a revolving fund, so any monies recovered through litigation increase universities’ ability to help other students with education costs,” Candace Smith, a spokeswoman for George Washington, said in an e-mail. The university doesn’t comment on specific lawsuits, she said.

 

...

 

“You could take a job at Subway or wherever to pay the bills and that’s something you need to do if you have agreed in taking a loan to pay it back,” McCluskey said. “It seems like basic responsibility to me.”

 

The interest rate on Perkins loans is 5 percent, and students get a nine-month grace period after leaving school or graduating. In the 2007-2008 academic year, 64 percent of Perkins loan recipients reported parental income of less than $50,000, according to Mark Kantrowitz, who runs finaid.org, a website on educational lending.

 

College Costs

 

With college costs climbing faster than the rate of inflation over the past four decades, students have taken out more loans, swelling outstanding education debt to $1 trillion, more than what Americans owe on their credit cards.

 

The University of Pennsylvania filed at least a dozen Perkins lawsuits last year, according to court records. Penn, based in Philadelphia, gave out more than $8 million in Perkins loans in the year ending June 2012, according to the school.

 

...

 

Promissory Note

 

...

 

Penn refers loans to a collection agency when they have been delinquent for 120 days. Michelle Brown-Nevers, an associate vice president, declined to discuss thresholds because she said she didn’t want to reveal collection practices.

 

...

 

Yale is suing Elizabeth M. Triggs, who studied there between 2001 and 2006 and signed five promissory notes totaling $8,255 under the Perkins program, according to a filing in Superior Court of New Haven last year.

 

Unpaid Perkins

 

...

 

Students who take out Perkins loans aren’t eligible for government income-based repayment plans when they run into financial trouble, unlike borrowers from the more popular Stafford loan program used by many middle-income families. Such repayment plans let students with high debt relative to their paychecks make smaller payments over time. Colleges can work with Perkins students to develop individual plans.

 

Financial Counseling

 

...

 

The federal government also lets universities and debt collectors charge higher collection fees than Stafford when they pursue a Perkins debtor.

 

On the first attempt, schools can charge 30 percent of loan principal, along with interest and late fees. They can charge 40 percent for the second effort and an additional 40 percent on litigation, according to the Education Department.

 

The fees are higher than the 25 percent allowed for government-backed Stafford loans because the lower value of the Perkins ones makes them less appealing to collection agencies in terms of commissions, said Dan Madzelan, a former Education Department official.

 

Not Practical

 

The University of California system tries to use its own personnel before suing Perkins debtors because balances are relatively small, said Coolidge. When borrowers don’t have assets or income, winning a judgment doesn’t actually result in collecting the money, she said.

 

“It’s not that we wouldn’t do it,” she said. “It’s not that practical.”

 

 

 

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Tue, 02/05/2013 - 16:25 | 3217402 SilverTree
SilverTree's picture

Fucking brilliant. 

Tue, 02/05/2013 - 16:35 | 3217444 redpill
redpill's picture

You get penniless students to borrow a hundred grand from you to take your overrated, overpriced college courses.  Student graduates and can't find a job even with a fancy piece of paper proclaiming he's brilliant.  He has no money to pay you back.  Does he have a problem?  No, overpriced "higher education" school, YOU have a problem!

Tue, 02/05/2013 - 16:40 | 3217461 fourchan
fourchan's picture

one kind of education leads to another. lol debt slaves

Tue, 02/05/2013 - 17:00 | 3217562 negative rates
negative rates's picture

Soon it will be bring your own diploma to the job interview, and make certain it's certified and payed for.

Tue, 02/05/2013 - 17:19 | 3217637 Peter Pan
Peter Pan's picture

Perhaps the students need to sue Yale for accepting them into courses for which there are no real job prospects.

Tue, 02/05/2013 - 17:28 | 3217671 francis_sawyer
francis_sawyer's picture

Hey MDB... Is it 'doomer libertarians' fault that your IVY LEAGUE heroes are deadbeats?

Tue, 02/05/2013 - 17:50 | 3217763 dwayne elizando
dwayne elizando's picture

Why don't they just sign the graduates up for disability and EBT before they leave college. Problem solved.

Tue, 02/05/2013 - 18:02 | 3217808 Pure Evil
Pure Evil's picture

Just think, if these hallowed Ivy League graduates were to take jobs at Subway or whatever, they would be putting some poor undocumented illegal alien out of work.

If that were to happen, they'd have to return to their home countries, and then who'd vote for Obama and the Democrats.

Tue, 02/05/2013 - 19:45 | 3218182 yogibear
yogibear's picture

Subway seems appropriate for a number of those PhDs in the Federal Reserve.

Tue, 02/05/2013 - 21:41 | 3218447 MilleniumJane
MilleniumJane's picture

I wouldn't trust those bastards to make a sammich for me.

Wed, 02/06/2013 - 03:42 | 3219229 mr_T
mr_T's picture

Univ colleges are greedy leeches.
200 usd for a text book... What a scam the laws of physics or math etc. has not changed in centuries yet you are forced to constantly buy new books. Then they preach about conservation and environment.
You get a degree in worthlessness. I know a Harvard MBA that can't get a job..crazy

Wed, 02/06/2013 - 03:45 | 3219234 mr_T
mr_T's picture

Univ colleges are greedy leeches. 200 usd for a text book... What a scam the laws of physics or math etc. has not changed in centuries yet you are forced to constantly buy new books. Then they preach about conservation and environment. You get a degree in worthlessness. I know a Harvard MBA that can't get a job..crazy

Wed, 02/06/2013 - 12:16 | 3220179 Freddie
Freddie's picture

Hope & Change.  Loads of idiots from Yale and the Ivy League would vote for him even as he was having them shot.

Tue, 02/05/2013 - 18:05 | 3217824 Jay_Son
Jay_Son's picture

"avoiding responsibility is seemingly rewarded in the new normal."  Ya, well, fuck you.

I didn't go to school to become a slave at a fast-food restaraunt.  If the government wants to subsidize schools and degrees with no economic value, or lenders want to make loans that can never be repaid, then non-payment of loans is EXACTLY what they, and you, should expect.

Tue, 02/05/2013 - 18:53 | 3217979 LasVegasDave
LasVegasDave's picture

slave at a fast food restaraunt? 

Did you major in PE or sociology? 

Did you borrow money for your degree?

stupid slaves like you are grist for the mill. 

Tue, 02/05/2013 - 22:24 | 3218567 hamstercheese
hamstercheese's picture

Is this one generation speaking to another? Shame on the WWII and subsequent generations that believed they should have been given everything.  Free health care. Social Security. Pensions, civil or private. Their votes were bought with borrowed money, and the debt gets transferred to their children..and the slinkly continues down, step by step, all the way the generation above tells the generation below 'get a college education, buy the biggest house you can buy' - brainwashed, all brainwashed, and now these students of today are stuck with all this debt they were told was 'good' debt - "Think education is expensive? Try ignorance." Debt injecting institutions don't have a monopoly on education...you can get one on your own, debt free.  Read, write, converse, study, travel.  There is an awakening of the silent young masses here and they will be endorsed by people in my generation (baby boomer/Gen X cross over).  Student loans are not forgivable, the banks got Clinton to pass this in the late 90's.  Serfdom by design through debt ignorance and delusional ideals enjoyed by their parents and grand parents. Shame on us, we told these kids what to do through the power of suggestion and as they awake into adulthood they are realizing they have been lied to by the institutions they trusted the most.  I can only hope they overthrow this social structure addicted to the heroin of a debt based currency.

Tue, 02/05/2013 - 20:48 | 3218339 de3de8
de3de8's picture

Asshole alert!

Tue, 02/05/2013 - 17:49 | 3217760 Clayton Bigsby
Clayton Bigsby's picture

This is an awesome idea actually.  I can all but guarantee you it happens...

Tue, 02/05/2013 - 19:49 | 3218191 yogibear
yogibear's picture

Like the quote from the Good Will Hunnting movie,

 

Will: See, the sad thing about a guy like you is in 50 years you're gonna staht doin some thinkin on your own and you're gonna come up with the fact that there are two certaintees in life. One, don't do that. And Two, you dropped a hundred and fifty grand on a f***in education you coulda got for a dollah fifty in late chahges at the public library

Wed, 02/06/2013 - 12:52 | 3220311 SkottFree
SkottFree's picture

Do the offer Walmart Greeter/Burger Flipper PHD's?

Tue, 02/05/2013 - 17:31 | 3217690 smlbizman
smlbizman's picture

why would anyone think, that lending money to people, that are so stupid they are trying to borrow your money....will ever be smart enough to pay it back.......

Tue, 02/05/2013 - 19:08 | 3218043 Caveman93
Caveman93's picture

That's a high price to pay just to be an "Obediant Worker"

 

RIP George Carlin.

Tue, 02/05/2013 - 16:44 | 3217485 Titus
Titus's picture

True story:

Germany 10 years ago. 1 girl in a group of approx 15 students doesn't go to the university. She was sneered at by her educated friends because she wasn't part of the smart group. 

Fast forward to now. Everyone but this girl graduated from the university and now are slaving away as employees. The girl, however, opened up her own business (legally assisting farmers with growing plants hydroponically) and has her gross sales of over 1 million euro a year. 

Slaves are educated in how to be slaves. Education kept everyone in this group from being independent. 

Tue, 02/05/2013 - 17:00 | 3217560 ParkAveFlasher
ParkAveFlasher's picture

Nothing like a good Sandusky'ing for alumni that don't pay up.

I hear ham-slapping in the showers.  Whatever you do, don't peek!

Tue, 02/05/2013 - 17:20 | 3217643 Peter Pan
Peter Pan's picture

As Mark Twain once famously said, "I never let my schooling to get in the way of my education."

Tue, 02/05/2013 - 17:42 | 3217735 Pareto
Pareto's picture

big +1.  This is fast becoming the new normal.  The benefits of higher education aint what they used to be, but, the EXPECTATIONS sure are.  A colleague of mine teaches finance.  they just had a mid-term.  The test essentially cornered their knowledge on the time value of money sorts of questions.  One question was a very realistic all too common problem of estimating how much a person would have to save for a 10% down payment on a home that is inflating in price at 1.5% per annum, given that whatever annuity the person takes on, it will fetch them 9%.  Very real, tangible problems.

At any rate, 1 kid scored 93 (bravo).  His class average was 58.  Many of them failed (< 50).  The test was fair, but, students didn't think so.  Instead they elected to bitch and complain that "well, we thought we were just going to calculate questions" (i.e, he gives them the formula sheet and 3 of the four variables, they solve for the unknown).  So, forget about actually solving a problem, students instead are more interested in memorizing, doing and thinking as little as possible.  My colleague told them "we have spread sheets for that."  Good for him.  Don't apologize.  If these students are aiming to be next year's budget directors and finance ministers, then the wake-up call is probably the best thing they can get from you, I told him.  And for sure, I told him, "you can tell them that they are of no use to me.!"

If these same kids did a time value of money analysis on their expected return once they left school, they'd quickly learn that the present value of tomorrow's expected income < future value of their education costs instead invested at say 5%.  Maybe they would evaluate their prospects differently like the girl above did.  At any rate, I asked him whether its geting better or worse over the years.  "Definitely worse."  We both recalled when we flunked an exam (and god knows I flunked my share), the last thing I did, was blame somebody else, LIKE THE PROFESSOR!  You always knew that it was you, and only you, that fucked up.  Nobody else.

But, its like i told my wife the other day, when stuff is free (i.e when the government is paying for it and you are not), then you get what you pay for - a whole lot of nothing.

Tue, 02/05/2013 - 21:43 | 3218453 Ballin D
Ballin D's picture

I agree with your overall point but I just wanted to note that I doubt that example is representative of most finance students. Even the HR majors at the state school I went to have to do more convoluted TVM problems by the first test in intro to finance (all bus. majors must take some fin/econ/acc/mgmt, etc). A few sorostitutes cry to faculty but nothing gets done and they have to retake the class until they pass or go get a degree in art.

Tue, 02/05/2013 - 18:11 | 3217840 Snoopy the Economist
Snoopy the Economist's picture

Titus: That's great that she did well - but how is that going to solve the problem for millions? Bill Gates dropped out of college to start MSFT - is that the speech that guidance counselors should give in HS? The solution is much lower cost education - stop paying administrators ridiculous $ and start rewarding hard work again - destroy welfare to get ppl off their a$$es.

 

Just saying...

Tue, 02/05/2013 - 20:51 | 3218349 de3de8
de3de8's picture

No, stop making the money so easily available, no different than the housing debacle.

Wed, 02/06/2013 - 00:02 | 3218910 MeelionDollerBogus
MeelionDollerBogus's picture

It's more than just cost of education, it's quality. Many more should try to be innovators. If after some risk-balanced failure happens, then seek others who are innovators & work for them or invest in their projects.

Tue, 02/05/2013 - 17:04 | 3217578 Kaiser Sousa
Kaiser Sousa's picture

RP -
Always been a favorite of mine....
Cause u get it.....

Tue, 02/05/2013 - 17:17 | 3217628 blu
blu's picture

The universities have become unsustainable. Nobody can afford their services. So they give vendor loans to the kids, and essentially are funding themselves that way via laundered money. The kids can and do walk away when they sense they have been taken for a ride. The real pay-off for the Universities will be later when Uncle Sam shows up with tax money to underwrite some or all of the losses.

In the end, as with the banks, these Universities are using the sheeple as a way to get some of Ben's funny money. Nothing more, nor less.

Won't help them. They are still going to die.

Tue, 02/05/2013 - 18:28 | 3217902 Chuck Walla
Chuck Walla's picture

BA, the new GED?
Forward Soviet!

Tue, 02/05/2013 - 18:28 | 3217903 Chuck Walla
Chuck Walla's picture

BA, the new GED?
Forward Soviet!

Tue, 02/05/2013 - 23:46 | 3218860 Buck Johnson
Buck Johnson's picture

Yep, this is going to end well.  Soon very soon this bubble will implode also along with others. 

Tue, 02/05/2013 - 18:02 | 3217814 killallthefiat
killallthefiat's picture

I highly advise everyone to click on the don't drone me bro pic.  Thank you for the laugh!

Tue, 02/05/2013 - 16:40 | 3217423 hedgeless_horseman
hedgeless_horseman's picture

 

 

I worked my way through college (in-state tuition) and paid my loans.  I have little sympathy for Ivy League deadbeats. 

Don't blame the colleges...

...blame The Federal Reserve Bank and the co-dependent US Congress.

Tue, 02/05/2013 - 16:51 | 3217505 LawsofPhysics
LawsofPhysics's picture

Likewise HH, but just to be the devil's advocate, I seem to remember seeing a graph recently showing an increase in administrators and management costs relative to the faculty (who actually perform the instruction).  Administrators are paid considerably more, for what exactly?

Seems to me, both sides have benefitted from the banking largesse, yet one is now required to live in slavery while the other is not.

For the most part I simply see the massive mis-allocation and mal-investment of resources and capital as the root of all the world's problems.  Investing in more stuffed shirts is certainly something most major Universities have ben doing for quite some time now.  Heck, Krugman has a nobel...

do we really need to say any more?  by the way, why not put up the same graph for a state school.  I think you will find them to be a considerably better bargin, even when priced in Gold.

Tue, 02/05/2013 - 17:10 | 3217574 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

 

 

Administrators are VERY crucial for civilization:

  • what if someone says something innapropriate?  
  • what if someone is politically incorrect?  
  • what if some professor terrorizes the children, saying some lie like "guys, the US is fucked, and you are fucked".  

The administrators are the only ones who can pepper spray these pedonazi terrorists thus protecting us all from this horrible unthinkable harm.

Tue, 02/05/2013 - 17:18 | 3217635 LawsofPhysics
LawsofPhysics's picture

Indeed, of course the administrator does not actually do it themselves, but rather find the appropriate union thug to deliver the spray.

Tue, 02/05/2013 - 18:12 | 3217843 steve from virginia
steve from virginia's picture

 

 

 

Administrators allocate the parking spaces.

 

Vital ...

Tue, 02/05/2013 - 20:38 | 3218312 Temporalist
Temporalist's picture

It is not just the salaries of administrators there are more administrators per teacher and student now.  Why?  Free money!  Print MOAR!  That usually solves everything.

Oh and Security is much more vital on campuses nowadays.  They are administrators too...of beatings, tazings and pepper sprayings.

Tue, 02/05/2013 - 16:33 | 3217437 Rick Blaine
Rick Blaine's picture

I've got the bowl of popcorn ready...

This should be quite a show.

 

Tue, 02/05/2013 - 20:02 | 3218222 Doomer
Doomer's picture

Seen this show before.  I always throw my bowl of popcorn during the part where the dumb lenders get bailed out by the government.  Both groupls happen to be graduates of the fine institutions mentioned in the article.

Tue, 02/05/2013 - 16:43 | 3217470 Son of Loki
Son of Loki's picture

"...basic responsibility..."

What's that?

 

So old hat.

 

I'm with the Horseman on this one. I worked all through college and then took 2 jobs after to pay the loan back in 4 years...I know, I know...so old fashioned.

Tue, 02/05/2013 - 19:01 | 3218016 JonNadler
JonNadler's picture

they had at least four years to teach them responsibility and NOW they realize they don't know any? HA HAHA

Tue, 02/05/2013 - 16:50 | 3217506 Banksters
Banksters's picture

I paid of my loans on the internet bubble.  Thank goodness.  Debt is slavery.

 

 

Tue, 02/05/2013 - 17:48 | 3217757 Clayton Bigsby
Clayton Bigsby's picture

Guess there's not so much demand for that Womens Underwater Basket Weaving Equality and Gender Studies degree after all.  Oh well...

Tue, 02/05/2013 - 16:25 | 3217404 Tim Brasco
Tim Brasco's picture

 Expert Trading Community - Traddr™ http://www.traddr.com   2,670 traders 1,277 charts  4,336 videos 846 discussions 48 Events  10,546 blog posts: What are you waiting for? It's free and always will be so join today. 

Tue, 02/05/2013 - 16:40 | 3217460 Poetic injustice
Poetic injustice's picture

I prefer offers of 87,000/week or whatever that spam was.
Yours is even crappier. Goodbye, and go somewhere else to pimp yourself out.

Tue, 02/05/2013 - 16:43 | 3217479 LongSoupLine
LongSoupLine's picture

fuck you Tim.  Fuck off

Tue, 02/05/2013 - 16:27 | 3217410 Shizzmoney
Shizzmoney's picture

Parasite eating the host now

I'm pretty astonished I make more than a Yale grad......and I have a crappy job! #lol

Tue, 02/05/2013 - 16:29 | 3217417 Dr. Richard Head
Dr. Richard Head's picture

My community college associates degree, along with starting at the ground floor of a start up back in 1996, has proven to be much more lucrative than borrowing to edumacate myself.

Tue, 02/05/2013 - 16:49 | 3217502 W74
W74's picture

I'm a student right now, but at least on the GI Bill I'll graduate debt free and I'm getting paid to go.  Not a bad gig.

Having said that I encourage kids younger than me to NOT go to college despite what their parents are telling them.  My advice is to go get a license or professional certificate in just about anything else.  I tell them to go be a Plumber, Electrician, Welder, Trucker, Drywall Installer, HVAC mechanic, or any other profession where they have to work with their hands (and more of their brain than what a Yale grad works with).

It may not be glamorous, but it certainly is honest.  Put in your 8 hours and call it a day.  When you're at work: work.  When you're at home: relax.  Life really wasn't all that bad when most people did just that.

Tue, 02/05/2013 - 16:54 | 3217530 MachoMan
MachoMan's picture

This is pretty much it...  tell kids the same thing...  the saddest part is, they can make a ton more money going their own route...  there is ZERO opportunity cost from foregoing college... 

Tue, 02/05/2013 - 17:12 | 3217609 Casey Stengel
Casey Stengel's picture

Welders net 3500/ wk working on the Eagle Ford shale play in TX. I saw the pay stub.

Tue, 02/05/2013 - 19:00 | 3218015 secret_sam
secret_sam's picture

I think you mean ONE welder...might need to broaden the sample size a bit for more accurate data.

Tue, 02/05/2013 - 19:42 | 3218167 smartstrike
smartstrike's picture

And GI Bill is not being a parasite? What did your recruiter pay you  as a signing bonus so you could plug a few civilians. Those kids that went to school without killing anyone are more moral and honest than any gang banger that joins US ARMY or Marines.

Over 50% of veterans apply for disability and that's besides getting all sorts of signing bonuses, housing,  health care and $40-60,000 + spending money on education.

Tue, 02/05/2013 - 21:52 | 3218473 Hi Ho Silver
Hi Ho Silver's picture

It's not over 50%.

Tue, 02/05/2013 - 16:27 | 3217412 azzhatter
azzhatter's picture

Would a Yale grad be qualified to work at Subway? I'm thinking no

Tue, 02/05/2013 - 16:40 | 3217466 W74
W74's picture

One thing that boggles my mind when looking at job postings online is that 95% or more of jobs want EXPERIENCE.  Why?  I understand the value of experience, but I'd rather have a young go-getter who works hard than a lazy fuck who's probably divorced and in debt and feels entitled to more pay than the value they produce.

Having said that, when it comes to college grads, well give me an 18 year old out of high school over a 22 year old kid out of college.  Why?  The 18 year old has had four fewer years of having his brain pumped full of Marxist "gimmie dat" psychology.  Give me a Veteran any day of the week too, at least Vets know how to show up on time and understand that keeping busy makes the day go by faster.  I really wish union slugs would learn that last part, it's no wonder they all hate their own union jobs because they don't do anything all day.

Tue, 02/05/2013 - 16:55 | 3217540 LawsofPhysics
LawsofPhysics's picture

Having performed interviews lately, I don't know what world you are living in, but it has been my experience that it is the younger applicant the feels entitled, not the other way around.  The older person you describe will have either given up (on jobs and women) and would not be interviewing, or he would be desperate to prove that he has learned his lesson and will have gotten his shit together and willing to work for anything.

Tue, 02/05/2013 - 17:05 | 3217582 azzhatter
azzhatter's picture

I like guys over 50. They usually aren't in a hurry to go home and get laid

Tue, 02/05/2013 - 18:01 | 3217806 francis_sawyer
francis_sawyer's picture

Awhile back I met a Yale grad on an online dating service... Over the phone, I talked her in to answering the door stark fucking naked [with high heels] for our VERY FIRST DATE...

~~~

Not quite sure what they teach up there... [But whatever it is, it's alright by me]...

Tue, 02/05/2013 - 18:21 | 3217880 Watts_D_Matter
Watts_D_Matter's picture

Whats her number?

Tue, 02/05/2013 - 18:31 | 3217914 francis_sawyer
francis_sawyer's picture

Forget... But I didn't see her with clothes on until 4th date...

Tue, 02/05/2013 - 18:26 | 3217895 Watts_D_Matter
Watts_D_Matter's picture

you are right...because when they get home the dudes are getting "honey do's" thrown at them by some tit sagging hag....so I would stay at work too...

Tue, 02/05/2013 - 18:04 | 3217816 SamAdams1234
SamAdams1234's picture

In a nutshell there is the plantation mentality at work: work 'em til they drop or are desperate, then use them as fertilizer.

 

Tue, 02/05/2013 - 18:04 | 3217817 SamAdams1234
SamAdams1234's picture

In a nutshell there is the plantation mentality at work: work 'em til they drop or are desperate, then use them as fertilizer.

 

Tue, 02/05/2013 - 17:05 | 3217585 Catullus
Catullus's picture

Because 22 year old go getter can't show me he can get out of bed to show up to work in time.

Tue, 02/05/2013 - 17:08 | 3217588 Mrmojorisin515
Mrmojorisin515's picture

sigh, i wish i had the energy to counter argue your baseless assumptive statement, but it won't change your mind.  Also i'm sure you haven't heard in the news lately how lots of vets are complaining they can't find jobs.  Even though every application you fill out asks if you are a vet, cause i'm sure our overly just government doesn't funnel tax credits to companies that hire vets

Wed, 02/06/2013 - 16:50 | 3217413 CClarity
CClarity's picture

Wow.  So they're essentially saying "if you get into such a prestigious institution as our own, you should invest in yourself, mortgage your future, do whatever it takes to matriculate with us . . . but rather than assure that our name or education will open doors for you, we want you to be sure to take a job at Subway to pay off any loan we may make you."  

Hahahahahaha - - - but you are smart enough to get in!

Tue, 02/05/2013 - 16:28 | 3217414 TrumpXVI
TrumpXVI's picture

What a great plan.  Get a job at Subway and pay for tuition at The University of Pennsylvania......NOT!

Tue, 02/05/2013 - 16:42 | 3217475 harami
harami's picture

dp

Tue, 02/05/2013 - 16:42 | 3217476 harami
harami's picture

Damn you, now I'm cleaning up half chewed chicken bits from my keyboard.

Guess it's better than cleaning bathrooms with my worthless Yale degree though.

Tue, 02/05/2013 - 16:30 | 3217422 seek
seek's picture

This is a sign of the beginning of the end for this bubble. Suing your own students isn't exactly a strong selling point on either the school or job prospects after.

Tue, 02/05/2013 - 16:41 | 3217469 MachoMan
MachoMan's picture

The job prospects genie is out of the bottle...  the big thing this should be telling everyone is that the institutions are feeling the crunch and are desperate for the money.

Tue, 02/05/2013 - 16:43 | 3217480 Poetic injustice
Poetic injustice's picture

It depends. If student wins in court, they can put on ads "Our students are so good, that they win cases even against university".

Tue, 02/05/2013 - 16:31 | 3217424 fonzannoon
fonzannoon's picture

"beautiful deleveraging"

Tue, 02/05/2013 - 16:31 | 3217425 mayhem_korner
mayhem_korner's picture

 

 

By extension, does this mean the Gov't is going to sue the taxpayers when they (sic) default? 

(or do they just declare war on foreign bondholders who drop their Treasury holdings?) 

Tue, 02/05/2013 - 16:32 | 3217429 Nothing To See Here
Nothing To See Here's picture

Time to increase the FED's "asset" buying program from 85 to 135 billion a month.

Tue, 02/05/2013 - 16:42 | 3217474 fourchan
fourchan's picture

i see what you did there +1

Tue, 02/05/2013 - 16:32 | 3217433 BlueStreet
BlueStreet's picture

Rather than working for Subway the grads should gather their receipts together and get in on the 11" footlong class action suit.      

Tue, 02/05/2013 - 16:44 | 3217487 Poetic injustice
Poetic injustice's picture

They should check prospects first, and catch university on some of lies provided there.
Then they can go and get some free dough from university.

Tue, 02/05/2013 - 16:33 | 3217436 reader2010
reader2010's picture

The geniuses of Wall Street will find a smart way to turn those deadbeats into pre-packaged Ready-to-Eat-Meat for the world's EBT cardholders.  Innovation and Freedom!

Tue, 02/05/2013 - 16:33 | 3217438 I need more cowbell
I need more cowbell's picture

Penn State just goes all old school on their asses; more than one way to collect the rent.

Tue, 02/05/2013 - 16:38 | 3217445 TroyPDX
TroyPDX's picture

The solution is obvious. These former students merely need to borrow more money, enough to pay just the interest on their student loans. They could do that indefinitely. What could go wrong?

Tue, 02/05/2013 - 16:37 | 3217446 Son of Loki
Son of Loki's picture

Easy to find these students for the subpoena....just go down to the unemployment office...they are in line. The others are at home still sponging off Mom and Dad as they live in the basement....with Grandpa.

Tue, 02/05/2013 - 16:37 | 3217449 secret_sam
secret_sam's picture

That's almost as good an idea as taxing the poor.

Tue, 02/05/2013 - 16:37 | 3217451 knowless
knowless's picture

Lol, these dumbshits think subway is hiring? Motherfuckers have no idea what it's like.

Tue, 02/05/2013 - 16:38 | 3217454 fonzannoon
fonzannoon's picture

Funny the guy with the pony tail ended up being the guy serving fries.....

http://www.youtube.com/watch?v=ymsHLkB8u3s

Tue, 02/05/2013 - 16:50 | 3217508 Dr. Engali
Dr. Engali's picture

That's a great movie,but here is my favorite scene.

Tue, 02/05/2013 - 17:09 | 3217601 Just Ice
Just Ice's picture

Yeah, I like that one too.

Tue, 02/05/2013 - 17:15 | 3217617 Dr. Engali
Dr. Engali's picture

oops I don't know what happened there :)

 

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

Tue, 02/05/2013 - 16:39 | 3217456 q99x2
q99x2's picture

The solution presented on ZH so far as I see it is that by the time they come after you you should have a new social security number and name and work under that then move out of the country and collect social security and work in your new place of residence.

Learned this from studying globalists and globalism.

Tue, 02/05/2013 - 16:40 | 3217458 IridiumRebel
IridiumRebel's picture

Long Ramen Noodles and PHd Fryside fux

Tue, 02/05/2013 - 16:40 | 3217462 exgop
exgop's picture

thats great redpill

 

Tue, 02/05/2013 - 16:40 | 3217464 BlueCheeseBandit
BlueCheeseBandit's picture

If the Perkins loans program shrinks, then fewer worthless degrees, so existing ones have better job prospects. Sounds like market self-correction at work.

Oh I'm sorry, I was thinking about this like a market where the goal is to serve the consumer, not enrich the politically protected "service" provider. My bad.

Tue, 02/05/2013 - 16:41 | 3217468 Dr. Engali
Dr. Engali's picture

Sadly for most of them any real life experience they pick up working at Subway will be worth more than that over priced piece of paper.

Tue, 02/05/2013 - 16:42 | 3217473 monopoly
monopoly's picture

Yup, lets go after the youth of this country above all else. 20% is a huge number and I bet it is higher than that. The future of any country lies in the promise of its youth. Except here we have created "debt slaves" out of our young people. But thank goodness the professors, administrators, and college advisors are all keeping up with inflation with salaries we cannot afford. Can't ask them to take less, just like we could never ask our corrupt, idiotic Congress to take less. And lets keep putting up more unneeded buildings for our college students to learn in. Oh, the debt, no big deal. We will just raise tuition again to pay for our edifices. Cannot get a job in your field. Sorry, not our problem. We gave you the "tools" to get a job. Subway, Walmart, Costco, go get a job. We need more money to keep the dream alive before it all blows up and turns into a nightmare for all of us.

Tue, 02/05/2013 - 16:42 | 3217477 logicalman
logicalman's picture

Interesting that those receiving the loans must be responsible while those originating them misleadingly get off with no consequence at all.

The new normal indeed

Tue, 02/05/2013 - 16:45 | 3217488 BlueCheeseBandit
BlueCheeseBandit's picture

I know. Who do I sue to recover my next bad investment?

Tue, 02/05/2013 - 16:43 | 3217482 tip e. canoe
tip e. canoe's picture

the rats are beginning to eat their own children it seems

Tue, 02/05/2013 - 16:44 | 3217483 aaronb17
aaronb17's picture

So far, there are still income and property exemptions to help those being crushed by student loan debt get by without being completely ground into the dust.  Here are some tips (as someone who's been fighting this battle and learned the hard way, you're welcome): 

- Your first $217.50/wk in net (after-tax) pay is exempt from garnishment under federal law.  That is a PER EMPLOYER exemption.  If you work two part-time jobs, you can make up to $435/wk that is ungarnishable. 

- A Roth IRA allows for $5,000 in deposits per year.  These deposits are completely exempt from attachment or garnishment.  They can also be withdrawn at any time without penalty.   So you can deposit up to $5,000 per year of your paycheck into the Roth IRA, and your creditors can't touch it, but you can withdraw the funds anytime without penalty if you need them (such as if you're starving on $400 a week perhaps? 

- Many states have a "homestead exemption" that allows you to roll money into your home, building equity that creditors can't attach.  In several states (including Florida) this is an unlimited exemption.  Your nest becomes your nest egg.  

- Once you've accumulated some protected assets, lowball the collection agencies hired by the student loan lenders.  Sure, this debt isn't dischargeable in bankruptcy, but they are getting hungry.  I've received offers to forgive the full loan if I'll just pay 40 percent.  I haven't bit yet, but am very tempted to liquidate some exempt assets for that sort of discount. 

Tue, 02/05/2013 - 16:48 | 3217486 ebworthen
ebworthen's picture

And those schools have inflated their tuition and fees at 10% per year for the last 30 years.

It can easily be argued that the students are following the examples set by bailed out banks, insurers, and corporations - along with their own government.

If there is no bankruptcy or failure allowed for Wall Street or Washington than why should there be for our young people?

It is laughable to hear these ivory tower pundits talk about responsibility when they have milked the system and fed at the public trough for over a century with little accountability or prudent management.

Higher Education has become "Higher Affirmation".

Colleges and Universities are dream factories; their primary role is selling dreams to the 90%+ who will be no better off and deep in debt for buying into the dream.

Modern Institutions of Higher Education are breeding grounds for delusional thought, broken ideologies, Orwellian group-think, and equivocating tautologists.

Tue, 02/05/2013 - 16:47 | 3217489 busted by the b...
busted by the bailout's picture

The government did the same thing with small family farmers in the 1970s: They kept them afloat with all manner of farm loans until many were forced into bankruptcy or lost their land or both. 

That generation of people were not accustomed to carrying large amounts of debt and were ashamed when they couldn't pay the loans back.  Some committed suicide.

For many others the government's "help" only prolonged the agony and the end result was the same -- failure. 

Usually, imo, the best help is reality, not denial and more debt.

Tue, 02/05/2013 - 17:59 | 3217802 SamAdams1234
SamAdams1234's picture

But the generations that followed became smarter: they saw coroprations and businesses throwing everyone under the bus to save themselves in Bankruptcy. They no longer have any reason to feel shame and they dont..

Tue, 02/05/2013 - 16:45 | 3217490 LongSoupLine
LongSoupLine's picture

Ha!  Reap it you overcharging Ivy league fuckers.  Eat your fucking losses like the fucking middle class had to fuckers.

 

Fuck you Larry Summers.  Fucking ass sucking prick.  Eat liquid shit and die you Obama ball licker.

Tue, 02/05/2013 - 17:16 | 3217621 ParkAveFlasher
ParkAveFlasher's picture

Just when I think he's down, LSL comes roaring back. 

Tue, 02/05/2013 - 17:20 | 3217632 Aegelis
Aegelis's picture

Mispost.

Tue, 02/05/2013 - 16:45 | 3217492 Big Corked Boots
Big Corked Boots's picture

I'd like to see a chart linking loan default rates to the student's majors. There's no doubt that the rates are highest for Communications, Political Science, Women's Studies, English Lit, etc.

If you are going to major in something useless like Architecture - which is what I did - the least you could do is complete it on a scholarship. That way you can say you wasted 5 years of your life without incurring any debt.

Tue, 02/05/2013 - 17:00 | 3217548 Catullus
Catullus's picture

If the numbers existed, the government would make it illegal to distribute it. Sort of like the food stamp spending numbers. You're not allowed to distribute them.

http://m.washingtontimes.com/news/2012/jun/24/top-secret-what-food-stamp...

Tue, 02/05/2013 - 20:43 | 3218321 BlueCheeseBandit
BlueCheeseBandit's picture

Ah, the old lib arts are stupid, should have gone technical and u would be made in the shade argument.

One of my best friends still unemployed 1.5 years out of U of Michigan with both a bachelors (Summa cum Laude) and Masters in nuclear engineering.

Wed, 02/06/2013 - 05:27 | 3219290 Vlad Tepid
Vlad Tepid's picture

Does he know how to use "Ye Olde Internetses?"

Tue, 02/05/2013 - 16:46 | 3217493 LukeWorm
LukeWorm's picture

Sue the universities for crappy degrees that don't give you a proper job 

Tue, 02/05/2013 - 16:55 | 3217538 youngman
youngman's picture

actually if you study Engineering....Nursing..Dental..Medicine...you will get a job...but that is SOOOOO hard.....its easier to get an 8 year liberal arts degree..that used to take 4 years..but hey...why try so hard....THAT is the new motivated "student"

We have and are raising a bunch of babies...that will bitch the rest of their lives...

Tue, 02/05/2013 - 17:16 | 3217623 secret_sam
secret_sam's picture

Bullshit, asshole.  You don't even live here, yet you pretend you have a clue about the US job market?

There are MILLIONS of engineering and hard-science grads who are not finding work with their new degrees. 

The entire planet is in a massive depression.  Finding work is not guaranteed for ANY field of study.

"Nursing/dental/medicine" is government subsidized industry, so of course you stand a decent shot of getting a piece of that gravy train.  But you're certainly not going to be doing anything PRODUCTIVE in most of those positions.

Tue, 02/05/2013 - 18:19 | 3217855 youngman
youngman's picture

Like i said..looks like we are raising a bunch of babies that are going to bitch the rest of their lives...

By the way...I am a Mechanical Engineer...Colorado State University

Tue, 02/05/2013 - 19:04 | 3218030 secret_sam
secret_sam's picture

That's not what you said.  What you said is bullshit, and I call you on it.  You'd have to actually talk to some folks to know anything about the subject, but hey, you're doing well, so why bother?

You are full of shit, mr. engineer.  Why else did you leave the US?  It didn't have something to do with your CAREER, did it?

Wed, 02/06/2013 - 00:14 | 3218943 MeelionDollerBogus
MeelionDollerBogus's picture

Are you shitting me? I’m in “socialist” Canada and we don’t subsidize dental with anything but consenting contract benefits from work. Wow.

Yes, if you’re on welfare you can get some “dental benefits” but usually this means “if your teeth are rotting we’ll pull them ALL out for free”

That’s some “benefits” there.

Tue, 02/05/2013 - 16:46 | 3217494 Sudden Debt
Sudden Debt's picture

All I knew after University was that I knew nothing.
All I know is thanks to experience and self education.

The number of idiotic profs who knew shit about the world is mindblowing.

They said I would never make it in business... now I make tripple what they make.

Tue, 02/05/2013 - 20:43 | 3218322 krispkritter
krispkritter's picture

What I learned as a collage granulate: http://www.youtube.com/watch?v=QuRj77ByAeY

Tue, 02/05/2013 - 16:47 | 3217496 earnyermoney
earnyermoney's picture

A job at Subway? To pay off a 200K loan? LOL.

Guess Subway is the suburban equivalent to the hood's McDs. Sociopaths shanking other sociopaths.

Tue, 02/05/2013 - 16:56 | 3217527 ebworthen
ebworthen's picture

I'd bet the assholes from the Universities suing are making $150K+ with 14% of every check 401K matched, subsidized health-insurance, new iPad, iPhone, iMac every year, a month's paid vacation, two-hour lunches, and a secretary to do the real work - all on the State and Federal Government (taxpayer's) dime.

Tue, 02/05/2013 - 16:59 | 3217555 earnyermoney
earnyermoney's picture

I'll take the same side of your bet.

Tue, 02/05/2013 - 16:51 | 3217513 youngman
youngman's picture

I know there will be a government bailout on this one....you can count on it....how can a politician say no to a student..."just trying to get ahead"

Tue, 02/05/2013 - 16:54 | 3217531 Sudden Debt
Sudden Debt's picture

even better: just like the army, a student can go into the army to get a degree.
Well... you become a government slave for 5 years before or after you go to college.
It would be a great trick to own you like a slave.

Tue, 02/05/2013 - 17:14 | 3217615 Aegelis
Aegelis's picture

Dup post, sorry.

Tue, 02/05/2013 - 17:15 | 3217616 Aegelis
Aegelis's picture

Ooh, brilliantly put!  But if I may amend, it's year 12 for me after my little state university and I've got a long way to go until they're paid off.  Biochemist doesn't pay as much as it sounds.

Tue, 02/05/2013 - 17:21 | 3217646 Sudden Debt
Sudden Debt's picture

unless you go into the biggest business in America :)

Tue, 02/05/2013 - 18:46 | 3217953 W74
W74's picture

This was true.  I guess I had decent timing.  Still deployed to that illegal war west of the Free Republic of Iran, where I witnessed contractors making millions upon billions off the backs of dudes who were patrolling every day outside the wire in the dust and the heat.

If it weren't for the latest taxpayer "thank you" GI Bill I probably wouldn't have gone to college, nor would I have gotten out....which probably would've not been fun.

Tue, 02/05/2013 - 17:08 | 3217599 MachoMan
MachoMan's picture

How could the government say no to J6P homeowner?  The government will again figure out how to not extinguish any of the debt for students, but ensure that institutions and creditors are made whole...

Tue, 02/05/2013 - 16:52 | 3217524 IridiumRebel
IridiumRebel's picture

University of Hooked on Phonics......they will accept you!

Tue, 02/05/2013 - 16:55 | 3217533 Joebloinvestor
Joebloinvestor's picture

This reminds me of an old Monty Python skit where a patient refuses to pay his psychiatrist because he is "cured".

His sanity gets reposed.

My advice to indebted students is to withhold your vote till you get a free ride from whatever party will pander to ya.

Tue, 02/05/2013 - 17:00 | 3217563 waterhorse
waterhorse's picture

Revise the bankruptcy laws and allow student loans to be discharged on a case-by-case basis.

Tue, 02/05/2013 - 17:05 | 3217583 Campagnolo
Campagnolo's picture

this is a fucking disgrace for all students that can't afford those ridiculous tuition in the first place. File for bankruptcy (chapter 7)!!, tell "Fuck you" to the criminal banks, what you got in your brain (years of hard work) nobody can take it from you.

Tue, 02/05/2013 - 17:09 | 3217602 aaronb17
aaronb17's picture

Government-backed student loans have been non-dischargeable in Chapter 7 or 13 for decades now.  In the past 10 years that protection has extended to all kinds of private education loans.  The banks were ready for this bubble, and have been backstopping it for years.  The pop is going to be a lot uglier as a result, I'm afraid. 

Tue, 02/05/2013 - 17:12 | 3217611 Poetic injustice
Poetic injustice's picture

Yes, and guess 3 times who will be backstopper of this bubble pop.

Tue, 02/05/2013 - 17:30 | 3217686 Bunga Bunga
Bunga Bunga's picture

Looks like the banks shoot themselves in the foot. When you can't clear your credit history, you will never qualify for a car loan in your life and not to talk about a mortgage. I wonder who is left to increase lending to get fresh money into the economy in order to service existing (mortgage) loans.

Tue, 02/05/2013 - 18:27 | 3217900 Campagnolo
Campagnolo's picture

you are right...my bad

Tue, 02/05/2013 - 17:06 | 3217590 Cman5000
Cman5000's picture

This is hilarious ..

Tue, 02/05/2013 - 17:11 | 3217608 Aegelis
Aegelis's picture

The greatest of tragic comedies is not found in fiction, but rather reality.

Tue, 02/05/2013 - 17:17 | 3217625 earnyermoney
earnyermoney's picture

The Universities can hire all those retruning vets to collect the fees.

Tue, 02/05/2013 - 17:20 | 3217639 balz
balz's picture

In ancient times, there was a Debt Jubilee once in a while.

I think we are way overdue.

Let's erase individual debt and move on.

Morality about paying one's debt is meaningless when there is no morality anyway about anything else.

Nuff said.

Tue, 02/05/2013 - 17:33 | 3217697 MeBizarro
MeBizarro's picture

This is a pollyanna pipe dream given that those in power would lose their leverage and wealth.  It would also have its own set of problems but I do agree that at some point we are going to discharge this debt.  I just think it will ultimately be monetized away.  

Tue, 02/05/2013 - 17:45 | 3217750 donethat
donethat's picture

There used to be 'Debtors Prisons' and Indentured Servants. Maybe nothing has changed?

Tue, 02/05/2013 - 20:03 | 3218225 TheFourthStooge-ing
TheFourthStooge-ing's picture

It's now a form of free-range slavery, but yes, aside from that detail, nothing has changed.

Tue, 02/05/2013 - 17:19 | 3217641 flacorps
flacorps's picture

One commentator has observed that this country now has royalty: those who live by a different set of rules than apply to everyone else. Congresscritters and Wall Streeters make up the bulk of that royalty. Another 19% are their willing accomplices, benefiting by serving as their muscle.

Defaulting with no intention of repayment is one way of delivering a screwing back to the royalty. There is a shadow economy that all these youth can join, or they can emigrate overseas beyond the reach of their creditors.

http://landolakes.patch.com/blog_posts/the-new-america-rule-of-law-for-d...

Tue, 02/05/2013 - 17:23 | 3217653 MeBizarro
MeBizarro's picture

A handful of isolated examples hardily means that Yale or Penn NEEDS to do this but more likely they do it because they can and in the process make a nice buck while doing it with the late fees.  

I so wish that all colleges were required to collect and report data that was independently-verrified (not self-report nonsense) on a host of graduation statistics including employment rates, income by major, etc.  Some private colleges because of enrollment hits are finally start to do this more out of sheer desperation than anything but a healthy dose of transparency would go a long way to cleaning up some of the problems that are rife in higher education.  

No doubts that as you introduce some market forces you would begin to force out some of the more marginal institutions especially much higher-priced colleges, would begin to see some real pressure on tuition and overall pricing, and correct some of the overinvestment we have in certain majors that don't have great employment or salary prospects.

We would still have a problem with job creation in the US (much larger and more complicated issue) but if the transparency that I describe would have been put in place 20 years ago I bet we wouldn't nearly have the problems we do now in higher education.  

It was also completely ridiculous to not let student loans be discharged through bankruptcy just as any other form of personal debt can be discharged too.  It is a form of debtor's prison which was largely put of out business in this country by the Civil War starting in the 1830s due to the horrific abuses and unequal treatment debtors received.  Not being able to discharge student debt loans through bankruptcy is basically a type of 21st centruy debtor's prison.  

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