Obama Unveils Student Loan Debt Bubble Bailout

Tyler Durden's picture




 

"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation," notes the always astute White House... and so it's time to do something about that... by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the 'easily available' credit is soaring with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans.

As we noted previously, the amount of heavily delinquent student loans has just hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter.

So: when does the Fed finally admit i) there is a student loan problem and ii) the only way to solve said problem is to promptly monetize it?

or iii) A Federal Government bailout...

As Reuters reports,

President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans, a White House official said on Sunday.

The president will sign an order directing the secretary of education to ensure that more students who borrowed federal direct loans be allowed to cap their loan payments at 10% of their monthly incomes, the official said.

Federal law currently allows most students to do this already. The president's order will extend this ability to students who borrowed before October 2007 or those who have not borrowed since October 2011, the official said.

The administration says this action will help up to 5 million more borrowers, although it will not be available until December 2015.

More broadly, the administration is looking for ways to stimulate faster economic growth without relying on legislation...

Preventing student loan repayment problems fits with that goal because officials say it will help young workers avoid credit blemishes that will hurt them down the road.

"Many student loan borrowers are working and trying to responsibly make their monthly payments, but are nonetheless struggling with burdensome debt," the White House official said.

"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation, with such consequences as a damaged credit rating, losing their tax refund, or garnished wages," the White House official said.

Perhaps its time to reassess whether taking on massive indentedness for a degree that leaves you earning minimum wage anyway is a sensible idea.

Now we are sure there will be no unintended consequences from this law... no sudden spike in non-payment, no tumble in loan bundle values, and no collateral chain follow through...

Oh wait...

The number of borrowers in the income-based repayment programs climbed 24% from January through March to 1.63 million, the Education Department recently said.

 

The amount of debt covered by the programs grew 22% during that period to $88 billion—nearly one-tenth of all outstanding federal student debt.

WTF!

Welcome to the real world, debt serfs...

 

 

President Obama said...

  • *OBAMA: RISING TUITION COSTS LEAVE FAMILIES `FEELING TRAPPED'

And we said...

 

And then President Obama said...

  • *OBAMA SAYS HIGHER EDUCATION `SUREST PATH' TO MIDDLE CLASS
  • *OBAMA SAYS HIGHER EDUCATION IS `SMART INVESTMENT'

And we said...

It's just insane that the administration can make up so much crap - not have a clue how much it will cost.. and the manstream media just glosses over it .. a ha just another bailout for those who over-extended themselves.

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Mon, 06/09/2014 - 13:46 | 4837593 Millivanilli
Millivanilli's picture

Lol

 

When in complete meltdown, offer govt assistance to the debt slaves.   This will work out... like shit.

 

Obama,

No money, no problem, Bad Credit, No credit, No problem.  Kick the wheels on this baby.  For 9999.99 you can drive this baby off the lot today...

 

 

 

Mon, 06/09/2014 - 13:46 | 4837625 Arius
Arius's picture

have some compassion ... these are your brothers, sisters, sons and daughters ... even strangers ... still americans!

Mon, 06/09/2014 - 13:48 | 4837634 Millivanilli
Millivanilli's picture

I don't have a fucking bit of compassion.

 

If people don't care to understand the fundamental and usury nature of our credit based money system, zirp, nirp, etc fuck em.  

 

They get what they deserve.

 

Now back to sports, beer and titties.

Mon, 06/09/2014 - 13:52 | 4837655 fonzannoon
fonzannoon's picture

u leave titties out of this.

Mon, 06/09/2014 - 13:59 | 4837692 pods
pods's picture

They will try their best to keep this debt bubble from popping.  

At least we get to see who is really in control.  (can you please pay me something so I can pretend your loan is good?)

I say blow the whole thing up.  Keep stiffing them students!  Credit score will be the least of our worries when this one pops.

pods

Mon, 06/09/2014 - 14:04 | 4837709 Dr. Engali
Dr. Engali's picture

Your credit score is just a number to signify how good of debt slave you are. The higher the number the more value they put on you as a slave. 

Mon, 06/09/2014 - 14:10 | 4837755 SafelyGraze
SafelyGraze's picture

more and more colleges now are simply storing their graduates out in parking lots

you can see them on google maps

thousands and thousands of graduates

wearing their caps and gowns

packed in rows

channel stuffed

Mon, 06/09/2014 - 14:20 | 4837808 0b1knob
0b1knob's picture

< NO AUTOPLAY VIDEO EVER!!!!!!!!!!!!!!!

< More autoplay!  I love it!

Mon, 06/09/2014 - 14:27 | 4837839 boogerbently
boogerbently's picture

This will change the "nature" of these non-performing loans to give the appearance of an improved economy (less debt).

The ONLY thing obama has "improved" in this economy, is how to fudge the numbers.

Mon, 06/09/2014 - 14:37 | 4837884 Anusocracy
Anusocracy's picture

Like Harry Browne used to say: The government breaks your leg then offers itself to you as a crutch.

Mon, 06/09/2014 - 14:48 | 4837930 Save_America1st
Save_America1st's picture

Maybe obama can buy all those grads 1-way bus tickets to Seattle so they can make 15 bucks an hour "minimum" wage at McDonalds.  Of course they'll probably have to fight for a spot in the interview line with millions of Mexican refugees. 

Mon, 06/09/2014 - 14:53 | 4837940 Manthong
Manthong's picture

Well, that ought to get the sheep’s minds off of Benghazi, the NSA, the NDAA, the Bergdahl, the illegal migrant invasion and the market rigging debacles and on to all of the great things the black messiah is doing for them.

Mon, 06/09/2014 - 14:55 | 4837965 Never One Roach
Never One Roach's picture

One of my sons is overjoyed by this news. He said over lunch [to my friggin astonishment] now he can go out and get one of those "zero down, no job check, no interest for 5 year mortgages" and grab a new car ... "zero down, 10 years to pay back, no interest."

 

He said "society want shim to do it."

Where did I go wrong? Maybe when Mable dropped him on his head at age 2 the effects were more seriosu then I thought?

Or was it a genetic mutation?

Mon, 06/09/2014 - 15:09 | 4838032 Soul Glow
Soul Glow's picture

Tyler wrote -

OBAMA: RISING TUITION COSTS LEAVE FAMILIES `FEELING TRAPPED' He still doesnt get that costs are rising due to easy credit

Obama doesn't get a lot of things.

Mon, 06/09/2014 - 15:21 | 4838074 Gaius Frakkin' ...
Gaius Frakkin&#039; Baltar's picture

Uh, it's not just Obama...

The majority no longer understand the fundamentals of supply and demand or they pretend like it's no longer relevant.

Mon, 06/09/2014 - 15:28 | 4838104 Soul Glow
Soul Glow's picture

But the point is that the President of the United States of America has no fucking idea what he is doing.  Nevermind the status quo, it is forever to remain ignorant.

Mon, 06/09/2014 - 15:43 | 4838190 dontgoforit
dontgoforit's picture

Amen Soul Glow.  Or, if he does have a clue, he is determined to fulfill Agenda 21 and Cloward-Piven.  He seems to want to truly make 'debt-slaves' of all the people by increasing our debt to where it will take generations to get it under control, if ever.  And he's not working alone.  Impeach this dude before it's too late!

Mon, 06/09/2014 - 16:38 | 4838429 Cruel Aid
Cruel Aid's picture

Amen to you, thats what people dont get. Its going to plan, by the book and ahead of schedule.

The handlers know what they are doing. The prez is just a loveable dope!  er

Mon, 06/09/2014 - 19:46 | 4839000 HenryHall
HenryHall's picture

HYPERINFLATION IS THE SOLUTION

Coming soon to a dollar near you.

Mon, 06/09/2014 - 23:04 | 4839439 All Risk No Reward
All Risk No Reward's picture

The solution for WHOM?  Not the Banksters that control trillions in cash and trillions in debt paper.

Why would the Banksters zero out their wealth instead of offloading all its debts on society and stealing all they can (bailouts) and then busting the economy to turn their trillions in cash and trillions in debt paper into OWNERSHIP OF ALMOST ALL OF PLANET EARTH?

The answer is - THEY WOULDN'T.

So THEY WON'T.

Everyone needs to be aware of group think and take a gander at the following lists of biases and extirpate them from their cognitive thought processes.

Limiting payment amounts IS NOT A BAILOUT.

It actually increases one's debt as interest is accrued on a larger principle than otherwise would occur.

There will be no substantial "bailouts" for citizens.  Any money given to the plebs is simply riot control and another debt generation mechanism engineered to create inextinguishable debt and then turning that INEXTINGUISHABLE DEBT into OWNERSHIP OF REALITY.

Hyperinflation may well be the endgame, BUT IT WON'T HAPPEN UNTIL THE BANKSTERS HAVE UNLOADED THEIR TRILLIONS IN CASH AND TRILLIONS IN DEBT PAPER AND THEY OWN/CONTROL THE PHYSICAL PLANET.  When the Bankster Cabal owns / controls the planet, the fraudulent debt based money monetary has done what it was engineered to do and it can go away at that point.

This is so elementary, I don't understand the mental block that prevents so many people from seeing that the Economics 101 version of 2+2=4 is accurate.

And no, they won't tell you their plan.  They need you all in on inflation in order to maximize their take.

Mon, 06/09/2014 - 17:32 | 4838596 ebworthen
ebworthen's picture

I think he gets it.

He appears compassionate.

Demicans buy more votes.

Lending banks get bailed out.

Republicrats squelched, secretly happy.

Schools can keep raising tuition.

Hopium remains, bailouts remain.

Crushing middle class continues.

Mon, 06/09/2014 - 20:10 | 4839067 PT
PT's picture

I'll have to have a proper read of this article later, but it looks like Obama has successfully introduced a ten percent tax to anyone with a degree and made it look like it is "the graduates' fault".

(Yes, still plenty of room to argue, but the degrees go to the biggest idiots, I mean the highest bidders, and what banksters refuse a student loan on the grounds of it being too expensive in relation to expected earnings?)

Oh yeah, and the "ten percent tax" goes to the banks, not govt revenue.

Mon, 06/09/2014 - 15:14 | 4838050 Cthonic
Cthonic's picture

He's almost got it figured out.  All that's left is to explain margin to him.

Mon, 06/09/2014 - 18:44 | 4838815 CheapBastard
CheapBastard's picture

He sounds like a typical red-blooded, Kim Kardashian oogling, Jason Beeper listening, Idols watching Merikan. I bet you are considered the strange one in the Family thinking those odd thoughts about work, frugality, and so on. Very very old fashioned. the kid is simply taking advantage of "The Socialist System."

Tue, 06/10/2014 - 00:16 | 4838816 CheapBastard
CheapBastard's picture

Double post...sorry

Mon, 06/09/2014 - 15:19 | 4838069 detached.amusement
detached.amusement's picture

where did you go wrong? 

 

I'd start with....you dont appear to have taught him what currency is.  Or Money.  Or the connection to work.

Mon, 06/09/2014 - 17:49 | 4838646 balanced
balanced's picture

I used to pride myself on the fact that I work hard every day to earn what I have. I save (stack) each month and drive an old car. I watch other people, some friends, seemingly getting free money from the government left and right, student loans, ebt cards, etc., all the while refusing to work. These people spend money as though they are wealthy, because they continue to spend everything they get FOR DOING NOTHING.

I'm am sincerely starting to wonder if I've got it all wrong. Maybe there is something to be said for using the system to your advantage. After all, we are all forced to play be these rules. Why not get something out of it? In addition it would help to bring the whole house of cards down faster.

I would never really do it. I want to contribute something of value to those around me, and I want to earn what I have. But I am starting to resent that about myself.

Mon, 06/09/2014 - 18:07 | 4838690 StillSilence
StillSilence's picture

Don't give in.....One lifestyle is sustatinable, the other not so much. Those who you describe will reap what they sow, as will you.

Mon, 06/09/2014 - 18:45 | 4838808 Seek_Truth
Seek_Truth's picture

@balanced & StillSilence:

You've both got it right.

1 John 1:5-10

Mon, 06/09/2014 - 15:22 | 4838082 smlbizman
smlbizman's picture

the force is a very tough opponent..

Mon, 06/09/2014 - 19:54 | 4839033 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

He said "society want shim to do it."

Where did I go wrong?

Ummm..... did this particular son, by any chance, bear an odd resemblance to your mailman from around 20 years ago?

Mon, 06/09/2014 - 23:30 | 4839492 boogerbently
boogerbently's picture

I absolve you from all ostensible wrongdoings, parentally.

They choose their own path.

It's YOU Vs their peers.

I am relieved to know that at some point, my kids MUST have said:

Jeez, Dad has been RIGHT all along!

 

Mon, 06/09/2014 - 14:52 | 4837953 COSMOS
COSMOS's picture

Let's Seeee

10% student loans, 10% health insurance, 50% Rent, 20% food, 10% car insurance, 20% Gasoline, 10% electricity and water, 10% misc expenses, we need to let Americans print their own money, cut out the FED middle man, at least the money will go where its needed

Mon, 06/09/2014 - 16:07 | 4838292 TexasAggie
TexasAggie's picture

This reminds me of the old poster about budgetings:

total Inc = 20.

Rent =8

car = 4

groceries = 6

my beer = 2

wife's beer  3

solution - eliminate wife's beer.

Mon, 06/09/2014 - 16:39 | 4838435 deflator
deflator's picture

 I think I ran into her the other day, she said something about being lonely and bored.

Mon, 06/09/2014 - 16:49 | 4838487 duo
duo's picture

when Obama is through with the coal industry it's 20% electricity and water, and down to 10% food instead of 20%.

Tue, 06/10/2014 - 13:46 | 4841239 Sokhmate
Sokhmate's picture

Coal is a carbohydrate, or is it a hydrocarbon?

Mon, 06/09/2014 - 15:33 | 4838137 SDShack
SDShack's picture

"Hello, can I take your order? Can't make up your mind, well I have a BA in pyschology, so let me recommend you get fries with that."

Mon, 06/09/2014 - 16:36 | 4838421 Taffy Lewis
Taffy Lewis's picture

Welcome to McDonald's can I please help you? Shit, what can I do tonight? - Ice Cube circa 1988

Mon, 06/09/2014 - 17:15 | 4838562 Edelweiss
Edelweiss's picture

  Pretty effective way to buy future votes.  Does anyone here doubt that's the intent?

Mon, 06/09/2014 - 20:48 | 4839167 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Pretty effective way to buy future votes.  Does anyone here doubt that's the intent?

Yes, I doubt that's the intent. If voting actually mattered, your theory would be reasonable and sensible. However, compared to the gargantuan shit heap that is the student loan bubble, the money used to buy elections is mere pocket change.

This is actually a clever plan by the lenders to enslave borrowers to a lifetime of monthly tithes while depriving their heirs of an inheritance. For the "bailed out" borrowers under this program, ten percent of their monthly income will keep them technically out of default, but it likely won't be enough to amortize the loan.

For many, their payment won't even cover interest charges, so not only will the loan principal never decrease, the loan balance will actually increase over the years. For those whose payments cover their interest charges, the remaining amount applied to the principal will be infinitesimally small, much like the size of a differential element from first semester calculus. Imagine the situation of paying for fifty years, only to see the loan's principal reduced by a mere five thousand dollars.

But wait, there's more. The middle class still hasn't been completely looted yet. Some of these borrowers will acquire assets (via inheritance or insurance settlements, for example) over the course of their lifetimes. By the time they kick the bucket, they may have equity in a house, a stash of US Treasurys, a MyRA account, maybe even some stock in General Motors, Cisco, and IBM.

Of course, under current law (and I doubt this will ever change), the student loan people have first dibs on the assets of the estate of the borrower. But hey, after the loan principal and all associated fees are paid, the heirs are welcome to divide up whatever is left.

Mon, 06/09/2014 - 14:21 | 4837810 cifo
cifo's picture

It's the perfect time to apply for a student loan.

Mon, 06/09/2014 - 14:55 | 4837968 max2205
max2205's picture

While you sit around bitching you're getting softer. 

And the FSA is in the streets getting stronger. 

Mon, 06/09/2014 - 15:13 | 4838047 Greenskeeper_Carl
Greenskeeper_Carl's picture

each time i look around, the walls move in a little tighter

Mon, 06/09/2014 - 15:14 | 4838048 Herd Redirectio...
Herd Redirection Committee's picture

"If people don't care to understand the fundamental and usury nature of our credit based money system, zirp, nirp, etc fuck em.  "

The problem is, these kids get ZERO financial education in school.  I know.  I was one of them.  I only figured out the scam AFTER taking out the loans (I was  a young, dumb kid) and at that point I could have stopped borrowing more, but only by dropping out of the program midway.  Which is a tricky predicament, when you are already on the hook for a few $$$.

People are repeatedly lied to, information withheld, minimal financial education (or its all BS like MSNBC), that makes many of these loans fraudulent, plain and simple.

Mon, 06/09/2014 - 16:39 | 4838415 Stroke
Stroke's picture

You are the only one making sense on this thread...it's easy to say "fuck 'em", these purveyors of loans, & I'll say all loans, job (commissioned) is to keep the borrower in the dark & lost in a sea of confusion.

"Gee the man behind the desk "must" know or he wouldn't be here"

 BULLSHIT that man or woman is there to close loans.

Stop offering woodshop, or fucking dodgeball in the early grades & teach these kids about the sharks in finance

 

The country will be better for it.

Mon, 06/09/2014 - 16:35 | 4838416 Stroke
Stroke's picture

You are the only one making sense on this thread...it's easy to say "fuck 'em", these purveyors of loans, & I'll say all loans is to keep the borrower in the dark & lost in a sea of confusion. "Gee the man behind the desk "must" know or he wouldn't be here"

 BULLSHIT the man / woman is there to close loans.

Stop offering woodshop, or fucking dodgeball in the early grades & teach these kids about the sharks in finance

 

The country will be better for it.

Mon, 06/09/2014 - 14:46 | 4837918 RafterManFMJ
RafterManFMJ's picture

My duel collage degrees only costed me 6 years and a studant debt of $140,000! I got to school full-time in Mother's basement on the computer full-time! I graduate with degree in landscaping and one in law! I come your house, plant blueberries, spread pine bark then fall down and sue!

Same day!

As always, thanks you very much Univercisty of Phoenex!!

Mon, 06/09/2014 - 14:50 | 4837935 JRobby
JRobby's picture

Apollo Education Group

 

 

Mon, 06/09/2014 - 15:00 | 4837996 insanelysane
insanelysane's picture

You had me going and then you screwed up and spelled graduate correctly.  Gradjiate is more like it.

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