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Obama Unveils Student Loan Debt Bubble Bailout
"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...
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 $88 billion—nearly one-tenth of all outstanding federal student debt.
WTF!
Welcome to the real world, debt serfs...
President Obama said...
- *OBAMA: RISING TUITION COSTS LEAVE FAMILIES `FEELING TRAPPED'
And we said...
OBAMA: RISING TUITION COSTS LEAVE FAMILIES `FEELING TRAPPED' He still doesnt get that costs are rising due to easy credit
— zerohedge (@zerohedge) June 9, 2014
And then President Obama said...
- *OBAMA SAYS HIGHER EDUCATION `SUREST PATH' TO MIDDLE CLASS
- *OBAMA SAYS HIGHER EDUCATION IS `SMART INVESTMENT'
And we said...
Net Worth Of College Grads With Student Debt Is 20% Less Than High School Grads With No Debt http://t.co/6zAhdCVokm pic.twitter.com/2sTYZXrPfR
— zerohedge (@zerohedge) June 9, 2014
It's just insane that the administration can make up so much crap - not have a clue how much it will cost.. and the manstream media just glosses over it .. a ha just another bailout for those who over-extended themselves.
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The industry should pay for this debtor "insurance".
Establish the rate on school usage of Federal student loans and the larger the endowment, the larger the rate.
Those schools with higher rates of default, pay a higher rate.
Lastly, those professors earning a salary well above the median, are directly tax'd for contributing more to the debacle.
Kinda like how banking should be paying.
Screw the bond holders.........ehmmmm...I mean the pension funds....ehmmm...the retires.......anyone over 50.....working tax payers........screw'em all!!!!
Where do I get my free lunch???
same place the big banks have gotten theirs.....
why begrudge some actual citizens some of da vig -- i mean, look at this another way, its the first time that some of the "proceeds" of the ongoing theft have been shared with any of the peasantry....
This is essentially a bailout, because of the term 10% of monthly income.
Everyone is gona be making 30$ a month student loan payments lol
Lets see, 100,000$/ say even 50$ a month ... 2000 months ok the loan should be payed off in 166 years ;p
This is going to become a mess, because you will need crazy regulatory agencies to run around chasing people to make sure the reported monthly incomes are accurate, its going to turn into a nightmare.
The typical loan will probably take 50~ 70 years to pay off.
Might as well wipe the damned thing and be done with it.
Lets be honest, the whole point of student loans, was so that professors and college presidents / higher ups could go buy a few lambos/ferraris and mansions, it had nothing to do with education.
Drive around to half the schools that have students in debt, http://www.completecar.ie/img/blog/Misc/IMG_0178.JPG thats what they usually look like.
You are correct except that loans will never be paid off. Notice that total more than 90 days delinquent exceeds total amount loaned out. I have a son who borrowed money for courses in a school; the entire amount was paid to the school before he began, and before the first day of class the school went bankrupt. His money was lost - he did NOT get what he paid for. And still he now "owes" more than twice what he borrowed, has no job, does not have the certifications he paid for, and has no prospects to ever pay that back. But any discussion of this meets with cries of horror!
We are preparing a generation for debt slavery, debtors prisons, and worse. If the past is a guide, it is only a matter of time before the 'slaves' revolt.
Just saying.
Craig
I wish there was a race horse named "Moral Hazard," and it won the Triple Crown!
The joke continues to be on us.
yes it does ... as the government gives literally trillions to the banks, and we get NOT A FUCKIN' PEEP out of all these masters of the universe here....
but give some kid a break? OOOOOOOOOOOOO Moral HAZARD .... Big Time...
NONE of them, students OR BANKERS should get cash, but,,, since the grab for whatever is left on the table as well as the crumbs underneath? if the kids can get some, I say go for it.
Banks and other financial companies, homeowners, soon health insurance companies, students...everyone is getting bailed out. Socialism of losses creates moral hazzard. Worse, it allows prices to keep rising. Why should a college cut its costs now? May as well charge $5 million per year since the taxpayer is the bag holder.
This is nothing. Just wait and see.
once upon a time said student loan debt could be paid off quickly and much more easily because a high paying job was to be had. Now kids leave with a mound of debt and the only open positions for employment do not require a degree. I not only got 2 undergraduate degrees but went on to get an MBA because I wanted to make more money and having this attached to my name meant a better job, management, and set me a part from other applicants. Nowadays, I am not sure if all this extra education makes sense with the lack of real jobs in America. The conundrum is deep.
"If I don't like the Law, I just make one up!"
-- HGH, Backdoor Barry
Why the fuck am I working so hard to pay the taxes I do? Un fucking believable. This country is so fucking done.
My question has to do with how many of these loans are the result of curriculums stuffed with useless politically correct courses, and perhaps even curriculums that are useless?
What an excellent vote buying scheme.
Forgive the Principal ?
No talk of that, just make it easier to pay.
Change the Bankruptcy laws back to Pre-2005, where debt absolved via bankruptcy? NO.
Just making the BANKs whole...
Dept. of Education running a slave ship. They make more money than EXXON selling their shitty loans:
http://news.yahoo.com/blogs/the-lookout/makes-money-off-student-loans-mi...
If you like your student debt, you can keep your student debt...
actually, even if you hate your student debt, you are stuck with your student debt.
fixed it.
If not, then your parents can keep it. If they were dumb enough to cosign
Fuk it
I'm quitting my job, maxing out my credit cards, filling my home and garage with rent to own crap, dropping all insurance, and halting payments on my bong of the month club
My bailout has to be up next
.
You do know that's a DEA sting operation, right?
Colleges are a scam. A properly motivated student in most cases, and with most degrees could learn twice as much , at a tenth the cost, and in a third of the time -from their own efforts through a good online accademy. Why do you think Homeschoolers are smart? They don't sit around for 8 hours a day wasting their time -learning nothing. Most american college students learn nothing but bad habits -sex, drugs, rock'n'roll, skip haldftheir classes - they come out dumber when when they went in. Forgive half their debt and let the schools and banks eat the losses -Then if these kids ever do make any money they can pay it back by being required to pay it to local soup kitchens so we can feed all these starving, homeless persons or something like that. or anything -but not the Federal Government -they'll just squander it by foolish immoral wars and handouts to criminal Banksters.
But you just outlined the problem with the idea of a "properly motivated student". Hell even when I was in college a century back or so it seems, there was very little motivation going around, and even then a lot of parents were picking up the tab, so kids were just using school as another delaying tactic to avoid getting a job.
The thing is, many students see school like many employees see their jobs....all they need do is show up. If they perform poorly, its not their fault but that of their "administrator". Motivation is key to everything, from eating to sex, if you ain't got none, you ain't getting none.
Just showing up has never been enough for anyone but a select lucky few. For everyone else it is a war of survival, always has been and no amount of hoping for change will ever make it any easier, only worse. Every day not trying is a lost opportunity that will be harder to make up for tomorrow. NOTHING gets easier.
Well said...but I'm not so sure about the rock-n-roll part anymore. Miley "the slob" Cyrus and Bieber is more like it.
You can ignore reality
But you cannot ignore the consequences of ignoring reality
Ayn Rand was on welfare during the last years of her life. She didn't escape consequence.
Obama GETS Reggie Love's backside, but that's about it......
One of my tenants had $100,000 in student loan debt but could not find steady work. One night he was drinking and told people in the bar that he was going to kill himself. He died that night in a high speed motorcycle wreck in the Broadway Tunnel, in San Francisco. He had no family and had problems, but he was a nice guy. I've always thought the student loan debt overwhelmed him.
I hate to be harsh, but many fragile people just don't make it. We see people with tragic, painful, terminal diseases that somehow manage to keep on going, and others who off themselves because they were dissed on FB. But we can keep on telling everyone how fucked they are, what victims they are and I'm sure that will help a bunch.
And in case you might be wondering, alcohol, depression, a bar, night time and motorcycle in a tunnel, are about a lethal a mix as one can concoct. And most people who kill themselves do it as a selfish act to punish those around them, so doing so owing 100k sounds perfectly rational to me. There may be a reason its a sin, but you could also believe that it is simply the church trying to prevent people from killing themselves while still owing money. Loss prevention.
This is classic Cloward-Piven strategy for this Administration. For the unintiated, the strategy requires the complete overwhelming of a system (any system) of governance in order for there to be true reform. Originally posited for an end to poverty in the late 60's and early 70's, one need only look to the current immigration debacle, healthcare, student loans...notice any patterns or similarities? Yes, indeed...just stop enforcing the laws, change the laws, or hasten the collapse of law...and then you get the reform you desire.
I was just thinking this would allow a AAA Rating on derivatives of tranches of student loans to sell to the Chinese or European bankers.
But will have to consider what you are saying. Crisis. Collapse. Narrative. Fix.
Students will lose, other debtors probably will be combined into the narrative & fix. So with Debt over $60 Trillion, foreigners owning over $28.3 Trillion in assets... most of the citizens are ripe for take over or enslavement.
Yeah, President Obama did not create the "Rip Off" of ACA health Care without a deliberate plan. They ignored fixing Medicare & Medicaid. They ignore the problems with Social Security. And yet they have a purpose.
Problem, Change the Narrative, Present the Fix.
How did that work with Health Care, 9-11 Attack, NSA Spying, McCain-Fiengold Campaign Finance Reform, Gramm–Leach–Bliley Act, 2008 Financial Crisis, Savings & Loan Crisis, Keating Five, Dot Com Collapse, Financial Ratings Crisis, Derivatives Crisis.
That's exactly what it will do. By giving student loans a further government guarantee, these loans will trade more 'money' than ever. Classic inflation.
Of course it will only further inflate the cost of university education, but while student debt trades 'money', it can't by definition default. The shell game thus continues.
The furriners are too smart to buy that tranch. Buyers of said garbage are the fund managers of the muni retirement programs, as always. They don't care because when it blows up, the mother ship will just jack up our property taxes to cover the net.
Potus is dopey.
Period.
College inflation is a rampaging scam, hogs guzzling at the feed trough.
Driven by the free loan entitle me this army.
I'm all for education. I'm not at all for brain washing propaganda.
What's 10% of almost nothing?
His actions may actully increase money velocity yes? Moar inflation, yes?
Keep stack'n bros......
globaleconomicanalysis.blogspot.com
Looking to Drastically Reduce College Costs? Study Abroad!
So what are the unintended consequences?
Marginal students are rewarded.
Good students will face still face higher tuitions because every person with a pulse will have more incentive to borrow, thus raising tuition prices for everyone. Serious enabling.
Responsible students may have curtailed education goals in the past due to the high costs of the interest payments, but now find that this debt forgiveness may have been the threshold in whether they would have gone to college or not, and elected (responsibly) not to becuase of high debt.
Everything that the government sticks its nose into has preverse consequences, and Obama has perfected this negative feedback model to a T.
We are near then end. Top Down, bottom up, inside out.
reminds me of that saying
Give a man some cash, he votes democrat once.
Teach a man to mooch, he votes democrat for life.
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."
They forgot the last part of that sentence... "...to serfdom".
"...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...."
the banksters got their trillions; it's time for the students to get their billions. all bad debts should be discharged and liquidated. there should be credit cosequences, but fuck you and your debtor prisons. it takes 2 to tango, and the lenders should have been brighter than their students....the whole education racket is a crock and should be buried under along with the banks and government.
My credit score is about on par with the number of ounces of gold at Fort Knox...Yippee Ki Yay!!!!!!
10% of ZERO is still ZERO. Borrow a ton of money claim it as a student loan and just dont work..
Where is that damn EASY button..
I cried a little today. Mostly in regret. I wish my parents had NOT told me to go get an engineering degree that would cause me to work as a teaching assistant in college to responsibly and personally pay off my tuition without government assistance so that I would be gainfully employed and be a positive contributor to the GDP for my lifetime and provide my child with a solid financial launchpad.
Instead they should have let me pursue the $60,000 arts degree that would have gotten me 4 years of incredible fun after which I would probably have sold insurance products at some agency and, in 20 years of my graduating, my student loans would be forgiven. I could also have raised many kids that would live off of government assistance and could call their grandparents overseas using a government subsidized phone.
One more bailout. Many more to come. Now I can safely tell my child to "pursue her dreams" because everything is paid for by someone else through the government. There simply is no incentive to contribute. Only to take.
indentedness? I guess the writer did not attend college.
Enslaving a generation using its own weight. This was sweet.
After having been hit and run twice in two years and being eliminated from a 100k plus job in 2010 due to overall economic downturn and company BK I too was having some difficulties. With a left shoulder that no longer worked physical labor was out of the question. Sales gigs in my field were few and far between. Having worked as executive chef in the 80's and 90's I went to work as a relief cook in a nursing home for 11 dollars an hour while the lawsuits for my injuries worked their way through court. Though on a permanent 10 lb lifting restricition by a respected rehabilitation doctor I made meals for 90 nursing home residents and all that entailed. See, in my world all work is honorable. If it is legal the money you make will always be better than money given to you. I had to resort to lawyers because in a hit and run wreck your own insurance company is responsible for your injury rehab and expenses. When the insurance industry owes you money they can and do ignore you. Another industry in our country that is all based on false promises. We recently had a single mom and her two teens living in our home while she "got on her feet.
She worked part time for a state job. In a part time state job she got 2 weeks of paid vacation. I asked 200 a month from her toward groceries, utilities etc as I was making about 200 a week myself in the part time world. Her kids came back to our place with all new clothes and some new electronic games for the 13 year old boy. And my 200 dollars for the last month wasnt paid yet. When I mentioned that it was odd all these new things were purchased and the "rent" was late I was told she would look for a new place to stay because I offended her. That night while moving her purse from the kitchen table my wife saw an income tax folder slide out of her purse which showed she had received a 3K plus income tax refund. Wow. See, the hand out not hand up mentally in this country is rampant. She was offended I actually needed the 200 dollars at that point yet had gotten over 3K in income tax refunds and somehow that was "her" money?
I will share my last meal with you just don't steal from me. They moved out. I feel for her kids. They are learning their life skills from mom. The me me me mentality is eating the insides out of our country. It isn't just the bankers, it is realtors, insurance industry, municipal government monopolies, property taxes out of control. The only thing we truly have control over is what we focus on and what we allow ourselves to think. The neighbors daughter was just hired as a librarian by a ritzy suburb. She has a library science degree. Starting salary is over 60K a year. Lifetime pension. Lifetime benefits. Shuffling books. We are beyond fixing people. Prepare accordingly.
Fuck this being holier than thou shit.
They bail out these fucking lame ducks and I'm loading up on student debt too.
Fuck it, everyone's leeching, so will I.