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"Staggering" Student Loan Defaults On Deck: 27% Of Students Are A Month Behind On Their Payments
Calls for a benevolent suspension of both personal responsibility and accounting truisms (which mandate that one person’s liability is everywhere and always someone else’s asset) in the interest of forgiving all student loans at the expense of the US taxpayer aside, America has a student debt problem. Here are some good places to start if you need a refresher:
- The Treasury's Worst-Case Scenario: Over $3.3 Trillion In Student Loans In A Decade
- The Next Subprime Crisis Is Here: Over $120 Billion In Federal Student Loans In Default
- "Cancel All Student Debt" - The Petitions Begin
As we’ve documented exhaustively in the past, the country is laboring under around $1.3 trillion in non-dischargeable loans to students which isn’t a good thing, especially in a country where the jobs driving the economic “recovery” have, until last month, been created in the food service industry and where wage growth is a concept reserved for only 20% of the workforce. It would seem that this could make it increasingly difficult for students to repay their debt, especially considering how quickly tuition costs have risen. In other words, tuition is going up, wages aren’t, and the latter point there is only relevant in the event you find a job that pays you a wage in the first place (i.e. where your compensation isn’t determined by the generosity of the “supervisory” Americans who can still afford to eat out).
The severity of the problem has been partially masked at times by the tendency to inflate the denominator when one goes to calculate delinquency rates. That is, if you include all student debt outstanding, even that in deferment or forbearance in the denominator, then clearly the delinquency rate will be biased to the downside because the numerator will by necessity only include those students who are currently in repayment. That’s really convenient if you want to make things look less bleak than they actually are.
Of course you can’t be delinquent when you aren’t yet required to make payments, so the more accurate way to calculate the figure would be to include only those students in repayment in the denominator. This apples-to-apples comparison is likely to paint much more accurate picture and sure enough, a new St. Louis Fed (who recently documented the shrinking American Middle Class) study finds that the delinquency rate for students in repayment is 27.3%, well above the 17% figure for all student borrowers. Here’s more:
To further analyze student loan delinquency, and given that many programs allow borrowers to postpone repayment on their student loans, it seems pertinent to study a measure of the share of loans not in repayment. The second figure shows the percent of student loan borrowers whose loans are not in repayment.
Borrowers’ loans are defined as “not in repayment” if (i) their student loan balance is larger than or equal to the previous period (i.e., quarter) and (ii) there is not a pastdue student loan balance in the current period. Note that the “not in repayment” status includes the loans of most student loan borrowers who are still in college. It involves more than that, however, since it also incorporates loans in deferment and forbearance, which are mechanisms that allow borrowers to suspend or reduce student loan payments under certain circumstances. 4 For 2010:Q4, we find that about 45 percent of student loans were not in repayment; this implies that only about 55 percent of student loans were in repayment.
As a consequence, if we adjust the delinquency rate to consider that only a fraction of the borrowers have payments due, this level of delinquency is very concerning: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency rate of 27.3 percent for borrowers with loans in repayment. This level of delinquency is much higher than for any other type of debt (credit cards, auto loans, mortgages, and so on).
Even the fudged denominator figure doesn't look that great with 17% of all student borrowers delinquent...
...and speaking of forbearance and deferment, here's the breakdown by category...
...and here's the trajectory for the size of the bubble under difference economic scenarios...
* * *
So we say again, let the "cancel all student debt" petitions begin because the students are going to cancel it anyway, the same way some homeowners in Florida and New Jersey are canceling their mortgages — by refusing to pay. And as a reminder, once the country's colleges and universities realize that the taxpayer is on the hook when former students don't pay, you can expect tuition rates to go parabolic.
Note that we were the first to warn about the student loan bubble and now, some two and a half years later, even Bill Ackman has come to the same conclusion. Here's what he said about the situation earlier this week:
“If you think about the trillion dollars of student loans we have outstanding, there’s no way students are going to pay it back.”
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Of course everthing is shitting itself all at once. Credit rejection just hit an ALL TIME HIGH.
http://hostingd.imagecross.com/image-hosting-07/7759credit.jpg
...Washington/Wall Street House of Cards will collapse when American Millennials, en masse, simply stop paying Federal taxes.
Cant arrest 100 million citizens
With the billions of bullets that they bought I'm pretty sure they will try.
Welcome to FEMA camp #17! Have a spectacularly democratic day!
Ah, the coming storm.
Chances are, the inner city areas get squeezed first. They are closest to the edge in terms of resources and most likely to react violently. These areas will be ring-fenced. And, of course, it will be televised quite heavily.
Eventually, the pain will spread. As will violence. Most people will just be on thier own per se. There aren't enough cops to really contain what is coming. Rather, shock and awe will be needed. "Tanks in the streets" was not a threat, it is a inevitability. Ironic huh? But, most of us knew Wall Street was thief going into to the mess in 2008.
Large cities, sure. They will be locked down. But I don't buy them locking down the entire country like that, at least not successfully. If they could pacify relatively small countries like Iraq, Afghanistan or Vietnam, I wouldn't give them very good odds here. Considering the govt fucks up pretty much everything it tries to do, I doubt this will be any different.
They're making it sound like student loan forgiveness is just around the corner.....would YOU PAY ?
So let me get this straight, we, ZH commenters, want everyone to default so the banking system collapses? So that way noone else can get a student loan and only the wealthy can go to college after high school. So then they can educate themselves and become management and keep everyone else below them? Seem kinda like aweful logic, but what else is there to expect from them uneducated. It's a trap!
Perhaps you didn't hear, student loan forgiveness is already here:
http://www.studentloanproject.us
Mental pictures of Kurt Russell as Snake Bliskin come to mind .. Escape from New York .. only it might be escape from any big city with a large population of EBT card holders or even SSI recipients. As for tanks in the street .. they might make points and control areas at first.. but that will deteriorate fast as people figure out they are living in an occupied country .. when the good old boys understand .. this is not a drill . hopefully they will come out fighting .. not en masse but like good guerilla fighters ..if we are lucky they will not fight their own countrymen . but not counting on it . mindset in the military is changing and has been for some time.. when they essentially axed Posse Comitatus . I figured osmething was up . the DoD came out with a white paper bout the glories of getting rid of Posse... never in my life thought I would think like this .. just impossible to believe how far we have fallen . it has taken decades but the bottom of the pit may be at hand.
Consider that the MIC has been researching issues such as runaway growth for decades. It is not as if where we are today is some sort surprise. That is the biggest lie of all. The general direction is pretty clear. Is the details that are a bitch.
strange. this US Student Debt thing is the damn single most scary thing that comes up regularly on ZH, for me...
and yet it's also one that attracts very few comments, and even fewer good comments
am I missing something, is there reason to be relaxed about it? or is it of less interest because you can't bet for or against it?
At least 4 years ago it was painfully clear that .GOV was going to push student loans as the next bubble. All the same hallmarks.
Now, it has the signs of stressing to the breaking point.
It's not the only thing they're trying to bubblize. Truth be told they're trying to blow any bubble they can as big as they can. Their only successes so far have been in student loans and auto loans. Doesn't mean they're not trying elsewhere though.
My son says his generation is better, and faster than us older folks.
I tell him there are still some things I can do better than a recent college graduate, like pay the bills on time!
My son says, "hey dad I'm taller than you now"
I reply, not when you're on your knees begging me for money.
What do you mean you can't bet against it? I'm going to bet against it this afternoon by going to the local coin shop up the street.
Well Ghordius, I think it falls into the same category as the US government's unfunded liabilities. That gets little airtime because it is in the future, and there is no solution.
Same thing with this. These loans are secured against nothing. No house, car, or boat. Only against a person's ability to repay. Sure they are not dischargeable, but when push comes to shove, if there is no money, they aren't going to get it.
But it is a huge problem, as these loans are assets being held by someone, and they are big.
I think Janet earmarking some storage space on some hard drives for them at the FED. Why not, the FED has bought lots of other crap it is not allowed to buy (MBSs for one).
After this blows, next will be the trillions in corporate debt that is allowing stock buybacks.
But it all leads to the same place. There is too much debt in the USA, and the need to ever increase that debt to keep from collapsing leads to some seriously fucked up decisions.
pods
but pods, isn't it terribly dangerous to expose a big chunk of the younger generation to such a corrosive thing like that?
I mean, you know I do not know much about the US. but I can guarantee you, if we would do something like that in Europe, we'd have a whole series of revolutions
the youth would be on the barricades, and damn, I'd be joining them. imho there is a huge difference between a shared, abstract liability and such a personal, individual thing like that
unless I get again completely confused on how Americans see such extreme individual fates, which is probably the cultural bridge I don't seem able to cross
G, it is not just the youth here. I know people in thier 40's who are taking out massive "Obama" loans for college - and living on the money more than anything else. I also know that they will never pay that money back.
Most of the youth, on the other hand, is winding up on this path because they (and thier parents) see the world now as binary. Professional something or burger flipper. College degrees have become more of a credential in the process. Likewise, educators are pushing kids all down the same pipeline. It is very robotic in nature. No thought. Just ram - ram - ram. A massive educational sausage grinder (sort of like Pink Floyd video for Another Brick in the Wall - very apro po) with the goal being yield extraction to keep the perpetual growth money machine that is our modern financialized economy ticking a little longer. It is economic cannabalism... none different than the housing bubble except that it is even more evil.
Americans have been too stupified by their gadgets and TV .. most do not want to believe their country has been hijacked by a select oligarchy plutocracy .. they want to believe the American dream is possible .. have no clue .. its over .. the corporate media in this country does not help .. honestly I wonder if they put something in the drinking water to neuter people and make them passive .. in the US rioting is associated with lower class or hippies of the 60s .. protests . usually a left phenom . .the right . good luck getting them to drag their sorry butts out for much of anything . a lot of keyboard warriors but little else.. still if this ever really blows. there are people who will fight back .. cities will riot . but rural areas will hunker down and fight if they have to. The media portrays our impoverished condition as OUR fault .. since media is corporate they tow the corporate establishment line . .if you think things are out of kilter and unfair you must be involved in classwarfear . shame on you . that is . against the rules for us to point out the disparity and insanity of making debt serfs of a majority of the people. Most are conditioned to this sorry state of passivity by media and by bread and circuses.. it wil have to get really bad for Vietnam or civil rights era protests to become standard .. America . I do not know it anymore. Not to mention we have a sorry history of govt. crack down on protest . from Bonus march wher troops were used against encamped World War I veterans protesting the fact they had been promised a bonus and never received it .. to the Ludlow Massacre . where Rockefeller used hired thugs and govt. agents to massacre a number of workers on strike. We have or HAD a rule called Posse Comitatus where military can not be used on civilians .. its gone out the window .. when will people fight back . when they have no other choice. either that or they will go willingly to some FEMA camp or govt. gulag in order to be fed and given a bed.. I await the revolt but not holding my breath.
I'm no expert on student loans Ghordius, but it seems to me that if the overwhelming majority of student loans are backstopped by the US gov't./i.e. taxpayer, then these loans WILL eventually be repaid. It's just a matter of who pays them off and when.
That's why to me even though it's another bubble, it "bursting" won't have the same impact as, say, a housing or stock market bubble. Not saying it's right, it is what it is.
If I'm wrong people, please explain why. Thanks.
It won't but I think instead of corporations filing for chapter 9 or 11 Americans who are delinquent on their student loans will have a big stamp going across their social security government whatever the f profiles
"Eligible for conscription"
This is the only way I see citizens being liable and forced to pay back their student debt since .gov can't really force a penny or a nickel out of someone when they got none and imprisonment or detainment is less profitable compared to slave labor. Then they can justify our MIC budget and people will have no choice but to go with MSM conventional "crap headlines" since liability will literally reduce anyone to feeling like a absolutely worthless POS especially when it becomes impossible for the said person to pay it back...
I'm just as worried as everyone else
Is it just me or is there way too many 84-96 month loan new cars driving down the road recently?!
How do people afford to drive new cars? Maybe they can reference me and others on ZH to where they work :D
Ghordius, I think the problem is that you do not see this as nefarious in design, where I do.
What better way to get people needing to work than paying off debt that they cannot discharge? (good for government)
In my eyes, this is another way to increase the debt load (the supply of money) in the system. (good for bankers and government)
Education has been financialized. It is done. By making these loans non-dischargeable, the ball was put into motion. Now, the supply of money that is chasing a limited thing has been increased to infinity for the most part. So the people selling the product can increase prices and still fill the rooms. Market has been shut down.
The government and bankers get their debt creation, and those selling the product get bigger houses and fancier sabbaticals.
Americans have also been subject to the American educational system for 100 years, so 90 out of 100 do not see the bigger picture. They are fed the "college is a necessity" meme for generations.
So, the system rolls on towards cataclysm.
pods
I gave up. Quit working after being laid off. Moved in with my mother. It's less embarrassing than participating in this system. $40,000 in student loans 17 years after graduating. Payments barely covered interest and left me poor as fuck. Ruined a relationship. I quit. I'll find a way outside of the matrix. Any government rep/thug better stay the fuck away from me. Especially game wardens.
I gave up too.
No choice: child-support or student loans... which will land you in jail faster?
I'd love to surrender my degree in lieu of repayment. Why can't I?
I find it terrifying, both as a taxpayer and as a parent. (Particularly on that last front, since even though I'm well-versed in the issue and aware of the alternatives, my wife is a dedicated blue-pill type who insists our boys follow in our four-year-college footsteps. I expect continued fireworks on that front.)
But here's the thing. EVERYTHING is broken. EVERYTHING is fucked up. Student loans are broken. Pensions are broken. The safety net (SSDI/SS/Medicare/Medicaid) is broken. The regulatory system is broken. The financial system is broken. Employment is broken. The wealth gap is broken. Healthcare is broken. The legal system is broken. EVERYTHING IS BROKEN.
In that light, this is just one of countless inoperable tumors in the body of our society. And maybe it doesn't get as much response at ZH, since not everyone is exposed to it, but everyone (at least here) probably has some direct connection to the markets. But the fact remains that it's a huge issue.
It's a big issue for my wife. She has a good bit of it, I have none. Not in a big hurry to pay it off either. That which can't be repaid, won't be. It's all fraudulent, IMO and is going to be written off anyway. Hate to say it, but anyone paying it all back is going to get fucked even worse.
Crimson,
Well said, no way to know what the right thing to do as the system so utterly corrupt to the core.
Everything you have mentioned that is broken has somethign common that is right in the middle of it...
.gov
Those who've put themselves through college figure it's not their problem.
Those who've put, or are putting their children through college figure it's not their problem.
Those who have current unpaid student loans figure it's not their problem, assuming they'll get bailed out by the progressives.
My bet is on the latter occurring, with the two former classes becoming even more righteously indignant.
Anything to further foment class warfare.
Divide and conquer, it's the American Way!
+1
Divide and conquer is what we have to beat. Somehow...
I also agree with another post up there on everything pretty much in system is BROKEN.
I would try my best to stay away from the system, but for those who feel they can game the system and let the taxpayers be on the hook will slowly corrupt from the inside out
We need SME reforms and incentives, return of the mom&pop, only way to save America along with people who give a fuck
*fingers crossed*
I have to agree with you that the sevarity of this issues doesn't seem to get the respect from the readers that it should.
Who would of thought that after graduation you need a decent paying job to pay off student loans. Not to mention that this doesn't bode well for the future housing market either.
It's a giant circle-jerk between universities (where they indoctrinate a fresh batch of think-skinned, know-nothing, entitlement-minded liberal progressives every year), the students who are being told they must have a college degree or perish (and, of course all college loans are GOVERNMENT loans to pay for this), and the government itself who loves loaning money to indoctrinate those kids into the the "big government is your only salavation" mentality.
When this all goes bad and the government is looking at MASSIVE losses on their student loan portfolio, they'll write it all off, stick the taxpayers with part of the bill and print the rest of the money they need to fill the hole out of thin air (issue more Treasury Bonds).
So, no, it's not like this is going to take down the banking system like 2008. It's mostly GOVERNMENT paper- the private sector was booted out of the student loan business in 2009 and they weren't the biggest players even before that.
And, of course, more Treasuries being issued is just what the doctor (Krugman) ordered. Because the banks can buy them, sell them to the Fed and we can do all sorts of new monetary stimulus all over again.
In short, don't sweat it. We got this.
I basically said the same thing above. Every dollar of student loans that is govvie-backed WILL be repaid. It's just a matter of when, and who.
Of course, who will be you and me. So there will be less impact, which maybe morphs into less concern. Not saying it's right, it is what it is.
We are all greeks now.
not man millenials on here
as a millenial, most of them are STUPID!!
Win. You can't take away an education (hint* it costs NOTHING to learn).
Also, what can you take away from people with "intangibles"?
The boomer utopia is making sure it's worth as little as possible. They're THAT threatened of "New" Money.
you're right but there are only about 50 million americans paying taxes
Big deal? Does that move a single pip in the gold price?
What cannot be paid, won't.
Why dont these kids go on IBR??????
I dont understand why anyone would default????
Nobody is ever going to pay that crap back. Hell they even give it out to people that are totally disabled and the loans even say that the totally disabled never have to pay them back. Those banksters don't care they are only buying time as they continue to make preparations to kill everyone.
cancel student debt petitions begin. fuck them. they borrowed, pay it back you fucking deadbeats. is there any wonder why this country is such a waste land now.
A lot of the students cant pay back the banks and the government because the banks and the government screwed up the economy. So is deadbeat the right word?
What can't be paid won't be paid.
If debtor's prison was actually a money maker I suspect we would have them.
The problem is it costs too much to house/feed/clothe/supervise the prisoners to turn a real profit without a big fat government paycheck (i.e. private prisons).
Much cheaper to just let them default.
Why can't we have lenders prisons???
And who forced these self consumed, think they are entitled people to sign for the loans? Screw them.
Who forced these short sighted creditors to extend loans for over priced crap degree programs?
It takes two.
Why don't we bail out the debtors instead of the creditors this time, just for variety?
Two wrongs do not make it right. What message is being sent to those that signed for the money? For that matter forgive ALL debt for everybody. Trophies for all !!
The message being sent, and I do agree with you, is that the people that run the system fucked up and lured young willing dupes into debt slavery. Now that system is failing and they admit it so everyone wins but the .01%.
If you raise your child to be a racist the likelihood is they will be a racist. If you raise your child to not know what debt slavery is and the whole society approves of it they will likely be a debt slave.
The young people, if nothing else, were cajoled into this system that seems "ok" until it isn't.
No, two wrongs do not make a right.
But in reality the big business/big money interests get a walk while the little guy takes the beating.
And just from a top down herd management perspective if you have any hope for a recovery then you need young people in the peak of the consumption phase to be able to consume (house, kids, etc.).
If there is no hope of recovery then fuck it.
Do you truly believe that paying off their student debt will make them become financially responsible? IMO it will not. Next up they will feel entitled to a home, car, etc. I am sick of this entitled mindset generation and at some point they need accountability for their actions.
Perhaps you fail to grasp that student debt is multi-generational/
http://www.gao.gov/products/GAO-14-866T
The biggest debtor group is 25 - 49, but there are some under 25 and over 50 too.
Overall these are NOT the entitlement minded crowd, but the people who, misguided though they may be, were trying to do the right thing to get a good paying job.
If you are a teenager it is easier to just hop directly on the gravy train and sign up for all the government bennies you can, rather than actually make the effort to get some kind of education.
IME the most entitled group are the boomers who expect to get theirs...hands off of Medicare and Social Security even if there isn't enough money for it, even if we have a higher percentage of children in poverty than old folks. We are heading into a situation where we have 2 workers to support 1 retiree while half of those workers make less than $30K a year. Yeah, I'm sure that will be fine.
Forced? I think it's safe to say that they were strongly encouraged by the same "folks" that are queued up to ride to their rescue. Governments love dependent citizens; it justifies the need for yet more government.
Simple really. And no forcing is required, just patient and methodical indoctrination of trust and reliance.
What about the government's fiduciary responsibility to it's citizens? IMO government guaranteed student loans are a breach of that responsibility and therefore I think everything including forgiveness of loans should be on the table.
the solution will be: for debt forgiveness, you give uncle sam the next 4-6 years of your life in the military.
nope just sign a document agreeing to vote democrats and everything is free and includes month cash payments. Heck if you agree to teach or work at some liberal scam charity they already forgive the loan
yes, usa need big war to send there 50mln people in foodstamps and debt slaves.
That solution exists now. You never heard a military recruiter talk about helping with existing student loans? Most young people still aren't stupid enough to join this military.
“If you think about the trillion dollars of student loans we have outstanding, there’s no way students are going to pay it back.”
Lead by example...When you live in a country that can not repay it's debt and just keeps piling it on, who seriously gives a shit?
This is what we teach them in college.....not to honor your debt...in fact to have no honor at all...be a deadbeat..that is cool....what a world we are going to be living in when the rule of law fails...
Something a very astute buisness law and economics professor taught me in college was that it is legal to not pay your bills, That economics are based on trust, and the answer to any legal question is "it depends".
With that being said, at this point student loan depts are "odious depts" made in bad faith for the sole purpose of enslaving the youth of america and enriching the financial elite. They should be discharged and forgiven and the whole higher education thing left to market forces. (Boom goes the dynamite). Just like obamacare was made for the sole purpose of enriching the insurance and healthcare sector. (healthcare bubble)
There is a reason why most major universites have 30% international (mostly asian). It is because they pay full price in cash subsidized by their governments. American Education still is one of the best, and the reason things are getting out of hand with tuition is because there is more money thrown at this resource in an inefficient manner in the same manner the stock market is being blown up. The higher education bubble will burst eventually. Also the whole forced diversity thing at universities is going to backfire as nothing is as an effective teacher as experience. Expect voluntary segregation going forward.
Our country is totally out of sync with natural economics and it is set up for a potentially cataclysmic event.
We need the government out of our schools.
We need the government out of our medicine.
We need the government out of our food.
When systems and organizations are forced to subsist on what they can procure through holistic means they will be the most responsible and best serving. END THE FED.
Let's just sum it up by calling it usury. This entire debt/fiat system is loan sharking from the day you're born into it.
USURIOUS!
"There is a reason why most major universites have 30% international (mostly asian). It is because they pay full price in cash subsidized by their governments."
Uh I think those international students are just plain rich, don't think their gov subsidize anything for them unlike amerika.
Ok maybe the top 10 candidates from each country...
My favorite ZH comment - " Ho Li Fuk"
why pay your student loan when you need the new I watch...
Receiving recorded calls now selling Student Loans,,, Definitely bubble stage.
The great moral hazard facing this world is that kids realize that if countries get bailouts and banks get bailouts and corporations get bailouts, then why shouldn't they. If they have learned anything in their short time on this planet, its that from the top down nobody will be accountable for their actions.
Thanks Ben for doing, in your own words the "courageous" thing to do and as a professor teaching "our" children well.
Lead by example at it's best.
Obvious all educators need to be paid even more and all education should be free. Obama Workers Party annouces all professsors and jaintors at any education facility will now make $1 Million index to increase 50% a year....and anyone with education debt will receive 50% negative interest payments...if they sign a letter agreeing to vote Democrat for the remainder of their lives!!!! Printed Money for Everything!!!!
We are at Supidity Level Condition STUPCON 1! or is PINK?
don't worry about the bankers. uncle sam will make good on those deadbeat loans.
Zactly what I said above. Every govvie-backed dollar loaned WILL be repaid.
Got to love how Wall Street is always on the lookout for another group of people to stuff up with their debt.
Don't laugh, because right now they're probably starting to look at 'kiddie loans' for the under 12s. Why not, start them young and hook/capture them for life.
Oh you mean student loans that fund education expenses for kids aged 5-18? Because that exists:
https://www.salliemae.com/student-loans/private-school-loan/
did not know that, but I should of guessed it would happen sometime...MOAR debt is GOOOD for the economy, dontcha know?
Holy shit. WOW. Didn't know there was such a thing.
We are so screwed.
Ummm, can I get my payments back?
"All debts are paid- either by the borrower or by the lender."
The solution is not to cancel debt. The solution is to allow student loan debt to be discharged through bankruptcy.
Banruptcy is not a free ride. It takes 10 years before the record of bankruptcy is removed from credit history. It takes about 3 years before one can get any credit line at all, therby forcing the bankrupt person to live on a cash basis during that time.
Those, who can afford to service the debt, wil. Those who can't will file, will endure several years of austerity, and then will be able to start life anew.
This is the whole purpose for bankruptcy laws. It is a travesty of justice that student loans have been specificall excluded from bankruptcy protection.
They could even have a new category of "Student Debt Bankruptcy" since they have no equity to begin with and are borrowing, theoretically, against their future earning power, the lenders, who allowed this to happen and even promoted it, and have crashed the system so there is no more future earning power for those that can't find work at entry level, could allow for a new category of bankruptcy that isn't as harsh.
Or the lenders could just own up to being shit out of luck with their rigged game and never collect.
let students deduct the interest and keep them in the system. It's the only way to prevent another melt down. Some smart presidential candidaie should run with this.
Reminds me of how car interest was tax deductible...
if I can depreciate my sgopping centers over 39 years... as they appreciate in value... then why can't my daughter deduct the interest on her student loans.
appocean,
Student loan interest is already tax deductible.
it's capped at $2500... and if you make more than 100k per year you didn't get the obama interest rate reduction.
Just add this to the "unfunded liabilities" in the Al Gore Lock Box of imagination!
Check out the picture with this article. http://news.yahoo.com/union-spends-big-low-wage-campaign-endgame-unclear...
Fight for Dignity - Fight for $15
Do college grads understand that it takes a whole bunch of $15s to make up $30k or $60k or more in debt???
And dignity??? My dignity is worth at least $37.50.
Zero sympathy for retards paying $25k for a "Business Administration" diploma from Clown College, AZ.
Clowns need managers too. The dumbest clown is smarter than the smartest banker; at least they know how to save gas buy putting 25 other clowns into a tiny car.
Wow, so apparently, you not only support the brainwashing that forces these kids to make these dumb choices, you kick the victim too.
Every minute of EVERY day, every IDIOT, in our public schools is told, "go to college, get a degree, you can do it, here is "free" cash," for over 13 years.
And the "good" parents encourage too.
Even if Little Jane or Johnny are bumbling idiots, you MUST get a degree, MUST.
I have zero sympathy for the future boomers that are going to go hungry because they trusted social security and banks.
They shoulda known. What say you?
Why do you hate clowns?
Making balloon animals isn't easy and they have to learn somewhere.
I signed in to answer your "why"?
Just because you are working and broke, doesn't mean you qualify for a forbearance.
The out is based on your income, and if you are making around $35k, which is EXACTLY what the lucky new grads that get jobs end up at, and you have to buy your own health insurance, and consider the higher tax rates, higher car insurance rates and higher consumer loan rates, if you want to both live in a building and eat, you may not be able to make those payments.
The income levels are set by people making millions a year that get outs for all the things we are mandated to pay for. They have NO idea what it is like for single 24 year old making $35k a year, but they are the ones setting the "reasonable" amounts of repayment. Hence, not getting paid.
Exactly like the healthcare debacle where millions of Americans not on the welfare found out the government feels it is reasonable for a family of 3 grossing less than $40k a year can "afford" over $10,000 in health insurance premiums. My guess is my son and his family weren't the only ones with the household head insured, the rest uninsured and the 1% of gross salary paid to the IRS in the bullshit responsibility fee.
You should see all the "students" that live high on the hog in major metro areas after borrowing student loans and then eating sushi 3 nights a week while partying every other night. Alcohol, condoms, vibrators, coke, meth, ecstasy and weed cost money.
Dont worry Hillary will fix it... We need moar Bartending Jobs!
Lots of censorship on ZH today.
What gives?
I think we might be in the middle of a coup here.
Time to lockup the admin passwords....then sort it out.
Students have absolutely every right NOT TO PAY. Based on nothing else than economic conditions are a fraudulent lie coming out of the US gov't. I don't care if some of them are aware of it, it's the gov'ts fault for parading them thru this circle jerk.
And why should any of you give a fuck? It's only digital zeros created from nothing that creates slaves for life.
Didn't we just have a "time pulled forward" speech on here yesterday? All this is are the bankers not being able to wait for mortgage slaves and have found a way to entrap your fucking ass before you even hit the pavement.
Here's something else worthy of making a note of:
http://beforeitsnews.com/alternative/2015/04/retired-cia-agent-confesses...
All loans are pure fraud anyway. Conjuring numbers out of thin air (no work involved) and making you pay for it (with your work). Is anyone lawfully required to honor such a contract? I guess so... if you consent to such an arrangement.
Essentially true under a reserve fiat currency standard. A genius move for the money changers.
Govt. privatizes gains and socializes losses. If you pay off the debt - they get rich. If you default, the loss is spread among the citizens, including those who just defaulted.
Don't want to repay, then don't. The government will raise business taxes another few % to compensate and the businesses, just like you will have a right not to hire.
Vicious circle.
The federal reserve should just buy it all off. Then not demand repayment. Just like they are about to do with the US Treasury.
Reading the terms of these student loan agreements, one would have to be a complete imbecile to sign one. Collapse is all but certain. A nation of fools.
The people signing those 100 page contracts are judged not capable of deciding to drink alcohol, but can be enslaved for financially for LIFE. Most Boomers don't read and understand the contracts they sign, but magically their children are supposed to be that capable at 17 years old?
Somehow, many of us feel justified in blaming them for this travesty.
EVERY adult that is SUPPOSED to be protecting and looking out for these CHILDRENs future have told them to SIGN.
And somehow, a dumb kid that can't even drink a beer, or understand a legal contract, or how long forever is, is magically mature and smart enough to take this on.
This country continues to make me sick. We create situations and then punish those that take us up on them. I hope there is a special place in hell for everyone that self-righteously judges and condemns others for only doing what they have been forced to do.
excellent comment.
The obvious solution is to lower the drinking age to thirteen.
Joking of course. Student loan debt is a relatively small piece of the debt pie but arguably the most important to civil obedience as idle and broke youths have time and motivation to plot revenge. Youth always wins eventually.
Reminds me of conversations I have often about "equality" (read job quotas) to rectify "a history of priveledge for white men" (or some other overgeneralization).
I set it up this way..."You think there should be preferences to equal out the numbers of races and genders in various jobs, etc etc because of disparities remaining from previous generations? Hmmm? So you think we can have the old white guys fired...or are you meaning you just won't hire very many young white guys (and really young black guys have it even harder but these people never look at real numbers so I just keep it simple)? You know...history says it's not a real good idea to have a bunch of young men hanging around with nothing to do and not much optimism. That doesn't usually work out well. Case in point...always and forever in history."
Exactly. I'm actually surprised this hasn't been taken up by any law firm, a class action lawsuit for unfair lending practices doesn't seem that far fetched. They're basically letting children sign contracts indebting them for the rest of their lives. An 18 year old today is mental toddler. Don't forget these our GOVERNMENT BACKED loans. The GOVERNMENT works for the people and therefore has fiduciary responsibility to those people. Backing bad loans in bad faith is a clear breach of fiduciary responsibility and the government is liable for damages. IMO balances of all loans should be forgiven, government backing of student loans should be stopped and problem would be solved.
I've thought the same thing...adding that claims of fraud can be added for the promotional materials used in recruiting as well. Especially when the recruiting is aimed at under 18s. There's blatant false advertising going on and completely unsubstatiated claims disguising the bad deal these kids are about to sign on to.
Fake money fraudulently created to pay for a fake, fraudulent education. I say everyone should just go home and call it even. Didn't Billy Preston say, "nothing from nothing equals nothing."?
"Nothing from nothing means nothing". "You got to have something, if you want to be with me". But you're right in that "means" equals "equals".
it's okay. just forgive the defaulters, and charge a higher interest rate to the responsible losers to make up the difference.
those responsible losers are the US tax payer lol
that's exactly what is going to happen... the responsible people get screwed. I would hope that people on this site woukd actually add to the conversation rather than 90% of the dribble that shows up now... this site has gone way down hill.
college is the biggest scam going right now.
if you have a high school aged kid..they are better off not going unless they're in ap math/physics classes and even the ROI on those degrees is questionable these days thanks to the ponzi scheme economy we live in.
we're fucked!
I'm a Phonics!
That'll be $100K.
This is only of concern if you think the government cares about remaining solvent. The objective of student loans is a) to finance the higher education oligopy, and b) create debt slaves. I'm sure "those in charge" are fine to keep printing money.
Until they can't.
This is only of concern if you think the government cares about remaining solvent. The objective of student loans is a) to finance the higher education oligopy, and b) create debt slaves. I'm sure "those in charge" are fine to keep printing money.
Until they can't.
Call it for what it is: welfare for the colleges. You think the Ivy League could maintain their absurd tuition levels absent the student loan program? You think any state school could keep jscking up tuition levels year after year after year? The student acts as a pumping station from the Treasury to the bursar's office. Then the student gets tagged with a bill he can't pay. Does the college get dinged for offering majors in crap like "Lesbian Studies"? Think again.
Nope...the colleges get dinged if they don't offer those majors actually. And your right, the "student" is really just a money laundering vehicle transfering money from younger generations to the older generations...whether it be with real cash (a paradox I know;-) or debt issued in their names by the government.
Can they not wipe their asses as well?
Whenever I've gotten calls from the servicer of the fed student loan I have, it seems they've done everything they can to have me defer payment. It has always seemed strange. They were obviously instructed to do this. They don't want to hear about my ability to pay, just instruct me on my ability to not pay.
Your loan is earning interest a 7% or higher, correct? This is for a federally insured loan backed by the borrower's lifetime of earnings AND his/her Social Security entitlements. In short, it is a demand note with the security of a treasury bond and a return twice as large as the longest dated bond? Why would a lender ever want you to repay such a wonderful asset?
1.75%, deferred
when you see students banding together in mobs to 'cancel student debt' because they are all a bunch of fucking sheep and caanot take the time to research the legal and ordinary method of debt cancellation known as the u.s. bankruptcy process, let alone actually reading the code itself for the provisions that prohibit discharge of most student debt. -----------------you realize that those very same students are fucked because they are retarded sheep that could not learn any critical thinking skills in college to do their own research.
Just a very interesting observation. Vladimir Putin said during a conference: “Education is a right, therefore it must be free.” Really, isn’t it very interesting, how his view of human rights is different from the USA?
Everyone has an inate right to educate themselves. With the advent of the Internet and search capabilities, public schools and colleges should have become a relic of yesteryear, but the non-thinking public hasn't caught on yet.
Just the way TPTB planned it.
But it's happening. The loss of legitimacy first will be in higher ed, because you actually have a chance not to go/pay. K-12 has the monopoly secured by force requiring everyone to pay whether they go to the govt mandated school or not, and if you don't prove to the government you are educating your child in some other fashion...force is used to drag your kid to that same mandated school. Higher ed doesn't have quite so cozy of a setup.
These are the 27% that probably never should have gone to college in the first place!
Fine, forgive the loans, but you don't get to keep the degree. Fair is fair.
Most people here just don't understand. These are not your father's student loans. Because they are both non-dischargable and the ONLY debt that can be directly collected from your Social Security check, they are NOT unsecured loans. Rather, they are payday loans with a very long time until payday.
What is really happening is that students are taking an early advance on their Social Security without penalty. Only those who die before retirement will ever escape repayment.
I suspect not one in one thousand students who take out these loans understand this.
A HUGE segment of the population makes a living off of governments ability to tax.
So stop giving loans and lets see what happens to the cost of tuition, and professors pay. I bet the cost of a degree would plummet along with worthless classes.
MALINVESTMENT That's the word Spelunker will see on cave walls placed there by historians to explain what happened.
Buddy of mine in college was house-sitting for his swim coach one summer. Big goddam mansion in the hills, on a leafy street. Naturally, we had a keggar.
But my little kid brain was thinking, how does a guy who teaches two phys ed classes and coaches a div III swim team afford this shit? And how can I sign up? By the way, where the fuck is this guy right now?
On sabbatical, in Hawaii.
Buddy of mine in college was house-sitting for his swim coach one summer. Big goddam mansion in the hills, on a leafy street. Naturally, we had a keggar.
But my little kid brain was thinking, how does a guy who teaches two phys ed classes and coaches a div III swim team afford this shit? And how can I sign up? By the way, where the fuck is this guy right now?
On sabbatical, in Hawaii.
Fuck one month, I'm five years behind.
bwahahahahahahahahahahahahahahaha
Has it made a difference in your life? I'm actually curious...anything you find you can't do because of the default?
I took out student loans from 2009 to 2011 and have paid them back. That probably makes me a sucker, but I just cannot stand being in debt.
That said, it looks to me like the first step would be to cease and desist any and all government student loan backing, and the government should, as immediately as possible, STOP issuing new loans. It should then do everything humanly possible to divest itself of anything that even smells like student debt and get out of the business. This system was FAR better before the government started being the sugardaddy of the 18-22 bracket. College was also FAR cheaper then, even in inflation-adjusted dollars (my Dad had nothing to start with and worked his way through school in 4 years). Leave PELL grants and similar in place, but for Christ's sake don't give them to people majoring in 18th century Russian literature or whatever. STEM, teaching, and other actually USEFUL majors that lead to actual jobs.
My daughter is in Kindergarten this year. It gives me a headache to think of what things will look like by the time she's ready for college. I'm planning on saving now and just bypassing the entire financial aid thing. Yes, it's expensive, but it's far easier on my (and her) sanity. It's worth it if you can do it.
Yes...and no...and maybe so. I'm not sure the lesson learned from the experience would be to save for your daughter's bad investment in college. I can only imagine the "value of a dree" in 13 years...and I have a 5 year old daughter too, and a 7 year old son...and I am an academic adviser at a University (and instructor in Media History) with a couple advanced degrees (and a pile of loan debt not worth it at all for the salary). No one in my family went to college before me and I had no guidence whatsoever...everyone I knew thought I was lucky to be going (and paparently lucky to be borrowing money at inflated interest rates on inflated tuition rates...although they had/have no clue really).
But you're right. You got to get the govt out of the loan business to bring the costs down. I'm not sure if I would restrict everything to STEM though...shit, philosophers have saved the world as often as scientists and others. But just have it have cost and value in real terms, the truly inspired will go or find a better way to make "their difference". The future is not going to require a college degree IMO. Because at some point, after "the reset", what a person actually produces will matter again.
Took out a loan and repaid it within 2 years of graduating. At the time half the loan was a govt. grant given to low income families, which I belonged to. While I was making payments $1800 went to interest. Grant portion accounted for $12000, so it was worth it for me personally. I've heard friends from well to do families complain that they weren't eligible for grants and had to put up the full amount.
Had one more friend whose parents were from a high income bracket - both in the medical field, however they refused to pay for her education all together, insisting she gets a job and saves for it. Because of high family income she did not qualify for grants and strangely wasn't eligible for a loan either.
At the time we both thought the parents treatment was unfair, but now looking back I think they knew better than anyone what was best for their daughter.
Unfortunately I haven't kept in touch and don't know how the story played out.
What do I hear the students parrot..."But the reality is, if I don't go to college there is no way I'll ever get any job." I actually hear that...over and over and over and....
Student loans are the first and easiest for people to Stop paying on. People can get deferments, etc., and just Stop. Later they can then move on to other fiat debts, and then...
The most powerful weapon the American people have is Rejection.
The system of fraud and theft that has been built up upon the backs of the American people is dependent upon our backs. Withdraw our backs, and the whole scheme collapses. This is our greatest weapon.
Stop Paying--Put it into food, and precious metals, etc. They stole whatever "debt money" they loaned you in the first place (fraudulent-reserve banking) and soon you won't be able to pay them anyways, so Stop Paying.
Stop Playing--Stop being a tool for them to use, mock, and call "stupid." Stop Playing.
Stop Obeying--If they are in violation of the Constitution then they are not legitimate anyways, so Stop Obeying their unlawful dictates.
The Four Rs
Rejection: Stop Paying. Stop Playing. Stop Obeying.
Revolution: It is inevitable, so prepare, as they are.
Retribution: The guilty must answer for their crimes against the American people and the Constitution. No “truth and reconciliation,” but “trial and Retribution.”
Restoration: Restore the American people, country and Constitutional republic.
The banksters need to repay us.
The government will not engage in any debt forgiveness. Why? Because the US government never forgave anybody for defaulting on their usury; for demanding justice from this state crime equating to financial slavery. Yet increasingly, students can’t pay the usurious debts on mostly worthless, unmarketable degrees. The government is responsible for the destroying the labor markets – so why should citizens suffer that insanity – suffer policies that favored the exportation of jobs? The government makes too much money off the loans to think about restructuring these debts. Given that the federal government is utterly corrupt, having “ditched” the citizens’ welfare for corporate welfare, then treating the citizens as “cows to be milked” – to foot the bill for “deadbeat” corporations, all borrowers ought to simultaneously default. Then we will see who is in charge of the nation.