Trump Administration Rolls Back Obama Protections On Student Loans

Tyler Durden's picture

Just days after reports emerged that student loan defaults are soaring, which is undoubtedly due to some combination of, among other things, poor job prospects for the millions of snowflakes who graduate each year with their $200,000 educations in anthropology and the moral hazard created by liberal politicians constantly calling for student debts to be 'forgiven' (a.k.a. forcefully jammed down the throats of taxpayers), the Trump administration has revoked rules put in place by Obama that barred student debt collectors from charging penalty fees on past-due loans.

Originating from the Department of Justice, the "Dear Colleague" letter (full letter included at end of post) says that Obama's unilateral rules implemented in 2015 could have "benefited from public input"...but what good is being King if you can't unilaterally force new laws on the masses? Per the Washington Post:

The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.

 

The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.

 

Education officials sided with Bible, prompting USA Funds to sue the department in 2015. Earlier this year, the company agreed to pay $23 million to settle a class-action lawsuit born out of the Bible case, though it did not admit any wrongdoing.

DeVos

 

Of course, it didn't take long for Elizabeth Warren to draft a letter to the Education Department urging them to not take away 'freebies' from America's entitled snowflakes.

On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said “results in an unnecessary financial burden on vulnerable borrowers.”

 

“Congress gave borrowers in default on their federal student loans the one-time opportunity to rehabilitate their loans out of default and re-enter repayment,” the letter said. “It is inconsistent with the goal of rehabilitation to return borrowers to repayment with such large fees added.”

Of course, these new rules came just days after new data published by the U.S. Department of Education revealed that $137 billion of federal student loans were in default as of December 2016, a 14% year-over-year increase.  Key findings from the Consumer Federation of America:

Average amount owed is $30,650 per federal student loan borrower. Average amount owed per borrower continues to tick up, rising 17% since the end of 2013, when borrowers owed on average of $26,300.

 

$137 billion in default. For federal loans originated by financial institutions (FFEL) and the US Department of Education (Direct), a total of $137.4 billion in balances were in default, a 14% increase from 2015. This cumulative level of defaulted balances includes loans which defaulted in previous years. Defaulting on a federal student loan comes with severe consequences. Borrowers can face seizure of their tax refund, garnishment of their wages, and an inability to pass employment verification checks.

 

1 million Direct Loan defaults in 2016. In 2016, 1.1 million Federal Direct Loan borrowers defaulted. Federal law typically defines a federal student loan default as being 270 days past due. Borrowers defaulting for the first time slightly decreased compared to 2015, though borrowers re-defaulting slightly increased compared to 2015.

 Seems the cost of financing those spring break trips to Cancun just got a little costlier...sorry, snowflakes.

 

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chubbar's picture

Just a little "sumthin, sumthin" for the Middlebury and Berkeley fans! The little snowflakes better start learning how to suck cock if they plan on surviving.

guitarzaan's picture

Brushguard installed.  Power-washer gassed up.  Bracing complete.

debtor of last resort's picture

Whininggg.... in your stupid gender toilet with koran asswhipes

SilverRoofer's picture

Love it !

You took it out now pay your bill

Fuckers

Trucker Glock's picture

"Winning!!!!"

Winning for a fucking collection agency.  Good luck trying to get people to pay back debt when it's compounded with unreasonable collection fees.

$4,500+ on $18k debt.  And the fuckers charging the $4,500 don't own the debt.

swmnguy's picture

Yep, this is a nasty swipe at anybody who owns a piece of all that student loan debt.  Sure, it's non-dischargeable through bankruptcy, unlike every other debt but child support and taxes.  But even collection agencies can't squeeze blood from a stone.

The Education Finance Complex thought they had this licked, and I'm sure they still do.  Agree with businesses that businesses won't train anybody anymore, make the students pay for their own on-the-job training, hand out the loans, get .gov to guarantee them so there's no risk to the lender at all; and then bar the door so nobody can bankrupt out.  The perfect time to jack the price, load up the ranks of Higher-Ed executives and all the assistants and perks they require.  Guaranteed money.

But that still doesn't put money in the pockets of people who can't pay 2x-4x median per capita income for a 4-year degree.  Never mind the anecdotes about $200,000 anthropology majors.  I'm talking about $75,000 Accounting degrees at state colleges.  People who never would have gone to college 50 years ago now have to have a 4-year degree to get a $25,000 job.

It's a bubble and it's going to collapse.  All the sooner now, if collection agencies get in on the skim.  Soon enough .gov is going to have a few million people to collect on, and then a deal will be forthcoming.  Teach elementary school on the Rosebud Reservation, or work in a clinic in New Orleans for 4 years, and you're even.  Something like that.  I don't oppose the idea.  The notion that this'll teach the snowflakes is pointless.  No money is no money, add all the penalties and chiseling opportunities you want, it's still no money.

 

chubbar's picture

Well, they can't squeeze blood from a stone but what they can do is get a judgment against the debtor and attach all future earnings. Nothing like a garnishment on wages linked to their SS# to get a young snowflake incentivized into sucking cock or spreading cheeks to make rent. HA! This is getting good!

crossroaddemon's picture

All they have to do is get a consolidation loan and go on IBR... that isn't changing. It's very easy; I just helped my neighbor do it. If you're in default on your student loans you're an idiot because tehy are super easy to get out of.

ZD1's picture

The collection agency does OWN the debt having purchased the defaulted loan from the originator.

Collection fees are a good incentive NOT to default on a loan.

Don't take out a loan in the first place.

shovelhead's picture

Collection agencies typically buy the debt at deep discount.

post turtle saver's picture

college education costs have outpaced inflation by 2.5x since 1985, yet everyone here is crowing about "winning"... this is what happens when government gets into the education loan business and then makes the debts nondischargeable... now we add insult to injury by allowing collection agencies to tack exhorbitant fees on top of the debt...

these guys make Uncle Vinny's loan shark operation look downright legitimate... on the other end, colleges have decided that price discovery is for losers and have raised costs through the roof... after all, why not, employers are requiring four year degrees to become a goddamned fry cook at McDonald's, so they know they have little Johnny & Jane's parents by the short and curlies... "can't get a job without that precious degree in today's economy, no siree, fuck you pay me"

remember when public universities were funded by (wait for it) the public? not that the public paid for everything but there were funds there to be had... all that shit stopped in 1985 when tuition and fees at public schools ramped up almost 40% over the next five years... now, why was that?... it was because states stopped funding public institutions, they had to because they were running out of money and had to make cuts for _pension obligations_ (hey, sound familiar? history doesn't repeat but it sure does rhyme)... I should know, I lived through that mess, but none of it compares to the bald faced sharking that we're seeing now...

rising health care costs are _nothing_ compared to what we've witnessed over the last 30 years with college education costs... I suppose you could justify it if the product (education) had improved in lock step but in reality it's gotten worse... all that money is going to admin, tenure and retirement... sure as hell isn't going to actual educational improvements...

what can you do as a consumer? all you can do is vote with your wallet... don't sign up for onerous loan terms thinking that Magic Knee Grow or equivalent is going to make the problem go away... if anything they'll step in and fuck it up further with "deferment" which is just another way of saying "you still gotta pay, it will just be a lot more later"...

I'm rambling... this situation is so utterly fucked up though that the only way I see out of it is allow for debt default... I don't know what kind of crazy world student loan providers live in but never in a million fucking years should anyone be allowed to provide credit with a guarantee of no risk of default... that's crazy and introduces a level of moral hazard across the board that should never be allowed...

Bigly's picture

1000% agree: govt should get out of ALL loans, including student debt

swamp's picture

Illegal aliens in public collages getting in-state reduced tax payer supported tuition is a factor.

hobo with a shotgun's picture

You want to convert more kids to Communism? Because this is how you convert more kids to Communism.

Bigly's picture

Huh? Anyone reading my comments knows i am NOT a statist.

One thing this thread has torn open is that there are bad actors in all parties involved 

  1. Govt. Should not be in the loan business. Ulterior motives of indoctrination and debt slavery with a pass off to taxpayers.   Biggest culprit.
  2. Banks. Res ipsa loquitur
  3. Colleges/univ. No adverse risk for them currently. Pimp enrollment biggest staff, bigger salaries, higher tuitions.  No skin in the game...but needs to have a lot in the future.  Will need to shrink most institutions as some people will rightly choose to NOT enroll. Oh well
  4. Students.  Dumb, morons, lack critical thinking skills and allow themselves to be manipulated (thanks to shitty public schooling and indoctrination to be a stooge unsuccessfully countered by their parent (s)). They do not understand the cost/benefit equation. Could feel sorry for them but do not as they are strident and unlikeable and dumbed down. They also were done in by stupid parents who are fully responsible for them as children .  Some are salvageable but an astounding sad amount are not imho.
  5. Parents. Where were you in saving?  Well i UNDERSTAND if you were not able to crack that nut due to inflation of #3 above.  So then where were you to tell them to go to community colleges (or 2 years at state univ local branch then 2 yrs on main campus...WAY cheaper...same degree) instead...get creative how they approached this?  Or maybe suggest they do a trade?  ...Especially if they are not that bright or driven? 
  6. Collateral.  This is mentioned here and not for nothing.  Personal loans are generally small amounts.  Where's the teeth in enforcing payment with no collateral?  There isn't any hence the horrible pay till you die on this put in by dems whi want you all on the debt plantation and pliable.
    1. If these loans were underwritten like they should be on ability to pay back...AND ...if colleges gave the loans and in conjunction with banks would eat defaults this could be the way to go

But what to do about the loans outstanding right now?

It is totaly unfair, moral hazard, to let these students skate.  You then have a huge number of people who think they can be bailed out and it is completely unfair to those who tortured to pay off their loans. There needs to be alternative ways to pay it off.  They cannot skate.

 

This is not communist you dumb fuck

 

kizell's picture

As I high earning millennial with large student loan debt, I agree with you that students should not be able to skate free.  Most of us are not asking for forgiveness.   

What we are asking for is equality in lending practices.  Especially when it comes to being allowed to file bankruptcy.  If filing for bankruptcy is good enough for our president, it should be good enough for students.

Bigly's picture

I despair at the bigger picture:

People who think contract law is crap and signing one's name means nothing.

A person's WORD used to mean something, let slone their signature.

I applaud your initiative and am glad you landed a job with decent comp.

Your peers canmot be allowed to skate scotfree.  Some form of restitution must be made. 

Going fwd with new contracts and a complete overhaul i agree that this needs altered. For existing contracts....well, i happen to believe they should be honored. 

If we let this happen i find it hard to believe that 90+% will NOT default.

And taxpayers cannot take that hit.

 

kizell's picture

You're not really making a point here.  Contract law does not hinder bankruptcy filings for most things (other than child support) so that argument should not apply to student loans either.

And I don'tunderstand why you keep bringing up this whole getting away Scott free argument.   Bankruptcy is by no means a way of getting off Scott free.  Your credit is ruined for a decade and you will have problems finding certain kinds of employment.  

Furthermore, you keep saying no student should get away scott free.  Well fine but what about the lenders.  Banks take a hit when credit cards go unpaid, when car loans are not repaid, and when customers ditch their mortgages, but are they expected to skate free for student loans?

Again, EQUALITY IN LENDING PRACTICES 

dizzyfingers's picture

No one holds a gun to the heads of people who take out loans.

There is a reasonable idea that the loan seeker knows what he/she is about and intends to pay.

Letting them off without consequences if they don't pay isn't in the contract.

If someone doesn't intend to pay, don't sign on the dotted line.

Sorry, it's about making  good decisions rather than bad ones. 

The consequences (no credit for a long time) are teachers, not punishment.

kizell's picture

I'm going to put this all caps so maybe the message sinks in

FILING FOR BANKRUPTCY IS NOT GETTING AWAY WITHOUT CONSEQUENCES.  AS IT TURNS OUT THERE ARE SEVERE CONSEQUENCES FROM FILING BANKRUPTCY. 

And as a matter of consistency, you should believe that Donald Trump should not have been allowed to file bankruptcy because he violated his "contract."  But I would wager that you feel differently about that one.  But if you do feel differently then you should believe that Trump is an irresponsible coward without personal accountability......ya know, since we want to be fair and all.

post turtle saver's picture

let's call that Obama DCL for what it really is... a shameless attempt to buy student and young professional votes... "vote Democrat and Uncle Sugar will make the bad man with his hand out go away"... fucking pathetic

MFL5591's picture

The same children who are on the beach enjoying spring break who will get out of school and unable to pay back loans should be working during breaks to save money for their future bills.  This is how I got through school.  If anyone said to me that they were going on Spring break I would have thought it would be to work not drink and party!

swmnguy's picture

My son is a college student.  I have 3 siblings who are college professors.  I have just asked them how many college students are living the high life on Spring Break.  They replied unanimously, independently of each other, "About 1%, mostly spoiled rich kids."

The other 99%?  Just like 99% of everybody, they're working extra shifts over the break.  That includes the professors, most of whom are adjuncts making about $15,000 per semester.

The notion that college students are taking out loans to go party and booze is a psy-op by the finance sector.  I'm shocked that ZHers are falling for such arrant bullshit.  But then, the bullshit is flavored with intellectual-bashing, lefty-bashing, SJW-bashing, so it's tailored to the ZH mindset.

Hell, if Hillary had said nasty things about college professors, schoolteachers and students she'd probably be President right now.

kizell's picture

It really should not surprise you.  It's that "battlestation" mentality when someone hears a story that confirms or discounts their belief system.  I see it on every blog of every major website, both conservative and liberal ones.  Most of ZH commenters are no more enlightened than those at huffpost (sad to say)

FreshOutaSumfinForNufin's picture

Brick and mortar college will be made obsolete  by the internet really soon.  I can learn anything  I want to on open culture.  Time for disruption in this industry.  Surprised there aren't advertiser funded, free apps for degrees yet.

ElCapitalist's picture

This is not a victimless crime folks. The real suffering will be in Cancun and other spring break destinations, not to mention countless bars and Greek organizations. Perhaps this may convince Mehico to pay for the darn wall.

panhead20's picture

If they are defaulting on the loan, why not pile on more fees and penalties. Make them indentured for life.

nmewn's picture

Moar damnable winning? OMG I just can't take it!

(Sigh) ;-)

RafterManFMJ's picture

A lot of gloating here. You know, were I King of America I'd dial up the wayback machine and see if our erudite poster said anything about the .gov printing money to save the Banksters in 2008, or the QE printing --- and if he didn't then my edict would be he dances at the end of a noose.

Tiresome the cunt that points at misdirected pennies while a pallet of billions goes missing.

EDIT Not you NWEN, the OP

Chief Wonder Bread's picture

It's time the gubmint got out of the student loan scam. At the same time, let the debt holders take the losses, not the taxpayers.

post turtle saver's picture

BINGO... since when is an entity so special that they're protected by law to make loans that are _guaranteed_ to never be defaulted on? talk about the easy button for lenders, yee haw we don't have to do risk management anymore, happy days! damn that makes me fucking mad...

Farqued Up's picture

Debt holders spent the money. Contracts are sacrosanct and if they are ever ignored by one of the parties and isn't forced by law to comply, this country will become the old USSR. They had a helluva time crawling out of their holes when they tried due to no contract law. The Party WAS the law.

nmewn's picture

Understood.

The problem with snowflakes is, at some point they will have to be instructed that when you sign a legal contract they are bound by its terms. If their parents didn't teach them that or the government sponsored indoctrination centers called skools didn't either...now they know.

Call it...a life lesson.

Ass, gas or grass nobody rides for Faaarrreee! except for Wall Street commercial bankers, for now but their day is coming ;-)

tmosley's picture

>at some point they will have to be instructed that when you sign a legal contract they are bound by its terms

That is so incredibly incorrect that I feel like I should admonish you with something more than a tongue-lashing.

You can, in fact, get out of any contract. In this case, you SHOULD be able to get out of it by declaring bankruptcy, with the negative consequence for you being the terrible black mark that will leave on your credit, and the possibility of attachment of assets by judgement. But of course, if there were such assets, they would have something to pay the loan with. Plenty of people have gotten stuck with worthless gift cards because the business they were for went bankrupt.

As for those making these terrible loans to young people with absolutely no standards, well, they deserve to lose their money, just as I would if I were to lend $100K to some 18 year old kid who wanted to be an English major and also party for six years.

nmewn's picture

I don't believe its inaccurate at all.

Neither party was forced into a contract (except the taxpayer again if this continues) ergo, both parties mutually agree to the terms of it. If one party breaks it penalties are provided for and AGREED ON before it was ever signed by either.

The penalty is part of the terms or are you saying snowflakes don't know how to read after just having graduated government run high skools or even worse...do not understand what the words mean that they just read or did they sign the contract with the premeditated intention of breaking it all along? They are going to find "contracts" are legally binding throughout their adult lives, whether its for a house, property, car, wills, trusts or credit cards. 

If you are saying student loans going Forward! are to be treated as speculative loans (read junk bonds) I'm all for it but the whole idea of retroactive (ex post facto) I'm against as it relieves one party of their obligation while throwing the other parties loss on me, the taxpayer.

Still winning ;-)

tmosley's picture

It doesn't matter what is written in the contract once one party breaks the contract. That is why it is called "breaking the contract" rather than "complying with the contract".

If you put up collateral, they can seize that. If there is no collateral, then they weren't very smart for giving you all that money, now were they?

>They are going to find "contracts" are legally binding throughout their adult lives, whether its for a house, property, car, wills, trusts or credit cards

They can default on all that crap too. And even get bankruptcy protection, which exists for some reason that many "libertarians" seem unable to comprehend. Mortgages are secured by the value of the home they are buying, and a down payment. Same with the car. A will is not a contract. A trust is a legal construct. Credit cards are unsecured loans that they can discharge far more easily than student debt.

>I'm against as it relieves one party of their obligation while throwing the other parties loss on me, the taxpayer.

It's not some kid's fault that Bush changed the law on them. If you don't like it as a tax payer, stop paying taxes. If you are afraid to do that, then shut up and labor for the state, slave.

nmewn's picture

"If you put up collateral, they can seize that. If there is no collateral, then they weren't very smart for giving you all that money, now were they?"

Again, they didn't put up any "collateral", the student AND (can I emphasize the "and" enough?) tenured faculty at that university's skin in the game is me...(the taxpayer)...by virtue of government backing of student loan programs

And again if you wish for student loans to be looked upon as speculative (read junk bonds) in the market going Forward! I'm fine with that because thats all it ever was anyways, another handout with the government working hand-in-hand with bankers at my expense.

Again in a free market no problem, right? 

But no, thats not what you want...you want the abridgment of written, agreed upon contracts ex post facto.

You really don't know wtf you actually want, it seems you want "selective anarchy" where the purpose of a contract doesn't matter NOW and it only damages a third party who was never voluntarily involved in the contract to begin with. 

tmosley's picture

>If the government holds someone hostage, it is your responsibility to be a slave for life

Nah, I think I'll just let you be as much of a slave as you want to be. Borrowers aren't responsible for the behavior of the government, and I think you know it.

You don't understand the purpose of a contract. They are not chains. They signify intent, and define the terms of a relationship going forward. Well guess what? Intents can change, and relationships can be ended. Lenders have a responsibility to ensure that borrowers are likely to be able to and willing to pay back the loans they make. If you make a million dollar loan to a junkie, and he runs off and blows it all on cocaine and hookers, whose fault is it? You knew who you were lending it to, or should have. Its called fucking due diligence. If you are lending money to a bad credit risk, or if it is a LOT of money, you need to get collateral. If you don't, and he defaults, it's called tough titty.

If said junkie turns his life around ten years down the line, you don't get to hound him for repayment. You don't get to put him in debtor's prison either. You eat the loss and learn YOUR fucking lesson.

If you are mad about being involved in a contract you never agreed to, again STOP PAYING TAXES. If you are too cowardly to take that step, then fuck you. Get back to work, slave.

nmewn's picture

And thats it?

Because a "progressive government" was involved in a conspiracy with socialistic banks to create a monopoly (at my expense) to provide fellow communal travellers of tenured faculty with a constant revenue stream, I'm supposed to throw away all concepts of contractual law?

lol...I can't wait to hear about your ideas on international treaties and the ramifications of breaking those. 

tmosley's picture

You are too ignorant to understand bankruptcy and the gross distortion that has been introduced into the market by its suspension in regards to student debt. Don't try to pretend like you have a leg to stand on here.

Why don't you tell me what you think the ramifications of breaking international treaties are? Is a big grand-daddy ultra-government going to come down from the stars and put the US in space-debtor's prison?

nmewn's picture

Being pig-headed while calling me ignorant is no way to win a debate T, I know perfectly well what bankruptcy is, to what it applies, what Sallie Mae/Navient is and was and what a Brunner test is. 

You need to understand what a contract says before you sign it.

tmosley's picture

It's pig headed to point out that denying college kids bankruptcy protection where everyone else has access to it is unfair, if not downright monstrous?

You think that you need to understand a contract before you sign it. How is an 18 year old kids supposed to know that? They don't teach that shit in school. This is likely the FIRST contract a kid ever signs, and it is for this enormous amount that would buy them a very nice home, or enable them to start a business. And of course, the lender bears no fucking responsibility for vetting borrowers. No, no, because big daddy government guaranteed the loans, they get to feast on the flesh of our children.

You need to understand that you are opening the door to violence by denying young people equal protection under the law. And you probably won't like the consequences of intergenerational warfare.

nmewn's picture

Apparently you missed where I already said I'm not opposed to these loans being treated as speculative (junk bonds)...going forward...but what they agreed to is what they agreed to.

I don't accept socialistic argumentation or their premises based on their own past miscalculations, misdeeds and idiotic policy decisions. And that is not an accusation toward you, it is a simple statement of fact.  

The government set up Sallie Mae (a GSE, like in China or Russia, which was and is stupid) and inserted itself into the "university market place". Not only did bankers benefit from this action but bureaucrats, university presidents and tenured faculty at all levels and now that its reached its inevitable crisis point (as most clear thinking people knew it would) the notion of lashing out against contract law itself strikes me as yet another assault on western principles of law, some ersatz Bolshevism for "the common good".  

Thats why I never argue within those bounds.

They signed a contract they didn't understand or did (and is relevant) and now their circumstances as a degreed womens studies majors or anthropologists (or whatever) has no value in the market place so they can't pay it back? 

This is not MY problem and it shouldn't be yours.

Again...going forward...if they choose to take out loans for unusable degrees in poetry or history (or whatever) I don't have a problem with some imbecile giving them a loan but it should be treated as junk debt...not backed by any implied or real obligation of the taxpayer (us, the third party). 

Is that clear enough?

It was a voluntary signing of a contract between those two parties that I had nothing to do with or even wanted anything to do with because it was a sham from the start but the contract stands and is binding.

Let them default then if they can prove they don't own an i-fone and the bill that goes along with it, don't own designer clothes because they can't afford them and in fact ride mass transit because their student loan payments prevent them buying a bicycle. This is not some societal issue brought about by the free market. It was brought about by nanny-state progs & statists of all stripes and just who defends the rights of us (the third party) in all of this who's names do not appear on the contract anywhere?

QuantumEasing's picture

No need to tussle, guys. You're both correct.

Nmewn, it's a travesty that contract law is not mandatory, along with legalese, in HS. But then, the Gov does NOT want informed sheeple.

Comprehending (NOT "understanding") contracts and contract law would render most of the loan sharks non-viable.

As would the comprehension of the difference between simple and compound interest.

Make it simple: all loans that are shown to be invalid contracts (single signer) need to be thrown out, and the backing by the "Gov" rescinded.

MagicHandPuppet's picture

By your logic, these student loan snowflakes can just not pay the loan back, regardless of the penalties the goobermint (pretends to?) apply.  Problem solved (in your fantasy). 

tmosley's picture

They can, though that prevents them from working above board ever again. More employees for the black and grey markets.

Bankruptcy exists for a reason. Keep people in the system. Let them get back on their feet. Become productive again.

TBH you sound like an entitled boomer. Wonder how you'll do when SS collapses, and you are too old and frail to work, and everyone younger than you is mean from decades of poverty. You think they will bother to walk around your corpse as it lays frozen to the crumbling concrete, or just step over it?

MagicHandPuppet's picture

"prevents them from working above board ever again" ...same for us unlucky tax slaves who try to beat the system by not paying taxes "owed", and then getting caught.  It may seem voluntary to you as long as your lucky streak continues.  I know people whose luck in that area ran out, and it was not/is not a pretty picture.

I agree with you on bankruptcy.  The issue, however, as others have pointed out, is the moral hazard of these loans being backed by the goobermint.  Who do you think loses in the end if a loan backed by tax slaves goes through bankruptcy settlement?  Now, imagine everyone jumping on the "free shit jubilee" bandwagon with all of those existing student loans worth around $1 Trillion.  And, now add up all the costs of bankruptcy court for the 44 million cases to boot.

If the banks or the universities were taking the hit, then fuck 'em.  Let the bankruptcies roll.  Alas, that just ain't the case.

And, no, I'm no boomer, lol.  Your description of the country's future, however, is probably just how things will turn out when the chickens come home to roost.

tmosley's picture

Who says the government has to pay? Fucking default already. It is in no way the fault of the student. How is an 18 year old kid supposed to change government policy?

All this debt is bad. Making slaves of an entire generation isn't going to help ANYONE. All it will do is incite a bloody rebellion by young people against the old. I'm not that young, but I can tell you, I feel like bashing a few people's faces in with a nice thick length of rebar. Can't imagine how people who came after me feel. They never even had the oportunity to start a family, or buy so much as a starter home. The level of smugness and entitlement in this thread is simply beyond the pale.

MagicHandPuppet's picture

"It is in no way the fault of the student."

LOLkay... 

There is enough blame to go around.  But, placing blame does not give a blank check allowing one to skirt responsibility.  While you're hung up on protecting the poor college grad who didn't realize debt was a personal liability, you're avoiding addressing the primary culprit: goobermint involvement.  Yes, goobermint can default and they should.  But, they won't.  The tab simply gets added to the tax bill that you are pretending won't be collected - though I agree that it should be wiped clean as well.

The solution is simple, really:  End income tax.  End goobermint guarantee of all loans (including student loans).  End all goobermint involvement with student loan schemes of any kind. End the federal law preventing bankruptcy discharge of student loans (or any debt for that matter). Done!

Here's the catch: it's all very unlikely to happen in our lifetimes.  

Meanwhile, the baby steps reducing the screwing over of the little guys and gals who had no part in the contract (i.e. us tax slaves) are WINS!

P.S. I finally finished paying off my student loans.  They were huge and I had debtor's remorse as soon as the first bill came after graduate school.  I was angry and confused when I got the first bill.  I felt like a victim and wanted to blame "the system" or whatever the fuck the lazy part of me could quickly target.  The worst part was: when I did the math (following the first bill) and reviewed my job prospects, I came to the painful realization that my chosen profession would never allow me to pay off the debt early - and I was destined to a meager existance for the next 10 years (at least).  

But, then I put on my big boy pants and decided I wasn't going to make excuses.  The painful repayment process took a lot of sacrifice and hard work, but it also taught me valuable lessons in avoiding future trappings of being a debt slave and being limited to 9-to-5 wage earnings.  It chaps my ass when people insinuate that now I, as a captive tax slave, have ANY responsiblity to foot the bill of an unfortunate "victim" who willingly agreed to a contract but who is now reneging.  Everyone gets a trophy, right? And, we're all in this together, right?  Fuck that shit. You want to end this bullshit (and, I agree that it's unfair and bullshit)? Then fight for the reduction of goobermint in every possible facet.

The most important thing NOT to do is to try to collectivize the problem.

QuantumEasing's picture

"End Income tax."

Why? Just because you are unwilling to do due diligence as to your status?

No. The Income Tax is 100% constitutional, and applies to about .7% of the population.

End Loan Fraud. Two party signatures, provable, extant funds in place before they are loaned. No more tricking people into creating debt notes and then charging them for it.