"The Student Loan Racket" - The Complete Infographic

Tyler Durden's picture

When we looked at the latest release of consumer debt a few days ago, we spread the data into its constituent government and non-government loans. Needless to say, taking away the "government" means consumer credit has imploded. So where does all this government debt go? Two places: car financing (see previous post about retail sales surging on a spike in car sales especially subprime loans to Government Motors clients), and student loans. Below we look at the letter. As the following infographic from HealthcareAdministration.com shows, student loan debt, now at $830 billion, has surpassed credit card debt—a statement not likely to have been heard 20 years ago. Student loans, unlike any other form of debt, cannot be forgiven via bankruptcy—these loans must be repaid. Is this the next bubble to burst? Look for clues in this comprehensive infographic.

Exposing the Student Loan Racket in America
Via: HealthcareAdministration.com

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Stoploss's picture

Most of the kids don't understand the terms of the loan anyway, so they are put at even more risk. After graduation, entering a workforce with 0 available job's in their skillset, forces them to take any job, and that is where the train leaves the tracks. The first time their SS# is popped for with holding tax after graduation, that loan becomes hot. Now they have a degree, and a job working at Jack in the box, with a student loan payment equal to or greater than their entire monthly pay.

STUDENTS: If you cannot find a job within your degreed skillset, DO NOT WORK. The loan will remain dormant for a period of time, while you file suit against your education institution, for failure to deliver on THEIR promise to properly prepare you to enter the workforce, thereby enabling you to repay the loan.

The govt loans you the money, while saying at the same time, they will have job's created and ready for you, when you graduate.

That is a LIE. Now, you have been taken advantage of.  

Sue them for breach of contract, educational failure, and anything else you can think of. If your going down the loan shitpipe, at least make those lying fucks spend some frn's defending their sorry asses in public.

koaj's picture

my boys are 3 and 1. i have plenty of time for this thing to collapse.

Henry Chinaski's picture

We prepaid state tuition when our children were 1 year old (15-16 years ago).  It is by far our best performing investment with a value around 9-10x the original investment (for a state university) with practically no downside risk.  It is transferable elswhere at a lesser value, but still much more than we paid.

Not sure I would do that now, since the benefits are reduced, the costs are higher, and there is a real risk of default or dillution.  Your plan to let things shake out is a good one.

I have three college bound children in high school now.  Everybody understands that student loans are not an option. 

Moe Howard's picture

Good for you. However, when I grew up, it was understood that higher education was the financial responsibility of the child. Costs were low, before the boom in easy credit for students. If you really wanted an education, you could work for it. How many people do you think would work hard weekends and after school, do without iPhones, TVs, other luxuries, in order to get a degree in Womans's Studies or African-American Studies etc? I would venture to say none. None of these nonsense degrees would be out there if the student themselves had to pony up the money on the line.

CrazyCooter's picture

I (now) disagree with the notion that all kids should go to college. Some should go, others should do something vocational (journeyman or 2 yr associates), and the rest should just go into the work force.

The pre-pay thing paid off because the cost of education is outracing everything else. That is going to change as soon as government stops guaranteeing the studen loans (paying off the original lender). The risk free money (to the lender) has allowed prices to go to the freaking moon.

This is old, but this was covered to some degree on Ritholtz's blog (before I stopped reading it).




Mr Lennon Hendrix's picture

Not all kids should go to college, but those that do should understand the terms of the loan.  Are the loans excessive?  Are they fair?  It doesn't matter; if you sign that loan, you should pay.

Of course, I am all for a massive loan default by former students.  The education system is half assed, overpriced, and many programs could be better studied in the public library.

But, we should not bail this system out when it comes down, we should let it fail.  We should not bail out the students, or the Universities.  We should let them fail, and let the higher education system burn so that we can remake it for the better.  This, of course, is what we should have done with the financial system 3 years ago.

This is what we should have done with the Major Banking Houses.  It is difficult to decide how to pick apart the system and that is why we should end all bailouts by ending the Fed, take all the capital from the Major Banking Houses and recapitalize the Treasury, back it with gold, and say hello to our little friend- a gold backed system; one with substance and security.

pan-the-ist's picture

I haven't signed in for a while, but I just wanted to say.. WORD.

Unfortunatly, the people at who make the rules make a ton of money from this system, so it won't be allowed to burn... until they've pulled out - they we will be stuck with the emtpy bag, again.

saiybat's picture

Let the education system burn K-12 to university. They're only good for indoctrination and learning trivia. They took logic and civics out of curriculum after the Vietnam war for a reason. All of it needs to be brought down.


George Carlin on American Owners and Education


Ahmeexnal's picture

how about "the rest should just go into the slaugherhouse".  emm...I mean, the armed forces.

Semper fool!

Libertarians for Prosperity's picture




I respectfully disagree with a point in your article. With regard to car sales, you're connecting dots that simply cannot be connected. 

You claim the surge in car sales is due to GM's subprime loans, but you provide no proof of that.  You simply provide a link to a MarketWatch article from the summer of 2010 when GM purchased AmeriCredit.  Do you think all car sales are anchored to AmeriCredit? In other words, is the balance sheet of AmeriCredit a mirror of the entire car business?  Furthermore, do you think all GM's subprime loans go to AmeriCredit? Where's your forensics of AmeriCredit's portfolio and of GM's sales?

You're cynically trying to say that the surge in car sales is directly rooted in GM's subprime loans, and this just isn't correct.  I think you're trying to make it look like GM's only business is subprime, and that the only reason car sales have surged is due to GM ratcheting up their subprime portfolio. 

And this is just false.

We want truth, not propaganda.  If you insist on spinning everything negative, then you're no different than CNBC who spins everything positive.


fuu's picture

"We want truth, not propaganda."

Coming from you that is rich.

CrazyCooter's picture

To obviously disrespect the USMC with "semper fool" does not contribute anything to the conversation. It is easy to pick your favorite Marines in history; for light or dark. Doing so shares a little bit about who you are as a person.

To dismiss a whole branch of the US Military as such, that sir, makes you an asshat. This commentary will color my interpretation of anything you have to contribute henceforth.



porrannor's picture

As everything else, through comercalization based on the misguided gov subsidies (student loans and other programs), the concept of the Higher Education has been redefined. Suffice to say, with some exceptions, it is a joke. 

reader2010's picture

What if the State declares bankruptcy? 

TheClub55's picture

Word... mine are 3 & 5, love em to death but no way I will ever co-sign for loan.  I will do the same thing my parents did, disown them at the start of college (yes, I will loose the duction).  But, once that happened (it took a year), I receivced in-state tuition in a new state, was offically poor so recieved grants that paid 100% of tuition.  This only time in my life I've gamed the system to my advantage (I've still paid much more in fed tax than the grants they gave me) and only took some very low dollar staffor loans that got locked in at 3%.  Then found a company to pay over 80% of grad school (paid the 20% cash).

If all goes well we'll have massive restucture of the loan progam w/ in 5 years!

DOT's picture

Be prepared to home school.

Read Plutarch's "Lives" to them!

twotraps's picture

...daughter is 17 months.  Bad news is that it could be 700K to put her through by the time she gets there.

SteveNYC's picture

My kid is even younger. Trust me, by the time they hit 18 the education financing system as it currently appears.....will be gone. There will be no $700k tuition, relax.

candyman's picture

Move to New Mexico. If you graduate from a HS in NM you can go to UNM for free, the taxpayer picks up the bill. My nephew got a 4 year free ride.  There may be some restrictions now thou.

Buck Johnson's picture

You're correct, this will collapse.  Because even people who have jobs are paying a reduced amount on the loans via IBR or income based repayment.  Many who are paying loans and are working a good job my be making 60,000 or more a year, but after their monthly studen loan debt they are making 30,000 a year.  That is why you have someone who is in an important job or good position living with their parents or not living as high on the hog (many don't do this they live on credit), because they don't have any money left.  You can't pay a loan of over 100,000 dollars (and that is being cheap from some schools) from a good school if you can't get a job that pays well enough to pay the loan and also allow you enough income to buy into the "american dream". 

This is going to collapse because students aren't finding the high paying jobs promised, if they even can find a job.  Their laden with debt and can't really buy a house or even think about getting married because fo the debt.  I think of all those trillions used as guarantees and payments to the banks to protect them so they don't damage whats left of the economy.  lets take the two traunches of 750 billion that congress agreed to give the Fed, that 1.4 Trillion dollars.  That money could have been used with alot left over to buy up all the bad mortgages and it would still be cheaper.  That money could have allowed the govt. to say we will allow the students and individuals to discharge their debt in bankruptcy and/or by helping for one year in some capacity for the govt.  So much money that could have been used to better the US but was wasted on the banks and overseas.

When this implosion happens, it will take down alot of people and institutions.  It will literally change the face of the US.

Woodyg's picture

In Oregon they pump out around 5,000 new teachers a year - most with Masters - last year less than 500 new Teachers were hired.

Let's just Face Facts - there simply not enough jobs in a centralized, automated economy for the large and ever increasing population.

I beleive the new crisis for society is what do we do with this problem of population rising faster than available jobs?

Just ignoring the problem CANNOT fix this problem - except to perhaps deliver us a revolution in the streets.

LawsofPhysics's picture

Infinite growth on a finite world is impossible.  Looks to me like the system is so structurally flawed that it will collapse.  Population can not increasse exponentially (which is what the system depends on).  unfortunately most do not understand how an exponential equation works.  So be it, peak humanity, peak stupidity.

fourchan's picture

dont tell thet to the federal reserve.

topcallingtroll's picture

Hey Luddite

There is always a job available. In a true free market no productive asset is allowed to go to waste, even labor. It is a profit center for someone, somewhere.

We could easily employ the bottom 20 percent as servants to the rest of us, if nothing else. Of course that would require getting the government and the lawyers out of the way.

Right now the bottom twenty percent is overly incented to fall down your stairs. For that reason i wont employ anybody but latino immigrants. They are still too honorable or naive to commit that kind of fraud. The bottom 40 percent of americans can eat a shit sandwich and go to hell. I would never hire them anymore. They are just looking for their chance to join the lawsuit lottery.

unerman's picture

And you, shitstain, is what makes America the disgusting pig she comes across as.

unerman's picture

And you, shitstain, is what makes America the disgusting pig she comes across as.

dondonsurvelo's picture

Stoploss, Nobody put a gun to their heads and made them sign up for a loan.  My nephew went to a community college for two years and he was 4.0 in HS.  He was then able to get scholarships for his undergrad degree.  Sure it is not cool or glamorous to spend two years at a commuter school but he has no debt.  He is now a TA at a university getting his masters in geology.  I want to see where in the loan contract that a job will be waiting for them.  You are full of it.

lilmac929's picture

Here's a nice little story that fits this crazy world that makes no sense...

I know a guy who was unemployed over 2 years ago, for a whole year, taking vacations and having fun while "waiting for a job he wanted."  He finds a job he thinks is worthy, and works there until recently when he was let go.  Now he is busy again planning a fun year + (snowboarding, vacations, etc), and recently told me he may be able to go back and get his masters...which the gov't will pay for too!  What a deal!  Parents pay for undergrad, and the rest of society pays for you to get your graduate degree!  I'm so glad I could help!  I really feel good about getting a job the week I was legally able to work (14 yrs old), and working ever since to help pay for all of you that "just need a little help."  I mean, I might argue that I needed a little help when I was working 40-50 hrs per week while putting myself thru Engineering school for almost 7 years because I didn't have parents to pay for school, or car, or clothes, etc...but I guess my opinions don't matter because I'm a maker and not a taker.  Is this what they mean by "social justice"?  

This shit has got to stop!  This is F'ing rediculous!  Let this bitch burn to the ground and let the cards fall where they may.  Mother nature will sort this shit out.  I'm done being some politicians bitch so he can buy votes.  STOP STEALING MY PROPERTY AND "REDISTRIBUTING" IT YOU FUCKS!

Well...I feel better!

Henry Chinaski's picture

... and another libertarian is born!

RockyRacoon's picture

I worked my way thru college as well.   If about 50 to 100 people with your views met up with the OWS crowd there would be blood.   Not amongst you -- I don't mean that.   The blood would come from the "establishment" who tried to control a crowd full of the likes of me and you.   Remember when we used to call them "the establishment"?   Only the names have changed; they are still there are still hanging onto control wherever possible.

Melville1977's picture

Two college grads ending up suing their respective colleges citing the college failed to live up to its objective---helping them find employment. One student was from Boston College and the other I think was from Trinity College. I don't know if they won or not but I think it is a sign of the shitty economic times.

I think trends forecaster Gerald Celente is right in regards to his prediction of the collapse of the college industrial complex. One college used their campus as collateral with Skank of America. Some colleges are even starting to lower their tuition. Riots took place at UCLA last year when it was announced there would be fee hikes.

Citxmech's picture

Do you know of any examples of a single plaintiff who have been sucessful suing an institution of higher learning on your theory?

MacGruber's picture

Exactly. You'd also have to set precedent. I'm sure the defense would merely say the plantiff didn't fulfill their end, and if they had that they wouldn't have even filed the suit. Education is a perfect racket for these thieves because it you have a de facto out - the student.

Stoploss's picture

For what it's worth, another alternative to actually attending college and subjecting yourself to the incessant brainwashing offered up by our "ivy league" institutions, is to use your computer for what it was built for. FREE EDUCATION. I have always considered my computer to be the premier educational tool, that knows no limits, has no bounds, and most importantly, does not offer biased information in a monotone drone voice.  I have done this for years, as i also was spit into a zero job workforce in the early 80's.

Pick your college, log on to their library sites, and start reading, reading and read some more. Then go to the cirriculums of your chioce to view the info sources of the particular course you are interested in, and start reading. When you have finished, and think you are ready, you may purchase the test out exam, (back in the day i paid 700 - 1200 per exam, and take the test. These exams are different than offered by the professors, since they exempt of any and all opinions of said professor, as well as "likeability" by said professor, you know what i mean..

I chose Princeton University for my free education, and read everything Lord Keynes ever wrote, But i have no need to test out at this stage in my life. What i do have though, is the playbook as to exactly how this all ends.

How do you like me NOW Ben??

Oh, and FUCK YOU, your day is a commin'.

lemonobrien's picture

just lie and make up a different SS#, you think the illegals work'n at jack'n the box have a  valid SS#.

infotechsailor's picture




I agree with you mr. stoploss... but instead of not working, why not just leave the country? your degree is still valid, and by renouncing your citizenship, your debt goes byebye. sure, might be hard to come back, but why would you want to? China, australia, singapore, switzerland, japan, korea, etc.

lots of places better than this land of wallstreet socialism and useful idiots who elect them. if ron paul doesn't win, I'm tempted to move to south america.

High Plains Drifter's picture

no lawyer will take such a case.  he or she will say there is no money in it for them and suing the government is no win situation..

Thisson's picture

You are wrong.  There are currently a slate of class action lawsuits being brought against lawschools on the grounds that they lied regarding their post-employment job placement statistics.  In other words, that they fraudulently induced the students into attending and paying tuition. 

Had the schools told the truth, there would be no basis for relief.  But I believe that the schools have lied about their job placement stats, and that the cases do have merit. 

MacGruber's picture

Riiiight, sue for breach. Good luck with that. With what money? I have a friend that just graduated with 100k in loans, his monthly payment is 1,000. He now paints houses for a living because he can't get a job in his field. How is he supposed to find the time, money, and energy to sue someone?

The problem in education is the same as it was for housing. Everyone is doing it, so the cancer seems normal. The way to solve this is to stricture the educational institutions. Make it painful for them to charge large amounts for tuition. When I went to school I lived in a converted barracks, ate at the cafeteria, and my tuition at a state school was $1400/semester. Now kids live in mini-hotels, eat off campus and pay 1400 just for books. The problem is that the educators forgot that its about EDUCATION. The huge, modern buildings and outsized admin salaries do not contribute to the bottom line - which is learning.

Ruffcut's picture

I have bitched about this bloated education and healthcare monsters for over a decade. Double digit inflation, on and on and no one gave a shit.

Now it comes to roost. My kid graduated from a private engineering college and had minimal debt. I helped him pay it off. I know many people in their sixties that have "parent loans" that they have paying for years. Even when their kids buys a new Audi and they still pay his education and can't afford to retire.


It is high time that these bloated universities sharpen their pencil. And the kid needs to grow up faster to figure out how to help themselves. Stop making your kids a bunch of leechfucks. They ain't your friends and don't give two shits for you. You only help them to make enuff to get the fuck out of the house.

No wonder my friends that never had kids look years younger. My brother who is a pharmicyst has two kids and they never even finished high school. Currently both are in jail.  Most people call me a prick for getting into my kids' shit all the time. Enuff of this nurturing shit and prepare these fucks for the new normal.  "kids are a blessing", my aching asshole they are.

Thisson's picture

You're wrong.  In NY you do have to pay for your kid's college education.  It's completely F'd up.

Lord Koos's picture


It was not an accident that these loans skyrocketed during the Bush years.  What's next, debtor's prison? 

Chuck Walla's picture

Rent to own America's youth.  The Fed gives "easy money" to people too dumb to realize the scam.  What a great way to enslave a generation.  Of course they made that debt non-dischargeable in BK as so many kids would come out of school, get a job and stick it to Uncle Sugar Daddy.  That is you and me.  BK while your young wasn't that bad a strategy.

zorba THE GREEK's picture

I will gladly pay you Tuesday, for an education today.

High Plains Drifter's picture

government supported colleges are about the same as government schools in general............garbage in and garbage out.  the never ending lie.............

Whoa Dammit's picture

Good article about student loans and their connection to none other than the Vampire Squid. (Following the money is getting so easy these days, since you only have to look in one place.)


myne's picture

Doing it right:

As a general rule, all students who attend Australian tertiary education institutions are charged higher education fees. However, several measures are in place to relieve the costs of tertiary education in Australia.

Most students are Commonwealth supported. This means that they are only required to pay a part of the cost of tuition, called the "student contribution", while the Commonwealth pays the balance; and students are able to defer payment of their contribution as a HELP loan. Other domestic students are full fee-paying (non-Commonwealth supported) and receive no other direct government contribution to the cost of their education. They can also obtain subsidised HELP loans from the Government up to a lifetime limit of $100,000 for medicine, dentistry and veterinary science programs and $80,000 for all other programs. Australian citizens and (with some limitations) permanent residents[1] are able to obtain interest free loans from the government under the Higher Education Loan Programme (HELP) which replaced the Higher Education Contribution Scheme (HECS).

HELP is jointly administered by the Department of Education, Science and Training (DEST) and the Australian Taxation Office (ATO).[2]

In addition, qualified students may be entitled to Youth Allowance or Austudy Payment to assist them financially while they are studying. These support payments are means and assets tested. Further assistance is available in the form of scholarships.

HELP loan management

HELP debts do not attract interest, but are instead indexed to the Consumer Price Index (CPI) on 1 June each year, based on the annual CPI to March of that year. The indexation rate applied on 1 June 2006 was 2.8% and 3.4% on 1 June 2007. Indexation applies to the part of the debt that has been unpaid for 11 months or more. Thus, indexation is calculated on the opening HELP debt balance on 1 July of the previous year plus any debt incurred in the first half of the current year (usually for first semester courses) less any compulsory and voluntary repayments, with bonus. Any HELP debt incurred on second semester courses (usually determined in June) will not be subject to indexation until the next year. After indexation, the new balance is rounded down to a whole dollar amount.[13]

HELP account debtors can make voluntary repayments. These repayments attract a 10% bonus for repayments over $500. This means that if a person voluntarily repays $1000, the debt is reduced by $1100. If the remaining debt is less than $500 the bonus still applies on repayment of their balance of the debt. As making voluntary repayments does not exempt the person from compulsory repayments, if the person intends to pay off the total debt voluntarily, it is financially advantageous for them to do it before lodging the tax return. This will attract the 10% bonus on the repayment, and there would be no balance on the debt to which the compulsory repayment provisions can apply. Better still, if the voluntary repayment is made before the indexation date of 1 June, the avoiding of the indexation adjustment is an additional bonus. Even factoring in the 10% bonus on voluntary repayments, many people elect not to pay off their debt in advance of the required repayments because it still works out to be probably the cheapest loan someone will ever receive.

If a person with a HELP debt dies, any compulsory repayment included on their income tax notice of assessment relating to the period prior to their death must be paid from their estate, but the remainder of their debt is canceled.


HELP debts are administered by the Australian Taxation Office and will be repaid compulsorily over time through the taxation system. If the HELP Repayment Income (HRI) of a person with a HELP debt exceeds a certain threshold, which for the 2007/08 financial year is $39,825, a compulsory payments will be deducted from the person's tax for the year. To work out the HRI, the ATO will add back to the person's taxable income any net rental loss claimed against that taxable income and add fringe benefits and exempt foreign income received, which have not been included in the taxable income. Unlike marginal tax rates, the repayment rate applies on the full HRI, so that a person with a HRI of $39,500 in the 2007/08 tax year would not have to make any compulsory HELP repayment, but a person with a HRI of $40,000 would make a payment of $1,600. This is 4% of the HRI (not taxable income or the debt balance) of $40,000. The compulsory repayment amount cannot exceed the balance of the HELP debt.


Josh Randall's picture

AZ ROCKS - we win most people in default - how do you like us now, B!tchez ?