Tag Archives: Student Loans

Trillion-Pinchers Lacking Empathy, by Tim Hartnett

The whole college finance system ends up supporting a well-heeled elite of professors and administrators, some of whom do nothing to justify their sinecures and salaries. From Tim Hartnett at lewrockwell.com:

Regular readers of the Washington Post opinion section should give credit where it is due. An enormous divergence of views is presented on their pages. Ideas in 100% opposition often appear on the very same day. That said, how the editors decide if an essay makes enough sense to arrive in print can leave the public overwhelmingly underwhelmed.

On the other hand, some takes on reality are so deluded and deranged publishing them can serve valuable purposes. First, they save detractors from the accusation of attacking straw men. Second, they can act as ideological springboards for launching crackpot notions high enough to get more scrutiny. Third, they provide a lode of asinine quotations that drive home the opposite point that was intended.

Christine Emba splashes A-19 on the Friday, May 6 WP with a belly-flop that soaks every onlooker. Why such a lack of compassion on student debt, barely wastes a word covering what’s wrong with education and economic justice overall from a standpoint guaranteed to make things worse. It starts with the title and continues spectacularly in the first sentence: “Why can’t we let good things happen to other people?” A “good thing” in her reckoning is handing over a sum that could feed roughly 300 million lavishly for a year so the kids can celebrate gender euphoria.

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Just Say No

Political Cartoons by Pat Cross

h/t The Burning Platform

Student Loan Forgiveness: Who Pays? By SchiffGold

Why, the taxpayers pay, of course, just like they directly or indirectly pay everything the government does. From SchiffGold and schiffgold.com:

Student loan forgiveness has been in the news lately. There are a number of different plans being floated, from blanket debt repudiation up to various amounts, to more limited income-based schemes. But nobody ever talks about a key question: who is going to pay for it?

Well, you will.

I think most Americans think Joe Biden or Congress can just wave some kind of magic wand and student loan debt will just disappear. Poof! No harm, no foul. In fact, I think a lot of people believe student loan forgiveness will stick it to the evil banks who lent out all of that money.

But it doesn’t work that way.

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The Trillion-Dollar Lie, by Matt Taibbi

Who says student loans can’t be discharged in bankruptcy? It’s not easy, but it happens. From Matt Taibbi at taibbi.substack.com:

Universities built palaces and financiers made fortunes in part through a lie: that student loans can’t be discharged in bankruptcy. But a series of court cases is helping unravel the scam

Stefanie Gray explains why, as a teenager, she was so anxious to leave her home state of Florida to go to college.

“I went to garbage schools and I’m from a garbage low-income suburb where everyone sucks Oxycontin all day,” she says. “I needed to get out.”

She got into Hunter College in New York, but both her parents had died and she had nowhere near enough to pay tuition, so she borrowed. “I just had nothing and was poor as hell, so I took out loans,” she says.

This being 2006, just a year after the infamous Bankruptcy Bill of 2005 was passed, she believed news stories about student loans being non-dischargeable in bankruptcy. She believed they would be with her for life, or until they were paid off.

“My understanding was, it’s better to purchase 55 big-screen TVs on a credit card, and discharge that in a court of law, then be a student who’s getting an education,” she says.

Still, she asked for financial aid: “I was like, ‘My parents are dead, I’m a literal fucking orphan, I have no siblings. I’m just taking out this money to put my ass through school.”

Instead of a denial, she got plenty of credit, including a slice of what were called “direct-to-consumer” loans, that came with a whopping 14% interest rate. One of her loans also came from a company called MyRichUncle that, before going bankrupt in 2009, would briefly become famous for running an ad disclosing a kickback system that existed between student lenders and college financial aid offices.

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Unpaid Federal Student Loans Top $435 Billion, by Adam Andrzejewski

$435 billion is not chump change. From Adam Andrzejewski at realclearpolicy.com:

As President Joe Biden considers forgiving $10,000 in student debt per borrower and ending tuition for many students at public colleges, it is worth noting that college graduates already have not paid $435 billion back to the federal government.

That’s right, of the government’s $1.4 trillion student loan portfolio, almost one-third is unpaid.

That $435 billion is compared to the $535 billion that private lenders lost on subprime mortgages during the 2008 financial crisis.

The figure comes from FI Consulting, hired by the Department of Education, and whose work was checked by accounting firm Deloitte, and is a total of losses over the life of the loans in the federal government’s portfolio.

People in income-based repayment programs pay the loans based on how much they earn, and the government forgives loans that haven’t been paid back after 10, 20 or 25 years.

The findings estimated that on average, borrowers in income-driven repayment plans will repay 51 percent of their loans, while those in other repayment plans will repay 80 percent.

As the debate over implementing free college tuition and canceling student debt continues, policy experts, journalists and the public should keep this $435 billion figure in mind.

The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com.

https://www.realclearpolicy.com/articles/2021/05/18/unpaid_federal_student_loans_top_435_billion_777088.html

The Trustees Have Failed, by Techno Fog

The older generation, the boomers, hasn’t done too well for future generations. From Techno Fog at technofog.substack.

Brown and Black Wooden Chairs Inside Room

A Story of Generations

I often reflect on the concept of generational responsibilities. That each generation, whether mine or yours, has the same type of supportive role to the other for the common good, although the obligations may be different. Let me put this another way:

Every generation is the caretaker of the generations that came before, and the trustee of those who will come after. 

To explain by example: a child enters this world under the care of their parents. And the parents leave this world being cared for by their children. These are general observations (and aspirations) that leave out everything in between and all those little moments that define care.

To be more specific, and to hopefully state the obvious, caring for a child isn’t just a roof over their head and three meals a day. It’s teaching them values, being an example for them to follow, making them feel safe. It is making a marriage work for the benefit of the children and not divorcing for the convenience of the adults. Ensuring, as best we can, their future.

Then as we age, we see our parents start to fight with the parts of their daily lives they once did with ease. Their struggle is our struggle, though the struggles are different. Each day a brush more diminished until we say goodbye.

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The Student-Loan Fiasco: I’m Going to Wade into the Debate, But with my Boots On, by Wolf Richter

Student loans for higher education has become a very profitable racket. From Wolf Richter at wolfstreet.com:

The University-Corporate-Financial Complex is going to squeal.

OK, I’m going to wade into this debate. And I’m going to do it with my boots on.

The student loan fiasco – the pile of debt that has ballooned to $1.6 trillion – and what to do about it – particularly how much of that student debt to forgive at the expense of taxpayers – has now entered the list of presidential campaign promises.

These promises of student-loan forgiveness are efforts to buy votes at the expense of the rest of the taxpayers, whose money this is, on the principle that whoever proposes the biggest debt-forgiveness will get the most votes from those graduates and their parents.

I can’t blame them. It’s just too juicy a low-hanging fruit. If I were a politician running for office, I’d promise the same damn thing, and that’s why I’m not running for office.

But this $1.6 trillion is an asset on the government’s books. It was funded by tax receipts and debt that the government issued. If hypothetically, all students paid off their federal student loans today, the gross national debt would drop by 7%, from $22.5 trillion to $20.9 trillion.

Forgiving these student loans wipes out that asset, but the national debt that funded these student loans remains. That’s how that would work. There are no freebies, when it comes to debt.

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11 Rage-Inducing Facts About America’s Wildly Out Of Control Student Loan Debt Bubble, by Michael Snyder

Michael Snyder exposes the student loan/higher education scam. From Snyder at theconomiccollapseblog.com:

Higher education has become one of the biggest money-making scams in America.  We tell all of our young people that if they want to have a bright future, they must go to college.  This message is relentlessly pounded into their heads for their first 18 years, and so by the time high school graduation rolls around for many of them it would be unthinkable to do anything else.  And instead of doing a cost/benefit analysis on various schools, we tell our young people to go to the best college that they can possibly get into and to not worry about what it will cost.  We assure them that a great job will be there after they graduate and that great job will allow them to easily pay off any student loans that they have accumulated.  Of course most college graduates don’t end up getting great jobs, but many of them do end up being financially crippled for decades by student loan debt.

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Broken Promises, by MN Gordon

A lot of people are going to get screwed when the debt merry-go-round finally stops. From MN Gordon at acting-man.com:

Demanding More Debt

Consumer debt, corporate debt, and government debt are all going up.  But that’s not all.  Margin debt – debt that investors borrow against their portfolio to buy more stocks – has hit a record of $642.8 billion.  What in the world are people thinking?

A blow-off in margin debt mirroring the blow-off in stock prices. Since February of 2016 alone it has soared by ~$170 billion – this is an entirely new level insanity. The current total of 643 billion is more than double the level of margin debt at the tech mania peak and 15.4 times the amount of margin debt just before the crash of 1987. [PT]

Clearly, they’re not thinking.  Because thinking takes work.  Most people don’t like to work.  They like to pretend to work.

Similarly, people may say they care about debt.  But, based on their actions, they really don’t.  When it comes to the national debt, the overarching philosophy is that it doesn’t matter. Government debt certainly doesn’t matter to Congress.  Nor does it matter to the President.  In fact, their actions demonstrate they want more of it.

Big corporations with big government contracts want more government debt too. Their businesses demand it. They’ve staked their success on the expectation that the debt slop will continue flowing down the trough where they consume it like rapacious pigs.

The higher education bubble is also based on a faulty foundation of debt. The business model generally requires signing credulous 18 year-olds up for massive amounts of government backed student loans. From what we gather, federal student loan debt is closing in on $1.4 trillion.

Total student loans outstanding (red line – the data are only available from 2007 onward) and total federal government-owned student loans (black line). The former figure was closing in on $1.5 trillion as of Q4 2017. [PT]

Now what would happen to all these high paid professors and fancy country club style college campuses without all this government sponsored debt? The automobile business is also based on a model that demands more debt.  Outstanding auto loan debt is now somewhere around $1.2 trillion.

To continue reading: Broken Promises

 

Millions Of Millennials Could Be Trading Sex For Their Next Debt Payment – Here’s How, by Tyler Durden

Sugar Daddies, Sugar Mommies, and Sugar Babies; the explosion in student debt is creating a whole new set of relationships. From Tyler Durden at zerohedge.com:

As the storm clouds of peak stupidity gather over the heads of the millennial generation who were conned by banks, government, and universities to take out excessive amounts of leverage in auto loans, credit cards, and student debt; millions have flocked to a new website seeking ‘Sugar Daddies’ and or even ‘Sugar Mommies’ to pay off their debt amid an economic environment where wage growth remains non-existent.

Today’s real simple get-out-of-debt option for the broke college/post college millennial is through an unconventional dating website called SeekingArrangement.com.

In 2016, the website identified some 2.5 million college students who turned to the site in an act of desperation to find a ‘Sugar Daddy’ or even a ‘Sugar Mommy’ in exchange of personal time for straight cash.

The website’s mission is to “delivers a new way for relationships to form and grow. Sugar Babies and Sugar Daddies or Mommas both get what they want, when they want it”.

We find it hard to believe the intention of the website, when created by MIT graduate Brandon Wade in 2006, was to have 25% of the 10 million users—broke college millennials.

According to Business Insider,

 A couple years ago, the site noticed an uptick in the number of members signing up with a university email address, Alexis Germany, a spokesperson for SeekingArrangement.com, told Business Insider.

It decided to launch a marketing campaign – dubbed Sugar Baby University – targeting indebted college students and young people who are interested in college but afraid of taking on massive loans.

In total, Americans owe more than $1.3 trillion in student loan debt to federal government agencies and or private lenders.

To continue reading: Millions Of Millennials Could Be Trading Sex For Their Next Debt Payment – Here’s How