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Student loan debt: The next financial disaster?
CBS News ^ | February 9, 2012 | By Lynn O'Shaughnessy

Posted on 02/09/2012 12:29:04 PM PST by Oldeconomybuyer

(MoneyWatch) Student loan debt is pushing a growing number of Americans into bankruptcy and an organization of bankruptcy lawyers predicted this week that the college debt problem could become as big a catastrophe as the home mortgage crisis.

"Take it from those of us on the frontlines of economic distress in America, this could very well be the next debt bomb for the U.S. economy," warned William E. Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys.

The association just released a survey of 860 bankruptcy attorneys that revealed some disturbing trends. Here are some of the most troubling ones:

More than four out of five bankruptcy lawyers say that the number of potential clients they are seeing with student loan debt has increased in the recent years.

Twenty-three percent of bankruptcy lawyers have witnessed cases involving student loan problems jump from 50 percent to 100 percent in the past three to four years. Another 39 percent of the attorneys have seen their potential client cases increase 25 percent to 50 percent in the same period.

(Excerpt) Read more at cbsnews.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events; Politics/Elections
KEYWORDS: acorn; obamanomics; socialism; studentloans

1 posted on 02/09/2012 12:29:17 PM PST by Oldeconomybuyer
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To: Oldeconomybuyer

Mine is almost paid off, yeahhhhhhhhh


2 posted on 02/09/2012 12:30:19 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: Oldeconomybuyer
Student loan debt: The next financial disaster?

This has been going on for some time now, yet largely ignored. The sad part is that most of those with student debt would pay it off if they could, but they graduate from over-priced colleges and in the 0bama Depression can't find jobs, or have to settle for much lower paying jobs.

3 posted on 02/09/2012 12:37:36 PM PST by The Sons of Liberty (Psalm 109:8 Let his days be few and let another take his office. - Mene, Mene, Tekel, Upharsin)
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To: Oldeconomybuyer

So... we should bankrupt the whole country instead?

How about this idea...

don’t borrow money you cannot afford to pay back.

Would you loan someone $250,000 so they could get a minimum wage position? Of course not. Not if reality plays a part in the transaction, but if the government guarantees it..... dang


4 posted on 02/09/2012 12:42:03 PM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: Oldeconomybuyer

It’s not the student loan debt; it’s the fact that a student loan produces a worthless diploma unless the graduate specializes in medicine or science. There are so few opportunities for graduates otherwise that a stint in college is almost a waste of time. It would be wiser to wait to see where the opportunity is and target the education to that opportunity. Graduating from college today doesn’t produce enough income to ever pay off the loan.


5 posted on 02/09/2012 12:42:38 PM PST by arrdon (Never underestimate the stupidity of the American voter.)
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To: Oldeconomybuyer

It’s not the student loan debt; it’s the fact that a student loan produces a worthless diploma unless the graduate specializes in medicine or science. There are so few opportunities for graduates otherwise that a stint in college is almost a waste of time. It would be wiser to wait to see where the opportunity is and target the education to that opportunity. Graduating from college today doesn’t produce enough income to ever pay off the loan.


6 posted on 02/09/2012 12:42:54 PM PST by arrdon (Never underestimate the stupidity of the American voter.)
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To: Oldeconomybuyer

We also have millions of young fools, who having failed to grasp the basics of economics in High School; spend hundreds of thousands of dollars on a career path that pays minimum wage.

Consider a BS or Masters in Performing Arts. For a mere $150,000 you can learn to use theater makeup, run lighting and play “Let’s Pretend” for a couple of years. Maybe you can get a job at your local theater, volunteering to contribute your skills there. The odds of getting a professional position, are next to zero.

Meanwhile, that student loan will ensure you live at poverty levels a large portion of your adult life.


7 posted on 02/09/2012 12:43:18 PM PST by Hodar ( Who needs laws; when this FEELS so right?)
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To: arrdon
Yes. The global salary arbitrage will reduce salaries in the future while the fees and prices of colleges will continue to go up.
8 posted on 02/09/2012 12:45:23 PM PST by Theoria (Rush Limbaugh: Ron Paul sounds like an Islamic terrorist)
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To: Hodar

Or you could apprentice as a plumber, electrician or auto mechanic, among other trades. But then you’d have those icky dirty hands and the elites would call you stupid.

Never mind. /s


9 posted on 02/09/2012 12:47:54 PM PST by SnuffaBolshevik (In a tornado, even turkeys can fly.)
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To: driftdiver

$80,000.00 dollars for a four year bachelors degree in Urban studies. Got a job making $24,000.00 dollars a year at the civil rights institute museum. $2400.00 a year, or 10% of what I make to pay off the loan. It will take over 33 years to pay it off. Oh’ there is more, I didn’t add interest to the $80,000.00 dollars. Moral to the story. Colleges make a lot of money off people getting worthless degrees.


10 posted on 02/09/2012 12:47:54 PM PST by political1 (Love your neighbors)
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To: Oldeconomybuyer
Worst thing that ever happened to college students

All student loans did was allow the colleges to charge tuitions above what the average student could afford by working or his parents could save

Tuitions have far outpaced inflation

11 posted on 02/09/2012 12:52:01 PM PST by uncbob
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To: political1

“$80,000.00 dollars for a four year bachelors degree in Urban studies. Got a job making $24,000.00 dollars a year at the civil rights institute museum. $2400.00 a year, or 10% of what I make to pay off the loan. It will take over 33 years to pay it off. Oh’ there is more, I didn’t add interest to the $80,000.00 dollars. Moral to the story. Colleges make a lot of money off people getting worthless degrees”

So who put a gun to your head?


12 posted on 02/09/2012 12:52:18 PM PST by Mashood
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To: Oldeconomybuyer
When prices get out of hand in other sectors, CEOs are called before congress to explain themselves. Maybe it's time to drag some of these university Presidents in front of a congressional committee to explain why the cost of a college education is so high. They should be made to explain to the country why a kid should be $ 100,000 in debt on the day they graduate, or why parents have to deplete their retirement savings or remortgage the house so their children can go to college. They should also be asked to justify the textbook scam that the professors have gotten away with for years - tell the American people why their kids are forced to buy textbooks authored by their instructors, paying prices four and five times greater than what a comparable book in a retail book store sells for.

Don't get me wrong - I'm not saying that everyone should get a free ride. However, the colleges and universities in this country have gotten away with price gouging for far too long. This is an issue that could be a winner for the Republicans. Insisting on congressional hearings on the cost of a college education would force the Democrats to defend their allies in the academic world, while driving students out of the Democratic fold.

13 posted on 02/09/2012 12:56:16 PM PST by GreenHornet
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To: arrdon
I earned my education degree at a state university. Between paying as I attended and the small athletic scholarship I received, I managed to graduate debt free. My brother-in-law holds the same degree from a small private college. He is 38 and still has loans. The salary for his first year of teaching was less than the cost of his first year of college.
14 posted on 02/09/2012 12:56:20 PM PST by goodwithagun (My gun has killed fewer people than Ted Kennedy's car.)
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To: Oldeconomybuyer

It will only be a financial disaster if it is handled as badly as the underwater mortgages were. Obama is pushing to let mortgage deadbeats, many of whom signed false applications as to ability to pay, off the hook. These deadbeats should have gone through bankruptcy and foreclosure, instead of getting a sweet deal that shifted their debt to the US government deficit.

If a student accepts a loan, he or she should pay it off, the terms of payment are already low rates and long on times to pay. To let the dead beats off the hook makes honest folks into suckers.


15 posted on 02/09/2012 12:56:25 PM PST by RicocheT (Eat the rich only if you're certain it's your last meal)
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To: The Sons of Liberty

Those same kids could still take those lower paying jobs, live at home for a couple of years and throw everything they make into their debt and be relatively debt free in a couple of years.

Even a 9 buck an hour job, they can pay off about 25 grand in those couple of years.

Yeah, no car and no life, but so what?


16 posted on 02/09/2012 12:56:55 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: RicocheT

IIRC he’s pushing for the equivalent: if your career doesn’t duly match your student loans for a few years, you’re off the hook.


17 posted on 02/09/2012 12:59:07 PM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: Oldeconomybuyer

We better force the lenders to allow the poor students off the hook and ad that money to the tax bill. It’s the only fair thing to do.


18 posted on 02/09/2012 1:01:48 PM PST by AD from SpringBay (We deserve the government we allow.)
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To: Jonty30

Twenty five grand, sure, but a lot are graduating with much more debt - in the $100+ range. I’d like to see figures on just how much debt is being incurred. Many probably never really thought about how the debt would be repaid, just like the housing crisis, only there I strongly suspect a lot of the “under qualified” never had any intention of paying.


19 posted on 02/09/2012 1:06:29 PM PST by The Sons of Liberty (Psalm 109:8 Let his days be few and let another take his office. - Mene, Mene, Tekel, Upharsin)
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To: GreenHornet
Maybe it's time to drag some of these university Presidents in front of a congressional committee to explain why the cost of a college education is so high.

Economics 101: Supply And Demand
A thing is worth exactly what another pays for it. If a customer is willing to pay a high price, that is what it is worth. "Price gouging" is just a matter of recognizing that something worth one price under normal circumstances may be worth far more under abnormal circumstances; that the customer doesn't "like" the price is irrelevant if he is nonetheless willing to pay it.

So long as would-be students are willing to pay high prices for an education, so long as banks make it easy to go deep in debt for that education (because on the whole the loans DO get paid off), and so long as Congress makes it ever easier for students to foist those costs onto otherwise uninvolved taxpayers, prices WILL RISE.

Demanding the university Presidents explain themselves to Congress is pointless - both are doing everything they can to ensure those prices go up.

20 posted on 02/09/2012 1:09:37 PM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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i didn’t know you could declare bankruptcy for student loans.


21 posted on 02/09/2012 1:11:06 PM PST by snowstorm12
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To: Hodar

If you or I did what the Universities do we would be jailed for fraud. They get these kids in, work hard to separate them from parental influence and then push loans on the kids.

My son is in college and the blatant lies he gets told are amazing.


22 posted on 02/09/2012 1:12:58 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: political1

“Colleges make a lot of money off people getting worthless degrees.”

Yes they do. And they give the money to kids with no strings attached. The kids can use it for ANYTHING they want.


23 posted on 02/09/2012 1:17:04 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver

I read yesterday where a SSgt Law Enforcement Officer in Nevada was making $95,000/yr, and with over-time was clearing over $109,000.

I’m an Electrical Engineer with 22 yrs experience. I’ve faced layoffs more times than I care to count. Been down-sized, had companies fail, out-sourced and have had to move 3x in the past 10 years, just in order to find a job. Sold each house at > $20k loss.

This officer (who beat a citizen who was in an a Diabetic shock) not only gets paid more than I do, but has had the tremendous opportunity of having continuous employment, a retirement and able to live in the same community for 20+ years. Even after being video taped beating this innocent man - still has his job.

Screw the education .... I’d have been so much better off getting a job and living of the Gov’t largess.


24 posted on 02/09/2012 1:22:37 PM PST by Hodar ( Who needs laws; when this FEELS so right?)
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To: Oldeconomybuyer

This is the Bubble scam that the government has been using to push up the credit markets.

I don’t know what this article is talking about, but student loan debt that is guaranteed by the federal government can not be discharged in a bankruptcy.


25 posted on 02/09/2012 1:24:53 PM PST by Revel
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To: snowstorm12
"I didn’t know you could declare bankruptcy for student loans."

I don't think you can be excused for any federal debt. (IRS etc) However if you are unable to pay debts and declare bankruptcy you can have the other debts excused, leaving enough to pay off the student loans.
I could be wrong. . . .

26 posted on 02/09/2012 1:25:45 PM PST by DeaconRed (Cold War Veteran. . . . US Army Security Agency 1964-1968)
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To: Oldeconomybuyer

Once 50.01% of the electorate agrees with the proposition that “the government should forgive my student loan debt” it will happen.


27 posted on 02/09/2012 1:28:23 PM PST by Buckeye McFrog
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To: uncbob
Look at Hillsdale College, they gave me the best bang for the buck...plus the best education. (I received more scholarships from them than anywhere else I applied)
28 posted on 02/09/2012 1:31:04 PM PST by the lastbestlady (I now believe that we have two lives; the life we learn with and the life we live with after that.)
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To: Oldeconomybuyer

how about a means test for institutions?

If their endowments can fully fund tuitions for students why are they indenturing students?


29 posted on 02/09/2012 1:31:11 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Hodar

I met a guy a couple months ago. He was retired military, then retired from govt agency.

Now on social security. He was bragging about his 3 govt checks. All while insulting small business owners.


30 posted on 02/09/2012 1:33:58 PM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver

Should have put it off. You are going to be MAD when obama forgives all student loans to win the student vote.


31 posted on 02/09/2012 1:36:45 PM PST by guardian_of_liberty (We must bind the Government with the Chains of the Constitution...)
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To: The Sons of Liberty

By knocking off the top 25 grand saves you about 100 to 125 grand in interest over the next thirty years. You’ll probably knock a couple hundred dollars off you’re monthly payments.

That’s only in two years and working one job. If you bear down and work as much as possible and do it for the next 5 years, you’ll probably knock the whole thing off, no matter the amount.

I suspect a lot of the students who have a lot of debt weren’t serious students. They didn’t study as hard and took longer on their course of studies than most.


32 posted on 02/09/2012 1:39:28 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: snowstorm12

A person with a student loan can indeed declare or be forced into bankruptcy, but the student loan cannot be discharged in the settlement unless the lender agrees. Student loans are the modern equivalent of indentured servitude.


33 posted on 02/09/2012 1:40:05 PM PST by Skepolitic
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To: guardian_of_liberty
You are going to be MAD when obama forgives all student loans to win the student vote.

Obama can't do it alone, he'll need help from his closest ally in Congress, Crybaby Boehner.

34 posted on 02/09/2012 1:46:28 PM PST by Prokopton
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To: Buckeye McFrog

if that is the case then the defaults should attach to the endowments and assets of the university.

they should bear the brunt of junk degrees.


35 posted on 02/09/2012 1:49:41 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: ctdonath2
A thing is worth exactly what another pays for it. If a customer is willing to pay a high price, that is what it is worth. "Price gouging" is just a matter of recognizing that something worth one price under normal circumstances may be worth far more under abnormal circumstances; that the customer doesn't "like" the price is irrelevant if he is nonetheless willing to pay it.

What about the textbook scam that I mentioned? This isn't a matter of someone "willing" to pay for the professor's outrageously overpriced book - they're told they MUST buy the book in order to pass the class.

36 posted on 02/09/2012 1:55:34 PM PST by GreenHornet
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To: The Sons of Liberty

Im taking on $50,000 in debt. But plan on repaying it..


37 posted on 02/09/2012 2:05:51 PM PST by goseminoles
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To: driftdiver

$16,000 to go. I’ll have it paid off by the time I’m 20 years out of school.


38 posted on 02/09/2012 2:21:17 PM PST by FateAmenableToChange
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To: GreenHornet

Two separate issues involved.

The textbook “scam” doesn’t cost nearly as much, like off by orders of magnitude, as the tuition “scam”.

There may be a place (arguable) for government intervening in institutionalized abuse of customers. Serious Constitutional issues aside, supply and demand again intervenes to solve the issues, albeit sometimes slowly. Students borrow/share books, Internet sales improve access to used books, copying proliferates (may be illegal, but it’s still supply-and-demand solving the problem), and of late Apple et al have made huge strides at rocking the foundations of the textbook market.

Like tuition, textbook prices rise because students pay the price. They complain, but pay. It’s part of the total cost of the package, which everyone has a choice to pay or find alternatives. When enough find alternatives instead of paying the high price, that price will drop; so long as enough pay up, so will the price.

Comes back to: education, in modern times, is free. It’s the certification which is expensive, and there are career paths which do not require certification (and which are probably better for the graduating student, like starting a business).


39 posted on 02/09/2012 2:31:04 PM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com/)
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To: The Sons of Liberty

“The sad part is that most of those with student debt would pay it off if they could, but they graduate from over-priced colleges and in the 0bama Depression can’t find jobs, or have to settle for much lower paying jobs.”

I think many can’t even get low-paying jobs; in my area they seem to be set aside for non-English speakers or young whites with facial piercing and tattoos who probably don’t cost much.


40 posted on 02/09/2012 2:46:00 PM PST by kearnyirish2
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To: ctdonath2

Knowledge is free. Crack open a book, rent some videos and practice.

It should be possible to do that and still become certified.


41 posted on 02/09/2012 2:48:54 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: Jonty30

“Those same kids could still take those lower paying jobs, live at home for a couple of years and throw everything they make into their debt and be relatively debt free in a couple of years. Even a 9 buck an hour job, they can pay off about 25 grand in those couple of years.”

Companies don’t want to pay anyone over 22 anymore; they save a lot of money by hiring uneducated young people (even at a high school level), and don’t care that the service is horrible to non-existent.


42 posted on 02/09/2012 2:50:02 PM PST by kearnyirish2
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To: kearnyirish2

That I understand, but I can’t totally blame the companies as I have worked with many of these kids.

For the quality of work they are willing to put out, you may as well hire a barrel of monkeys.


43 posted on 02/09/2012 2:56:35 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: Oldeconomybuyer

Now, this happened at the dawn of time, when I first attended college, in 1962. I paid for my first year from my savings during my military service. Thereafter, I supported my college education from a mix of very low government loans (about $800 a year) and the income from my work as an announcer at nearby commercial radio stations. When I graduated after 3.5 years I left owing something on the order of $2,000, which I paid off within a year or so.

Of course, that was then and this is now. Then, the college degree really meant something and I easily got good employment. Now, after many years of work, my wife and I are retired and both of us have very nice pensions.

We feel sorry for those who went to college in recent years, they are so screwed.


44 posted on 02/09/2012 4:17:18 PM PST by OldPossum (ou)
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To: kearnyirish2

The use and abuse of unpaid internships also come to mind.


45 posted on 02/09/2012 4:28:47 PM PST by tbw2
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To: Oldeconomybuyer

The right thing to do is to allow student loans to be discharged in bankruptcy.

Of course that will shatter the very foundations of academia as the money spigot is immediately shut off. That’s another reason why it is the right thing to do.


46 posted on 02/09/2012 4:45:27 PM PST by RFEngineer
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To: tbw2

“The use and abuse of unpaid internships also come to mind.”

I worked full-time while going to college full-time; I always thought unpaid internships were for students who were “independently wealthy” (their parents were footing their bills). I can’t believe in this day and age (and I felt this way years ago) that holding out the possibility of a job would motivate someone to work for free (though I understand that now older workers are doing it to avoid resume gaps - which is sad but practical).


47 posted on 02/09/2012 9:08:59 PM PST by kearnyirish2
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To: Voter#537

Tax debts owed to the IRS can be discharged in bankruptcy under certain conditions. See this article from the August 2010 issue of the Journal of Accountancy:

http://www.journalofaccountancy.com/Issues/2010/Aug/20102591.htm


48 posted on 02/10/2012 3:10:32 AM PST by TheCPA
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