Skip to comments.Student loan crisis getting worse (Need for bailout coming?)
Posted on 03/29/2013 3:51:35 PM PDT by SeekAndFind
You didn't think it was possible, did you? This CNBC article details how the snowball keeps picking up steam as it rolls downhill, threatening to crush the entire student loan program:
Student-loan defaults surged in the first three months of 2013, while efforts to collect bad loans are faltering, according to credit analysts and government audits. It is the latest twist in a college debt crisis that is hanging over recent graduates and dragging on the broader economy.
Credit-rating firm Equifax said $3.5 billion in government and private student loans went bad in the first three months of 2013, the most since the company began keeping track. The U.S. Department of Education said 6.8 million federal student loan borrowers are now in default, representing $85 billion in debt. And the department's systems for collecting the bad loans are struggling to keep up.
The Department's Office of Inspector General found in December that more than $1.1 billion in defaulted student loans were stuck in a sort of computer limbo.
"The Department is not pursuing collection remedies and borrowers are unable to take steps to remove their loans from default status," wrote Assistant Inspector General for Audit Patrick Howard in the December 13 report, which blames a system installed in 2011 by Xerox that is supposed to transfer defaulted loan accounts from servicing companies to private collection agencies. Those collection firms have considerable power, including the ability to garnish up to 15 percent of a borrower's wages. But none of that can happen until the accounts are transferred.
A Xerox spokesman declined to comment, referring inquiries to the Department of Education.
(Excerpt) Read more at americanthinker.com ...
The Department’s Office of Inspector General found in December that more than $1.1 billion in defaulted student loans were stuck in a sort of computer limbo.
“The Department is not pursuing collection remedies and borrowers are unable to take steps to remove their loans from default status,” wrote Assistant Inspector General for Audit Patrick Howard in the December 13 report, which blames a system installed in 2011 by Xerox that is supposed to transfer defaulted loan accounts from servicing companies to private collection agencies. Those collection firms have considerable power, including the ability to garnish up to 15 percent of a borrower’s wages. But none of that can happen until the accounts are transferred.
He said some $600 million of the affected loans will be transferred “in the coming weeks.”
But government auditors say some damage is already done. The Inspector General’s office says the collection problem led to a “material weakness” in the department’s financial controls last fiscal yearan issue Education Secretary Arne Duncan has vowed to address.
on tap for 2014... student loan forgiveness, if you work for the DNC or OFA.
You knew the game was over when the New York Times posted that story a couple of years ago about a twenty-something guy who was up to his ears in student debt and had no way of paying it off. The guy had recently finished law school and had no solid employment prospects, so he basically gave up and began working for cash in various odd jobs around New York City. He was pretty confident that he’d never pay a penny of the money back because he was, in his own words “judgement-proof” from a legal standpoint.
Question: What happens if a gang of true believers in Cloward-Piven acquire high positions within the feral government themselves, bring in/appoint their comrades, and then have an overwhelming command of said feral government?
Why should these loans be forgiven??? No one forced people to take out loans, and they can pay them back just like the rest of us do. Go to work and pay them off.
Too STUPID to fail!
I will be SO ANGRY! I repaid ALL of my college loans on time, in full, and we paid for all three of our kids to go to college. Youngest just finished in 2011. His was the most expensive because he went to a private university in California, that doesn’t do Instate Tuition. It was very expensive. We didn’t buy a new car for ourselves from 1995 - 2011. We scrimped and saved and lived frugally.
I guess we should have gotten HUGE student loans for our kids!
And if the US gov decides to TAKE 40% of our money from the bank, we will wish we hadn’t been so frugal, we will wish we had spent ourselves into debt - like the fed gov did
It's simply a matter of reality hitting home. You can't squeeze blood from a stone, and you can't get someone to pay back $200,000 in student debt when they're earning $12/hour in their mid-20s.
My responsible son just paid his student loan off early. I am so proud of him. He’s been gainfully employed since he graduated from college going on three years now, in a job he was hired for even before he graduated, and has been promoted twice. And he has quite a sizable bank account. I just wish he would meet a nice, conservative Christian/Catholic girl and settle down. :)
As I have often posted here, one thing I’ll remember about the Obama years will be feeling stupid for working and paying my bills.
Who said they are forgiven?
How many of these graduates in default can't find gainful employment? What do they plan to garnish?
I’m sure a lot of them would agree with that. The problem is, hindsight is always 20/20 and it’s too late to be thinking that way when you’re already $200,000 in the hole.
It could be, but right now your school loans stay with you even if you declare bankruptcy.
Bring back US jobs, to the USA.
You have an entire generation incapable of hard work.
RE: Bring back US jobs, to the USA. Now.
Every body says that, very few tell us HOW it can be done.
Gee, the record number of defaults couldn’t be because people expect to be bailed out, could it?
To hell with them, make them pay!!
I worked my way through college as did everyone i grew up with in the 40s and 50s!
Let’s see, you start a state “education lottery” which is supposed to pay for a college education, then you raise the tuition so that it costs more to go to college than ever before, then you hire a bunch of left wing fruitcakes and call them professors, then you encourage young people to borrow huge sums to pay for five or six years of college after which they have a degree but less actual education than a public high school graduate of fifty years ago. Now after years of little or no income at an age when people used to be earning money and after incurring a huge debt, they enter the labor market at 24 or so, an age at which grandpa had a wife and two kids and was already an established citizen and they find no job or they take a job which requires only an eighth grade education in real world terms even though it may be advertised as available only to those who have a minimum of a bachelor degree. What could possibly go wrong?
Such a wonderful world, many graduates now owe as much or even more in nominal terms for student debt than what my life time earnings were projected to be fifty years ago.
I think we all will!
For the same reasons that California is losing thousands of jobs to Texas. Texas is business friendly. You can start a new business in Texas a million times faster than in Calif. Calif has higher taxes and many many many more regulations. It is impossible to do business in Calif.
“Why should these loans be forgiven??? No one forced people to take out loans, and they can pay them back just like the rest of us do. Go to work and pay them off.”
I have two kids in college. we’re paying the freight, lucky that with sustained sacrifice we have been able to do it.
One is graduating in May. His peers who are in unemployable majors are just now figuring out that they are screwed.
They don’t get it yet. how much they’ve been scammed by their “univerisities”. If they did truly understand, they’d be burning these places to the ground.
That said, I agree with you nobody forced them to take loans out.
Logic dictates that these loans need to be dealt with somehow. A large portion of them will simply not be paid back. As infuriating as it is to those like you and me who actually paid (and I paid again for my kids), nothing good comes from leaving the current system in place.
The best way, in my opinion is to allow the loans to be discharged in bankruptcy court - Chapter 7 elimination or Chapter 13 reorganization.
This will fundamentally transform institutions of higher learning overnight.
These kids were stupid, they were duped, they were self indulgent, they were entitled little brats, they were lots of other things.
But they should not be slaves of the government sponsored loans to support marxist university largesse.
You can fundamentally change America by burning the present University funding system to the ground. If the kids won’t do it literally (and they have every reason to literally do it), cut off their financing by the knees and what the crumble in every bit as dramatic a fashion.
Then kids with excessive debt will have only wasted their time, and not ruined their lives with university-assisted suicide. They will at least have a chance.