Skip to comments.Heading for the student debt cliff
Posted on 06/22/2013 8:17:36 AM PDT by Oldeconomybuyer
Cable news channels regularly stoke their viewers' fears about China holding $1.1 trillion of U.S. debt. But they're focused on the wrong $1.1 trillion of loans.
The borrowers of this other $1.1-trillion debt are far more likely to default on their obligations: students, particularly those who went to for-profit colleges. The global consequences could be and likely will be staggering.
More than 38 million Americans have student loans outstanding. To put this in perspective, 38 million is the combined population of New York and Florida. And this collective debt is on par with the entire GDP of Mexico.
(Excerpt) Read more at latimes.com ...
I predict that Obama will eventually ask that student loans be forgiven in bankruptcy. Right now, in most cases, such loans can’t be discharged in bankruptcy.
The other thing Obama will do, is ask that loans be forgiven if the students work in politically correct fields, such as teaching in inner city schools, or being social workers. Whatever happens, if loans can be written off, or discharged in bankruptcy, it means that they won’t be paid back.
I think there should be some quid pro quo for writing any of these loans off. Not sure I agree with potential ideas of his excelleny, but they should at least have to put some effort into it rather than just tossing them onto the taxpayers to pay for their folly sans liability, even if we give them credit at far above the wages they are working for to pay it back in indirect proportion to their pay, for instance, someone earning 50K gets no write off while someone earning say 25K gets a loan write off of half the difference to a set standard, or in this case, $12500. No earned income say $25K a year.
In bankruptcy one must give up most of their assets, so, unless we chop off their heads, how does one recover an education asset otherwise? I say measuring it against their taxable income is a valid way.
Big Education providing less and less for more and more.
The University system is a cess pool of political correctness with the hard sciences dominated by social science agendas.
Being Leftists, the faculities line their pockets, while the money they do spend on the colleges is mainly focused on bragging rights versus other institutions.
The party line is that a degree is automatically a quality product, thus any input into the system is good input.
Grants from the public trough are stepping stones to promotion and marching the narrow path of political correctness and socialism is the path to grants.
Part of the payoff for the destruction of America. One the inflation leaders is tuition, raise the amount that can be borrowed on student loans and tuition goes up, then the process is repeated over and over. In addition to the outrageous grants the universities are monetarily rewarded for the corrupting of our heritage, history, morals, etc. The professors who spout all this crap get their share and they are part of the progressive movement.
Smart. Doing nothing is a disaster. Writing them off is a disaster. Nothing wrong with quid pro quo.
When I enlisted in 1971 I had a student loan debt of $3,000. That doesn't sound like much now but my base pay started at $250 a month and I still managed to pay that off on an e-4's pay even though it could have been waived until my discharge,
The difference is honor and integrity. These whiners need to get out of their parent's basements and get any job, not just the $200,000 a year job they think they deserve.
All three parties should share the burden — the students should feel the pain, the schools should feel the pain, and the lenders should feel the pain. They’re all greedy and stupid, and have to learn.
“Whatever happens, if loans can be written off, or discharged in bankruptcy, it means that they wont be paid back.”
I think you’ve got it backwards. The loans won’t be paid back, for the most part, so that means they need to be written off, or discharged in bankruptcy.
The implications are mostly to Academia. As long as they aren’t written off or discharged, Academia can pretend they will be paid in full and continue to be the beneficiary of student loan money.
Once they ARE discharged in bankruptcy, the game is up for Academia. They either have to guarantee that a student will be able to pay back a loan they take out (which they obviously can’t/won’t do) or they have to reduce their prices to a level in which loans can be paid back (which they also can’t/won’t do - voluntarily).
Look for unemployed Liberal Arts professors to be competing with their former students for Barista jobs a the local Starbucks as soon as student loans start being discharged.
Gosh, it is a crisis! How did this happen! It must be the fault of all the for profit universities! SHAME ON THEM!
But hey, rather than be critical of the excessive fees and insurance requirements of colleges, let’s focus on the other end of it: How to stick it to anyone else.
See, the colleges already have the money. They got paid up front before the student even stepped foot on campus. And that 1.1 trillion ‘student loan debt’ is covering a whole lot more than, well, loans for college. It is loans for a new computer, a new phone, housing, food, books - the list goes on and on.
And for the most part, almost all of it over priced. A friend’s son is in college. The college ‘granted’ a ‘scholarship’ of nearly half the cost of tuition. We worked it out; with the discount, they were paying $40 per hour of instruction. Now on the face of it, that seems like a bit of a bargain - after all, the mechanic wants $120 an hour. The typical class has 35 students. $1400 an hour?
All universities are money mills for the liberal agenda. And since nothing about forgiving student loans affects those money mills, they will push for this, as more students will take out even bigger loans, knowing that they’ll never have to actually pay for them.
This is how the dems will get Hillary elected in 2016. GIVE, GIVE, GIVE our money away to get votes.
Don’t worry.......the taxpayers will bear the burden. My friend’s husband signed a student loan for their son in the tens of thousands. Sadly two years later, he was diagnosed with terminal cancer and passed a few months later. The debt has been forgiven as the borrower has died. I am happy for my friend that she isn’t on the hook for the money, but someone has to pay it back, don’t they?
College education has become no different than the real estate industry. Prices are inflated for no other reason than the fact that people are willing (and encouraged) to borrow large sums of money to conduct business with these “sellers.”
The big bankers are like the mob, they want their money back.
I mean the global banks.
Students will be refi’d and keep paying.
Forgiveness of loans here and there will equal those loans being paid off by the US taxpayer.
Globalism is all about DEBT SLAVERY.
HELLO ? Has anyone been paying attention for the last 100 years ?
What ever happened to the old-fashioned concept of personal integrity, responsibility and accountability? The students took out the loans so they could attend about 12-15 hours a week of classes, maybe do some studying and do a lot of partying and beer swigging. Really...students have a 4-5 year vacation and then expect taxpayers to bail them????? The nerve of these whining slackers. Get a job and pay off your debts, you degenerates.
Everybody gets something under the above plan. And the taxpayers get minimally screwed. Best of all, the government loan monster gets phased out. Permanently.
If tiny little Hillsdale College in Michigan can line up their own group of lenders to finance their student's education, then there is no reason why a Harvard, Yale or Penn State can't do the same.
Good idea and best of all, the T/Ps are just on the hook for nothing.
Unfortunately Generation Next and Generation Text have been taught that they are owed a living. Not all, of course, but many have been taught by parents and teachers that they shouldn’t work so hard when the Government (taxpayers) should be ‘helping’ them have all the ‘luxuries’ their parents have. And have it all NOW.
Not always. In fact, if one properly plans for a BK nothing is surrendered.
"...so, unless we chop off their heads, how does one recover an education asset otherwise?"
Health care debt is dischargeable. Returning a liver, arm or leg is not required.
Students now are the new entitlement/victim class being courted by dims. Dangle the carrot of no student loan repayment and you have another block of voters on the plantation. This block transcends race and ethnicity, a goose that lays the golden egg for the dims.
I say let them pay up. If a college education didn't teach them, it's about time they learned what it means to sign a contract.
Personally, I always thought debt for education was dumb. If you're really good at something, you'll get scholarships. If mommy and daddy can pay, it's no problem. So, those with debts when they graduate are already behind those two groups....those more qualiified than they are and those better connnected than they are. And they're adding a third minus....which just further diminishes their ability to compete.
(PS...I got help paying for college the old fashined way...part parent's help, part high SAT Math score for scholarships)
“Health care debt is dischargeable. Returning a liver, arm or leg is not required.”
Doctors bills discharged through BK are not usually tossed upon the taxpayers to make good. Most of the delinquent student loans are government guaranteed.
Learn What the Student Loan Forgiveness Act Could Mean for You
By EQUAL JUSTICE WORKS
March 21, 2012 RSS Feed Print
On March 8, Congressman Hansen Clarke (D-Mich.) introduced H.R. 4170, the Student Loan Forgiveness Act of 2012.
Normally we don’t go into the findings of particular pieces of legislation, but the Student Loan Ranger thinks findings like this are refreshing and show Rep. Clarke is living in the reality most of us inhabit, including:
Total outstanding student loan debt officially surpassed total credit card debt in the United States in 2010, and is on track to exceed $1,000,000,000,000 during 2012;
Excessive student loan debt is impeding economic growth in the United States. Faced with excessive repayment burdens, many individuals are unable to start businesses, invest, or buy homes;
Because of soaring tuition costs, students often have no choice but to amass significant debt to obtain an education that is widely considered a prerequisite for earning a living wage.”
If you want to hear more from Rep. Clarke, you can watch him introduce the bill in the House. But right now we’re going to do what the Student Loan Ranger does best: explore the details.
The act would create a new 10/10 Loan Repayment Plan (with new forgiveness provisions), cap interest rates for all federal loans, greatly improve Public Service Loan Forgiveness, and convert some borrowers’ private loans to federal loans. That’s a lot! Here’s more information on four key parts:
And, as you may be aware, this is a common technique of businesses holding credit card debt . . . at least the smarter ones.
They rightly reason that 70% is a whole lot better than nothing and, besides, they've already made more than the 30% in interest and fees.
I'd argue that most BKs discharging large amounts of medical debt are not from doctor office visits. They are from expensive hospital stays. Hospitals do receive partial reimbursement for unpaid bills from tax revenue. Even if they didn't does it really matter whether John Q gets screwed from higher taxes or higher medical fees?
But that's not the point. The point is there are many situations where an individual can benefit from services, then remove the obligation for that debt through a BK. School debt is the one area where it's not dischargeable. That is unless someone charged his tuition on his AmEx.
And you are quite right about the feds now holding those loans. It's for that reason I cannot see them ever absolving any of that debt.