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Heading for the student debt cliff
Los Angeles Times ^ | June 22, 2013 | OP-ED

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 ...


TOPICS: Culture/Society; Government; News/Current Events; Politics/Elections
KEYWORDS: debt; studentloans

1 posted on 06/22/2013 8:17:36 AM PDT by Oldeconomybuyer
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To: Oldeconomybuyer

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.


2 posted on 06/22/2013 8:20:01 AM PDT by Dilbert San Diego
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To: Dilbert San Diego

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.


3 posted on 06/22/2013 8:36:14 AM PDT by Mouton (108th MI Group.....68-71)
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To: Oldeconomybuyer

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.


4 posted on 06/22/2013 8:40:20 AM PDT by SampleMan (Feral Humans are the refuse of socialism.)
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To: Oldeconomybuyer

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.


5 posted on 06/22/2013 8:41:55 AM PDT by duffee (NO poll tax, NO tax on firearms, ammunition or gun safes. NO gun free zones.)
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To: Mouton

Smart. Doing nothing is a disaster. Writing them off is a disaster. Nothing wrong with quid pro quo.


6 posted on 06/22/2013 8:46:29 AM PDT by RIghtwardHo
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To: Oldeconomybuyer
It's not like the students don't realize they are piling up debt. They elected to do it and now it appears some have no intent of repaying the debt. They expect the government to bail them out with other people's money.

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.

7 posted on 06/22/2013 8:46:36 AM PDT by pfflier
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To: Oldeconomybuyer

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.


8 posted on 06/22/2013 8:47:18 AM PDT by Born to Conserve
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To: Dilbert San Diego

“Whatever happens, if loans can be written off, or discharged in bankruptcy, it means that they won’t 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.


9 posted on 06/22/2013 8:49:36 AM PDT by RFEngineer
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To: Dilbert San Diego
Sure sounds like something he would do. The divisiveness alone that would create is right up his alley. Think about it, lots and lots and lots of people have already gone bankrupt (to be fair, they did sign the loans of their own free will) and that is on their credit for years now, permanent debt slaves. I can see obama selecting a cut off date and only a portion of student loans will find relief. The others are screwed (even the ones who paid off all their loans via Treasury garnishment against their wages). On top of that, you just KNOW "some" majors (politically correct ones, useless otherwise) will get more relief than others.
Student loan debt forgiveness can bring a lot of havoc to America at a social level and the community organizer in the White House only knows how to agitate, not mend.
10 posted on 06/22/2013 8:50:03 AM PDT by Ghost of SVR4
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To: Oldeconomybuyer

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.


11 posted on 06/22/2013 8:56:54 AM PDT by kingu (Everything starts with slashing the size and scope of the federal government.)
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To: Dilbert San Diego
I predict that Obama will eventually ask that student loans be forgiven 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.

This is how the dems will get Hillary elected in 2016. GIVE, GIVE, GIVE our money away to get votes.

12 posted on 06/22/2013 9:00:10 AM PDT by Right Wing Assault (Dick Obama is more inexperienced now than he was before he was elected.)
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To: Oldeconomybuyer

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?


13 posted on 06/22/2013 9:00:50 AM PDT by originalbuckeye (Never yield to force; never yield to the apparently overwhelming might of the enemy)
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To: pfflier

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.”


14 posted on 06/22/2013 9:04:04 AM PDT by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
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To: Oldeconomybuyer

WAKE UP.

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 ?


15 posted on 06/22/2013 9:10:42 AM PDT by PieterCasparzen (We have to fix things ourselves)
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To: Alberta's Child

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.


16 posted on 06/22/2013 9:11:04 AM PDT by hal ogen (First Amendment or Reeducation Camp?)
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To: Mouton
My idea would do the following:

  1. Write off 30% of all debt, 25% to the borrower, 5% to the educational institution which generated the loan.
  2. The educational institution is then on the hook to collect the remaining 70% and remit it over time.
  3. They are free to sell it to factoring companies or freeze transcripts and suspend degrees for students in default. It is their choice. That's why they get the 5% to work with.
  4. If they still can't collect, the loan holders are free to put liens on their endowments, real estate and other assets. Colleges which have sold mostly worthwhile marketable degrees have little to worry about. Those which have not perhaps deserve to go out of business.

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.

17 posted on 06/22/2013 9:24:57 AM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: Dilbert San Diego
nor should they be... the collateral in the deal was the knowledge and that can't be repossessed, unless you cut their head off that is
18 posted on 06/22/2013 9:33:18 AM PDT by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
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To: Vigilanteman

Good idea and best of all, the T/Ps are just on the hook for nothing.


19 posted on 06/22/2013 9:56:57 AM PDT by Mouton (108th MI Group.....68-71)
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To: hal ogen

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.


20 posted on 06/22/2013 10:10:09 AM PDT by originalbuckeye (Never yield to force; never yield to the apparently overwhelming might of the enemy)
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To: Mouton
"In bankruptcy one must give up most of their assets,....

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.

21 posted on 06/22/2013 10:32:24 AM PDT by moehoward
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To: Alberta's Child
College education should be subject to anti-trust laws then. Most states have two land grant college/University systems and some have private colleges. They set the rates because their is no competition.

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.

22 posted on 06/22/2013 10:33:08 AM PDT by pfflier
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To: Oldeconomybuyer
I just did a quick check. The average student loan debt upon graduation in 2009 was less than $30,000. That's doable, if they drive a used car, live in reasonably priced housing, and forgo vacations. Anyone who went in debt after 2009 must have sanity issues, because it was already difficult to find good-paying jobs.

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)

23 posted on 06/22/2013 10:48:12 AM PDT by grania
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To: Dilbert San Diego
stupid me. I paid for my kids college so they wouldn't graduate with a pile of debt.
24 posted on 06/22/2013 10:52:53 AM PDT by Kozak (The Republic is dead. I do not owe what we have any loyalty, wealth or sympathy.)
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To: moehoward

“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.


25 posted on 06/22/2013 12:41:21 PM PDT by Mouton (108th MI Group.....68-71)
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To: Dilbert San Diego

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:

http://www.usnews.com/education/blogs/student-loan-ranger/2012/03/21/learn-what-the-student-loan-forgiveness-act-could-mean-for-you


26 posted on 06/22/2013 3:29:55 PM PDT by ilovesarah2012
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To: Mouton
Actually, the T/Ps are indirectly on the hook for the 30% write-off. But that is a political price worth paying to get the government out of the student loan business permanently. 30% is a LOT, LOT better than the 100% alternative.

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.

27 posted on 06/22/2013 3:38:06 PM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: Mouton
"Doctors bills discharged through BK are not usually tossed upon the taxpayers to make good. Most of the delinquent student loans are government guaranteed. "

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.

28 posted on 06/22/2013 10:35:34 PM PDT by moehoward
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