Heading for the student debt cliff

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.

"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.

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.

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)

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

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.

"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.

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