I seem to recall that the default numbers for student loans is pretty high. Anyone recall?
Written by CNBC, it has sweet little tidbits like this:
"...Federal loans come with a lot of protections that should make default rare, said Kristin Blagg, a research associate at the Urban Institute, focusing on education. However, she learned, that is not the case: Within four years after leaving school, nearly a quarter of the borrowers had defaulted. “To default is still pretty common,” Blagg said. She added, “I found that these are borrowers who tend to be in financial distress.” Defaulters are less likely than nondefaulters to have types of debt that require a risk assessment, like credit card, auto and mortgage debt. They’re more likely than nondefaulters to have their utility and medical bills fall into collections, as well. Blagg said these additional debt pressures can explain, at least in part, why some borrowers might be putting off their student loan payments.
Really. How many of these "Defaulters" had mortgages before they graduated from college, and rang up credit card debt IN college? So, they graduated with degrees in Gender Studies, rang up a boatload of credit card debt during and after schooling, then got a government guaranteed mortgage, all before they discharged their college loan debt?
This is like kids murdering their parents and then begging the court for leniency because they are orphans!
And we pick up the bill for them, because this is what happens when the government guarantees the loans, not a bank. If it were a bank, and THEY were responsible for picking up the default, the conversation would go like this when applying for student loans:
PROSPECTIVE STUDENT APPLYING FOR LOAN: Well, I have been accepted at Harvard, and the tuition there is $120K dollars a year, so I am looking for...ah...$480K dollars, plus some more for books, fees, some minor living expenses, and room and board.
BANK LENDING SPECIALIST: I see. What are you going to major in?
PROSPECTIVE STUDENT APPLYING FOR LOAN: Gender Studies.
BANK LENDING SPECIALIST: I see. And what kind of "minor living expenses" were you looking to cover?
PROSPECTIVE STUDENT APPLYING FOR LOAN: (smiles slyly) Well, someone told me I could get money included in the loan, so if I needed to go skiing or on Spring Break, I would have a little extra to do it with, and could pay that back later. (still smiling, but sheepishly and conspiratorially)
BANK LENDING SPECIALIST: Do you currently have a job?
PROSPECTIVE STUDENT APPLYING FOR LOAN: Er, no. I get an allowance.
BANK LENDING SPECIALIST: Do you have any collateral such as a Trust Fund?
PROSPECTIVE STUDENT APPLYING FOR LOAN: What's 'collateral'?
BANK LENDING SPECIALIST: Ah. I see. Well, imagine you wanted to borrow $500 from a friend, and to make sure your friend knew you intended to pay him back, you gave him that nice Rolex on your wrist and told him he could keep it if you don't pay him back.
PROSPECTIVE STUDENT APPLYING FOR LOAN: (eyes widening) Uh, really? My friends wouldn't make me do that! Is this something new?
BANK LENDING SPECIALIST: (smiles sympathetically) Well, it is new now that the US Government won't agree to give us a Rolex if you don't pay us back. We don't mind being your friend as long as you give us a Rolex worth $500K dollars. Hm. Yours isn't the gold one with the diamonds, so the watch won't suffice.
PROSPECTIVE STUDENT APPLYING FOR LOAN: Well, I am going to Harvard, and I can pay you back once I get a job. Doesn't that count for anything?
BANK LENDING SPECIALIST: Perhaps if you had the top 10% grades in high school, and you were taking Chemical Engineering, we might consider taking that risk with lower collateral, but...you were a little above average in high school, and your major 'Gender Studies' isn't exactly going to fill your pockets with money to pay us back, so you can understand we are a little reluctant to lend you money without collateral.
PROSPECTIVE STUDENT APPLYING FOR LOAN: Wow. I had heard how greedy banks were...but I had no idea! Doesn't my word count for anything? Can't you have some faith in me?
BANK LENDING SPECIALIST: Well, if you were willing to shoulder the burden to be an Electrical Engineer from Harvard, we might consider it. But more likely you will be a lower paid worker in a Human Resources department somewhere, if you use your degree at all. More likely you will be a bartender or waiter. So, without collateral, and sufficient collateral at that, we cannot give you a loan. Perhaps your parents might co-sign for the loan, or put their house up for collateral?
PROSPECTIVE STUDENT APPLYING FOR LOAN: No. They wanted me to go to Medical School, and they were pissed that I wanted to go into Gender Studies. I wasn't all that interested in cutting people open and stuff, or having to look at old people's white, wrinkly butts, and Gender Studies seemed way more interesting to me. So, no. They won't sign for the loan.
BANK LENDING SPECIALIST: We can't lend you the money. If the government offered to pick up your debt if you didn't pay, we would lend you all the money you want, and more. But with the passage of the "Stop Anally Screwing the Taxpayers for Debt Incurred by Useless No-Loads Who Have Gender Studies Degrees Act of 2019", we have to look out for ourselves and stop lending to people who will never pay it back.
PROSPECTIVE STUDENT APPLYING FOR LOAN: Wow. You sure are a dick. I won't be coming back here for a mortgage when I am ready to buy a house!
BANK LENDING SPECIALIST: If you come back here to get a mortgage with a Gender Studies diploma in one hand, and your palm out in the other, due to the repeal of "The Community Reinvestment Act of 1977" and all legislation that branched out of that, along with the "Stop Anally Screwing the Taxpayers for Debt Incurred by Useless No-Loads Of All Stripes Who Should Rent Instead of Buying Houses Act of 2019" in which the government no longer pays when people default on mortgages they should have never had in the first place, we won't be giving you a loan for a house, either. Sorry Buttercup.