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Student loans seen as potential ‘next debt bomb’ for U.S. economy
Washington Post ^ | 03/12/2012 | Eric Pianin,

Posted on 03/12/2012 8:19:35 PM PDT by SeekAndFind

Bankruptcy lawyers have a frightening message for America: They’re seeing the telltale signs of a student loan debt bubble that is placing increased financial pressure on families struggling with their children’s mounting debt. According to a recent survey by the National Association of Consumer Bankruptcy Attorneys, more than 80 percent of bankruptcy lawyers have seen a substantial increase in the number of clients seeking relief from student loans in recent years.

In most cases, those clients could not meet the federal hardship standards that are necessary to discharge a student loan through bankruptcy proceedings. Instead, many of these parents or guardians who co-signed the student loans face the prospect of losing their life savings, cars or homes to collection agencies for aggressive private lenders.

illiam Brewer, head of NACBA, has said, “This could very well be the next debt bomb for the U.S. economy” — something akin to the housing mortgage loan crisis that triggered the U.S. financial crisis.

“Obviously, in the short term, student loan defaults are not going to have the same ripple effect through the economy that mortgage defaults did,” Brewer said. “My concern is that the long-term effect may be even graver, because people who need student loans to try to get a higher education or retraining” will be unwilling to run the risk of taking out a student loan.

Moody’s Analytics has evaluated the chances of a student loan crisis.

“Despite its rapid growth even as credit quality weakened during and after the recession, student lending is not likely to turn into the next subprime crisis,” it said in a January report. The student loan market is one-tenth the size of the residential mortgage market. And more than 90 percent of student loans are federally guaranteed.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: college; debt; debtbomb

1 posted on 03/12/2012 8:19:40 PM PDT by SeekAndFind
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To: SeekAndFind

Still no demand from the commie liberals for “comprehensive tuition reform” though, huh?


2 posted on 03/12/2012 8:23:00 PM PDT by FlingWingFlyer (It's time for Americans to WEAN the government off of OUR money!!!)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Time for a gubmint takeover of all higher ed that’s “at risk” of collapse, pay for golden parachutes and fund those pensions, and while we’re at it, take a good hard look at whether AGW-deniers really should have tenure. Thanks SeekAndFind.


3 posted on 03/12/2012 8:26:15 PM PDT by SunkenCiv (I come to bury Caesar, not to praise him)
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To: FlingWingFlyer

“The Student Loan Debt Bubble - Just like we saw with the housing bubble, the student loan debt bubble just continues to grow and grow and grow. At some point the nearly 1 trillion dollar bubble is going to burst. What effect will it have on our financial system when that finally happens?”

http://endoftheamericandream.com/archives/35-shocking-facts-that-prove-that-college-education-has-become-a-giant-money-making-scam


4 posted on 03/12/2012 8:30:36 PM PDT by Carthego delenda est
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To: Carthego delenda est

Time for student loan applicants to submit a business plan for themselves before undertaking higher education on borrowed money. If they can’t show a need for them to pursue a particular degree, the loan should be denied.

We have enough art history, literature and womens studies majors who are flipping burgers.


5 posted on 03/12/2012 8:34:05 PM PDT by CarmichaelPatriot
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To: Carthego delenda est

IMHO, too many people went to “college” who had no business going to “college”. A lot of money went towards Bovine Scatology classes that were of absolutely no use in the real world.


6 posted on 03/12/2012 8:34:22 PM PDT by FlingWingFlyer (It's time for Americans to WEAN the government off of OUR money!!!)
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To: SeekAndFind
increased financial pressure on families struggling with their children’s mounting debt

Well sure, if you consider adults with a college degree to be "children" then the above statement makes perfect sense.

7 posted on 03/12/2012 8:34:29 PM PDT by eclecticEel (Life, Liberty, and the Pursuit of Happiness: 7/4/1776 - 3/21/2010)
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To: SeekAndFind

Lots of my daughter’s college friends took 2 & 3 vacations a year with loans from ‘Aunt Sallie’.....she couldn’t go cause we didn’t have the extra income to send her to spring & winter breaks to Vegas


8 posted on 03/12/2012 8:36:34 PM PDT by MadelineZapeezda (Conservatism: "It's either there or it isn't.")
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To: SeekAndFind

BOHICA!


9 posted on 03/12/2012 8:37:36 PM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: SeekAndFind

Why did the federal government unconstitutionally takeover student loans for higher education?

To build another plank in their platform of entitlement paid for by the producers (ironically, mostly by poor stupid lottery players).

Atlas needs to hurry up and shrug. The Bengay is probably costing him a fortune. Oh wait, now Atlas is helping the takers’ agenda to make their profit.


10 posted on 03/12/2012 8:39:27 PM PDT by Fledermaus (Democrats are dangerous and evil. Republicans are just useless.)
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To: Carthego delenda est
One big difference here is that a student loan is just a loan. At the height of the mortgage bubble we had overpriced homes supported by mortgages that couldn't be paid off -- and often there were multiple loans leveraged on top of an existing overpriced home. There was also the issue of collateralized debt obligations that were created from these mortgages.

If a student defaults on his/her loan, then that's about all the impact it has. Nobody ever leveraged anything out of that loan, except maybe parents who co-signed and who may now be on the hook for the cost of a worthless "education."

11 posted on 03/12/2012 8:41:49 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Carthego delenda est; Yehuda; 444Flyer
“The Student Loan Debt Bubble - Just like we saw with the housing bubble, the student loan debt bubble just continues to grow and grow and grow. At some point the nearly 1 trillion dollar bubble is going to burst

You reminded me of a few verses I was reading last night. It's as if Lucifer ("light-bearer") should be read as "hope-bearer".

Isaiah 14.

12 How art thou fallen from heaven, O Lucifer, son of the morning (dawn)*! how art thou cut down to the ground, which didst weaken the nations!
13 For thou hast said in thine heart, I will ascend into heaven, I will exalt my throne above the stars of God: I will sit also upon the mount of the congregation, in the sides of the north:
14 I will ascend above the heights of the clouds; I will be like the most High.
15 Yet thou shalt be brought down to hell, to the sides of the pit.

"We were looking at the “o” of his name and had the idea of a rising sun and a new day,” according to Sender. “The sun rising over the horizon evoked a new sense of hope."

https://en.wikipedia.org/wiki/Obama_logo

12 posted on 03/12/2012 8:52:50 PM PDT by Ezekiel (The Obama-nation began with the Inauguration of Desolation.)
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To: eclecticEel
Since the mid 1980s the cost of higher education has been increasing at approximately 2.5 times the rate of inflation. There are a number of factors at play, but the vast majority of this increase is going to personnel expenses, which means that the teacher's unions are pricing their members out of their jobs. Excessive government subsidies through student loans and grants have allowed this to happen.

This trend cannot continue because our faltering economy cannot support this bloat. Entrepreneurs are coming up with more efficient and cheaper ways for people to get marketable skills. This means that leftist professors who think that they deserve huge salaries for brainwashing young minds will eventually find the demand for their services severely diminished. Hopefully with people seeking to gain marketable skills for a reasonable expense instead of worthless degrees in leftist studies... the pendulum can begin to swing back to some type of sanity. But it is too early to know what will happen, but I am hopeful.

13 posted on 03/12/2012 8:55:55 PM PDT by fireman15 (Check your facts before making ignorant statements.)
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To: SeekAndFind

And more than 90 percent of student loans are federally guaranteed.


And the federal government has the money to replay these loans???

It’s just as bankrupt as the people who are going to bail on these loans.


14 posted on 03/12/2012 9:16:54 PM PDT by cableguymn (Good thing I am a conservative. Otherwise I would have to support Mittens like Republicans do.)
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To: SeekAndFind

And more than 90 percent of student loans are federally guaranteed.


And the federal government has the money to repay these loans???

It’s just as bankrupt as the people who are going to bail on these loans.


15 posted on 03/12/2012 9:16:54 PM PDT by cableguymn (Good thing I am a conservative. Otherwise I would have to support Mittens like Republicans do.)
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To: SeekAndFind

Cry me a river.


16 posted on 03/12/2012 9:55:58 PM PDT by 867V309
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To: FlingWingFlyer
Still no demand from the commie liberals for “comprehensive tuition reform” though, huh?

It's an election year, and the Dems always rely on the young voters. You can bet that later this year Obama will position himself as wanting to write off everyone's college loans... but the mean, evil Republicans are in the way of that goal.

17 posted on 03/12/2012 10:02:21 PM PDT by Cementjungle
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To: SeekAndFind

Time for overpaid underworked professor salary reform.


18 posted on 03/12/2012 10:07:00 PM PDT by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: SeekAndFind

It’s a Crisis again.
Who was it that said:
“Never Let A Crisis Go To Waste”

And
Who did he work for


19 posted on 03/12/2012 10:13:19 PM PDT by funfan
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To: Secret Agent Man
Time for overpaid underworked professor salary reform.

Agree in part. You should see the levels of high paid administrators that have grown like a cancer. My Daughter is finishing up her last level of calc before entering her major in engineering. There were four sections with 1400 students and two professors. They were given a 26 question multiple choice exam! The professors had no say in this. I called the "test coordinator" who went on to lie to me on the phone. They buy the exams. Not what the professors teach or a test of the material. A bought exam because they are too hard to grade. 2.1 million dollars in tuition! I went ballistic on the phone. This is what a modern University is. A money mill with little product in return. We are in serious trouble without a major revolution in higher education.
20 posted on 03/12/2012 10:26:42 PM PDT by PA Engineer (Time to beat the swords of government tyranny into the plowshares of freedom.)
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To: SeekAndFind
Big oil, big tobacco, big pharmaceutical.

Why doesn't the GOP ask "Why is Big Tuition out to hurt the American youth?" over and over and give the left a taste of their own medicine?

21 posted on 03/12/2012 10:28:06 PM PDT by stuck_in_new_orleans
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To: SeekAndFind

If you are wealthy or have a large trust fund, feel free to take Liberal Arts courses. If not, major in the sciences.


22 posted on 03/12/2012 10:33:53 PM PDT by Onelifetogive (I tweet, too... @Onelifetogive)
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To: SeekAndFind

This story helps to explain why the cost of higher education has gone through the roof.

http://www.freerepublic.com/focus/f-news/2857908/posts


23 posted on 03/12/2012 10:51:03 PM PDT by Oliver Boliver Butt
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To: PA Engineer

And in many, many places, teaching assistants teach the main class, not the professor. I was a TA for 2 years 20 years ago, and I helped run labs, had a bunch of office hours a week to help students with questions and helping them understand things, but I never, ever taught an actual class period.


24 posted on 03/12/2012 11:07:56 PM PDT by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: SeekAndFind
The government doesn't sell student loan debts. The only collection agencies that collect on this paper are collecting for the government. The government may, at their discretion, garnish salary and Social Security checks of those who are in default. The government writes off most loans once a borrower becomes permanently disabled or dies.

The government does very little to pursue lawyers. I have been told by lawyers that they are taught in law school that if they are successful (self employed) they will never have to pay off their loans. The government will put a lien on assets of someone who owns a home and owes $10K before they'll do anything to pursue a lawyer with a $100k debt. The reason is that a lawyer will take the government to court and spend money trying to avoid paying. A homeowner with a $10K loan can't afford to fight. It's an easy win

I collected on student loans for 8.5 years.

25 posted on 03/12/2012 11:37:51 PM PDT by The Brush
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To: SeekAndFind

I am damn glad that my student loans were circa 1968 and were repaid in 10 years. It was well worth it for me, but not so much for young kids today. College costs have exploded during the last couple of decades.


26 posted on 03/13/2012 1:15:15 AM PDT by lwoodham (Time is what keeps everything from happening all at once.)
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To: Alberta's Child

The (non)Affordable Health Care bill made sure the tax payers would be on the hook for the student loan debt.


27 posted on 03/13/2012 3:23:28 AM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: Son House
Well, then that's OK. The U.S. government is about $15 trillion in debt right now, so adding another $1 trillion in unpaid student loans to that pile is no big deal. Which means these "students" got worthless educations and paid nothing for them anyway. Sounds like everyone got their money's worth.

The whole house of cards is crashing down, folks.

28 posted on 03/13/2012 3:34:51 AM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Carthego delenda est

“Just like we saw with the housing bubble, the student loan debt bubble just continues to grow and grow and grow.”

I’d imagine parents are going to stop co-signing for the loans, especially as they realize they can’t be re-paid on a Wal-Mart greeter’s salary.

Higher education, like home ownership and children, are a thing of the past for most Americans; access will be limited to the “protected” classes.


29 posted on 03/13/2012 4:09:49 AM PDT by kearnyirish2
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To: Cementjungle

“You can bet that later this year Obama will position himself as wanting to write off everyone’s college loans... but the mean, evil Republicans are in the way of that goal.”

I don’t see any other way he holds on to any of those voters, but that still doesn’t address the jobs issue which is killing his crop of young voters of yesteryear.


30 posted on 03/13/2012 4:13:37 AM PDT by kearnyirish2
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To: SeekAndFind

I heard on the radio this morning that the NCAA expects to rake in $11B - yes Billion - dollars on the upcoming NCCA Men’s Basketball Tournament.

As a parent struggling to help 2 students through college, that seems obscene to me. Just heard it on the news, so haven’t researched where that money might end up, but have a feeling not much of it will go toward scholarships..


31 posted on 03/13/2012 4:19:00 AM PDT by IamConservative (Shall I try and perhaps fail or shall I do nothing without fail?)
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