Posted on 12/31/2014 9:47:13 AM PST by Kaslin
From November 2013 through November 2014, the aggregate balance in the federal direct student loan program -- as reported by the Monthly Treasury Statement -- rose from $687,149,000,000 to $806,561,000,000, a one-year jump of $119,412,000,000.
The balance on all student loans, including those from private sources, exceeded a trillion dollars as of the end of the third quarter, according to the Federal Reserve Bank of New York.
"Outstanding student loan balances reported on credit reports increased to $1.13 trillion (an increase of $8 billion) as of September 30, 2014, representing about $100 billion increase from one year ago," the bank said in its latest report on household debt and credit.
Seven years ago, in November 2007, the aggregate balance in the federal direct student loan program was only $98,529,000,000. Since then, it has grown by $708,032,000,000.
This is money that young Americans owe the federal Treasury -- and that gives the federal government leverage over their lives.
"Under the DL program, the federal government essentially serves as the banker -- it provides the loans to students and their families using federal capital (i.e., funds from the U.S. Treasury), and it owns the loans," explains the Congressional Research Service.
In fact, the program is a government-funded redistribution of wealth to colleges and universities. The question is: Who will ultimately pay for that wealth transfer?
In 2013, the National Center for Educational Statistics published a study of student aid in the 2011-2012 school year. It showed that 40.2 percent of students attending a postsecondary school had a federal student loan.
The percentages were higher for full-time students and those who attended four-year colleges. Fifty-five percent of students attending college full-time had a federal loan, 58.1 percent of those attending a four-year doctorate-granting institution had a federal loan, and 61.4 percent of those attending a four-year non-doctorate granting institution had a federal loan.
The average amount of a federal student loan during that school year was $6,500.
In 2012, according to the National Association of College and University Business Officers, the University of Texas System had an endowment of $18,263,850,000 -- the largest of any state university system. In 2013, that endowment grew 12 percent -- or $2,184,463,000 -- to hit $20,448,313,000.
Yet, according to the College Board, an in-state student attending the University of Texas at Austin during this school year will pay $26,324 in total costs (including $9,798 in tuition; $11,456 in room and board; $760 for books; $2,280 in personal expenses; and $1,490 in transportation expenses).
The "average indebtedness at graduation" of a University of Texas student is $25,300, says the College Board. This is "the typical amount of loan money a student who attended this college must pay back." (The College Board does not specify how much of that indebtedness is owed to the federal government.)
In 2012, according to NACUBO, Harvard had and endowment of $30,435,375,000 -- the largest of any American university.
In 2013, that endowment grew 6.2 percent -- or $1,898,918,000 -- to $32,334,293,000.
Yet, according to the College Board, the cost of attending Harvard this year is $62,250 (including $43,938 in tuition, $14,669 in room and board, $1,000 for books and supplies and $2,643 in personal expenses). The "average indebtedness at graduation" of a Harvard student is $12,560.
By providing an average of about $100 billion per year in student loans, the federal government allows even the nation's wealthiest universities to charge students more than they and their families can pay without going into debt.
That makes colleges richer and students poorer.
The federal government already has programs in place to forgive or payoff the student loans of Americans who engage in government-approved activities, or who do not do well enough financially to pay off their own loans.
"Loan forgiveness and loan repayment programs," says the Congressional Research Service, "typically are intended to support one or more of the following goals: Provide a financial incentive to encourage individuals to enter public service. Provide a financial incentive to encourage individuals to enter a particular profession, occupation, or occupational specialty. Provide a financial incentive to encourage individuals to remain employed in a high-need profession or occupation -- often in certain locations or at certain facilities. Provide debt relief to borrowers who, after repaying their student loans as a proportion of their income for an extended period of time, have not completely repaid their entire student loan debt."
"Currently, over 50 loan forgiveness and loan repayment programs are authorized, and at least 30 of which were operational as of October 1, 2013," says CRS.
When the government forgives or repays a student loan, it becomes a redistribution of wealth from taxpayers to a person who attended college.
Yikes!
This issue is going to win the election for the Fake Indian or some other Socialist. Promise loan forgiveness and young voters will be crawling over broken glass to go and vote for it.
Exactly.
Typical government/corporate run boondoggle that will be largely written off sometime in the future.
Taxpayers will take it in the shorts again.
Just spitballing here but I'm guessing other things like Census reports (for race data), EITC payments, Section 8, SNAP, WICs and EBT are going to be the real discriminators as to who actually gets their loans "forgiven."
Indirectly. The government will make banks eat these loans. Just like it did to the premium bond holders that invested in GM.
The government paying colleges to assembly-line socialists.
Sounds like you’re on to something.The whole country is being converted into a nation of takers,not makers.The Dems have been working hard for decades to do this,maybe they win by understanding base human nature.
Yeah you are correct.
meaningless. O will just issue another of his EO’s to eliminate this debt. Then he will do same for the National Debt. Thus, ending his term of office (if he leaves?) having restored USA to 100 percent solvency.
ps: that’s what so wonderful about having a president who really cares about America instead of just another greedy blood-sucking Kapitalist Pig Repubican ripoff artist.
/s
Liz Warren is all over this one. Issuing Groupons to millenials for student loan writeoff will buy a solid block of votes in 2016.
Oh any parent allowing a kid to incur such debt is crazy.
These kids wont have families , lives, happiness, they won’t even be able to afford morals
‘What do you want me to do?’ ‘ oh ok whatever you say, boss’
BOHICA
We rode his butt in high school so that he'd be score academic scholarships, and he did... a few local one-time shots and, more importantly, continuing scholarships at his college. We continue to ride him so that he'll keep those scholarships.
He works at pizza delivery to fill the gap and have pocket money.
When I look at how much is wasted in Pell Grants and such, it turns my stomach. I'm not necessarily against helping out poverty-stricken scholars, but there needs to be some sort of accountability.
After some period of time each semester, "excess" grant funding is paid directly to the student. If tuition is $4000, and the student received $9000 is aid, then the balance of $5000 is "refunded" to the student. The key is that the student must attend classes for a short period of time.
My son and his friends always look forward to the day when the attendance threshold is reached, because it's so much easier to get good parking. Once the student has received the "refund" they quit going to classes.
I remember several years ago when the big push was for everyone to get a college education. I thought at the time “how foolish.” Sure you need a college degree for certain professions but most kids would be better off with an apprenticeship for blue collar jobs. They are always in demand and they wouldn’t be burdened for most of their adult lives with a huge debt. What a scam that was but it did provide lucrative careers for some professors and more loot to the colleges and universities.
Case in point....
When I was a kid (WAAAAY back in the 1970’s) my mother became infuriated when the school sent home an application for free/reduced price school lunches. She did not work and we did kind of struggle with a large family and my dad’s sole income. But she would NEVER have taken a free lunch, or food stamps, or any other kind of government aid. Just on principle. Nor would most of the people we knew.
Today I’m afraid most people shrug and say if the government is putting it out there I may as well go and get my piece. That they will do it anyway, so if I don’t get my share it will just go to some other bloke. That I’m paying taxes for it anyway, so I am just recouping some of my own money. That big companies like Walmart, Hormel, Safeway, Kroger, Kraft, etc. etc. etc. are really benefiting, so what’s the harm?
I’m afraid this kind of thinking has now become dominant.
And that is still true today
Don’t worry - just more debt that can be bought up with Federal Reserve, manufactured electronic entry-money during the next round of Quantitative Easing.
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