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The Great Student Loan Writedown. The cost of forgiving debt keeps growing and growing and . . .
Wall Street Journal ^ | February 13, 2020 | WSJ Editorial Board

Posted on 02/14/2020 6:49:21 AM PST by karpov

If banks reported their liabilities using the same fictitious accounting that the federal government does for student loans, they’d be charged with fraud. Behold the Congressional Budget Office’s latest restatement of the cost for income-based repayment plans.

The Obama Administration promoted these plans as a way to reduce student loan defaults. Borrowers who couldn’t afford their monthly payments could refinance their loans for free. They merely had to agree to pay 10% of their discretionary income for 20 years—10 years for those who work in “public service”—after which their balance would be forgiven.

The number of borrowers who have enrolled in these plans has blown away forecasts. From 2010 to 2017, the share of all borrowers repaying direct loans through these plans increased to 27% from 10%. The plans have especially caught on with graduate students with large balances. About 56% of debt disbursed to graduate students is being repaid through these plans.

CBO estimates that the government will wind up forgiving $167 billion of graduate debt in these plans over the next decade. The write-down for undergraduate loans is less—$40 billion—but the budget gnomes have repeatedly underestimated loan costs only to revise them upward later.

In 2012 the agency forecast that student loans would turn a $219 billion profit for the government over 10 years. Now it projects they will cost the government $11 billion through 2029—using the government’s fictitious accounting that doesn’t consider borrower risk. Under fair-value accounting standards that businesses use, loans are forecast to cost taxpayers $263 billion.

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


TOPICS: Business/Economy; Editorial; Government
KEYWORDS: studentloans
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To: karpov

So why not hit the endowments of the schools that ran up these bills? After all, if they have massive endowments, it probably means they overcharged their students.

Let’s call it a School Debt Buy Back. The schools can buy back the debt they caused.


21 posted on 02/14/2020 7:56:48 AM PST by Malsua
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To: stanne

I don’t think it’s illogical. Young adults have choices.

Gov’t student loans should not be available for funding graduate degrees—why are we/they doing this? The next generation getting in huge debt for grad school so they later feel they can never buy a house or have kids? A BA/BS is enough.

And all these kids could have stayed at home, attended community college (free or very low tuition in many states) for 2 years, worked P/T year round, and avoided at least the first 2 years of student loan debt. And then—they could transfer to, and take out loans for, in-state colleges only. And work toward a decent degree. And get out quickly. Most college students take 6 years now to get out of college (dragging it out for mainly stupid reasons—I have a college kid myself so I know)—they should get in and get out in 4. My first kid got in and out in 3.


22 posted on 02/14/2020 7:58:07 AM PST by olivia3boys
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To: Luircin

No. Students are being taken advantage of and lied to. They should be informed that lying politicians will have them in worse national debt by the time they reach middle adulthood than they can possibly handle.

I don’t allow my kids to believe bs politicians and their media without a Socratic discussion. I don’t care if they don’t like it
They need to have some wisdom


23 posted on 02/14/2020 7:59:29 AM PST by stanne
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To: stanne
Partying to the degree I’ve witnessed vicariously is also complete insanity. Those days should be over.

Amen! This is the only kid I was willing to "invest in" specifically because she does NOT party. I have three others that were on their own.
24 posted on 02/14/2020 8:16:29 AM PST by mmichaels1970
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To: stanne

Exactly. Students are being lied to, and they haven’t yet the wisdom to know that, and so will vote for the liars to “solve” the problem that the liars themselves created.

It’s up to us to teach the next generation differently, which it seems you’re doing.


25 posted on 02/14/2020 8:18:12 AM PST by Luircin
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To: Malsua; All
So why not hit the endowments of the schools that ran up these bills? After all, if they have massive endowments, it probably means they overcharged their students.

They're definitely overcharging. If the gov't came out tomorrow and guaranteed every kid in America $1mil per year in student loans, school tuition would rise to $1mil per year.
26 posted on 02/14/2020 8:24:14 AM PST by mmichaels1970
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To: karpov

I’m laughing at the kids complaining about paying back their student loans. The money from the loan goes to COLLEGE tuition. The Democrats found a way to move money from the government to the liberal colleges...use the kids and make them pay the debt...and the kids are not bright enough to see what their ”free for all” government is doing to THEM. If the kids won’t pay it back, then buying their vote again by pardoning it. These kids are WILLINGLY caught up in velvet grasp of socialism and liberal political tricks...they will never admit to being duped. By the way, I paid off my student loan in 3 years. Back then, if you were given a loan, it was meant to be paid back. If these kids get a pass, then I demand a reparation for paying mine. :-)


27 posted on 02/14/2020 8:34:24 AM PST by ThePatriotsFlag (Congress is not made up of leaders however they are representatives of their voters.)
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To: karpov

The average Student Loan Debt is $28,000, the price of an average Car.

I guess “we” should pay off everyone’s Car Loans too.


28 posted on 02/14/2020 8:38:37 AM PST by Kickass Conservative (Kill a Commie for your Mommy.)
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To: stanne

I was brought up to believe that when you put your name on the dotted line, you own it. I am sick of this whining.

If some Rich Liberal wants to payoff the Student Loans of these people, he can write a Check. The same goes for Big College who profit dearly from these Loans.

Leftists act like these poor “children” were forced to borrow the money ala The Godfather, “either your Brains of you Signature will be on that Contract”.

Thousands of young people sacrificed their Lives and Limbs to defend this Country. I’m sure every one of them would have preferred having to pay back a Loan instead.


29 posted on 02/14/2020 8:46:14 AM PST by Kickass Conservative (Kill a Commie for your Mommy.)
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To: Darteaus94025

Require colleges and universities to cosign the debt of their students. Then they would provide education which will train for employment.


30 posted on 02/14/2020 8:47:05 AM PST by ActresponsiblyinVA
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To: Kickass Conservative

“ I was brought up to believe that when you put your name on the dotted line, you own it. I am sick of this whining.”

I was too. Never thought of reneging on a debt. Anyone who co-signs these loans ought to be careful to have life insurance out on the kid. The debt does not go away if the kid gets caught in a drunk driving doa Mia

But ewe were brought up in a world not yet molested by the Clintons and the obamas who if anyone cares to just notice has been overwhelmed

I am not suggesting that kids should put more debt on other people I am suggesting that they and we figure out how to be aware that liberal politicians lie

That the debt won’t be forgiven by them nor taxpayers nor university presidents nor professors willing to not get paid

Basic economics

Come on


31 posted on 02/14/2020 8:55:17 AM PST by stanne
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To: karpov

The Feds should sieze every universities and colleges endowment fund and apply them to the debt. The institues of higher learning might rethink their high tuition.


32 posted on 02/14/2020 8:58:27 AM PST by CarmichaelPatriot (Recovering Kalifornian... Loving Alabama!)
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To: karpov

Here’s a clue for the government retards responsible for this nightmare. Stop making student loans!


33 posted on 02/14/2020 9:03:50 AM PST by Desron13 (You may choose to ignore reality but you can't force reality to ignore you.)
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To: Luircin

That and move the age for voting back to 21 what it was before the democrats screwed up that because of their vote man war.


34 posted on 02/14/2020 9:09:59 AM PST by stanne
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To: stanne

I’ll bet a dollar to a donut that many of these Morons who take out these Loans do so knowing that sooner or later a Rat President and Congress will “forgive’ the Debt.

They are probably egged on by their Rat loving Parents.

I wish I could do the same with a Loan on a Ferrari F8.


35 posted on 02/14/2020 9:40:23 AM PST by Kickass Conservative (Kill a Commie for your Mommy.)
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To: Kickass Conservative

They’re 17 and 18 years old. You want to blame them for this?

Give me a break.

3/4 of them have never been patented


36 posted on 02/14/2020 9:53:28 AM PST by stanne
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To: stanne

>>>They’re 17 and 18 years old. You want to blame them for this?<<<

A 17 Year Old cannot be Legally bound to a Contract.

An 18 Year Old can join the Military and Vote.

If their Parents Co-signed, they own it.

It isn’t my responsibility as a Taxpayer to pay off someone else’s bad decisions.


37 posted on 02/14/2020 9:57:58 AM PST by Kickass Conservative (Kill a Commie for your Mommy.)
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To: Kickass Conservative

You’re barking up the wrong tree

No one should be continuing this misappropriation of fundsstarted by our government and NOT by our kids

Certainly not people like me who with my family paid all of any student loans we are and we’re responsible for

So get off my case


38 posted on 02/14/2020 10:21:37 AM PST by stanne
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To: stanne

I didn’t know I was getting on your case. That certainly wasn’t my intention.

I thought we were having a back and forth about People who think the Taxpayers should be responsible for their own bad Financial Decisions.

Have a nice day my FRiend.


39 posted on 02/14/2020 10:24:39 AM PST by Kickass Conservative (Kill a Commie for your Mommy.)
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To: fireman15

https://thecollegeinvestor.com/21666/discretionary-income-calculator/

https://thecollegeinvestor.com/11856/secret-student-loan-forgiveness/

Note that if you have no “discretionary income” (like you are living with someone who supports you) then you may wind up paying nothing.


40 posted on 02/14/2020 10:58:43 AM PST by SauronOfMordor (A Leftist can't enjoy life unless they are controlling, hurting, or destroying others)
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