Posted on 11/21/2020 7:09:21 AM PST by karpov
The U.S. government stands to lose more than $400 billion from the federal student loan program, an internal analysis shows, approaching the size of losses incurred by banks during the subprime-mortgage crisis.
The Education Department, with the help of two private consultants, looked at $1.37 trillion in student loans held by the government at the start of the year. Their conclusion: Borrowers will pay back $935 billion in principal and interest. That would leave taxpayers on the hook for $435 billion, according to documents reviewed by The Wall Street Journal.
The analysis was based on government accounting standards and didn’t include roughly $150 billion in loans originated by private lenders and backed by the government.
The losses are far steeper than prior government projections, which typically measure how much the portfolio will cost the government in the next decade, not the entire life of the loans. Last year the Congressional Budget Office estimated that the student-loan program would cost taxpayers $31.5 billion, including administrative costs.
After decades of no-questions-asked lending, the government is realizing that it has a pile of toxic debt on its books. By comparison, private lenders lost $535 billion on subprime-mortgages during the 2008 financial crisis, according to Mark Zandi, chief economist at Moody’s Analytics.
The effect this time is different. The government, unlike private lenders, can borrow trillions of dollars at low rates to absorb the losses, without causing a panic. But taxpayers will end up paying a price because Congress will have to raise taxes, cut services or increase the deficit to cover the losses.
The absence of a cataclysmic event like the financial crisis is removing the impetus for the federal government to change its lending practices, which analysts said have enabled colleges to raise tuition far above the rate of inflation.
(Excerpt) Read more at wsj.com ...
Another Obama legacy.
Combine student loan losses with the losses in airlines, cruises, entertainment, small businesses, real estate, restaurants, hotels, bars, tourism, transportation, gyms, etc...
What’s next year’s bailout going to equal?
3 trillion?
5 trillion?
7 trillion?
Top universities have become giant hedge funds with schools attached to them, and the left uses academia as a political and ideological slave plantation.
Only someone like Trump can fix this, because the problem is so systemic. Simply declare that’s he’s ending the debt-servitude of American youth by 1) ending the federal student load program, 2) taxing university endowments above $1 billion, and 3) end all federal aid to any university that raises tuitions in the next 5 years.
The absence of a cataclysmic event like the financial crisis is removing the impetus for the federal government to change its lending practices,...
All they have to do is print money and add debt
when the mortgages went under real humans were affected and panicked
no, taxpayers who will be on the hook are not real humans
and we owe 27 trillion anyway. What’s another half trillion?
I figure if I live long enough I’ll see 100 trillion debt.
Then we’ll owe 1/10 of a number I don’t even know the name of :)
This whole student loan forgiveness hysteria has got to be galling to the suckers — my sister included — who dutifully paid back their loans.
Biden’s solution is to just forgive student debt entirely. Problem solved!
Everyone has to work or die. It was a normal fact of life throughout time.
No Government bailouts and no stealing or you go to prison and work for your upkeep.
COLLEGES WHO PRODUCE STUDENTS THAT UNABLE TO SECURE AND REPAY STUDENT LOANS SHOULD TAKE ON LOSS ON THEIR EDUCATION. NOT SOCIETY AS A WHOLE.
During this entire year, to my knowledge, no credit card company has offered to lower its interest rates. Quite a few families have been forced by necessity to max out, or greatly increase their use of them. Wonder if Biden will push for them to do so. That affects more then those who need help in paying off student loans.
...while making 6 figure salaries.
No hypocrisy there...no sirree.
(AKA Micheal Moore trough eating pig think)
Now teaching the difference between crony/corrupt capitalism and REAL capitalism I could get behind...but not at 5-figure a semester rates + interest.
Why support universities that provide worthless degrees at significant costs while always asking for more money for their endowments?
recover the loan losses from the colleges. There are only so many bikini inspectors in any economy.
Screw them. No debt forgiveness. No bankruptcy. They promised to pay and they should pay back every cent with interest.
It is okay if their lives suck till they die.
There are that many “adult” deadbeats out there, huh? 🤬
That would be a great start.
You nailed it with this response:
Biden’s solution is to just forgive student debt entirely. Problem solved!
Universities hold $598 billion in endowments at the end of fiscal year 2017 according the National Center for Education Statistics. Students have $400 billion in toxic loans. Problem meet solution.
These university endowments should be seized. Why does a university need to hoard money anyway?
TOXIC debt! Situation CRITICAL!
I remember when the WSJ was a decent paper and not a hype rag
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