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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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Related thread: Student Debt Forgiveness in U.S. to Total $207 Billion in Next Decade, CBO Says. The biggest benefits will go to borrowers who attend graduate or professional school.
1 posted on 02/14/2020 6:49:21 AM PST by karpov
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To: karpov

*** GIMME FREE STUFF ***


2 posted on 02/14/2020 6:50:46 AM PST by EagleUSA
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To: karpov

How is 10% of “discretionary” income cakculated?


3 posted on 02/14/2020 6:53:45 AM PST by fireman15
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To: karpov

Claw back the forgive debt from the schools that took the money in the first place. Go after their endowments.


4 posted on 02/14/2020 6:54:37 AM PST by HangnJudge (Kipling was right about Humanity)
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To: karpov

Why doesn’t Barry and the rest of the libs who passed the stupid student law act pay off the student loans.


5 posted on 02/14/2020 6:56:10 AM PST by jetson
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To: EagleUSA

If this keeps up, Mrs rktman is gonna want her money back that she paid off 30 or so years ago.


6 posted on 02/14/2020 6:57:22 AM PST by rktman ( #My2ndAmend! ----- Enlisted in the Navy in '67 to protect folks rights to strip my rights. WTH?)
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To: EagleUSA

All they ant for Winter Festival is free money!


7 posted on 02/14/2020 7:12:54 AM PST by Rurudyne (Standup Philosopher)
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To: karpov

Take it out of the endowments of the universities that gleefully exploited dumb 18-year olds so they could hire affirmative action “perfessers” of imaginary subjects.


8 posted on 02/14/2020 7:14:58 AM PST by E. Pluribus Unum (Truth is hate to people who hate truth.)
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To: HangnJudge

Exactly, the colleges that took their money have billions in endowments.


9 posted on 02/14/2020 7:23:46 AM PST by Lurkinanloomin (Natural Born Citizens Are Born Here of Citizen Parents_Know Islam, No Peace-No Islam, Know Peace)
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To: karpov
Repeal the idiotic law that makes it impossible to shed the debt through bankruptcy and the problem will cure itself.

Those owed money will either make an arrangement with the debtor to repay with no interest constantly being added, accept a reduced total amount owed to some level the debtor can handle, or just accept the bankruptcy and move one.

JMHo

10 posted on 02/14/2020 7:24:34 AM PST by Rashputin (Jesus Christ doesn't evacuate His troops, He leads them to victory !!)
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To: HangnJudge

President Trump has started getting some money back via the large endowments. This should all be privatized with colleges accepting 30% of a bankruptcy loss. If they still want to accept iffy students, then that is what a school scholarship is all about.


11 posted on 02/14/2020 7:26:39 AM PST by Revolutionary ("Praise the Lord and Pass the Ammunition!")
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To: karpov

Here is the problem:

We somehow had a usurper in the White House for eight years who not only doubled our national debt from the previous 200 years but he was allowed to place student loans- the student loan industry- not just the health care industry- in the hands of the government

We allowed our government to take advantage of our kids

Most kids get out of college wth high tens of thousands
And way into hundreds of thousands for masters and professional degrees

We have a damned hell of a nerve making fun of these kids for wanting a break

Look around. They can’t get married and have families

Why anyone would blame them for this mess and call them freeloaders is
Pure insanity

Stop


12 posted on 02/14/2020 7:27:49 AM PST by stanne
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To: karpov

Here is the problem:

We somehow had a usurper in the White House for eight years who not only doubled our national debt from the previous 200 years but he was allowed to place student loans- the student loan industry- not just the health care industry- in the hands of the government

We allowed our government to take advantage of our kids

Most kids get out of college wth high tens of thousands
And way into hundreds of thousands for masters and professional degrees

We have a damned hell of a nerve making fun of these kids for wanting a break

Look around. They can’t get married and have families

Why anyone would blame them for this mess and call them freeloaders is
Pure insanity

Stop


13 posted on 02/14/2020 7:27:50 AM PST by stanne
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To: stanne

I guess it needed to be said twice


14 posted on 02/14/2020 7:28:59 AM PST by stanne
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To: stanne
Most kids get out of college wth high tens of thousands

Literally just cosigned on a freshman undergrad first year state school private loan like 10 minutes ago. I wish it were going to be "high tens". Ugh.
15 posted on 02/14/2020 7:30:16 AM PST by mmichaels1970
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To: mmichaels1970

Oh I’m in for a couple of hundred.

We’re not looking for forgiveness but a roll back from what Obama did. This is a mess. Blaming the kids is completely illogical


16 posted on 02/14/2020 7:33:04 AM PST by stanne
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To: mmichaels1970

One answer is make sure there’s a job security at the end of that. Diversify, as many majors as they can fit in and keep a decent GPA with

Partying to the degree I’ve witnessed vicariously is also complete insanity. Those days should be over. We got away with that barely in the ‘70s


17 posted on 02/14/2020 7:37:21 AM PST by stanne
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To: stanne

The problem is that the kids are wanting to vote for more of the same in order to get ‘debt forgiveness.’

I find it hard to blame them because they haven’t attended the class of experience yet, but it’s still enraging to watch the leftists exploit them again and again.


18 posted on 02/14/2020 7:38:56 AM PST by Luircin
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To: karpov

Who got the money from the students? That is who should pay.

Confiscate college endowments to forgive the loans. If more money is needed, go after the pensions/401k funds of the professors and university staff. And if even more is needed, force the universities to trans out a loan for the balance.


19 posted on 02/14/2020 7:38:58 AM PST by Darteaus94025 (Can't have a Liberal without a Lie)
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To: karpov
There is a whole generation indentured by student loans, with no possibility of repaying them in their working lives.

These debts must be written off in ordinary bankruptcy proceedings. That is the entire purpose of such provisions and student loans should not be exempt. Moreover, the loan balance write-downs must not be considered "taxable income" to the individuals.

To the greatest extent possible, the losses should be clawed back from University endowment funds. The Universities were the principle beneficiaries of these scams.

And, except for Medical and Engineering degrees, we should not be making student loans any more. The other fields of "education" simply are not worth the investment or risk.

Much of our "higher education" system should be scrapped. Something else needs to replace it.

20 posted on 02/14/2020 7:49:48 AM PST by flamberge (The wheels keep turning)
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