Posted on 12/01/2020 7:12:20 AM PST by SeekAndFind
Millions of borrowers in the federal student loan program are defaulting on their loans. The Education Department now estimates the cost of student loan losses at more than $400 billion. That exceeds the losses of banks during the sub-prime mortgage crisis. As such, progressives are now pressuring Joe Biden to forgive student debt entirely. The losses in the student loan crisis increase the federal deficit, imposing heavier tax burdens on current as well as future generations. Citizens need to understand why the federal student loan program failed, and what impact this failure has on our society.
The federal student loan program was originally defended on the grounds of efficiency. It was argued that private student loan programs were inefficient because students could not collateralize their future earnings. This argument has proven to be false, as colleges have extended loans to students using income-based repayment schemes. Private lending institutions are in fact efficient in allocating loans to students. They have an incentive to practice due diligence, selecting borrowers who are likely to repay their loans. Potential default on the loans sends the right signals. Private lenders assume the risk when the loans are in default. Credit agencies assign lower credit scores for lending institutions that extend loans to students who are not creditworthy.
During the financial crisis in 2008, some lending institutions with a risky portfolio of student loans in default went into bankruptcy. Students who default on loans bear some of the cost of non-repayment, in the form of low credit scores that preclude them from borrowing for homes, cars, and other loans.
The private student loan program has been largely displaced by the federal program extending loans to college students directly. The rationale for the federal student loan program was to extend loans to a broader group of students.
(Excerpt) Read more at americanthinker.com ...
No bailouts either.
I remember back in the day saying too big to fail should only be used as a porno title.
I agree with you.
Besides the analogy is wrong. They won’t be zombies, they’ll be vampires, sucking the life out of everything.
Actually, I’d be okay forgiving 2020 payments, and maybe part of 2021 until the economy recovers, but I don’t think we should wipe out all the student debt. Just make them whole for the pandemic.
Once the government gets its hands on something, they make a mess of it.
Once students knew they're guaranteed to get loans from the government for tuition, too many students took advantage of the money offered but either didn't finish college or they got degrees that required so much debt that they could never pay them back.
Once colleges and universities knew the government was handing out guaranteed student loans for tuition, they took advantage right away and increased their tuitions to keep pace with the amount of money the government would lend the students.
Now we're $400 billion in the hole from unpaid student debt, and tuitions at colleges is so expensive, you need massive loans to afford them nowadays.
I remember back in 1966 when I entered university the summer I graduated from high school. In-state tuition was so low that I could work a couple of part time jobs while attending and could easily afford to pay the tuition myself. My parents couldn't afford to send me to college but there was never a discussion about borrowing money for tuition. Back then, if you didn't have the money, you didn't do it.
My wife and I know one individual, 40 years old, who owes $68,000+/- in student debt but never got a degree. They'll never pay it back. Their credit is ruined and they can't find decent employment. The mistakes people make in life is astounding sometimes.
It’s the time of the season.
You are legally an adult when you take out this loan. You can buy a home, get married, raise kids, drive a car, etc.
YOU picked the college or university
YOU picked the degree and field of study
YOU are responsible for completing your degree
YOU are responsible for determining whether this investment is a wise investment career-wise, or a foolish one.
If YOU chose to attend a college and pursue a degree in French Literature, Interpretive Dance, Female Studies and in doing so, incur a debt of hundreds of thousands of dollars; you have the God given right to be a moron.
If you picked a STEM field, it is hard work; but the payoff is very likely there. If you picked a Victim-hood field, or a non-marketable career field, the odds are poor that this was a wise decision.
Your right to be a MORON does not include the RIGHT to put a gun to my head, and demand that I pay for your foolish decision, or inability to complete the task YOU chose.
I am all for student loan forgiveness as long as it comes out of the endowments of the universities that exploited dumb 18-year olds for their guaranteed loan dollars.
The universities approved loans that a banker would never have approved because it wasn’t the university’s money being loaned.
An insane recipe that got the desired result, students with degrees in advanced basket weaving who were buried in debt without any hope of having an actual life.
That’s why they want socialism and think riots and looting are acceptable behavior.
And the foolish decision to make insane bets on MBS by Ivy League MBAs and Physics, Math, and Engineering PHDs?
I went into Electrical Engineering, used my GI Bill, and paid off what little I borrowed.
I just find it odd that student debt is the only debt one cannot discharge in bankruptcy.
Educated and powerful people knew this was going to happen, yet all the blame is on the student. I also find that odd.
Zombies?
At least they can still vote democrat...
ICWYDT...
Like you, I am a Elec. Engineer.
I worked my way though college, I delivered pizza, I mopped floors, I did electrical work, I worked on farms, fixed cars, Any job I could find to pay for school. It wasn’t easy. I graduated with only $5k student debt.
Personal responsibility. No cape, no tights, can’t jump worth crap. Running? Nope.
My niece brought a nice guy to Thanksgiving a few years back. Theater Major, he got his Masters in Theater Lighting, here in Utah. He owed $225K because he didn’t want to work while pursuing his “art”. He delivers for Domino’s and VOLUNTEERS at a local Playhouse to run lights for their plays.
Yes, I said $225k for a young man to pursue a degree in “Let’s pretend” in a degree field so obscure that not only does it not have the potential for a career, at best it’s a part-time volunteer job. But, he had 6 years of fun going to school.
Now, he can declare bankruptcy and walk away from that debt, and let me pay for it? Nope. No sale
For every 10k in debt a student flakes on, give them 1 year in prison. Quite a motivator to pay those federal loans back, isn't it?
We would go to prison if we didn't pay our taxes, am I right?
I never borrowed a dime for my college education. Worked my way through school. Left with no debt, and a well paying job as a semiconductor process engineer. It was a wonderful lifetime career!
The evil slime mom and I split Darling (now DOCTOR Darling) Daughter’s student loans. Probably shoulda had her work her way through school as well, but all’s well that ends well...
I was blessed to have a wafer fab job dropped in my lap early on. Dinky little three man operation, literally in a garage. Learned a bit of everything, mostly that I loved the work, I loved watching a slice of silicon turn, step-by-step into scores of ICs.
It was off to the races from there! I used very little of my EE education, but lots of chemistry, optics, physics, plumbing, and mechanical work. Every day an adventure, with the possibility of finding a way to do the 'impossible'.
You two sound as though multiple sigma from the norm in a distribution. (opposite directions obviously)
“Now, he can declare bankruptcy and walk away from that debt, and let me pay for it? Nope. No sale”
There might not need to be a sale...
“But one also finds in the human heart a depraved taste for equality, which impels the weak to want to bring the strong down to their level, and which reduces men to preferring equality in servitude to inequality in freedom”
Alexis de Tocqueville
Requiring me to pay for someone else’s tuition is a form of slavery.
Wish I’d had free college. I had to pay for mine and our kids’.
I call this the “big education” cycle:
1) make unlimited loans available to students
2) schools raise prices to absorb the available money
3) schools pay outrageous salaries to professors and assistants
4) professors donate to Democrats
and repeat
Hopefully she was attractive enough to marry a plumber or electrician and have a good life as a wife and mother.
Defaulting on their loans keeps the repo people in business it will be booming for a long time.
Out of curiosity, how much was your total debt?
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