Doug Short quantifies the amount owed to the government for student loans, but he doesn’t discuss the absolute fact that hundreds of billions will never be repaid. The Obama administration is solely responsible for this disaster and they don’t give a shit. Keeping millions of morons in school artificially lowers the already fake unemployment figures. Doling out billions in loans to functionally illiterate dumbasses is a perfectly acceptable liberal solution.
The government is hiding the true disaster in plain sight. Obama has the balls to declare that “only” 11.6% of student loans are in default. Now that’s funny. Here are the facts:
- Total student loan debt outstanding of $1.32 trillion.
- The Federal government is owed $972 billion, up from the $945.6 billion in Doug’s article.
- Loans in official default of $51 billion.
- Loans officially in repayment of $400 billion – the other $500 billion isn’t due because the students are still in school or the government says they don’t have to pay because they have a good excuse (like the dog ate their homework).
According to the government that makes the default rate a high, but reasonable 11.6%. One problem. The total amount of debt that should be in repayment is $600 billion, not $400 billion. There is $200 billion of student loan deb that should be being paid back, but the government has either allowed forbearance or deferment. The reasons allowed for these categories are unemployment, non-full time job, or the ever popular financial hardship.
So in layman terms, that means that $200 billion is in DEFAULT. They aren’t paying because they can’t pay. Therefore, the true default rate is 38%, not 11.6%. Obama and his minions prefer the BIG LIE when reporting any statistic. And what’s worse, this is after shifting $200 billion of debt to their new and improved repayment programs with Orwellian names like: Income-contingent plan, Income-based plan, Pay As You Earn.
Obama and his Keynesian acolytes are doing everything in their power to shift hundreds of billions in bad loans onto the backs of taxpayers. Every time one of these fraudulent for profit diploma mills goes bankrupt or is charged with fraud by the government, they relieve the debt of the morons who were stupid enough to enroll in these criminal institutions. Relieving their debt means you pay. Easy peasy. Who could have possibly figured out the University of Phoenix, Corinthian, Devry, ITT, and the rest of the for profits were a fraud?
Obama continues to dole out over $100 billion per year in future bad debt to people intellectually incapable of succeeding in college, with no oversight, no realistic chance of getting repaid, and no concern for the massive budget implications. The losses to taxpayers will be in excess of $300 billion. So it goes.
Guest Post by Doug Short
Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset in Uncle Sam’s financial accounts?
- A) U.S. Official Reserve Assets
- B) Total Mortgages
- C)Taxes Receivable
- D) Student Loans
The correct answer, as of the latest quarterly data, is … Student Loans.
The rapid growth in student debt has been an ongoing topic in the financial press. A stunning chart that continues to haunt us illustrates the rapid growth in federal loans to students since the onset of the great recession. The chart is based on the Federal Reserve’s Financial Accounts data (available here) for government’s assets and liabilities. We’ve used a log-scale vertical axis.
For a more dramatic look at the same data, here it is with a standard linear axis.
As we point out on the chart, the two callouts are for Q4 2007, the quarter in which the Great Recession began (December 2007) the most recent quarter on record, Q3 2015. The loan balance has risen and astonishing 818 percent over that time frame, most of which dates from after the recession.
This chart only includes federal loans to students. Private loans increase the debt burden. The Federal Reserve Bank of New York regularly tracks household debt and credit. In their most recent update, they calcuate student load debt to be nearing $1.2 trillion.
But back to our quiz. Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It’s 45 percent of the total Federal assets. This is about 8.1 times larger than the 5.5 percent for the Total Mortgages outstanding and 6.0 times the size of Taxes Receivable at 7.6 percent.
Interestingly enough, the 45 percent referenced above is off the peak in Q1 of 2015. Here is a look at how this metric has changed since 1995.
Of course, assets are, sadly, the trivial side of Uncle Sam’s Financial Accounts balance sheet — about 1.98 Trillion. The liability side totaled 17.67 Trillion at the end of Q4.
The student loan bubble, the biggest slice in Uncle Sam’s asset pie, will haunt us for many years to come.
Closing note: For a fascinating perspective on student debt repayment, see this article by a team of economists at the Federal Reserve Bank of New York.
I wonder if any gov stupid loan money was lost on “Trump University”?
I’m so shocked! The Feds have been giving money to Blacks since the Civil Riots Act: sub-sub-prime loans for breeding houses; mobile boom-box cars for whorehouses and drug stores; provide the cash to franchise ZOG’s with the Blacks to start a business or farm, to subsidize Black babies, Black home-care social services, head start, health clinics, food banks, Black colleges, Black Research Grants, Community Improvement Grants, Black earmarked scholarships, Job Training Corps, student loans (which were not paid back by Blacks who felt society owed them way back even when I as a college student in 1965). There are reasons the Feds throw money at Blacks: stimulate the economy with cash while training and enriching Blacks for Democrat votes and political power; turn Blacks into Useful Idiots for the planned Communist Revolution; boost ZOG enterprises incomes; push Whites down,
45% or our Federal assets are Student loans?
Surely I misread that chart, I know it would be high, but thought maybe around 10%, not 45%.
So what happens to the national balance sheet if the leftists in their leftist delirium decide to forgive student loans?
This wouldn’t be a good thing, those assets would have to be made up from somewhere to keep us with at least the appearance of some degree of fiscal solvency.
My son bagged groceries 10 to 12 hours a day saving money for college so that he would be debt free going into his senior year, at which time, if he was able to do that, his father and I would make sure he finished without debt.
He tells me all the time that his peers are up to their ears in debt but aren’t the least bit worried… they are all POSITIVE the government will forgive them the debt at some point.
He hopes his father and I will agree to let him take a student loan and buy a new car.
We told him that if he takes out a student loan, the deal is OFF and we won’t pay for this last semester.
He is a little pissed at us right now but he will thank us. Unless the stupid fucking government does in fact forgive all the damn student loans and he gets to say “I TOLD YOU SO.”
Only in Keynseian speak are student loans assets. They’re simply bad debt; uncollectable debt. If you or I go to a bank to borrow money to buy an actual asset for our business, and we list on the app, under assets for collateral “Taekwan and Roshonda owe me $200,000 dollars”…well, You reckon we’d get the loan?
The worst part of the massive student loan debt, is that we have nealry 60% of HS grads now going for some sort of college degree. Yet, the average HS grade has a functional reading level of 7th grade now, down from the 8th grade level a few years ago. Colleges have more remedial and non-credit courses than every before by a large margin. Schools have to ensure that there are plenty of fairly fluffy courses available as well so that students can maintain a 2.0 and 24 academic credits for yearly progress to maintain full-time status and keep their loans.
So we have far too many kids graduating HS that can’t read even at a HS level, and most of them struggle to pass the most basic fundamentals of math type course the schools provide. I worked at Colleges and State schools in the past and I was amazed to see students struggling with what looked to me like middle school math, very basic algebra, rounding and the like. Of course there have always been lazy asses in school, but at least the lazy asses back in the day could usually read and do High school level math, not middle school crap. It’s been a decade since I worked in Higher Ed but it was already pretty bad then and most Proff’s new that at least half their classes were idiots–just paying the bills for the others that tried. The sad thing is some of the kids actually work hard, yet they are so woefully prepared for College that it’s a losing cause, you just can’t learn HS in a couple remedial courses. Apparently reading text messages and twitter feeds of celebs doesn’t help improve reading ability. There aren’t jobs to line up with all this debt “work permit” crap to begin with. It’s basically like buying a ton of lotto tickets for some of these kids, except you don’t pay 6% compound interest over 20+years, so IF you owe 40k, you will end up paying more than double. Basically small 20yr mortgages to work as bartenders or corner stores part time, except mortgages go for a lower interest rate!
Not a problem. DShort who is usually a reasonable honest guy is excited about nothing. We can pay this whole bill and only add 7% to the national debt. Just roll it into the national default.
Seriously, it makes no difference to paraphrase Hillary. We could stop all deficit spending tomorrow and we will still be bankrupt. Nobody can fix $ 20 trillion indebtedness. I don’t know when but we passed the point of no return some time back. Star is the maff guy, maybe he knows.
Bankruptcy won’t wash away student loans, which can burden the former student for the rest of his/her life, sucking away a huge proportion of whatever earnings he or she might eventually have and leaving them insufficient income to live on (though their nominal income from the job disqualifies them from Medicaid or food stamps).
In other words, student debt has created a class of Americans whose efforts to better themselves via education resulted in permanent poverty.
Webster
http://www.collegewebster.com
I agree with you except I don’t understand how it’s all Obama’s fault. This type of predatory lending in regard to student loans goes back decades when Obama was a teenager. He’s just another liar in the wheel of deception.