Did the Obama administration commit ‘the biggest accounting fraud in history’ with student loans? Experts weigh in

Via Yahoo Finance

The Wall Street Journal’s editorial board (WSJ) recently suggested that the Obama administration pulled off “the biggest accounting fraud in history” with student loans when eliminating the role of private lenders in the federal student lending market.

Experts who spoke with Yahoo Finance acknowledged the issue with the general policy in hindsight, though they disagreed on who exactly is to blame.

In 2010, Democrats “nationalized the market to help pay for Obama Care,” WSJ asserted. “The Congressional Budget Office at the time forecast that eliminating private lenders would save taxpayers $58 billion over 10 years. This estimate was pure fantasy, and now we’re seeing how much.”

The WSJ op-ed also highlighted the rising number of severely delinquent student loans since then and blamed the Obama administration for expanding plans in 2012 for new borrowers “to reduce defaults, buy off millennial voters and disguise the cost of its student-loan takeover.”

The editorial board then added: “This may be the biggest accounting fraud in history.”

Continue reading “Did the Obama administration commit ‘the biggest accounting fraud in history’ with student loans? Experts weigh in”

Student Loans – The Economic Time Bomb

Guest Post by Martin Armstrong

Trump should reverse what the Clintons did to student loans. He should RESTORE the right to go bankrupt. This huge problem was created by the Democrats who exempted student loans from normal protection for consumers. In addition, the bankers then exploited the entire issue by getting parents to co-sign.

The entire argument for eliminating the right to go bankrupt was that they had no collateral. The FRAUD here is the bankers managed to get the Democrats to hand students to them on a silver platter. Then they then pulled a fast one by demanding parents co-sign. That way, they can take their parents’ house.

Continue reading “Student Loans – The Economic Time Bomb”

STEVE EISMAN: SMART, LUCKY, ABRASIVE & NOW ONE OF THEM

I loved Michael Lewis’ book – The Big Short – about the 2008 Wall Street created global financial catastrophe, that is still impacting the little guys on Main Street eight years after it was supposedly resolved by Paulson, Bernanke and Obama. I even wrote an article about it called The Big Short: How Wall Street Destroyed Main Street. I also loved one of the main characters in the book – Frontpoint Partners hedge fund manager Steve Eisman – a foul mouthed, highly skeptical, open minded guy who figured out the fraudulent subprime mortgage scheme and shorted the crap out of the derivatives backing the fraud, making hundreds of millions in the process.

I had the opportunity to attend a 90 minute talk by Steve Eisman last night where he discussed the financial crisis, the response by the Fed and government, and the future for the financial industry. My perception of him, based on the book and movie, was he was a cantankerous asshole who didn’t care what anyone thought about him. My perception matched what I experienced. He was dropping f-bombs, insulting the institution hosting his talk, making fun of business school students (he graduated with a liberal arts degree) and dismissing any question he found to be stupid.

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31% Of College Students Spend Their Loans On Spring Break

Obama’s $700 billion investment of your tax dollars in the youth of America, really paying dividends.
Tyler Durden's picture

As Washington D.C. liberals continue their fight for ‘free’ college education for all (which, of course, is just a nicer way of saying largely useless community college education crammed down the throats of taxpayers) and student loan forgiveness programs, a new study from LendEDU reveals some of the shocking realities behind where college students are really spending their $1.3 trillion worth of student debt.

Per a survey of 500 college co-eds, LendEDU found that 31% of students, or roughly 2.4 million kids, admitted to using student loan money to fund their binge drinking trips to Cancun and Daytona Beach for spring break.

Continue reading “31% Of College Students Spend Their Loans On Spring Break”

Visualizing The Stunning Truth About How Students Are Spending Loan Cash

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Over the last 15 years the starting salary for recent college grads has declined about $4000. Unfortunately, as ValueWalk.com details, the amount of student loan debt most students are graduating with has skyrocketed. You can now expect to graduate into a worse job market and with more debt than just a decade ago, which is leading to a serious financial crisis- the average debt load upon graduation is $37,000, and many people can’t even make their minimum payments.

Continue reading “Visualizing The Stunning Truth About How Students Are Spending Loan Cash”

THE ANTI-CINDERELLA MAN (PART TWO)

In Part One of this article I made a fact based case that most Americans are experiencing an economic depression on par with the Great Depression of the 1930’s. In Part Two I will compare and contrast two very different men who raised the spirits of the common man during difficult economic times. As we approach the perilous portion of this Fourth Turning, it will take more than hope to get us through to the other side.

http://cdn.history.com/sites/2/2014/01/IH012802-P.jpeg http://www.parishoftraprain.org.uk/wp-content/uploads/2014/06/D-Day.jpg

Cinderella Man

Likening Braddock to Trump might seem far-fetched, until you think about parallels between the economic conditions during the 1930’s and today, along with the deepening mood of crisis, despair and anger at the establishment. Braddock’s career coincided with the last Fourth Turning. James J. Braddock was born in 1905, to Irish immigrant parents Joseph Braddock and Elizabeth O’Toole Braddock in a tiny apartment on West 48th Street in New York City. His life personified that of a GI Generation hero. One of seven children, Jimmy enjoyed playing marbles, baseball and hanging around the old swimming hole on the edge of the Hudson River as a youngster. He discovered his passion for boxing as a teenager.

Braddock refined his skills as an amateur fighter and in 1926 entered the professional boxing circuit in the light heavyweight division. Braddock overwhelmed the competition, knocking out multiple opponents in the early rounds of most fights. As a top light heavyweight, he stood over six feet two inches, but seldom weighed over 180 pounds. But his powerful right hand was no match for opponents that weighed close to 220 pounds. His star was ascending. He earned a shot at the title in 1929. On the evening of July 18th 1929, Braddock entered the ring at Yankee Stadium to face Tommy Loughran for the coveted light heavyweight championship. Loghran avoided Braddock’s deadly right hand for 15 rounds and won by decision. Less than two months later the stock market crashed and the country plunged into the Great Depression.

Continue reading “THE ANTI-CINDERELLA MAN (PART TWO)”

THE ANTI-CINDERELLA MAN (PART ONE)

There are several movies I will watch every time they are aired on one of my generally useless 600 cable channels. They all have the same thing in common – a compelling character portrayal which keeps you riveted and mesmerized by how the protagonist deals with adversity and circumstances beyond their control. The movies I can’t resist include: The Godfather I & II, The Green Mile, Shawshank Redemption, Apocalypse Now, and Patton. Another captivating movie, which didn’t do well at the box office, is Cinderella Man. The portrayal of Depression era heavyweight boxing champion James J. Braddock by Russell Crowe is inspirational, with a rousing and improbable victory by the champion of the common man. While watching this great movie a few weeks ago I found myself equating the themes to the current presidential campaign.

http://www.freemovieposters.net/posters/cinderella_man_2005_1974_medium.jpg

The Greater Depression

Braddock was an inspiration to all downtrodden demoralized Americans during the Great Depression. The parallels between the 1930’s Great Depression and today’s Greater Depression are uncanny, despite the propaganda emitted by the establishment politicians, media and banking cabal that all is well. The corporate mainstream media faux journalists scorn and ridicule anyone who makes the case we are currently in the midst of another Great Depression. They are paid to peddle a recovery narrative to keep the masses ignorant, sedated, and distracted by latest adventures of Caitlyn Jenner and the Kardashians. An impartial assessment of the facts reveals today’s Depression to be every bit as dreadful for the average American as it was in the 1930’s.

Continue reading “THE ANTI-CINDERELLA MAN (PART ONE)”

DIPLOMA MILL ITT – AND IT’S GONE!!!

Five years ago ITT Educational Services had revenues of $1.5 billion and profits of $300 million. Of course, it was nothing but a scam diploma mill totally dependent upon Federal student loans. It’s stock traded for $77 per share. Yesterday the Feds said they would no longer fund federal loans to this diploma mill. It’s stock this morning is trading at 64 cents. And it’s gone!!!

Guess who will be picking up the tab for all the loans doled out to the brainless twits who enrolled at ITT during the reign of Obama? YOU!!!

I wonder who was writing articles about this diploma mill scam years ago? Who coulda knowed?

University of Phoenix is next.

http://www.theburningplatform.com/2012/06/01/seven-years-of-college-down-the-drain/

http://www.theburningplatform.com/2012/10/21/dysfunctional-dishonest-insane-intolerable/

http://www.theburningplatform.com/2013/02/06/all-is-well-3/

http://www.theburningplatform.com/2015/03/01/breaking-bad-debt-episode-three/

http://www.theburningplatform.com/2016/03/19/the-great-student-loan-scam/


GOVERNMENT IS THE PROBLEM

Here are two charts that show how successful, government solutions are for the citizens of this country. First off, even according to the manipulated and under-reported CPI figures, you have lost 65% of your purchasing power since 1978. Using a real measure of inflation, its closer to 85%, but why quibble. You are slowly but surely being impoverished by the Federal Reserve (aka Wall Street bankers) and the corrupt politicians you elected to represent your interests.

Doug Short presents the cost of college tuition, medical care and new cars over the last 38 years. One of these things is not like the other. The second chart shows the growth in Federal loans to students since 1995. You may notice that prior to the Federal government getting involved in college education, college tuition rose steeper than overall inflation but only by a moderate amount. My tuition at Drexel University in the mid-1980s was in the mid $5,000 range. I was able to work and pay the majority of my tuition, with only a couple thousand dollars in loans.

Inflation Markers

If you are perceptive (that leaves out all libs and government employees) you will notice that as the Federal government has doled out more loans, the cost of college tuition has skyrocketed. You see, just like welfare, you get more of what you subsidize. If the federal government is willing to give your tax dollars to every Tom, Muhammed, or Laquesha to go to college, demand will rise. Since the supply is limited, colleges can raise prices dramatically as they know the Feds are supplying the paper.

Continue reading “GOVERNMENT IS THE PROBLEM”

HARD TIMES & FALSE NARRATIVES

The mainstream media mouthpieces for the establishment peddle false narratives, disingenuous storylines, and outright propaganda to keep the ignorant masses confused, oblivious to reality, misinformed, and passively submissive to the opinions of highly paid “experts” and captured fiscal authorities. The existing social order likes things just as they are.

They reap ill-gotten riches, wield unchecked power, and control the minds of the masses. They are the invisible government consciously manipulating the minds, habits and opinions of the multitudes in order to dominate society, control the levers of government, and accumulate obscene levels of wealth through manipulation of the currency and domination of the banking and corporate interests.

One of the false narratives being flogged by the establishment propaganda peddlers is the mass retirement of Baby Boomers causing the plunge in the employment to population rate from 64.4% in 2000 to 59.7% today. They need to peddle this drivel, because the difference between these two rates amounts to 12 million missing jobs. The employment to population ratio is currently at 1984 levels. Any critical thinking person with basic math skills realizes the government reported unemployment rate of 5% is an Orwellian farce.

Continue reading “HARD TIMES & FALSE NARRATIVES”

It Begins: Obama Forgives Student Debt Of 400,000 Americans

So now if you’re depressed because you can’t get a job in your lesbian studies or African studies major, you will qualify as disabled and can then have all your student loans paid for by the hard working taxpayers of this country. What a country.

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Joining the ranks of “broke lawyers” who can cancel their student debt, “Americans with disabilities have a right to student loan relief,” now according to Ted Mitchell, the undersecretary of education, said in a statement. Almost 400,000 student loan borrowers will now have an easier path to a debt bailout as Obama primes the populist voting pump just in time for the elections.

On top of “the student loan bubble’s dirty little secret,” here is another round of student debt relief…as MarketWatch reports,

The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.

 

If every borrower identified by the Department decides to have his or her debt forgiven, the government will end up discharging more than $7.7 billion in debt, according to the Department.

 

“Americans with disabilities have a right to student loan relief,” Ted Mitchell, the undersecretary of education, said in a statement. “And we need to make it easier, not harder, for them to receive the benefits they are due.”

 

About 179,000 of the borrowers identified by the Department are in default on their student loans, and of that group more than 100,000 are at risk of having their tax refunds or Social Security checks garnished to pay off the debt. Often borrowers losing out on these benefits aren’t even aware that they’re eligible for a disability discharge, said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.

 

“Borrowers just frankly don’t know about this program,” she said. “In the past it’s been incredibly complicated to apply and that process has been getting better over time, but some people just assume that it’s not going to work.” The letters will help make more borrowers aware of their rights, Yu said.

*  *  *

So it’s a start – “broke lawyers” ,the poor” and “disabled Americans” get student debt relief. What about models that suddenly become too ugly to work? Or Petroleum Engineers no longer able to work because of The Fed’s over-indulgent easy money creating a glut in oil prices? Don’t they have a right to relief from their student debt? Seems like not granting students debt relief would violate all of their “safe spaces” – so cancel it all! Student Debt Jubilee here we come.

Continue reading “It Begins: Obama Forgives Student Debt Of 400,000 Americans”

Declining Education – part 2 (How to fix it)

FORWARD – I should have known I would be called out in my last article for not actually ending it. Fine, lets have some fun.

 


The problems our educational system are incredibly complex, with several issues stemming from policies that seemingly are unrelated, but all end up leading back to our future voters.

 

For example: Two parent households had a single main bread winner, which meant one could stay home and ride herd on the children. As pay dropped for the single earner, the other had to go to work. Now both are out of the house, kids are left to their own devices. Parents begin to divorce in greater numbers, with financial concerns cited as the #1 cause of divorce. Schools are now being asked to raise children in addition to educating them. They do so with the rod and it hurts feelings. Eventually the state steps in, and turns all education centers into touchy-feely daycares. As kids get dumber, colleges struggle with incoming students. In order to make everyone feel special, Congress loosens the restrictions on lending, which lets a flood of idiots into college. Now the higher education also has to gut their quality to help raise these gentle souls up to be the useless consumers we all know they can be.

 

And still they bitch about their feelings.

Continue reading “Declining Education – part 2 (How to fix it)”

THE GREAT STUDENT LOAN SCAM

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.

Continue reading “THE GREAT STUDENT LOAN SCAM”

Clinton Made Student Loans Non-Discharable

Hillary-Screw-You

The two major acts that the Clintons did perpetrate, which have set in motion our greatest crisis were (1) they repealed Glass-Steagall allowing banks to go nuts and return to proprietary trading of the 1920s at the direction of Robert Rubin of Goldman Sachs, and (2) they gave the banks absolute dominion over students by removing their right to declare bankruptcy on what they owe the bankers. No other class of debt has such an exception. And Hillary pretends to care about the people? Come on. She and Bill have done more for the bankers than any Republican ever did. Furthermore, ANY press that refuses to tell this truth is by no means FREE, but bought and paid for all the way.

It was the Clinton Administration that aided the bankers for on October 7, 1998, when President Clinton signed the Higher Education Amendments of 1998 (the 1998 HEA), which provided federal funding for education loans at a reduced rate of interest. However, Clinton snuck in the 1998 HEA two specific changes regarding the collection of student loans that is a brewing part of the Sovereign Debt Crisis today.

Glass-Steagall-Signing-Repeal

So let’s get this right since the media will NEVER question Hillary since she walks on water and the mainstream media is just equally bought and paid or else they would ask the question — WHY?


Why Obama’s Favorite Student Debt “Relief” Program Will Cost Taxpayers $100 Billion

Tyler Durden's picture

A few months back, we called the government’s Income Based Repayment plans, or IBR, “the student loan bubble’s dirty little secret.” As the name implies, the idea with IBR is that monthly student debt service payments are based on the borrower’s disposable income. The less money one makes, the less one has to pay. Each monthly installment under the program counts as a “qualifying payment”, and after 300 of these, the balance of the loan (assuming it’s not paid off after 25 years), is forgiven. Perhaps the most interesting thing about this scheme is that it allows for “payments” of zero. Here’s what we said back in April:

After 300 “qualifying monthly payments” — so after 25 years of payments — any remaining balance is forgiven and legally discharged. The interesting thing about this is that if the calculated payment is zero, it still counts as a “qualifying monthly payment.” That is, if, based on the borrower’s financial situation, he/she is not required to make an actual cash payment for a period, that period still counts towards the 300 “payments” needed to have the balance of the debt discharged, meaning that in the end, borrowers could end up paying substantially less than principal (taxpayers eat the balance) and are effectively allowed to remain in a perpetual state of default while avoiding actual payment default along the way.

Needless to say, when borrowers elect to enter an IBR plan, the payment streams from their loans become far more unpredictable, which is why suddenly, Moody’s and Fitch can’t figure out how to rate student loan-backed paper. The best (and most hilariously absurd) idea yet comes from Citi, who suggested last month that Moody’s should consider scrapping the whole idea of loan maturity, because after all, one can’t really default on a loan with an indeterminate maturity date so if you just amend the bond indentures and extend the legal maturity date to infinity, you don’t have to downgrade the ABS.

Continue reading “Why Obama’s Favorite Student Debt “Relief” Program Will Cost Taxpayers $100 Billion”

How Student Loans Create Demand For Useless Degrees

Submitted by Josh Grossman via The Mises Institute,

Last week, former Secretary of Education and US Senator Lamar Alexander wrote in the Wall Street Journal that a college degree is both affordable and an excellent investment. He repeated the usual talking point about how a college degree increases lifetime earnings by a million dollars, “on average.” That part about averages is perhaps the most important part, since all college degrees are certainly not created equal. In fact, once we start to look at the details, we find that a degree may not be the great deal many higher-education boosters seem to think it is.

In my home state of Minnesota, for example, the cost of obtaining a four-year degree at the University of Minnesota for a resident of Minnesota, North Dakota, South Dakota, Manitoba, or Wisconsin is $100,720 (including room and board and miscellaneous fees). For private schools in Minnesota such as St. Olaf, however, the situation is even worse. A four-year degree at this institution will cost $210,920.

Continue reading “How Student Loans Create Demand For Useless Degrees”