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The student loan bubble, time to bail out the banks again

Slew Foot

Slew Foot

Lifer
"There is an estimated $730 billion in outstanding federal and private student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that tracks financial-aid issues -- and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in "forbearance," which means payments are halted while interest accrues."


Is that really true? 60% of the student loans out there arent being repaid? That's an absolutely astronomical figure.
 
What percent of that 60% are students in school are just out 6 months?

Plus with the economy the state its in the unemployed get a forbearance as well.
 
I'd like more information on how they defined their terms. Remember, when you are a student, you are not paying your FAFSA loans (the payments and interest are deferred until you graduate and have a job). Thus, by FinAid.org's definition, all current students are in "default, deferment, or forbearance". However, a current student shouldn't even be considered a problem.
 
dullard said:
I'd like more information on how they defined their terms. Remember, when you are a student, you are not paying your FAFSA loans (the payments and interest are deferred until you graduate and have a job). Thus, by FinAid.org's definition, all current students are in "default, deferment, or forbearance". However, a current student shouldn't even be considered a problem.
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yeah. I simply do not believe that 60% are in default.
 
Oh come on. In addition to the grave doubts about the 60% default figure, I'd like to point out that it is extremely hard to discharge student loans in bankruptcy and that the rates are already subsidized by the feds.

Remember the big dustup last summer when the Obama Adminstration proposed using the subsidy money to instead make loans directly to the students, making savings by cutting out the middlemen, and this was attacked by the GOP as socialism and anti-free enterprise? (Although for the life of me I can't see how an already subsidized business can be called free enterprise).

I think we are seeing yet another lobbying scheme to generate public support for the poor bankers-and they are overreaching greatly.
 
Thump553 said:
Oh come on. In addition to the grave doubts about the 60% default figure, I'd like to point out that it is extremely hard to discharge student loans in bankruptcy and that the rates are already subsidized by the feds.

Remember the big dustup last summer when the Obama Adminstration proposed using the subsidy money to instead make loans directly to the students, making savings by cutting out the middlemen, and this was attacked by the GOP as socialism and anti-free enterprise? (Although for the life of me I can't see how an already subsidized business can be called free enterprise).

I think we are seeing yet another lobbying scheme to generate public support for the poor bankers-and they are overreaching greatly.
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I remember that. My wife has a few small Canadian student loans left and one of them in the last several months was given a lifetime 0% interest rate, backed by the newfoundland gov. I simply have no motivation at all to pay it off, so I'm just going to make minimum until I get tired of writing checks.
 
Skoorb said:
Thump553 said:
Oh come on. In addition to the grave doubts about the 60% default figure, I'd like to point out that it is extremely hard to discharge student loans in bankruptcy and that the rates are already subsidized by the feds.

Remember the big dustup last summer when the Obama Adminstration proposed using the subsidy money to instead make loans directly to the students, making savings by cutting out the middlemen, and this was attacked by the GOP as socialism and anti-free enterprise? (Although for the life of me I can't see how an already subsidized business can be called free enterprise).

I think we are seeing yet another lobbying scheme to generate public support for the poor bankers-and they are overreaching greatly.
Click to expand...
I remember that. My wife has a few small Canadian student loans left and one of them in the last several months was given a lifetime 0% interest rate, backed by the newfoundland gov. I simply have no motivation at all to pay it off, so I'm just going to make minimum until I get tired of writing checks.
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That's the wise thing to do, seriously. Save the money somewhere else. Let 2-5% inflation pay off the loan for you.

Thump533-- I don't remember that, but I wasn't following it. That makes me not happy. I'm really starting to hate republicans. Want some real conservatives.
 
soccerballtux said:
That's the wise thing to do, seriously. Save the money somewhere else. Let 2-5% inflation pay off the loan for you.

Thump533-- I don't remember that, but I wasn't following it. That makes me not happy. I'm really starting to hate republicans. Want some real conservatives.
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How is de-privatizing student loans "real" conservatism?

edit: more like completely public-izing?
 
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Deferred just means that the students are still in school (or less than 6 months from when they stopped going to school). You aren't expected to start paying back your student loans while you are still in school.

It definitely does not mean that there isn't any hope of getting that money back.
 
JS80 said:
How is de-privatizing student loans "real" conservatism?

edit: more like completely public-izing?
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Right now the student loan business is a bank handout. The only way to solve this is to get rid of the student loan program. No more handouts to anyone.
 
Subsidized student loans are a feedback loop which increases the price of schooling forcing more people to seek out loans which increases the price of school.

FIGHT!
 
Hacp said:
Right now the student loan business is a bank handout. The only way to solve this is to get rid of the student loan program. No more handouts to anyone.
Click to expand...

Tell that to the woman that owes more than $550,000 and will be paying till she is 70.
 
GoPackGo said:
What percent of that 60% are students in school are just out 6 months?

Plus with the economy the state its in the unemployed get a forbearance as well.
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This. And also what percent are still in school, meaning no payments being made yet but the loan and interest increasing on the unsubsidized loans?
 
Skoorb said:
yeah. I simply do not believe that 60% are in default.
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I believe it. Many new college graduates, including many with large student loans, have been unable to find work in their fields. This also can result in career loss and the loss of the entire value of their degrees, meaning that they might never find work that will pay enough to allow them to pay their student loans. (Employers will regard people who didn't find work in their fields shortly after graduation as being complete losers and instead look to fill entry-level positions with fresh young graduates.)

Our nation's institutions of higher learning are essentially an Education-Banking Complex whose only interest is to enrich the colleges and the banks. They don't care whether or not they are producing too many graduates or whether they'll be able to find jobs in their field or whether or nation needs more graduates in Field X. Their only concern is to bring in tuition dollars from the loans and to shackle people into non-dischargeable student loan debt.

This coming crisis reminds me a little bit of the housing bubble--lots of irrationality, greed, regulatory failure, and a complete lack of any sense of social responsibility.
 
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WhipperSnapper said:
I believe it. Many new college graduates, including many with large student loans, have been unable to find work in their fields. This also can result in career loss and the loss of the entire value of their degrees, meaning that they might never find work that will pay enough to allow them to pay their student loans. (Employers will regard people who didn't find work in their fields shortly after graduation as being complete losers and instead look to fill entry-level positions with fresh young graduates.)

Our nation's institutions of higher learning are essentially an Education-Banking Complex whose only interest is to enrich the colleges and the banks. They don't care whether or not they are producing too many graduates or whether they'll be able to find jobs in their field or whether or nation needs more graduates in Field X. Their only concern is to bring in tuition dollars from the loans and to shackle people into non-dischargeable student loan debt.

This coming crisis reminds me a little bit of the housing bubble--lots of irrationality and a complete lack of any sense of social responsibility.
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Don't forget University employee unions.
 
BoberFett said:
Subsidized student loans are a feedback loop which increases the price of schooling forcing more people to seek out loans which increases the price of school.

FIGHT!
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I have to agree with this. As long as students are willing to fork over the money for whatever the school is charging, the tuition will continue to go up at unsustainable rates. The banks are willing to fork over the money because 1) student loans aren't erased in a bankruptcy filing, 2) they get paid interest on day one either by the federal government (subsidized loan) or by someone else (unsubsidized loan).
 
Hacp said:
Right now the student loan business is a bank handout. The only way to solve this is to get rid of the student loan program. No more handouts to anyone.
Click to expand...

I like seeing spoiled children mooching money off their parents tell others they shouldn't get loans.
 
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