AuthorTopic: The Official Student Loan Debt Slavery Thread  (Read 10641 times)

Offline RE

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The Official Student Loan Debt Slavery Thread
« on: November 28, 2012, 01:26:27 AM »
The Student Loan issue has been covered in many different threads here over the last year, and it is about time to create a Central Location for the articles and information which cover this BALLOONING issue.

Based on charts published on Zero Hedge, it appears this problem is now going Ballistic.

Legally speaking, Federally Insured Student Loans CANNOT be dischared in Bankruptcy.  Does that mean though they will ever be paid off by the borrowers?  Any clue here in the commentariat WHY said loans were constructed not to be washed in BK Court?  I can tell you why, but I am curious to see if anyone else knows the real reason.

Anyhow, the charts are clear here, this one is collapsing.

RE

The Scariest Chart Of The Quarter: Student Debt Bubble Officially Pops As 90+ Day Delinquency Rate Goes Parabolic
Submitted by Tyler Durden on 11/27/2012 16:10 -0500

Consumer CreditdefaultStudent Loans

We have already discussed the student loan bubble, and its popping previously, most extensively in this article. Today, we get the Q3 consumer credit breakdown update courtesy of the NY Fed's quarterly credit breakdown. And it is quite ghastly. As of September 30, Federal (not total, just Federal) rose to a gargantuan $956 billion, an increase of $42 billion in the quarter - the biggest quarterly update since 2006.



But this is no surprise to anyone who read our latest piece on the topic. What also shouldn't be a surprise, at least to our readers who read about it here first, but what will stun the general public are the two charts below, the first of which shows the amount of 90+ day student loan delinquencies, and the second shows the amount of newly delinquent 30+ day student loan balances. The charts speak for themselves.

http://

This is how the Fed described this "anomaly":

Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter.  However, of the $42 billion, $23 billion is new debt while the remaining $19 billion is attributed to previously defaulted student loans that have been updated on credit reports this quarter. As a result, the percent of student loan balances 90+ days delinquent increased to 11 percent this quarter.

oh and this from footnote 2:


As explained in a Liberty Street Economics blog post, these delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.

We'll let readers calculate on their own what a surge in 90+ day delinquency from 9% to 11% (or as footnote 2 explains: 22%) in one quarter on $1 trillion in student debt means. For those confused, read all about it in this September article: "The Next Subprime Crisis Is Here: Over $120 Billion In Federal Student Loans In Default" which predicted just this.

* * *

And so it's official: Pop goes the student loan bubble, as just confirmed by the Fed.

Luckily student debt is dischargeable in bankruptcy. Oh wait. It isn't.

Source: Quarterly Report on Household Debt and Credit, Household Credit Excel Source

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Offline widgeon

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Re: The Official Student Loan Debt Slavery Thread
« Reply #1 on: November 28, 2012, 11:47:22 AM »
Why?

To create a Lifetime Debtor Class.  Not a doubt in my mind.

The mortgage debt wasn't good enough because there was that problem of responsibility for a physical asset, property titles, etc. and people really didn't get into mortgage debt until much later in life.

Having a population of young indebted serfs gives the "goobermint" incredible social engineering leverage.


Offline monsta666

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Re: The Official Student Loan Debt Slavery Thread
« Reply #2 on: November 28, 2012, 01:30:40 PM »
I heard that one of the few ways these student loans can be discharged is by joining the army. If true is it a coincidence that this is one of the few avenues left to escape debt servitude?

Offline Surly1

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Re: The Official Student Loan Debt Slavery Thread
« Reply #3 on: November 28, 2012, 01:55:47 PM »
Why?

To create a Lifetime Debtor Class.  Not a doubt in my mind.

The mortgage debt wasn't good enough because there was that problem of responsibility for a physical asset, property titles, etc. and people really didn't get into mortgage debt until much later in life.

Having a population of young indebted serfs gives the "goobermint" incredible social engineering leverage.

Widgeon, that answer wins the intertoobz for today.

Absolutely- debt as a control mechanism. Another problem with the mortgage strategem is that not enough people are going to be able to afford houses, so chain 'em up good upon entry into the workforce.

All part of creating Alan Satan Greenspan's "precariat." May he rot in hell.

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BTW, Earlier today, RE posted a link to the .pdf of the "Report from Iron Mountain." I downloaded it and just skimmed the beginning and the conclusions. I have never seen a conspiracy I didn't like, but this will make you piss your pants.

Must read.
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Offline RE

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Re: The Official Student Loan Debt Slavery Thread
« Reply #4 on: November 28, 2012, 05:01:53 PM »
Why?

To create a Lifetime Debtor Class.  Not a doubt in my mind.

The mortgage debt wasn't good enough because there was that problem of responsibility for a physical asset, property titles, etc. and people really didn't get into mortgage debt until much later in life.

Having a population of young indebted serfs gives the "goobermint" incredible social engineering leverage.

You are on the right trackin terms of the big picture, but that isn't what I was thinking of.  Just the rationale for why this class of loans would get this distinction of being non-dischargeable.

Reason is there is nothing that can be Repoed and sold off in a Bankruptcy.  The Education is inside your head.  If it was dischargeable, the smart poor folks  would go to the best University Money can Buy, and upon graduation before getting a job, immediately declare BK!

Anyhow, as the above Hockey Stick graphs show, this is what students are doing now regardless of the fact the BK can't be discharged.  Who really cares if your credit rating is trashed and you can't get a mortgage?  If you are making minimum wage, they can't garnisheer your wages at poverty level.

Eventually, all this shit will be written off.  Irredeemable Debt.  That which cannot be paid will not be.

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Offline g

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Re: The Official Student Loan Debt Slavery Thread
« Reply #5 on: November 28, 2012, 05:52:26 PM »
Quote
Eventually, all this shit will be written off.  Irredeemable Debt.  That which cannot be paid will not be.

RE

A debt will always be paid, either by the lender or borrower.

You are correct that all this shit will be written off, but unfortunately will be paid for by the hapless taxpayer, to keep the bankster scum solvent that lent it.    :'(



Offline widgeon

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Re: The Official Student Loan Debt Slavery Thread
« Reply #6 on: November 28, 2012, 06:49:43 PM »
I don't think the presence of "security" has anything to do with it ... although I'm sure that is the "reason" a pol or bankster would give.  Credit Cards are unsecured and they are dischargeable.  Student Loans were for decades but no longer.  No, a Special Effort was made that required premediatation and collusion ... now all bearing fruit.  The only explanation that accounts for every observed fact & outcome is a planned lifetime debt contract.


Offline RE

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Re: The Official Student Loan Debt Slavery Thread
« Reply #7 on: November 28, 2012, 09:04:58 PM »

You are correct that all this shit will be written off, but unfortunately will be paid for by the hapless taxpayer, to keep the bankster scum solvent that lent it.    :'(

No, the taxpayer won't pay it off, because the taxpayer won't have any money to pay it off with.  That is why it is IRREDEEMABLE DEBT.

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Offline Petty Tyrant

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Re: The Official Student Loan Debt Slavery Thread
« Reply #8 on: November 30, 2012, 03:40:27 AM »
Prisons for profit are a way forward for a lot of debt such as this. People get a ruling against them in a court even if the supposed debtor never is summoned to a court in another state. Then thier license is suspended and they can not drive.  A warrant for arrest goes out  and the debtor is locked up, he can not get out until the debt is cleared. These things are progressing steadily, dont worry about that.
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Offline monsta666

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Re: The Official Student Loan Debt Slavery Thread
« Reply #9 on: November 30, 2012, 10:46:58 AM »
You are on the right trackin terms of the big picture, but that isn't what I was thinking of.  Just the rationale for why this class of loans would get this distinction of being non-dischargeable.

I don't think that can explain why the debts cannot be expunged. There are strong penalties to claiming bankruptcy that can in many cases effect future employment (it seems a good number of jobs in the US make credit checks) so that would provide enough of an incentive to stop people claiming bankruptcy frivolously. Let's not forget many of the graduates are young people with little to no work experience and many of those do not want to reduce their career prospects by committing such actions.

Also there are many loans made that are unsecured yet those loans are removed in the case of bankruptcy. Student debt unlike other nonsecured debts is a special case in this regard. Why does student loans get special status? I mean what is so different about this this than running big credit card bills or other such measures? Moreover not every country places such burdens on students. For example in the UK the university fees have recently trebled to £9,000 ($15,000) a year and seeing as most courses are three years in duration that equates to the average British student being about £50,000 ($75,000) in the red upon graduation. However unlike the US those loans do not have to be repaid immediately. In fact you are only eligible to start paying back on those loans if your income exceeds £15,000/$22,000 per annum so if you remain unemployed or earn less than this wage through underemployment you do not pay back any money. If you cannot pay those loans within 30 years any remaining amount is removed from the record. So you see in this case while the fees can be seen as excessive it is a more forgiving system than the one in the US. Not saying it is all roses, but it is better.

I think the system of student debt in the US has its own dynamics not just on the level of the loans being insecure but also in the attitude the US holds for its graduates. Why have the administrators in this industry got the power to inflict such strict terms on its students and why is student debt such a special case? I think the main reason comes because of the amount of money involved in the industry and since money = power the powers that be can make special cases for their industry as they have given enough money to the right congressmen/senators to push their agenda.

Offline g

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Re: The Official Student Loan Debt Slavery Thread
« Reply #10 on: November 30, 2012, 09:32:02 PM »
Quote
Why have the administrators in this industry got the power to inflict such strict terms on its students and why is student debt such a special case? I think the main reason comes because of the amount of money involved in the industry and since money = power the powers that be can make special cases for their industry as they have given enough money to the right congressmen/senators to push their agenda.
True enough Monsta, May I add one you may have overlooked, their young age.

Never let a youngster with forty or fifty good years left to horrorize, intimidate, attach pay checks, charge late fees, double the rate of usury on go free by bankruptcy. If you are to have bankruptcy laws have them apply to folks 65 and over.

You are taking away the prime group of beneficiaries of God's Workers if you let this group of rubes out of the Bankster's clutches, forty or fifty good years left to perform their kind and loving deeds to their slaves in bondage.

Offline RE

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Free College Education!
« Reply #11 on: January 05, 2013, 04:59:31 PM »
Now it's getting good.

In order to resolve the BALLOONING problem of Student Debt Default, TPTB are rewriting the laws regarding how Student Loans are to be paid back, and how long it takes to finally get your debt accumulated for learning worthless information wiped off the books.

As the below article from Zero Hedge indicates, there is now absolutely ZERO reason not to take out the biggest loans you possibly can get guaranteed by Da Goobermint to go to school and drink beer and bang coeds for as long as you possibly can.

In one fell swoop this solves the problem of Youth Unemployment and further Money Creation thru irredeemable debt.  Da Goobermint nor Private Industry can figure out how to provide decent jobs for HS Grads, so instead they will now offer further loans you don't have to pay back if you don't get a job upon Graduation, if in fact you actually ever Graduate.

You can go get your BA, your Masters, your Ph.D, your MBA, your JD...that works up to around 16 years in Academia!  Just keep taking out more Loans!  Evenif you only get a job flipping burgers at Mickey Ds at the end of it (all those sheepskins will be REQUIRED for applying for the job), most you gotta pay every month is $100 for 20 years, then you are Free & Clear!

Is this stupid or what?  Of course it is, just provide the damn education for FREE, it would be cheaper that way.  LOL.  It doesn't put more fictitious money on the Bank Balance sheets though if you do it that way.

This is just hilarious.  Sadly, I probably can't get any of these loans and will have to pay for my Nursing Ticket out of Pocket Change, but if you are broke right now and out of a job, APPLY TODAY to the University program of your choice and take out the Loans up the Ying-Yang!

RE

Here Comes The Student Loan Bailout
Submitted by Tyler Durden on 01/05/2013 14:59 -0500

CounterpartiesMonetizationNew NormalRecessionStudent Loans


2012 is the year the student loan bubble finally popped. While on one hand the relentlessly rising total Federal student debt crossed $956 billion as of September 30, and was growing at a pace that will have put it over $1 trillion by the end of 2012, the one data point confirming the size, severity and ultimately bursting of this latest debt bubble was the disclosure in late November by the Fed that the percentage of 90+ day delinquent loans soared from under 9% to 11% in one quarter.



Which is why we were not surprised to learn that the Federal government has now delivered yet another bailout program: this time focusing not on banks, or homeowners who bought McMansions and decided to not pay their mortgage, but on those millions of Americans, aged 18 to 80, that are drowning in student debt - debt, incidentally, which has been used to pay for drugs, motorcycles, games, tattoos, not to mention countless iProducts. Which also means that since there is no free lunch, all that will happen is that even more Federal Debt will be tacked on to replace discharged student debt loans, up to the total $1 trillion which will promptly soar far higher as more Americans take advantage of this latest government handout. But when the US will already have $22 trillion in debt this time in four years, who really is counting? After all, "it is only fair" that the taxpayer funded "free for all" bonanza must go on.

The latest debt bailout, not surprisingly is not titled "Yet another taxpayer funded bailout for those who bought things they can't afford on credit" as that would not be very politically prudent, especially for those politicians who still have taxpaying citizens as their voters. Instead, its name is the much more PC: "Pay as You Earn Repayment Plan." Alas, it really should be called the former, because what it does is it incentivizes Americans to borrow even more Federal student loans, well aware that there will now always be a cap on the associated monthly interest payment which will never leave a mark regardless what the full underlying loan notional is. It also provides for full debt discharge should the borrowers end up with cushy Federal jobs - because the one thing the US government needs afford is more debt-saddled government workers.

What is the "Pay as You Earn Repayment Plan"? The WSJ explains:

A new federal program should make it easier for some recent college graduates to keep their student-loan payments manageable.

The new option, known as the "Pay as You Earn Repayment Plan," lets eligible borrowers sharply lower their monthly loan payments and qualify for loan forgiveness quicker than they might otherwise.

"It's a very good safety net for students who borrow too much," says Mark Kantrowitz, publisher of the financial-aid site FinAid.org. "If your debt exceeds your annual income, you will probably benefit."

 

Pay as You Earn, which took effect on Dec. 21, "is designed to help offset the effects of the recession for student borrowers most likely to take a hit in this tough job market," says Lauren Asher, president of the Institute for College Access and Success, which has pushed for the creation of income-based repayment plans.

Which in the New Normal, means everyone with a student loan will benefit. It also means, that courtesy of knowing this safety net is there, more and more people will take advantage of the government's latest generosity with other taxpayer's money.

What are the terms of this new bailout?

The new program comes at a time when rising student-loan balances—amid a still shaky job market—have weighed heavily on many families.

 

Typically, federal student loans must be repaid within 10 years. At current interest rates, that can work out to a monthly payment of roughly $300 for a borrower with $26,000 in debt.

 

Pay as You Earn, by contrast, limits student-loan payments to 10% of "discretionary income" as defined by government formulas. Borrowers who make regular payments could have the remaining unpaid amounts forgiven after 20 years.

So much for student debt being non-dischargeable: borrow hundreds of thousands, but make your monthly payment of a hundred or so bucks, and in 20 years you will be debt free, courtesy of US taxpayers. Actually, scratch that: one doesn't even have to make a payment!

In some cases, borrowers with low incomes could be required to make a zero-dollar payment and would still be considered current on their loan. Monthly payments can increase or decrease each year based on the borrower's income and family size.

For those who think getting full debt forgiveness in 20 years is far too long, why there's a loophole for that too: just go "work" for Uncle Sam:

Borrowers with public-service jobs may qualify for loan forgiveness after just 10 years.

As for eligibility "constraints":

To be eligible for the program, borrowers must have taken out their first federal student loan after Sept. 30, 2007, and received at least one federal student loan after Sept. 30, 2011. Borrowers also must meet eligibility cutoffs based on the size of their debt, their discretionary income and family size.

 

The U.S. Department of Education's Pay As You Earn calculator, available at studentaid.gov, can help you determine if you qualify. Borrowers can apply for the program online or by contacting the loan servicer that collects their payments on behalf of the federal government.

In other words, virtually all people who were responsible for the diagonal take off in the Federal student loan total in the current depression are now eligible for what will eventually be full debt discharge.

So let's get this straight:

1.go to some "everyone who applies is admitted" community college
2.take on the biggest Federal loan one can get
3.use the proceeds for everything besides the tuition (of course)
4.be unable to find a job after graduation (naturally)
5.plead poverty, accusing evil employers who don't hire those who majored in Foosball, and make "zero" payments while remaining in "compliance"
6.get a job working for the government, wait ten years, and have the entire loan magically disappear.
And there it is: incentives for the common, and very much broke, man in the New Normal.

If there is anyone out there who thinks this will not result in a "charge it" feeding frenzy and that the Federal student loan total will not go absolutely parabolic going forward, please raise your hand.

Of course, what is not discussed, is who is on the other side of all those forgiven loans. And the answer, dear taxpaying US readers, is starting at you in the mirror. Because all the Federal government will do is transfer the unfunded obligation, which has already been used to satisfy the purchase of goods and services, from one individual to the whole group.

But when one is dealing with the government of a country that is no longer even fit to be defined as "banana", what is adding one more trillion between already insolvent counterparties.

Finally, yes, this means the Fed just tacked on one more year of QE to its $1 trillion/year in US debt monetization, which also means the Fed's balance sheet will now also be used for to fund student loan forgiveness, among so many other things.

Insolvent students of the world, unite!
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Offline WHD

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Re: The Official Student Loan Debt Slavery Thread
« Reply #12 on: January 05, 2013, 05:44:34 PM »
Quote
Which is why we were not surprised to learn that the Federal government has now delivered yet another bailout program: this time focusing not on banks, or homeowners who bought McMansions and decided to not pay their mortgage, but on those millions of Americans, aged 18 to 80, that are drowning in student debt - debt, incidentally, which has been used to pay for drugs, motorcycles, games, tattoos, not to mention countless iProducts.

Not that I disagree with Tyler, necessarily. But my problem with the Zero Hedge crowd is, they make it sound like tax-payers, or rather, money earners, are a uniformly just and righteous set.

As example, let's consider Paul Ryan. He and his family made their riches, which I presume they pay taxes on, by running an earth moving enterprise. Which is to say, bulldozing the earth flat, mostly. Is this virtuous, because they made money, because they pay taxes? It is, I suppose, if you think the point of human existence is to pave the planet. Not sayin some earth movin' doesn't need to happen sometimes, just saying, just because you earn money and pay taxes doing whatever does not make you holy. If something needs reform in this country, it's the Puritan/Protestant work ethic, which facilitates the view that the earth is a thing to be exploited for the purpose of seeing how much any one individual can accumulate, without limit apparently. The sickness of Santanelli's "water bearers and water drinkers" is one and the same.

That said, these new rules should prove very lucrative for big edu. And ruinous for America, of course, as big edu mostly teaches BAU.




Offline RE

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Re: The Official Student Loan Debt Slavery Thread
« Reply #13 on: January 05, 2013, 05:58:57 PM »
Not that I disagree with Tyler, necessarily. But my problem with the Zero Hedge crowd is, they make it sound like tax-payers, or rather, money earners, are a uniformly just and righteous set.

The problem with the Zero Hedge crowd is that they are Pigmen, Piglet or wannabee Piglets.

The whole meme there is that the Bizness of Amerika is Bizness, and if you just let the Free Market go BERZERK and get rid of Goobermint, we would be doing GREAT!

They love to hate Keynesians and Fiat Money, except they all trade arund the Fiat every day and the minute Da Fed stops printing they will first go broke and then be pissed the endless stream of liquidity isn't there to mess around with on their Bloomberg Terminals.  Basically, they are a big bunch of Hypocrites and Fools, Tyler Durdens included there.

ZH however still does report on many stories you won't find in the MSM, and is a good source of collapse info.

RE
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Offline Petty Tyrant

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Re: The Official Student Loan Debt Slavery Thread
« Reply #14 on: January 05, 2013, 06:06:57 PM »
Read the information not the toilet roll commentary on ZH.
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