Thursday, December 02, 2010

S*%t liberals run - student loans

It's kind of interesting how politicians create laws to help debtors walk away from bad home loans, credit card debt, etc. But you know, the government's not so generous when you owe them money.

Take student loans. If you owe the government money on a student loan, they will hound you FOREVER. Student loans can't be discharged in bankruptcy. The feds can seize any tax refund to apply against your student loan. In other words, you'd be better off borrowing money from Carmine, your neighborhood Youngstown pawn shop owner/"banker". See, if you default on a loan from Carmine, he'll send over his collectors, Big Nicky and Tony the Fish, to "talk" to you about your repayment plans.

Now, they may break a bone or two in the process but at least you have the ability to run away and start a new life in Lexington KY or Athens GA without too much fear of repercussion.

Try doing that with a student loan.

I note this as a backdrop in what is coming down the pike. Massive defaults on student loans...............

Over the last decade, private lenders, abetted by college financial aid offices, eagerly handed young people hundreds of thousands of dollars to earn bachelor's degrees. The student loan bubble may be about to burst.

In some respects, the student loan crisis looks remarkably like the subprime mortgage crisis. First, outstanding student loan debt has ballooned: It grew roughly four-fold in the last decade to $833 billion as of June — surpassing outstanding credit card debt for the first time.

Secondly, defaults have soared amid the difficult job market. In 2008, the most recent year for which data are available, nearly 3.4 million borrowers began repayment, and more than 238,000 defaulted on their loans. The number of loans that went into forbearance or deferment (when borrowers receive temporary relief from payments) rose to 22 percent in 2007, from 10 percent a decade earlier, according to The Chronicle of Higher Education. Over a 15-year period, default rates range from 20 percent for federal loans to 40 percent on loans to students who attend for-profit schools, The Chronicle found.

When are we going to have congressional hearing on the feds pushing loans on to students who had no ability to repay them?


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