Another Federal Program in the Red, . . .

. . . and Getting Redder.



Some 43% of the roughly 22 million Americans with Federal Student Loans were either behind in payments or have received permission to postpone payments due to economic hardships as of Jan 1 2016.

About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment. Three million more owing roughly $66 billion were at least a month behind.

Meantime, another three million owing almost $110 billion were in forbearance or deferment, meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment. The figures exclude borrowers still in school and those with government-guaranteed private loans.

Ref: The Wall Street Journal


"A billion here, a billion there, pretty soon, you're talking real money"
__Senator Everett Dirksen, ca 1966

Ain't Big Government just grand ?

Why poor old DonDiego remembers the Good Old Days when he got a student loan and paid it off in total and on time. And just about everyone else with student loans whom DonDiego knew paid theirs off too.

Wait a minute, . . . DonDiego thinks he knows. Maybe, jes' maybe, if one waits long enough every Big Government Program magically turns into a Giveaway Program and nobody ever has to pay because it really is magical. 'Cause if'n it ain't magical, somebody's gonna pay, . . . and DonDiego thinks he knows jes' who that's gonna be.
Sonofabitch ! Whatever happened to Debtor's Prison ?

Is the government supposed to be profiting from the loans?

Its not easy to get a job when you're a graduate of ASSOL
Antonin Scalia School Of Law

Its a wonder why all those Bernie-Sanders-like countries in commie land don't have this problem.

No, government is not supposed to be profiting from the loans. In fact, government's not supposed to be involved in such loans. This should instead be fully handled in the private sector.

In the 70's 1 in 5 High School grads got a college degree. Now over 1/3 have degrees and even more attend. Considering the population increase that is a lot more students. Many of them do not belong in college. Many of these Universities that were once about producing an excellent end product are now about making money and paying moron professors to study "50 shades of grey". Can't imagine why an "art history" major can't find a job that will allow them to pay off hundreds of thousands of dollars of debt. Not to worry, politicians will cover it with taxpayers as long as you vote for them. I used the "new" GI Bill for some of my education and paid off my 10 year student loan in 6 years.

DonDiego suggests the Government should not be in "the business" of making loans.

But, in any case, billryan poses the wrong question.

One alternative question: "Should the Government be claiming to make a profit off the Student Loan program, when, in fact the Government, . . . and by extension The Taxpayer, is, in fact, losing money at an ever-increasing rate?
Example: Uncle Sam is on Track to Make $66-Billion Off Student Loans details how Elizabeth Warren claims the program is profitable when, in reality, the accounting method required by Congress within the Law is known to be flawed. i.e. Congress intentionally wrote the Law to make the Loan Program look profitable when it is not.
The Washington Post goes into great detail in explaining this fraud. For example to "sell" the program and make it look "profitable" the Government Accounting Office is required to treat the loans as if they are Government bonds of comparable duration, "the safest investment in the world", thus understating the likelihood of default.
It is just that likelihood that is now becoming apparent; students are failing to make payments, while the Government keeps paying its bondholders regularly.

A second alternative question: "Should the Government be Making Loans to Bad Credit Risks (at the expense of the taxpayer) ?
From the Washington Post, above: "If you walked into a bank and said 'I'd like a loan' and then they asked for your credit score, and you say 'No questions asked, please,' they'd laugh you out the door," Jason Delisle, Director of the Federal Education Budget Project says. "That's how the government makes student loans."
Delisle guesses that the actual market rate would be between 12-18 percent, far above any rates the federal government currently charges.
Bottom line the Government is making such loans. DonDiego says the Government should not.

A third: "Should the Government be spending taxpayers' money to fund a useless degree in, f'rinstance, "Theater" or "Womens' Studies?" The recipient of such a degree is unlikely to be able to make change for one as a cashier a McDonald's, let alone earn a living and pay off a loan.

There's lots of better questions than billryan's that one might ask.

Like: "Why was the public told that student loan debt was not dischargeable in bankruptcy?"
The answer is easy. Those in favor of "giving" money to students wanted the public to believe their taxpayer dollars were safe. But as US News reports it is a myth: "In fact, according to a study published in 2011 by Jason Iuliano, at least 40 percent of borrowers who do include their student loans in their bankruptcy filing end up with some or all of their student debt discharged."

Question: what kind of free market enterprise would willingly give a loan to an 18 year old kid with no work history, credit history, or high end job skills ? Answer: Probably the same kind of free market enterprise that would willingly give health insurance to a 70 year old man with a bad heart and diabetes.

The abstract, libertarian solution to problems is no solution at all. And that's why even Ayn Rand disciples never implement tehm once they get off the campaign trail and into office. Public services are not meant to be "for profit" enterprises - they are meant to solve problems the free market cant. But, hey, Ted Cruz needs to give some red meat to people who believe businesses willingly engage in financially detrimental activity because....well, just because.

I suggest DonDiego not review the rest of the big government program budget because the news gets much, much worse......the Big Government defense program (aka the US Military) was in the RED last year for a whopping $600 billion dollars! Jimminy Christmas!

Why? Should only those who can afford school be able to attend?

If the student has good high school grades and test scores, plans to attend Purdue to study engineering, the private sector would lend. Conversely, if the student was planning to attend any college to study History, or even worse, African American History, not a bank on Earth would touch that loan.

Boiler believes that the 70 year old should have pre-planned during his younger years.

"Why? Should only those who can afford school be able to attend? "

Why is it the federal govt's repsonsibility?