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Nov 30 2012

$Trillion Bailout for Nationalized Student Loans on the Way

What did you think would happen following Obama’s Hugo Chavez-style nationalization of the student loan industry if not this:

America’s now-nationalized student loan industry just reached a value of $1 trillion, according to Citigroup, growing at a 20 percent-per-year pace. Since President Obama nationalized the industry (a tacked-on provision of the Obamacare bill), tuition has gone up 25 percent and the three-year default rate is at a record 13.4 percent. …

With many young people unable to pay their loans (average graduating debt is about $29,000), Citigroup and others are speculating that this industry might be ripe for a bailout.

To pay off all the current defaults, Citigroup says it would cost taxpayers $74 billion. However, this number doesn’t include those who will default in the coming years, and, when the government rewards the defaulters, it will encourage more borrowers not to pay their debts.

And liberals in Congress have proposed forgiving all student loans via “The Student Loan Forgiveness Act 2012,” costing taxpayers $1 trillion.

Then instead of paying off their loans, they can try paying off the national debt. Just kidding. By reelecting Obama, we officially established that America has no intention of paying off the national debt. We’re just going to keep spending until the house of maxed out credit cards collapses. Then those who survive the inevitable violence can root through the rubble for rotting garbage to subsist on entirely debt free.

post-apocalypse-new-york
The future young people have voted themselves.

On tips from Henry B and Artfldgr.

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  • Tchhht!!!

    Seventy-five college have endowment funding of more than $1 billion and liberals want to stick it to taxpayers?

    http://www.mainstreet.com/?cm_ven=msmsnp

  • Steve

    House Majority GOP Majority Whip Video: WE’VE GOT YOUR BACK!

    This is Small Business America:

    http://www.commoncts.blogspot.com/2012/11/house-gop-video-weve-got-your-back.html

  • M. Wilson

    “If you put the government in charge of the Sahara Desert, within five years there would be a shortage of sand.”–Milton Friedman

  • Ummah Gummah

    .

    Daaas raaaaaciss!

    .

  • Ummah Gummah

    .

    You think THAT’s crazy?

    I’ll raise ya:

    Greek tabloid sues German government for “crimes against humanity” for imposing fig-leaf “sanctions” on Greek overspending at the ICC in The Hague:

    http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=fr&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.welt.de%2Fpolitik%2Fdeutschland%2Farticle111707823%2FDeutsche-unterstuetzt-Griechen-Anzeige-gegen-Merkel.html&act=url

    A female German “human rights activist” Moonbat has joined the lawsuit against German taxpayers:

    Action lawsuits against the euro policy have long been nothing unusual. But none went so far as the editor of the Greek tabloid magazine “Crash”.

    Georgios Tsangras had in the summer at the International Criminal Court in The Hague filed a criminal complaint against Chancellor Angela Merkel for “crimes against humanity”. Now this lawsuit is supported also from Germany. The human rights activist Sarah Luzia Hassel-Reusing these days is specially moved to The Hague, the documents in person at the court leave.

    “I support the Tsangras indication so far that I can see in Greece crimes against humanity,” says Hassel-Reusing. Their reasoning seems unusual and, if you like, also original “. Specifically I mean the damage to the health of countless Greeks from starvation and deprivation of drugs” You’ve gathered “substantial facts and arguments” and can prove that this damage was a direct result of health required by EU and International Monetary Fund austerity, says the psychologist practicing in Wuppertal.

    This is an excerpt from a Google translation of “Die Welt” website since an English-language link cannot yet be found.

    Thus, you will have to make to with this poorly translated text until someone BOTHERS TO REPORT on this bizarre “lawsuit”.

    If this gains any traction, anyone from any country will soon be able to sue taxpayers of more productive nations for a share of the loot.

    Greek retirees in their 50s on the beach sipping whatever they sip over there in Greece while Germans toil under an ever-increasing yoke of tax burdens well into their 70s to pay for it all..

    Obama must be proud.. when will Mexico sue the United States for their “fair share”?

    .

  • Mickey Shea

    Good now I can get my masters degree in Deconstructing
    French Existentialism.
    That’s Doctor Mickey…

  • Ummah Gummah

    .

    Non, c’est Docteur Mickey..

    .

  • beagle

    Paying off my student loans by the end of next year. Already have a decent college plan set up for the young up-and-comer.

    I feel like a sucker.

  • Winston Smith

    And overnigh tuition bills would triple, quadruple…. after all if people dont have to pay back loans why not take out 7 figure loans? $1 million+ The skys the limit.

  • Winston Smith

    Next up: Credit Card bailout.

  • Comrade J

    Dave, check this news at Jawas.

  • dan

    funny ,Conrad…
    I read that Obama has stopped funding/handing out Pell Grants

  • Kevin R.

    We’re just going to keep spending until the house of maxed out credit cards collapses. Then those who survive the inevitable violence can root through the rubble for rotting garbage to subsist on entirely debt free.

    If America were in isolation from the rest of the world the would be the likely scenario. Unfortunately, for all those young people that voted for Obama collapse brings war. Lots of war.

  • Clingtomyguns

    And of Course the Obama Regimes Motives Behind the Seizure of the Private Student Loan Business In the Obamacare Bill Was to A Blank Check to its Cronies in Liberal Colleges To Raise Tuition and Bloat the Salaries of Faculty — All Guaranteed by Taxpayers

    The Obama Administration’s student loan policy to promote a college education shares many attributes with the 1995 Clinton-initiated Bush-promoted policy to promote homeownership that subsequently led to the subprime lending debacle. First, declare that the opportunity to own a home — go to college — is a basic right. Then set a public goal for homeownership — college attendance — well above private individual demand. When budgets become tight, have government lenders replace private lenders, mitigating the need to save in advance or demonstrate the ability to repay.

    As with subprime mortgage lending, the volume of student loans ballooned during the last decade to over a trillion dollars, and even with favorable deferral and forbearance provisions 27% of student loans are already past due according to a recent NY Fed study. The average student debt upon graduation won’t quite reach the level of the average subprime mortgage, but the “investment” in education will likely be farther underwater than the average subprime house. The payment burden will lead many more to default. Recognizing the societal stress of living at home longer and delaying marriage, legislation was recently introduced to allow student borrowers to discharge student loans in bankruptcy, encouraging default while leaving taxpayers with the loss.

    The effects of the student loan credit bubble are similar to the subprime home-ownership bubble. Just as the homeowner subsidy is mostly captured in the cost of houses, the education subsidy is mostly captured in the cost of education by educators, many of whom are members of public employee unions. Whereas private tuition costs have gone up about 25% in constant dollars over the last decade, public tuition has gone up at twice that rate.

    This extensive government largess has produced a number of unintended — though not necessarily unforeseeable — negative consequences. First, it has dramatically driven up the tuition and fees charged by colleges, which in turn has forced more students to take out loans. This should have been easy to foresee, since the agents running the colleges would know that their clients had access to government-backed loans and so would jack up tuition quickly to extract that money.

    Second, this flood of money has only encouraged administrative bloat, which in turn has increased college costs with no increase in the quality of education. Again, this should have been foreseeable. The administration would be rationally well-informed about the new honey-pot of taxpayer-backed loans, and the self-interested administrators are the ones who decide where to spend the money, so you don’t need to guess where they will (and did) spend it.

    In fine, the student loan program, meaning the use of taxpayer guarantees to fuel the rapid growth in college loans, has been a textbook illustration of moral hazard. It has induced often marginal students to rack up debts to get often marginal degrees (or none at all), and has induced colleges to expand often pointless administration and useless programs (victims studies, anyone?).

    No one questions the desirability of modest public grants targeted to the most deserving students. But the magnitude and scope of higher education subsidies for public institutions has widened the gap between the total cost and market value of public education, a primary motivator of “Occupy Wall Street.” Ostensibly financing subsidies should be directed more toward private job-oriented educators to lower youth unemployment. But the Obama Administration has re-directed student loan financing toward public universities that require greater subsidies to keep their class rooms filled due to high fixed costs that are straining state budgets already deeply in deficit.

    College tuitions soar each year, advancing far in excess of the inflation rate. The overall inflation rate since 1986 increased 115.06%, which is why we pay more than double for everything we buy. On the other hand, during the same time, tuition increased a whopping 498.31%.

    When the student loan bubble bursts, you can bet that politicians will, as always, argue that “nobody saw this coming” and establish another inquiry commission to prove it! It is time for “change” back to traditional roles where bankers provide the loans and politicians provide the subsidies. But bankers and student borrowers should beware: the taxpayer-financed subsidies are directed more toward progressive political indoctrination than marketable job skills.

    http://www.americanbanker.com/bankthink/are-student-loans-the-next-subprime-lending-debacle-1048075-1.html

    Read more: http://www.americanthinker.com/2012/11/approaching_crunch_time_on_the_student_loan_debacle.html#ixzz2Dk1ISoIL

    http://inflationdata.com/Inflation/Inflation_Articles/Education_Inflation.asp

    http://lawprofessors.typepad.com/legalwhiteboard/2012/08/federal-funding-of-higher-education-a-bubble-that-is-going-to-burst.html

  • JustAl

    This one particularly pisses me off. My son joined the National Guard, in part because they promised to pay off his student loans. But guess what? “Oh, the page about the student loans was accidentally left out of that phone book sized contract you signed, sorry sonny.”

    Eleven years and two combat tours later he still hasn’t missed a payment so this “bail out” won’t do shit for him, of course.

  • 762×51

    What a moron I was. My son graduated college last year and I paid for it myself. If only I had soaked the taxpayers for the bill I could of had an $250k in my retirement plan which commissar Obama is planning to take away. HAHAH, cheated you out of that you dirty little Marxist bastard.

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