"The Crisis Has Become Pandemic" - System To Collect Defaulted Student Loans Is No Longer Functioning
zerohedge.com/news/2017-05-07/crisis-has-beco...
zerohedge.comPosted May 8, 2017, 12:44 AM UTC
13658
zerohedge.comI certainly hope we can figure out a solution before the whole thing comes crashing down around us. From what I've read, I do think there is an inevitable crash coming in student loans, and further higher education in general, but I'm confident a little proactive legislation could go a long way in mitigating the damage.
8
Student debt isn't even whispered about by our leaders.
Crisis, and nothing short of crisis, will cause them to even notice the problem.
12
[deleted]
2
Yep.
Young people are fucking stupid.
2
The lack of housing purchases is just the start. The deflationary response will continue to take decades. Baby boomers won't be able to get out from under their lavish purchases and will continue working well after their own parents retired. I, for one, have my popcorn ready to watch it all burn. Maybe my debt will go up in the fire.
2
Excellent!
7
[deleted]
1
[removed]
-9
Why the fuck did creditors lend to people who wouldn't be able to pay their debt back?
-Everyone else with half a brain
28
Answer: because the banks get paid either way. Either the student (or co-signers) actually finds some way to pay, or, the bubble inflates and pops, at which point the banks go crying to the government to make them whole. Since the government has established that it is unwilling to allow banks to collapse, even given egregiously abusive and illegal behavior (because to do so would put the entire economy at risk), banks are perversely incentivized to create bubbles.
In fact, the bigger the bubble, the higher the stakes, the better it is for the banks. The banks claim earnings/profits, on paper, as long as the bubble lasts. Then, when it inevitably collapses, they whinge about their losses and how it could bring down the entire economy until the government bails them out. -Everyone else with a whole brain.
Wow, that's a neat business model! How do I get in on that? -Everyone with a degree in economics or finance.
2
This is why I think the bailouts were bad precedent. It allows the large banks to take these stupid risks knowing the taxpayer will bail them out at the end of the day.
I believe that going through the short term pain of letting the banks fail would have been better in the long run. Smaller banks and credit unions likely would have bought up the assets of the banks for pennies on the dollar.
2
Government guaranteed those loans which is why they were packaged as grade a debt bundles. Bailout was just fulfilling obligations on a massive scale .
1
This user may be a frequent poster on T_D and related subreddits, either on this account or another account. Semantic and syntactic analysis of this users last 150 public posts reveals moderate correlation (minimum Pearson's r = .51) with themes and language frequently posted on subreddits including T_D, and TheRedPill.
Project Veritas is an independent project. It seeks to develop effective technologies in service of transparency on the web and combating misinformation. We're always trying to make our webtool smarter; please email us if you have tips for other subreddits or websites that are associated with T_D. Send comments to [email protected]
26
this sub is disappointing me
6
Do me! Do me!
5
What difference does it make if someone posted on The Donald? I post there periodically. So what? Does that invalidate my argument automatically even before it can be evaluated on the substance of its merits?
I guess student loans and outstanding student debt isn't an issue now because people don't like the messenger that is addressing the topic...
4†
Why not just let us downvote the opinions expressed Gary without the guilt by association.
3†
Gnarly.
This is why you post using alt accounts on socio-economic-political subs; they're gamed/botted/astroturfed and you don't know always their agenda.
(I'm not a Donald fan but this type of sub policing is freaky.)
Gonna suck watching the Orange President win a second term, at this rate. He won't be popular, but the other side is really losing it, too :(
3
[deleted]
0
[deleted]
2
Witch hunting bot (guilt by association). Awesome.
1†
Wow. Things like this aren't doing a lot to combat the "Crybully" stereotype.
-2†
No, more realistic, is we don't make enough money to pay it back between rent, food and transportation to our jobs. If we can even find a job. Not that we don't want to pay it back.
20
It doesn't matter what creditors want if someone's unable to pay it. Why are so many unable to pay it? Think about it.
18
No need to, my man! Default away!
8
U mad bro?
But hey good luck collecting those defaults assuming the article's correct.
2†
What do you think caused the Bush recession?
2
[deleted]
1
Well, that sounds interesting, to say the least, but I'm unfamiliar with the publication. We'll have to see if this hits more and more trustworthy new sites.
The economists Michael Hudson and Steve Keen write/talk a lot about debt, and basically say that "odious" debts must just be forgiven, there must be a "debt jubilee", to get economies back on track. Apparently there is sound economic theory and history supporting this.
Seeing as bankers can be bailed out, I don't see why (former) students can't.
You don't see how students with debt are unable to lobby congress, and how our political system denies large (but geographically sparse) voting blocks representation?
whoosh!
Then what about all the people who paid back their debt? I'm all in favor of forgiveness but how do u take that into account? I'd say give a tax return of all money collected.
What about the people that didn't take loans and paid their education in full?
Yeah seriously good point on that one. I'm really not sure. I still think we should return it all, no matter how great of an effort it is - HUGE economic stimulus, and besides we're just wasting that money on our military, or on subsidies to industries that don't need them.
The banks were required to pay back the bail out money plus interest. That wouldn't work with student debt since paying back the money with interest is the whole problem.
The reason, historically speaking, for not discharging student loan debt is that you cant repossess an education. With other forms of debt, you just take the item back and sell it. You lose on depreciation, but you dont lose everything.
Jesus Christ, you spectacularly misunderstood my post.
Minimum basic income can be seen as a "rolling jubilee".
I'm not convinced.
Neither am I. I also have bitcoin.
But it's as sound a theory as anything is in "economics".
Well we bailed the banks out with loans that were repaid in a few years.
By now, the banks have paid back all the bailout money plus interest.
so, does that mean we can have interest-free consolidation loans with small minimum monthly payments
No. We are not too big to fail.
It's cool. Let's go ahead and forgive the loans of all these poor kids that haven't found an appropriate job with their degree. As a person who's never missed a payment, I'm glad to see just another example of fuck ups getting breaks while I support it.
There is a link within the Zero Hedge article to an article posted on a Consumer Reports (see below) blog. I would call CR a highly reliable source of information.
https://consumerist.com/2017/05/05/the-system-to-collect-defaulted-student-loans-is-no-longer-functioning/
Even before this current collections shutdown, the debt recoveries on defaulted loans have been dwarfed by new defaults for the last several years now.
Below you can see my comments from the following thread:
https://www.reddit.com/r/studentloandefaulters/comments/66b9v0/default_recoveries_by_private_collection_agency
"Basically, 14.5 BILLION (I'm rounding to the nearest hundred million (which BTW is super fucked up because the numbers are so big that you can round them off to the nearest hundred million)) dollars in defaults were added in this one quarter while only 2.3 billion were recovered. That's a ratio of 6.3 to 1. And if we look deeper into the numbers, this has probably been happening every quarter for the last decade. Yes, they're most certainly swamped."
I see Consumerist, not Consumer Reports. Carry on though...
It is clearly written at the bottom of the page:
"Part of Consumer Reports Founded in 2005, Consumerist is an independent source of consumer news and information published by Consumer Media LLC, a not-for-profit subsidiary of Consumer Reports."
If you're going to be dismissive at least try to be right first.
[deleted]
A subsidiary is not the same as the original company, so in my book I'm still right. Thanks for pointing out why I should give a shit about this source anyway....
Yeah, and I wouldn't consider either to be a top-notch source for economic news ...
Who cares if the number of defaults grows each year? There's always going to be some people that can't or won't ever pay back those loans. Since they don't ever get charged off, this is to be expected.
This is why loans charge interest.
Buy Bitcoin yo.
It was made to make sure there could never be another bailout from your pocket to the banks. But it only works if you opt in.
[deleted]
If you leave your coins on an exchange and you aren't trading on margin you're an idiot just waiting for this to happen to you.
PULL YOUR COINS
When you stop doing business with sketchy markets.
Try PayPal, or Coinbase, or do it locally with local bitcoins and meet at a safe place like a police station.
But we know you are just copy/pasta FUD.
If you really wanted to shit on bitcoin you could at least show some competence and point out the block size SNAFU, an actual legitimate issue. Not some r/buttcoin FUD from 5 years ago.
Bitcoin should be criticized but you really need to get with the program, that's some old and tired propaganda. Just let it go. Bitch about segwit or BU or something. At least pretend you know what's going on.
Zerohedge started life as a somewhat interesting finance/economics blog, but took a hard right/alt-right turn into conspiracy mongering at some point.
https://mediabiasfactcheck.com/zero-hedge/
(for a snarkier analysis)
http://rationalwiki.org/wiki/Zero_Hedge
Yeah I've seen some WTF articles on there over the past year or so, a sharp divergence from their originally normal finance and economics coverage. It made me think they were a victim of typosquatting, or had possibly lost their domain name and web address to someone else.
a surprise, to be sure
I feel like there is a Star Wars reference here, so have an upvote.