http://www.wsj.com/articles/student-debt-payback-far-worse-than-believed-1484777880

Due to a 'technical glitch', the Department of Education had overstated student loan repayments at 99.8% of colleges and trade schools in the country.

At about 25% of the total schools (more than 1000), an analysis showed half of students were either in default or had not paid back $1 on their debt within 7 years.

Hardest hit school was the University of Memphis, which went from 67% repayment within 7 years to 47%.

[Edited on January 19, 2017 at 10:49 AM. Reason : .]

1/19/2017 10:48:12 AM

The economy is great though, unemployment is super low, people should have no problem paying their loans back right?

1/19/2017 10:54:11 AM

[Edited on January 19, 2017 at 11:53 PM. Reason : you humans are witty creatures]

1/19/2017 11:52:53 PM

definitely goes in TSB

1/25/2017 7:54:35 PM

next bubble

1/25/2017 8:49:41 PM

^

1/25/2017 10:32:35 PM

The student loan bubble has been obvious for years. IIRC, it's larger than the housing bubble, and has absolutely zero assets to backstop it. It's gonna be a rough crash. And our Golden Boy, Obama, inflated the hell out of it via Obamacare, too, just to make the numbers work. And even then, the numbers don't work, lol.

1/25/2017 11:31:31 PM

^is that claim not exactly what WaPo gave Lamar Alexander 4 Pinocchios for?

https://www.washingtonpost.com/blogs/fact-checker/post/are-college-students-are-being-overcharged-on-loans-to-pay-for-obamacare/2013/07/16/ce0d3794-ee3f-11e2-bed3-b9b6fe264871_blog.html?utm_term=.0be95010f4c6

1/26/2017 6:47:00 AM

treating the Washington Post as anything other than leftist shilling - classic. Read the article and tell me how exactly you think what Lamar Alexander said isn't 100% true. The author had to ignore half of his statement, use the wrong interest rate, and then only look at 2 years vs 10 to make half a rebuttal that it wasn't truly $50 billion. How about answering the bigger question of why student loans programs are funding health care and not education?

1/26/2017 9:53:52 AM

WaPo is certainly no Buttbart, if that's your frame of reference.

1/26/2017 10:11:37 AM

There is no such thing as a student loan "crisis", at least not in the sense of an existential threat to our economy. Even if every single one into default tomorrow, it would still be roughly 1/10 of the magnitude of the home mortgage/foreclosure crisis. A college education remains one of the best investments out there as the difference in earning potential between people who do and don't get one is massive and undeniable. Yes, at the individual level it's still a problem where a lot of people need to be helped with debt relief, but all this fear mongering over it being the next "bubble" is just propaganda to prevent taxpayer investment into higher education.

1/26/2017 1:19:14 PM

Or to prevent squandering tax dollars to inflate the cost of a college degree that continues to decrease in value. The government incentivizing people that can't afford something to try and buy it as the cost of it inflates... no problem there, eh leftists?

By all means, lets have free college from the government. K-12 has been done soooo well, after 12 years of government education our kids are worth a whopping $7.25 an hour. Really setting them up for success in the free market... I bet with a few more years the government can do even better. You hear that waiters and waitresses? Keep pursuing that worthless Lesbian Dance Theory Degree on the tax payer's dime, then when you graduate, the government can force Starbucks to pay you more than you are worth as you work as a bitter barista!

1/26/2017 1:51:57 PM

^^^^I'm not going with the "overcharged" angle, so no. Instead, the college loan takeover was added in to Obamacare because it represented a positive income stream, overcharging or not. eleusis' statement was right: why was student loan money used to "balance" Obamacare by the politicians and pundits?

Meanwhile Shrike is burying his head completely in the sand on this crisis. We have mountains of student debt, much of it bad, all of it with no physical asset backing it up. The value of a college education, while substantial, can't be recouped if a borrower defaults. The debt-insurance cascade from the student loan bubble popping could be far worse than the mortgage bubble, precisely because there is no asset to offset the loss. Current estimates have student loan debt at 1.26T, with at least a quarter of borrowers at least a month behind. Roughly 60% of of dollars owed are not being paid on for various reasons. The mortgage default rates were far far FAR lower than that. But no, there's no crisis, Shrike.

1/26/2017 2:16:18 PM

1.26T? There have been $8 trillion worth of home foreclosures since 2008 and that doesn't even count all the banks whose solvency were threatened by overexposure. Also, half of all student debt is held by 25% of borrowers who actually attained degrees, have relatively good paying jobs, and will pay back their loans. Just like illegal immigration, this isn't a real problem, just an excuse for the extreme right to screw over people who can't afford an education on their own.

[Edited on January 26, 2017 at 2:37 PM. Reason : illegal]

1/26/2017 2:28:48 PM

The people that can't fund a good education on their own are screwed by reality. The right just wants to stop the left from buying votes with taxpayer funded handouts.

1/26/2017 2:46:34 PM

What is the worst case? It's not like the housing crisis where people became homeless and lost thousands of dollars in equity.


The crisis is there but I'm not sure what will happen.

1/26/2017 2:54:46 PM

congress should just let people bankrupt out of the loans, then new students wouldnt be able to get the loans anymore. that would cause the cost of tuition to go down. win win

[Edited on January 26, 2017 at 5:13 PM. Reason : w]

1/26/2017 5:13:05 PM

^^^^ You really don't have a clue, do you? The current total US mortgage debt is 8T. The current US student loan debt is 1.26T. The difference is a factor of 8, and it's even less when you consider the underlying asset of the mortgage versus the lack of an asset for student debt.

This is mortgage debt


This is student loan debt


From 2000 to the peak in 2007, mortgage debt roughly doubled. From 2008 to 2010, student loan debt almost quadrupled. If housing was a "bubble," and that debt only doubled in 7 years, what would you call double the rate of housing debt increase in less than a third of the time? This is a plain and obvious bubble, and the US gov't is on the hook for it when it pops, and it's going to pop massively. And, considering that our absurd college loan system is causing the massive price increase in tuition, you're not going to get very far with the argument that I want to "screw over people who can't afford education on their own." We're already doing a damn good job of that with our student loan system as it is, and Obama came along and doubled down it.

1/27/2017 12:36:17 AM

Whoa, student debt quadrupled over that period of time? It's almost like there was some massive economic event that caused a bunch of people to lose their jobs and incentivised them to go back to school! I wonder what that could have been? Eh, nevermind, let's just blame the black guy.

Look, the housing crisis didn't happen just because home values got too large and their was too much mortgage debt. It was catalyzed by variable APRs spiking and making mortgage payments unaffordable for a bunch of folks at roughly the same time. Then there was all the investment banks who'd packed their portfolios with junk mortgage backed assets and credit default swaps. All this eventually caused home values to drop precipitously.

None of these factors exist with student loans. The value of a college degree isn't going to suddenly drop for some unforeseen reason and they don't take your degree away because you miss a payment on a loan (although this sounds like something a Republican would do). Wall Street isn't making a bunch of risky trades based on student loans. The required payments on existing loans aren't going to suddenly double or triple for some reason. And like I said, half of all student debt is held by folks who actually have good paying jobs and will pay back their loans. This is the definition of a false equivalence. There is no impending student loan "crisis", you're just wrong.

[Edited on January 27, 2017 at 10:12 AM. Reason : .]

1/27/2017 10:04:33 AM

We honestly just don't know what would happen with a student loan bubble popping. The most likely scenario is that Fanny Mae and Freddie Mac, or whoever owns them now, will be hit hard, hard enough to where they really tighten the reigns on who they loan money to. Or how much they loan, which probably wounldn't be a bad think because as others have said, when the banks stop loaning an unlimited amount of tuition money, universities would adjust their tuition down.

Maybe even structure their loaning based on degree. Should that even be a thing? It would be a very touchy subject I'm sure.

1/27/2017 10:16:00 AM

I'd be all for adjusting loan amounts based off of major. I'm sure there's a way to get the average income for someone with a particular degree after 5 years and use it as a baseline for a loan amount.

I'd even be willing to adjust loan amounts based on performance. If you suck as a student, you get less money.

At the very least, I imagine it would change the behavior of college entrants and to consider the financial consequences of their choices, especially if they're going to be on the hook for it.

1/27/2017 11:23:08 AM

Well like I said that is a touchy subject, and radical at that.

But in the real world that is how a lot of business loans work. If you can't somehow prove to the bank they are making a good investment and will get their money back, they won't give it to you to start with. Is that how student loans should work? I don't know.

Are there people out there with good jobs who have English degrees? Sure. I know a few in IT who have humanities degrees (I'm one of them). But if someone wants to get a degree that will put them in a job market that is already saturated, should the bank turn them down?

1/27/2017 11:27:25 AM

You'd also have to look at the attrition rate for individual majors if you were going to appropriate loan amounts based on the degree being pursued. I remember being told by NCSU intro to engineering that one out of every 3 engineering students at the school switched majors or dropped out, and something like 50% of engineers are no longer practicing engineering 10 years after graduation. These loans may be at higher rate of default if the student never gets into one of those higher paying jobs, or does graduate and changes careers after 5 years because they don't like the work or can't handle the stress.

1/27/2017 1:17:34 PM

I think the biggest thing is there needs to be more education and counseling before handing out student loans. Perhaps some sort of class you have to take online that actually explains how loans work and be able to pass a test before you can qualify. It needs to be explained with math people can understand what they are getting into when they take out these loans and possible problems down the road. It is easy to say people should just know that but a lot of people don't and sign up for these huge loans not knowing the full scale of what they are getting into. In the end its personal responsibility for taking out loans but trying to help people understand is a good step I think. If you have been informed and signed off on being informed and you still take out 100K for a basket weaving degree then you should be on the hook for that money I dont care what your excuse is.

[Edited on January 27, 2017 at 2:09 PM. Reason : .]

1/27/2017 2:08:36 PM

What if, and I know this is really sticking my neck out here, states just continued to fund higher education at the same rates they did before the recession?





That could make college more affordable and reduce student loan risk by decreasing the average loan amount!!!

1/27/2017 2:28:22 PM