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Congratulations
to the University of Phoenix, a private for-profit school, which has the
dubious distinction of having 4,359 percent more student loan defaults than
Columbus State, the top public school.
A student loan is considered in default when it is 360 days delinquent.
Number of Loans in Default
The above chart from the New York Times article Bad Student Debt
Stubbornly High as Collection Efforts Surge.
There is now over $1 trillion in student debt and $76 billion of that is in
default reports the NY Times in Debt
Collectors Cashing In on Student Loans
As the number of people taking out
government-backed student loans has exploded, so has the number who have
fallen at least 12 months behind in making payments — about 5.9 million
people nationwide, up about a third in the last five years.
In all, nearly one in every six borrowers with a loan balance is in default.
The amount of defaulted loans — $76 billion — is greater than the
yearly tuition bill for all students at public two- and four-year colleges
and universities, according to a survey of state education officials.
In an attempt to recover money on the defaulted loans, the Education
Department paid more than $1.4 billion last fiscal year to collection
agencies and other groups to hunt down defaulters.
Unlike private lenders, the federal government has extraordinary tools for
collection that it has extended to the collection firms. Ms. Cordeiro has
already had two tax refunds seized, and other debtors have had their
paychecks or Social Security payments garnisheed. Over all, the government
recoups about 80 cents for every dollar that goes into default — an
astounding rate, considering most lenders are lucky to recover 20 cents on
the dollar on defaulted credit cards.
There is no statute of limitations on collecting federally guaranteed student
loans, unlike credit cards and mortgages, and Congress has made it difficult
for borrowers to wipe out the debt through bankruptcy. Only a small fraction
of defaulters even tries.
“You are going to pay it, or you are going to die with it,” said
John Ulzheimer, president of consumer education at SmartCredit.com, a credit
monitoring service.
Debt Slave Collection Business is Booming
Last year the government paid $1.4 billion to collect defaulted loans of
which $355 million went to 23 private debt collectors. Student debt
collection is now the most sought-after contract within the industry.
No wonder.
Student loan collectors have the ability to garnish wages, seize tax refunds,
and seize other government payments.
Those in the debt slave racket are of course willing to do anything to keep
the business alive. Obama wants to expand the program. Of course, so do all
the universities and anyone associated with the slave trade.
The schools and slave trade collection agencies are big contributors to
politicians willing to accept campaign bribes to keep the student
"aid" programs intact.
Student "Aid" or Economic Prison Sentence?
You know the answer to the question if you have any common sense. Student
"Aid" is not for the kids. Virtually nothing of importance in the
education industry is "for the kids".
From public unions, to aid programs, and even grants, the entire system is
geared to sending as many kids as possible to school, hoping to make debt
slaves out of them for life.
The only rational thing to do is kill every one of these ridiculous programs
cold turkey. Those in the slave trade will fight tooth-and-nail against
cutbacks, led no doubt by the University of Phoenix.
For more on Student "Aid" please see
·
A Remarkable
Comparison: Affordable Student Loans vs. Affordable Housing an email from Eugene Holloway, a
Maryland Attorney, on the rising cost of college education.
·
Debt for
Diploma Schemes: Debt for
Diploma Schemes and the Cookie Monster Principle
·
Off-Balance-Sheet
Budget Fraud: Budget Deficit
Accounting Fraud and the Off-Balance-Sheet Student Loan Scam; Time to Scrap
Entire Student Loan Program
·
Pell
Grants Turn Students into Debt Zombies: For Profit
Schools Turn Students Into Debt Zombies; It's Time To Kill The Entire Pell
Grant Program
·
Subprime
College Loans, Who is to Blame?: Subprime
Goes to College; Students Buried in Debt; Who is to Blame?
·
Expect
More Student Riots: University
of California Campus Erupts In Riots; Student Loan Scam Drives Up Cost Of
Education; Expect More Riots
Major Economic Headwinds
The effect on housing and the economy of these disastrous policies are
enormous, yet Bernanke is not even bright enough to figure it out.
Please consider a few snips from Central
Bankers Fail to Understand Forces Holding Back the Economy; Ten Major
Economic Headwinds
Ten Major Headwinds
1.
Boomers
heading into retirement have insufficient savings
2.
Student
debt holds back home-buying, marriage, and family formation
3.
Ability
and willingness of individuals and businesses to take on more debt has shrunk
dramatically. Attitudes towards lending, borrowing, and home ownership
have changed.
4.
Bank
bailouts at taxpayer expense left banks intact but did nothing for households
deep in debt
5.
Tax
policy encourages flight of jobs and capital
6.
Technology
now serves to destroy more jobs than it creates. Please see Robots to
Rule the World? Taking All Jobs? Replace Women? for a discussion.
7.
Untenable
pension problems at the city, state, and federal level can no longer be put
off.
8.
Public
unions and collective bargaining are structural problems at the heart of the
pension mess as well as the heart of numerous city bankruptcies.
9.
Artificially
low interest rates weakens those on fixed income
10. Commercial real estate bust on top of
housing bust limits further job expansion. How many more Walmart, Pizza Huts,
McDonalds, nail salons, Kohl's stores, Office Depots, Home Depots do we need?
Where?
Housing and Recoveries
Housing has led nearly every economic recovery for decades. So look at point
number two above: Student debt holds back home-buying, marriage, and
family formation.
I expect housing to be weak for a decade because of those points. Prices will
be stagnant for years as banks work off REOs.
The structural overhangs of inept policies, bank bailouts, mortgage fraud,
public unions, and boomer retirements guarantees Bernanke will not be able to
stimulate lending to the degree he wants.
Worse yet, Bernanke's policies only serve to increase the economic
distortions and the tension between the 1% and everyone else.
Addendum:
Note to All Facebook Users:
If you have not yet voted for your favorite charity (it costs nothing to
vote), please do so. Chase is giving away $5 million to charity, and I have a
cause that I support.
Please click on this this link: Facebook
Users, I Have a Favor to Ask, then follow the instructions.
Read more at http://globaleconomicanalysis.blogspot.fr/2012/09/university-of-phoenix-top-of-heap-in.html#3fFyCbc1FsfBpvUP.99
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