The Coming Student Loan Debt Crisis: Cataclysm? or Catastrophe?

Discussion in 'Politics & Current Events' started by Dr. Wankler, Jul 18, 2017.

  1. Dr. Wankler

    Dr. Wankler Member+

    May 2, 2001
    The Electric City
    Club:
    Chicago Fire
    Or, for some, beneficial series of clerical errors...

    https://www.nytimes.com/2017/07/17/business/dealbook/student-loan-debt-collection.html


    Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing.

    The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments.

    Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation.



    Lucky bastards. Oh well, good for ... Wait, what?



    Some of the problems playing out now in the $108 billion private student loan market are reminiscent of those that arose from the subprime mortgage crisis a decade ago, when billions of dollars in subprime mortgage loans were ruled uncollectible by courts because of missing or fake documentation. And like those troubled mortgages, private student loans — which come with higher interest rates and fewer consumer protections than federal loans — are often targeted at the most vulnerable borrowers, like those attending for-profit schools.

    At the center of the storm is one of the nation’s largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate’s lawyers warned in a recent legal filing, “As news of the servicing issues and the trusts’ inability to produce the documents needed to foreclose on loans spreads, the likelihood of more defaults rises.”

     
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  2. JohnR

    JohnR Member+

    Jun 23, 2000
    Chicago, IL
    Fortunately for the overall financial system, the total amount of student loans is FAR below that of subprime loans a decade ago. That won't help the suckers who hold that debt, but it should limit the pain to those who are in some way involved, as opposed to the general economic problems that were caused by the 2007-08 mortgage meltdown.
     
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  3. The Devil's Architect

    Feb 10, 2000
    The American Steppe
    Club:
    Chicago Fire
    Nat'l Team:
    United States
    I am more than willing to let Navient eat my outstanding balance
     
  4. KCFutbol

    KCFutbol Moderator
    Staff Member

    Jun 14, 2001
    Overland Park, KS
    Club:
    Kansas City Wizards
    Nat'l Team:
    United States
    If there is a worse company than that bunch of clueless douche bags, I'd be shocked.
     
  5. chaski

    chaski Moderator
    Staff Member

    Mar 20, 2000
    redacted
    Club:
    Lisburn Distillery FC
    Nat'l Team:
    Surinam
    Ever hear of The Trump Organization?
     
  6. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    So higher rates for upcoming freshmen?
     
  7. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    Fyp
     
  8. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    Is TU still open?

    Did shawn and Jaime sign up for classes?
     
  9. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    Bump.

    The case for forgiving all student loans:

    http://amp.nymag.com/daily/intellig...yones-student-debt-for-the-economys-sake.html


     
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  10. ArsenalMetro

    ArsenalMetro Member+

    United States
    Aug 5, 2008
    Chicago, IL
    Club:
    Arsenal FC
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  11. taosjohn

    taosjohn Member+

    Dec 23, 2004
    taos,nm
    But.but,but-- if we start giving away more free stuff, even more Messican rapists will come here!



    That there is a way of injecting money into a demographic that probably won't hoard it...

    But you'd impact private institutions tremendously, though-- who'd go to a great private school if a good state school was free? So you might want to set up a system for allowing private school to get themselves annexed by state systems-- I'd hate to think of my alma mater, which is well endowed, has a great physical plant, and has gone need-blind, failing because a disproportionate mass of its potential student pool is diverted to SUNY-Bingy or something...
     
  12. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    If I remember correctly, back when states actually put money on education, getting into a good public university was difficult and you’ve had to had good grades. That’s a way to ensure that money is not diverted to iffy institutions with horrible track records and poor credentials.

    While we need to make sure everyone gets a good education, I think that at least part of the answer is improving our high school and elementary formation, and providing more technical education that does not require 4 years and a heavy investment.

    And we also need to recognize that a lot of jobs will disappear in the next few decades. Improving the minimum wage and/or combining it with a universal basic income might do the trick.

    Oh, and prestigious private institutions would probably survive with tuitions, donations and possibly some Federal grants.

    IOW, the whole system has to be revamped and it is likely that fewer people will be applying for 4 year education and that good private institutions would still get enough money directly from their students and alumni.
     
  13. taosjohn

    taosjohn Member+

    Dec 23, 2004
    taos,nm
    By jumping into the need-blind deep end shortly after killing off its fraternities, my school in effect chose to define its future as quality students not "the quality" students.

    It may not get the level of support directly from students and alumni for a while that it might need to make/complete the transition. It has, in effect rejected its White Privileged past and reached to a future serving All Mankind-- and it would be a sorry reward for courage if it dried up its own sources of money temporarily and its pool of future-affluent self-made alumni permanently in the two moves.

    I know you can't make a cake without breaking eggs, but I've got some serious sentimental attachment to an institution that has justified my faith in it over time here...
     
  14. American Brummie

    Jun 19, 2009
    There Be Dragons Here
    Club:
    Birmingham City FC
    Nat'l Team:
    United States
    My understanding was the opposite. I thought the debt associated with student loans was an order of magnitude larger than the housing market.
     
  15. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    IIRC....

    1.5 Trillion...
    45 million debtors...
    About a third are behind...
     
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  16. American Brummie

    Jun 19, 2009
    There Be Dragons Here
    Club:
    Birmingham City FC
    Nat'l Team:
    United States
    And I thought the housing market was only 10% default and $700 billion.

    Somebody correct me. It has been a decade.
     
  17. roadkit

    roadkit Greetings from the Fringe of Obscurity

    Jul 2, 2003
    Fornax Cluster
    Nat'l Team:
    United States
    Are you serious? I just suppose that private school will need to learn to live within its means. They might find they will have to reduce tuition or eliminate some departments to stay competitive. Providing a solid estimate of how an education from the private school increases long term earnings potential post-graduation as compared to the free state school would be another selling point.
     
  18. taosjohn

    taosjohn Member+

    Dec 23, 2004
    taos,nm
    Not with my first line, no.

    I doubt any responsible institution of higher learning truly "lives within its means" any more. I was just suggesting that it would be a sort of conservation move if traditionally private schools could be recycled into the proposed public system instead of going dark and new facilities being built up to fill their shoes.

    "Fraid I can't see what would have gotten you in a snit about that...
     
  19. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    I think your numbers are right. The main difference is that subprime mortgages were weaponized into privately held CDO2s, while most of the student debt is directly held and/or backed by the Federal government.
     
  20. usscouse

    usscouse BigSoccer Supporter

    May 3, 2002
    Orygun coast
    Going abroad could be an interesting and mind expanding way to go. Cost of living and day to day expences would be immediate concern but not the long term loan costs.

    The staggering cost of higher education in the United States has many prospective college students wondering whether going to college is worth the expense. While conventional wisdom still points to the benefits of having a college degree, more students and their families are seeking alternatives to lower their college tuition bills. Some Americans are even looking abroad, as some countries offer free tuition to international students and programs of study entirely in English.

    https://www.investopedia.com/articl...-countries-virtually-free-college-tuition.asp
     
  21. xtomx

    xtomx Member+

    Chicago Fire
    Sep 6, 2001
    Northern Wisconsin, but not far from civilization
    Club:
    Chicago Fire
    Which means that the Federal government is profiting on the backs of (primarily) lower income students and workers.
     
  22. American Brummie

    Jun 19, 2009
    There Be Dragons Here
    Club:
    Birmingham City FC
    Nat'l Team:
    United States
    But does that mean the threat of a bubble bursting is lower?
     
  23. dapip

    dapip Member+

    Sep 5, 2003
    South Florida
    Club:
    Millonarios Bogota
    Nat'l Team:
    Colombia
    I’d think so. There’s no urging need for ROI and the default rate is already high. As long as enough people keeps paying back and/or the private lenders don’t have to eat their loses, the crisis looks unlikely in the near future.
     
  24. rslfanboy

    rslfanboy Member+

    Jul 24, 2007
    Section 26
    I'm no economist, so here I go: Hold my beer.

    A decade+ ago, The financial institutions sold junk for top dollar and then ownership of that junk got spread around so that nobody knew who owned what and what their exposure was. That caused the huge stock market crash, banks losing capital, and then them no longer being able to meet obligations because they were so leveraged on the BS investments.

    As for student loans held by the govt, we can always print more money. There's little risk that the govt will default or crash, thereby wiping out your 401k.
     
  25. ArsenalMetro

    ArsenalMetro Member+

    United States
    Aug 5, 2008
    Chicago, IL
    Club:
    Arsenal FC
    All students. My dad's a retired lawyer and I have student loans. I don't know anyone whose family was worth less than $5 million that didn't have student loans.
     
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