Alarming Number of Student Loan Debts Aren’t Being Paid
This dam is eventually going to break and all bets will be off.
Zero Hedge reports.
7 Million People Haven’t Made A Single Student Loan Payment In At Least A Year
Of course one reason no one is panicking – yet – is that the severity of the problem is masked by artificially suppressed delinquency rates. As we’ve documented in excruciating detail, if one excludes loans in deferment and forbearance from the numerator in the delinquency calculation, but includes those loans in the denominator then the delinquency rate will be deceptively low. In any event, as WSJ reports, even if one looks at something very simple like, say, the number of borrowers who haven’t made a payment in a year, the picture is not pretty and it’s getting worse all the time. Here’s more:
Nearly seven million Americans have gone at least a year without making a payment on their federal student loans, a staggering level of default that highlights how student debt continues to burden households despite an improving labor market.
As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days, quarterly data from the Education Department showed this week. That was up 6%, or 400,000 borrowers, from a year earlier.
The figures translate into about 17% of all borrowers with federal loans being severely delinquent—and that share would be even higher if borrowers currently in school were excluded. Additionally, millions of other borrowers who haven’t hit the 360-day threshold that the government defines as a default are months behind on their payments.
Each new crop of students is experiencing the same problems” with repaying, said Mark Kantrowitz, a higher-education expert and publisher of the information website Edvisors.com. “The entire situation isn’t getting better.”
7 Million People Haven't Made A Single Student Loan Payment In At Least A Year (Zero Hedge)
Comments
So I’m out there busting my ass every single day in order to make enough to put food on the table, a roof over my family’s head and pay my college loans, and SUFFERING for it because I get lumped in with those no-good, defaulting creeps in terms of people looking at “my debt to income ratio” as a likelihood of default when I go looking for a loan to expand my law practice, one of my other businesses or for some other reason?
It’s enough to make one say “screw it” and simply not pay going forward, take that $1800 I’m paying every month and pay off my other debts.
But no. I’m one of the “responsible” ones, and I would feel ashamed.
Apparently my contemporaries have both no shame, and no self-worth.
What other businesses are you in? You sound busy. 🙂
As for those who don’t repay: Congress has never heard the term “moral hazard,” and it isn’t limited to student loans. I could write 10,000 words on this.
I will say this: I feel no interest in being more financially responsible than the government that points guns at people to take their money for $460k outhouses, et alia. I feel no obligation to be a sap.
CLOSE the Fed.
I have my law practice – which I am having to pare back the number of individuals I see who are indigent. I used to be willing to take on DTPA cases either on contingency or on payment terms with a minimal prepaid IOLTA fee from the elderly or disabled as a public service to the community.
Now, even for people who I think have got a good case AND the defendant is solvent, I’m having to tell them “you’ve got to plunk down $2,500 in advance, AND I’m going to bill you every month to bring it back up to that $2,500 for what I have spent working for you for that month.” If they can’t, I can’t help them. I’ve been burned one-too-many times.
I also own Skinner Industries. Arbitration, mediation, business negotiations, business efficiency analysis. I am the local arbitrator for the Better Business Bureau of El Paso, and the only BBB Autoline Arbitrator still willing to take cases within about a 200 mile radius. It does not pay well for the amount of work it requires, but that is largely the only place that some consumers can get any reasonable chance at a hearing of their complaint.
My extended family as a whole owns Manth-Brownell, Inc. (a manufacturing company in upstate New York). I (much more rarely now) consult on projects for them: capital, efficiency or legal. Generally now they only call me if they need something really, really big looked at.
My parents separately own Skinner Resources, a subchapter S that owns the land that Manth-Brownell, Inc. sits upon, and that is in certain other business ventures.
Won’t or can’t?
So many suckers got suckered into meaningless, overpriced degrees. Heck, get a Masters to make 28k a year?
Since student debt can’t be discharged in a bankruptcy because of a few bad actors some time ago, loans are made no matter what the potential for repayment would indicate as a good or bad risk.
Right up there with the housing loans made to people who couldn’t afford them.
All because of the concept of “Sounds compassionate; social justice; ‘fair’, etc.” that Liberals use to justify their emotionally, not rationally, based positions.
Right up there with “Gun Free Zones” and other “feel good but does bad” Liberal concepts.