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Student Loan Bubble: Air Added

We wrote last month about America’s ballooning student loan problem … which is compounded by the fact the American job market is terrible (and about to get terribler). Well guess what … the bubble is getting bigger. According to data released this week by the U.S. Department of Education (which…

We wrote last month about America’s ballooning student loan problem … which is compounded by the fact the American job market is terrible (and about to get terribler).

Well guess what … the bubble is getting bigger.

According to data released this week by the U.S. Department of Education (which for the record ought to be permanently, not partially shut down), the default rate for the three-year period ending September 30, 2012 climbed to 14.7 percent.

That’s the highest it’s been since 1995. Last year, the default rate was 13.4 percent.

“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Education Secretary Arne Duncan said in a statement.

Really? Thank you, Captain Obvious.

An estimated $146 billion of taxpayer-subsidized student loans are now in default, people. But Duncan isn’t about to slow down the gravy train.

“The Department will continue to work with institutions and borrowers to ensure that student debt is affordable,” he said. “We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders—to improve college affordability for millions of students and families.”

Translation?

The federal government is going to continue feeding tuition hikes at both government-run and private institutions by conning future borrowers into the same trap … perpetuating a vicious cycle fueled by additional debt.

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11 comments

CNSYD October 1, 2013 at 10:42 am

What are the default rates at USC and Clemson? How does that compare to the on-line diploma mills, e.g. Phoenix? Answer these questions and you will have your solution.

Reply
Frank Pytel October 1, 2013 at 10:57 am

I simply can not disagree. I personally defaulted on some yahoo school in Compton. 25 years later I hit the teachers exemption. They don’t hound me any more. Dont worry. They got about90% back. Serves the wankers right for subsidizing the old adage ‘shite in one hand….. ‘

Reply
jimlewisowb October 1, 2013 at 11:01 am

Appearing soon at a shopping mall near you

Alex Thornton Write in Candidate for Governor

Reply
Jackie Chiles October 1, 2013 at 12:32 pm

Until government loans are attached to requiring people to major in fields with some chance of paying it back, this will only get worse. No bank would loan some idiot 18 year old kid $250k for a degree in Art History where you have a 2% chance of finding a job in Art History, and, even if you do find a job in Art History, the pay is $30k a year. Its nonsensical.

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MashPotato October 2, 2013 at 2:13 am

You mean to say that banks assess loan risks better than the government? Whodathunkit?

Reply
BillC123 October 1, 2013 at 1:00 pm

I believe this is next on Obama’s list. All of those African-American Studies and other worthless degree graduates will be able to waive their repayments as long as they agree to be life-long Democrats.

Reply
? October 1, 2013 at 1:39 pm

Nah, they are going to make them gov’t mules/slaves, and then they will be “forgiven” for their debt after years of helping Uncle Sam to rape & pillage what’s left of the productive non-gov’t working people.

I’m guessing 3 years of “gov’t service” or something along those lines.

Reply
Charlemagne, King of France October 1, 2013 at 2:57 pm

its already built in. if you work for the govt for 9 years your student debt is forgiven

Reply
? October 1, 2013 at 5:56 pm

There ya go! I didn’t even know that.

9 years and your debt is “forgiven”(by taking it out of everyone else’s pocket), great.

Reply
CL October 1, 2013 at 7:29 pm

I like the proposal to require the school to co-sign the loan.

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Travis Zachary October 2, 2013 at 8:59 am

The student loan business is a complete scam. Until we do away with the notion that academic success for all students should result in a “college” degree the better. Of course since employment is no longer expected to last any significant duration, there is less and less on the job training provided by employers.
What you end up with then is students signing up for ridiculous programs at ridiculous schools, without any actual consideration for whether or not they are going to acquire any actual marketable skills.
And the reality is that employers do not give any credence to most of the for profit school degrees. If your resume says South University, University of Phoenix, etc., it just straight into the circular file.

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