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Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It's 45 percent of the total Federal assets. This is about 8.1 times larger than the 5.5 percent for the Total Mortgages outstanding and 6.0 times the size of Taxes Receivable at 7.6 percent.
Funny how a liability is now classified as an "asset" by the government
I expect that in the future those private student loans will be either eliminated or highly regulated.
Some sort of bailout - reduced repayment and then forgiveness, for that smaller number of extremely distressed borrowers will go through.
Yeah. Basically private loans is a huge red flag that there's a high probability you're doing something stupid like running up $60,000 in student loans for and AA in criminal justice from a for-profit school which in general is a good qualification to then go take your 8-hour initial course, get certified, and work armed security for $12/hr. The smarter people just skp the $60,000 in debt and wasted two years and take some part-time classes while working.
I don't know that we'll see a private student loan bailout. There's not much love lost for the whole for-profit schools thing. To some degree they're being unfairly scapegoated. Community colleges tend to fair almost as bad as the for-profits do. It's just that the debt is a lot less, Both systems are generally dealing with the marginal students where the better qualified jump straight to a four-year and aren't really having a default problem.
Government makes Big Bucks off student loan defaulters through garnishments with added penalties and fees.
Good. There should be fees and penalties if you default. You signed a legal agreement to pay back the money you borrowed. If there wasn't punishment for not doing so, there would be no incentive to pay it back.
Good. There should be fees and penalties if you default. You signed a legal agreement to pay back the money you borrowed. If there wasn't punishment for not doing so, there would be no incentive to pay it back.
If this is a good thing, nobody should be worrying or complaining about student loan defaults since they are a rich source of income for government.
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