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Ranger Rick: A surprise for student loan forgiveness

I remember it like yesterday, our anointed president at the time, Barack Obama, announcing the U. S. government would be the lender of record for all future college education loans.  Those rascally banks were just putting too much pressure on those wanting help to attend college by asking they pay it back at a small interest rate once they graduated.

What cretins, wanting the bank members money to be paid back to the bank so lending to others could proceed!

I knew it would be a massive giant ClusterFoxtrot, anytime the government gets it’s ugly mitts on a program, it expands exponentially and graft and corruption ensue.  Besides, anything Obama and his administration touched turned into brown excrement.

It was announced recently the federal government is set to lose nearly half a trillion taxpayer dollars in college loans that won’t be repaid, according to an analysis conducted by the U.S. Department of Education.  What a surprise!  I was completely taken aback and had the vapors.  The federal government program in trouble?  How could this be?

The Education Department, which has surpassed Bank of America and JP Morgan Chase to become the nation’s largest consumer lender, hired FI Consulting to examine the $1.37 trillion dollar student loan portfolio held by the federal government at the beginning of this year (2020).

The accounting firm projected that borrowers could pay back $935 billion in principal and interest.  That leaves a $435 billion loss, which is by far larger than any estimates released previously.  This includes the Congressional Budget Office estimate in May 2019 of a loss of $31 billion, including administrative costs (yes, there is a cost to lending – personnel, overhead, administration of accounts, etc.).

As Gomer Pyle used to say, “Surprise, surprise, surprise”!   It is almost as much as the $535 billion that private lenders lost from subprime mortgages in the 2008 financial crisis.  Subprime mortgages that the federal government insisted banks must allow or their charters to do business would be pulled.  Oh, our wonderful federal government, just a barrel of laughs and bad news.

According to the Wall Street Journal, the projected losses are largely driven by defaults and income-based federal student loan forgiveness programs.  That means little Johnny or Susie can say they can’t get a job with their degree in Underwater Basket-Weaving so their loans must be forgiven.  But they can weave a fine basket!

This debacle doesn’t include about $150 billion in loans from private lenders backed by the U.S. government, which isn’t eligible for federal student loan forgiveness but are at risk of default.

This comes at a time Democrats call for easing some, if not completely eliminating student loan debt.  What a fine Christmas present for the U.S. taxpayers!

You wanted Biden, and you now have a dementia ridden, forgetful, bumbling, stumbling shell of a man to be president, or should I say figurehead.  We all know Kamala the Commie will soon be the president after Joe is committed to the nursing home of his choice.

And I will support the new president exactly like the Media (ABC, CBS, NBC, MSNBC, CNN, all newspapers and magazines), Establishment Republicans, BLM, Antifa, Russians, Chinese did to President Trump and his Administration.

I really will – I PROMISE!

The rotting of America from within continues in earnest soon!

10 Comments

  • Many students like myself overborrowed and are overeducated. The job we thought we needed the education for did not materialize, and as a result, our debt-to-income ratio is severely out of balance. I do not believe that widespread debt forgiveness is the answer. However, current law does not allow borrowers to eliminate student debt in bankruptcy. This is the answer. Allow borrowers to eliminate the debt and pay the penalty for the mistake- same as they can for abusing credit cards or buying too much home. This gives borrowers that can pay it the option to avoid the consequences that Ch. 7 can have on their ability to use credit for 10 years.

  • Mr Vote
    Sorry, but there have many thousands before you that have your current problem. Believe it or not they ended up paying their loans off.
    Have you tried working two jobs, yes they may not be paying what your educated job would of. That’s the gamble you took . Betting your education would make you a life without financial worries.
    Now you like others want a lower penalty payoff, because you lost your gamble on making big money.
    Sorry, but many of us, our children and grandchildren worked hard and did some suffering to repay the debt they signed to repay. There was no abuse to that loan . You willfully agreed to the terms.
    I have no sympathy for those gambling on education when if they might have entered a trade they would not be debt bound today.
    Betting on education to become financially stable “flew out the door” at least 6 to 8 years ago.

    • Mr Vote,

      Mr Smit is 100% correct. You borrowed the cash, you promised to pay it back, now make the right choice and pay it back. Don’t take the easy way out. You will feel better doing it on your own!

      Cheers!!

      • Mr. Wilkens,

        Thanks. I am paying it back, as I stated above. Was trying to make a broader point about types of debt protection vs looking for an easy way out.

        Cheers to you as well!

        • Mr Vote,

          I understand you are paying the loan back. I am 100% encouraged that the lenders won’t allow this debt (student loan) to go bankrupt. Additionally I wish credit cards, cars etc. were not allowed to go bankrupt. They borrowed in good faith they should have to pay it back. If they need some time to get through a tough spot, I am good with that. However when you’re back on your feet, start paying it back.

          Cheers!!

    • Mr. Smit,
      You’ve missed the point of my post. Your assumption that I’m not working hard enough to pay back a debt the size of a mortgage is erroneous and borderline insulting. I do work multiple jobs. I do work hard, and will continue to work hard to pay off student debt. In my personal situation the vast majority of my debt is on a Master’s Degree that I overvalued in the early 2000s, before your ‘6-8 years ago’ timeline. At this time, the discussion of Federal Loan Forgiveness is not addressing graduate debt- only undergrad. In addition, I did state that I agree with you- widespread debt forgiveness is wrong.
      My point is this: I do not understand why student loan debt is protected under current bankruptcy law. People can go out, waste credit on fancy cars, big houses, and run up massive credit card bills. They can discharge all of this debt with a Chapter 7 declaration. Yes, they’ll have horrible credit scores for a decade, but they can eventually rebuild and start fresh. Students who ‘gambled on education’ or simply listened to everyone in school telling them they needed degrees to do anything in the world cannot discharge the debt. They can default, but the debt will always hang over them. We allow people to make stupid mistakes with credit, but we don’t allow people to make stupid mistakes in education.

      • Mr Vote
        Just a comment on your last sentence.
        Supposedly, graduation from high school puts you in the realm of being an adult. Making “stupid mistakes ” requires penalties.
        It may be hard to accept, but education after high school is not a requirement. It’s not a guarantee of a well-paying job or employment. Bringing debt upon one’s self in speculation of gain does require repayment plus interest.
        It’s wonderful you are working to repay your loan. As you also said, you have a problem with the post graduate education being excluded from this program.
        Post graduate study is not forced on anyone. It is a choice made by an adult with a minimum of four years higher education. One pursues this on their own free will.
        People making mistakes by going into debt because of education must pay the price for being “smarter” than the average high school graduate.
        Signing a loan, credit cards are “free-will commitments.”

  • The biggest mistake is to allow “guidance councilors” to tell kids in their jr. & se. years they need a college education to have a successful career. What hogwash!
    If you want to become a surgeon or dentist, yes, college is essential. A trade associates degree, military service, and working for a company that provides college tuition assistance is preferable than piling on mounds of debt. Most service members attend college at night or weekends. Many a summer Saturday was spent in college classes by many of my friends.

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