Obama’s New Student Debt Law Perpetuates The State Of Welfare

Never mind the fact that it was idiotic to get a $100,000 loan in order to get a Psychology or a Marine Biology degree. Now, the Obama Administration is trying to stick the taxpayer with a bill. Again. Who will—and won’t—benefit from student loan aid

Students with federal loans will be able to cap payments at 10% of their monthly income for 20 years. Any remaining balance thereafter will be dismissed.

So, let me get this straight. Not only does the law sticks the taxpayer with paying for someone else’s overpriced education, but it also creates a Welfare mindset while discouraging hard work. Simply brilliant. Welcome to the United Socialist States Of America.

Obama’s New Student Debt Law Perpetuates The State Of Welfare Google

March 27, 2014

America’s Experiment In Debt Slavery Continues Unabated

In a nutshell, the article below has a number of highly educated attorneys and doctors whining that they cannot afford to buy a new BMW or Audi and get a loan on a large house because of their huge student loan balances. As I shed a tear for them, this is a big problem. Roughly 37 Million Americans now have some sort of a student debt, totaling $1 Trillion. Some are even using student loans as their primary source of income: Student Loans Replace Home Equity ATM’s.

While it’s a complex financial and personal matter, I would advise people to think twice before getting their college degree. Particularly, if they really on college loans to finance the matter. While it is not a popular opinion, colleges are, more or less, worthless. Let me give you an example.

Let’s take Person A. who starts out as a plumber making $40,000 a year (increasing at 2% per year) right after high school and Person B. who goes to college and graduates with a history degree and a $100,000 debt load. Even if Person B is able to get a better paying job of let’s say $50,000 (which is questionable) it won’t be until about their retirement age that they will be able to catch up, financially speaking, to person A. If at all. According to my quick financial calculations. Making University education not only obsolete, but unnecessary.

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America’s Experiment In Debt Slavery Continues Unabated Google

Ap Writes: $1 trillion student loan debt widens US wealth gap

Rising college costs add to $1 trillion student loan debt, widening US wealth gap

Every month that Gregory Zbylut pays $1,300 toward his law school loans is another month of not qualifying for a decent mortgage.

Every payment toward their student loans is $900 Dr. Nida Degesys and her husband aren’t putting in their retirement savings account.

They believe they’ll eventually climb from debt and begin using their earnings to build assets rather than fill holes. But, like the roughly 37 million others in the U.S. saddled with $1 trillion in student debt, they may never catch up with wealthy peers who began life after college free from the burden.

The disparity, experts say, is contributing to the widening of the gap between rich and everyone else in the country.

“If you graduate with a B.A. or doctorate and you get the same job at the same place, you make the same amount of money,” said William Elliott III, director of the Assets and Education Initiative at the University of Kansas. “But that money will actually mean less to you in the sense of accumulating assets in the long term.”

Graduates who can immediately begin building equity in housing or stocks and bonds get more time to see their investments grow, while indebted graduates spend years paying principal and interest on loans. The standard student loan repayment schedule is 10 years but can be much longer.

The median 2009 net worth for a household without outstanding student debt was $117,700, nearly three times the $42,800 worth in a household with outstanding student debt, according to a report co-written by Elliott last November.

About 40 percent of households led by someone 35 or younger have student loan debt, a 2012 Pew Research Center analysis of government data found.

Allen Aston is one of the lucky ones, having landed a full academic and financial-need scholarship at Ohio State University. The 22-year-old software engineer from Columbus estimates it let him avoid about $100,000 in debt.

Without loans to repay, Aston is already contributing 6 percent of his salary to a retirement fund that is matched in part by his employer and doesn’t have the same financial concerns his friends do.

“I’m making the same money as them, but they have student loans they’re paying back that I don’t. So, it definitely seems noticeable,” he said.

At the other end of the spectrum is Zbylut, an accountant-turned-attorney in Glendale, Calif. He’s been chipping away at nearly $160,000 in student debt since graduating in 2005 from law school at Loyola University in Chicago. Now 48, the tax attorney estimates he could have $150,000 to $200,000 in a 401(k) had the money he’s paid toward loans gone there.

“I’m sitting here in traffic. I’ve got a Mercedes behind me and an Audi in front of me and I’m thinking, ‘What did they do that I didn’t do?'” Zbylut said by cellphone from his Chevrolet. He’s been turned down twice for the type of mortgage he needs to buy a home big enough for himself, the fiancee he would have married already if not for his debts and her 10-year-old son.

“I have more education and more degrees than my father, as does she than her parents, and yet our parents are better off than we are. What’s wrong with this picture?” he said.

Student debt is the only kind of household debt that rose through the Great Recession and now totals more than either credit card or auto loan debt, according to the Federal Reserve Bank of New York. Both the number of borrowers and amount borrowed ballooned by 70 percent from 2004 to 2012.

Of the nearly 20 million Americans who attend college each year, about 12 million borrow, according to the Almanac of Higher Education. Estimates show that the average four-year graduate accumulates $26,000 to $29,000 in loans, and some leave college with six figures worth of debt.

The increases have been driven in part by rising tuition, resulting from reduced state funding and costlier campus facilities and amenities. Compounding the problem has been a trend toward merit-based, rather than need-based, grants as institutions seek to attract the higher-achieving students who will boost their standings.

“Because there’s a strong correlation in this country between things like SAT scores or ACT scores and wealth or income, the (grant) money ends up going disproportionately to students from wealthier families” who tend to perform better on those tests, said Donald Heller, dean of the Michigan State University College of Education.

Those factors, along with stagnating family incomes and declining savings, have made student loans a much bigger part of funding higher education, Elliott said.

Harvard Business School’s Michael Norton wonders whether greater public awareness of the widening wealth gap in the United States would hasten policy change. Norton conducted a 2011 survey that found that people tend to think wealth is more equally distributed than it is.

But with elected officials from President Barack Obama on down now talking about the wealth gap as an urgent public problem, a more complete picture seems to be emerging, he said.

“Both parties are now saying, perhaps inequality has gotten to the point where it’s not fair when people don’t have a chance to rise, and we need to do something about it,” Norton said.

Targeting the soaring cost of higher education, Obama in August proposed the most sweeping changes to the federal student aid program in decades. His plan would link federal money to new college ratings and reward schools if they help low-income students, keep costs low and have large numbers of students earn degrees.

Lawmakers in Congress also are debating how to address the issue, including proposals to allow graduates with high-interest loans to refinance at lower rates.

The American Medical Student Association supports expanding the National Health Services Corps, which provides loan forgiveness in exchange for service in underserved areas.

Nida Degesys, AMSA’s president, graduated in May 2013 from Northeast Ohio Medical University with about $180,000 in loans. The amount has already swelled with interest to about $220,000.

“There were times where this would make me stay up at night,” Degesys said. “The principal alone is a problem, but the interest is staggering.”

Yet, as costly as medical school was, Degesys sees it as an investment in herself and her career, one she thinks will pay off with a higher earning potential.

College degrees can pay off. College graduates ages 25 to 32 working full time earn $45,500, about $17,500 more than their peers with just a high school diploma, according to a Pew Research Center analysis of census data.

Elliott says the country needs to re-think college financing options to bring debt down and graduation rates up.

“We can’t,” he said, “let debt hinder a whole generation of people from beginning to accumulate wealth soon after graduating college.”

March 3, 2014March 3, 2014

Warning: Student Loans Replace Home Equity ATM’s

Just when I think things can’t possibly get more idiotic and ridiculous, they do. As WSJ reports, tens of thousands (if not hundreds of thousands) of Americans are going back to school in order to take out student loans. Not for education, but to use them as their primary source of income. Once you think about it, it does make perfect sense and I do not blame the people trying to get whatever money they can in order to bridge their expense gap.

I guess this so called 6.6% unemployment is not working for everyone. I do blame the FEDs and the idiots at every level of our government. The situation we see today is the direct result of monetary policy implemented over the last 2 decades. Somehow, the fools believe that they can simply print money and insure that everything goes on as it should. Of course, it works until it doesn’t.

We have already experienced a number of sever bear markets since the 2000 top. With one more bear market and a severe recession left of the clock (2014-2017), it is my hope that the American people wake up and demand answers from their Government. But I will not be holding my breath. For most Americans, watching “The Biggest Loser” is a lot more important than understanding macroeconomic issues at hand. Oh well.

WSJ Writes: Student Loans Entice Borrowers More for Cash Than a Degree

Some Americans caught in the weak job market are lining up for federal student aid, not for education that boosts their employment prospects but for the chance to take out low-cost loans, sometimes with little intention of getting a degree.

Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

“The only way I feel I can survive financially is by going back to school and putting myself in more student debt,” says Mr. Selent, who has since added $8,000 in student debt from living expenses. Returning to school also gave Mr. Selent a reprieve on the $400 a month he owed from previous student debt because the federal government doesn’t require payments while borrowers are in school.

A number of factors are behind the growth in student debt. The soft jobs recovery and the emphasis on education have driven people to attain more schooling. But borrowing thousands in low-rate student loans—which cover tuition, textbooks and a vague category known as living expenses, a figure determined by each individual school—also can be easier than getting a bank loan. The government performs no credit checks for most student loans.

College officials and federal watchdogs can’t say exactly how much of the U.S.’s swelling $1.1 trillion in student-loan debt has gone to living expenses. But data and government reports indicate the phenomenon is real. The Education Department’s inspector general warned last month that the rise of online education has led more students to borrow excessively for personal expenses. Its report said that among online programs at eight universities and colleges, non-education expenses such as rent, transportation and “miscellaneous” items made up more than half the costs covered by student aid.

The report also found the schools disbursed an average of $5,285 in loans each to more than 42,000 students who didn’t log any credits at the time. The report pointed to possible factors such as fraud in addition to cases of people enrolling without serious intentions of getting a degree.

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Capella Education Co., which runs online schools, examined student costs and debt at institutionspublic and privatein Minnesota and concluded that between a quarter and three-quarters of loans taken out by students were for non-education expenses. At one of Capella’s master’s programs, the typical graduate left with about $30,200 in student debt even though tuition, fees and book costs totaled roughly $18,800. Borrowers are prohibited under federal law, except in rare instances, from discharging student debt through bankruptcy.

The share of student borrowers taking out the maximum amount of loans—$12,500 a year for undergraduates—has risen since the recession. In the 2011-12 academic year, federal Education Department data show, 68% of all undergraduate borrowers hit the annual loan ceiling, up from 60% in 2008.

Research suggests a fair chunk of that is going to non-education expenses. In 2011-12, about a quarter of student borrowers took out loans that exceeded their tuition, after grants, by $2,500, according to research by Mark Kantrowitz, a higher-education analyst and publisher of the education site Edvisors.com.

Some students say they intend to get a degree but must borrow as much as possible because they can’t find decent-paying jobs to cover day-to-day expenses.

Tommie Matherne, a 32-year-old married father of five in Billings, Mont., has been going to school since 2010, when he realized the $10 an hour he was making as a mall security guard wasn’t covering his family’s expenses. He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.

“We’ve been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don’t have to worry about food,” says Mr. Matherne, who owes $51,600 in federal loans.

Some students end up going deeper into debt. Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh’s online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable.

“Obviously, it’s better not to use it that way if you can help it, because you’re just going to owe that much more later,” says Ms. Merritt, a former bookkeeper.

The government lets students use a portion of federal loans for living expenses on the grounds that it allows students to devote more time to studying and improves their chances of graduating. Even when schools suspect students are over-borrowing, they are restricted by federal law and Education Department policy from denying funds.

College and university trade groups are pushing legislation this year to set lower maximum loan limits for some types of students, such as part-timers. Dorie Nolt, spokeswoman for Education Secretary Arne Duncan, says the Obama administration is “exploring alternatives to see how we might ensure that students don’t borrow more than necessary.”

Mr. Selent, of Fort Lauderdale, knows he is getting himself deeper in a hole but prefers that to the alternative of making minimum wage. In his 20s, he earned a bachelor’s degree in communications from a local for-profit school but couldn’t find a job in the field after graduating and began falling behind on his student-loan bills. He is now taking courses for a degree in theater so he can become an actor.

Meanwhile, federal loans allow him to cover any needs that arise during the semester. Says Mr. Selent: “It keeps me from falling apart.”

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Warning: Student Loans Replace Home Equity ATM’s Google

October 7, 2013

Educated Slaves Controlled Through Debt

Daily Ticker Writes: This Is The Next Sub-Prime Crisis

The staggering cost of student loan debt is daunting — it tops $1 trillion.

Now there is new data showing that students are increasingly faltering under the weight of this debt.

The U.S. Department of Education says figures reveal one in seven borrowers defaulted on their federal student loans. The default rate also rose to 14.7% from 13.4% the year before, the highest level since 1995 based on a related measure, according to Bloomberg News. (The report is for the three years to Sept. 30, 2012.)

In the above video, Jim Rickards, senior managing director at Tangent Capital and author of Currency Wars: The Making of the Next Global Crisis and the upcoming Death of Money, calls the student loan debt load the “next sub-prime crisis.”

Rickards makes his case based in part on the size of the debt and the nature of its underwriting.

I highly recommend you to click on the link above and watch the video. A very interesting perspective on the student loan issue that I tend to agree with.

Basically, Mr. Rickards views Federal Loan Program simply as another avenue for the Federal Government to prop up the economy. They do so by lowering underwriting standards on the student loans backed by the US Government and pump a huge amount of that money/liquidity into the real economy through students and Universities. Most of that money is then spent (college students don’t save) and that by default flows into the real economy. Of course, enslaving millions of students for decades to come in the process.

When you look at it from a different angle, that is indeed exactly what is happening. In my previous article Why You Should Default On Your Student Debt…Today!!! I suggested that you should default on your student debt if you owe more than $50,000.

I will say it again. You shouldn’t hesitate to strike back at an entity (even if that entity is the US Government) that is trying to enslave you for the next few decades under the false pretenses and their own self interests. Figure out how to do it.

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October 1, 2013October 1, 2013

Why You Should Default On Your Student Debt….Today!!!

Bloomberg Writes: Student-Loan Defaults Rise in U.S. as Borrowers Struggle

About one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy.

The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said today. Based on a related measure, defaults are at the highest level since 1995.

The fresh data follows the announcement by Barack Obama’s administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes. The rising number of defaults shows the pain of borrowers, said Rory O’Sullivan, policy and research director at Young Invincibles, a Washington nonprofit group.

“Our generation is behind in the economic recovery and not recovering as fast as we need to,” said O’Sullivan, whose group represents the interests of people ages 18 to 34. “It’s financial disaster for borrowers. Defaults can dramatically affect their credit rating and make it harder to borrow in the future.”

Read The Rest Of The Article Here

U.S. borrowers owe $1.2 trillion in student-loan debt. That is an obscene amount that is literally killing the future of America and postponing everything from household formation to purchasing a car.

Clearly that is not good. If you are a college student with a lot of debt here is my advice for you.

If you owe less than $50,000 pay it off over time.
If you owe more than $50,000….DEFAULT NOW. Simple as that.

Now, understand something. American Corporations and the US Government spend billions of dollars each year marketing to you that your Credit Score/Report is basically a sacred institution. Default and it will destroy the rest of your life. In fact, it is so bad that most Americans would rather die than ruin their credit report.

You know what my opinion is? Screw them. These same Corporation default all the time, only to come back and ask you for a bailout. The US Government is basically insolvent. Yet, they want you to be their debt slave forever. Defaulting will not destroy your future. If anything, it will free you up. I highly encourage you to do research into this area to see if defaulting on your debt is a viable option for you.

Now, I know that you technically CANNOT default on your student debt. However, if there is a will there is a way. You are smart, you went to college. Do what you need to do in order to figure out how to do it.

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