US Government Will Make A Record $51 Billion Off Student Loan Debt This Year

As the cost of "so called" higher Education increases exponentially over the years, so does the profit for the Department Of Education. Consider this a "stealth tax" on students who either didn't have the necessary information to make an informed decision on the "pay vs. the cost" of student loans for their particular field or of course those just plain dumb enough to go $50,000 in debt they can never write off to get a $10 an hour job.

Advice for those going to college.... If you are going to take out massive amounts of debt, make damn sure the job you are training for pays enough to pay back that debt!

Doctor, Pharmacist, Dentist, etc.

Do your research or you will either be in debt for the rest of your life or live below the poverty line so you can defer the debt payments (one of my wife's acquaintances has to intentionally live below the poverty line or pay back $90,000 in debt for a Graphic Design Degree which did not translate to a job!)

Student loan debt is now one of the Obama Administration's biggest cash cows.

The government is poised to pocket a record $51 billion profit from federal student loan borrowers this year, according to a report by the Congressional Budget Office.

That's roughly 40% higher than the CBO's original forecast in February, $35.5 billion.

The Huffington Post's Shahien Nasiripour helps put the new estimate in perspective:

"Exxon Mobil Corp., the nation's most profitable company, reported $44.9 billion in net income last year. Apple Inc. recorded a $41.7 billion profit in its 2012 fiscal year, which ended in September, while Chevron Corp. reported $26.2 billion in earnings last year. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo reported a combined $51.9 billion in profit last year."

Student debt is second only to mortgage debt in American households, and it's the only kind of debt that's steadily increased even throughout the recession. We're long past the $1 trillion-mark for federal and private student loans combined, but federal loans may break $1 trillion on their own soon enough.

Still, none of these moves would really help today's student borrowers. Student loans are practically impossible to discharge in bankruptcy, and for those unlucky enough to have borrowed from private lenders, variable interest rates can be crushing over time.

a reply to: infolurker

I always tell my daughter to make sure you get a good degree that gives you job skills if you are going to go into debt for college. I actually plan to pay off her student debt once she graduates, but I wanted her to work under the assumption that she will be paying for her entire education so that she will be more engaged and make good financial decisions. Not everyone has someone to pay off their debt so this is a big problem.

originally posted by: infolurker
As the cost of "so called" higher Education increases exponentially over the years, so does the profit for the Department Of Education. Consider this a "stealth tax" on students who either didn't have the necessary information to make an informed decision on the "pay vs. the cost" of student loans for their particular field or of course those just plain dumb enough to go $50,000 in debt they can never write off to get a $10 an hour job.

Advice for those going to college.... If you are going to take out massive amounts of debt, make damn sure the job you are training for pays enough to pay back that debt!

Doctor, Pharmacist, Dentist, etc.

Do your research or you will either be in debt for the rest of your life or live below the poverty line so you can defer the debt payments (one of my wife's acquaintances has to intentionally live below the poverty line or pay back $90,000 in debt for a Graphic Design Degree which did not translate to a job!)

Student loan debt is now one of the Obama Administration's biggest cash cows.

The government is poised to pocket a record $51 billion profit from federal student loan borrowers this year, according to a report by the Congressional Budget Office.

That's roughly 40% higher than the CBO's original forecast in February, $35.5 billion.

The Huffington Post's Shahien Nasiripour helps put the new estimate in perspective:

"Exxon Mobil Corp., the nation's most profitable company, reported $44.9 billion in net income last year. Apple Inc. recorded a $41.7 billion profit in its 2012 fiscal year, which ended in September, while Chevron Corp. reported $26.2 billion in earnings last year. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo reported a combined $51.9 billion in profit last year."

Student debt is second only to mortgage debt in American households, and it's the only kind of debt that's steadily increased even throughout the recession. We're long past the $1 trillion-mark for federal and private student loans combined, but federal loans may break $1 trillion on their own soon enough.

Still, none of these moves would really help today's student borrowers. Student loans are practically impossible to discharge in bankruptcy, and for those unlucky enough to have borrowed from private lenders, variable interest rates can be crushing over time.

The quickest way to lower the cost of college is to cut off government student loans. College cost are out of control because the availability of easy financing has inflated tuition.

And the headline above is why no one should ever, ever expect the government to start paying for college.

The loans are too lucrative and our government is too far in debt to cut off the money spigot.

While this is not an 'Only in America' problem, the US has major problems compared to other countries.

This is of course what happens when private industry gets involved in education. The profit margins just ooze up the charts.

If you are an American and you want to go to College, try another country. It will be far cheaper for you and you will gain a respect for another culture. You may even pick up another language, always handy when going job hunting.

Corporations should never be allowed to operate in this area. Education should be largely free or close to it.

P

a reply to: infolurker

I was very fortunate to pay off my student loans. The only reason I was able to do it though was from an investment that ended up paying off very well.

Otherwise, I would probably still owe them. That was just timing, a bit of research, and setting out the wait for a return.

Having said that...I graduated from a private, liberal arts college that bordered on an Ivy League curriculum. Not bragging at all, just trying to set up my next point about college educations.

That point being: I have self educated myself and learned an unimaginable amount since I graduated college.

My degree is only a piece of paper that, yes, does help with getting a good job but, I've learned more on my own than I ever retained from those 4 years.

Most people won't believe me when I say that but, I can promise, it is 100% true.

I studied in college because I had to make the grades.

I learned real knowledge because I wanted to be educated.

There is a huge difference.

a reply to: pheonix358

Pfft! How did so many generations manage to do it when college was only paid for out of a person's pocket?

The problem is that government got involved to "make college affordable" by offering loans, and as soon as that happened, the free and easy money made the costs skyrocket. The government has far deeper pockets than any private citizen except the very richest, and with the government backing your education, there is absolutely no incentive for any public school to keep their costs down anymore.

They certainly don't have to worry about what their students can afford. After all, the students have access to financial aid. How you pay that off is none of their concern.

If the government aid was withdrawn, then the colleges might have to worry about that consideration again.

a reply to: infolurker

They better enjoy it while it lasts, because student loan defaults are at their highest. Student loan debt will be one of the main factors that will cause an economic collapse in this country. Something better be done to help these college graduates get off their feet so they can contribute to the economy and have some spending money to invest and buy consumer goods. These students are strapped with loans that are equivalent to mortgage payments!

originally posted by: WeRpeons
a reply to: infolurker

They better enjoy it while it lasts, because student loan defaults are at their highest. Student loan debt will be one of the main factors that will cause an economic collapse in this country. Something better be done to help these college graduates get off their feet so they can contribute to the economy and have some spending money to invest and buy consumer goods. These students are strapped with loans that are equivalent to mortgage payments!

Yep, we pay two mortgages each month - one to the mortgage agency and one to the student loan folks.

We are fortunate that mine were half paid for by athletics otherwise we'd be sunk.

a reply to: infolurker

I could use the same condemnation for people who get 30 year mortgages when they are over 37 years old and then wonder why they die while working past "retirement age". Or people that get reverse mortgages and leave nothing for anyone, not even anything to pay for their own funerals. All about number one I guess.

I heard the economy went to cr@p and wages deflated... maybe that had something to do with it. Whatever.

Here is the problem. When I went to school about 15 years ago (holy crap) my parents went with me. The problem here is they had no flippin idea either lol. I even went to a damn community college and still ended up 15k in debt (I know its not much) but then I transferred to a private school and put another 15k in debt. They call them advisers but it feels like they are more sales people. My wife and I now know and will be able to better understand when our kids are ready for school. Then you add in the fact that the loans are 20 years and when you just pay the minimum it takes forever and the interest adds up.

They make a hell of a lot more off of Drugs and Weapons. Nothing the Gov't does surprises me anymore. If i woke up and they all decided to cluck like chickens and wear pink i doubt i'd be surprised at that either.

Yep, we pay two mortgages each month - one to the mortgage agency and one to the student loan folks.

a reply to: ketsuko

I don't see how getting a college degree today is worth being strapped with enormous debt. It's not only the colleges and universities that are taking advantage of students, but landlords around these campuses are charging 3 times the amount for their rental property! When I attended college we rented out a house that had a $500 dollar rental fee. Four of my buddies and I rented it out and we each contributed 100.00 a month! This was a large 3 bedroom home.

A few years ago my daughter rented out a small house which really was a large double trailer off campus. The landlord was charging $3,000 dollars a month for rent! Her and 2 other girls paid 1,000 dollars a month for rent! What's disgusting is this place wasn't worth a 1/3 of what this landlord was charging, and this was considered low rent compared to other homes and apartments around campus! These landlords have given these students no other choice put to pay this outrageous rent!

a reply to: infolurker

I wonder how much of those billions will really end in the hand of the government, after all student loans while offered under the government education assistance they are backed by private banking institutions, they are getting their cut also.

originally posted by: infolurker
Advice for those going to college.... If you are going to take out massive amounts of debt, make damn sure the job you are training for pays enough to pay back that debt!

Doctor, Pharmacist, Dentist, etc.

I hear this advice a lot and this strategy doesn't work anymore either.

Keeping up with the basics in terms of education and on-the-job work skills won’t be enough for jobs requiring future-tech, contemporary labor market, skill-sets. The poor and even the middle class (not the upper middle class) will simply NOT be able to keep up with the skill demands for future employment, which will include REQUIRED CERTIFICATIONS, STATE LICENSING, etc., while somehow earning wages AND keeping a roof over their heads at the same time. In the VERY NEAR future, these very high costs skills that will be needed to stay “relevant” in ALL labor markets, will only be affordable to the rich, or possibly to a VERY far forward thinking middle class families, willing to sacrifice everything financially, while pooling resources to keep their offspring competitive in the larger job market.

I will begin with the usual assertion I hear in regards to the impact of these, soon to be real, “future-tech jobs", which contrary to beliefs of some, includes the trades and accompanying "proprietary tech" that will not be repairable, only "replaceable by a certified/licensed tech".

“Someone has to get paid to fix the robots!”

I often hear this above noted rebuttal to mass automation and current labor cutting measure in the modern workplace, BUT it misses a subtle point that ONLY the children of the wealthy will have the opportunity to become TRUE experts in such fields. Let me clarify, through the prior 20th century, a poor kid who studied hard could become a lawyer, accountant, even a doctor sometimes, with the right combination of hard work, savings, scholarships, family support, etc. or simply by going directly into the trades, learning on the job, with pay. HOWEVER, in current engineering and technician curriculum’s today, times have changed, to favor kids whom have had access to expensive software and hardware to “experiment” with and “practice” on before entering college or into their chosen training program. So, when these kids finally get to college or their apprenticeship, those whom have had lots of "free time" to “play” with robotics and programming, outside of class, WILL CERTAINLY outpace their less privileged peer who flips burgers part-time, to pay rent and school expenses.

Before 1990, 40% of teenagers had part-time jobs while in school. This is a relevant statistic because today only 20% of teenagers in school have part-time jobs. Teens at one time made up a sizable portion of the workforce and such changes in employment practices have shifted away from this, meaning, poor kids do not have any opportunity to build jobs skills of any kind, both before, during and after college.

Although not my primary point, I do think there is plenty of evidence that teens today do not have the opportunity to get part-time jobs, BUT the wealthy kids are beginning to develop advanced skill-sets that COULD be MORE helpful in their future adult careers, than say, “working at a taco stand after school”. Bill Gates and Mark Zuckerberg are very good, EARLY, examples of people who made use of their free time and access to money, without the need to labor for part-time pay. During that free time they develop specialized skills that could not have been learned at a MINDLESS part-time job or even in formal schooling. In the end, they leveraged that free time learning and tech access, due to wealthy parents, into long term careers.

Here is a modern example of a company with a big contract to fill and absolutely no "will" to increase wages to attract experienced personnel, nor the desire to train inexperienced ones on the job, while paid. Instead they put out a story on the web bellyaching:

bridgemi.com...

In the link below this paragraph I have posted an example of what I believe to be a young person, from a well off family, who majored in robotics at USC. She doesn’t appear to have had an unrelated part-time job, in relation to her major, while in college. She also seem to have had access to “experiment and PLAY” with technology in her spare time, earning a masters degree back-to-back to the bachelors AND at the end of college, got a job offer at a University sponsored dinner party for robotics majors. NOBODY I went to college with, EVER, got a job offer at a university sponsored dinner party. In contrast, I’m sure many Ivy league and top 10 school graduates do get job offers at university sponsored dinner parties. My point being, these future “robot repair jobs” are going to require smart kids, with desire to advance, whom also went to good schools, had lots of spare time and money to play with the tech outside of school AND got their jobs offered at dinner parties, some of which will be non-paying internships at first. These job offers will not be gained through sending out blind jobs applications through linkedin or company job boards, as has been done up until now. Basically what this girl is doing for Disney will, in the near future, be more like what a plumber or electrician does today, EXCEPT you won’t get trained on the job, in a low-pay apprenticeship when at “entry level”. In fact to even be considered for these “future-tech jobs” in the first place you’ll need to have good academic pedigree, lots of unpaid hobby experience and 1+ years of unpaid internships. Can kids outside of the upper middle class do the same thing as this young woman? I think not!

Here is her story, readers can decide for themselves, my opinion is that this is what a career for a plumber is going to look like in 15+ years:

onedublin.org...

Those whom are going to be rendered jobless by automation/robotics/tech are going to be the least likely to be able to pick up these pieces in the coming era of traditional jobs destruction. Its going to IMPOSSIBLE for the poor to go back to school, get a masters degree in robotics, in full-time only engineering programs. Contrary to belief these programs strongly discourage their admitted students from taking part-time jobs, while favoring students who have both the money and free time, whom have NEVER work at an unrelated job to their majors and also buy expensive robotics hardware/software to experiment with outside of class.

Mark my words the future labor market in the pursuit of “maintaining robots or other tech” is going to be the sole domain of rich kids with advanced degrees from good schools because NO ONE is going to train anyone else perceived as lesser, in that kind of job, WITH PAY.

To continue my above point, I believe “rich kid” job mobility is going to be a bigger problem for regular folks beyond what the previous "rich kid" pedigree typically brought in the 20th century. This unfettered access to endless money and time to “explore” academics and hands-on work with no consequences, is going to END job mobility of any kind for the lower and middle classes, even for those whom have met the typical required higher education and work experience standards. Its a superstar only job market now, with no room for middle of road folks.