Today we have this headline: >>FHA's Mortgage Delinquencies Soar<<

"The share of government-guaranteed loans, a majority of which are backed by FHA, that were 90 days or more delinquent soared nearly 27% during the year ending March 31. Foreclosures jumped nearly 17%, according to a report published recently by federal regulators."

How long before this one???: >>Financial Aid Delinquencies Soar<<

Once again, we have the government stepping in to do what the private market can't...make more bad loans...

http://finance.yahoo.com/news/fhas-mortg....

Well, I can look at this a few different ways....

1) They're learning early that their lot in life is to be debt slaves to TPTB - namely, big banks and those they finance to make laws for them.

2) It's the last bastion of the debt pie before all-on collapse - unless they somehow find a way to start raping our minor children as well.... and I'm not EVEN ****ing joking about that. I guarantee there are some *******s out there trying to plan on how they can do that very thing. (I think Karl posted a video clip on this that comes to mind... an IRS-type ******* comes to the house with a mother holding her child, and asks (presumably to the mother) them to cough up multiple tens of thousands of dollars for the rest of their lives - only to find out he's purposely talking to the CHILD.)

3) We're teaching them EARLY that they can go ahead and take on all the debt they care to - without having to worry about paying most of it back. Much like the dip****s currently in charge of our country's finances, there will be absolutely NO hope of paying these ****ing things back in full.

Frat - I don't wholly understand your certainty that there will be massive defaults on student loans (point 3). It is my understanding that student loans are non-dischargeable in bankruptcy. That is, once you take one out, you're hooked - they can garnish your wages in perpetuity - and they will. Thus, rather than teaching our children to be deadbeats, we are teaching them to be debt slaves. I am almost as certain as you appear to be that this will all work out peachy - not.

I am going back for my masters in basket weaving.

Steel, there's no certainty in any of the above! :-)

I go back to the old "If it can't happen, it WON'T happen" - simply because dischargable or not, if the money ain't there, it ain't there. You think people will work just to have their entire check garnished for student loans - that they're most likely not even being put to use because there aren't any ****ing jobs for them? I can't see it happening... I'm thinking more black marketering, working under the table, etc - on a massive scale.

Total economic collapse has these kinds of effects.

Steelhead wrote..

Frat - I don't wholly understand your certainty that there will be massive defaults on student loans (point 3). It is my understanding that student loans are non-dischargeable in bankruptcy. That is, once you take one out, you're hooked - they can garnish your wages in perpetuity - and they will.

How long do you think it's going to take the debt slave children to look around at the 40 year pig-in-the-python of .gov retirees (and grandfathered current .govers) Living Large on Easy Street before they decide they're going to do something about it?

Well since i cant get a job i am very much qualified for, ie a decade of experience, because of no degree i might as well get a student loan. **** it. Seems to be no other options....

Frat,

Def. have to agree with point 2 of your initial post. As far as reading KD's continued monthly posts about this debt game, student loans are the end of it.

People have exhausted the credit cards and others like me and the missus are done using them except in an emergency or for the ol' rent a car thingy. Heck, since the '08 depression began, we have just 1, yes, 1 visa with a $3500 limit, just enough for travel or an emergency tranny, if need be. Of course, you have it backed by the same in the credit union, just don't want to have to use the debit for those amounts.

Anyway, back to your point, yes this is the end game of debt. Of course the genuis is why wait for someone to take 30-year mortgage, get them at 17 in college and they are hooked very early, and unlike housing, you ain't gonna get out of this ball and chain. On top of that, like housing, bankers aren't even manking the loans, it's the stickin' goobermint! Man, I shudda been a bankster! WHat was I thinkn?

The big however, is your point 3! As has been said a million times, what can't be paid back, WON'T!!!!

Think about this....student loans are more than cc's and total more than a cool trillion dollars. If we divided that up amongst 300 million 'duhmericans, the cost is $3,333/man, woman, and child. Sick, just plain sick.!

Sadly, when your eCONonmy is 70% consumption, with roughly 10% manufacturing, and the only game in town is debt, esp. goobermint debt, you have reached the end and collapse is emminent.

Hello,,, the debt Ponzi is over ... or ending, or well, just Ponzi.ing

Again - if people use some common sense (it is rare, I know!!!) and (a) go to state school, (b) study and not party, (c) live with parents or at a cheap off-campus place, and (d) choose a productive major instead of Aleut Indian Lesbian Basket Weaving studies, they still can find good jobs and graduate with almost no student loans. My student who interviewed in May got 5!!! job offers for a BS position at private companies. On the other hand, if someone feels entitled to partying at a private school for $50K per year while receiving a degree in Gender Equality studies, then no one can help that person.

Drb,

What is boils down to is these kids don't want to work at anything...but they want to live like they've worked for 30 years.

This even should up on a recent episode of Judge Judy...in a nutshell...a girl used (or planned to use) her student loan money to buy a new $30k car...she had to get a car so she could get to school, you see...her moron dad cosigned the car loan.

One small problem...the student loan wasn't enough to pay for school and the car (insurance and all)...so she was suing her dad to force him to make the car payments since he cosigned.

Couldn't take it to the end, so I don't know what the decision was...probably told her to pay her own bills knowing Judy.

PS> Judge did ask her why she didn't buy a used/less expensive car...short answer...it wouldn't be good enough for her to be seen in...

Debtpie,

I agree. Most of students have Iphones and fancy cars (we are a public school, so parents are not rich in most cases), and it usually about "fun" and "how easy this class is" and not "what will I learn". Not all students are like that, but a substantial majority are.

I find it very troubling that revolving and non-student loan non-revolving are beginning to recover. It won't be enough to generate a "recovery", but it will be enough to compound the damage that will have to be taken. This is, IMO, one of the worst consumer credit reports I have seen in months all things considered.

I'd like to clear up some misconceptions here:

The government makes student loans now. Yes, that means you and I are on the hook when students default. However, prior to the government taking the loans over, they guaranteed the loans the banks made, so we were still on the hook then when students defaulted. The difference is that now the taxpayer benefits when loans are repaid. Most ARE repaid, and at interest rates that exceed the rate that the government borrows money. Grad students must pay, for example, 7% on their loans, they don't qualify for the 3.4% rate. That would include med students, PA's, pharmacy, etc. I agree that the non-dischargeable nature of the loans should be changed. I suspect it was more of a necessity from an economic standpoint before the government took over making the loans, to limit government losses. (Actually, the loans aren't really non-dischargable, only quite difficult to get discharged. I had a client, he remained intermittently flagrantly psychotic and unable to care for himself and stay out of the hospital, much less work, despite treatment and residence in a high level care group home. His doctor and I helped his mother to successfully get his loan discharged. The onset of his illness was when he was about 22 or 23 years old, as is common with schizophrenia, after earning his degree. He was collecting SSI/Medicaid as his sole sources of income. However, the guidelines are very rigid, strictly enforced, and should be relaxed.)

Student loans do not result in garnishment of entire paychecks. There is a percentage limit of what they can take. It is somewhere between 10-20% of income that can be required to go towards repayment, I don't recall the exact figure.

As far as I know, the government is not making, nor do they own, housing loans. They only guarantee them. The taxpayer takes the risk, but gets no benefit. However the GSE's and other govt agencies do earn fees to cover expenses, however at least in the case of Fannie/Freddie (fees, paid for by borrower, just increased to compensate for cost of unemployment extension), they are grossly inadequate.

Most students are NOT using their loan money to buy new cars. If you look, yes, you may find those who spend their money irresponsibly. We will always have irresponsible people at every income level. Youth are in a catch-22. They can't afford to get college degrees without loans, and the jobs (majority of well-paying) are limited to those with college degrees. The evidence shows that those with degrees have lower rates of unemployment and earn significantly more in lifetime earnings. Perhaps the situation should be different, but this is the reality they currently live in.

drb wrote..

Most of students have Iphones and fancy cars (we are a public school, so parents are not rich in most cases), and it usually about "fun" and "how easy this class is" and not "what will I learn".

I taught college classes for three years. I found the above to be true, esp. the part about not caring about learning, to be mostly true for the students that had somebody else, e.g. mommy and daddy, paying for college. Those who had jobs and were paying their own way were more serious. It is human nature to place higher value on things we have to make contributions towards, freebies get taken for granted.

I confess that mommy and daddy paid for my first degree when I was young and I had a bad attitude, too. College was about partying, not learning. When I returned to school in the 90's, my attitude had radically changed. It was my money, and I placed a much higher value on my time, which was now being pulled in many directions. If I was going to invest the time and money, by George, I wanted maximum return. And I had zero problem expecting my professors to earn the salaries I was paying them (though they liked me, because I had the confidence that comes with maturity to actively express my interest in learning the material).

drb wrote..

Again - if people use some common sense (it is rare, I know!!!) and (a) go to state school, (b) study and not party, (c) live with parents or at a cheap off-campus place, and (d) choose a productive major instead of Aleut Indian Lesbian Basket Weaving studies, they still can find good jobs and graduate with almost no student loans.

Again, I must quibble with you that this is not necessarily true. My daughter meets all of your requirements. She will start year 6 of her 7 year pharmacy program in the fall. Her pre-pharmacy work was fully paid for courtesy of mom and dad, loan free prior to year 4. She's in a state school and lives at home as she has all but one year. She refuses anymore financial help from us. She drives an 11 year old car with about 200K miles that I gave her when she went to college. She worked little prior to starting the program, choosing instead to focus on getting admitted as entrance is extremely competitive. Yes, she partied some but she studied too, a lot. She has been mostly working part-time since starting the program (last fall she had a 21 hr course load, almost broke down!), currently as a pharmacy tech, to earn her spending money. There is no way she can earn anywhere close to tuition on minimum wage pay levels. Most kids don't even have jobs. The program is quite demanding.

She will graduate with over $100K of loans, as tuition is $25K/year for the four year program. She tells me her loan levels are lower than most in her class. A couple years ago, when she began the program, two new schools opened (there are only about 50 nationwide maybe?) and other schools expanded the size of their new classes to meet expected shortages in demand that have not materialized. Instead demand has been reduced. Currently, pharmacy graduates are facing dismal employment prospects. She wants to pursue veterinary research but hopefully because she is working at a large retail chain, she will have a place to fall back on. I'm sure they like her.

The same thing, except I didn't take out loans, happened when I returned to school. When I started, software people were in hot demand. I finished after the bubble had burst and jobs were scarce. It's impossible to predict demand in 3-4 years. The exceptional students will always land on their feet (and my daughter is probably exceptional in regards to conscientiousness/work ethic, smart but not THAT smart, works hard though, got that attitude from mom and dad, not that I'm biased, mind you), but not all students can be exceptional.

Bigbluffer,

What you say is true for Pharmacy. It is also true for Med schools. I was talking about a 4-year degree. My students get jobs in oil with BS or MS degrees and little debt. Of course they are not paid 130K like those pharmacists who get jobs.