/dev/null Posted August 8, 2012 Posted August 8, 2012 http://www.bloomberg.com/news/2012-08-07/bernanke-says-student-loans-won-t-cause-crisis.html
DC Tom Posted August 8, 2012 Posted August 8, 2012 I didn't get past the first paragraph without laughing hysterically.
3rdnlng Posted August 9, 2012 Posted August 9, 2012 I didn't get past the first paragraph without laughing hysterically. Don't be so cynical, those loans are backed by the government, not some silly ass real estate.
Chef Jim Posted August 9, 2012 Posted August 9, 2012 I didn't get past the first paragraph without laughing hysterically. So far this year I have met with two people with $1 million in student loan debt which neither are paying anything on. They're just letting them compound. Now I'm not up on this but will these loans be forgiven at some point? One of them said he'll just wait until they're forgiven and that's why he's not paying them. If there is no recourse why pay them off. They can't "forclose" on your education.
3rdnlng Posted August 9, 2012 Posted August 9, 2012 So far this year I have met with two people with $1 million in student loan debt which neither are paying anything on. They're just letting them compound. Now I'm not up on this but will these loans be forgiven at some point? One of them said he'll just wait until they're forgiven and that's why he's not paying them. If there is no recourse why pay them off. They can't "forclose" on your education. I read somewhere today about S.S. checks being confiscated, or at least reduced in order to allow the feds to get their money back from backing student loans.
DC Tom Posted August 9, 2012 Posted August 9, 2012 So far this year I have met with two people with $1 million in student loan debt which neither are paying anything on. They're just letting them compound. Now I'm not up on this but will these loans be forgiven at some point? One of them said he'll just wait until they're forgiven and that's why he's not paying them. If there is no recourse why pay them off. They can't "forclose" on your education. I think, at least in theory, the lenders can put a lien on assets. The federal government probably has even more power to collect. But...how do you get a million dollars in student loans, anyway? Who the hell is lending this money? Oh, yeah...lenders who have absolutely "no risk", because the loans are "backed by the government," hence someone else's risk, and they can loan as much as they want. Not a thing like mortgages, Bernanke. Completely different situation.
Chef Jim Posted August 9, 2012 Posted August 9, 2012 I think, at least in theory, the lenders can put a lien on assets. The federal government probably has even more power to collect. But...how do you get a million dollars in student loans, anyway? Who the hell is lending this money? Oh, yeah...lenders who have absolutely "no risk", because the loans are "backed by the government," hence someone else's risk, and they can loan as much as they want. Not a thing like mortgages, Bernanke. Completely different situation. One half mill was she was just a career student and kept getting loan after loan. It's been 30 plus years since I got my loan but it appears they underwriting is non-existant. The other half mill was a guy who originally had $100k in loans and has just not been paying it off and it's compounded to $500k. I just can't fathom how they've let it get that far along. He's a pediatrist that makes about $60k a year. He must be marketing to people with no feet or something.
Gary M Posted August 9, 2012 Posted August 9, 2012 One half mill was she was just a career student and kept getting loan after loan. It's been 30 plus years since I got my loan but it appears they underwriting is non-existant. The other half mill was a guy who originally had $100k in loans and has just not been paying it off and it's compounded to $500k. I just can't fathom how they've let it get that far along. He's a pediatrist that makes about $60k a year. He must be marketing to people with no feet or something. Damn I make that much with an AAS and I don't have to put up with stinky feet. Oh and my college debt was about $6k and paid off on time.
Doc Posted August 9, 2012 Posted August 9, 2012 One half mill was she was just a career student and kept getting loan after loan. It's been 30 plus years since I got my loan but it appears they underwriting is non-existant. The other half mill was a guy who originally had $100k in loans and has just not been paying it off and it's compounded to $500k. I just can't fathom how they've let it get that far along. He's a pediatrist that makes about $60k a year. He must be marketing to people with no feet or something. Is that a doctor that takes care of kids' feet?
Chef Jim Posted August 9, 2012 Posted August 9, 2012 Is that a doctor that takes care of kids' feet? Is that a doctor that takes care of kids' feet? At $60k a year I don't think he's taking care of anyone's feet.
Doc Posted August 9, 2012 Posted August 9, 2012 At $60k a year I don't think he's taking care of anyone's feet. Smaller feet, less money. Probably has mostly Medicare/Medicaid patients. Or works a couple days a week.
TPS Posted August 10, 2012 Posted August 10, 2012 I think he's correct in the point he's trying to get across. If the private banking system held most of the loans, then the system could face another solvency crisis. Defaulting on loans owed to a government that issues its own currency, won't cause a banking crisis.
WorldTraveller Posted August 10, 2012 Posted August 10, 2012 (edited) True, but the nature of some of some of the bonds that are being issued, specially out in California are not that dissimilar to what we saw during the sub prime debacle. Some of the bonds are "exotic" and they are similar to "Zero-coupon" issued bonds where interest payments aren't due for another 20 years down the road at double digit interest rates very well may pay out 10 times original cost when redeemed. Maybe we don't see a private sector banking risk, but we could see a systemic public sector risk which I would argue is worse Edited August 10, 2012 by WorldTraveller
Rob's House Posted August 10, 2012 Posted August 10, 2012 If a bank goes under it sells its assets & its investors & creditors take a loss. What happens when the government goes under?
WorldTraveller Posted August 10, 2012 Posted August 10, 2012 (edited) In the case of the U.S, that wouldn't happen, at least not initially. Before that would ever come close to happening, we would print massive amounts of money, enough to buy our own debt, which is sort of what we are doing now, except in our present case, we're doing it not out of "necessity" because of lack of demand for our debt, but to "stimulate" it through lower rates etc. Edited August 10, 2012 by WorldTraveller
CosmicBills Posted August 10, 2012 Posted August 10, 2012 Are you guys saying I don't have to pay back my loans? 'Cause that would be sweet.
/dev/null Posted August 10, 2012 Author Posted August 10, 2012 If a bank goes under it sells its assets & its investors & creditors take a loss. What happens when the government goes under? It starts printing money and starts seizing assets
TPS Posted August 13, 2012 Posted August 13, 2012 If a bank goes under it sells its assets & its investors & creditors take a loss. What happens when the government goes under? Again, a government that prints its own currency can't technically "go under." As some have said, the central bank can always purchase more debt which could cause a collapse of the dollar and increased inflation. "Could." There is no global substitute for the dollar as reserve currency--yet, so its safe haven status helps maintain its value in an uncertain world; and inflation is being restrained by excess (global) resources. Of course, there's also the possibility of raising taxes and cutting spending...
DC Tom Posted August 13, 2012 Posted August 13, 2012 Of course, there's also the possibility of raising taxes and cutting spending... Only slightly less possible than Kate Upton giving me a lap dance.
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