ALL IS WELL!!!
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
The Federal government bureaucrats who think they can control the levers of finance to steer our economy to greater heights are creating a new subprime bubble. The absolute implosion of the for profit diploma mills, that have fed like bloated pigs at the Federal loan trough, is the Bear Stearns moment for the massive student loan losses that will be foisted on the shoulders of the American taxpayer. The deceptive schemes, fraud, and financial aid manipulation practices of the publicly traded diploma mills – Corinthian Colleges (down 90%), ITT (down 90%), Apollo Group (down 80%) and DeVry (down 60%) have been revealed, as their ill- gotten profits have evaporated and their stock prices have crashed. Enrollment at the king of worthless online degrees, the University of Phoenix, has plunged from 600,000 to 400,000 and they are closing 115 of their 227 campuses. The proof that much of the student loan bubble has been created by these for-profit shysters can be seen by the fact that 60% of all student loans are owed by people over 30 years old, with 33% owed by people over 40 years old. These people bought into the re-training fallacy perpetuated by government drones and mainstream media mouthpieces.
But still the Federal government continues to blow the bubble bigger and bigger as non-revolving consumer debt has reached all-time highs. Peter Thiel recently compared this bubble to the housing bubble we are still dealing with:
“We have a bubble in education, like we had a bubble in housing…everybody believed you had to have a house, they’d pay whatever it took. Today, everybody believes that we need to go to college, and people will pay– whatever it takes. There are all sorts of vocational careers that pay extremely well today, so the average plumber makes as much as the average doctor. I did not realize how screwed up the education system is. We now have $1 trillion in student debt in the U.S. Cynically you can say it’s paid for $1 trillion of lies about how good education is.”
Delinquency rates have already begun to skyrocket as the diploma mill scam implodes, dropouts can’t make loan payments with their EBT cards and even graduates from legitimate colleges are stuck waitressing at TGI Fridays and can’t make their payments. Millions of millenials are ensnared in the chains of debt servitude, with no chance of escape.
Delinquency rates on student loans made in the past two years stand at 15%, according to FICO, versus 12.4% for loans made from 2005 to 2007. This is proof that loans doled out since the Federal government took control of the market have been distributed willy-nilly in a frantic effort to artificially reduce the unemployment rate. Average student- loan debt last year rose to $27,253 from $17,233 in 2005, with almost 605 of bank managers surveyed in December expecting delinquencies to worsen in six months, according to FICO. Andrew Jennings, chief analytics officer of Fair Issac, said in a statement:
“This situation is simply unsustainable and we’re already suffering the consequences. When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default.”
When subprime mortgages blew up, at least there was collateral to alleviate some of the losses. When the subprime auto loans blow up, at least there will be vehicles to repossess. Student loan debts are the ultimate in subprime, with no collateral and millions of jobless debtors. The situation is much worse than the delinquency numbers reveal. More than half of the student loans are in deferment, grace periods, or forbearance, meaning they are not currently requiring repayment. This means the true delinquency rates are twice as high as the reported figure of 15%. What happens next can be succinctly summed up by the esteemed economist John Kenneth Galbraith:
“Then the shit hit the fan.” – John Kenneth Galbraith
The involuntary taxpayer bailout for this Federal Government created disaster will exceed $200 billion after the shit is done hitting the fan.