by Tina Grazier
Brace yourselves, another debt crisis is looming!
Some bankruptcy lawyers are sounding alarm bells just as they did before the housing crisis. This time it’s about student loan debt in America:
“This could very well be the next debt bomb for the U.S. economy,” said William Brewer, president of the National Association of Consumer Bankruptcy Attorneys.
“As bankruptcy lawyers, we’re the first to see the cracks in the foundation,” Brewer said. “We were warning of mortgage problems in 2006 and 2007. The industry was saying we’ve got it under control. Nobody had it under control. Now we’re seeing the same signs of distress. We’re seeing huge defaults on student loans and people driven into financial difficulties because of them.”
The AP article contains flabbergasting information. For instance, Baby Boomers over the age of sixty “still owe about $36 billion in student loans”. Boomers are the ones who benefitted from the boom days of the eighties and nineties ushered in by technological advances and the Reagan economy. They had a tremendous opportunity to make money and most of them did. How many of these people could have paid their debt off and just chose to irresponsibly ignore the debt?
President Obama ushered in a government takeover of the student loan program. Since his inauguration advertising for student loans on the web has been up, up, up. Nearly every page has an ad inviting people of all ages to check out the possibility of going back to school with a student loan. The sluggish economy has meant that new graduates are not finding work and those who do rarely find the type of job or salary they expected. All of this adds up to rising student debt that is now over $1 trillion. College borrowers have always had a poor history of repayment on student loans. Now that the government is in charge taxpayers are ultimately responsible for this debt. So, if I’m a student loan debtor won’t I be thinking:
“Why pay back my student loan if taxpayers have my back?”
If I remember right Obama’s student loan forgiveness program is a part of ObamaCare. If the SC overturns ObamaCare the forgiveness clause should go away too.
It was ALWAYS impossible to default on a student loan. They are even exempt from bankruptcy. That’s why the amount owed for baby boomers is still on the books.
Obama wanted this forgiveness program to buy the votes of students, but the lesson they learned was they’re not being held responsible for their owed debts, and will in the long run hurt them and those they owe.
Call it what you want, but fraud comes to mind if you incur a debt without the intent to pay for it.
This looming bubble is particularly troubling since many investment people are also expecting a second wave of home defaults…man do we need a new administration and someone that has some idea of what it takes to get people back to work!
Re Peggy: “If I remember right Obama’s student loan forgiveness program is a part of ObamaCare. If the SC overturns ObamaCare the forgiveness clause should go away too.”
So typical of congress to stick in unrelated things to get them passed.
http://www.riehlworldview.com/carnivorous_conservative/2010/03/student-loan-fees-to-fund-obamacare.html
Seems like you recollect real good ; )