Everyone has heard about the ongoing and growing bubble in student loans -- which now totals $1.25 Trillion and rising even though the non-payment rate has hit 43%. If you ever needed evidence of how broken Washington DC has become, this is it. Outright defaults have reached at least 13% but the government is still making loans and doing so at very low interest rates.
Much of that $1.25 T student loan portfolio is held as an "asset" of the Federal Government (just like a bank's assets are their loan portfolio). It is, in fact, the LARGEST asset of the Fed Government. But 43% of it already looks very shaky. But don't expect any write-downs or "mark to market." Any kind of proper accounting or even accountability is now absent in every aspect of government.
The College tuition "bubble" has all the makings of a free-money welfare scheme. According to the NAEP (National Assessment of Educational Progress), overall only 30% of 12th grade students perform at a "proficient" or better level for 12th grade knowledge, skills and capabilities. That's averaging the Reading and Math scores for those proficient or better. (See here for Math and here for Reading.)
One would think that a student should be performing "proficiently"or "advanced" at the 12th grade level before they are ready for college, right? You thought wrong. Some 66% of high school graduates are going to college but only 30% of them are performing proficiently at the 12th grade-level. It means that, overall, about 1/2 of kids going to college probably don't belong there.
Given this situation, one shouldn't be a surprised if about 1/2 of those college loans aren't payed back. But that's what we're seeing. Because 1/2 of these kids don't belong in college at all, it's not really doing them any good. It's all a huge racket that benefits colleges--both good and bad ones and the not-for-profit and for-profit ones. All that money has inflated college tuition costs to the moon and has priced-out the next generation of college kids. And those student loans are a huge burden to an entire generation of young adults.
And if you look at the data for Black kids at the 12th grade level, only 12% of those kids are "proficient" or better at 12th grade studies but fully 70% of all black high-seniors are going to college! Only 12% of black kids are qualified for college but 70% are taking the money and going to school (and actually attending classes???). Why is this? Because black teenage unemployment is sky high. And few blacks can pass up seemingly "free money." They are right though, politicians will bail them out before long -- all at taxpayer's expense.
So, about 83% of black college kids don't belong at college at all. Correspondingly, the expected student loan default rates for blacks will be about 80% or higher. This is already being seen in repayments from primarily black colleges are leading the list of institutions where NOT ONE DOLLAR OF STUDENT LOANS are being repaid.
So, this has all the marks of a "free-money" scheme (that will ultimately need a taxpayer bailout) and a welfare scheme to "benefit" or "help" black kids the most. It's also a huge "racket" to fund unworthy colleges and professors. For-profit colleges are benefiting enormously from all that "free money." See my blog post "Student Loan Racket In Action."
Think about how stupid Hillary, Sanders and others in the Democratic Party are who are in favor of "free college" for all. It would amplify the absurdity of the current tuition bubble and turn many colleges into high schools--which I suspect is already happening. How can it NOT be with so many "deficient" kids attending class?
Confirming that mainstreet media are a bunch of liars, they never tell you that most of the students that demand "safe spaces" and other protections to shield themselves from opinions that they don't understand or like are mostly minority kids who don't belong on those campuses in the first place. And it shows. Insanity is taking over this country (and world).
And Congress is sitting on their asses watching the money fly out the window since it's assumed that taxpayers will pay the bill for the defaults. Shut down the whole damned thing! Only private banks should be making such loans!