Thursday, June 7, 2012
Student Debt "Collection"
Here is how the student debt bubble operates:
#1. College education has increased by 300% in 30 years;
#2. Potential students borrow a pile to somehow get that dreaded degree;
#3. The student takes out loans and more loans and more loans until he or she is drowning in debt, but is convinced that upon graduation;
#4. But economic reality suggests that there are few jobs, huge numbers of "graduates" and massive mill stones of debt around their necks.
#5. The Department of Education hires several "Collection Agencies" or "Guarantors" who are paid millions in bonuses by ensuring a debtor is immersed in austerity for the remainder of his adult life, paying off a mortgage due to the loans taken out to better himself.
Bloomberg did an excellent piece recently (see below)
Anyone in the student loan debt trap reading this will get very angry. These are the main "guaranty" agencies:
Of course the next big change in the pipeline is a DOUBLING of interest rates on loans, which the Republicans want to increase in July.
This would be disastrous for OMOTS with loans taken out to "educate" himself.
And the student loan bubble will surely BURST!