Posted On: Thursday - April 27th 2017 5:19PM MST
In Topics: University Global Financial Stupidity
The subject of the huge amount of debt involved in university student loans outstanding (and to come) has been discussed in 5 or so posts under the University topic key, starting here. Now, from Zerohedge, we read Baby Boomers Borrowed $100BN In Student Loans For Their Children And Now Defaults Are Soaring.
This article describes loans to parents of college students made when the Feral Gov't backed stuff hits a limit (there is a limit? Glad to know that, at least.) Right now, the $100,000,000,000 involved is just 7% or so of the student debt money, but hey, you've gotta start somewhere, right? This part of the Zerohedge article (the wider italics being Zerohedge, and narrower italics are their quote of the Wall Street Journal describing the "Parent Plus" program. Be aware that the stupidity has induced vomiting in the young, old and feeble:
When it comes to federally subsidized student loans the underwriting standards put even the no-income, no-doc mortgages of 2005 to shame. Just take the case of Sherry McPherson as an example. Per the WSJ, McPherson was able to secure $100,000 in student loans for her son and herself to attend a trade school despite "her shaky credit and unemployment." Adding insult to injury, for taxpayers at least, McPherson has already refinanced her loans into one of Obama's "income-driven plans" which "sets her payments at zero while she is unemployed."
Sherry McPherson took out Parent Plus debt in 2006 so her son could enroll in a seven-month certificate program at a Seattle for-profit school that teaches commercial diving. She was an unemployed single mother with thousands of dollars in credit-card debt, a car loan and a subprime credit score. She had just retired from the Army after suffering an injury in Iraq.
The school, the Divers Institute of Technology, told Ms. McPherson she needed to borrow nearly $16,000 to cover remaining tuition after her son maxed out on undergraduate federal loans, she recalls.
Ms. McPherson, now 50, remembers telling the school’s financial-aid administrator she wouldn’t be approved because of her shaky credit and unemployment.
“She looked at me and said, ‘Look, all we need is your Social Security number,’ ” recalls Ms. McPherson. “They approved me in three minutes.
She hasn’t worked since, partly because she attended college and graduate school herself. Her Parent Plus balance has more than doubled. Combined with her own student loans, she now owes more than $100,000 to the federal government.
Ms. McPherson has refinanced into an income-driven plan, which sets her payments at zero while she is unemployed.
Oh, 11% of the "parent plus" borrowers have not made a payment within a year. That is pretty far along the road of complete default, not just delinquency. Those are the people who will respond to "Where's the money?" with "Don't worry, you'll get it when I get it". How do you feel about this, taxpayers?
One last thing good about this particular ZH article, is that it's low on the metaphors. Tyler Durden (yeah, right!) doesn't even use the term "bubble", though I do; it beats an article a few days back saying that this part of the bubble was just the tip of the iceberg. Hey, what is it, a bubble or an iceberg, dude? "Well, it's an iceberg with a big bubble of climate emissions inside it! Watch the fuck out!"
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