$270 Billion In US Student Loans Are Delinquent

How much debt are Cdn students carrying? I don’t know how to get that number. Does anybody know?
I know many young people carrying far more that $10 grand in student debt. More like $40,$70, even $100 depending on how long they stay in the system to get an Masters or Phd…
There is still an unassailable belief in ” higher ” education to secure one’s future.The concept is simple. A degree can be traded for a well paying,secure career and an extra dash of glowing social status. The realities on the ground are ignored. Trades are generally considered ” dirty work “. So what’s wrong with a little sweat and dirt I wonder? Particularly when a pay cheque pays for soap and a shower stall.
As on other issues I have capitulated, stopped issuing warnings. Canada is still fast asleep and snarly at any attempts to disturb the slumber.

What the deflationists fail to grasp is that the default of student loan debt will be inflationary, not deflationary. Since the taxpayer will ultimately pay, and since the people defaulting on the debt are, to a large extent. the taxpayer, you have a William C. Escher type of semi-closed loop. Only in this case it is a financial one, not a stairway in a painting.

On a GAAP accounting basis, the ANNUAL amount of fiscal deficit is about $6 trillion (according to shadowstats), which is 40% of GDP. This explains why gasoline is so much higher in price, even as demand is falling through the floorboards. Nobody, even Saudi Arabia, can sell crude oil for less than the cost of production for very long.

The government cannot afford a collapse in the USA’s university system. It is a crucial part of the Orwellian group think apparatus, particularly in terms of economic doctrine (Keynes good, Marx, Austrians bad, lol). So student debt will eventually be forgiven, and paid by Bernanke, as the fed expands their balance sheet by yet another trillion, at some point.

One of the main tools in the kitbag of TPTB to keep the unwashed masses from tearing them to shreds like mad dogs is divide and conquer.

In the past it was along religious or ethnic lines or even just income brackets

History’s rhyme this time will be a new wrinkle on an old game.

The divide and conquer will be generational this time, with a vengeance.

The Boomer are caught between several rocks and hard places simultaneously.

First, very few (1-10%) will have enough funds left in their 401k/retirement funds after the Kleptocrats ‘MFGlobal’ their nesteggs into omelets.

Second, because of step one above, they will have to keep working “until dirt hits the lid”, as the old graveyard expression goes.

Third, because of step two above, the younger generation will never advance up what’s left of “the pay scale”, trapping this younger generation in even more under-achievement than they where going to be in anyway with all their debts from student loans/car loans/credit card debts.

Fourth, because of step three above, the younger generation will increasing view the “older generation” with enormous contempt and pronounced lack of Respect, on a grand multitude of levels.

Sure, some kids still love their parents but at least 50% where raised in broken and/or divorced settings and do not have a warm fuzzy familial vibe about them.

Taking care the two or more sets of parents/step parent in old age is not in the cards anymore than paying off the student loans.

As soon as ‘the older generation’ is too old to produce meaningful work in a long emergency subsistence survival setting, they will be feed into the wood chipper to provide mulch for the Victory Garden compost pile or left on the Ice Floe for the polar bears to recycle, if there are any left.

~

Reverse, you say that 27 million loan-owing students cannot be put in debtors prison, which is true. But they can be hounded for years, have wages garnished and otherwise be controlled. Debt serfdom has been a feature of human civilizations since Biblical times, and it’s a fact of daily life in places like Pakistan today.

Debt collectors are persistent like bedbugs. Let me tell you a funny story from my life.

In 2004, when I was still living in San Francisco, I got a couple of calls from someone asking for me by name. They wouldn’t say who they were at first, just asked in a slightly hostile way if my name was “_____ ______.” That tactic rang a bell with me, because years before I had worked at a psychiatric halfway house and one of the patients with money problems used to get similar calls.

On the second or third occasion, I got the caller to tell me where they were from — a debt collection agency. That was odd, because I didn’t owe anybody anything except for our house mortgage, which was always up to date. I persuaded the ominous male voice on the other end of the phone to tell me what it was about. Turns out it related to student loan debt for a guy with my same first and last names, but a different middle name and birth date. He had gone to college in Minnesota and welshed on his student loan (among other debts.)

It seemed REAL important to the debt collector that he should establish what my name was. I was hacked off about being bothered, so I decided to game HIM. I would not outright deny that I was this Minnesota guy, but I wouldn’t admit it, either. That would be lying. It would also spoil the fun. So I played the role of a surly scofflaw deadbeat, challenging the debt collector to do his worst.

“How are you going to get this money from me? You say you’ll garnish my wages? Do you know where I work, smart guy? You say you have my Social Security number? What is it?” (I eventually conned them into telling me this similarly-named fellow’s SSN, his date of birth, names of all sorts of relatives — just a ton of personal information.) “How do you know that I haven’t found a job using a fake SSN? Go ahead and try to garnish me! You say you’re going to come to my house? Just try it!”

I did some research online about what the federal regulations are that pertained to debt collecting. For instance, they can’t threaten to tell a debtor’s relatives about what they owe, but debt collectors can insinuate that they will. That’s how I learned the names of this debtor’s parents and grandparents. The collector would say things like “If your Grandpa So-and-So found out how much you owe, wouldn’t you be ashamed?” I would throw it back at them: “The law says you can’t do that, so don’t pretend you will.”

This went on for months! I had a great time with it. Instead of hanging up, like most of the deadbeats probably did, I’d try to keep the debt collectors on the line as long as possible. I figured the more of their time I wasted, the less time they’d spend harassing real debtors. I wouldn’t curse, just act all recalcitrant. I got to know the voices of several debt collectors — one would get assigned to bug me and after a few weeks give up and hand me off to someone else. Several were shrill and nasty — I liked hoaxing them best.

I finally stopped when I got a sympathetic debt collector. (He sounded like a black dude — maybe they have more empathy.) Because he was nice, I told him the truth, what my real middle name and birthdate was. No more calls!

From that agency, that is. About six months later, a different mob started phoning. I guess this Minnesota guy’s file was sold to a new debt collection agency, and they retraced the same steps the first one did. (Apparently I was found by a check on the name of my nursing licence.) I was still playing the “Maybe I am that guy, and maybe I’m not” game with them when I left the country.

Anyway, these blood-sucking ticks don’t drop away easily. They don’t need to lock people up, they just need to keep leeching them off. It’s employment for some people, and if companies are buying bad debt for 5¢ on the dollar and collecting 10¢ of it overall, they’ve got a 100% return. I reckon the $270 billion prize package is enough of an incentive to keep the Inspector Javerts busy pour longtemps.

Reverse Engineer post=1658 wrote: As far as the borrowers are concerned, the reason they are not paying back the loans is they have no job. Said borrower is equally poor with the debt or without it, the only time it makes a difference is if he ever does get a paying job, which for many is highly unlikely at this point.

As far as the lenders are concerned, they will get paid by Da Goobermint. As far as Da Goobermint is concerned, they will roll another $27B or so a year into the deficit to cover the interest payments on the $270B pricipal owed here. Chump change! Nobody will notice another $27B/year as the liabilities climb into the Trillions/Quadrillions!

This is how it will go until the wheels fly off the bus. You are immersed in a system of irredeemable debt of essentially fictitious money to begin with. It can’t even be paid off with Slave Labor, because the Slaves are themselves a liability.

Disagree, especially with regards to student loan debt, which cannot be discharged and will be fully recourse for all practical purposes (unlike some mortgage debt). Even student borrowers without a job will have accumulated savings/assets that can be stripped of them, and/or parents who have acted as guarantors on the loan. Many of the students will be forced into low-wage corporate slavery that will be just enough to keep some portion of the debts current, or perhaps qualify for re-negotiated terms, i.e. re-formulated debt slavery.

Those debts which must be made completely or partially whole by the government will most certainly cost the taxpayer through higher taxes and reduced spending on public services, entitlements and social safety nets. Even if we assume that none of these trends will last long before the currency is hyperinflated and sociopolitical structures completely break down, that itself is a HUGE price to pay for all savers, debtors, workers and, generally, all citizens/residents who are not among the relatively insulated 1%.

In the end, someone/something always pays, and most likely it will be a combination of debtors, savers, workers, retirees and society as a whole over the course of a few decades. If the collective has taken on debts so excessive that they cannot be worked off even through asset forfeitures and slave labor before HI, anarchy and/or totalitarianism sets in, then it’s hard to argue that everyone in society is not being made to pay the ultimate price.

ashvin post=1661 wrote:
In the end, someone/something always pays

Disagreed. That which is mathematically impossible to repay will not be repaid.

In the End Ash, Monetary Systems DIE. Always.

RE

To Ashvin and/or Ilargi, could either or both of you respond to the idea that the stock market will continue to go higher and higher as the US dollar is debased. Just as in Zimbabwe, as the Zimbabwe dollar tanked the market soared. Certainly the US is not and never will be Zimbabwe, aren’t we seeing the same thing play out in the US and European stock markets? Some would say it is the same as putting your money in gold but the stock markets continue to soar even as gold stabilizes. I would love to hear your thoughts on this. Thank you.

ashvin post=1672 wrote: The reason I think it’s important to make the distinction is that, through your argument, it makes it seem like there are no negative, long-term consequences to these students taking on boat loads of debts, or any other borrower for that matter. Yet, there they are.

Oh, there are plenty of Negative Consequences. You can read all about them in the Book of Revelation

Revelation18:11-13 wrote:

And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more: 12The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble, 13And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses, and chariots, and slaves, and souls of men.

The consequence here Ash is the collapse of the Civilization we live in. TEOTWAWKI. “Its all going up in smoke”, as I wrote on Peak Oil 4 years ago, “in the Greatest Bonfire of Paper Wealth in All of Recorded History”.

There are consequences to be sure. Many Dead People for one. Dead People do not pay back debts. EVER.

RE

istt post=1670 wrote: To Ashvin and/or Ilargi, could either or both of you respond to the idea that the stock market will continue to go higher and higher as the US dollar is debased. Just as in Zimbabwe, as the Zimbabwe dollar tanked the market soared. Certainly the US is not and never will be Zimbabwe, aren’t we seeing the same thing play out in the US and European stock markets? Some would say it is the same as putting your money in gold but the stock markets continue to soar even as gold stabilizes. I would love to hear your thoughts on this. Thank you.

If the idea is put your money in the market and wait to collect some phenomenal returns, then it’s a very bad one. Even if/when the dollar is debased into oblivion, the currency valuation of stocks will be outpaced by the devaluation in purchasing power. In a deflation, of course, the nominal value of stocks will plummet. The only way stocks are good for returns is if you are a very short-term speculator or you think that we are returning to a healthy and productive economy soon, after the bad debts are all cleared out, and that’s not something you should be thinking.

By no means do I believe we are moving toward a healthy economy, in the US or elsewhere around the world. However, stock markets have soared since the bottom in March of 2009, despite the fact that nothing has improved. It seems currency debasement is the only plausible explanation. I have watched Nicole’s presentation and it is very persuasive. What I find confusing, though, is the real value of things. She shows how values adjust relative to other groups as market conditions change. But it is not clear as to what that translates to in terms of holdings and especially timing. She, Ilargi and you could be spot on but if it happens when we are all deceased it will do us little good.

Hey vk, good to see your post. Been wondering how you are etc…

ashvin post=1686 wrote:
Care to explain those blanket statements? I find it very unlikely that productive assets and resources, human labor being one of many, will be worth nothing, to anyone. Or maybe I just forgot how energy is harnessed, food grown, water cleaned, shelters built, etc. If we are talking about “assets” such as money/cash flow/investments/etc., then they will most certainly be worth something until the monetary system completely collapses, never to return.

Sure.

On the asset side here, first off more than 50% of the population has no more than 2 months worth of bills in savings, no pension, no investments. If they are living in a McMansion, they are likely underwater, its not an asset.

Of the remaining population the main 2 assets any of them have is their House and their Car. If both are paid off, these probably are not people with student loans.

Even if both are paid off, as gas becomes unavailable, neither the car nor the McMansion are worth anything at all. The suburban ring road model doesn’t work without the automobile, so suburbia essentially ends up a Ghost Town. The car is just worth its scrap metal value.

Insofar as the worth of Human Labor goes, in an overshoot situation all people are liabilities, not assets. It costs more to feed and clothe them than you can get return in value added labor. Like a Car that has no value because the Gas is too expensive to feed it, a Human Being in Overshoot has no value if the food is too expensive to feed it. Dead People hold more value than slaves do, because dead people don’t eat.

Far as this being the only possible outcome, no I do not make that case; I just make the case I think it is the most likely outcome. I also cannot fix an absolute timeline to this. As I have said before, I think we will be going through a period of extreme Fascism here that could last quite some time, 20 years maybe even more though I doubt it. During this period in order to survive you probably have to make yourself useful to the Fascist state in some manner, probably as Soldiers which of course under Conscription is a form of Slavery itself.

Will there be Chain Gangs of Debtors in this scenario? Perhaps, but I don’t think its all the irredeemable debt of the past that matters, many people even non-debtors who did not take out Student Loans will also be so impoverished that their only options will be to serve the State in some sort of low paid job which just provides enough for subsistence living.

The debt system is so oversaturated with debt at all levels here that once Da Fed stops supporting the TBTF, they are not going to be able to replace that money through taxation or slave labor of debtors, its simply too great a debt in Energy terms, not monetary terms. If Da Fed perpetually prints new Debt to keep the TBTF solvent, then the money to roll over all the old debt is not coming from the labor of J6P, its just being conjured up out of thin air on a perpetual basis, further running up the numbers. So under neither paradigm does J6P ever actually pay off this debt, because as I said in Energy terms it cannot be repaid. The stuff is just well and truly gone here, at least the High EROEI stuff.

Its all in how you look at it Ash. I take a fairly long view of things, I’m generally looking 50-100 years down the line here, but I think much of this will become evident inside the next 20 years. I don’t see any way a significant Die Off will be avoided, and by significant I mean on the order of 50% or more of current world population. Under such a situation, I do not see how anything resembling our current monetary system will be perpetuated, so maost of the debt, Sovereign, Corporate and Public will simply be incinerated. The FSofA is never going to pay back its Trillions in unfunded liabilities, McMansion Debtors are not going to repay their mortgages, and Student Borrowers are not going to pay their Student Loans. The system has reached the end of the line, or at least it is very close to it. We will get Political Upheaval, Nation States as they exist now will disintegrate, they will be no more. Property Titles and Deeds issued under these Sovereign States will not be honored, any more than Confederate Dollars were honored after the Civil War.

Is this going to happen tomorrow or the next decade? Probably not, but its the writing on the wall that I read and I think it is the most likely outcome.

RE

RE,

After your last post, I’m not sure there’s actually much of a debate. Like you said, you are taking the very long view of things (I consider 20-100 years the “very long view” in this environment), while I am talking within the next 50 years at most. If students graduating now are either 22 or about 25-26 when they finally get out of school (perhaps older for med students and others who started their “higher education” late), then I’d say the consequences they reap from that debt will last over the better part of their lifetimes.

I do understand what you’re saying about the the value of assets belonging to students (or perhaps their parents), including their labor, in the very long-term, and believe it is a valid point. I have never argued that TPTB will be able to maintain complexity at the scale of a nation-state such as the US in the very long-term, regardless of how much slave labor they have. One must wonder, though, how that changes as we move down to smaller political entities, which may continue to be corrupt/oppressive in their own ways?

Anyway, good discussion!

ashvin post=1704 wrote: RE,

After your last post, I’m not sure there’s actually much of a debate. Like you said, you are taking the very long view of things (I consider 20-100 years the “very long view” in this environment), while I am talking within the next 50 years at most. If students graduating now are either 22 or about 25-26 when they finally get out of school (perhaps older for med students and others who started their “higher education” late), then I’d say the consequences they reap from that debt will last over the better part of their lifetimes.

I do understand what you’re saying about the the value of assets belonging to students (or perhaps their parents), including their labor, in the very long-term, and believe it is a valid point. I have never argued that TPTB will be able to maintain complexity at the scale of a nation-state such as the US in the very long-term, regardless of how much slave labor they have. One must wonder, though, how that changes as we move down to smaller political entities, which may continue to be corrupt/oppressive in their own ways?

Anyway, good discussion!

Good discussion indeed 🙂

There’s a difference in the timelines we are talking about, but there is crossover also. A lot of this could play out inside 20 years, at least the beginnings.

In the near term,again say the next 20 years, what can we expect? Here in the FSofA, debtor’s prison seems unlikely since the prisons are already overfilled. Wht seems most likely is the same old dunning phone calls with threats of litigation, garnisheering paychecks etc. Except how likely is that litigation? I have experience with Bankruptcy court, and unless you have some really big debts the bank doesn’t even bother to show up. Now,student debt can’t currently be discharged in a bankruptcy, but in order to garnisheer your salary (if you actually had one), the bank does have to show up in court.

Why doesn’t the bank show up? Because it’s more costly to send in the corporate lawyers than they can generally get a return on. They know that statistically speaking most of their deadbeat borrowers don’t have jobs or assets they want. If parents co-signed the loan, do they want to take the parent’s house? No, they already are overflowing with foreclosures, they dont need to add to their inventory with McMansions repoed to cover student loans!

So, here we are today where many of the recent graduates are UE, have no assets and also have debts which in theory can’t be discharged. You also have the fairly high likelihood that inside the next 20 years said debtors will not be getting any kind of decent paying job that could touch these debts, nor will they be accumulating any assets that could be repoed, nor is it cost effective to litigate the debts, nor is it cost effective to imprison them, since in prison they certainly can’t pay the debt. Sense a problem here? LOL.

Of course you do, and so do the Banksters and Da Goobermint. The answer of course is to paper over the problem and Extend-Pretend. The trick is for Da Goobermint to fill the hole in the Banks’ Cash Flow problem by covering the interest on the Debt not being paid by the deadbeat students while not seeming like they are “forgiving” any loans. How long can they keep doing this? Well, if what they are doing with respect to the deadbeat housing borrowers is any kind of yardstick here, a minimum of 5 years at least, so you are already 1/4 way through the 20 year timeline there.

To be honest, I don’t think the student borrower is all that much worse off than his counterpart who eschews further education in favor of staying out of debt. Said non-debtor is ALSO going to be broke with no job, the main difference I see is one person got a few years of living on debt while banging some co-eds; while the other one played nintendo in Mom’s basement.

Insofar as the further future following a one to many breakup of current Nation-States? One thing I think is pretty certain is that local Warlords will not have Internet access to banking databases containing debtor information. As to what form local economies will take in the aftermath of systemic monetary collapse, that is a topic all its own, and a huge one to say the least. Leave that for another day.

RE

ashvin post=1719 wrote: RE,

At this point, you are tap-dancing all over the place

That’s why they call me “Bojangles RE”. 😀 (sure wish I could drop in a pic or vid here of Bill “Bojangles” Robinson, but the text would disappear so no multimedia 🙁

Ashvin, I have a track record on this one. Back in 2009 I told my nephew and a couple of other friends who were having diffculty making their mortgage payments to just stop paying. All 3 have been living Rent Free for 3 years.

If you have friends struggling to make their student loan and mortgage payments, tell them to STOP PAYING! With $270B in delinquent payments out there, its going to be quite some time before your friends ever get on the docket. When the Bank calls, reply with the old standby, “the check is in the mail.” LOL

If you think most of this will be paid back, I think you are quite wrong. Of the people who owe this $270B, I doubt they have half of that in assets to strip, and that would INCLUDE their parents. The same people got these loans as got sub-prime mortgages, its tons of the underclass kids of the country, they just got no assets to strip NOW, not in 30 years, and they are not going to have any more in 30 years either.

OBSERVE what is actually occuring here Ash, if Banksters could recoup their losses in sub-prime by asset stripping the debtors, they would be doing that. But they are not because the Numero Uno asset that probably 80% of J6Ps out there have just isn’t really worth much and if they try to auction it off they’ll get pennies on the dollar.

Athough the law reads that Student Loans cannot be discharged in BK, the situation is still worse because there is NO collateral directly backing those loans like a McMansion. The product that the student debtor bought with the loan cannot be repoed at all, and hitting on cosigners would take some significant Lawyering which would be very costly.

At some point in the future if they start lining up Student Deadbeats at the Courthouse I might change my advice, but I don’t see it happening in the next 5 years anyhow. It doesn’t match the tactics they have been pursuing at all. Da Goobermint will paper it over, there will be renegotiation of principle and interest, payment schedules will be lengthened into the 22nd Century and they’ll keep this up until the wheels fly off the Bus.

RE
https://www.doomsteaddiner.org

Bojangles RE

Look for it in the Kitchen Sink at the Diner.

https://www.doomsteaddiner.org

RE

Well of course they will eventually be out of the McMansion, since once they can’t get Gas or it becomes unaffordable the place is a White Elephant anyhow. At $4+/gallon, far flung suburbs are ALREADY White Elephants, this isn’t some distant projection for the future. Meanwhile, long as the Banksters do not want to write down the losses and stop the merry-go-round, you live rent free and use the cash to buy a used Bugout Machine ready for the day you have to abandon the McMansion.

Is stepping off the treadmill by stopping your debt payments a risk-free option? Obviously not, since you pretty much have to stop working with the Banking Biz entirely, assuming you are still employed you have to cash your paycheck at Walmart and operate entirely in Cash.

I don’t find this to be baffling at all because the system may have a a”survival instinct”, but it is terminal and will not survive. Once you grasp that it is heading for the Great Beyond, there are choices that can be made which in other circumstances would not seem logical, but in fact can be better choices.

The whole Banking Biz depends on a critical mass of people “playing by the rules”. When MANY people stop playing by the rules, the system collapses.

RE