“If you thought mortgage-underwriting standards were lax right before the housing crisis, wait until you take a closer look at student loans. Borrowing for a house at least requires an appraisal of the property and an assessment of the borrower’s future capacity to pay. Student loans require neither. Instead, students and families are encouraged to invest in any program at any price…

….Today, easy credit from federal loan programs provides little incentive for campuses to keep tuition low, and many students and parents gladly borrow to pay these increasing costs, only to run into financial trouble when the loans come due. Delinquency rates on student loans reached 12% in 2013, higher than the roughly 10% delinquency rate on mortgages at the height of the housing crisis in 2008-09.”Miguel Palacios and Andrew P. Kelly, “A Better Way to Finance a College Degree”; April 13, 2014, Wall Street Journal

“By now, it should be clear to everyone that with $1+ trillion in U.S. student loan debt and too many of these students out of school and unable to pay, that we have another huge consumer debt crisis on our hands. This reminds me a lot of the recent mortgage and banking crisis in U.S.. How so? They both involved massive market distortion/intervention by the government (albeit well-intended) that encouraged both lenders to lend more and borrowers to borrow more (and prices for homes and college to rise rapidly; well above inflation rates). Today, both the U.S. student loan and U.S. mortgage markets have essentially been nationalized.”, Mike Perry, former Chairman and CEO, IndyMac Bank


April 28, 2014- “Federal Plans That Forgive Student Debt Skyrocket”, (WSJ)

April 28, 2014- “Defining Delinquency Down”, (WSJ)

April 25, 2014- “Telling Students to Earn Less”, (WSJ)

April 13, 2014- “A Better Way to Finance that College Degree”, (WSJ)

Posted on April 28, 2014, in Postings. Bookmark the permalink. Leave a comment.

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