The U.S. is Going to Forgive Over $100 Billion in Student Debt in Coming Years
“a scathing review of the Education Department’s accounting methods”
Sometimes it almost seems like our system of handing out and then collecting payment on student loans is just a big house of cards. Almost.
The Wall Street Journal reports:
U.S. to Forgive at Least $108 Billion in Student Debt in Coming Years
The federal government is on track to forgive at least $108 billion in student debt in coming years, according to a report that for the first time projects the full cost of plans that tie borrowers’ payments to their earnings.
The report, released on Wednesday by the Government Accountability Office, shows the Obama administration’s main strategy for helping student-loan borrowers is proving far more costly than previously thought. The report also presents a scathing review of the Education Department’s accounting methods, which have understated the costs of its various debt-relief plans by tens of billions of dollars.
The overall government student loan portfolio—currently totaling $1.26 trillion of debt outstanding, including privately issued loans backed by the government—continues to generate a profit, though these projected revenues are dwindling as more people go into income-based repayment.
Senate Budget Committee Chairman Mike Enzi (R., Wyo.) ordered the report last year amid a sharp increase in enrollment in income-driven repayment plans, which the Obama administration has heavily promoted to help borrowers avoid default. The most generous version caps a borrower’s monthly payment at 10% of discretionary income, which is defined as any earnings above 150% of the poverty level.
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is proving far more costly than previously thought.
This would be where the journalists, not long ago, would put in “unexpectedly”.
But lately even they aren’t doing that. I guess by now even the most obtuse devotees know what to expect from the Obama administration.
If aluminum siding salesmen were doing to elderly homeowners what colleges are doing to students, they’d all be in jail.
When the government made student loans virtually automatic, colleges immediately started rapidly inflating tuition, since the money was really coming from good old Uncle. Nominally, the students agreed to horrible debt balances, desperately seeking access to the colleges, as the tuition rapidly multiplied. Teenagers signed on for these huge debts with no understanding of what they were agreeing to.
Once again, just like “affordable healthcare” which began to be destroyed in 1966, now education is catastrophically expensive, as a consequence of government intrusion into the market.
Some of the increased costs are of course due to inflation of the dollar, which favors loan repayment. Unfortunately, wages have not kept up with the dollar, and college costs have inflated by a far greater amount than has the dollar.