Told Ya
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From: Blue Ridge Mountains, GA
Senior Member
Joined: Aug 1999
Posts: 1,506
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From: Bakersfield, CA, USA
Currently, about 13% of student loans go into default within the first 3 years. They apparently don't keep track of the total rate of default (to include those that quit paying after 3 years). Clearly, that rate must exceed 13%.
The government has a hammer over the shools: If more than 30% of a school's student loans default within the first 3 years, that school could lose all or some of their federal funding.
At a 13%+ default rate, it seems like student loans are a pretty risky investment. But the government will see to it that everyone can get a loan, at an artificially low interest rate that does not reflect risk.
It's almost like the government uses taxpayer money to subsidize people to be students, keeping them off the unemployment rolls and keeping money funneling into the universities, which then sing the praises of big government.
Gee, what could possibly go wrong?
Sorry for the thread jack, but this country is changing very fast. The government takes over student loans, and creates winners and losers in the auto industry, paying off their buddies and leaving investors high and dry. The taxpayers lose $billions, and the centralized power in DC expands and expands. And hardly a word is said.
The government has a hammer over the shools: If more than 30% of a school's student loans default within the first 3 years, that school could lose all or some of their federal funding.
At a 13%+ default rate, it seems like student loans are a pretty risky investment. But the government will see to it that everyone can get a loan, at an artificially low interest rate that does not reflect risk.
It's almost like the government uses taxpayer money to subsidize people to be students, keeping them off the unemployment rolls and keeping money funneling into the universities, which then sing the praises of big government.
Gee, what could possibly go wrong?
Sorry for the thread jack, but this country is changing very fast. The government takes over student loans, and creates winners and losers in the auto industry, paying off their buddies and leaving investors high and dry. The taxpayers lose $billions, and the centralized power in DC expands and expands. And hardly a word is said.
Last edited by dirt bike dave; Dec 20, 2012 at 07:08 PM.
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Joined: Aug 1999
Posts: 1,506
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From: Bakersfield, CA, USA
True, the government essentially earned interest by making a massive, risky loan that easiliy could have gone bad, in exchange for stock.
From an aritcle I saw, there were two large components of the AIG bailout/investment, and the government earned like 2.8% interest on one portion and 7.9% on the other, and the combined internal rate of return was like 5.8%.
Basically, the government loaned $Billions in exhange for stock, with a portion of the loan and investment only returning 2.8%, on a risky bet. Glad it worked and certainly there would have been fallout if AIG failed, but is this really an appropriate role for government? Taking stock in speculation and earning interest on bailouts? Cause you know, we will lose more often than win.
Even if it is the kind of thing a huge government should do, it does not seem like something to brag about. "We made a profit gambling $billions of taxpayers money in the stockmarket and on risky loans! Whoo Hoo!"
From an aritcle I saw, there were two large components of the AIG bailout/investment, and the government earned like 2.8% interest on one portion and 7.9% on the other, and the combined internal rate of return was like 5.8%.
Basically, the government loaned $Billions in exhange for stock, with a portion of the loan and investment only returning 2.8%, on a risky bet. Glad it worked and certainly there would have been fallout if AIG failed, but is this really an appropriate role for government? Taking stock in speculation and earning interest on bailouts? Cause you know, we will lose more often than win.
Even if it is the kind of thing a huge government should do, it does not seem like something to brag about. "We made a profit gambling $billions of taxpayers money in the stockmarket and on risky loans! Whoo Hoo!"
Last edited by dirt bike dave; Dec 20, 2012 at 08:14 PM.