With the popping of the student loan bubble apparently in progress, rumors are circulating that the Federal government will bail out the $1 trillion student loan industry.  When 50% of graduating Americans have $30,000 + in student loan debt and cannot find a job with real unemployment hovering over 20%, the entire sector is subprimeQE to Infinity…AND BEYOND!!!

A possible $1 trillion bailout is coming—and soon.
America’s now-nationalized student loan industry just reached a value of $1 trillion, according to Citigroup, growing at a 20 percent-per-year pace. Since President Obama nationalized the industry (a tacked-on provision of the Obamacare bill), tuition has gone up 25 percent and the three-year default rate is at a record 13.4 percent.

Ron discussed this problem last night with Larry Kudlow:With many young people unable to pay their loans (average graduating debt is about $29,000), Citigroup and others are speculating that this industry might be ripe for a bailout.

To pay off all the current defaults, Citigroup says it would cost taxpayers $74 billion. However, this number doesn’t include those who will default in the coming years, and, when the government rewards the defaulters, it will encourage more borrowers not to pay their debts.

And liberals in Congress have proposed forgiving all student loans via “The Student Loan Forgiveness Act 2012,” costing taxpayers $1 trillion.

Adding another $1 trillion dollars to the national debt isn’t exactly “forgiveness” for young people—it’s prolonging the payoff. In fact, student loan bailouts are a catch-22 for young people because they’re going to be held accountable for paying off the national debt and interest payments.

A student loan bailout will also be rewarding higher education bureaucrats for a diminished product. A college degree used to mean that a person would add on average $1 million to their income over their lifetime. Today a college degree only guarantees an average $300,000 in added income over a lifetime.
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  1. What the hell why don’t they just pay everybody’s loans, Mortgages, All Debts as they are paying everything else and we will all live happily ever after. What a bloody Joke. LETS ALL GO BLINDFOLDED.  KEEP STACKING

  2. This is a socialist’s dream, not mine.  Please wake me up!  I have worked hard to be debt free and to provide for my family.  Now those that are profligate are getting everything I had to work for, but without the sacrifice. 

    • That’s too much in four years in my opinion. I’ll say silver will reach at least more than 54.50$ per ounce according to a line drawn from the 2008 low price to the recent 2012 low price on the silver’s chart.

  3. Well it would dump more money into the economy via people not having huge student loan payments. Put that money on a debit card good for stuff made in the USA only…. I think it is time for government to get creative instead of stickin gits head in the sand and printing to infinity. Do what Iceland did.

    • “I think it is time for government to get creative instead of stickin gits head in the sand and printing to infinity.

      Heh heh… if only their heads were in the sand and not in an anatomically impossible location. 

    • That’s a good idea! That way, it will help a lot of American companies, businesses and the jobs and the result of that will be that the American economy will be advancing again… for a short period of time.

  4. I believe this will set a horrible precedent among all students not to pay off their student loans. This could quickly snowball into an avalanche of debt. This will also make it harder for other students and their parents to pay for tuition without obtaining a loan.

    • The doubly sad part is the ideological bias in university is anti-free enterprize. In addition to these kids being indoctrinated into becoming statist anti-liberty bigots, they are now learning that the state can take away their debts.. Of course this only lasts until entrepeneurs and small business owners fold their tents for greener pastures. New Zealand also had such notice once upon a time, til became broke soon after. ”The problem with socialism is you run out of other peoples money” but thats a lesson to be learned another day, in the not too distant future.

  5. They have a problem, no jobs to pay down their loans, sooo maybe a grace period of 3 years after graduating before interest accrues.
    That would help them some, the banks that made the loans get screwed a bit, the taxpayers= neutral.
    Outright forgiveness of debts only for students dumps the bills on those that never borrowed the money and chose to work instead.. Totally wrong.

  6. Bailouts?  What sort of bailouts?  A GM type?  So the student gets a Chevy Volt sort of bailout.
    Maybe an AIG bail out designed for Warren Buffet.   Or FHA, Freddy Fanny type.  Puleeze!
    Government debt to bail out government debt?   The cure is worse than the disease.  The only winners are the banksters.

    The student is free from the student loan. But he or she will pay for it, along with us long suffering tax payers,  for the next 30 years.  We are now forced to cosign the ultimate $1 trillion bailout with our names on the line for the next 3 decades.  Big whoop on this idea. Perfect, just freaking perfect. 
    Another subprime garbage CCC- loan system  set up that needs bailing out.  For heavens sake, please go and get it done so I don’t have to read any more about student loans.  Thanks

    • “Bailouts?  What sort of bailouts?” Any sorts of bailouts as long as the bailouts help the banksters and destroy the other people. Can’t these students simply work at part-time jobs to pay for their scholar fees?

  7. It’s baffling to me that people either don’t see or are unwilling to discuss the basic supply and demand principles at play with college tuition costs.  Colleges across the country are impactedand seeing record number of applicants every year.  Put another way, there is an insufficient supply of college educations available every year. This alone would cause tuition costs to rise.  Then add the fact that the federal government is providing access to loans and grants to pay for college ( which are apparently now free) and you effectively increase the demand for college educations.

    The schools have no incentive to actually review budgets and cut costs, because record students apply despite 20% yearly tuition increases.  The UC system just had another vote to raise The salary for the new UC Berkeley chancellor by $50k to an obscene $486,000 a year.  That’s before benefits. 

  8. We are at that pivotal moment where the wheels have just come off and we are waiting the inevitable screeching sound as metal hits the pavement.

    This is just more of what I call “capitalist socialism”. A bazarro world of benefits doled out to “some” of the people through bailed out loans. In this world, nice guys finish last and everyday is a lottery jackpot to those who live recklessly.

    Enjoy it while it lasts. The guns are being cleaned and loaded as we speak. 

    Everyone will be a domestic terrorist before this is over.

    • yes, the wheels are coming off.  there are no more credible actions. there are only temporary bandaids. TPTB are not going to forgive student debt. they will only backstop the banks’ losses. 

    • If one already lives in the small villages outside the cities block the bridges, barricade the the roads and man the ramparts! Main St. is about to be under siege by a tidal wave of human desparation!

    • “If one already lives in the small villages outside the cities block the bridges…”

      Blockages can be removed.  Standby to detonate the ends of the bridges. 

    • Everyone will be terrorists in the governments’ point of views while the governments will be tyrants in the point of views of everyone. Because of that, there may be a really big fight between those two forces.

  9. I am so torn by the govenment socializing student loans (I have a child in collage). On the one hand you have the young people coming out of highschool that want to be able to earn a living wage so they take out a loan. But they can only get the loan from the government. They enter into the loan honestly with the intention of paying it back. On the other hand what they don’t realize is that the govenment is setting them up! Because the govenment knows that all the debt is destroying the very economy and the jobs that these young people will need to pay back the loan. This makes the loan a fraudulant agreement on the part of the government! When the young people get out of school there will be no jobs waiting. No employer ready to hire them. What is even more insidious is, since it is a gov. loan, they can not default on it. The gov. ends up with an indentured servant. I can’t help but wonder if this wasn’t the reason for taking over all student loans to begin with!

    • That’s exactly why they took it over-all part of the con.  The most vital part of the con was to convince you, me, and your child that in order to earn a living wage or be successful you must take on pointless debt and aquire a useless degree-in a large majority of cases.  The knowledge that serves me on a daily basis came in no shape or form from high school or college.  They want a strangle hold on anything that contributes to the molding of each person-ie education, nutrition/diet, spirituality/religion on and on and on-no accidents for coincidences, just evil greed.

    • “Because the govenment knows that all the debt is destroying the very economy and the jobs that these young people will need to pay back the loan.”

      Only if they choose to remain in the US.  Many young entrepreneurs are leaving the US for FAR greener pastures overseas… where many are welcomed, hired, and doing well.  Pity that they cannot remain here and build the US economy as easily.  Unfortunately, there are WAY too many barriers erected in front of them for that.

    • I have to agree that getting a job these days is very hard. For example, I have applied my application to work for 50 jobs. Three of them have interviewed me while only one of them have accepted my request!

  10. Why should students have to pay?  It would make them accountable for their actions!
    Another step in the direction of being ‘in debt’ to our giveaway govmint.
    Knew this was coming, I am not surprised!
    I worked my way through college, earned 100% of my expenses.  It was not easy.
    Today, I take pride in my early achievement.
    It is called SACRIFICE.  
    Not today!  We all have to foot their bill.  
    Call your career politician that holds a Senate seat! 

  11. Right you are, Sheepdog. Some of the students also major in vapid things. Ancient languages, art appreciation, women’s studies, it was never easy to get jobs in certain majors anyway.  Students also party on those loans, not all of the funds go to tuition.
    Sorry they got sucked in, but the working stiffs shouldn’t get the bill, no way. Life’s a bitch with a degree, so, I guess it’s a day at the beach without one?
    Wrong. We the ‘uneducated’ work like dogs for our money. Time for junior to learn how to stretch some fence.  Things will turn around and when they do, they can use their sheepskins and move into something more plush. 

    • @Conax: I agree. Why should the young people who chose not to go into debt to the government (and everyone else) end up paying for those who did. It just ticks me off that Washinton has found one more chain, one more shackle, & one more weight on us.

  12. Thank you all for the comments above 
    It got me to thinking about the value in/value out of a college education.  One of the problems is the incredible costs now embedded in the colleges and Universities, particularly those of the public sort.  I went to SDSU and my entire cost per semester was about $500 for tuition and books.  A good paying part time job got me through.  SDSU is a ‘Gentleman’s B’ school, to go along with my GPA.  It now cost $5,000 a year.  The tuition inflation since 1980 is well over 1,000 %,  3 times the national average for inflation.  The incomes of adminstrators and professors is staggering.  This headcount makes college a very pricy place to park your mind for 4 years.  One of the primary reasons for this tuition inflation was the full scale advent of student loans for any and all parts of the educational process. These forms of youthful indebtedness are aided and abetted by all forms of government and private scholarships.  Scholarships for golf and hockey come to mind.  Scholarships stacked on top of each other make it a relatively painless process to finance any amount of tuition accordable.  The cost of education quality for scholarship hoop jumping leaves a student dereft of a quality education. It just pays the cost of a 4 year hiatus in life’s education processes.
    It’s much like medical coverage.
    If your insurance convers everything except a $20 co pay then no one price shops.  I pay cash for my medical coverage until my HSA deductible of $5,000 is hit.  This makes me price shop for services with cash, receiving as much as an 80% cash discount.  I see tuition in the same light. If the entire freight of tuition is covered by outsiders, the extent of the debt created is meaningless until the piper needs to be paid. Scholarships are pretty much free money if you jump though enough hoops, some of which are meaningless. I am on the scholarship committee of a group and what we see in requests is pretty amazing  What some kids will do to get even $1,000 is an eye opener.
    But the real problem is that this whole student loan is a national discrace and scam.  Leftist liberal hotbeds, aka the typical public and many private colleges, turn out education contents that are completely worthless in the job world today.  Would you hire someone with a Transgender studies degree?  I think not. That the person spent $100,000 on his or her education is a crime.
    Students are easily duped into taking courses and going for degrees that ‘feel good’ and ‘feel right’ in light of the liberal hogwash that substitutes for high school education. It’s a natural ramp to the furtherment of this education swill.  Too many promising students get trapped in this glue, brainwashed to the Nth degree which 2-3 years of wages are snorkeled out of their pocket by the elites. I would call this Educational Gateway Drug Abuse.
    This education trap was not created by accident. The liberal Progressive nature of the higher education schools is not without its attractivness  It does not require a great deal of study, if any at all, to receive a degree.  The indoctrination and propaganda from these colleges denies and discourages critical thinking.  
    Sumkid has more critical thinking in any 5 of his posts than many students might encounter in a year of college
    But the enormous cost of the degree is often not balanced by anything that might resemble an education.  The product of the education sausage factory is often young people without skills to engage in higher level jobs that are income meaningful.  The Sciences and Business schools are not producing the educational outputs we need.  3,000,000 jobs are unfilled because our students and young kids don’t have the skills to fill them.  Some large firms have to provide remedial reading for their new hires.
    In my opinion, this IS a conspiracy between the elite liberal educators in their ivory towers, paid phenomenal sums to teach one class while producing one more monograph that only 7 people will read, coupled with banksters who aid and abet this debt crime along with governmental agencies who turn a blind eye to the end results.  Students are an annoyance to be dealt with while the Ivy League professors rub elbows with the elites to acquire another grant, at tax payers expense, to produce another useless study about the sexual preferences of Borneo tree frogs.  I’m hip to that but we have all been there and seen that in the last issue of Nat Geo.
    The conspiracy, if there is one, and I think there is good evidence to that, is dumbing down of this country’s young people in order to make them more indebted, less capable of thinking independently and far less able to exist outside the confines of the STATE. Highly educated and propagandized sheeples with a generational debt that can never be paid.

    • “The conspiracy, if there is one, and I think there is good evidence to that, is dumbing down of this country’s young people in order to make them more indebted, less capable of thinking independently and far less able to exist outside the confines of the STATE. Highly educated and propagandized sheeples with a generational debt that can never be paid.”

      The word you seek in this paragraph is… docile.  Being docile makes one malleable, predictable, and controllable… the liberal trifecta.

    • Tuition fees are going up way too fast! A lot of young people are realizing this problem and they protesting against the rising cost of tuition. But, that won’t help at all because inflation is always rising and that will make the colleges to lose some revenues.

  13. I can say without a dobut that my business degree is worthless.  I am almost done paying off my student loans from 10 years ago after paying interest only-this is what many people are doing and remember all they care about is the interest, principal was made out of thin air anyway-for the first five years or so due to my low income coming out of college and I had decent jobs.  I had some good times and I accept full responsibility for my wasteful actions, but this is one big hoax.  I would have been MUCH better off skipping college all together and instead found a good skill or trade after high school-another joke.  High school and college did very little to really educate-I could have done better by spending a half of the time in a library where my critical thinking skills would have flourished instead of being stunted by the drivel passed off as education in my time.  College is logical for a few specialized professions but a system of internships and apprenticeships etc., would serve any population better than the joke we have going now.  I have come to realize that when something is done and perpetuated in such an idiotic manner, it is not by accident or coincidence and someone or many someones is profiting handsomely from the whole scheme.  I get hateful responses from most when I say that I would most likely never encourage young people or my future children to attend college but it’s just becasue these people are in the same place I was years ago and have fallen for the guise that is put out there telling us that the only path to prosperity is through some useless college degree that qualifies you for nothing-it’s automatically taken internally as an insult because they have been programmed to take that stance; again, they have done a marvelous job of brainwashing but there are always those that it either does not work or eventually wears off after enough non-exposure.  It’s just part of the big hoax on all of us.  Same as relying on government-“if I just get this degree, it will take care of me cause they told me it would”.  Just another avoidance of personal responsibility where people have been duped to think life will be ok if “someone” will just take care of things for me.  I basically set myself back at least four years but more when you think of how long since then it took me to wake up and realize the con.

    • I want to have a job in the future that pays me very well and the only thing required to obtain that job is to finish high school. It doesn’t matter if you lose a lot of dollars in college. What it mostly matters is how much time you’ve lost in college and you can’t get that amount of time back from your life.

  14. When the gov’t touches it, it gets ruined.  That is what happened to college tuition costs.  Easy money gov’t guaranteed subprime student loans distorted the college tuition market, just like easy money guaranteed subprime home mortgages distorted the housing market and caused the housing bubble.

    What the government should do is get out of the college tuition subsidy business.  

    End result will be dramatically lower tuition costs.  Students then will then be able to work and put themselves through school like I did once again. 

    • “What the government should do is get out of the college tuition subsidy business.”

      Sorry but that is not part of the plan.  This is not about education.  Education is only another control tool. 

  15. When this thing finally blows up there may not be a government or TBTJ banks (praying) left. Literally everything could change in a matter of days or weeks. Just like the naked short takedown of Lehman Bros. by JP Morgan. Who you gunna call? Ghost Busters?

  16. Guess what you can do after your student debt is bailed out?   You can GO BACK TO SCHOOL!    Because you need another degree to really separate yourself from the herd!   LOL

    If they had a sort of Student Debt Jubilee what about people who are just entering college?   I guess they’ll have to pony up for the full amount.    That’s how it works in the real world, the older generation takes it all and sticks the young uns with the bill.     You can bet tuition will keep rising.   Even the tuition at community colleges has tripled and quadrupled in the last 15-20 years.     That’s basically a doubling of prices every 5 years folks.    If you want to see the future look at the past. 

  17. That one trillion dollars is not free. It has been funded by taxing the American citizens and funded by creating more dollars out of thin air which steal the purchasing powers of people who are holding the US dollar.

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