One of the very first government-created disasters that I wrote about on this blog was the student loan mess. The blog opened for business on November 6, 2012; and already on November 29, 2012 I had a post titled “Out Of Control Student Loans.” That post noted that, from a beginning in 1966, the federally-guaranteed student loan program had just reached a milestone of $1 trillion of student loan debt outstanding, with no signs of an end to the ongoing increase in outstanding balances. Also, at that time, the so-called “delinquency” rate for student loan borrowers had just suddenly soared from about 8.5% to 11% within less than a year. And, the post pointed out, the 11% delinquency rate was in fact quite deceptive, because very large numbers of borrowers — about half — are in some kind of deferral or forbearance status at any given moment, which leads them not to be counted as “delinquent,” even though they are out of school and not paying anything. That meant that if delinquencies had been measured as a percentage of borrowers expected to be paying, rather than as a percentage of all borrowers, the delinquency rate would have suddenly doubled to more like 22%. The post concluded: “Get ready to lose half or so of the trillion.”
Could things possibly have gotten even worse since then? Of course! After all, this is a pile of free federal money there for the taking. Who is going to pass it up? As long as nobody is really paying much attention, this problem will just continue to explode out of control. And really, what with the “civility” crisis, the Elizabeth Warren Cherokee scam, the Kavanaugh confirmation, the midterm elections, and whatever, who has time to pay attention to a mere trillion dollar problem?
Which is exactly why the problem continues to grow. . . .Read More