The Department of Education, one of the nation’s leading student loan lenders, is getting serious about collecting on $67 billion in defaulted loans. Yesterday, Bloomberg News reported the mob-like lengths the government agency is going to in order to cash in:
The debt collector on the other end of the phone gave Oswaldo Campos an ultimatum:
Pay $219 a month toward his more than $20,000 in defaulted student loans, or Pioneer Credit Recovery, a contractor with the U.S. Education Department, would confiscate his pay. Campos, disabled from liver disease, makes about $20,000 a year.
“We’re not playing here,” Campos recalled the collector telling him in December. “You’re dealing with the federal government. You have no other options.”
Campos agreed to have the money deducted each month from his bank account, even though federal student-loan rules would let him pay less and become eligible for a plan — approved by Congress and touted by President Barack Obama – requiring him to lay out about $50 a month. To satisfy Pioneer, Campos borrowed from friends, cut meat from his diet and stopped buying gas to drive his 82-year-old mother to doctor’s visits for her Parkinson’s Disease.
The average student graduating with a bachelor’s degree comes away with over $25,000 in loans, which would require a monthly repayment of more than $200 for at least ten years. If the average is more than $25,000 — however — there is a large group of students who are walking away with significantly more, especially if they have then gone on to complete a post-graduate degree.
I’ve heard it argued that the student loan bubble burst will be bigger than the housing burst — the debt is held by a large proportion of one age bracket of the population, unlike a home cannot be sold (even at a loss), and unlike other debt is virtually impossible to be rid of, even after filing for bankruptcy. This year, the amount of debt held by America’s students will surpass the debt held by all of America’s credit card holders, while the rate of borrowing continues to increase for student loans at a faster rate than for any other kind of debt.
Instead of putting a stop to the extension of credit, the Obama administration has continued to allow the Department of Education to blindly loan tens of thousands of dollars to America’s students without so much as a notice informing borrowers how much their monthly payments will be upon graduation. After they are unable to pay it back, the Department of Education farms out the collection to private agencies who will stop at nothing to collect. Another solution, limiting the amount of debt offered to 18-year-olds, has seemingly never been considered as an option.
A new Pew Research Center survey found that almost 30 percent of people between 25 and 34 are living at home — and they are actually okay with the arrangement. The Pew study also showed the numbers of multigenerational households in the United States is at its highest level since the 1950s.
An entire generation of Americans is now reliant on their parents much later in life than any previous generation. Under ObamaCare, Americans can expect to be on their parents’ insurance plans until the age of 26, and they can also expect to be still living at home, putting off marriage until the average age of 27.
President Obama has fought to keep adults on their parents’ healthcare plans long after they should have moved out, gotten married, and started independent lives. He is trapping a generation (which he has narcissistically dubbed Gen44 after his presidency) in a cycle of personal debt, preventing them from being able to survive when the weight of the national debt comes crashing down. When the bell does start to toll on our historic debt burden, turning Washington, D.C., into Athens, don’t expect Gen44 to do anything but lead riots from their parents’ basements.