Another fine mess … when the Federal government takes over the student loan market which is now over $1 trillion.
But at least the YoY growth is slowing down.
“Many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed. Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.”
Not exactly a surprise, particularly when we are experiencing the WORST wage recovery from a recession since 1965.
Student loan already are the worst performing of the major debt classes (and that is BEFORE the data is adjusted for the recent revelation of underreporting).
The far more dire implications, however, are for broader student loan market, because if the latest unfabricated data suggesting that loan delinquencies are rapidly rising toward 50% across most of America’s colleges, then the US is facing a default problem of staggering proportions. Recall that back in December 2014, The Treasury Borrowing Advisory Committee forecast that in an aggressive scenario, as much as $3.3 trillion in student loans could be oustanding by 2024. Incidentally, that is the scenario that has captured the growth of student loans since it was presented.
And then there are alleged problems with the largest student loan servicer, Navient. Wait a minute! The Department of Education wasn’t paying attention to the student loan SERVICERS?????