photo by stubblepatrol.com
There is a rarely discussed government-created debt tsunami on the horizon, a wave so titanic and vast it could make the 2008 housing bubble that threw the US economy into a technical depression look like a ripple.
It’s the impending tidal deluge of college loan defaults, and it is not only the creation of federal policy, but it appears the previous administration and many current RINO's in Congress don’t want Americans to be aware of it.
During the last two days of the Obama Administration, Wall Street Journal investigative reporter Andrea Fuller shed some light on the situation. She exposed the fact that in the last week of President Obama's occupancy at 1600 Pennsylvania Ave, he saw his cronies at the Department of Education release word that (*shocker*) they had “mistaken” the enormity of student loans in default.
In fact, they had “mistakenly” not reported that more than half of all student loans handled by the feds -- the feds now are the only entity issuing US student loans -- are not just in default, but students have not even paid $1 each on their loans in the last seven years.
How utterly bizarre.
How is this possible? How is it that after former President Dwight D. Eisenhower pushed the 1958 National Defense Education Act that handed colleges loans to let colleges, in turn, loan money to students (all in the name of “national defense”, of course), after the squeaky-clean Lyndon B. Johnson finagled the unconstitutional Higher Education Act of 1965 that started direct college loans called Federal Family Education Loans (FFEL), after Dick Nixon introduced Sallie Mae (the Federal Student Loan Marketing Association) to buy up student loans held by private banks, inspiring an even greater moral hazard of riskier loans, after the feds expanded student loans via Pell Grants in 1972, after Jimmy Carter signed the Middle Income Student Assistance Act of 1978, after Ronald Reagan and a “bi-partisan Congress” increased the number of Pell Grants and pushed government payments to universities by more than 30%, after George H. W. Bush signed into law the 1992 William B. Ford Direct Student Loan Program (part of the reauthorization of Johnson’s 1965 Higher Education Act), after Bill Clinton began phasing-in even more direct student loan lending, after George W. Bush exploded student loans in 2007, likened to the “GI Bill” (which was also unconstitutional), and added this in a radio announcement…
…and after Barack Obama already signed into law a bill that essentially allowed students to only pay back loans up to 10% of their income, and default on the remainder after 20 years, one wonders how in the world demand for college might have been artificially increased, inspiring incomprehensible cost increases, and motivating students not to be interested in paying back their loans.
And who holds all those loans?
The feds, i.e. the taxpayers, i.e. future generations who will be born into tax slavery without any say whatsoever.
As Christopher Westley wrote in 2013 for the Mises Institute,
"In 1964, federal student aid was a mere $231 million. By 1981, the feds were spending $7 billion on loans alone, an amount that doubled during the 1980s and nearly tripled in each of the following two decades, and is about $105 billion today. Taxpayers now stand behind nearly $1 trillion in student loans."
And guess what? Even though this amount is now over $1.5 trillion, half are in default, and Zerohedge’s Tyler Durden notes that by 2024, this number could be $3.3 trillion.
As Jason Osborne of Credit Adjustment’s Inc., one of the largest student loan collections firms in the nation, notes, the Obama Administration actually counted these defaulting loans as assets in their overall deficit/debt numbers!
Is it any wonder why the Education Department kept the truth hidden? They had $1.5 trillion in loans on their “asset” sheet, making the US deficits and debt look smaller, but $500 billion were not assets in any way -- and that number is growing.
If a private company were to hide information like this and pad its asset sheets in such a devastatingly corrupt manner, it would be seen as fraud on the level of Bernie Madoff times nine.
But how can one express shock at this kind of corruption and fraud when the entire US government is operating in perpetual debt and generational enslavement? How can average citizens have their outrage heard when politician after politician, president after president, have tugged at heartstrings to insinuate the feds into the college funding racket, creating an environment where, as professor Richard Vedder said in 2013, college costs have skyrocketed by 500% since 1985 and universities are "in the housing business, the entertainment business; they're in the lodging business; they're in the food business"?
"Hell, my university runs a travel agency which ordinary people off the street can use," Vedder said.
Perhaps those travel agencies might come in handy. Given the lies -- er, sorry, “mistakes” -- of the Obama Department of Education in reporting the tidal wave of student loan defaults, Americans might want to evacuate as soon as possible, and leave the idea that the government can create a better educational world far, far behind.
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