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Post by Cnon on Jul 29, 2017 3:20:31 GMT -6
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Post by PandaWatch on Jul 29, 2017 4:57:35 GMT -6
They're drawing parallels, but to what end? Are they saying the "bubble" will burst a la the mortgage lending market? Because that is unlikely. The systems/structures/characteristics of mortgages and federal student loans are so different that it's apples and oranges.
Are there high defaults? Yes. Are borrowers struggling? Yes. Is tuition too high for many people to afford with out taking out large loans? Yes. There are a lot of problems that need solutions here, but this article is fear mongering in the sense that it's implying a financial crisis akin to what happened in 2008. That is not likely to happen. BUT, things need to change to help students and families.
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Post by Deleted on Jul 29, 2017 6:00:07 GMT -6
I read a nytimes article the other day regarding private student loans. There are several companies that are in litigation that could drag on for a long time because they can't prove they own the loans....bad paperwork and a whole slew of other problems. Meanwhile they were suing borrowers who could not afford the payments. It's such a mess but may lead to a lot of people getting their debts wiped out because of how bad these companies messed up.
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kitchen
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Post by kitchen on Jul 29, 2017 8:30:45 GMT -6
The morgage market is bigger. The mortgage backed security industry was doing things no one would do with student debt because student debt is unsecured by nature.
I do think there will be a crisis point with this. I don't think it will tank the economy the same way.
I have not done a ton of research but I would be shocked if anyone is selling credit default swaps on pick-your-for-profit-of-choice debt or finding ways to package the loans and sell them as AAA securities.
A collapse of student loan debt that had interest rates in the 8-15% (what's that like 5-12% spread over 30 year mortgages?) Can't have the same impact because no one owns an unsecured debt obligation with a rate like that thinking they'll always get paid back. The debt is unsecured (thus the high rate) and the market isn't based on the underlying assumption that the price of anything will sleays go up.
Basically, yes. Student debt is a big problem. No, it's not the same as the mortgage securitization industry meltdown.
ETA: because I like facts. Forbes told me US student loan debt was about $1.3 trillion in late 2016. The Fed said mortgage debt was $14.4 trillion..
ETA2: I'm also guessing that big banks could set their student loan defaults close to 100% and still pass stress testing. Unless Congress makes it so they don't have to do that....
ETA3: (I have thoughts). I think the looming crisis that will result from the first generation of workers who were expected to fund their non-SS retirement through their own savings is going to be way bigger. To the extent that people are paying off loans in their late 20s and 30s and even 40s rather than saving for retirement, student debt is a contributing factor. I believe that will be the next big THING, after healthcare. The data show that the current system doesn't work. People just do not save enough money.
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Post by blurnette989 on Jul 29, 2017 9:13:44 GMT -6
I read a nytimes article the other day regarding private student loans. There are several companies that are in litigation that could drag on for a long time because they can't prove they own the loans....bad paperwork and a whole slew of other problems. Meanwhile they were suing borrowers who could not afford the payments. It's such a mess but may lead to a lot of people getting their debts wiped out because of how bad these companies messed up. I read this article too, and I wonder about my government based student loans, because in the 10 years since I took my first loan, my loan servicers have changed eleventy billion times. I really like my current loan servicer but have had some seriously shitty ones. I really wonder how solid the records are based on all the sales of my loans. Also, I am on IBR, and have kept all records of payments because I don't trust them to know how many payments I have made. I won't be paying more than my 25 years. |
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Post by PandaWatch on Jul 29, 2017 9:53:22 GMT -6
The other thing to consider is that the vast majority of outstanding student debt is either owned by or guaranteed by the federal government. The private student loan market is small. Since 2010, the majority of students loans have been lent by the federal government. The big banks have been largely pushed out of the market. So even if those banks were doing shady things like mortgage lenders pre-2008, it would reperesent a small share of the market. It wouldn't be good, obviously, but it also would not have the same effect as what banks did to the mortgage market.
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Post by PandaWatch on Jul 29, 2017 10:03:05 GMT -6
I read a nytimes article the other day regarding private student loans. There are several companies that are in litigation that could drag on for a long time because they can't prove they own the loans....bad paperwork and a whole slew of other problems. Meanwhile they were suing borrowers who could not afford the payments. It's such a mess but may lead to a lot of people getting their debts wiped out because of how bad these companies messed up. I read this article too, and I wonder about my government based student loans, because in the 10 years since I took my first loan, my loan servicers have changed eleventy billion times. I really like my current loan servicer but have had some seriously shitty ones. I really wonder how solid the records are based on all the sales of my loans. Also, I am on IBR, and have kept all records of payments because I don't trust them to know how many payments I have made. I won't be paying more than my 25 years. IIRC that article was about trust companies that own the debt. If you have Direct Loans, the debt is owned by the Federal government. In that case the loan servicer is simply the middleman collecting payments and doing the administrative work. They don't own your debt. So, as long as the federal government owns your debt, moving servicers shouldn't result in the things that were happening in that article. |
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Post by silverspoon on Jul 29, 2017 14:19:26 GMT -6
I read a nytimes article the other day regarding private student loans. There are several companies that are in litigation that could drag on for a long time because they can't prove they own the loans....bad paperwork and a whole slew of other problems. Meanwhile they were suing borrowers who could not afford the payments. It's such a mess but may lead to a lot of people getting their debts wiped out because of how bad these companies messed up. Excuse me while I go pray to every deity in the sky that this could be in my future. All of my student loans are private. |
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Post by Deleted on Jul 29, 2017 15:05:28 GMT -6
I read a nytimes article the other day regarding private student loans. There are several companies that are in litigation that could drag on for a long time because they can't prove they own the loans....bad paperwork and a whole slew of other problems. Meanwhile they were suing borrowers who could not afford the payments. It's such a mess but may lead to a lot of people getting their debts wiped out because of how bad these companies messed up. Excuse me while I go pray to every deity in the sky that this could be in my future. All of my student loans are private. I have two that are and they suck, one of the companies handling mine is in litigation but it could take years. I'm not counting my chickens. |
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Post by blurnette989 on Jul 29, 2017 15:29:47 GMT -6
I read this article too, and I wonder about my government based student loans, because in the 10 years since I took my first loan, my loan servicers have changed eleventy billion times. I really like my current loan servicer but have had some seriously shitty ones. I really wonder how solid the records are based on all the sales of my loans. Also, I am on IBR, and have kept all records of payments because I don't trust them to know how many payments I have made. I won't be paying more than my 25 years. IIRC that article was about trust companies that own the debt. If you have Direct Loans, the debt is owned by the Federal government. In that case the loan servicer is simply the middleman collecting payments and doing the administrative work. They don't own your debt. So, as long as the federal government owns your debt, moving servicers shouldn't result in the things that were happening in that article. Yes, you are absolutely right. I more meant that u don't trust records have been properly kept and transferred to each servicer to prove I've made qualifying payments. I've had friends on PIlC already having problems because loan servicers are saying some payments didn't count or didn't happen when they did. |
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