Sub-prime mortgages and federal student loans
"Central View," by William Hamilton, Ph.D.
Twin Disasters: Sub-prime mortgages and Federal Student Loans:
With the Clinton, Bush, and Obama Administrations making "interest only" sub-prime mortgage loans to people not even able to pay their phone bills, a massive collapse of the American economy brought about the Depression of 2008-2010. Recall, the Little Banks failed and thousands of small retail businesses were bankrupted along with them.
But the Big Banks were clever enough to recognize a sub-prime mortgage scheme making the U.S. taxpayer the lender-of-last-resort when they saw one. The Big Banks received a $350 billion-dollar bailout from the U.S. taxpayers.
Next, the Federal Student Loan Program (FSLP) served to sub-prime college education. When the traditional colleges saw that even people who were academically unprepared for college could saddle themselves with thousands of dollars of tuition debt, they raised their tuitions to astronomic levels. Admission standards were lowered to admit students who barely passed high school academics. College officials and professors granted each other huge salaries.
Dozens of private, for-profit, colleges sprang up (some of them frauds) to hire sub-prime professors to teach sub-prime students some sub-prime subjects that would have no use in the real-world, prime-time marketplace. There were even private, for profit, law schools, producing sub-prime lawyers who could rarely, if ever, pass their state bar exams.
Mind you, most of the students victimized by the FSLP were not sub-prime people. They were decent folks who let themselves be conned into studying the History of Abstract Art 101 when they should have been learning to weld, wire, plumb, write computer code, and be of real value to Humankind.
Thousands of sub-prime graduates found themselves with no marketable knowledge and deeply in debt. But what if these sub-prime graduates would agree to serve ten years in the federal government (Deep State) or for some non-profit charity? Ninety percent of their student loan debt could be forgiven. Just how many FSLP debtors joined the Deep State is unknown. But reason suggests a large number did so. And, of course, any presidential candidate vowing to reduce the size of the Deep State must be opposed at all costs.
Now, the Biden* Administration says it wants all FSLP loans forgiven. Wait, the pre-2010 loans were made by banks that must be repaid. The post-2010 loans came from the U.S. Department of Education. Guess who would have to pay off the banks and the U.S. government? You, the taxpayer, to include millions of taxpayers who never got a chance to go to college because they came from poor families or they were unwilling to take on thousands of dollars of debt to the banks or to the U.S. government. Does that seem fair to the non-college men and women who do the day-to-day work of America? We report. You decide.
Suggested reading:. The Rooster Bar by John Grisham, 2017. "How Government Guaranteed Student Loans Killed the American Dream for Millions," by Daniel Kowalski, February 26, 2019, www. fee.org. See also: The Public Service Loan Forgiveness Program of 2007.
©2022. William Hamilton.