Posted On: Thursday - January 19th 2017 6:40PM MST
In Topics:   University  Global Financial Stupidity  Economics
In particular, I would like to write about the University loan bubble and accompanying University Stupidity that is at a very high level right now. There will be more to come on this topic and also the general topic of Global Financial Stupidity.
Due to time constraint for today, we will start now with an article from zerohedge on some "accounting problems" with student loan default rates. This is not starting with a very good introduction, but it's just to put this out there while the article is new, and we are at the last day of the Øb☭ma administration, bureaucrats of which have been faking data like a Chinese Cadre reporting directly to Chairman Mao.
Zerohedge says US Government Caught Massively Fabricating Student Loan Default Data
An the WSJ reported overnight "many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed."
The admission came last Friday, when 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. This also means that the number of loan defaults in various cohorts is far greater than previously revealed.
A spokeswoman for the Education Department said that the problem resulted from a "technical programming error."
And so, the infamous "glitch" strikes again.
How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. In other words, virtually every single number was made to appear better than it actually was. And people mock China for its own "fake data."
According to an analysis of the revised data, at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. This is a stunning number and suggests that the student loan crisis is far greater than anyone had anticipated previously. It also means that the US taxpayer will be on the hook for hundreds of billions in government-funded loans once attention finally turns to who is expected to foot the bill for years of flawed lending practices.
Was this the 2nd Great Leap Forward, being called GLF 2.0? It does seems like we have all leaped, but more like off the New River Gorge bridge with a china-made parachute than forward, it seems to me. Hey, could I be a zerohedge commenter - gosh darn it, I'm funny enough!
Here's a real ZH commenter - just off the first few for this article:
Krungle NoWayJose Jan 19, 2017 11:37 AM
You cannot tell a bank that they can make risky loans to teenagers with no credit history or jobs and that the government will be responsible for defaults and not expect bankers to hand them out like candy. This is yet another case where the taxpayer assumes the risk for banks and the banks only have to worry about the profit. If these loans were could all be discharged with bankruptcy, and if the government assumed no risk, you would find the student loan market immediately tighten up dramatically. And schools would adjust accordingly. If the loans came with grade requirements (something like if you start failing classes, we will stop funding you), you would find schools suddenly investing in education, not administration. As with almost everything in our society, the bad behavior starts with absolving banks of risk and guaranteeing their profits.
This is so correct that there is nothing that PeakStupidity could write for this post to explain any better (but we will later, just for the heck of it, as we thought of all this first).