1. Captain Obvious: Student Loans

    Well, here’s a surprise from student-loan land. Not.

    ABC News: Lax Student Loan Standards Created Debt Crisis

    This, obviously, was a topic which required a bureaucratic government study, and so we got one. From it we get amazing and startling new findings, guaranteed to drop jaws … findings like these:

    From 2005 – 2007, the report found that school involvement in student loans began to shrink and students began borrowing more than necessary. And, lenders began making exceptions for students with lower credit scores.

    Private lenders gave out money without considering whether borrowers would repay, then bundled and resold the loans to investors to avoid losing money when students defaulted.

    Those practices are closely associated with subprime mortgage lending, which inflated the housing bubble and helped bring about the 2008 financial crisis, according to the Associated Press.

    Huh. That’s weird. I know a guy who compared student-loan lending to subprime lending way back in 2010.


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  2. 3 Responses to "Captain Obvious: Student Loans" ...

    1. On August 3, 2012 @ 1:13 pm,
      Suzan wrote:

      Yeah, many of us saw this coming. What I am interested in however is the predictions of what is to be done about the situation. Student loan forgiveness? Let the bubble pop? What do you think the gov’t and lending industry will do about this?



    2. On August 7, 2012 @ 9:00 am,
      Money Saving Guy wrote:

      Very interesting observation. The difficulty is that no one listens. And the reason no one listens is because they are happy making huge amounts of money by selling the debt on to some other idiots who are also keen to sell the debt on to the unsuspecting public! We were all to blame for the credit crunch and then the global recession but the banks need to take the lions share of the blames, as they should have stuck to their tight lending criteria.



    3. On August 23, 2012 @ 3:51 pm,
      David wrote:

      Without real consequences lenders will always take the money hand over fist and then leave the mess to someone (taxpayers) else to clean up.



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