Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans

I was curious to take a look at the growing student debt load and the government's exposure to potential repayment issues. A recent analysis of individual credit data by Donghoon Lee of the Federal Reserve Bank of New York found that student loans are the one category of household debt that continued to rise during the Great Recession. As of the end of 2012, student loans came to nearly a trillion dollars, more than total credit card debt, auto loans, or home equity lines of credit.

The federal government plans to write off $173 million in unpaid student loans in the coming fiscal year, which will bring its three-year write-off total to $716 million. Taxpayers were on the hook for $312 million in Canada Student Loan write-offs in the 2011-12 fiscal year and $231 million in the current fiscal year (2102-13), although the loans in question span many years.

Congratulations to the University of Phoenix, a private for-profit school, which has the dubious distinction of having 4,359 percent more student loan defaults than Columbus State, the top public school. A student loan is considered in default when it is 360 days delinquent. Number of Loans in Default

Those who think the answer to the unemployment problem is more education might be surprised to learn the Majority of Unemployed Attended College. For the first time in history, the number of jobless workers age 25 and up who have attended some college now exceeds the ranks of those who settled for a high school diploma or less.

Even as the gargantuan $1+ trillion student debt load has been the bubbly elephant in the room that few are still willing to talk about (as the ease of obtaining very fungible loans, with ultra-low interest rates, have become the primary source of lifestyle funding for a wide swath of Americans who are rotating out of high yielding credit cards into this latest Uncle Sam subsidy, and is thus just one more aspect of the status quo perpetuation), there have been until now zero opportunities for a the proverbial highly convex "ABX" short in the student debt space.

Even as the gargantuan $1+ trillion student debt load has been the bubbly elephant in the room that few are still willing to talk about (as the ease of obtaining very fungible loans, with ultra-low interest rates, have become the primary source of lifestyle funding for a wide swath of Americans who are rotating out of high yielding credit cards into this latest Uncle Sam subsidy, and is thus just one more aspect of the status quo perpetuation), there have been until now zero opportunities for a the proverbial highly convex "ABX" short in the student debt space.

“So, my student loan payments are more than my monthly rent?” exclaimed my sister-in-law, Kari. “More than a mortgage payment, to be honest,” I replied. Kari is finishing up her junior year of college in May and was curious about what life after college would like like.