tag:blogger.com,1999:blog-7321229718141307911.post2819742846740623478..comments2023-10-24T01:44:59.579-07:00Comments on Newshoggers Archive: Student Loans Will Soon Exceed $1,000,000,000,000.00Ron Beasleyhttp://www.blogger.com/profile/04442030471061531104noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7321229718141307911.post-78094751724587668422011-10-23T23:23:03.000-07:002011-10-23T23:23:03.000-07:00The fly in the ointment is failing to discern the ...The fly in the ointment is failing to discern the difference between principal and interest. If education loans are to be government-guaranteed the principal should be the only portion being secured, but NOT interest. If lending institutions understood going in that the principal was secure but the interest terms were not they would be more circumspect in who received the loans.<br>The trillion dollars above represents principal, I'm sure. I don't want to think about how much INTEREST, current and future, it represents. The implications are much worse than they appear.<br>The lesson of the 2008 bailouts was that losses would be socialized while profits continue to be privatized. Something is very wrong with that picture.<br>The toxic part of "toxic loans" was not the loans but thinking that there might be real value in the arithmetic above and beyond the actual value of the underlying assets. Big mistake. Very big. It's what most people would call magical thinking.<br>John Ballardhttp://profile.typepad.com/john_ballardnoreply@blogger.comtag:blogger.com,1999:blog-7321229718141307911.post-38186243270562874372011-10-23T18:59:10.000-07:002011-10-23T18:59:10.000-07:00Not that much different than people taking out the...Not that much different than people taking out the equity in their home to maintain a lifestyle they could not otherwise maintain. That debt also is not dischargable in bankruptcy. Yes, not all home loans are the result of that practice, and not all student loans are the result of students who chose expensive private schools over lower cost public ones or community colleges, advanced degrees over settling for undergraduate degrees, not working for a living while in college, buying cars with their student loans, etc.<br>Sure, we should not throw the baby out with the bath water, but neither should we drink the bathwater and call it KoolAid just because there is a baby in it. The baby may be cute, but the bathwater is still full of poop and spit up.<br>Bill H.http://billsandiego.blogspot.comnoreply@blogger.com