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And speaking of changes, what will Trump do about this.
Posted on: December 4, 2016 at 13:26:29 CT
GA Tiger MU
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The obvious correct answer is to abolish this entire dung pile dept by sundown.
Federal accounting in action
It might be 40 years until we know the costs of the government’s student loan programs.
The Government Accountability Office issued a report yesterday — ripping the Education Department a new one for slipshod accounting practices, and attempting to come up with workable numbers.
We know this much: Uncle Sam is owed $1.26 trillion of outstanding student debt. And the GAO says the feds will likely forgive at least $108 billion of that debt under various loan-forgiveness programs. Another $29 billion will be written off because of the borrower’s disability or death.
Here’s the wacky part: The Education Department’s accounting assumes it will never incur losses via the borrower’s default… because under a 2005 law, student loans can’t be wiped out in bankruptcy.
But in reality, about 8 million borrowers are currently in default. That’s about 18% of all borrowers. Yes, they can have their wages and Social Security checks garnished… but seriously, how much blood does Uncle Sam expect to extract from a turnip?
It’s through this accounting trick that the government’s student loan portfolio is considered profitable. “But the loans are certainly not profitable when accounting for defaults — as a bank must,” says Dan Amoss of our macro research unit.
Federal accounting in action
It might be 40 years until we know the costs of the government’s student loan programs.
The Government Accountability Office issued a report yesterday — ripping the Education Department a new one for slipshod accounting practices, and attempting to come up with workable numbers.
We know this much: Uncle Sam is owed $1.26 trillion of outstanding student debt. And the GAO says the feds will likely forgive at least $108 billion of that debt under various loan-forgiveness programs. Another $29 billion will be written off because of the borrower’s disability or death.
Here’s the wacky part: The Education Department’s accounting assumes it will never incur losses via the borrower’s default… because under a 2005 law, student loans can’t be wiped out in bankruptcy.
But in reality, about 8 million borrowers are currently in default. That’s about 18% of all borrowers. Yes, they can have their wages and Social Security checks garnished… but seriously, how much blood does Uncle Sam expect to extract from a turnip?
It’s through this accounting trick that the government’s student loan portfolio is considered profitable. “But the loans are certainly not profitable when accounting for defaults — as a bank must,” says Dan Amoss of our macro research unit.
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And speaking of changes, what will Trump do about this. - GA Tiger MU - 12/4 13:26:29