phoenix loan defaults student debt collection agency

Debt Slave Collection Business is Booming as …
health care helicopter military budget declaration land value

New Military Budget has a Glimmer of Sanity

Students and sick people bear the brunt of wasteful spending until voters fix who should make spending decisions. We trim, blend, and append four 2012 articles from: (1) MISH'S Global Economic Trend Analysis, Spt 10, on student debt by M. Shedlock; (2) Capital Account, Spt 10, on medical costs by K. Smith: (3) Inst. for Policy Studies, Spt 10, on military spending by M. Pemberton and G. Rossman; and (4) R. Wagner, a candidate for the Vermont Senate, Spt 6, on human rights.

by Mike Shedlock, by Keith Smith, by Miriam Pemberton & Gabriel Rossman, and by Robert Wagner

The University of Phoenix, a private for-profit school, has the dubious distinction of having 4,359 percent more student loan defaults than Columbus State, the top public school.

There is now over $1 trillion in student debt and $76 billion of that is in default.

As the number of people taking out government-backed student loans has exploded, so has the number who have fallen at least 12 months behind in making payments -- about 5.9 million people nationwide, up about a third in the last five years.

In all, nearly one in every six borrowers with a loan balance is in default. The amount of defaulted loans -- $76 billion -- is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities.

In an attempt to recover money on the defaulted loans, the Education Department paid more than $1.4 billion last fiscal year to collection agencies and other groups to hunt down defaulters, of which $355 million went to 23 private debt collectors. Student debt collection is now the most sought-after contract within the industry.

Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms: seize refunds and garnish paychecks or Social Security payments. Over all, the government recoups about 80 cents for every dollar that goes into default -- most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards.

There is no statute of limitations on collecting federally guaranteed student loans, unlike credit cards and mortgages, and Congress has made it difficult for borrowers to wipe out the debt through bankruptcy. Only a small fraction of defaulters even tries.

The schools and slave trade collection agencies are big contributors to politicians willing to accept campaign bribes to keep the student "aid" programs intact.

Student "Aid" or Economic Prison Sentence? From public unions, to aid programs, and even grants, the entire system is geared to sending as many kids as possible to school, hoping to make debt slaves out of them for life.

A Remarkable Comparison: Affordable Student Loans vs. Affordable Housing. Student debt holds back home-buying, marriage, and family formation. Housing has led nearly every economic recovery for decades.

To read more

JJS: Elsewhere, you can read that the tuition-inflation requiring students to borrow so much does not go to professors so much. Instead, it goes to more staff (administrators, fundraisers, etc) and to new buildings on campus. Maybe it’s time to wonder if a Citizens Dividend a la Alaska’s oil share is a better option than debt peonage.

Also, maybe it’s time to wonder if the best way to learn is by sitting down a bunch of people (at a hormonic age) to swallow everything somebody tells them. What would a curiosity-driven system look like? More hands-on learning? More “teachable moments”?

Now turn from public spending for education to government spending for health care.

This interviewed doctor who does not accept Medicare claims his way would drive down costs. It’s one POV but worth knowing about. US medical costs are skyrocketing much more steeply than in other countries.

To watch

JJS: Now turn from public spending for “butter” to government spending for “guns”, the hugest part of the US federal budget.

Even House Republicans can't stomach spending $17,000 on a helicopter drip pan. $17,000 whats? You know, pans that catch leaking transmission fluid.

Here's a milestone of sorts. In July, for the first time since 1998, the House of Representatives voted to maintain the current military budget rather than increase Pentagon spending. It's the first step toward bringing the budget down.

Within the bill, which included more than $600 billion for the military, the House embedded a few gestures toward fiscal sanity. Most important was the decision of 89 Republicans to join most Democrats in shaving a billion bucks off the budget that House Republican leaders had proposed. That's mostly a symbolic move in a budget of this size, but worth celebrating nevertheless.

At the same time Congress rejected other modest, sane, cost-cutting gestures, such as nixing the Pentagon's $72 million advertising budget for NASCAR races.

We won't get too carried away that a sane approach to military spending is around the corner. Still, for the first time since before the 9/11 terrorist attacks, Congress voted to trim the overall military budget. It's a start.

To read more

JJS: Can we fix wasteful spending by debating what to spend public money on or by electing “more rational” spenders? Or should we empower taxpayers to be the ones to spend public dollars? And if taxes were limited to falling on our common wealth, on socially-generated values only, would owners and businesses still bother to lobby politicians for favors that elected officials could no longer deliver?

Prefacing the declaration, which among other things demanded more of the usual leftist wishes of public schooling and socialized medicine (both of which may be superior to the current system), a candidate for the Vermont Senate, wrote: Since our communities create the value of land, the community can collect the unearned increases in value. If the community does not, land speculators will. That is the only just tax.

Miners, loggers, groundwater extractors must pay us royalties for the resources which are LEGALLY ours. (This is the public trust doctrine). This reduces and eliminates taxes on earned income, which increases private wealth. Bolivia did it, Alaska did it. Why not Vermont?

There is a huge difference between government “ownership”, and collection of rent. The Commons do not belong to the “state”. The Commons are public assets belong to the people of Vermont, NOT politicians.

If you understand the unearned income in land gained by absentee landowners, you see public rent collection is mandatory to prevent unearned income and speculation on Wall Street.

What has been created by nature or society is Vermont’s Commons. What has been created by capital and labor is private. Widely distributed secure private land titles are essential to prosperity, but the “rent” (annual rental value of land, often equated with the inflationary increase in value) must be collected or you get massive unearned wealth, wealth concentration and speculation.

To read more

JJS: Just as it is vital to recover the socially-generated value of locations, how vital is it to disburse these rents back to the members of the society generating them?


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Thoreau Was Right

The safest strategy to avoid a courtroom appearance

Senator Levin Questions U.S. Aid

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