Laura Silva Laughlin wrote "Welcome to SubPrime University" today. In a nutshell, high default rates, incorrect accounting at the government level, no systemic risk, burden transfers to taxpayer. It has become the American way to sign a few pieces of paper to obtain instant gratification whether that be a student loan, new car, a home, or a credit card. The 2008 disaster was centered around lending standards for housing. Hindsight is 20/20 for everyone but it is clear that most people look back at what led to the 2008 Great Recession and say "What were we thinking?" It seems like common sense in hindsight.
But the student loan problem is different. The problem is hidden within the Country's budget. It can be swept under the rug along with several other wasteful spending items. It won't cause any public company to face the brink of destruction and gain significant media attention. It will simply stay under the overall deficit spending umbrella. Deborah Lucas says in the article that it is a $56 Billion miscalculation to the Government's overall deficit calculations. The problem is that our system is set up to handle problems in a reactionary approach. We only look to fix things when their it is too late or after a major catastrophe. Are we too weak to be proactive and get ahead of these problems. Maybe I am cynical because you rarely hear about crises averted. Here is the link to the blog...http://finance.fortune.cnn.com/2013/02/14/subprime-student-loans/
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