Half of the US government's financial assets are student loans • Hacker News Board

Re: Half of the US government's financial assets are student loans

#91

Post by rgbrenner » Fri, Jan 12, 2018, 9:50 PM UTC

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

the US government’s #1 financial asset is debt ... for university education

This isn't quite true.. In addition to the assets in the chart, the governemnt has about 8T in mortgages (out of 15T total outstanding) through several Government Sponsored Enterprises, like Freddie Mac and Ginnie Mae: https://www.federalreserve.gov/econresdata/releases/mortouts...

The only difference is that the government took over the student loan market without creating a GSE to manage it.

Re: Half of the US government's financial assets are student loans

#92

Post by noobermin » Fri, Jan 12, 2018, 9:50 PM UTC

aantix wrote: post #84

adreamingsoul wrote: post #65

Earlier quoted context omitted.

Millennial here, thanks for the daily reminder of the future I have to deal with. Failing government systems, check. Unaffordable educational system, check. Limited housing and land, check. Degrading climate, check. Some days I believe I just may find a way out of it. But, for every day I participate in the rat race is just another lost when I should be working on building a better future for my family.

"limited housing and land"? I don't agree. The Midwest is very affordable. Plenty of land. Remote work is a definite possibility.

Convince the capitalist/managerial class this is a good idea. The other option is to replace them.

Re: Half of the US government's financial assets are student loans

#93

Post by vminkov » Fri, Jan 12, 2018, 9:51 PM UTC

adreamingsoul wrote: post #65

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

Millennial here, thanks for the daily reminder of the future I have to deal with. Failing government systems, check. Unaffordable educational system, check. Limited housing and land, check. Degrading climate, check. Some days I believe I just may find a way out of it. But, for every day I participate in the rat race is just another lost when I should be working on building a better future for my family.

Come to Eastern Europe, your student loan money is enough for a whole new life here.

P.s. honestly, I don't understand how ppl who are so hoplessly indebted are not migrating here. Bulgaria offers very cheap life with the opportunity of doing business with the EU and the US. Why work 24/7 when you can enjoy a good life in a place where the local people and economy need a foreigner to lead them in the business and globalizing world?

Re: Half of the US government's financial assets are student loans

#94

Post by adreamingsoul » Fri, Jan 12, 2018, 9:51 PM UTC

aantix wrote: post #84

adreamingsoul wrote: post #65

Earlier quoted context omitted.

Millennial here, thanks for the daily reminder of the future I have to deal with. Failing government systems, check. Unaffordable educational system, check. Limited housing and land, check. Degrading climate, check. Some days I believe I just may find a way out of it. But, for every day I participate in the rat race is just another lost when I should be working on building a better future for my family.

"limited housing and land"? I don't agree. The Midwest is very affordable. Plenty of land. Remote work is a definite possibility.

You don't have to agree, but that fact is still true. I also have hesitations with buying land in the Midwest, mostly due to climate change factors.

Re: Half of the US government's financial assets are student loans

#95

Post by bradleyjg » Fri, Jan 12, 2018, 9:51 PM UTC

trsohmers wrote: post #52

bradleyjg wrote: post #16

Earlier quoted context omitted.

In what sense is it a bubble? What assets are being bid up by enthusiastic investors and could suddenly collapse in value?

The fact that private lenders are incentivized to give out more and more leads to universities charging more and more. Even with all the money being spent, the same (or in some cases less) level of education is being provided. On top of that, how do you repossess someones education in the case of default? You can't, so the government can do one of three things: 1.Pay off the loan holders (by printing money, huge infl…

Private lenders are tiny part of the market in student loan originations, even a smaller part in undergradatute loans.

The federal government is the overwhelmingly dominant player and they set the terms by fiat rather than any kind of market.

The “lenders” are the USG, and the cost of capital is only the imputed inflationary effect of transforming a loan into spending. Given the experience of the last decade those inflationary pressures may well be smaller than we had thought.

Re: Half of the US government's financial assets are student loans

#96

Post by SheepSlapper » Fri, Jan 12, 2018, 9:51 PM UTC

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

> Millennials are the most educated generation in history. Yet there are record numbers of them working off student debts as waiters and bartenders, and supplementing their income on the side with ‘gigs’ (like being an Uber driver)

We're the most educated in history, but many people decided to use that education to learn topics that aren't lucrative/in demand. Personal responsibility plays in a ton here, and some people made bad decisions. It's still simple/easy to get a good education at a state school, entirely paid for by loans, and come out with a degree that will allow you to pay those loans back in a few years. People who plan accordingly benefit in a HUGE way from the availability/accessibility of student loans, the barrier to entry is that much lower.

As far as SS goes, I'd be happy to see it fail but I'm also happy to keep paying into it without a guarantee of return in order to ensure my parents generation doesn't find themselves destitute. There are so many ways to plan for your future, having the government come in and force you to participate in SS is far from ideal. Not sure how my fellow Millennials feel about that, though...

Re: Half of the US government's financial assets are student loans

#97

Post by tanderson92 » Fri, Jan 12, 2018, 9:51 PM UTC

hidenotslide wrote: post #54

noobermin wrote: post #36

Earlier quoted context omitted.

If that's the case, shouldn't this be flagged? Also, you mentioned the Fed, which isn't the same thing as the US gov't, right?

I don't really want to go down the conspiracy theory rabbit hole of who does what at the Fed but it's main decision makers are government appointees, it was established by an act of Congress, and it remits its profits to the Treasury. Ginnie Mae is part of the government as well (also mortgages). Fannie/Freddie are GSE's but currently under directly government control since the financial crisis. I'm not sure how the…

It's fascinating accounting-wise. Matt Levine has a good write-up here: https://www.bloomberg.com/view/articles/2016-08-08/fannie-an...

The interaction of the accounting rules and the new tax plan was fascinating too because the value of their deferred tax asset changed:

> “A reduction in corporate tax rates would require us to measure our net deferred tax asset using the new rate in the period in which the rate change is enacted, resulting in a one-time charge through the tax provision in the period the tax rate was changed, ...”

More here: https://www.housingwire.com/articles/42130-trump-to-sign-tax...

Re: Half of the US government's financial assets are student loans

#98

Post by tmnvix » Fri, Jan 12, 2018, 9:51 PM UTC

AlexCoventry wrote: post #82

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

> the company will make a payment to a buyer’s student loans of as much as 3% of the purchase price, up to $13,000. How does this make economic sense? It reminds me of the deals home sellers would make to prop up their numbers in '06/'07.

As a debtor, I would rather debt that can be discharged through bankruptcy, so there is incentive there to prefer this offer to that of another similar offer that doesn't include the debt transfer. In other words, there is benefit to both the borrower (a 'better' kind of debt) and lender (we sell something we might otherwise not).

Re: Half of the US government's financial assets are student loans

#99

Post by dorchadas » Fri, Jan 12, 2018, 9:53 PM UTC

adreamingsoul wrote: post #65

gesman wrote: post #11

Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans. That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career. Millennials are the most educated generation in history. Yet there are record numbe…

Millennial here, thanks for the daily reminder of the future I have to deal with. Failing government systems, check. Unaffordable educational system, check. Limited housing and land, check. Degrading climate, check. Some days I believe I just may find a way out of it. But, for every day I participate in the rat race is just another lost when I should be working on building a better future for my family.

And that's _exactly_ why I will likely never have kids. I'm a millennial myself, caught up in all that (doubly so, if they remove the student loan forgiveness for public workers), and I don't want to make any child of mine grow up in the world it seems we're heading to (especially degrading climate).

Re: Half of the US government's financial assets are student loans

#100

Post by prostoalex » Fri, Jan 12, 2018, 9:54 PM UTC

evanpw wrote: post #51

Notwithstanding entirely valid concerns about student loans, this is pure clickbait. The feds also own 30% of the nation's land (640M acres), and have the exclusive right to collect $3T+ per year in taxes (not to mention they can literally print dollars).

AFAIK land is not used for collateral to estimate credit worthiness. Taxes are, but it's understood that the figure is ballpark and subject to economic fluctuations.

A portfolio of loans, however, can impact the credit worthiness of the borrower if the default rate exceeds historic expectations, which is what US experienced in 2008 with mortgage-backed loans.