The Inevitable Failure of Government Subsidies: Student-Loan Delinquencies Now Surpass Credit Cards

posted by Nima

November 30, 2012 · Posted in General Economics 

Governments are excellent at creating problems and telling people that they need the government to solve them.

About 2.5 years ago I wrote:

Next to housing and consumer credit, higher education has been yet another government subsidized and outright managed scheme to turn people into debt slaves for life. And still, people apply to colleges and go in debt like nothing ever happened.

And what do we see unraveling these days? Student-Loan Delinquencies Now Surpass Credit Cards:

The proportion of U.S. student loan balances that are in delinquency — that is, unpaid for 90 days or more — surpassed that of credit-card balances in the third quarter for the first time, according to the Federal Reserve Bank of New York.

Of the $956 billion in student-loan debt outstanding as of September, 11 percent was delinquent — up from less than 9 percent in the second quarter, and higher than the 10.5 percent of credit-card debt, which was delinquent in the third quarter. By comparison, delinquency rates on mortgages, home-equity lines of credit and auto loans stood at 5.9 percent, 4.9 percent, and 4.3 percent respectively as of September.

Government subsidized mortgages lead to skyrocketing home prices and a subsequent surge in delinquencies and foreclosures, leaving people with assets worth less than they spent on them. Government subsidized student loans lead to skyrocketing tuition prices and a subsequent surge in student loan delinquencies, leaving graduates with degrees worth less than they spent on them.

What solutions can we expect to hear from the mainstream media infested idiot drones around us? Of course: the government has to step in and subsidize this strange and inexplicable phenomenon of students struggling with student loans.

Like I said: Governments are excellent at creating problems and telling people that they need the government to solve them.

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One Response to “The Inevitable Failure of Government Subsidies: Student-Loan Delinquencies Now Surpass Credit Cards”

  1. Gregory on December 3rd, 2012 9:56 am

    Thanks for the information! I posted this on my Facebook Page with my commentary. I’ve been following this topic for a while and have done some extensive research as well as blogged about it. I have even created an original graph depicting the economic loss of subsidies. Keep up the good work!

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