Student loan recipients are defaulting on their student loans in increasing numbers.
Student loans are a scam. Here’s why. Thirty plus years ago the folks on Wall Street figured out they could purchase student loans, and then issue bonds to rich investors that were backed by the student loans. The 1 percent own the vast majority of those bonds. As the government or students make payments on the loans, much of the payments are redistributed to the 1 percent as payments on those bonds.
It was a nice scam since the government guaranteed the loans, which means there is no risk in being a bonds backed by student loans. Think about it. Rich investors are earning money with zero risk. Worse yet, depending on your view point, the students take all the risk, since they have to to pay and pay, with no chance of going bankrupt and getting rid of this burden. They have become indentured servants to the 1 percent.
Wall Street pressured then President Ronald Reagan, as well as Republican and Democratic law-makers, to cut the amount of federal grants the government gave out to its citizens. That forced more members of the 99 percent to take out even more student loans.
This is how political power works and the Bush tax cuts works. Give the rich more money, they buy more politicians of both parties, like Wall Street Senator Ron Wyden, and then their political servants enact legislation that redistributes income from the 99 to the 1 percent.