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Archive for January 15th, 2014

The student loan bubble was due for a collapse last year as record defaults occurred. Wall Street investment firms found that investors were fleeing the bond market that backs student loans late last year due to fears of an impending collapse.

Investment firms buy loans from Sallie Mae and then issue bonds backed by these government guaranteed loans. It’s a profitable business when investors are buying.

In a remarkable coincidence last year, the government doubled the rate of interest students pay for student loans, from 3.4 to 6.8 percent. This doubled the return on investment for bond buyers, but also redistributed income from working class students to Wall Street bankers and investors. In other words, doubling the interest rate on students made the student loan backed bonds a more attractive investment.

We don’t know how many meetings Wall Street pirates had with President Obama, Senate majority leader Harry Reid, and House Majority Leader John Boehner to discuss raising rates on students, or what they said to get the government to jack up the  interest rates, but we can rightly suspect that meetings did occur, and the middle class was the victim of this income redistribution scam.

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