Many years and many months ago, the Association has voiced that the student loan debt has burdened majority families and young Americans.   AAEA has also ranked the candidates who might be able to ease the burdens, based on their campaign platform.  Needless to say that the latest voters’ preference in Iowa is indeed leaning toward what has been ranked and hypothesized by the Association.  If the Iowa’s sentiments are the representation of the American voters’ logical choice, then America has a clear winner in the 2020 big dance, even before November 3rd.  Only one condition that needs to be fulfilled to make this result to happen.  This condition required that the American voters act rationally, instead of irrationally.  The latest pool results in Iowa show a very interesting voters’ preference toward the candidate which happens to be the strongest supporter for easing the student loan debts in the US.  While the race is still along way toward the finishing line, this pool shows that most voters are leaning toward a candidate who will lift up the student loan debt from every household, family and student loan borrowers’ shoulder in the US which is estimated to be around 64.5 million months ago.  This number will grow bigger every second, not just because more young Americans and their families are getting trapped in the quicksand.  Rather,  a great number of them are more fully informed which then will help them to make a rational choice, instead of irrational or emotional.

Based on data and analytics approach, the Association is the first organization that has shared its studies publicly to the American public on the root of the student loan problems and the reason why this damaging process of wealth transfer from the young American, their families and working class to the other parties needs to be discontinued.  Otherwise, Uncle Sam will face serious negative economic impacts in the near future.  It is not about a dichotomy between the red and the blue, the have and have not, or the working class and the financial institutions or Wall street and the Main street or capitalism and socialism or any other dichotomies that political analysts apply to differentiate the voters.  Rather it is about rational choice.  It is about logic directed toward eliminating all that does not fit the common sense.  However, the beneficiaries of the current system will and have tried to keep their position using any strategies, means, resources and ways available to them.

The financial burdens of young Americans that have caused by student loan debt have been designed purposely through systematic errors planted by many parties and interest groups, which in no way can be fixed in the nearly term or ever.  Recent studies show that there are many conflict of interests, even among members of the legislative branch.  These folks supposed to work toward their constituents’ interests.  Unfortunately, over time, they are more interested in their own or the lobbyists’ or the big campaign contributors’ interests.  Really sad.  But now, all families in the US, and all student loan borrowers have a great chance to reverse the course and to make a logical decision by casting their ballots to the advocate of student loan total debt bail-out.  Even to unseat those folks in the legislative branch that do not represent their (voters’ or constituents’) interest.

Though there is no time-limit for student borrowers to pay their student loans, it is however has created more problems to many.  There are no studies on average years are required to pay the loans.  However, according to the fed law, the loans will be forgiven around 20 years.

Plus and minus the standard deviation, the average student loan (undergrad) borrowers have to labored about 20 years to repay their loans.  If a person graduate from a college at the age of 22, then she or he will finish repaying the loans at around 42 years old.

The important question is this:  will it be good strategies for all the borrowers to pay the minimum amount and wait until the loans mature in 20 years when it got forgiven? May be or may be not because the forgiven amount is subject to income tax!

Happy Labor Day!

Recently several articles in the media reported that it is getting more difficult to get the student loan forgiveness.

The American public needs to be thankful for the current administrator has helped the voters to make up their mind regarding in the 2020 election.  Stark differences have helped to erase the gray areas.

All the suffering will soon be over, but two conditions have to be met.

1. Participated in the 2020 election process and
2. Make the right choice.

It is not about bailing out someone’s financial mistakes.  It is not even about blue or red dichotomy.  Rather, it is all about making a rational choice and stop the unfair wealth transfers.  Perhaps, there are lemons in the borrowers population group.  However, there are also good apples and oranges, which may be the largest group in the whole population.  Evidences have shown that some of the borrowers will never be able to pay-off their loans, ever and will bring along their loan to their grave.  Sad!

Hang in there buddies and remember the date.  Unless it will be changed, the date is November 3, 2020—15 months from today.

So, what is the IYC (inverted yield curve).  In short it is a graph that shows the relationship between short-term and long-term bond yields, where long-term yields fall below short-term yields.  Financial market participants use this chart as a prediction of possible economic recession in the future.

On August 14, 2019, the IYC exactly showed that, and caused the DOW to down-nosed more than 800 points on average, which is around 3.05%.  If recession is going to occur in the long-run that will bring chain reactions such as a weaker job market which then will affect the ability of student loan borrowers to repay their loan.  Meaning?  More people will take the forbearance option.  This will push even further the default rate.

In short, if the prediction is correct (which has been in the past), here is going to happen in the US higher ed:

1. Losing jobs, mean delayed loan repayment.
2. More people may enroll to update their skill set.  So enrollment in certain areas or programs may go up.
3. Demand for student loans may go up, but higher ed institutions may need to rely more on their own resources due to a lower state budget which caused by lower state income tax.
4. Since education can be seen as long-term investment, the interest charged rate supposed to be lower because of the IYC hypothesis.  But it will not happen any time soon.

As the 2020 election gets closer, the public has an important decision to make.  Either to continue transfer their wealth or hard-earned cash willingly to other entities or to make the right decision to stop it.  Needless to say that as a whole, the society, and certainly not particular individuals or institutions can make that decision.  Rather a collective decision.

There are pros and cons on any public policy decisions.  However, issues related to the student loan debt deserve in-depth analyses.  The Association has long shared its research and the results show that the problem is not about paying back the loan.  Rather, the intention errors or the systematic errors that have been induced into the system is the issue.  These intention errors are designed to benefit certain entities which have reduced the ability of the borrowers to pay-off their loans at a reasonable time.   These strategies are applied based on the ideas that the longer the loans are paid-off, the more milk can be produced from them, in term of interest charges, late fees and others.  Some may take the remaining of the loan balance to their grave.  It is pretty sad.

The systematic errors and moral hazard have been added intentionally to the system to benefit certain parties.  This is the root of the problems.  Asymmetric information and the power to make deviations in the whole system have enabled certain parties to make abnormal profit on the expense of others.  The whole industry has been distorted with lack of wisdom., i.e., the presence of moral hazard and systematic errors.   These errors goes uncheck, especially in a situation where check-and-balance has not been exercise by those institutions that supposed to do that.  Or perhaps, the grand collaboration intentionally done to distort the system has occurred.  Who knows?

Under such circumstances there is no way out to contain the issue.  But likely be possible through the implementation of an appropriate public policy.  This is one of the reasons why the issue of student loan debt getting worse everyday without the sign of easing.  That is because no current optimal public policy is available.  Or may be the executive branch does not think this is an issue or may not be their best interest.  Therefore, there is a minimal viable effort directed to find a pareto optimal solution.

However, the American public now has the golden opportunity to reverse the course.  But, the society as a whole has to make the right choice.  America, it is into your hand to solve the skyrocketing student loan debt is in-placed.  It is you, the American public that has the ability to make this important change which may have a life-time future financial impacts on everyone of you.  It is not up to someone or an institution to make the change.  Certain law makers in the Capitol Hill have supported this life-time opportunity.  However, they cannot make it happens without your participations.  The American public has to support them.

Happy election!

Every year the Fourth of July refreshes the memory of every American citizen about their freedom.  As a nation, the Americans have to be thankful for many accomplishments that make its citizens living in a better condition compared to those in many other countries in the world.

However, one also has to think factors that may drag that condition; and those factors potentially will affect the future of the country.  This site consistently shares thoughts on the student loans.  Mishandling of the loan debt may have negative effects.  Systematic errors have transformed the situation from bad to worse, up to a point with a binomial outcome–let the current condition runs its course with minimal or no public policy, until the law makers or the new elected administration completely bails it out.  The American public does not need to know that the problem exists until a Wall Street tells the public that there is a serious issue with student loan system for the Street is part of the contributor of the moral hazard.

Happy Fourth!

Recent discussions on personal finances revealed that majority of the American public is unquestionably concerned about their financial situation, and student loan debt seems to be one of the biggest issues.  Majority of the players, except for the students, their family, and portions of the American public, may have received the benefit directly or indirectly from the situation.  There are always two sides of the same coin and each side has its own story to justify its interest.

Yes, one may ask, what is the common zone where everyone feels comfortable with the student loan issues.  Looking at the data and the American public’s opinion, it is pretty obvious that one side of the coin is worse off for their wealth has been “legally” transferred to the other side of the same coin.  In any business arbitrage cases,  there is always one party who stays independent, the referee or the judge that has the role to bring both sides on the table that may lead to solve the disputes.

Unfortunately, that is not the case for student loans.  There is no designated referee  that can be considered as the judge.  Perhaps, among the three government branches, supposedly the executive branch will help to resolve the issue through public policy.  The reality is that there is hardly a regulation designed to protect the worse-off side of the coin.  The reason is simple for the focus of the current administration is not on education.  Rather, on the economy, in particular to increase the DOW through whatever means possible for it is seen as a viable success story that can be sold on the campaign trail.  However, one needs to observe if the market is the sole representative of the economic growth?  Perhaps, this is a new approach in economic theory of how one can measure the economic growth through the DOW, rather than the GDP.  But, one also can ask a critical question of how a simple tweet can increase the DOW by 400 points literally in a couple of minutes? How can GDP got affected by only one tweet? How then this relates to a real country economic growth?  How increasing in the DOW is able to ensure the economic equality among the citizens of UCLE SAM?

That having said, the American public has the opportunity to reverse the course.  To stop the wealth transfer from their hard-earned dollars to others which will forever change their financial burdens by participating in the big dance next year.  The student loan borrowers have the opportunity to express their voice which may have huge impacts not only on themselves, but also for their siblings’ future well-being.  This is the biggest moment for more than 64.6 million loan borrowers to change their financial challenges through collective efforts, called presidential election.  While the Association is neutral, and does not lean toward a particular candidate, the public may check candidate’s track record on this particular issue through the following article that has been written and shared in the BLOG.  In the article, AAEA has calculated a score and analyzed who is the strongest and reliable advocates for the student borrowers.  Who is strongly side with and for the borrowers as shown in the following recent article that confirmed again our independent observations, and data analytics based analyses.

On the graduation ceremonies of 2019 class, the new graduates at Morehouse College are overjoyed.  Not only that they finally received their dreamed diploma, but also for special gift that each of them will receive from the commencement speaker.  It is Mr. Smith who promised to pay all their student loan debt by creating a special grant that will serve the purpose.

Two days prior to the commencement ceremonies at Morehouse College, to be exact, on Thursday May 17, 2019, the American public also learned that Navient-the loan servicing company also celebrated a milestone for making the Fortune 500 list.  In announcing its success, the company reported its $13.7 trillion in revenue and $1.1 trillion in profit.

Let’s analyze these two great news by using a coin that has two faces–head and tail.  Needless to say that there may be 2 important sources of $13.7 trillion revenue, that are coming from interest and the late payment fees.  These revenues can be seen as the amount of transferred wealth from the borrowers and the public to one of the American corporations, which happened to be listed as a public entity in Wall street.

It is depend which side of the same coin that one on.  You may love the student loan program if you own the company’s shares or otherwise, if you are on the opposite side.