Critique of Student Debt and the Next Bailout
Thesis: The author discussed there being a widespread agreement between the Republican and Democratic parties that the student loan industry is heading towards a massive default. This article was very well written and contained ample information regarding the student loan market and the possibility of future government involvement. The author made his point by giving precise evidence. The quality of his work was outstanding and both sides of the political parties’ perspectives were addressed.
“So What” Statement: The college loan predicament may end up as the first major bank bailout since Presidents Bush and Obama helped Wall Street repair the damage it caused in the housing industry.
I. Article …show more content…
Point of critique: Explanation of the student loan debt industry.
a. There is widespread agreement that the runaway individual student loan debt loads are careening toward default on a massive, systemic scale and something must be done about it.
b. Nearly three-quarters of the graduating class of 2015 graduated with some amount of debt, the average of which was more the $35,000. The author produced actual numbers to give the audience an understanding of how much student debt there actually …show more content…
The federal government has taken steps to lower borrowing costs and reduce long-term debt for students, forcing some large financial players out of the market and inviting less regulated institutions into the industry. The author explains well that while the governments’ steps have helped some students, they may have created a more risky marketplace.
III. Point of critique: Explanation of the SLABS market.
a. The danger of the SLABS market is that lenders may increase their rate of lending by lowering the underwriting standards, in order to chase profits on the secondary bond market in the face of rising risk.
b. The current SLABS market is roughly $210 billion, and this market is invested in by both premier investment houses and smaller firms like banks, private equity firms, and hedge funds. The author lets the audience know that there are several parties that could be effected, not just one or two.
c. SLABS only earn for investors as long as the underlying loans are paid off by their maturity dates- a scenario that is growing ever more unlikely as tuition costs continue to increase and employment and earning among college graduates remains stagnant. The author’s clarification of the SLABS market profitability, helps understand why companies invest in
Thesis: The author discussed there being a widespread agreement between the Republican and Democratic parties that the student loan industry is heading towards a massive default. This article was very well written and contained ample information regarding the student loan market and the possibility of future government involvement. The author made his point by giving precise evidence. The quality of his work was outstanding and both sides of the political parties’ perspectives were addressed.
“So What” Statement: The college loan predicament may end up as the first major bank bailout since Presidents Bush and Obama helped Wall Street repair the damage it caused in the housing industry.
I. Article …show more content…
Point of critique: Explanation of the student loan debt industry.
a. There is widespread agreement that the runaway individual student loan debt loads are careening toward default on a massive, systemic scale and something must be done about it.
b. Nearly three-quarters of the graduating class of 2015 graduated with some amount of debt, the average of which was more the $35,000. The author produced actual numbers to give the audience an understanding of how much student debt there actually …show more content…
The federal government has taken steps to lower borrowing costs and reduce long-term debt for students, forcing some large financial players out of the market and inviting less regulated institutions into the industry. The author explains well that while the governments’ steps have helped some students, they may have created a more risky marketplace.
III. Point of critique: Explanation of the SLABS market.
a. The danger of the SLABS market is that lenders may increase their rate of lending by lowering the underwriting standards, in order to chase profits on the secondary bond market in the face of rising risk.
b. The current SLABS market is roughly $210 billion, and this market is invested in by both premier investment houses and smaller firms like banks, private equity firms, and hedge funds. The author lets the audience know that there are several parties that could be effected, not just one or two.
c. SLABS only earn for investors as long as the underlying loans are paid off by their maturity dates- a scenario that is growing ever more unlikely as tuition costs continue to increase and employment and earning among college graduates remains stagnant. The author’s clarification of the SLABS market profitability, helps understand why companies invest in