Student loan default rates exceed ‘fake data’ numbers published by Obama administration

If there was one thing that Donald Trump could do to both protect his Presidency's economic future, and crush Barack Obama's false legacy, it would be to go back and redo every single economic data point that has been manipulated to fulfill the false narrative of an economic recovery.  From fake unemployment and GDP numbers, to the actual values of core and price inflation... coming out early and announcing the real numbers would give Trump a nice starting point where he could show positive results from his policies on day 1. Yet besides the fake data that states that America has an unemployment rate of just 4.6%, or that most jobs created over the past eight years have been higher paying ones, there is another piece of data that Obama's cabinet lied about that affects the generation of millennials who feel burdened by their own boatload of debt.

An the WSJ reported overnight "many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed." The admission came last Friday, when the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers. This also means that the number of loan defaults in various cohorts is far greater than previously revealed. A spokeswoman for the Education Department said that the problem resulted from a "technical programming error." And so, the infamous "glitch" strikes again. How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. In other words, virtually every single number was made to appear better than it actually was. And people mock China for its own "fake data." According to an analysis of the revised data, at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. This is a stunning number and suggests that the student loan crisis is far greater than anyone had anticipated previously. It also means that the US taxpayer will be on the hook for hundreds of billions in government-funded loans once attention finally turns to who is expected to foot the bill for years of flawed lending practices. As the WSJ adds, this isn’t the first time data problems have affected the Education Department: a recent government report criticized how the department tracks information including the budgetary implications of student loan forgiveness.  “This is a quality control issue with a Department of Education that has been facing criticism already for other data issues,” Robert Kelchen, an assistant professor of higher education at Seton Hall University.  The department “needs to be regularly audited so these issues can be discovered sooner.” There is another interpretation: as we reported yesterday, when we revealed that a Chinese province admitted it had fabricated fiscal data for the period 2011-2014, the reason the data were made up "because officials wanted to advance their careers." One can imagine that the career pressure for those government workers who would report, and be held accountable, for revealing the true picture of America's disastrous student loan bubble, would be likewise staggering. - Zerohedge

Exorbitant debt at the beginning of one's working career affects not only individual lives, but it also is a negative for the overall economy.  Home ownership has fallen under President Obama to levels not seen since the 1960's, and Wall Street, who depends greatly on younger workers pumping in money to fund mutual funds and 401k's, will find themselves scrambling for cash as the disparity between baby boomers selling and millennials buying stocks soon growing at exponential levels. Perhaps the best thing the new incoming President could do for America in his first 100 days is to repeal the bankruptcy laws George W. Bush passed a decade ago which made it much harder for people to absolve their debt when it becomes to burdensome to manage.  And it would also go a long way in garnering favor from a generation of young people who bet their entire future on hoping that a Sanders or Clinton victory would have wiped out their student loans entirely. Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.