Student-loan company Sallie Mae SLM -1.35% canceled a $225 million bond offering on Thursday after about two weeks on the market, according to people familiar with the deal. The move may mark a line in the sand: Investors whose thirst for yield has revived all manner of riskier asset classes decided they weren’t getting paid enough to buy at the offered price amid rising student-loan defaults.
More via Via Meadia and Instapundit. This is not quite the same problem as the toxic bad housing loans that triggered/heralded the financial meltdown in 2008; default or no, if you take out a student loan you’re almost certainly going to be on the hook for it until you pay it off, or you die. But that situation is because of political decisions, not financial ones. Lawmakers decided that the can could be kicked down the road… and who cares about deadbeats reaping what they sowed, anyway?
Well… when you’re trying to send everybody to college, and you let colleges set prices, and you make it really easy to get loans, and you make it really hard to discharge bad loans that shouldn’t have been extended (but were, because you’re trying to send everybody to college), and then you let the whole dang thing ferment for thirty years or so, well, the definition of ‘deadbeat’ expands. Which is why we have kids desperately spending their twenties trying off to pay off enough of their debt so that they can start a life in their thirties. This won’t last forever… but the second that the government makes student loan debt significantly easier to discharge via bankruptcy, well, those loans won’t be worth [expletive deleted].
Don’t have an answer. Except, of course, to note that the ongoing problem, is strictly speaking, an internal fight between various factions of the Democratic party, and that I for one don’t appreciate the way that they’ve sucked the rest of the country into their sad little brawl.
Moe Lane