Hedge funds have now taken over a Federal program that offers subsidized loans to students. The Republicans passed that horrible bankruptcy law recently that now makes it IMPOSSIBLE to escape not only student loans but high interest rates and charges. Now many former students are being billed for long-dead loans that were re-instated by this bankruptcy law.
MA promising high school student, I began to look at my choices for college in my sophomore year. I grew up in the Marble Hill projects in the Bronx, NY. By my senior year I had been to numerous college campuses for campus tours and overnight visits. The dream was actually happening for me, an immigrant to the United States from the Dominican Republic. I finally decided on Ithaca College. All this time that I was looking at colleges and universities I neglected to consider financing as a major issue. I knew that I had to pay for it somehow, but I didn't really think about it because I was wrapped up in filling out form after form. I knew that my parents wouldn't be able to help much with this expense as they had with elementary and high school.
At the time, the cost of attending Ithaca College (including room, board, books, and other nominal expenses) was close to $25,000 per year. I was awarded some scholarships and financial aid. I also took on some loans that originally did not seem too large. I don't know how much I borrowed, truthfully. All I knew back then was that I was going to college. I was convinced that the degree would pay for itself. Through the years, the scholarship and financial aid money dwindled and I borrowed more as the cost of attending Ithaca College rose. Now I stand with about $50,000 in debt for a B.S. in Economics. I don't know how much I have repaid because, truthfully, I fear my student loan debt. Even when I was a financial counselor telling my clients that the first step to resolving debt issues is to open up and look at their bill statements I was not able to really look at my student loan debt.
I'm now back at the Marble Hill projects. I hold a Bachelor of Science degree in Applied Economics and I regret that I now have to question whether I was naive to have believed in the value of education.
This web site has one story after another. There are several features here: the primary one is, few students understand compound interest. This is the fault of high school. They won't hammer home the reality of compound interest!
Second: despite high school and then college, many of the people writing their stories of woe have mastered the art of writing plain English. This shows the weakness of present educational systems in America. Namely, throughout the first 12 grades, seldom do students write anything at all. In Germany, I had to write essays every week.
These were not just graded according to errors and poor sentence construction, they were graded for quality. Namely, to make a case, explain a position, defend one's choices. I discovered a number of posters at that site spent over $100,000 to become lawyers yet upon graduation and even passing the bar exam, were unable to understand the laws, understand how politics and public policies drive laws and simply didn't have the personality a lawyer needs to ply their trade.
As someone who has no law degree yet has represented more than one client in the courts of law, I know that anyone can go to court and make their case to a judge, I have done it more than once, indeed, quite a few times! And won!
Law schools in the USA are churning out 'lawyers', many of whom are totally incapable of plying their trade because they can't face down opponents in an argument by weilding psychological and technical tools. There should be a personality test before entering law school.
I suggest throwing applicants into a shark-infested pool. Heh. Actually, have them argue a case in traffic court. I have even won cases there. Anyone can do this, by the way.
But our post-high school education system is all about making money by luring in students, not teaching them about the realities of life! I could have been a lawyer except during my younger years, I had, thanks to lightning bolts, severe migraine headaches during storms. Totally nonfunctional. As the years pass, this has healed and by 40 years of age, I could have done fine as a lawyer. I love sitting on juries, too, and can dominate the discussion of a trial during deliberations. I even asked to not be the head of the jury because this would inhibit my ability to argue my own point of view!
Life is rough and you have to follow the road it sets before your feet. No amount of schooling can change this fact. I was horrified to read the sad stories of students who take courses in the arts. The arts scream for apprentice-ship! To be a great painter or composer, one has to be out in the world from the very start, learning from a master, not taking a liberal arts program.
These programs were tailored for rich children who had to learn to be civilized. They needed to know how to appreciate the arts so they could go to the opera, talk about literature and poetry and buy paintings and fine furnishings when they inherit mommy or daddy's estates. This is all about becoming a ruling class person who has refined tastes.
If one looks at the history of real artists, they have miserable lives and they seldom go to school, what they do is live in communities in Paris or New York City and they feed off of each other and do whatever as much as possible. They live in often filthy slums and love it. Heh. Indeed, the horror of today is, when artists manage to find Soho or the Village or Park Slope and gather there, all the lawyers and stock brokers move in because they want to be part of the cultural scene.
You don't have to go to school to 'learn poetry', all one has to do is listen to lots of poetry, read lots of poetry, have a miserable enough life that one is moved to write poetry and then the biggest step of all: writing poetry! Every day, day after day. Poets doen't get rich but if they are real poets, they get to meet Pegasus who protects and love poets and flies them off to Olympus to meet the Graces who will be utterly enchanted by any poet chosen by the Divine Horse and if you are really good, they will give you the Golden Apple and then you die.
And other poets will read your poems and bless you. The reward is demi-god-hood. Absolutely nowhere is there anything about going to school. Once you master a language, the rest is simple yet very, very hard.
Activist hedge fund managers, who like to shake up public companies, and private-equity firms, which often relieve the pressure by taking those same businesses private, used to work in harmony.
But this profitable relationship is showing signs of stress, according to hedge fund experts at the 2007 MARHedge conference in San Francisco on Monday.
Private-equity firms have raised record amounts of money in recent years and are now trying to put this cash to work quickly in leveraged buyouts. In the past, activist hedge funds would help the process along by finding under-performing companies, criticizing executives publicly and arguing for a sale - often to a buyout firm.
But now, with LBOs coming thick and fast, some activists are trying to scupper deals, arguing that they undervalue the target companies.
Tons and tons of DEBT are sloshing around the planet seeking someone to pin down and force into paying back these debts. Namely, the obnoxious .5% yen loan rates are distorting international monetary systems to an astonishing degree and every time there is a chance to kill this monster, the USA and Japan join together to squelch it and it is threatening our own entire financial house.
One great place to park all this debt is on top of American's main asset: properties. This has led to a balloon in asset values as more and more people entered the property markets carrying IOUs from Japan that they could plunk down on a house and so they bid each other up to the skies and now the skies are falling! Saturation coupled with bankruptcies has stoppe this process.
So where to go? The hedge funds tapping into this eternal pool of potential IOUs looked around and discovered, thanks to the moronic, deadly Republican debt laws they passed recently, no one can EVER discharge a student loan by going bankrupt! Haha! There's gold in them thar hills!
Shares of student-loan firm Sallie Mae jumped about 18% Monday after the company agreed to sell itself to a group of private-equity firms and two major banks for $60 a share, or about $25 billion, the companies said Monday.
Shares of Sallie Mae jumped $8.23 to $54.99 Monday morning.
J.C. Flowers & Co. and Friedman Fleischer & Lowe LLC plan to take 50.2% ownership in the new firm, with J.P. Morgan and Bank of America each taking 24.9% stakes in the company, formally known as SLM Corp.
"We are pleased to invest in Sallie Mae and help provide increased liquidity, stability and financial strength," J. Christopher Flowers, managing director at J.C. Flowers, said in a statement. "Both Bank of America and J.P. Morgan Chase have fully committed to support the company with short- and long-term financing."
They are taking over these loans and they love the bad loans the most. While reading all the sad stories of often very badly educated people who were victims of an educational scam, I noticed that the majority were from people who had declared bankruptcy BEFORE the new bankruptcy laws were passed and they were suddenly the victims of these bankers seeking PAST funds they thought were discharged.
So they all got, in the last two years, notices that they had to pay back the full loans plus interest at 8-17% and penalties! This meant, the average past loan dropped when bankrupt could quadruple! So paying off $10,000 meant paying back $40,000 or more. Not only that, the banks set the repayment rates so these are like credit cards only with one huge craveat: they can't be escaped via bankruptcy!
This is a new form of serfdom. This is why Christianity and Islam were so successful: both religions forbade exactly this!
Historically, private equity firms have shied away from the financial services sector in part because of a fear of the industry's funding and reserve requirements, tight standards often set by regulators.
That changed in a big way Monday when a consortium led by J.C. Flowers & Co. and Friedman Fleischer & Lowe LLC agreed to buy embattled student loan company Sallie Mae (SLM :55.05, +8.29, +17.7% ) for $25 billion. The deal not only represents a first for private sponsors it comes as Sallie is under fire for its lending practices.
The deal for Sallie Mae, whose official name is SLM Corp., suggests that the private aversion to financial services may finally be lifting. Competition for quality targets among financial buyers has forced many firms to examine financial companies and Sallie Mae - even with its political problems - may be the first of many financial targets to fall.
"To get to the really big deals, most of them have some bastion of government regulation," said Michael Flynn, a partner in the corporate group at Sonnenschein Nath & Rosenthal. "A lot of the reluctance to go after the regulated companies is changing just because that's where the big deals are."
Namely, milking money flowing into things run by our own government which has been madly 'privatizing' goverment functions means the politicians will work with lobbyists to skim public services for profits no matter how painful this is for the voters. The mad rush to privatize is bankrupting America because crushing the lower classes with a mountain of debt they can't escape even with bankruptcy and refusing to provide needed services even after the taxpayers pay for them (I am refering to the pre-paying the baby boomers retirement but then hijacking the funds and using them for tax cuts) is the key to eternal wealth for the rich upper classes.
The buyout will put the company in the hands of two private equity investors, J. C. Flowers and Friedman Fleischer & Lowe, and two banking giants, Bank of America and JPMorgan Chase.
Although the buyers are investing a total of $8.8 billion of their own money, the remaining $16.2 billion will be financed with debt. Together, the two buyout firms will control 50.2 percent of the company, while the banks will provide Sallie Mae with up to $200 million in backup financing and own the remaining stake.
“The underlying business is very strong from a growth perspective since education costs are growing at twice the rate of inflation,” said Richard Hoffmann, a financial analyst for CreditSights in New York. “You can simply look at the enrollment of high school students and see what the growth rate is.”
This article provides detailed figures. First, 'education' is raging way past the rate of inflation. I happen to know via certain contacts, schools are suffering terribly. The cost of running campuses is skyrocketting, particularily ENERGY. And this is where all our inflation is: energy and stuff we need to survive. Schools have dealt with this by brutalizing graduates. They can't get positions as full professors for years and years because it is super-cheap keeping them as low-grade piece workers.
As the system degrades, more hopeful students pour in thinking a degree will open doors. This inflation of degrees means everyone must do it despite the fact that degrees are much less useful than simple apprentice-ships! One can learn an amazing number of things by working somewhere.
My main form of amusement has been get a company to hire me, discover their weak spots, submit a report and then get fired. Happened a number of times. Many times, the boss would yell, while throwing the paper at me, 'We are NOT going bankrupt.'
And so it goes: I have never taken a single course in economics. I wanted to be a novelist or some rot. A teacher. Namely, a professor who could yap at agape students. Instead, thanks to fate, I had to make my way in the real world and ended up thinking about money. Yech.
As we all must: this is important. And I am submitting a report here on my blog, it is about 1,000 pages long now, detailing how the USA is going bankrupt. And like in the past, the government and its army of stupid economics advisors are throwing it back in my face and screaming at me, 'We are NOT going bankrupt, we are rich!'
As for all students: you have to get organized and storm Washington, DC and demand the bankruptcy bill be rescinded! You have to demand all candidates for President to call a moritorium on fees and to drop all the rates to 2.3% on all overdue loans because they can't be discharged so there is no call for higher interest rates due to possible bankruptcy.
Gads. Fight! Fight back! Don't sleep walk through life! It is all about money.