Let's see the numbers

There is plenty of evidence that shows us that default rates are terrifyingly high. On another related note, M. Pilon at the WSJ recently put out a piece about the fact that student loan debt rates were higher than credit card debt rates, and I think we can all connect the dots to what the means vis-a-vis default rates. Since I've been covering this material for a long time, carrying out my own research, and have now been in touch with thousands and thousands of debtors, this information comes as absolutely no surprise to me. Moreover, Tim Ranzetta has put out some solid evidence about the increase in default rates, too. Ranzetta refers to the WSJ in this post from 2009, and adds, "to provide some insight into how these default rates rise as the loans continue to age, the Department recently released cumulative lifetime default figures for the 2002 cohort which saw its overall cohort default rate rise from 5.2% at its first measurement point in 2003 to 11.5% five years later." There is also strong evidence that suggests that 1 in 3 Federal student loans are now in default. So I think it's safe to assume that the bubble has burst here.

On two separate occasions, a reader, who is clearly an insider, has decided to challenge my claim that their is indeed a student lending crisis. I've asked this person to discard their anonymity and have an open conversation with me either here or via email (if they were bold enough to send me emails revealing their actual identity, I would certainly keep that confidential).

On my post about Kelly Field's piece on student loan default rates at the Chronicle of Higher Education, they made this remark [truncated version]:

"Meanwhile, more recent rates of default and delinquency continue to decline (except on the high-risk non-federal loans to trade school students which continue to languish). Makes you wonder whether the 'awareness' of the powerful collection tools of the guaranty agencies, federally-guaranteed lenders and collection agencies promulgated by SLJ and others has 'backfired' by strengthening and reinforcing the old postsecondary [sic] system at all levels. It could also be that the vast majority of students and parents don't borrow more than they can handle (many still don't borrow at all), and the focus should be assisting the minority that has gotten in over its head."

At this point, I am not sure if the reader is agreeing or disagreeing with me. It is safe to assume that they are taking a jab at me as well as another advocate for student debtors. Regardless of their take on my work, they are clearly claiming that defaults are on the decline. In the short post I wrote about M. Pilo the reader, and I'm presuming it's the same person, because the language and tone are similar in both remarks, wrote:

"Educational loan total balances are actually over $900 billion. Oh well, a reporter facing a deadline meets a garrulous but error-prone pundit: results are predictable.

Another one-sided story. Most students don’t borrow, and for the vast majority who do borrow, the debt is quite manageable. Oh well, I guess an article about a borrower paying $150 per month for several years is too boring for the newly-chic WSJ . . ."

I am not aware of defaults or delinquencies going down recently in any sector. In addition, if such information is available, perhaps this reader, who's clearly in the know, would be willing to submit it to me, so that I could publish it. Moreover, this commenter then separates out the for-profit sector.

Here's what I had to say to them, too: "Provide me with the evidence that debt is quite manageable. I don't buy it. On that note, I will be sending your comments to two contacts I have in the Dept. of Education. I'd like to see proof of this claim."

Until they show me the numbers, I ain't buying these claims.