Post: #1

Can you bet against Sallie Mae, AES? Pennsylvania Higher Education Assistance Agency?

WIA

Post: #2

have you taken a look at ticker SLM? It does have an options chain also but it's not very liquid

Post: #3

(12-05-2012 08:23 PM)juice Wrote:  have you taken a look at ticker SLM? It does have an options chain also but it's not very liquid

Yeah, seemed the time to do it was back in 07.

All the other companies in the student loan game seem to be private.

Per biz insider, they say you should short the for-profit guys like Phoenix.

seems i'm not the only person thinking about this.

http://articles.businessinsider.com/2011...dit-crisis

How many other ways can you short a macro trend?

WIA

Post: #4

I would short the for profit colleges. Unlike mortgages, student loans are not dischargable in bankruptcy, therefore you do have to repay them. You can short a macro trend through the use of options, futures, debt and stocks as well. you also want to look at the bigger picture and see what other companies do business with for profit colleges and short those as well.

Post: #5

(12-05-2012 09:32 PM)Lou pai Wrote:  I would short the for profit colleges. Unlike mortgages, student loans are not dischargable in bankruptcy, therefore you do have to repay them. You can short a macro trend through the use of options, futures, debt and stocks as well. you also want to look at the bigger picture and see what other companies do business with for profit colleges and short those as well.

Since of recent, you actually do not have to repay all of your student loans (federal)

For those people that are currently taking out federal loans or plan to do so in the future, the Obama administration has announced a proposal to the "Income Based Repayment" plan which I believe gets enacted at the end of this year. If you opt into this loan repayment plan, payments for all of your federal student loans get capped at 10% of your discretionary income (that is, income after taxes). After 25 years your loans are completely forgiven by the government.

One issue, however, is that your principal continues to accrue, so even though you are only paying 10% of your income to pay back your loans, the loan you are responsible for is getting immensely larger - if the U.S. government ever decides to change or cancel this plan (and they have already changed it a number of times) and you have been relying on this plan you are S.O.L. because the principal amount you are now responsible for is unfathomable.

Furthermore, if you wait 25 years and your loans are discharged, you need to pay income tax on your loans as if they were income. This creates a tax bomb because you are going to be taxed off that principal amount which has accumulated interest. (Im not too sure about how this works, though)

The U.S. government is pretty much acknowledging that people cant pay back their loans and is giving out $$ which its never getting back. It seems to me it would have made more sense to create some reforms to lower the cost of education, but whatever.

Private loans are not dischargable though, so shorting Sallie Mae may make you some cash money.

Post: #6

(12-05-2012 09:57 PM)se7en Wrote:  The U.S. government is pretty much acknowledging that people cant pay back their loans and is giving out $$ which its never getting back. It seems to me it would have made more sense to create some reforms to lower the cost of education, but whatever.

Private loans are not dischargable though, so shorting Sallie Mae may make you some cash money.

Yeah, I wonder how much i'd have to short to pay off my loan? lol.

It's a shame I couldn't buy my own discounted debt.

And higher ed needs to change, I just don't know how it will do so.
Online courses were the future, now they're the reality. I wouldn't pay thousands of dollars to watch youtubes and take computerized multiple choice tests.

That means a lot of those professors are going to lose their jobs. Cause why watch some rinky dink prof at my local, when I can watch the best person on the subject?

WIA

Post: #7

(12-06-2012 02:44 AM)WestIndianArchie Wrote:  

(12-05-2012 09:57 PM)se7en Wrote:  The U.S. government is pretty much acknowledging that people cant pay back their loans and is giving out $$ which its never
getting back. It seems to me it would have made more sense to create some reforms to lower the cost of education, but whatever.

Private loans are not dischargable though, so
shorting Sallie Mae may make you some cash money.

Yeah, I wonder how much i'd have to short to pay off my loan? lol.

It's a shame I couldn't buy my own discounted debt.

And higher ed needs to change, I just don't know how it will do so.
Online courses were the future, now they're the reality. I wouldn't pay thousands of dollars to watch youtubes and take computerized multiple choice tests.

That means a lot of those professors are going to lose their jobs. Cause why watch some rinky dink prof at my local, when I can watch the best person on the subject?

WIA

The quality / brilliant professors that are there because they conduct research and just teach as a formality will probably stay, but I def agree that many of the others who provide no value besides reading textbooks outloud will be forced to reevaluate their employment situations.

However, are you motivated enough to learn from online lectures? I always find it easier to stay on top of my shit when my study schedule is lossely structured around attending classes. However, I guess if there comes a time that I need to learn something new 100%, perhaps that will be motivation enough..

Post: #8

(12-05-2012 09:23 PM)WestIndianArchie Wrote:  

(12-05-2012 08:23 PM)juice Wrote:  have you taken a look at ticker SLM? It does have an options chain also but it's not very liquid

Yeah, seemed the time to do it was back in 07.

All the other companies in the student loan game seem to be private.

Per biz insider, they say you should short the for-profit guys like Phoenix.

seems i'm not the only person thinking about this.

http://articles.businessinsider.com/2011...dit-crisis

How many other ways can you short a macro trend?

WIA

here's a link, from a few months back, to some light options analysis on for profit education stocks: http://livevol.blogspot.com/2012/07/for-...-away.html

Post: #9

I think the law will be changed next year. How could the Obama administration bail out the banks over and over and leave students on the hook for their debt ? It would be great in waking more people up if they left the law as is and young people would wake up to the farce of Obama.

But yes at some point next year when the student loan debacle comes to a head they will change the bankruptcy law and I am certain student loan debt will be dischargeable.

Going over the option charts for SLM and looking at the LEAPS they are far more liquid than the front months. I think as this debacle unfolds there will be for more open interest and volume in these options.

For now I would sell CALLS and bank the premium being offered on the Jan 2014 17 strikes. Hell I am a gambling man I would even sell the $15 strikes as well. SLM is at a one year high, can't really see it going much higher and in a year from now look out below.

Post: #10

(12-06-2012 12:31 PM)BIGINJAPAN Wrote:  I think the law will be changed next year. How could the Obama administration bail out the banks over and over and leave students on the hook for their debt ? It would be great in waking more people up if they left the law as is and young people would wake up to the farce of Obama.

But yes at some point next year when the student loan debacle comes to a head they will change the bankruptcy law and I am certain student loan debt will be dischargeable.

Going over the option charts for SLM and looking at the LEAPS they are far more liquid than the front months. I think as this debacle unfolds there will be for more open interest and volume in these options.

For now I would sell CALLS and bank the premium being offered on the Jan 2014 17 strikes. Hell I am a gambling man I would even sell the $15 strikes as well. SLM is at a one year high, can't really see it going much higher and in a year from now look out below.

At these levels, I agree with the short thesis. SLM looks to have strong resistance at the $17-$18 zone. For me, a break above $18 would negate the short while a break below $16.40 would confirm it.

Post: #11

I originally had mine with Citibank or studentloan.com, now my loan is owned by discover....

$19k to go : (

Post: #12

(12-05-2012 09:57 PM)se7en Wrote:  Furthermore, if you wait 25 years and your loans are discharged, you need to pay income tax on your loans as if they were income. This creates a tax bomb because you are going to be taxed off that principal amount which has accumulated interest. (Im not too sure about how this works, though)

The people who get hit by this will never pay it. Kind of like the Obamacare penalty. A huge % of the people who will incur the Obamacare penalty will never pay it; just another reason why the administration's estimates surrounding Obamacare are sheer fantasy.