Obama Plans Steps to Ease Student Debt


#1

nyti.ms/UkUh9R


#2

Let’s see how this is. Millions of people, many of whom had no business in over-priced college anyway, but could have had jobs in skilled occupations, borrowed a lot of money instead of working to earn the money to go to college or a skilled trade school.

Meanwhile, some parents worked hard and did without in order to pay their childrens’ way, combined with the work the young people did themselves.

And because Obama does nothing whatever to encourage hiring, those kids can’t get jobs, particularly those who majored in some useless thing. Some don’t owe money and some do.

And I’m supposed to pay for them instead of paying for my own grandchildrens’ educations.

Mighty wrong, even though the “benefit” is mostly illusory.


#3

:thumbsup:

I’m one of those that wound up owing a decent amount after college, and there’s no way I want the government stepping in to mess with it. At the end of the day, that would wind up costing me way more in taxes than the darn loans.


#4

PROs:

  • Obama’s giving the agency reasonable time (til 2015 at least) to roll this out.
  • It’s an expansion of an existing relief program (a 2010 law that caps monthly repayments to 10% of income) to earlier (pre-2007) and later (post-2011) loans.
  • This isn’t forgiveness; this is the government allowing a slow-down of the pace of repayment to banks (pre-2007 loans) and government (post-2011).

CONs:

  • It’s being done through fiat. Arguably, because lending is now done through the federal government directly, this is within his purview, but I don’t like that this is another of Mr. Obama’s private little fiefdoms.
  • Responsible borrowing education isn’t part of it. The 10% cap may be helpful if you studied a specific field (engineering) but are having a rough time finding work (as engineers are finding now - ironically while engineering companies are pushing for more immigrant labor). You’ll probably find something better-paying soon and the 10% repayment is less of an issue. But if you borrow $100k for a Comparative Religious Systems degree, that 10% cap is going to be with you forever.
    To paraphrase another poster, not everyone goes to college. We need to accept that. We also need to accept that not every college-bound, bright student needs to go to Harvard, and on the flip-side that employers shouldn’t expect every job candidate to come from a Top 10 school. I went to two universities that few have ever heard of but I’ve done pretty well for myself.
  • We’re missing the larger discussions:
    • Employment (notably the 12.6% unemployment rate for 2011 college grads (Spreen 2013, in Monthly Labor Review.))
    • Degree inflation (or, “why does an entry-level position now require an MBA?”)
    • Why the Direct Loan program replaced the FFELP, such that the government now FUNDS all student loans rather than guaranteeing loans through an intermediary
    • That the debate over finding non-college-educated labor seems to devolve towards an immigration issue rather than relying upon Americans to pick a respectable trade

I don’t think the capping is a bad idea necessarily; students may always pay more if they can afford it (I lived with my parents for two years after college, partly to save on rent and work three jobs so I could pay most of my debt down). Nor do I think that lending for education is necessarily a bad idea. I am discomforted that I’ve been out of college less than 20 years, but my undergraduate institution’s tuition has tripled, and the allowed borrowing amounts have more than doubled since then.

Perhaps the cost will at least begin to force some greater discussion of what one actually does at college. I entered a computer science major and graduated a communication major. That was the first time, when tuition was less than $4k annually. The second time I had more focus as an econ and math major, and went to grad school on that. I’m still paying off the debt but it’s quite manageable. But if my kids want to study communication, they’re going to community college first; if they want to study biochemical engineering, financial mathematics or nuclear engineering, I could see justifying the cost of an Ivy League school.

The downside is that we’re already seeing a shift in what kind of graduates we have. Doctors get pinched from both sides - massive debt in medical school, crunched salaries from cutbacks in insurance reimbursements and malpractice insurance premiums. It could very well be that you’ll only see a doctor for very serious conditions, while a nurse, nurse practitioner or physician’s assistant will by your primary care provider.


#5

Ridiculous! My brother-in-law is one of those. Went to a high priced university on an engineering scholarship, decided it was too much work, then transfers into photography loosing his scholarship, with big dreams of doing all this artsy stuff with it and expected to pay the loans off. Then decides he can’t make it in that world so he’s teaching Yoga and complains about not being able to pay off his loans and thinks someone should help him. Part of the millenial generation aka the generation of entitlement.

OTOH, I lived at near poverty levels for a very long time to put myself through college and working at the same time. Sleeping sometimes 3 hrs/ day to do it all. Like many others who have had to do the same thing. And now this generation demands the gov’t take care of everything for them!? :rolleyes:


#6

The government takes care of them; they’ll take care of the government (or more accurately, the party that doles out the goodies).


#7

In my mind the real “bad guys” here are the universities who took advantage of the program to raise tuition to exorbitant rates. I think they should have to participate in any loss taken from these loans going bad.


#8

Why should I pay for someone else’ student loan debt?


#9

The same reason you should pay for their contraception.


#10

Every university I attended has built lavishly since I was there, though the number of students is not that much greater.

Some (but certainly not all) universities have gargantuan endowments. Typically, the larger the endowment, the less is the real student aid (other than loans).

I, too, think the universities are very much to blame in the current educational mess.


#11

I think it is true that most universities have little interest in providing affordable higher education. However, what is more surprising is that many students and parents are not interested in affordable higher education either. I was just at a conference at a university where I stayed in a dorm. When I went to this conference twenty years ago the dorm I stayed in a small room and the bathroom was meant to handle about 40 or more people. This time I stayed in a suite where two people shared a bathroom and each person had a private room with a big living room in the suite. Not the kind of living arrangements for someone thinking about cutting costs.


#12

Why stop at student debt! Hopefully Mr. O will also limit ObamaCare costs and mortgage payments by executive fiat also!


#13

I agree. College is not for everyone. Some trade schools are just as bad. If you are not a good student and don’t apply yourself you are wasting time and money.

It is sad how these young people are taken advantage of and not only have school loan debt but also have credit card debt.


#14

I don’t know of any industry that won’t charge what the market will bear. I think most of us, as individuals, are the same way.

Face it, if the market price for a person’s house is $500,000, how many people would insist that the house is only worth $114,086.62? (After all, 30 years ago, you only paid $50,000 for the house…and, with inflation, the value has only increased to that amount)

How many would initially ask for $600,000 — just to see if the market would support such a price?

And then if a person offers $650,000…how many would not accept such an offer and insist that the buyer only pay $114,086.62?

I don’t see that higher education is that much different. If a college (for example, Catholic University of America) says that tuition and fees is $39,726 per year and people are more than willing to line up and compete for the opportunity to pay that amount, can you blame the university?

If you say that you will blame the university, think back on the “house” example and tell me, with a straight face that if somebody offers you $650k for your house, you will let them know that you’ll only accept $114k for it. Just try to tell me that with a straight face.

A university charges too much money for tuition and fees when it gets to the point that they can’t fill seats.

It will only correct itself when people actually use economic decision-making and objectively determine if there is a viable return on their educational investment, rather than making irrational decisions based on emotion and concupiscence.

Sadly, bad decisions are facilitated by the wide availability of “free money” (in the form of grants, scholarships, and loans) from the government. If you get back to the point to where the majority of people need to spend their own money for education (at the time when the education services are purchased), the folks will be forced to return to some sort of rationality in their decision making. Until that point…people are going to be encouraged to make decisions that are totally nonsensical.

(please note that I am not talking about academic scholarships and work-study programs for hard-working, talented students that come from challenging economic circumstances)


#15

Absolutely true. Two of my daughters attended one of the same universities I did; about 10 years apart. When I took the first one, I was amazed at the “dolling up” of everything, including the dorms. When I took the second, I was flabbergasted at the changes. Both had scholarships and while the first one borrowed a bit, the second one didn’t have to. But the “full cost” of a year there (while lower than many) was still breathtaking.

But it’s not just the dorms. It’s everything. The spending over the last few decades is absolutely unbelievable, and it has not been to improve function for the most part, but appearance and unnecessary amenities.

I realize universities are competing with one another; that they “buy” the students who will raise their average incoming SAT and GPA scores. But it wasn’t always that way. The Catholic graduate school I attended had a terribly expensive private “rival” in the same city. Our buildings were all sorts of things, including converted hotels and such. Our parking lot was full of ten-year-old Chevys and Fords. The others was (no kidding) full of Mercedes and even a fair number of Porsches and Maseratis. But our school was massively less expensive to attend. But there was more to the appeal back then. I recall that even Bob Hope sent his daughter to my school. There were things more important than luxurious appointments.

But we got essentially the same education and were rather proud of our school’s hardscrabble, utterly functional, appearance. But it’s not like that now. Fountains and marble everywhere. People are paying a terrible price for those things.


#16

Sure, the universities should share some of the blame but you can’t overlook the role that government subsidization of higher education has played.


#17

Oh, I don’t overlook that. But then, when does government EVER insist on prudence when it hands out money?


#18

I have to agree with this. If college without any subsidization costs x dollars, then college after subsidization will cost x + subsidy. Colleges arn’t stupid. If they can receive x dollars from you without a subsidy they will capitalize on a subsidy to increase their bottom line.


#19

Unfortunately, since the Obama government took over student lending, it will become more and more politicized. Some groups will be favored, some won’t.


#20

What a great move by the President!

If this can be realized, along with the DREAM act, these would be two major accomplishments by this administration.

:thumbsup:


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