Student Loans! Get Your Free Student Loans Here!

[Ben]

Apparently that OWS punk with the "pay for my college" sign is kinda getting what he wanted. I'm trying to figure out how the White House statement of, "this will not cost the taxpayers anything" will work. Whoever gave the loans out is gonna get screwed whether it's the government (taxpayers), or private lending firms (taxpayers).  Also I hate the term "the loan is forgiven". Everybody wants their loans "forgiven".

http://www.foxnews.com/politics/2011/10/26/obama-to-announce-plan-to-reduce-student-loan-payments/

[Fly320s]

passed by Congress that reduces the maximum repayment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014

How does that work?  What happened to paying according to the terms of the loans?

[wmenorr67]

Mixed feelings on this.  If you are current then yeah give them a break, but if you are behind, get a damn job.

[Ned Hamford]

This just affects the payments; your interest still accumulates.

[De Selby]

This just affects the payments; your interest still accumulates.

I hope Obama's reforms will be meaningless, so I can keep hiring law grads at super cheap rates!

[Ben]

This just affects the payments; your interest still accumulates.

For twenty years, then you're off the hook from the way I read it.

[KD5NRH]

IMO, there are a lot of reforms they've been needing to do all along:

• No loans for zero-demand degrees - you want a degree in women's studies, you pay for it because no lender would realistically believe you're going to get a job in the field capable of paying that off
• No forgiveness of loans or other special treatment if there are jobs available - if you got an English Lit degree, but don't want to teach, tough.  You can do what you want after the debt is paid.  Until then, do what it takes to make your payments.
• No loans for general studies past second year; pick a damn major already.
• Ditch some of the crap requirements (health 101 for any non-bio major, foreign language for a chem degree, etc.) in favor of mandatory "how to dress and act like a grownup so you can get and keep a decent job" classes.  (Alternate credit available for us non-trads who have held real jobs.)
• Improve the payout process; 8-12 weeks into the semester, the loan effectively becomes next semester's money.  I can understand a couple of weeks to verify class attendance, but working full-time-plus just to get by for the first 2-3 months of school while taking 12-15 credit hours is not a recipe for good grades.  The number of my classmates that have dropped because they couldn't afford to miss work since they couldn't keep waiting for the loan money to be available is disturbing.

[roo_ster]

I hope Obama's reforms will be meaningless, so I can keep hiring law grads at super cheap rates!

Maybe we can round up a bunch here in America, stuff them into shipping containers, and ship them to The Place Where Toilets Flush The Wrong Way.  Sure, we'd lose 20-30% during shipment, but they were the weak ones, anyway.

[HankB]

. . . No loans for zero-demand degrees - you want a degree in women's studies, you pay for it because no lender would realistically believe you're going to get a job in the field capable of paying that off.

Nope - since these are some of the most reliably Democratic voters around, instead of cutting them off, the administration will likely be offering them more favorable terms for repayment of the loans.

Of course they don't say it that way, but when they base loan repayment terms on a nebulous concept like "ability to pay based on income" it's not the doctors, engineers and others with degrees that actually impart marketable skills who will be getting a break.

[longeyes]

Instead of putting the U.S. taxpayer on the hook, let the universities themselves take the risk of bad loans.  Permit the students to file bankruptcy and stiff the schools that keep using Federal subsidies to jack up education costs and build their academic empires.  Higher education in America has become one of the main arms of socialism in this country.  Until we dispel our cherished myths about education in America we are screwed.  "Education" is just one more American addiction; until American parents start saying "Hell no!" to cost increases and start questioning the real value of what their kids are learning the nonsense will continue.

[MillCreek]

Maybe we can round up a bunch here in America, stuff them into shipping containers, and ship them to The Place Where Toilets Flush The Wrong Way.  Sure, we'd lose 20-30% during shipment, but they were the weak ones, anyway.

But then they will come back as hardened, toughened Paul Hogan attorney-types, able to spear us with a knife at 20 paces, crush Foster's cans on their foreheads and have their way with our women with their cute accents.  Is that what we really want?  Crikey!

[TechMan]

Nothing like getting out early to buy the votes.    

[birdman]

IMO, there are a lot of reforms they've been needing to do all along:

• No loans for zero-demand degrees - you want a degree in women's studies, you pay for it because no lender would realistically believe you're going to get a job in the field capable of paying that off
• No forgiveness of loans or other special treatment if there are jobs available - if you got an English Lit degree, but don't want to teach, tough.  You can do what you want after the debt is paid.  Until then, do what it takes to make your payments.
• No loans for general studies past second year; pick a damn major already.
• Ditch some of the crap requirements (health 101 for any non-bio major, foreign language for a chem degree, etc.) in favor of mandatory "how to dress and act like a grownup so you can get and keep a decent job" classes.  (Alternate credit available for us non-trads who have held real jobs.)
• Improve the payout process; 8-12 weeks into the semester, the loan effectively becomes next semester's money.  I can understand a couple of weeks to verify class attendance, but working full-time-plus just to get by for the first 2-3 months of school while taking 12-15 credit hours is not a recipe for good grades.  The number of my classmates that have dropped because they couldn't afford to miss work since they couldn't keep waiting for the loan money to be available is disturbing.

In other words, exactly what would happen by default if lenders were allowed to price student loan money according to risk.  Student loans are really the very last (or perhaps the first, if you want a scary thought) lending mode where everyone gets the same rate, regardless of what risk is being assumed on the lender.  If free market were allowed, the hard-partying, poor grades, dead-language major would have to pay more (putting downward pressure on the tuition and resources of those schools) while the hard working, engineering major with good grades would get low cost money, which would encourage competition among schools to achieve actual performance of their graduates in the real world, lest their actuarial results hammer the costs of those attending and reduce their income.

I think loan risk (and as a result, interest) should be based on field of study, academic performance, which school, and all based on statistical hiring and lifetime earning results of graduates from that school, in that major, with those grades.

I other words, a straight-A mech or chem E at a top 10 engineering school should have very little interest, while a bong sucking philosophy major at private university of liberal middle of nowhere should have to pay more.  Their lower lifetime earning prospects, lower ability to secure sufficient income, all yield an increased chance of default.

[HankB]

I other words, a straight-A mech or chem E at a top 10 engineering school should have very little interest, while a bong sucking philosophy major at private university of liberal middle of nowhere should have to pay more.  Their lower lifetime earning prospects, lower ability to secure sufficient income, all yield an increased chance of default.

THAT'S RACIST! (Hey, someone had to say it.    )

[Fly320s]

Instead of putting the U.S. taxpayer on the hook, let the universities themselves take the risk of bad loans.  Permit the students to file bankruptcy and stiff the schools that keep using Federal subsidies to jack up education costs and build their academic empires.  Higher education in America has become one of the main arms of socialism in this country.  Until we dispel our cherished myths about education in America we are screwed.  "Education" is just one more American addiction; until American parents start saying "Hell no!" to cost increases and start questioning the real value of what their kids are learning the nonsense will continue.

I like it. That will allow the lender to keep a closer eye on the student and the lender will know when the student is changing majors, failing, etc.

[slingshot]

I think the loans should be provided to certain majors in college.  If you major is something that is the easiest major you can find just to have the "college experience", no loan.  If you are acedemically qualified to major in something that is more difficult and more apt to generate a job and a good income, sure.

Repayment....  loans must be repaid.  This is not a disguished grant program.  It's a loan.  10% of your net earnings for up to 20-years.... sure.  If the major does not likely support repayment on that basis, no loan.  

[longeyes]

I think the loans should be provided to certain majors in college.  If you major is something that is the easiest major you can find just to have the "college experience", no loan.  If you are acedemically qualified to major in something that is more difficult and more apt to generate a job and a good income, sure.

Repayment....  loans must be repaid.  This is not a disguished grant program.  It's a loan.  10% of your net earnings for up to 20-years.... sure.  If the major does not likely support repayment on that basis, no loan.  

A few years ago, when I was involved in a video-cum-website project at a major dental school, I wondered what it would cost to set up a Federal trust fund to offer in-perpetuity free dental education in America.  Answer: what would be called walking-around money in D.C. these days.  The money is, or was, there for certain valuable curricula, but it has been looted and misallocated.

[roo_ster]

Instead of putting the U.S. taxpayer on the hook, let the universities themselves take the risk of bad loans.  Permit the students to file bankruptcy and stiff the schools that keep using Federal subsidies to jack up education costs and build their academic empires.  Higher education in America has become one of the main arms of socialism in this country.  Until we dispel our cherished myths about education in America we are screwed.  "Education" is just one more American addiction; until American parents start saying "Hell no!" to cost increases and start questioning the real value of what their kids are learning the nonsense will continue.

This, in spades.

The schools reap the benefit of easy loans, they ought to take the risk.

In other words, exactly what would happen by default if lenders were allowed to price student loan money according to risk.  Student loans are really the very last (or perhaps the first, if you want a scary thought) lending mode where everyone gets the same rate, regardless of what risk is being assumed on the lender.  If free market were allowed, the hard-partying, poor grades, dead-language major would have to pay more (putting downward pressure on the tuition and resources of those schools) while the hard working, engineering major with good grades would get low cost money, which would encourage competition among schools to achieve actual performance of their graduates in the real world, lest their actuarial results hammer the costs of those attending and reduce their income.

I think loan risk (and as a result, interest) should be based on field of study, academic performance, which school, and all based on statistical hiring and lifetime earning results of graduates from that school, in that major, with those grades.

I other words, a straight-A mech or chem E at a top 10 engineering school should have very little interest, while a bong sucking philosophy major at private university of liberal middle of nowhere should have to pay more.  Their lower lifetime earning prospects, lower ability to secure sufficient income, all yield an increased chance of default.

This alone would eliminate a goodly number of folks who have no business going near college.

[MicroBalrog]

I have a better idea:

Let government out of higher education. Stop guaranteeing, subsidizing, setting- whatever, loans.

Government assistance should be only available to people who studying things relevant to the national defense, or who have earned it (i.e. members of the military ).

LEt the market set rates, not engage in useless arguments as to whose degree should be subsidized.

[longeyes]

I have a better idea:

Let government out of higher education. Stop guaranteeing, subsidizing, setting- whatever, loans.

Government assistance should be only available to people who studying things relevant to the national defense, or who have earned it (i.e. members of the military ).

LEt the market set rates, not engage in useless arguments as to whose degree should be subsidized.

Agree.

But my point--suggesting a possibly justified example of educational subsidy--is that in this, as in so much, we have let monies that could have gone for productive activities be diverted, in mass amounts, to questionable ends.  The American taxpayer has been paying all along for huge government "investments" both here and abroad but has not received the benefits he or she should have.  Why, for example, to cite a foreign investment, do we not charge for the military umbrella we provide the "free world?"  That alone would have ensured a large trust fund that could have been used to mitigate some of our economic problems in harder times.

[MechAg94]

I agree on getting the FedGov out of student loans all together.  That would be better picked up by private organizations and states. 

On the military, I might disagree at least in part.  I think we have benefited by using our Navy to police the sea lanes.  In addition, I might carry that further and say that our opposition to the Soviet Union in preventing the spread of communism and forcing the Soviet Union's collapse has benefited our country and economy quite a bit over the last few decades.  A 3rd point would be that the large amount of Research and Development funded by the military to push the edge of military technology has carried over to private industry and civilian economy.

[Ben]

Let government out of higher education. Stop guaranteeing, subsidizing, setting- whatever, loans.

Yes. In fact if Lockheed is looking for bright engineers, they can give out loans, grants, and scholarships (which I believe they already do) to students they think will "make the grade". At the same time, George Soros can give out loans, grants, and scholarships to students in [insert group here] studies programs, or anyone else he wants to, and more power to him.

 Private loans are then between the student and the loan provider. Private lenders should not be directed by the government to "forgive" loans, and taxpayers shouldn't be forced to pay for forgiving government loans.

Full disclosure: My viewpoint is based on me working in the stinkin' oil fields when I was 20 instead of going to college. I worked till I had the money to go to college, and I worked through college, including my regular job plus being a TA in grad school to get a break on tuition, so I'm a little jaded regarding students wanting a free ride or not wanting to pay back loans.

[Ned Hamford]

The problem is that the gov intermingling is long standing and pervasive in the field of student loans.  The loans for all has helped cause an absurd increase in college expenses; what with schools having no reason not to, all students being able to pay by simply taking those federally guaranteed loans. 

Like most gov involvement problems, the real politics is over who gets stuck holding the bag. 

[De Selby]

The problem is that the gov intermingling is long standing and pervasive in the field of student loans.  The loans for all has helped cause an absurd increase in college expenses; what with schools having no reason not to, all students being able to pay by simply taking those federally guaranteed loans. 

Like most gov involvement problems, the real politics is over who gets stuck holding the bag. 

It's win win for business - they get educated workers who are in massive debt, and therefore not nearly as choosy, either about working conditions, pay, or career.  It lets employers dictate the terms of employment more effectively.  People who feel obligated to pay their loans will take fewer risks and employers will benefit.

And people who don't care about their loans?  Yeah, we pay for that.  This is a corporate program and always has been.

[MicroBalrog]

Big business and big government work together? Who would have thought it?