Student loans?

[bara]

A comment I saw concerning student loans asked;

Why couldn't the government allocate some of those trillions they have spent on bailing out people who are already rich to eliminating student debt in america?


Ive been thinking about it myself and with the student loans somewhere in the 1 trillion dollar mark, im thinking suddenly freeing up all that money people are spending on students loans could really provide an economic boost.

Instead of loaning the banks money, they could have given them, in liquid assets as cash in order to get the banks to write off student loans or other loans that were being paid by financially strapped people.

Just an idea and I would like to see some opinions on it. I know its rather vague, but seeing some pros/cons of something like this would be nice.

Thanks.

[AdminAssistant]

I think relieving the pressure of student loan debt would be an enormous boost to the economy, not to mention a nice consolation prize to recent degree-holders who can't get a job in their fields because the Boomer generation can't/won't retire. However, such a plan has to be tied to a plan to reducing the cost of higher education in the first place.

[Panacea]

Part of the problem with student loans is there are several different flavors of them.

Some of them are subsidized by the Federal Government. Some are not, but may still be guaranteed by the Feds if you default.

Some are completely private loans (this are the ones with the worst interest rates and terms).

It's quite the confusing mess, and there's an issue of whether or not we "should" bail out students who have to have conferences with the Financial Aid office before signing most Federally backed loans. Then there's the issue of value. It is well researched that having a college degree means you will earn more over your lifetime than those who don't have one.

College education is like health care; the consumer is in a terrible position to make informed choices about the value of the school they choose to attend, and the fairness of pricing. They are usually just happy the kid got into the school of their choice and pay up.

Then there's all the things students are forced to pay for that have nothing to do with education; like subsidizing the sports teams. Most sports teams are money losers for colleges and universities, especially the big name teams. Very few earn a profit, most are subsidized by the students.

State schools have to deal with a further rip off: athletes on scholarships are often charged in state rates even if they are out of state students (most are out of state students).

These costs are shifted onto students. And athletic directors are good at sussing out new sources of revenue. When I was a student at a small university in North Dakota, the AD wanted the hockey team to get ice time, but there was no budget for it. Officially the hockey team was intramural. So the jocks campaigned to get themselves elected to the Student Government so they could take control of the clubs budget and re-direct most of the money to sports. I was on the student newspaper at the time and covered the SGA meetings. I reported heavily on the issue, which did not make me a popular gal with the jocks

I didn't keep track of the issue after I graduated, but I'm sure the following year the jocks got what they wanted once I was no longer there to keep them honest

Back on topic . . . .

I went to a major online university and was majorly overcharged. At the time I didn't realize how much I would end up paying for a degree that only added $1000/year to my salary at the community college. I had no way of knowing that at the time. I'll never recoup the cost of that degree.

It's held me back from getting my doctorate. I can't afford it, but without it I'll never be able to teach at the university level where I would make more money.

[AdminAssistant]

Another major problem for universities are the fucking stupid alumni associations and boosters. My school has had a laughably abysmal football season, so the boosters raised $6 million to buy out the coach's contract, so we could spend who knows how much recruiting a better coach. D'oh! 6 million dollars that could be spent on scholarships, fellowships, hiring more faculty, funding graduate students....who knows? But hey, next year we might have a winning season! 5 years from now we could get a bowl! Totally worth it! I really wish sometimes that universities were able to look wealthy alumni in the face and say, "Thank you for this donation to build a statue of yourself in the quad, but we're going to use the money to fix the air conditioning in the English building and update the computers we've had since 1996.

Online universities, like for-profit colleges (University of Phoenix and the like), are usually rip-offs, sad to say. More and more state-run 4-years are developing online and distance-learning programs that offer much greater benefits.

Panacea, wait for the doctorate. I wish I had. Universities just aren't hiring, and if they are hiring, it's for adjunct professors or lecturers. It's a little better in the sciences (including medical science) but not by much.

[HYHYBT]

Nice as this idea sounds, it does have a problem: if the government steps in and pays off *current* student loans, that creates the expectation that it will do so again in the future.

[Canarr]

As opposed to, giving banks bailout money?

[Crazedclerkthe2nd]

The problem I see with this is its kind of a slap in the face to all the people who have busted their asses to pay their loans. It would be the same as if the government paid a bunch of mortgage off to get people out of debt.

Financially responsible people do not deserve to be left in the cold.

Also, even IF the loans were forgiven that still wouldn't magically create jobs in fields that aren't really hiring.

[AdminAssistant]

It would perhaps be more feasible to adjust repayment plans so that those who are unemployed or underemployed don't have to chose between their loan payment and groceries.

[Panacea]

It would perhaps be more feasible to adjust repayment plans so that those who are unemployed or underemployed don't have to chose between their loan payment and groceries.

That's what the government is preparing to do. They're changing the repayment rules so that students with low incomes can pay lower payments, within their means, and the rest is forgiven after 20 years if their income does not increase sufficiently to pay it off (most people will pay off their loans because their income will rise enough to do so).

[gremcint]

I think there should be some sort of loan forgiveness for time working in the country in the field you studied in. really hard to administrate that.

[bara]

Thanks for the opinions.
I thought it was something worth looking at simply because it would free up a lot of capital for people to use on other endeavors, such as actually consuming and getting money back into the economy where it needs to be.

One of the biggest issues we are having is with banks and the like sitting on liquid assests instead of putting it back into circulation and I'm of the opinion that we need to get the money in motion again.

[Rapscallion]

It's true. A healthy economy is one where the money circulates, which is why there are major issues with the economies of several countries. Too much of it is residing in the pockets of a few people, and all it does it does is act as a magnet for more money.

Rapscallion

[bainsidhe]

The problem I see with this is its kind of a slap in the face to all the people who have busted their asses to pay their loans.

Hear hear! It may make me sound petty and selfish, but I'm pretty damn annoyed that I worked my ass off to pay off my loans early, yet sis makes the same wage as me and fritters it away, then wonders how she'll pay her bills.

Plus if all this funding was suddenly available to students, I imagine a lot of for-profit schools will take advantage and reap the benefits of increased attendance.

[protege]

Financially responsible people do not deserve to be left in the cold.

That's what pisses me off about student loans. I was able to pay mine off a couple of years after graduation. I was *damn* lucky to land a job right out of college. At the time, my car was paid for, and I was still living with my parents. I didn't have any bills for a long time...and whatever I made, went directly into paying off my school loans, and later...a new car. I was very careful with my money and paying off bills. Why exactly, should someone who isn't...be allowed to have their financial issues paid for by taxpayers? How the hell is that even remotely fair?

Case in point, my then-girlfriend got into money troubles, and had actually defaulted on her school loans. Somehow, that was forgiven by her lender. Did that mean she then had a job waiting for her? Nope. Any work she did (before moving 500 miles away and "disappearing" for six months) was part-time, and didn't pay very well.

Sure, forgiving outstanding loans might put a few more dollars into the delinquents' pockets...but at what expense? I have the feeling that they'll just repeat the cycle. If someone else is going to foot the bill, why not?

[guywithashovel]

Maybe they could work out some plans where people could get some of their loans forgiven if they do certain jobs. For example, teachers can sometimes get portions of their loans forgiven if they spend x number of years teaching in low income school districts. Maybe we could see if we could work out similar plans for people in other professions.

Right now, you can get some student loan forgiveness if you serve in the PeaceCorps or Americorps. Of course, if you're willing to give Uncle Sam some time after you finish college, you can get most if not all of your loans paid off.