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Message
re: Trump’s plan for student loans is solid
Posted on 5/12/19 at 8:14 am to Lsujacket66
Posted on 5/12/19 at 8:14 am to Lsujacket66
Right. Accountability is key. Paying 4-5yrs of $55K/yr tuition to get a teaching degree is obviously dumb. The government supporting such behavior is just as dumb. So I like some of the proposals.
HOWEVER:
This coming year, the federal undergraduate student loan interest rate is 4.53%. Federal rates for graduate student loans are 6.08% and parent loans are 7.08%
Meanwhile, the Fed will lend money to banks at a rate in the 2.25% - 2.5% range, the highest rates they've been charged in a decade.
Now I understand all about default risk. But given the fact that to address default risk, the Government could run loan repayments thru the IRS, with commensurate late payment fees, levies, and other penalties to minimize nonrepayment risk, why should a family making regular-on-time payments be assessed 300% the rate banks are for federal money?
HOWEVER:
This coming year, the federal undergraduate student loan interest rate is 4.53%. Federal rates for graduate student loans are 6.08% and parent loans are 7.08%
Meanwhile, the Fed will lend money to banks at a rate in the 2.25% - 2.5% range, the highest rates they've been charged in a decade.
Now I understand all about default risk. But given the fact that to address default risk, the Government could run loan repayments thru the IRS, with commensurate late payment fees, levies, and other penalties to minimize nonrepayment risk, why should a family making regular-on-time payments be assessed 300% the rate banks are for federal money?
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Posted on 5/12/19 at 8:14 am to weagle99
I don't think for-profit schools are inherently evil.
But the truth is that the majority of crippling student debt is concentrated among a very small segment of borrowers: middle-aged students who take out substantial amounts of loans to pay for for-profit/online schools to attempt a career change but who (1) fail to graduate or (2) fail to turn their investment into advanced career prospects.
If the Dept of Ed is willing to agree to back $60-80k in loans to these schools, the schools need to demonstrate they are doing everything possible to ensure students graduate in a good position to advance their career.
But the truth is that the majority of crippling student debt is concentrated among a very small segment of borrowers: middle-aged students who take out substantial amounts of loans to pay for for-profit/online schools to attempt a career change but who (1) fail to graduate or (2) fail to turn their investment into advanced career prospects.
If the Dept of Ed is willing to agree to back $60-80k in loans to these schools, the schools need to demonstrate they are doing everything possible to ensure students graduate in a good position to advance their career.
Posted on 5/12/19 at 8:14 am to weagle99
For-profit schools are not bad.
For-profit schools exploiting bad government policy is very bad. Trump’s proposals are meant to make that more difficult to do.
For-profit schools exploiting bad government policy is very bad. Trump’s proposals are meant to make that more difficult to do.
Posted on 5/12/19 at 8:20 am to Lsujacket66
I like that a lot. This is going to cause real cognitive dissonance for people who hate Trump as most of them probably support most of these proposals. This is the type of situation where good legislation should get done. You have a President who is unpopular with a large group of voters and an election coming up. He should want to do bipartisan legislation to shore up his support. I’m afraid things are so polarized though that groups will cut off their nose to spite their face.
Posted on 5/12/19 at 8:22 am to weagle99
The government is involved because there is value to society in having a well educated work force.
Posted on 5/12/19 at 8:28 am to LSU2ALA
quote:
value to society
This argument can be made for almost everything in society. Wrongly IMO.
Posted on 5/12/19 at 8:28 am to Lsujacket66
I like the idea with getting colleges to have skin in the game for unpaid debt. Basically tie in the responsibility for the loans with the ability for the graduate to find a good job where the debt meets a threshold to income.
For example: if a college throws a bunch of bullshite electives and lock step scheduling into the curriculum extending the students stay causing them to take on more debt only to graduate and get a job where the debt/income ratio is high, the college would be on the hook for a portion of that debt.
Fees, books, housing, and all the insane other costs that continue to get thrown in by schools that have zero incentive to control them as they know the money is guaranteed. It’s an interesting plan. Obviously the student/graduate would have to meet certain metrics as well. But it’s a bold move to get higher education to let go of the golden goose.
For example: if a college throws a bunch of bullshite electives and lock step scheduling into the curriculum extending the students stay causing them to take on more debt only to graduate and get a job where the debt/income ratio is high, the college would be on the hook for a portion of that debt.
Fees, books, housing, and all the insane other costs that continue to get thrown in by schools that have zero incentive to control them as they know the money is guaranteed. It’s an interesting plan. Obviously the student/graduate would have to meet certain metrics as well. But it’s a bold move to get higher education to let go of the golden goose.
Posted on 5/12/19 at 8:33 am to elprez00
quote:
Basically tie in the responsibility for the loans with the ability for the graduate to find a good job where the debt meets a threshold to income.
For public schools this responsibility ends up falling back to the taxpayer, no?
I don’t see why schools should be responsible for people’s life choices.
Or maybe I take an intentionally poor paying job to get off the hook for loan repayment.
Posted on 5/12/19 at 8:37 am to weagle99
I don't see anywhere in the proposal where loans are forgiven based off employment, but rather schools are penalized.
Posted on 5/12/19 at 8:38 am to Lsujacket66
Here's my proposal:
1. Go to a college that's less expensive.
2. Major in something that has a good track record for paying salaries high enough to justify the cost of getting a degree in it.
3. ????????
4. Profit.
Anyone spending $100k for a Bachelor's in something as widely available as General Business or something utterly useless like Gender Studies needs to be held to paying that money back as a lesson in what poor financial decisions look like.
1. Go to a college that's less expensive.
2. Major in something that has a good track record for paying salaries high enough to justify the cost of getting a degree in it.
3. ????????
4. Profit.
Anyone spending $100k for a Bachelor's in something as widely available as General Business or something utterly useless like Gender Studies needs to be held to paying that money back as a lesson in what poor financial decisions look like.
Posted on 5/12/19 at 8:42 am to Boatshoes
quote:
(1) Get the government out of it. (2) Allow student loans to be discharged in bankruptcy forcing lenders to vet the school, course of study, and academic qualifications of the borrower.
Right, stop loaning money on courses of study that have no monetary value potential, to people who have no credit, or grasp how hard money is to come by.
Posted on 5/12/19 at 8:45 am to weagle99
quote:
don’t see why schools should be responsible for people’s life choices.
Or maybe I take an intentionally poor paying job to get off the hook for loan repayment.
You aren’t off the hook. The intent isn’t for you to find a way not to repay. The intent is to make schools start getting serious about controlling the cost of higher education
Posted on 5/12/19 at 8:54 am to auggie
My take is look at it from a personal point of view. Would you loan money to the A student who wants a degree in Engineering or wants a dental, or medical, or vet degree? The answer would be yes and you would still want to see the grades every semester to make sure your loan is solid.
Would you loan money to a kid who wants a degree in gender studies or one of those other useless degrees? No.
History, geography, psychology and those type degrees - Not worth investment bucks unless the kid is really smart and can contribute to the field. Otherwise they're just a minor.
Would you loan money to a kid who wants a degree in gender studies or one of those other useless degrees? No.
History, geography, psychology and those type degrees - Not worth investment bucks unless the kid is really smart and can contribute to the field. Otherwise they're just a minor.
Posted on 5/12/19 at 8:56 am to mauser
quote:
My take is look at it from a personal point of view. Would you loan money to the A student who wants a degree in Engineering or wants a dental, or medical, or vet degree? The answer would be yes and you would still want to see the grades every semester to make sure your loan is solid.
Would you loan money to a kid who wants a degree in gender studies or one of those other useless degrees? No.
All of that would be labeled racist and sexist in our current society.
Posted on 5/12/19 at 8:58 am to elprez00
quote:
controlling the cost of higher education
Why do the costs need to be controlled?
Higher Ed isn’t grade school.
Given enough time, and no government interference, the market will correct all of this on its own.
Posted on 5/12/19 at 8:59 am to weagle99
quote:
I don’t see why schools should be responsible for people’s life choices.
I don't see why anyone should be responsible for other people's life choices but those on the left sure as hell do. Do you?
Posted on 5/12/19 at 9:02 am to weagle99
The difference with this particular action and “almost everything in society” is that the previous poster omitted a key phrase from his statement. Namely, “above and beyond the buyer”.
For example, you are correct that buying a pencil has value to society in the sense that buying the pencil benefits the purchaser and the purchaser is a part of society. So the benefit of the purchase of the pencil is a benefit to society. What makes education a special case is that there is value in education above and beyond the value of the individual purchaser. When a student buys a pencil, it is only the student and the pencil producer who benefit. But when a student buys an education, there are spillover benefits to a broad cross section of larger society. In economics, we call this a positive externality. And when a good contains a positive externality, the market left to its own device will always under supply that particular good. Which is why government can improve market outcomes in the education market.
But note that I said government can improve the market outcome, not that the government does improve the outcome. It still takes good policy to get that improved result, and our policies are not currently meeting that requirement. Meaning they are actually making the market even worse off. But that doesn’t mean we need government out of education; it means we need to enact better policy to realign the incentives of the market. And Trump’s proposals are a step in that direction.
For example, you are correct that buying a pencil has value to society in the sense that buying the pencil benefits the purchaser and the purchaser is a part of society. So the benefit of the purchase of the pencil is a benefit to society. What makes education a special case is that there is value in education above and beyond the value of the individual purchaser. When a student buys a pencil, it is only the student and the pencil producer who benefit. But when a student buys an education, there are spillover benefits to a broad cross section of larger society. In economics, we call this a positive externality. And when a good contains a positive externality, the market left to its own device will always under supply that particular good. Which is why government can improve market outcomes in the education market.
But note that I said government can improve the market outcome, not that the government does improve the outcome. It still takes good policy to get that improved result, and our policies are not currently meeting that requirement. Meaning they are actually making the market even worse off. But that doesn’t mean we need government out of education; it means we need to enact better policy to realign the incentives of the market. And Trump’s proposals are a step in that direction.
Posted on 5/12/19 at 9:11 am to funnystuff
quote:
When a student buys a pencil, it is only the student and the pencil producer who benefit.
Not to nitpick too badly, but there are numerous other entities in the pencil producer’s supply chain who benefit as well as shipping and delivery. There are economic ripples in society from almost everything we do.
quote:
But that doesn’t mean we need government out of education
I respectully disagree with this. There is nothing I see in the foundation documents of our Federal government that empower it to be involved in higher education. States are another discussion.
Full disclosure: I want to see the Department of Education eliminated.
Posted on 5/12/19 at 9:11 am to LSU2ALA
quote:
he government is involved because there is value to society in having a well educated work force.
Why is the federal government involved? We certainly were able to educate people in this country prior to 1979.
ETA: Ditto with what weagle said above about the Department of Ed.
This post was edited on 5/12/19 at 9:13 am
Posted on 5/12/19 at 9:11 am to weagle99
You don’t see why schools should share in any part of the responsibility for exploiting naive 18 year olds?
And taking a poor paying job would not get you off the hook. The argument is that schools should take a portion of the responsibility for knowingly exploiting kids, not all of it. Meaning the student still bears a portion of the responsibility as well, so taking a poor paying job would presumedly still be more costly than a high paying one.
And taking a poor paying job would not get you off the hook. The argument is that schools should take a portion of the responsibility for knowingly exploiting kids, not all of it. Meaning the student still bears a portion of the responsibility as well, so taking a poor paying job would presumedly still be more costly than a high paying one.
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