Posted on 09/19/2022 8:20:52 AM PDT by karpov
In The Student Loan Giveaway is Much Bigger Than You Think I argued that the Biden student loan plan would incentivize students to take on more debt and incentivize schools to raise tuition with most of the increased costs being passed on to taxpayers through generous income based repayment plans. Adam Looney at Brookings takes a deep dive into the IDR plan and concludes that it’s even worse than I thought. Here are some of Looney’s key points:
As recently as 2017, CBO projected that student loan borrowers would, on average, repay close to $1.11 per dollar they borrowed (including interest). Borrowing was often perceived to be the least favorable way to pay for college. But under the administration’s IDR proposal (and other regulatory changes), undergraduate borrowers who enroll in the plan might be expected to pay approximately $0.50 for each $1 borrowed—and some can reliably expect to pay zero. As a result, borrowing will be the best way to pay for college. If there’s a chance you’ll not need to repay all of the loan—and it’s likely that a majority of undergraduate students will be in that boat—it will be a financial no-brainer to take out the maximum student loan.
The data shows that roughly half of Americans with some college experience but not a BA would qualify for zero payments under the proposal, as would about 25% of BA graduates. However, the vast majority of students (including more than 80% of BA recipients) would qualify for reduced payments.
[A] lot of student debt represents borrowing for living expenses, and thus a sizable share of the value of loans forgiven under the IDR proposal will be for such expenses
(Excerpt) Read more at marginalrevolution.com ...
This was based on polling to gain the most advantage for the 2022 Nov election. Until that happens, we won’t know how well the plan will turn out. If it works, you’ll see a second round in 2024.
I haven’t heard anything about how they plan to actually implement it.
I worked/paid my way to earn a STEM degree.
I’m not inclined to help out a deadbeat whose degree only gave them the life skills to make coffee at places I don’t go to (I gave up coffee years ago).
Maybe if they quit electing Democrats we might have some common ground. But I don’t think that is possible. They are just too stupid.
Bkmk
And that’s the problem with this. They’ve now created an expectation that college-debt will be forgiven any time that political pressure is brought to bear — eventually this will be every presidential election cycle. Do you think RINO’s will ever oppose any of these Democrat tax give-aways to Democrat constituencies? Me neither.
If you click through o the article there is a table with the degrees of the least subsidized majors shown. All are listed as BA degrees. I would hope that most of all those STEM graduates got BS degrees.
Possible the authors just don’t know as much about our education system as they think.
Here’s how I think it should work...
Colleges have a loan fund, the amount is set, and can’t be changed. The fund is based on # of students that would need a loan x 10 years.
The student used the loans for 4 years of college and then the years of payback. The loan payments are a set percentage of their paycheck. say 8%. If the student gets a good paying job after college, the loan would be paid of quickly. If not, the college would soon run out of money to loan. This creates an incentive for the college to rid themselves of courses such as “intermediate, underwater basket weaving”.
What do you think?
The loan payment would come out of the paycheck no matter what job they have. In their field of study or not.
I noticed that, too.
None of those would normally be a BA, though a fellow post-grad I attended with had a BA in Mathematics.
Here’s how I think it should work.
All loan forgiveness should come from the trust funds of the Universities and Colleges.
That is because the author of the article has a journalism or liberal arts degree. They are not that smart. They thought everybody got a BA.
When I was at SU in the 1980s there were a lot of rich girls from Long Island that were sent there by Daddy not necessarily to get a degree. They were sent there to find a husband.
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