I predict a few things will happen:
1. Bankruptcy laws currently make it very difficult to discharge student loan debt. I predict that these laws will be changed, so that students can get these loans discharged in bankruptcy.
2. There will be additional programs to have debts forgiven if students do certain work, such as teaching in inner city schools, rural schools, or working in fields such as public health or social work.
3. There will be new laws so that loan repayments will be tied to income. Instead of having to pay $XX amount per month, a sliding scale will be in place, so that students who go into fields which don’t pay well will see their monthly payments adjusted downwards.
4. Interest rates on these loans will be permanently reduced at some point to a low level, say 3%, rather than being allowed to change based on interest rates in the financial markets.
5. Obama and Democrats will try to force through changes such as these in some comprehensive bill, thousands of pages long, which nobody will have time to read. And it will be said to be some emergency which has to be done right now. Nancy Pelosi will helpfully say we have to pass the bill to find out what’s in it.
Let me add, that your list implies that no private entity will EVER consider granting student loans under these unfavorable conditions. That means that college education will increasingly be financed by and manipulated by the Federal Government. Look for near indentured servitude to the government for loan repayment to be increasingly common in the future.
3 already exists. It doesn’t matter what your job is just what your income is. IIRC there are numerous levels you can apply for depending on your income.
Or we could tie professor’s income/retirement to the salaries their graduates earn.
If you can’t teach the kids a useful skill, your retirement package is going to look mighty thin...
The undue hardship standard in place at present is very difficult to meet. I think it will be a revision in the code, along with some nudges from places like the 9th Circuit, that softens this rule.
2. There will be additional programs to have debts forgiven if students do certain work, such as teaching in inner city schools, rural schools, or working in fields such as public health or social work.
The Obama administration has implemented a program which allows a student to pay for 20 years, some portion of their disposable income (however that is calculated), and then have the remaining balance forgiven. You would think that 20 years would cover payback of most borrowing. But the examples I have seen (assume, for instance, Brown undergrad, Yale or NYU law or medical school, etc.) show that even after 20 years, the amount forgiven can be significant. Remember, because the vast majority of student loans are federally guaranteed this is a zero sum game between the borrowing student and the taxpayer in general. The less the student pays, the more the taxpayer pays, and vice versa.
3. There will be new laws so that loan repayments will be tied to income. Instead of having to pay $XX amount per month, a sliding scale will be in place, so that students who go into fields which don’t pay well will see their monthly payments adjusted downwards.
Yup.
4. Interest rates on these loans will be permanently reduced at some point to a low level, say 3%, rather than being allowed to change based on interest rates in the financial markets.
Yup. Fixing it at one number in the mindset of the public means less recognition that the cost of funds actually fluctuates, and that fixing the rate means subsidies to some and surcharges to others. Why shouldn't the rate reflect the alternative use of those funds at the time they were borrowed by the student?
5. Obama and Democrats will try to force through changes such as these in some comprehensive bill, thousands of pages long, which nobody will have time to read. And it will be said to be some emergency which has to be done right now. Nancy Pelosi will helpfully say we have to pass the bill to find out what’s in it.
You got it.
“We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set. We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.” (emphasis added)
President Obama Colorado Springs, CO July 2, 2008