Posted on 07/25/2014 5:42:54 AM PDT by reaganaut1
Ever since the obstreperous Occupy Wall Street protests of 2011, Americans have been getting an earful about the alleged crisis of student loan debt. Sensing a chance to appear both compassionate and pro-education, many lawmakers want to do something to ease the plight of indebted students.
Senator Elizabeth Warren, for example, is pushing her populist plan of allowing students to refinance their loans at absurdly low interest rates. President Obama recently expanded the touchy-feely repayment system so that students would never have to pay more than ten percent of their discretionary income for 20 years before the rest of the loan is forgiven.
And that is only ten years if the individual goes to work in a “public service” job. For more on Uncle Sam’s foolish generosity with our money, see this piece I wrote in May.
What about good old bankruptcy? Unlike other kinds of debts, the law does not permit students to wipe out their college debts by declaring bankruptcy. Should the law be changed?
(Excerpt) Read more at forbes.com ...
That’s one way but inefficient and diluted by other activities. What does Sallie Mae do with the loans? Who holds the paper? Any synthetic products related to that paper? CDS’s related? Someone get Blankfien on the phone. Surely GS can make a bundle on this... :-)
Too bad you didn't read the article. Let me summarize: if the student files for bankruptcy and succeeds, the burden of the debt then gets transferred to the institution where the student attended. This would force the institution to think and invest in each student. As of right now, there is no risk to any place of "higher learning" because just about everybody can get a federally backed student loan. These places know this, and water down their curriculum and inflate grades which keeps the student firmly planted in their seat and the money rolling in.
Here is the back story.
The student loan program has large component of fraud where unqualified students take out tens of thousands of student loans to go finger nail polishing school and other trade schools or private diploma mills. The students do little and often don't attend school at all and just use the loans as spending money.
In some cases the situation is pure fraud and the schools simply split the tuition with the students and take the money and run. In the real world no one would ever loan on these types of educational activities but standards have been lowered and affirmative action type incentivize granting loans to unqualified and fraudulent borrowers.
It's the Student Loan equivalent of the Sub Prime Mortgage lending that killed our housing market.
These scams are especially prevalent with various communities and demographics where Obama has strong constituencies
The rub comes when it's time to pay the money back. The recipients soon learn that the banks are serious about repayment and student loan debt cannot be discharged in bankruptcy .
People who ran up a huge student loan bill enrolling in Latisha's Academy of Urban Basket Weaving and used the $30000 for clubbing and living expenses now find they are and unemployable and saddled with a debt load that their EBT cards can't service and that they can't shake the debt via bankruptcy.
Now Obama wants to bail them out.
Yes, let’s reward those students who make bad decisions and attend schools they can’t afford. We’re already rewarding the illegals who don’t want to wait in line to immigrate legally.
Oh, sorry. I didn't realize this entire thread was a pointless circle jerk. Putting the colleges on the hook will never, ever, ever happened.
I think many would gladly sign up for three or four years and get rid of all the debt. Value given for value returned.
Who could argue with that?
Me. The government is terrible at managing anything. We don’t need to have masses of young would-be students learning how to work by learning how to live off the government.
Are you to young to remember CETA and other such counterproductive job initiatives in the past?
Why can’t you just let them work it out on their own—whether they work and go part-time to a community college, or whatever their resources and ingenuity?
The problem is also one of massive subsidies to middle and upper-middle-class students and their families to fund waste and frivolity for years and years.
It’s not just Worker Joe taking some classes from Phoenix.
Yep. If it did happen, it would just be an initial step to directly subsidizing and in effect nationalizing our entire higher ed system. ObamaCollege.
To fuel their ridicules marketing of these worthless degrees, colleges are now erecting plush student housing. In fact, one of the best investments in the housing industry now is in firms that specialize in building these facilities.
As opposed to other deep and meaningful threads that are of great importance and relevance to what, exactly.
It’s not just Worker Joe taking some classes from Phoenix.
Abuse of the system is wide spread at all levels.
Fraud and the rise of diploma mills and pseudo trade schools sucking up student loan dollars is a huge part of the delinquent and unrecoverable student loan debt.
Student loans have always been expensive and somehow previous generations managed to pay the debt off. Even the 1970 , students ended up $30k in debt if they funded their educations primarily via student loans. Obama is trying to bail out the Sub Prime borrowers who took the student loan money and wasted it and also the upper middle to wealthy students who borrowed a quarter million dollars to get a degree in Womyn's Studies, African-American studies, Hispanic Studies, Asian Studies, Queer Theory or other such made up, phony baloney degree from an Ivy League type school.
Bailing out these losers and spongers as Obama proposes will destroy the Student Loan system that for generations has allowed the middle class students whose parents cannot afford to pay for their schooling to get a college eduction.
Agreed that that’s where the worst of it is. But it’s also ruining the colleges, which humor unserious students with ever more expensive recreational facilities and it makes it too easy for students to graduate both ruined for real work and primed for financial ruin as well.
There should be less government support for student loans than there was in the ‘70s, too.
I agree. It rewards the irresponsible spenders and penalizes the responsible workers.
I think the colleges should be nationalized.
Allowing the option of my plan is not at odds with anything you have said.
Some people will never pay of their loans in the way you describe. Their entire lives would be that of a debtor in financial prison. Allowing them another option hurts no one.
Why would you be against that?
Oh hell, no!
Because it is a subsidy, it enlarges government, and it is not an appropriate role for government. As I described previously, government jobs provide counter productive/negative experience anyway.
“A student loan forgiveness scheme is going to win somebody an election. That is inevitable at this point IMO.”
Without question. The majority of student loan debt is held by working professionals; many of them with Master’s degree debts of over $50k. The first politician to say, “Vote for me and I’ll forgive your student loan!” is going to win millions of votes.
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