Posted on 06/08/2019 3:29:53 AM PDT by reaganaut1
The U.S. student loan system is broken.
How broken? The numbers tell the story. Borrowers currently owe more than $1.5 trillion in student loans, an average of $34,000 per person. Over two million of them have defaulted on their loans in just the past six years, and the number grows by 1,400 a day. After years of projecting big profits from student lending, the federal government now acknowledges that taxpayers stand to lose $31.5 billion on the program over the next decade, and the losses are growing rapidly.
Meanwhile, four in 10 recent college graduates are in jobs that don’t require a degree, according to the New York Federal Reserve. And many American colleges are dropout factories: At more than a third of them, less than half of the students who enroll earn a credential within eight years, according to the think tank Third Way.
The U.S. is shoveling more and more money into a highly inefficient system that, polls find, Americans are increasingly dissatisfied with. College tuition has soared 1,375% since 1978, more than four times the rate of overall inflation, Labor Department data show. The U.S. now spends more on higher education than any other developed country (except Luxembourg)—about $30,000 a student, according to the OECD. Meanwhile, college presidents are being handsomely rewarded for the success of their enterprises: Seventy of them, including a dozen at public colleges, earned over $1 million in 2016-17, according to the Chronicle of Higher Education.
How did we get here?
The student loan system was built in the 1960s on the overarching belief that higher education is a safe and worthy investment for both society and the individual. At the time, the first children born after World War II—the baby boomer generation—were beginning to graduate from high school and enter college.
(Excerpt) Read more at wsj.com ...
Great summary on that last. We are turning our young into indentured servants. I do see quite a bit of awareness on this by younger folks over at r/The_Donald, FWIW.
Correct. The growth of college tuition parallels the the increased cost of healthcare in the us.
Bingo! Greedy leftist colleges with billion dollar endowments while they continue to collect blood from turnips.
I’m for getting the government the heck out of just about everything.
Especially the Educational Industrial Complex.
has anything to do with the fact that advocates of free college tuition and loan forgiveness are also left wing.
Sounds like an "un-endless chain", as one pyramid marketer once explained it to my brother listening to his talk.
We are in agreement.
Where did I say ‘wipe out a trillion dollars of debt’?
You are free to disagree with me, even vigorously disagree. But, do *not* twist my words.
What I said was we have to write *some* of it off. There are times when collection costs exceed the balance due. Anyone with business experience understands that.
The way the repayment system is structured right now is gentle on borrowers, but, very cumbersome. It’s costing us a lot of money to send out bills every month for $0, or $15, or $35 payments. All of those payments have to be processed, posted, and, hopefully; you get the idea.
Much of the evaluating and collecting is now being done by private companies, eg NelNet, Naviant, etc, under contract with the government. They’re somewhat more efficient. They take a cut of every cent collected. Thus, they have to be monitored closely to make sure they aren’t hinking the numbers. They have every incentive to stick borrowers with a higher payment that that for which they are eligible. It happens, collection agents being what they are.
There was a push a few years ago to fix the massive default rate. Hence, the kinder, gentler collection process. There are now two pathways out of default: rehabilitation or consolidation. The differences are not important for our purposes.
In either case, the borrower makes a determined payment to a collection agency for either six or nine months. At the end of that term, the default is *cured*. The loan is then transferred to another collection agency, aka *servicer* in regular repayment status.
The big carrot on the end of the stick for borrowers is FICO. Depending on whether the borrower went rehab or consolidation, their FICO is affected. If the loan is rehabbed, the default is completely removed. If it’s consolidated, the default remains, but shows as “current”.
What nobody tells borrowers is that when their loans go into regular repayment status, they show up on their credit reports as brand new debt.
That is the student loan collection process as it currently stands. A lot goes into calculating and monitoring incomes to establish repayment amounts. President Trump’s 12% would streamline that.
Trump would also take out the taxpayer subsidies of the “public service” borrowers who get their loans forgiven.
The goal of all this was *not* to recoup taxpayer money. Congress is well aware that will never happen.
They wanted to be able to wave a bunch of numbers around and boast about how many defaults they cured. That foams the runway for more funding.
I think all of you may be barking about the wrong word.
Try “Otiose” - producing no useful result; futile
Pronounced: “OH-she-ohss”
“Odious” means hateful or repulsive.
Nobody starts their own independent practice any more after finishing medical training because they are already in debt up to their eyeballs.
Thus a whole industry subsumed by government.
Next the government requires the doctors to do what they want: Ask about guns, etc. etc. Ask about spirituality. Ask about how you feel about gays, Trump, anything, to seek out unstable potentially mentally ill individuals.
Next force the doctors to weaponize psychiatry, especially addiction therapy.
Doctors become agents of the STASI.
Hmmmm.
Anything like that ever happened before?
there are 200 billion in endowments in the top ten endowed schools.
Not to mention the value of the properties at most all schools.
Liquidate and pay!
I presume those posting here like Democrats — “Oh, look, there’s a big pile of money in college endowments, let’s take it, and if there is no legal reason to take it, let’s pass a law authorizing us to take it!” — are looking simply looking for their or their family member’s debt to miraculously be erased.
____________
no a@@hat.
There are predatory practices and the education-industrial establishment connived with the government to asset strip and mortgage the future of our children.
They are paying their fines by asset stripping them to pay these exhorbatant fees that they charged.
That, sir, is an outstanding description.
I have seven kids, and I went to college and medical school (long ago)/
So far, I have three kids with bachelor's degrees and a college junior, with zero loan debt. My Dad paid for college, I paid for medical school, zero debt. I'm sure college will become "free" right after I write the last check for kid #7.
I say that only to show that I have no personal reason to gripe about the system or to favor loan forgiveness.
But you're right - the scope and nature of the "student loan" scam, once you've bumped into it (four times, so far!) is disgusting.
Most of the objections here are pragmatic, and wrong. Degrees aren't "worthless" - I was an English major, and I learned more about human nature and people in danger than I ever did in medical school. My three graduates all have liberal arts degrees, all are employed (not at Starbucks), and all are better people than they were in high school because of their educations.
There are students for whom post high school education IS worthless, and they shouldn't be going to college.
But they have to, because businesses can't IQ test applicants (Griggs v. Duke Power Co., 401 U.S. 424 (1971)), and from then until about five years ago, the ability to get a bachelor's degree was a reasonable replacement (except of course for cost and the wasted four years).
What has happened now, of course, is that this replacement for IQ testing has lost its value, because now anyone can go, basically for free (except those pesky loans), grading and failing to confer degrees is "racist", and the cost is skyrocketing far beyond the dollar value, while the personal improvement value is falling, because 1) everybody goes and 2) the intellectual challenge is being eliminated, again, because colleges "can't discriminate" - when discrimination (smart and future oriented vs. stupid and lazy) is their entire purpose.
Of course, the indoctrination is terrible - but it's worst at the high end, and the Ivies + Stanford and Duke are training for the ruling class, which is a whole OTHER subject - if Johnny and Jane want to run the government or make a fortune FACILITATING the government as lawyers and lobbyists, becoming indoctrinated in leftism is the price of entry, and in dollar terms, is MORE than worth it. Of course, it's also social carcinoma - but that isn't the main problem with the loan system.
no taxpayer payment.
take assets from the eduction industrial complex
It will pay it off within a year.
NIce! I was an English major.
But actually, it's both.
-——Nobody starts their own independent practice any more after finishing medical training ——
Because in the present complexity of the health care continuum a private practice is not viable. The output of the continuum is superior healthcare to that of a one man private practice.
I don’t know how to fix the current problem but I know how to fix it in the future. Set a national ceiling on tuition, say at $6,000 per student per year. Any and all tuition and fees an institution charges above the set ceiling has to be funded by the institution. The key here is these loans must be fully dischargeable in bankruptcy court. Then the schools are on the hook for the ridiculous tuition that student pay now-a-days.
THAT, sir, is an hypothesis, and from the front lines, I can tell you that the experimental results are very much in doubt.
Outstanding! Where can I send a contribution?
Well, in my case at least, you would be wrong.
Classic Soviet/Marxist theft. The vast majority of endowment funds are at the top tier of schools that have had nothing to do with this.
THere is less than zero reason to take assets from colleges without there being a legal basis, with them taken to court.
Even if there were a basis for taking such assets, the last place those assets should be transferred to is those who already had a big spring-break holiday on the taxpayers’ dime and were stupid enough to waste money on student loans they didn’t have the intellectual capital to make good use of.
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