Affordable as in the way it was just a couple of decades ago in relation to salaries.
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I think many, if not most, of us would be willing/happy to help someone that needs that extra boost. But not someone that has a history of repeated bad decisions…and all too often it seems, we know many, many more of the types that made bad decisions and want the bail-out/rescue instead of the ones that need a little one-time help.
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That is overstretch. I don’t think any 17 year old knows when takes loans and realized what he/she is up to. No one would educate them the degree you like to pursue would only earn you this much based on labor dept statistics, rather just some private institute marketing sales pitch.
17 years are expected to make bad decisions, it is unfortunate that we grown-ups lure them into the education that is bound to earn less.
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The US government could limit students to just a $5000 loan for each year. No private student loans (don’t allow them to be called student loans, just unsecured private loans), no Perkins or state or institutional loans. Will that prevent a lot of students from going to school? You bet.
The program could require a student to pay off undergrad loans before getting grad loans. The most any student could have out at a time is $20k (4 years at $5k/per). That will clear up the ‘loan problem’ but IMO there would be a bigger divide in those with a college degree and those without one.
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Agree, this is no different from families who live below their means & sacrifice for years to save into a 529 only to find their kid now does not qualify for financial aid. In many cases, parents who live a debt free lifestyle will find it comes back to bite them when their kids apply for financial aid. If they were to have spent that money on themselves, have debt or a house they cannot afford - they are rewarded by their kids receiving a “robust” financial aid package. This is the American way - to reward those who make what was seen as “poor choices” by older generations. Today this leads to reward because it buys votes. Those who lived without will get to pay for their own kids AND everyone else through their tax dollars. It is wealth redistribution. Nothing is “free” - it just means you get to pay more in taxes, whether you receive any benefit or not.
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Since there are only a few colleges (mostly private) that meet full need and those are very hard to get into, what more often happens is the student is admitted to the school with a financial package that includes some need based school grants, loans, and probably a COA that the student can’t afford. That student doesn’t get to go to that dream school if the parents have an average income and no savings.
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PSLF is available to any borrower who works in a job with a qualified organization. 501©(3) organizations are qualifying employers, and the job itself is irrelevant (the janitor, if actually employed by the organization, qualifies). Unfortunately, like everything that the government does, the rules associated with PSLF are a bit daunting. It is the same with income driven repayment plans - there should be no reason to default if the borrower has low income, but some do simply because it can be difficult to work with the loan servicers. I know this because I was a financial aid director, and I worked very closely with my students to help them with repayment options and issues. Streamlining repayment programs, making them more user-friendly, would be a huge help to many. There really are things that could be done right now, without needing Congressional approval, to make things better. Unfortunately, the Department of Education seems to thrive on making things more difficult than they should be (similar to the confusion Medicare presents for older citizens).
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“to point out the fact that loans are necessary evil for low SES” Yes, thank you for doing so.
Obviously, I don’t think a young person that doesn’t take on debt to go to college won’t be doing anything else. Perhaps I hadn’t made that clear. But there is a tendency to blame young people for whatever path they choose or their lack of paths.
Only 30% of the 4 million young people turning 18 qualify for the military. Veterans earn their education benefits, but still face challenges utilizing them. Wiser people than me who have served often post not to join the military solely as a way to pay for college. I know people that earned their education debt free through the military, but that’s not a viable path for most people.
Most people (69%) take on student debt to go to college. Why don’t they pay cash? Usually because they don’t have enough cash. Why don’t some people pay back their loans? Usually because they don’t have enough cash.
If someone heads directly into the work force but ends up with low wages we blame them for not getting a good education and investing in themselves. The median wage for those with a hs diploma is $38,792. Even ‘some college’ has a $43,316 median wage.
If they start a degree and have difficulty finishing the question is why didn’t they pick a degree they could finish.
If they complete a degree they could finish successfully the question becomes why didn’t they get a different more marketable degree.
If they go into debt to cover room and board to take advantage of a scholarship the question becomes why didn’t they use their local option and live at home.
If they stay home and help support their families the question is why didn’t they get more involved on campus, do more internships, build their network.
If they wanted to go to college why didn’t they apply themselves more in high school and get a full ride scholarship, etc…
Those questions are distractions from the simple fact that some people are and will continue to struggle with their student loan burdens.
People struggling today with loans aren’t free riders. They are people who have benefited the least while investing the most they were able. A free rider is someone like me, who has benefited the most while investing the least - as evidenced by the fact I was able to take out small loans at a time when education was cheap, wages were high and I paid them off so easily and so long ago I can’t even recall the exact amount.
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Perkins loans have ended.
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So, the government decides to forgive 10, 20, $50,000 in student loan debt tomorrow. All that had current student loans are happy. Then what? Do the kids that took out loans this year get that same amount? Do they get to borrow up to that amount in the coming years without having to repay? Do next year’s students get a pass on a similar amount? What’s to stop the cost of college from doubling in the next 5 years?
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Grown ups lure them into taking loans? Portraying these students as victims is a bit of a reach. No one tells a student what to study. This isn’t a ponzi scheme. They are receiving an education in exchange for the loans they take out. I agree that there should be better education about what taking out loans may entail on the back end and perhaps more transparency is needed by the colleges when they are packaged as part of financial aid and presented to the student. But it seems to me it’s the same issue: everyone is “excited” about “free” money but when the bill comes people are suddenly upset about paying.
When I got my first mortgage I was a bit scared by that big number on the financing disclosure that showed the total amount I’d repay over 30 years. These students need to understand what the repayment schedule looks like. I didn’t complain after 5 years that it was unfair that I had maybe bitten off more than I should have so the government or private lender that financed my loan should just forgive it.
And is $30,000 in debt really so egregious in exchange for a college degree? People pay $1200 for an iPhone they upgrade every couple of years.
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I also want to see permanent fix, not just band-aid solution, how to prevent this from happening in future.
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Maybe Income Share agreements? I’m not an expert, but I’m intrigued by the premise. Introduction - Back a Boiler - Purdue University
The average college degree can also be obtained for a variety of costs. Not taking into account merit aid or scholarships there is a wide range of costs to getting say a degree in accounting. The local cost to me can range from option 1: $9,000 total for the first two years at a community college and then another $17,000 total is n tuition for the next two years at a local state university ($26,000 total). Option 2: $34,000, 4 years tuition at the local state university. Option 3: $100,000, residential experience and tuition at the in-state flagship. Option 4: $240,000, residential experience and tuition at a local private university. Etc, etc.
I would say that many students that chose to go into debt took on more debt to have a different college experience that wasn’t totally necessary. We’d all love to have the nicest things in life but they do come at a cost. I’m sure my child would love to go to the an Ivy league school. My family’s budget, with saving since he was born, is the in-state flagship. That’s much more than my parents could afford for me. I worked my way through community college. I decided to make my children’s education a priority and saved for that.
Should we forgive loans of students that decided they had to have an extravagant college experience and took on debt to make that happen? There needs to be some limits and common sense here.
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Maybe I’m in the minority, but my kids really had nothing to do with deciding on loans. We told them what they could/would take (only whatever subsidized we qualified for). They both had to do an interactive quiz about it, which pretty much laid out what they were doing and what it was going to cost them afterwards. Not sure how long that’s been a requirement. How many 17 year olds are really making these decisions on their own? It can’t be a huge number. Any private loans are taken by parents - so that’s on them, not the kid.
Any subsidized loans are taken by parents? What does that mean?
Very few institutes do good job to educate students before starting college journey. Those are outliers. Majority of institutions doesn’t do the same. Who runs institutions? Grown-ups.
Mortgage: It is not same as student loan, because the mortgage has an underlying asset, student loan has nothing. As a lender it is easy to do risk analysis with mortgage than student loan. For mortgage you can do refinance if you had better interest rates than what you committed, you can sell house if no longer affordable or need to downsize.
Students loans, you can’t sell the degree.
Student loan doesn’t have a one solution fix, loan forgiveness is just one piece of puzzle, but also how to stop predatory univ who charges arm and leg for a lemon degree that has no use. Colleges are smart to buried them under common data set that barely anyone understands or pay close attention to, reason is colleges have no incentive in educating students about it. How one can avoid this rolling ticking time bomb from blast in future as well.
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The other thing that’s ridiculous is that almost all entry level jobs require a bachelor’s degree now. I graduated with an associate’s degree, and my parents thought that was good enough so no bachelor’s for me (took me 10 years to pay the AA loans off). Luckily I got a job before bachelor’s were required. I worked my way up the ladder because I was a hard worker and self educated myself in my field. When I quit to raise my kids I wasn’t far from six figures. I ended up homeschooling, so by the time I went back to the workforce, it was extremely hard to find a job in my field (marketing). Even admin asst jobs were hard to find without a degree. But I did end up finding an admin job at a small, local company. It was a hit to my ego, but we needed the income with two kids heading to college and almost no savings since I’d been out of the workforce so long. I proved myself to be a good employee, ended up creating a marketing position, and am earning a decent salary, though much less than what I was making before. And I’m staying put because without the 4-year degree it’s likely I won’t find anything.
All that to say, there are a lot of jobs that never used to require a degree that still probably don’t need one. Even kids with a 4-year degree need on the job training to learn. Why companies won’t give a chance to a hs grad who is a hard worker and train them up, I have no idea. If we did, fewer would choose to go to college.
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That should’ve said private.
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Agree with parental responsibility part, not every parents (should I say Grown-up) take that responsibility seriously either. Single parent is most likely working multiple jobs to meet ends. Low SES, parents themselves won’t even understand the nuiances of college finance, how would they educate their children?
Look at the news just broke, $15 minimum wage won’t be in stimulus bill. Who is hurting by that? Not the college degree guy. Those minimum wage jobs employees do multiple jobs to get to living wage. Those people don’t have weekend off. When those kids goes to college, they have minimal support system available and more likely to make bad decisions.
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