That sounds like free money. If they can get some of the principals waived, it’d be an unintended, but undeserved, home run.
Personally yes, it is a undeserved, home run as fortunately elder one is CS major and makes enough out of internship to support his brother as well (i know it sounds too good be true). However everyone with students loans have not studied the fortunate majors.
Usually when there is an executive order granting a benefit there is a starting and ending date for those included in the order. For example, DACA was signed in June 2012 but one had to have lived in the US since 2007 which prevented people rushing into the US to qualify. Many amnesty orders have a ‘by this date’ requirement.
I imagine if there is a forgiveness order, it will be for loans already funded, not for those being funded at the time of the order (or post order).
I’m also interested as to whether student debt forgiveness can be achieved by executive order. My initial reaction after some quick research is it’s a gray area that will be subject to legal challenge.
The US Government became the direct federal student loan lender in 2010 in conjunction with the passage of the Obamacare legislation. So loans originated after that and held on Treasury’s books are governed by the Federal Credit Reform Act. My guess is that either the Treasury Secretary or OMB have the ability to forgive loan principal or accrued interest under that legislation.
Anyone who say consolidated their Stafford loans through a private originator/servicer prior to that time is likely out of luck as those guaranteed loans are inside securitization transactions with third party trustees/investors.
But if people want to get rid of the tax consequences of forgiveness of indebtedness income, that would likely take congressional action to amend the IRS code.
Major in something that pays a lot of money. End of discussion. If you major in xyz studies that does not equate to a career that is on you. All of these ridiculous degrees nowadays that do not translate to a job, the taxpayers should not be funding.
5 Likes
Although some majors have little in the way of major-specific job prospects (hence their graduates compete for the lesser paid “generic bachelor’s degree” jobs unless they have advantages not related to their majors, like connections), majors which are associated with better paid major-specific job prospects are not always, since there can be economic or industry downturns. The frosh who chose to major in computer science in 1998, civil engineering or architecture in 2005, or petroleum engineering in 2012 graduated straight into the unemployment line; some of them may never have gotten into their desired career path.
But even a “generic bachelor’s degree” job (or one that has other education beyond a high school diploma, not necessarily a bachelor’s degree) is likely to pay more than a high school graduate job, so there is some government motivation to encourage people to upgrade their educational levels, since getting people to have higher pay means higher payroll and income tax collections and less social welfare type spending (the reason that states have state colleges and universities). Of course, whether current or proposed government financial aid and student loan policies are effective is another matter.
5 Likes
I assume what you read didn’t tell the full story about the German education system (they usually don’t). The reason Germany is able to provide “free college” is because of the amount of restrictions on access to it. So, there’s a societal trade-off.
Around the 5th grade students are separated into tracks (generally 3, but some places combine the “middle” and “lower” tracks now). Only the “top” track leads to college and is for the “top” academic students as of 4th grade (although it is now in some cases easier to change tracks than it used to be). The other tracks are basically vo-tech bound. The different tracks often go to entirely different what we think of as middle and high schools. In the US approximately 2/3 of students eventually enroll in some form of college. In Germany it’s only 1/3. Those who met the requirements to graduate from top track are guaranteed college, but not college of choice. There are also limits on number of students per major, so some end up with 2nd or 3rd choice of major.
Due to SES disparities in the tracks, Germany has tried some adjustments to try to address it, such as making track switching easier and creating combined schools as part of that, but there are still significant disparities. Germany at one point had the largest achievement gaps per OECD data.
I wonder why articles that taut Germany’s “free” college generally forget to mention all that other stuff…
5 Likes
I also disagree. Our purpose throughout our kids’ schooling was to increase their education, ability to think, and give them baseline skills to approach new fields of interest, as time goes on. Plus actively contribute back to society. Not just job certification.
D1 majored in a humanities “few prospects” field, but accomplished our goals.
Sure, some “jobs” pay better than others. But becoming
“educated” is more than that.
So my kids have loans. And, as a matter of fact, so do so many of those kids who did choose the majors typically thought of as having “better prospects.” Both kids have jobs with significant responsibilities, solid pay. One is now in finance, despite not having chosen an IB related degree. Lol.
6 Likes
I present the OECD numbers from 2018 for the first time tertiary entry rate for students under 25 (the demographic I’d consider relevant for CC):
It’s 45 percent for Germany.
It’s 44 percent for the USA.
The OECD average is 54 percent.
The share of kids finishing up with nothing but a vo-tech qualification in Germany is probably around 10 percent, I didn’t look up a statistic for that. Post-secondary training and education is almost universal, but it’s not always called college.
The share of adults eventually enrolling in some form of higher education has been hovering at just under 60 percent for a decade.
German higher education is cheap because it’s cheap and you get what you pay for as far as amenities, handholding, class sizes etc are concerned. Not because access is restricted (which it is, but in different ways which tend to work out to more or less the same thing as anywhere else, which is that you will have it easier if you are from a higher SES family and make better grades) but because expenses are restricted.
Edited to add its not a system I am “touting”. It does not make for a great educational experience. But it does make for a system, that, together with the enforceable right to post secondary child support from middle high income families and federal grant/loan program for kids from low Income families, guaranteed for the semesters your degree is supposed to take, removes financial barriers for access, with loan repayments capped at just over 10.000 EUR.
2 Likes
@tigerle Something must be causing a high proportion of German students to stop pursuing their degrees once they start (unless there has been a recent, meaningful shift there), as only 33% of 25-34 years olds have a tertiary degree (well below the OECD average of 44.9%, 2019 data). Education attainment - Population with tertiary education - OECD Data
Any thoughts?
Completion is around 78 percent, that explains some of it, a formerly much older student demographic, with many students not finishing before the age of 25, and yes, a recent, meaningful shift, both in kids graduating high school after 12th grade rather than 13th and at younger ages due to changes in school entry cutoffs, and in completion, with a change from Magister/Diploma/State exam, which took 5 years or longer to complete, to a bachelors/masters paradigm, with a bachelors taking between 6 and 8 semesters.
1 Like
I remember doing some research on the numbers in grad school, about 20 years ago, and they were much different, with the US at the time head and shoulders above most European countries in take up of higher education. I’d say most of the shift has happened in those last two decades. I work in higher education finance (those federal grant/loan programs) and I see fewer and fewer students above the age of 25, or taking longer than 8 semesters, which used to be the norm when I graduated.
Edited to add I just looked up the European wide paradigm shift to a more streamlined and comparable bachelors/masters system, called “Bologna process”, and the treaties were signed in 1999. Some of the shift started happening then.
I’d say moving more students through the system at a faster pace and in a shorter timeframe has led to a better allocation of funds.
I think this particular mind-state is probably needed for a particular segment of the population (I have fit in that population because I just wanted a 9 to 5 job and a paycheck). But I have also grown over the years to teach my kids to find something that they love to do and to figure out how to monetize it. My own Pops has made a lot of money over the last 20 years, despite getting a Sociology degree (also picked up a Masters in that time frame). I am happy that my kids should not have many financial problems post-grad (both are STEM majors with full-ride scholarships who plan to get advanced degrees), but I am also pretty certain that they would have figured out ways to create multiple income streams and to monetize their passions because they are already doing it (Oldest receives no financial support from us besides being on our insurance and cell phone plan and has built a 5 figured surplus with no debt as a 20 year old college student). That is more important to me than any major, because they have already “surpassed” my own personal limitations. The personality, motivations, support, talents and creativity of a person can matter more than the actual major. But for a large group of students, I agree with your premise.
3 Likes
@GetCollege19 @Tigerle Good conversation about Germany system and outcomes etc…Thanks for sharing for good of community
2 Likes
I have to admit I’m with you on this one. Anyone can go to college with virtually no debt. There are local community colleges and then they can go on to a get a bachelors degree 2 years later and won’t incur the outrageous debt. It’s a choice people make. If someone goes to an Ivy League school and can’t afford it and maxes out the loans, then they have no business suddenly bitching about it later and wanting 50k loan forgiveness. I’m sure that amount came from some average out there which includes all student loan debt. Don’t forget also that the minute you graduate the interest start to accrue to it does quickly compund. My ex husband graduated med school with $250k in debt. His choice. He could’ve gone for free somewhere but we made the decision to go to one of the best medical schools in the country and take on the debt not asking for handouts later.
If there is any sort of loan forgiveness program it should be tied to income and definitely should be taxed as if it’s income. But it should just disappear as if it’s a free gift to anyone that has debt. There are high income earners that have debt that they’re paying off, and there are low income earners that have the same amount of debt that they have difficulty paying off. Some of it also relates to the standard of living the person has now. If you’re making $60k in salary, have $1k in loans payments a month, but have a house, a car payment and eat a lot of meals out, travel a lot, like fancy clothes, etc, and say you can’t make your loan payments, well duh, you’re probably someone living beyond your means.
Bottom line, there has to be some better solution to this and yes, what about people who just paid loans or future etc, or even people that take the loans on purpose. I have seen so many of those questions in a group I’m in that people say, the loan rate is so cheap so we’re having our kid take out the loan even though we can afford college and then we might pay it off later but for now we can invest the money we have and come out ahead. Why then should they receive any amount of loan forgiveness? That would be a total scam.
4 Likes
@LTmomof2 This cracks me up. I have a kid that was supposed to go to a top CS program in the country. Instead decided he was going to skip college altogether and go right to silicon at 18 years old. Off he went and sure enough got a 6 figure job right off the bat. Actually had 4 offers out of the 5 companies he interviewed with. The 5th wanted the college degree, the others did not care. 1 of the 4 was a FAANG company. It was crazy and we as parents were shocked since we thought no one would hire a kid with no degree. Boy were we proven wrong. So, in the end we saved more than $150k in college and he got a high paying job. We also gave him all the money we had put into his 529 plan for him. Of course we had to pay him cash and move the 529 to a sibling but for my kid it wound up being a win win situation.
But bottom line is yes, go into something you love AND can make money at. Even if you get a major in something that isn’t going to pay a lot, get a minor in something that is marketable and will pay. It’s not that difficult to earn a minor and still graduate in 4 years.
To the others - one thing they can do with loans instead of forgiving them, is have realistic interest rates. Even if they’re zero or close to zero, who cares? They’re more likely to be paid back if they’re not accruing ridiculous amounts of interest. But the bottom line is the people who really can’t afford to pay back their loans aren’t going to be the ones who stimulate the economy with 10K loan forgiveness. Why? Because they’re not taking the 10k and spending it elsewhere. They need it to make their loan payments. So it’s not like they’re taking it and saying oh, I just got a free 10k so now I’m going on a spending spree and buying a car. It also really would just come off the backend of the loans so if they owed 50k, now they owe 40k so they would just have smaller monthly payments. Bigger savings and bigger stimulation would be lower interest rates. Think about when you refinance your mortgage. That’s what these people need.
These days, all but a few US medical schools will require six figure debt if the student does not have lots of parent money. Most who get admitted to a medical school get admitted to one, so they cannot choose the less expensive of several options.
Yes, typical professional school debt can be much larger than typical undergraduate debt.
1 Like
Correct. Med school tuition is high, there are few (and small) scholarships, merit- and need-based alike. Plus, its impossible to work while in Med school to offset the cost. And then, the med school debt grows for 4 to 8+ more years, as you’re doing internship, residency, and fellowship(s), earning nearly nothing.
That’s not a sob story…it’s just the simple explanation for the large debt load on physicians. But it’s the consequence of a choice and investment (more the former for most physicians, who consider it a calling).
But physicians and others with large amounts of student loan debt have a number of options to pay down that debt (or have it “forgiven”) via civil service, military service (active duty or reserves) or working in underserved communities.
How about more discussion in political circles about expanding such opportunities for all students that would like to lighten their student debt load. “Ask not what your country (or creditor) can do for you, …”
And Dr is the safest profession ever in terms of job security and earnings.