Burden of College Loans

<p>Consider my hypothetical compromise proposal (this is actually only in theory not in practice).</p>

<p>First off, some background information:</p>

<p>Some people say minimum wages aren’t really needed because we have laws of supply and demand. If the employer pays his employees to little, then the employees won’t work for said employer because the wage is too low and the employer will lose money in the long run. If the employer pays his employees too much, then the employees would want to work for said employer, but then the employer may lose money in the long run. The laws of supply and demand makes a wage that both parties can come to in agreement. </p>

<p>What if we introduced the concept of supply and demand into student loan debt while making student loan debt dischargable after bankruptcy?</p>

<p>Consider this:</p>

<p>The federal government or any party has a choice whether to give the student a loan or not (and if so, how much) based on the total family income level and total number of children in college in a given family. The federal government or the 3rd party has to be smart about giving out the maximum amount of loans because if they give too much, they lose money because the student can file for bankruptcy and get his loan discharged. If the federal government or 3rd party gives too little, then the student may be able to pay it back so quickly that the government or 3rd party can’t make money from the interest. This way, it will be somewhat like a business because they risk losing money at the possibility of making money. In business, there is both risk and reward. </p>

<p>What does everyone think about my hypothetical proposal?</p>

<p>You want to penalize a student for paying back a student loan early?</p>

<p>These posts have a child-like simplicity to them</p>

<p>

</p>

<p>Of course not. This is a horrible straw man argument. Of course there is going to be students who are able to pay back their student loan debt before interest in accrued.</p>

<p>What if we introduced the concept of supply and demand into student loan debt </p>

<hr>

<p>We already have the concept of supply & demand in the student loan market. As long as there is demand, there will be someone to supply. The key is to limit demand, and the best place to begin limiting demand is with the borrower. Educating the masses would be the way to achieve this. Instead of assuming the public is simply destined to remain ignorant, we should be trying to figure out how to educate the public so that they are NOT ignorant.</p>

<p>kayf, i have a cousin who is a doctor. she explained to me a while ago how she beat the system and why they had to change it
Apparently, in the 80s, med students were taking out humongous amounts of money for med school. Then immediately after grad , they filed for bankruptcy(since they had no regular income–residency). Then the media, the government and the publicin general got enraged because this was a huge scam; then after years of lobbying the private student loan companies then became invincible. The loans are secured by the government. It’became a no-lose situation for them.</p>

<p>My point is if you can say at age 18, someone should be allowed to vote, then why shouldn’t they be liable for their reckless behaviour. They are adults. I’ll be 18 nxt yr btw
And dont say bank bailout; if that didnt happen, the economy would have gone flatttt
There is no incentive to bailout legions of unemployed, poor indentured servants who willingly and knowingly took all this monies to enjoy “the college experience”. I dont mean to sound smug but really all we can do now is laugh in their face. There is absolutely nothing that anyone can do for this people.NOTHING.NOT NADA
We can just make the would-be servants(high school seniors and college students) more financially aware.</p>

<p>

good luck with that. 90% of 18yo have no clue how much money 50/100/200K is and how difficult it would be to have to pay back loans of this magnitude. Heck many of the parents here on CC aren’t much better when you see stories of turning down full rides to go pay full price at a private… only parents doing that should be those with 500K or more in the bank.</p>

<p>I love reading stories here of a parent stating that their snowflake has choice of school A at 100K cost for 4 yrs and school B at 200K cost. They then proudly tell child to not let cost be a deciding factor and let their 18yr pick whichever they like most. That’s telling kid that the 100K difference isn’t a big deal, so the kid then picks the more expensive school with prettier dorms. If parents can’t emotionally handle making the proper financial decision how can an 18yr?</p>

<p>Saynotoharvard, since the med school thing, way back when, govt loans were made non-dischargeable.</p>

<p>But in 2005, things really.really got nasty. The banks lobbied to get PRIVATE loans non-dischargeable AND the rules as to who could file Bankruptcy got toughter. The latter change is sufficent to protect banks (actually excessive in my book). PRIVATE loans can have excessive amounts and interest. I am not asking, nor is anyone I know, to have govt loans dischargeable. It is the PRIVATE loans that have gotten out of hand. Why should PRIVATE loans be non-dischargeable? Credit card loans are dischargeable? So are mortgage loans. THIS is the outrage.</p>

<p>Say no, my point is that the government is encouraging these kids to borrow to much, encouraging the lenders to loan too much, by preferential treatment in bankcuptcy. Its not fair.</p>

<p>“It is the PRIVATE loans that have gotten out of hand. Why should PRIVATE loans be non-dischargeable? Credit card loans are dischargeable? So are mortgage loans. THIS is the outrage.”</p>

<p>Indeed. Also, if people will read the articles, it’s clear that the bulk of the problem is not with the “special snowflakes” illogically choosing to finance 200k at their ivory tower private dream school rather than take the free ride at cinderblock state U. The real issue is for-profit schools which recruit heavily and then encourage much less sophisticated students than the typical CC reader to take out excessive loans for barely certified training programs that have little or no value when the (truly hoaxed in some cases) student “graduates” and attempts to translate the training into the high paying job they were promised the institution would help them find.</p>

1 Like

<p>kayf,
I think rather than encouraging private student loans to be dischargeable, we should encourage every single private loan dischargeable. Is this really the kind of country we want to have; where people are held unaccountable for their foolishness.
Think of it, this is a contractual agreement. No one is holding a gun to your head. You agree. So therefore, you are responsible.</p>

<p>This goes against all republican and libertarian values this country was founded upon. If you enter a contract with a private body, be it a person or a corporation, you must uphold it, not look for your more responsible taxpayers to bail you out.
Pay up to your Aunt Sallie
And dont bother calling congress, the industry probably has them in their pockets
carmen617,
Let’s not deceive ourselves here; for-profit schools are honestly not that many compared to the pseudo-non-profit schools that charge 50grand+ per year.
To the best of my knowledge, Congress has really gone hard on the for-profits. What we now need to do is revoke the non-profit status from the pseudo-non-profits. They make unbelievable amounts of money yet they call themselves non-profit. These people should pay taxes dammit.
Which other business in this world charges people 50grand+ but yet is tax-exempt
I guess that’s the problem; people dont realize higher ed is a business</p>

<p>It’s not just for-profit schools that encourage excessive loans. On this board we regularly hear from students who have enormous loans written into their financial aid packages. (NYU comes to mind in particular.)
The implication is that taking out huge loans is an acceptable and expected thing to do.</p>

<p>My friend is borrowing 30k a year for school. Her parents could only afford 9k so she originally was going to borrow 21k. She decided she needed/wanted a new car so her parents are now making the payments on that and not paying anything towards her tuition. So, in essence she is using school loans to finance her car. Her parents agreed because they stated that the hope loans will be forgiven some day. BTW, she lives on an urban campus and doesn’t work. Comes home two or three times a year. I will not be happy if loans are forgiven somehow. Lots of kids do variations on this. Get full amount of loans - use any money they had for school for extra crap-books, coffees, spring break. So if you had any extra 3k you just use that for fun stuff and get full loans .</p>

<p>nyu is the biggest scam in the world imo especially for the non-business students</p>

<p>dazdnconfused-that’s exactly the point–the money is used for so much reckless behaviour that it would be a travesty for it to be discharged; think of all the macbooks, $6starbucks, blackberries college kids have…and these are the same kids taking out 40,000grand plus loans. Give me a break</p>

<p>Again, I’ll say this over and over: The point is that if they could be discharged, THE LENDERS WOULDN’T LOAN THE MONEY TO BEGIN WITH.</p>

<p>The only reason lenders are allowing 18-year-olds to borrow up to a quarter-million dollars without collateral or even any credit history is the knowledge that the student can’t ever dump the debt. If the law was changed to allow non-Stafford loans to be ditched in bankruptcy, banks would stop passing out giant loans to kids like they were candy.</p>

<p>Sayno - </p>

<p>Pay up to your Aunt Sallie – I dont owe any student loans. My D wont have any. Please dont direct comments like this to me. </p>

<p>And dont bother calling congress, the industry probably has them in their pockets</p>

<p>I agree, other than the use of the word probably. Also note, that the Washington Post gets most of its gross revenue from student loans (through its sub Kaplan).</p>

<p>Maybe I heard wrong, polar, but for student undergrad loans (not talking about Staffords here), doesn’t there need to be a co-signer with some assets? Now…D1 is in her 1st year of med school, and she was able to get all the loans she needed on her own, without my signature.</p>

<p>Interestingly, there are mandatory seminars that she must attend about payoff options, eventual military or low-income area service that forgive part or all of the debt, that kind of thing. Also I think the school is trying to bang into these students’ heads the magnitude of the money they’re borrowing.</p>

<p>Also Say no to harvard, – you say “To the best of my knowledge, Congress has really gone hard on the for-profits.”</p>

<p>I disagree. They have done NOTHING. Show me one thing they have done.</p>

<p>Jnm123, here is an excerpt from a 2010 NY Times article about a undergrad getting private loans without a guarantee </p>

<p>'When they applied for a third loan, however, Sallie Mae rejected the application, citing Cathryn’s [the mother’s] credit history. She had returned to college herself to finish her bachelor’s degree and was also borrowing money. N.Y.U. suggested a federal Plus loan for parents, but that would have required immediate payments, something the mother couldn’t afford. So before Cortney’s junior year, N.Y.U. recommended that she apply for a private student loan on her own with Citibank. </p>

<p>Over the course of the next two years, starting when she was still a teenager, she borrowed about $40,000 from Citibank without thinking much about how she would pay it back"</p>

<p><a href=“http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html[/url]”>http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html&lt;/a&gt;
"</p>

<p>Every entity involved in this process bears a portion of the blame for the current state of the college costs/financial aid mess…the universities themselves, federal/state governments, lending institutions, etc. but the process starts and ends with the personal responsibility (or lack thereof) and slanted beliefs of the college student and their family.</p>

<p>Predatory practices are only effective if people allow themselves to become victims. A university is only going to get the outrageous sums of money they’re demanding in exchange for an education if the student/family insists on attending THAT PARTICULAR university. Once the family falls into that trap…there’s no shortage of predators licking their chops to loan them more than they can conceivably afford to make it happen…and damn the consequences. Who cares which predator is “more evil”…they all stink!! The college AO that convinces you their particular product is “worth the money”, the FA officer that offers you an “aid” package that includes huge amounts of loans, the lending institution that gives that money knowing full well you don’t have the financial means to pay it back…if you weren’t wearing the “Kick Me In The Financial Butt” sign in the first place they’ll move on to another sucker.</p>

<p>Part of the problem is the mindset of many CC’ers that insist you can never be “successful” if you don’t attend HYPSM…LMNOP…basically the alphabet soup approach to choosing a university. What a load of crap!! Do you realize what a miniscule amount of college graduates overall attend these universities? There are tons of schools across this country that will provide a student with a perfectly good education at a price that is affordable to the individual family…but too many people are swayed by those folks that seemingly need to rinse their mouths out after speaking of “lowly” State U’s…or God forbid…the possibility of attending a Community College for a few years to build affordable credits and a decent GPA before transferring elsewhere. Until parents start educating their children about what educational choices they can REALISTICALLY afford, and until perceptions about non-USNWR ranked schools change, this “self-licking ice cream cone” of a college cost/payment system will continue unchecked.</p>

<p>I could rant forever…but I’m tired of banging my head against the wall. I can’t help but be reminded of the story of the Frog and the Scorpion as I read the postings on these topics. Get real people…the Scorpions of the world always have and always will exist. Squash one and three more appear to take its place and as the Scorpion said “I’m a Scorpion, it’s what I do”.</p>

<p>Frogs of the world…WAKE UP AND QUIT GIVING RIDES TO SCORPIONS!!!</p>

<p>Dear Wolverine, – if this is the truth “Every entity involved in this process bears a portion of the blame for the current state of the college costs/financial aid mess…the universities themselves, federal/state governments, lending institutions, etc” - why do we only hold the least educated people responsible. It is outrageous.</p>