<p>tom. Someone has to make up for what parents who took out large loans cannot pay back. </p>
<p>That someone will be me and you.</p>
<p>I am already paying money towards the housing debacle. I have no interest in being saddled with paying more taxes so the govt can give parents a pass on their student loan debt.</p>
<p>
</p>
<p>One of the advantages of Parent Plus loans is that the debt is forgiven if either the student or the parent dies. Stafford and Perkins loans are forgiven upon death of the student.</p>
<p>Students are statistically less likley to die & those Stafford Loans are smaller than parents who don’t seem to have much limit on their loans. Plus, probably BOTH parents would need to die. That doesn’t seem like a great way to have college debt released, to me anyway.</p>
<p>We have no regrets that both kids will graduate w/o debt, due to choices we have made as a family. Not happy that I & others will have to bail out more with higher taxes and fewer servcies. Gets tiring, having so many that get in over their heads–some of them posting on CC about those wonderful dream Us & that one should go, regardless of finances, etc.</p>
<p>Perhaps we will be retired and in a lower tax bracket when it bursts.;)</p>
<p>Tired of bailouts tho–what messages are being sent to next generation? Don’t worry, you’ll be bailed out & it will saddle your kids & grandkids? 
:(</p>
<p>Sax, I agree with you. I support any effort to eliminate the 2005 Bankruptcy Act provisions which made private student debt non-dischargeable in bankuprtcy. Obama, as a Senator, voted against it. We need to force banks to be on the hook for their decisions.</p>
<p>PLUS loans are taken out by only one parent. When that parent, or the student for whose education the moeny was borrowed, dies, the loan is forgiven. The PLUS loan debt does not transfer to the surviving spouse or the estate. If you take out a PLUS loan, be sure the signing parent is the oldest, or the one most likely to die first.</p>
<p>As much as people like to beat-up the banks, you can’t blame them for the student loan debacle. They are simply playing by the rules the government set. Congress made the debt nondischargable in bankruptcy. The government also sets the interest rates and repayment terms and strongly encourages banks to make education loans as part of its community reinvestment requirements. </p>
<p>If required, banks could easily implement “full underwriting” student loans if such loans were easily dischargable. Would the nation and the colleges like the result? The loan rates would need to be similar to other unsecured debt - think credit cards. The amount of loans allowed would be based upon your verified income and assets. How many borrowers would qualify? If these borrowers can’t get the money, what would the impact be on college enrollment? How many professors and other staff would need to be layed-off?</p>
<p>It has never made sense to me that people can borrow virtually unlimited amounts of money for “education,” with no proof of any ability to repay such debt. Probably one of the major drivers for skyrocketing education costs is because people have access to loans, whether or not there is any prospect of them being able to EVER repay, especially since it is NOT dischargable in bankcuptcy.</p>
<p>I personally think there SHOULD be more underwriting of student & education loans rather than the ridiculous situation that currently exists, where in the name of higher education, people can acquire crushing debt with no apparent ability to repay said loans.</p>
<p>Chicago, the banks lobbied heavily for these changes. Very heavily. The 2005 BK ACT didn’t come from heaven.</p>
<p>If college enrollment changed, espcially with regard to the for-profit schools, so be it. Right now the banks and especially for profit colleges are taking advantage of those least able to understand the process.</p>
<p>Yes banks lobbied for the changes - because so many student loan borrowers of questionable integrity maxed out their loans and then declared BK to fully discharge the debt!! </p>
<p>Now, not everyone was so morally bankrupt and yes, the revised bankruptcy code is harsh - but how do draw the line? Banks aren’t charities - they can’t make no underwriting, below market rate loans to unqualified borrowers at the behest / encouragement of the government that you can easily walk away from and hope to stay in business. </p>
<p>Another thought about “full underwriting” - if you want to make loans dischargable maybe the banks will also determine the amount of the loans based upon your major, grades and estimated starting salary. No more $200k in debt for social workers or Greek pottery majors. </p>
<p>I agree - for profit / technical colleges do account for a good percentage of the problem - ban them from any government student loan program.</p>
<p>There should be caps on Parent PLUS loans as well; perhaps that would help? Personally, can’t understand going into $200K debt for most educational choices, tho I know some med students & others who will have that or more debt. Hopefully they will stay in the field & gainfully employed until they fully discharge the debt. Some have even talked about declaring bankruptcy–perhaps they’re aware of some way of getting around the non-dischargable issue of ed loans.</p>
<p>
</p>
<p>I say, “Amen!” Once in our young married life, we cosigned something for a family member. Of course, they were going to be responsible for the debt, but the pesky lender wanted some added insurance. That came to bite us on the bottom. Thank goodness it wasn’t as expensive a lesson as it could have been.</p>
<p>Although we haven’t gone into debt to pay for college (thank goodness), that money could have gone to increase our retirement savings. Or that money could have gone down the drain in the stock market crash…</p>
<p>I do not believe people should be able to walk away from their debt. Period. You should have to pay something based on your income. Even if you pay $1 a week you should pay.</p>
<p>I believe colleges will charge less when and only when people start choosing cheaper options.</p>
<p>Or, sax, if the money is not available to borrow. Without PLUS loans, my daughters would have gone to college, but it certainly would’ve been in-state & maybe not even the in-state flagship, instead of the OOS flagships they ended up attending.</p>
<p>Chicago Bear, the banks had more lack of integrity than the borrowers. They were more saavy, more educated.</p>
<p>I am a little freaked–as I said before–at the ease of obtaining these Parent PLUS loans. Mind you, I’m not complaining–because I needed them–and I appreciated not having to jump through 19 different hoops at application time. But I understand financial responsibility & know that you don’t borrow what you can’t pay back, so I get it.</p>
<p>But, while this kind of smacks potentially of the same type of deal as the mortgage mess, there are a couple of major differences. You would hope that parents of college-bound kids are a little more intelligent that the home borrowers that had no idea of what they were signing for. And with the Parent PLUS loans, there don’t appear to be the predatory tactics employed with the robo-signing of the mortgages & the promises never fulfilled.</p>
<p>jnm, many parents of college bound kids did not themselves attend college and are not familiar with the process of financial aid. Many have overblown ideas of what kids will be earning. Robo-signing comes down the road, after the loans are made, and resold many times. So we dont know if that will happen</p>
<p>Back to the original post, parents need to learn that retirement comes first and their children may not be able to go to the college of their choice due to finances.</p>
<p>I think the real problem is that most parents aren’t adequately funding their kids’ education accounts in the 18 years before college and have no idea of how financial aid works until it’s too late. I agree with jnm and think there should be, minimally, a debt to income review in the Plus loan process and that the limit on loans that schools will certify(COA - other FA) should be capped using the average COA for that student’s instate public schools. Those who want to attend the OOS flagship or expensive private school that doesn’t give enough FA (NYU comes to mind) would still have that option, but would have to pay the difference out of pocket. Also, there should be no private or parent loans certified without ensuring that the student has taken advantage of, or at least applied for, the student aid programs that are available to them. That would eliminate a good number of those who foolishly overborrow and we wouldn’t see so many new grads with $100K debt. It would likely also force some schools to rethink their cost structure and aid policies. </p>
<p>There are numerous repayment plans available for federal student loans but perhaps not enough for parent PLUS loans (which I have no direct experience with). I don’t understand why private lenders have amortization schedules which allow loan balances to increase when they are being paid as requested. I think that bankruptcy laws could be eased somewhat for those with hardships not of their own making (ie. disability, death of a spouse, ongoing medical care for a child, and other tragedies that life brings to the otherwise responsible citizen) and I hope that we can trust the bankruptcy judges/trustees to make those determinations with compassion and integrity.</p>