<p>"A new repayment option is really about student debt forgiveness. It's been popular, and is getting very expensive for taxpayers." ...</p>
<p>As expensive as the bank bailouts?
<a href=“Bailout List: Banks, Auto Companies, and More | Eye on the Bailout | ProPublica”>http://projects.propublica.org/bailout/list</a></p>
<p>@emerald,
Isn’t your chart showing that the bank bailouts were LOANS made by our govt to the banks, which the banks have largely paid back w interest? </p>
<p>Student loan bailout, in contrast, is about LOAN FOREGIVENESS.</p>
<p><a href=“http://money.msn.com/saving-money-tips/post--student-debt-forgiveness-plans-skyrocket”>http://money.msn.com/saving-money-tips/post--student-debt-forgiveness-plans-skyrocket</a></p>
<p>This is another article from msn that talks about how at least one law school used the loan forgiveness program to show students how they could actually pay very little of the tuition they owed because the tax payers would pay it for them. No need for them to drop the price of tuition if the govt is willing to pay your loan off.</p>
<p>Why should public employees get special treatment on paying off their student loans when they already get better benefits and better pensions than those in the private sector and on the taxpayer’s dime, when most states and the federal government are already choking on debt?</p>
<p>It’s true that student loan debt will cripple the current graduating generation. I’ve seen articles showing that entry level home sales are down due to the fact that these young people are drowning in debt. But the answer is not debt forgiveness. Potential students need to have it drummed into their heads how bad student debt is. Attend the most affordable college. No frills. Get a degree that will get you a job. </p>
<p>As it is now, colleges have no incentive to control tuition cost because the government will lend you what you need, even if you don’t have a prayer of paying it back. An expanded loan forgiveness program will make the problem worse.</p>
<p>
When I read this somewhere else, I thought the very same thing! I wonder how the idea that the poor civil servants deserve to have their loans forgiven got slipped in there. </p>
<p>The sad part about the debt is that it is todays students, whether or not they took on debt, that will be the most negatively affected. Those who have not accumulated debt will be taxed more to pay off the debt of those who can’t. Unlike the housing bailout there are no assets that can eventually be sold. Tax payers will be paying the debt not lending the money to bailout banks who hold deflated assets and were required to pay the funds back. Unlike the housing bubble I don’t see an end to this one. </p>
<p>Oy. Another case of unintended consequences when our elected leaders didn’t think things through.</p>
<p>One huge part of the problem is the for-profit schools, which for the most part offer little value as few graduate and those that do graduate usually do no better than they did before. “While students at for-profit colleges make up 13 percent of college students, they account for 31 percent of student loans and about half of loan defaults.”
<a href=“http://www.pewstates.org/projects/stateline/headlines/states-crack-down-on-for-profit-colleges-student-loan-industry-85899543625”>http://www.pewstates.org/projects/stateline/headlines/states-crack-down-on-for-profit-colleges-student-loan-industry-85899543625</a></p>
<p>They are like giant, parasitic, blood-sucking ticks that are difficult to remove from the body politic, as they have attached themselves through vigorous lobbying to a number of policy-makers.</p>
<p>I’m shocked, shocked, that when stuff is free, people ask for more of it. :D</p>
<p>I think some focus on exorbitant interest rates is warranted, especially for graduate programs. My DD’s MBA loans – Federal Direct Loans – from 2008-2011 were at 7.4%. Absurdly high in this economic period. In the end, we helped to pay them off, but that makes no sense when recent bank and treasury interest rates are as low as they are.</p>
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<p>And does your DD have any collateral for those MBA loans? How much should an unsecured loan to a 20-something without a job (and any visible means to make the payments) cost in interest?</p>
<p>Sure, if your D attends HBS, there’s a really good change that she’ll make bank upon graduation. But what about those earning an MBA from the University of Phoenix?</p>
<p>btw: the rates on grad loans were purposely cranked up to subsidize the cost of the Pell Grant program.</p>
<p>“My DD’s MBA loans – Federal Direct Loans – from 2008-2011 were at 7.4%. Absurdly high in this economic period.”</p>
<p>Actually not high at all. Unsecured loans, like credit cards, are usually higher than that right now, often in the 18-24% range. Some of us old folks who have cards our credit unions or have a long term banking relation myship might have a 7.0%, but I know my Chase cards are higher (never carry a balance on those).</p>
<p>bluebayou, my former SIL has an MBA from U of Phoenix - and she makes good money. Her employer paid for the degree.</p>
<p>I have railed against incurring a lot of student debt for years. However, the real time bomb is NOT just the student loan default. The real time bomb will explode on the parents who guaranteed their student’s loans.</p>
<p>Bailouts make me sick, whether for automakers, mortgage holders, or student borrowers. I think I am now on board with the idea that any student who wants federal financial aid has to sign over some percentage of their future income for some period of time. Perhaps it could be for financial aid that exceeds the total amount of the easy to obtain federal aid (the $27K aggregate.) So, if a student, along with the parents, decides to attend a school that costs far more than what can be paid for out of savings, grants, scholarships, and $27K aggregate in student loans, then that student has to provide as a collateral a percentage of earnings for the next 10-20 years (along with making monthly payments on the $27K.) Maybe the federal government could require that students purchase life insurance policies to cover their student loans, too.</p>
<p>In addition to that, I am starting to think that federal student loans in excess of that $27K aggregate should only be used at public universities. Why should I be bailing out a student attending a private university? I don’t want to bail out any student at all, but at least with those going to the state schools, I know that costs are minimized, and the money flows back into the taxpayer-funded system.</p>
<p>I don’t know the solution. All I know is that I am sick of paying a disproportionate amount of the taxes, a disproportionate amount of the health insurance costs, and now considering the prospect of not only paying for my kids to go to college (and requiring them to make decisions that would not put them in the position of needing a bailout) but of having to bailout some other parents’ kids, makes me really really really sick.</p>
<p>The terms of the Public Service Loan Forgiveness program are not surprising. Go work for some federal, state, or local government entity or some IRS-designated 501©3, and the government will forgive your student loans. The government knows how to take care of its own. The only people who qualify for whom I don’t begrudge them the loan forgiveness are those in the military - because education is absolutely needed when time to transition from the military to civilian life, and because we pay our military a pittance and very few get any of the perks that other public employees do. But other than that, those who choose to work in public service get the salaries they expect (and they know in advance for the next ten pay steps, what their automatically raised salary will be, regardless of their performance), and they get generous retirement packages, and more holidays than anyone else. If you are a cigarette-smoking public employee, then life is even grander, with all of the smoke breaks on a given work day.</p>
<p>The money-focused side of me says for me to go tell my kids to plan on working for the government after college, at least until the loans are paid off. But if my kids are anything like me, they would hate it. My own short stint working for state government taught me many things, but none more important than the three words most important words to any public employee: Friday, holiday, and payday. I just spent my morning today in a local government office, and no salary or benefit plan or loan forgiveness program would tempt me to spend my days there.</p>
<p>I see this differently. Graduates must currently NOT be in default, meaning they are doing what they were suppose to do. However, they are now required to use their time for the public’s interest, mostly low income public system institutions etc… and their loans will be forgiven after a certain period. Sounds like a great deal. It is not free, since they will be working for the public, just not where they would have wanted to work.</p>
<p>Will they get paid for working with the public? And, get their loans forgiven. Many people don’t work where they want to work because that’s all they can find. No deal.</p>
<p>Public workers get paid a lot less, at least most of us do, so the benefits partially make up for it. I make 50% of what I did in industry, and that’s what I was making years ago so it’s likely 33% at this point.</p>
<p>As for bailouts, I would be for letting unemployed graduates have a delay for paying their student loans until they had a full-time job, and also limiting the amount paid back to a reasonable percentage of their actual salary. There is NO WAY I would be for not paying back loans, it is not fair.</p>
<p>No taxpayer funded student loan forgiveness. Students should think long & hard about what majors they should be willing to borrow for.</p>
<p>I would love to learn about philosophy or gender studies in my free time, but why should I have to work my butt off to subsidize other people’s fullfillment of their hobbies.</p>