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Obama wants tax payers to pay for stundent loans

Discussion in 'Members' Lounge' started by Briansol, Jun 9, 2014.

  1. Briansol

    Briansol Admins Admin VIP

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  2. BigJ

    BigJ I'm just about that action Boss. VIP

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    As someone with crushing student loans who completely mismanaged them when I was younger, meh. Too little too late. The 15% rule would have saved my butt a few years ago when my minimum payments were unbelievably HUGE. Now a 10% rule? That's pretty beyond ridiculous.

    Any debt forgiven will be turned to income crushing them when the IRS comes.

    And these are public student loans if I recall.
     
  3. chestercheeto48

    chestercheeto48 Senior Member VIP

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    I have no issue with this as long as the person is still working in the field that they earned their degree in. Most of my loan will be paid off after 20 years. Hell it is almost paid off now. The only stipulation would be that it needs to be tied to "in demand" not fluffy majors like communication or liberal arts. You would also have to had a "responsible" payment history on these loans for 90% the life of the loan.
     
  4. Briansol

    Briansol Admins Admin VIP

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    I'm all in support of low rates and being accessible, but all this does is allow people to purposely fuck up, make as little of payment as possible to not go to debtors prison, and then in 20 years, it's all forgotten without a hitch.

    Ok, so that's the POS's.

    For normal people, it allows people to over-extend. ie, I'm going to go to school for 18 years to get a triple doctorate in basket weaving. racked up 5 million in loans. Would never be able to pay it off, ever. it's the mortgage crisis all over again.
     
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  5. chestercheeto48

    chestercheeto48 Senior Member VIP

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    This is also purely the product of "everyone has to go to college" attitude that I face on a daily basis. Looking back I probably would have chosen a different career path that would have taken me through a tech school where I would have already been two years ahead of my peers in terms of salary.
     
  6. Matts96HB

    Matts96HB . Moderator VIP

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    Oh look, another band-aid to cover up the real problem!

    Glad I have worked my arse off and have payed cash for nearly all of my education.
     
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  7. BigJ

    BigJ I'm just about that action Boss. VIP

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    I think this will only effect like 1.5mm people of the effective rate of those, is pretty slim I'm guessing... Pretty dumb as they could easily just work on some of the ridiculous interest and set up better default programs. Kind of just bullying like usual. No way any ed bill would have got through congress though. Terrible low hanging fruit.
     
  8. Capt. Orygun

    Capt. Orygun Win the Day

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    Frankly we had to do something. Student loans are quickly becoming the next bubble (see massive and growing student loan default rates). People went back to school, relying on representations made by politicians and universities that a degree meant returning to work when it did not necessarily mean than. Look at law schools: the ABA made schools revise how they report on employment to make it more transparent two years ago. The result: a 1/3rd drop in applications to law schools last year. Also, the DoE has been defunded to the tune of 40% in recent years as more and more students began taking more and more debt. The Doe is depending on students not to default, at this point.

    It looks as if some people in DC thought that if everyone went to college it would create massive non-tax government revenues from student loans as people returned to work. The problem is there isn't enough jobs for that plan to succeed. But, until such time as we stop subsidizing corporate America, I want main street to get the same bailouts as wall street. If you are really concerned about how this is going to be paid for... we could raise taxes, just saying.
     
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  9. SlushboxTeggy

    SlushboxTeggy It's only stupid if it doesn't work VIP

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    Same here. I wanted tech school and I was told I'm going to college. 10 years later, I'm thinking about tech school.



    As far as this program, I like that you pay a percentage of your income. Until I picked up a truck payment, my student loans payment was by far the largest bill I had every month.


    Still hate the abuse of the Executive Order though.
     
  10. Capt. Orygun

    Capt. Orygun Win the Day

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    And BigJ has a great point: you have to pay taxes on anything that is forgiven. Also, OP's representation is a bit dishonest. The deal is forgiveness after 20 years IF you pay 10% of your income during that time.
     
  11. Briansol

    Briansol Admins Admin VIP

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    So, if i rack up 1 million in loans to be a doctor.
    And decide to be a janitor instead at the end of it all...
    as long as i pay 2000 a year (assuming 20,000 salary here..) for 10 years, or 20,000 total... for 1 million.. It's ok, we're even?
     
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  12. endlesszeal

    endlesszeal Senior Member

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    B i want to chime in. Max student federal loan is $250k. Outside of that, you have to look at private. I dont know how they handle it with private, but Im sure theyre going to try come after you until you die. You could probably default on it and not pay but like any other bankruptcy. In addition to what silverchild said, not only do you have taxes on whats forgiven, you also have to pay the interested occurred. so really you are not paying back the principal, which can still be a lot.

    Like our medicare system, there are many contributors to this problem. I personally feel like education has been turned in a business and the business is to try and get as much money from students as possible via increasing tuition, charging outrageous amounts for "required" textbooks, spending millions on collegiate sports, amongst others. At least in Ca, it used to be that if you wanted to go to a state university, you register and pay the minimum (i was told tuition in the 70s was $300). granted a lot more people want to go so you have the selection process, but now a year of tution at a UC is right around $15-18K for in state.

    Lastly, the raising cost of higher education has put the US in a pinch for certain fields, in particular doctors. It really makes no sense for someone to go to school for a minimum of 8 years, 3 years minimum of residency and owe over $250k in loans or payments and make $160k/yr gross. Just doesnt financial sense.
     
  13. cheese9988

    cheese9988 Senior Member VIP

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    Personally, I can't wait for the student loan bubble to burst. Popcorn anyone? I spent way to much on school and paid it off myself.

    These idiot kids who think they can pay off $100k in student loans with a teaching degree are truly insane. And the parents who consign for these loans are just as much to blame. Dont get me started on those who decided to go to a university and then become a stay at home mom.

    If you want to follow your dream, fine, but don't look at me to pay for it. Get two jobs like everyone else.
     
  14. Briansol

    Briansol Admins Admin VIP

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    Student loan debt will still be owed even after a bankruptcy... its one of the debts that you can't get rid of.

    I don't disagree with you that education has become a business.
    But how is that the government's fault when there are exactly 0 federal colleges (outside of military)?

    Colleges are STATE or PRIVATE.

    Perhaps then, loans should not be made at the federal level at all. they should be done so at the state level for state schools and private sector for private schools.

    Costs are ridiculous because every school keeps trying to expand, upgrade, add new stuff, etc to remain competitive.

    I recently visited my old college campus.
    Since I left there, there's 2 new dorms, a new library, a remodeled student center, and a few neighboring housing became offices/property of the school.
    When I went, tuition was $365 per credit hour
    Today, it's 634 per credit hour.

    so, in 15 years, it's doubled.

    but so has everything else, and then some.

    gas was 99 cents, now its $4.
    min wage was $4+, now its $8+
    a new civic was 11 grand.. now 22
    books were 100-150... now 200-300



    So, please, tell me what exactly I'm missing besides inflation?
     
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  15. BigJ

    BigJ I'm just about that action Boss. VIP

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    Not being an economist but I believe there are legitimate answers to almost every thing you posted above. If i recall corporations that control most of gas, cars, books are making more money than ever with less competition.

    Whether you want to keep the old man style of BACK IN MY DAY IT WAS THIS MUCH BLAH BLAH, that's up to you, but realistically its pretty naive. Some things are the same price as they were then. Just look at consumer electronics where there is true viable competition.

    Feds make a SHIT ton of money on loans. I pay 6.55% on my student loans. They don't do the servicing of the loans, that's contracted out. Feds have the highest borrowing power in the land. Why wouldn't they be backing the loans with good rates? My 1 private loan is lower in interest than all of my perkins/stafford loans. I say work on the rate, not the 10% bs. That's too small of sector of student loan holders to effect anything. If there were a cut to rates the lower/middle class would probably spend more money. And probably create more, wait for it. Tax dollars! Job Creators! Blah blah blah.
     
  16. Capt. Orygun

    Capt. Orygun Win the Day

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    Not everything has doubled, real wages and even stated wages have not tracked the increases you have pointed to. As I alluded to with the 1/3rd drop in law school applications above, child students and breadwinners returning to the classroom alike were led to believe that all these student loans will pay off down the road. Then my friends in law school get their career counseling fact sheet on their student debt with advice like: "based on your student debt you need a yearly income of $230,000 to manage your loans and live," effectively telling them to eat cake when the representations made to us the year we applied were that the average private sector attorney was starting just south of six digits. As angry as I am with the VA right now because of the hospital drama, I gotta say they took care of me in the education department. But for those who are in this boat, it must be admitted that there is a good argument here that inducements were made, both in DC and by universities.

    Without dischargability, these loans enslave income earners for their productive lives. To the extent this debt exceeds the market value of their education, it will preclude them from buying property, investing, IE driving up GDP and productivity. Also, those who earn less (and thus qualify for the program) usually work in public interest, which serves to decrease the burden on social entitlement programs.

    So what you are missing is that there is this huge problem, that could hold down an entire generation of skilled workers (and thus the entire country), that both federal and state actors had a hand in creating. I would say that's what you are missing.
     
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  17. Capt. Orygun

    Capt. Orygun Win the Day

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    Also: the real long term solution here is to make all student loans dischargeable. There is no reason why students should be denied forgiveness where homes-owners and car buyers are not. It will also put pressure on those who issue loans to more closely examine the ability of students to pay off these loans before issuing them, and this will be good for sustainability in the long term.
     
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  18. Briansol

    Briansol Admins Admin VIP

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    I agree with letting the loans be re-financed. Apparently that was just shot down by the R's.
    http://finance.yahoo.com/news/senate-republicans-block-student-loan-142945982.html
    stupid move IMO and it's party BS on both sides as usual here...

    Low interest is a good thing. 3% is a good figure IMO... basically floats it at inflation levels.

    Honestly, if I had student loan debt higher than 5%, I'd put it on a credit card and move the balance every 12-18 months when the intro 0% wore off.

    Regarding discharging-- home owners/car owners LOSE the asset... the bank repo's it and can then re-sell it to recoup losses. You can't do the same with an intangible asset like knowledge.

    If, by your own idea, Cam, think that loan issuers should only give loans to those who have a high probability of paying it off in the future, does that mean that certain groups will get loans and others will not?

    Ohh, he lives in Detroit... he probably won't get a job there. NO LOAN FOR YOU!
    Ohh, he has 17 brothers/sister and a mom on welfare. Even if he gets a job he will have financial burden to his family. NO LOAN FOR YOU
    Ohh, she wants to be an early education major. A job paying about $22k here.... NOPE!

    I don't think that taking away accessibility changes anything but rather allows the 'privileged' to be the only ones who can have the advantage, and once again spreads the gap between the poor and the rich, eliminating the middle class.
     
  19. Capt. Orygun

    Capt. Orygun Win the Day

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    As with your "million dollar doctor" hypothetical, you continue to paint in alarmist's color's here.

    There are already metrics for how much debt you should have compared to your anticipated income, and it isn't based on living in Detroit. Some say you should never have more than twice your first year's income. I'm no economist, so I will leave the final math to others, but this can be done without creating opportunity discrimination.
     
  20. Capt. Orygun

    Capt. Orygun Win the Day

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    Another thing dischargeability would do, because loans would have to be more closely underwritten, is make the government more interested in universities providing candid and accurate employment information... which has kind of been a problem in recent years.
     
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