Student Loan Crisis

Obviously neither one. The onus for repaying a loan is on the borrower. It has always been that way. It needs to stay that way.

 

Well yes, paying back a loan is in the terms of the contract. And a one-off pay-off does nothing to prevent a return of the student loan crisis. But what can we do?

 

Not sure why there wasn't an option for neither.

 

Because a crisis requires action.

 

It seems like you are missing options. I think the loans need to be paid back. No one forced them to agree to take the money. At most I think we should consider reducing the interest rates towards zero and extend out the payment periods.

 

What crisis are you referring to? The imaginary one that Joe Biden voiced? Let's look at this from a more macro perspective perhaps. Wouldn't it be more meaningful to address the inflation in education that is entirely created by additional threshold borrowing limits? Why not start there. More, why not start with why you don't expect that students who choose debt aren't responsible for their monetary obligations. Further, why should government, in your opinion, be responsible for post k-12 education that generally most of us successfully paid for on our own?

 

I am not that familiar with this topic but could you give me the basics of:

1. Why should students loans be repaid by taxpayers?
2. Does anyone with a student loan qualify or if it is only for people that can't afford to pay off the loan?

 

Part of the crisis is the expensive cost of education. We need to get costs under control, but we also need to compensate students who, in recent years (note recent, not all years), who have been saddled with heavy debt, which cannot be discharged even in bankruptcy, need to be compensated for damages incurred by the American education system.

 

There is no crisis. A college degree gets you tens of thousands in higher earnings a year, pay your own cost of getting the degree.

 

WELL DUH. When the government infuses money into them they raise what they charge. Get government out it and the customers can decide if what they are charging is worth the price.

 

Presuming you have a degree that gives you an employable set of skills and knowledge.

 

I do not like the use of the term "compensate" it implies we owe these students something. Why do we owe them anything? This goes back to my original question; "why should student loans be paid by taxpayers?".

I would be willing to listen to arguments making higher level education and trades free in the future but I do not like the current idea of forgiving loans. Why should any student pay their own way if they could simply get a loan and default on it and taxpayers bail them out. Also why should a taxpayer scrapping by on a $30 or 40K income, with their own mortgage, car loans, and CC debt, have to use their tax dollars to pay off a student loan for someone entering the workforce earning $70K. This is why I asked are ALL student loans forgiven or only those that cannot pay? If it is only those that cannot pay how do we make that determination? Do they have to be unemployed? That would change the calculation of taking a job to include is it better to be unemployed for the required period and have $30K of student debt forgiven or work for $30K a year and have to pay off the loan yourself?

 

The current student loan system already has provisions for economic hardship.

There are several repayment plans that one can choose if they are qualified (Link: Repayment Plans | Federal Student Aid), at least for Federal Aid loans.

In addition, someone with Federal Student loans can temporarily stop payments or temporarily lower them.

Additionally, most repayment plans for Federal Aid will forgive the loan in 20-25 years if it isn't fully paid off.

This says nothing about private plans, but I don't know about those. They are probably a worse deal overall.

Oh, and some low-income individuals qualify for Grants (which is like free money, up to a certain lifetime limit) so that poverty isn't an excuse not to go to college. However, to pay for college, one must usually apply for both Grants and a Federal Loan to pay the high costs of going to school. So, everyone is going into debt.

 

If it doesn't then the cost of that degree should reflect that.

 

And it's the high cost that must be addressed. It is supposed to be an investment by THE STUDENT. The cost paid back by the fruits of that investment and that being the higher income it will command. Live a middle class standard of living for five years an pay off the loans with income premium. It the cost is higher than that then it is not worth it. Let's get the government money being injected and let the market place determine what is the value of the education.

 

Sounds like you know your stuff but based on your reply it seems to be counter to your argument that there is a crisis. You have just listed a number of ways a student can get Federal Student Aid and grants and even instances where the loans can be forgiven under the current system. You mentioned private plans but that is a contract between two parties and in my opinion unless someone is breaking the law government should keep their noses out of it.

 

then treat it like a normal loan, where people can go BK, Trump did that a few times

 

The problem with the income based plan is that if you haven't paid them off at the specified terminal date (it varies by about 5 years depending on which version you entered under) then you have to report the discharge amount on your taxes as income and pay taxes on it as income which will be taxed at your highest rate, and possible push you into a higher tax bracket. And, if you don't have the money to pay those taxes when they are due, then you and the IRS are going to be joined at the hip for quite awhile. So if you dropped an extra $125K on grad school and made less than interest only payments for 20 years, you could end up closer to having $175K in extra "income" to pay taxes on in year 21.

 

You can't do anything. It is not your problem. It is the problem of the borrower.

 

It is a normal loan. If people bankrupt, then government, who will pay it in the end, may learn that it doesn't belong in the lending business. That is for the banking industry. But my experience tells me government never learns from its mistakes. Look at what it is trying to do now.

 

Pay em off. Its not a very good idea, but its better than funding more social engineers to train more or our young people how to be docile, dependent, emotionally fragile communist cultists. Give grants to people who want to learn how to build electronics and operate heavy machinery.

 

I would be all in favor of that if the loans were issued like normal loans, and you had to show some ability to pay the loan back.

 

Well, it must not be enough, or else the politicians forgot that there were existing terms to help people pay down their federal student loans.

I only know a little bit about Student Aid because I just started University this year and I needed financial aid. Still, the loans I take out are a larger cost than the grants I qualify for. Like so:

Again that's:
Loan: $8490.
Pell Grant: $3966.

And that's just for now, more $ to come.

 

I'd go with a third option - to address the ridiculously high cost of colleges/universities.

 

I hate to say it but I don't have a lot of sympathy for this position and I would hope it is extremely rare. You have an individual that incurred $125K to earn a graduate degree and after a 20 year career made less than the interest payment. At the end of the 21 years the government gives him a huge windfall like winning a lottery and pays off the $175K for them. Now they are complaining they have to pay taxes on that windfall.

I went to university and earned 2 degrees. One in business and the other in computer science. I paid for my education with student loans and scholarships. Paying back the loans was a responsibility I cherished. Those loans and grants enabled my education, career and pretty much all my financial success to date. One of my goals when I retire is to set up a perpetual scholarship for future students so i can help a few more have the same opportunities.