I'm fine with interest forgiveness but not debt forgiveness with regard to student loans. Loans issued by the government to individuals for the purpose of investing in our future shouldn't be a source of profit. They should be interest free loans that cannot be discharged.
At the same time though, I think these loans should only apply to public colleges unless there are price controls put in place for private colleges.
So all your hypothetical losses are strictly financial? Am I reading that correctly?
Much of my student loans were initially at roughly 8%, now down to just over 7 when I consolidated. I think that there is certainly a mathematical argument that the rates would have be higher without government backing, but the rates are still fairly aggressive. That said, it certainly is challenging to individualize risk.That’s not how student loans work though. The government didn’t issue the loans, it just guarantees them. Private lenders actually make the loans and they certainly aren’t going to do it for free. The government insurance on them allows the interest rate to be lower than what it would otherwise be. If you want no interest loans that would mean the government would have to issue the debt (no one else would) and take a loss on it, even when paid back in full.
Are parents responsible for graduate school as well?Never earned more than 60k in a year. Graduating my second son this spring from the University of Michigan debt free. Am I going to be on the hook for all the deadbeats that get their loans forgiven? Someone will be on the hook for those loans. Seems pretty unfair for it to be me since i did what parents are supposed to do and provided for my children's educations.
That’s not how student loans work though. The government didn’t issue the loans, it just guarantees them. Private lenders actually make the loans and they certainly aren’t going to do it for free. The government insurance on them allows the interest rate to be lower than what it would otherwise be. If you want no interest loans that would mean the government would have to issue the debt (no one else would) and take a loss on it, even when paid back in full.
I'm asking for clarification. Do you see financial losses as larger than just money (like not having as much money prevents you from securing more options for your family/kids/etc.)?Sure
Are you sure about that?
https://studentaid.ed.gov/sa/types/loans
Yes there are private loans that are backed by the federal government. Those loans shouldn't exist in my opinion as it simply creates a middle man. If private companies want to offer loans then they should do so without the government backing them.
I would add to that the generally held belief that a degree in anything entitles you to a high paying job.The obvious argument to that is that none of the middlemen would make such risky loans.
Personally I would like something to the tune of majority of folks (unless they are honors+ in high school) should go to community college. The community college would be free and offer trade-skills as well (Auto-repair, HVAC, plumbing, etc...).
However, community colleges (or Universities) would then assess if people are qualified to enter an actual university. If they aren't qualified, you would get a "sorry, you're too stupid for University. Consider seeking trade-skills" message. Seems like a no-brainer.
The crux of our problem is too many stupid people going to college. Hence, over-inflated demand from federal loans that they will give to anyone with a pulse.
Much of my student loans were initially at roughly 8%, now down to just over 7 when I consolidated. I think that there is certainly a mathematical argument that the rates would have be higher without government backing, but the rates are still fairly aggressive. That said, it certainly is challenging to individualize risk.
For everyone? No limits or entrance requirements?Guys the APR wouldn’t just be higher without government backing, it would effectively be so high that student loans ceased to exist. I do not think there is a ‘just let them underwrite it’ alternative because nobody is going to make that loan.
My position is to eliminate them entirely and just publicly fund university education.
Guys the APR wouldn’t just be higher without government backing, it would effectively be so high that student loans ceased to exist.
I do not think there is a ‘just let them underwrite it’ alternative because nobody is going to make that loan.
My position is to eliminate them entirely and just publicly fund university education.
For everyone? No limits or entrance requirements?
This is a huge red flag. If lenders don't find value in lending, then why should our government? If it is truly valuable, someone will come along and reap that value. It's almost like you're saying these shit loans don't produce anything so let's force the people to make these loans via government. For what value?
OK again, if nobody is willing to make the loan, why are you proposing to take my money away from me to make that shitty loan? If the loan is good and beneficial, people will make it. If it isn't, then NOBODY should make it.
University education is far too expensive and there are plenty of ways to lower the expense without reducing the quality of education. As long as government funding keeps rolling in, what is the incentive to lower the cost? As long as this funding is use it or lose it, there is massive disincentive to lower cost.
What happens if there is one or more ethnic groups that end up being under represented? Would those entrance requirements be adjusted to achieve equal representation?Of course entrance requirements, it would be free to anyone able to get in.
What happens if there is one or more ethnic groups that end up being under represented? Would those entrance requirements be adjusted to achieve equal representation?
I'm trying to understand exactly how this system will work, and how it won't work. It seems inevitable that one group or another will say the system is unfair and needs to be balanced. I guess my question is, will it be completely merit based, the best get in, everyone else goes home?
What happens if there is one or more ethnic groups that end up being under represented? Would those entrance requirements be adjusted to achieve equal representation?
I'm trying to understand exactly how this system will work, and how it won't work. It seems inevitable that one group or another will say the system is unfair and needs to be balanced. I guess my question is, will it be completely merit based, the best get in, everyone else goes home?
Perhaps I'm looking at this from the wrong point of view. You're saying that there would be minimum standards and anyone who meets them is allowed entry? Is that correct?Entrance Requirements determine adequacy, not "Best". This obsession with "Merit" is rather odd, especially when "Merit" is defined solely on who is "Best".
Sorry, was posting quickly and didn't format that post at all. Was mentioning an anecdote and also generalizing.7-8% is ridiculously high, especially for a "can't-lose" government backed loan. If I could get a no-risk 7-8% return, I'd borrow everything I could and pour all of it into that.
Also, what do you mean individualizing risk? What risk is there in these loans? I think there SHOULD be risk. It is my understanding that there isn't risk to the lenders.
Perhaps I'm looking at this from the wrong point of view. You're saying that there would be minimum standards and anyone who meets them is allowed entry? Is that correct?
Seems sensible enough. What would the other criteria be? The only three I can come up with right off hand is gender, which might be problematical, financial standing, and race. Are there others?There are limited Entrants that can be accepted. Amongst those who meet the minimum requirements there are various criteria that can be used to choose those who will be accepted.
No one is going to reap that value because there’s no equity the lender can make a claim to.
If you have no income and no assets to seize the smart move is to have that idiot bank buy you an education and then declare bankruptcy. That’s why student loans can’t be discharged as is. If you remove that implicit guarantee nobody makes that loan.
There was a good series in the Washington Post a few years back about the causes of high tuition. In R1 and private universities tuition was in fact increasing far faster than could be reasonably justified. In other public universities the tuition increases were basically entirely tied to losses in state and federal funding because the baby boomers are the most entitled generation in history.