Leftists/Occupiers/and socialists of all stripes are frustrating. Many of them claim to be frustrated by wealth redistribution to the wealthy, but when I asked a purported “Occupier” about this at a recent protest, she told me that she supported the bailouts!
And then there is nonsense like this piece in support of legislation that would forgive all student loans. Yes, student loan debt — which now amounts to $1 trillion in the US — is a real issue, but such “debt forgiveness” schemes would be terrible policy for many reasons.
For starters, forgiving college debt would redistribute wealth upwards. Only 25% of the population graduates from college. These are the highest earners in our society. Doctors and lawyers pile up even more debt for their extended schooling, do we really need janitors and taxi cab drivers subsidizing them?
And, as the author points out, one bailout is inevitably used to justify another. So, if I’m a student, I’m no longer going to factor in my ability to pay into my decision, I’m going to get the most costly, prestigious, education I can. After all, the taxpayers are footing the bill!
Lastly, it has been argued by the Rio Grande Foundation and others that current taxpayer subsidies for higher education have caused the price tag of a college education to skyrocket. Once the government starts forgiving college loans, there will be no pressure at all to keep tuition prices down.
Paul, I would like to give you a little information on the bill you are talking about, H.R. 4170. It is not a forgiveness plan as you state, yes it is called the Student Loan Forgiveness Act of 2012 but what it actually is, is a new IBR payment. If you had done your homework and read up on the bill you would know that it is a 10/10 plan. You pay 10% of your discretionary income (defined as anything over 150% of the poverty line) for 10 years. Then the remaining balance will be forgiven. This bill is a long time coming. If you knew anything about student loans you would know that the interest is capitalized DAILY and that people pay thousands in interest yearly but only hundreds go toward the loan principal. Oh, and lets not forget interest on interest. The student loan industry is predatory and needs to be fixed. People want to pay back what they borrowed but when something like 5% goes to the actual principal this is really hard. We are not asking for a handout we are asking for fair terms. When people take out their student loans they are lied to (and no it is not always in the fine print). The contract changes after they sign it and you know what? It is not illegal!!! How is that okay? I can refinance my house, car or even credit card but NEVER can I refinance my student loan, that can carry upwards of 12% COMPOUNDING DAILY INTEREST. How does that sound right. Not only is this bill being proposed to get fairness back in education but also to help the economy. Who buys houses? That’s right, people just out of college. How do you or anyone expect students to be able to afford a house when they are already paying a mortgage+ size payment on their education. Not only that but this payment will follow most for the rest of their lives. We want to get the economy and housing market back on it’s feet? Then we need to help those out that went to college by limiting how much of their income must go to schooling. We are the ONLY first world country that charges like this for education. Many other first world countries either offer FREE education or they offer a plan such as; go to school now and when you start earning above a certain amount you will pay 10% of your income for 10 years. So in the end we are just trying to make our country a better place with the same opportunities that other first world countries offer. So I say to you Paul, do your research before totally disregarding this bill.
The easiest way to solve this problem is for students to not go into levels of debt that they can’t handle. Most students can afford a basic community college education if they work part-time. Then they can take some time off and earn money to get their bachelor’s.
I’d argue (and so would others) that the federal government’s involvement in the student loan industry for several decades has helped drive the cost of college skyward and create the situation that exists now. The solution to the problem is to reduce federal involvement, not get it further involved.
I see where you are coming from but what about the millions that are already in this situation and cannot travel back in time? I know for people just starting out what you suggest might work but with college costs skyrocketing over 800% in the last 20-30 years you can no longer just work your way through school on a part time job, even community college. To get the economy to recover we need to address those already in debt as well as those that are just starting out.
CNM is $579 per semester for a full 12-18 credit course load. Add in fees and books and you’re looking at approximately $1,500-2,000 per year. Average that cost out over 12 months and that’s $125-167 per month. Even if you only made minimum wage ($7.50/hour in NM) you could pay for tuition by working approximately 20 hours per month. Doesn’t seem like such a huge burden to me.
Ok, so ONE out of MANY colleges is cheap, so what. I used community college and then transferred to a 4 year school and my community college was no where near that cheap. I am not deluded about costs. You need to check some more schools, just because one kept it cheap does not mean all did. There are many studies and stats out that show that college prices have increase by leaps and bounds.
Dena, Who is forgiving the debt? If the college advisors led the person down this path then surly the colleges should absorb the debt, or the parents of the student. As long as the tax payer is stuck with fitting the bill, college prices will soar. I or my office assistant should not have to pay one cent of someone else’s advanced education. There is too many jobs going overseas because those occupations do not fit into the perception of a young persons ideal dreams of a high salary and no work (labor). I recently had a family member walk away from a $1.2 M mortgage and he is living in a $700,000 house (that he couldn’t sell) with his freelaoding 45 year old son and grandson. Who do you think pays for this? This concept of debt forgiveness results in lack of principles and honor of one’s word because other taxpayers will pick up the tab.
I have a family of 5, so HHS defines the poverty line as $26,170 per year. 150% of that is $39,255. According to my 2011 tax return our household income was less than that yet we still managed to pay approximately $250 per month toward students loan debt for my wife and I (approximately $50/month is towards a private loan that will be paid off in a year).
Under this plan if we only had to pay 10% of our income above that threshold we’d hardly pay a thing. Even if I made $60,000 a year we would end up paying about $172 per month for 10 years, less than we’re paying now. Would a household with an income above the national median really deserve such a generous subsidy?
A student loan is a no more complicated than any other financial instrument. There are dozens of free calculators on the internet that could show you exactly what you will pay in principal and interest every single month until your loan is paid off. If you have to borrow $50,000 or even $5,000 to pay for your education it would behoove you to figure out how much you’ll have to earn once that education is complete to pay back your loans and provide for food, shelter, etc. If the math doesn’t work out then get a job during college, go to community college for the first two years, or pick a college/major that will allow you to earn a degree in a field with employment prospects. A college education/student loan could easily be the second largest financial decision of your life (after buying a house) I have little sympathy for those who go into such a major decision without doing their research.
You are very correct Michael. I know of several students studying environmental science, art history, and music. When I ask them what they intend to do after college, most have no plans and all say because the job industry is changing so much I’ll WAIT to see what is available when I graduate. The environmental science person had not looked at any of the career opportunities or what salaries people with that degree made. I was trying to get the person to consider working for major engineering companies performing environmental impact studies (a lucrative career) but the gentleman responed, no I don’t want to do that…..I like animals.” Besides being in the wrong degree program, he had no clue as to how he was going to put his love of animals into application.
I have no sympathy for the people who go into unsustainable debt and expect their fellow taxpayers to bail them out. I also think Dena needs to check out CNM so she is no longer deluded about costs. It is fiscally irresponsible to go into debt for an education that will not provide you the means to pay your loans back. I am getting really tired of American citizens not being responsible for the choices they make. No more bailouts, period. This country is broke!
First, Dena’s elitist comments are objectionable.
Second, “free” higher education in other countries generally is available to the ruling classes and others of their ilk, and often with a quid pro quo resulting, i.e., do as you are told with the degree we financed.
Third, three years in our military, resulting in both a skill and some much-needed growing up for the childhood we now are extending well into the twenties, results in significant financial educational assistance.
Fourth, the CLEP program, some part of which is accepted at 2,900 schools, is a tremendous benefit; I eliminated all my undergraduate electives, resulting in a bachelor’s degree in 34 months
Fifth, after one has worked five years, the name of your college likely never will be discussed by your employer, nor will anyone care that you joined a campus children’s club (e.g., social fraternity or sorority). But the internship you served for a summer with GE or the CIA always will be part of that resume.
Finally, we should subsidize by loan or gift no education for persons who have performed no national service, or whose educational program will not result in a career capable of repaying an obligation.
Sure, clean up the mess; Congress could do that with a two-page bill in four hours, but they are too busy subsidizing corporate farms and other industries to support the contributions to their campaigns. Amazing how that cash flows in both directions.
Interesting proposal: all members of government must complete their own tax return; any error, however slight, results in being mulched. Thank you, Jonathan Swift, and Soylent Green
Communism made the Koch’s rich!
We always hear the talk of “Big Oil” and the “Big Drug Companies” and “Big Wallstreet”, but we never hear a peep about “Big Education.” These college administrations and professors with all their tenure seem to be doing rather well over the past 20-30 years. Meanwhile we have students graduating with worthless degrees. Do we really need all these satellite universities instead of one main campus? I think the whole higher education business needs to be looked at with a fine tooth comb.
My sister-in-law recently was in charge of organizing a conference for a major state universitiy’s grant department. They went to Hawaii for a 10-day meeting and they comp’d her a $1000/night ocean view room and paid for all incidentals. This was easily a quarter million dollar expenditure for the department overall. No wonder college…even state universities cost so much!
Yep, they have taxpayers to pay the bills!
To Andrew: Communism is making Obama rich too. And he is the head-commie. Out with him.
One issue I see is the worthless and unintellectual labeling of people as Communist, Democrat, Republicans, etc. It is readily apparent that this only polarizes people and the content of what they are saying is ignored. Being successful is the American dream and that usually includes being paid for it. Recent history indicates that the Demicans or Repubicats are both equally involved in this mess we are in.
College prices are going up, . there is no doubt about it, and the student loan program has a lot to do with it. Students in demanding subjects such as engineering or medicine do not have time to work their way through college, as I did. Even the GI bill does not cover the cost. Electron microscopes, high definition sonar, mass spectrometers, and MRI equipment all cost money. However, despite what educators profess, the person that benefits the most from an education is the person that has it. I do not believe I should be taxed to fund someone’s education without some form of public service in return, such as prison wardens, military, highway workers, police cadets, etc. This is not taking away jobs from the public. It is providing jobs to students in the public sector, so they can pay their debts, just like most other people. Since corporations benefit the most from the educated, then perhaps they should contribute more to the education of its employees but only through a co-op program with a defined contract and penalty clause for the student that if the student quits for any reason then the debt is owed to the corporation. I have hired a few students and they are basically of little value for the first couple of years until they learn to produce a product on time. I tend to agree with Wayne and believe that entering college straight from high school is a part of the problem. I know many students (not ALL, but the majority)that have entered college having no idea why they are attending except “everyone expects a college degree” and “people with degrees make more money.” Those people need to be in the workforce until they mature to the point that they have an idea as to what career they wish to pursue. I am not advocating a forced career or servitude. I have changed careers seven times. But the expense was mine, and my debts were paid, and, fortunately, most changes were more profitable in the long run. But, students need to have a purpose and an endgame. Without it, their debts will soar as they try and make up their mind as to what they want to do. By the way, most of the multimillionaires I know are NOT working in the field of their degree. About half do not have degrees, but drive and ambition is not in short supply with these individuals.