why pay off your student loans if the government will do it for you?

[Trill Clinton]

It used to be that we could blame colleges for failing to control their costs. But for the past decade or so, college costs have actually grown in line with the median household income, and the “origination” of new student loans has slowed down a little. The reason we haven’t seen a similar slowdown in overall student debt is that borrowers are making less progress on their loans. And a lot of the time they’re doing it on purpose — because they participate in programs that were dramatically expanded during the Obama years, and that forgive debt entirely so long as the borrower first makes small payments for a set period of time.

But the report also points to another factor that would seem to have a lot of explanatory power, especially when it comes to those with the highest debts: the still-growing popularity of “income-based repayment” (IBR) and similar programs, which were overhauled and dramatically expanded during the Obama years. Under these programs, students can make small payments for a decade or two, often not even covering the interest on their loans, and have the entire debt forgiven at the end.

This is not necessarily a bad idea in principle, but — as Jason Delisle has noted previously (https://www.nationalreview.com/2019/04/elizabeth-warren-student-debt-forgiveness-proposal/) in this space — the programs were structured in a way that encouraged their abuse by people with incredibly high debt levels, especially from graduate studies rather than two- or four-year degrees. As Delisle wrote,

Under current law, anyone who takes out a federal student loan today can enroll in IBR and have his payments fixed at 10 percent of his income, less an exemption of $18,700 (which increases with household size). . . . Then, after 20 years of payments (or only ten years for those working in any government or non-profit job), all of the remaining balance is forgiven, no matter how high it is.

He further points out, that, using the Department of Education’s own debt calculator, someone with $80,000 in debt and an income of $60,000 could receive $62,000 in debt forgiveness if he works for the government. Someone with $150,000 in debt and a $75,000 salary could pay for 20 years and still receive $82,000, more than half the initial balance. Meanwhile, as noted in the Moody’s report, the median amount borrowed is just about $17–18,000.

The Moody’s report further demonstrates that income-based programs are, indeed, highly attractive to people with big debts: “Only 5% of the total balances of borrowers who owe less than $5,000 are covered by [income-driven repayment programs]. Meanwhile, 53% of the balances of borrowers who owe more than $200,000 are in IDR programs.” And unsurprisingly, heavy borrowers have a disproportionate impact on student loans in general: Folks who borrow $20,000 or less represent 55 percent of borrowers but only 14 percent of the overall debt.


https://www.nationalreview.com/2020/01/student-loan-repayment-programs-obama-era-reforms-have-unintended-consequences-for-taxpayers/

https://www.cnbc.com/2019/11/01/wiping-out-student-debt-would-be-small-boost-to-economy-moodys-says.html

[boutons_deux]

"blame colleges for failing to control their costs"

BigCorp / Capitalists have been pushing for decades to run secondary education on a "business model",

aka, "shittiest possible product (eg, adjunct professors on welfare) for highest possible price", which exactly, eg, what for-profit "colleges" do, diplomas, if you "graduate", so shitty that employers laugh at them.

and above all when that "price" is students paying interest to Capitalists.

Exorbitantly priced higher education is as rigged as the entire economy.

[DarrinS]

Or, if you're a good parent, don't let your kid get into a stupid amount of debt. :tu

[Trill Clinton]

Or, if you're a good parent, don't let your kid get into a stupid amount of debt. :tu

I know everyone on this site is financially stable, but in the real world that isn't the case. What is a stupid amount in your opinion and how would you advise a middle class parent living paycheck to paycheck to help their child navigate the student loan crisis?

[spurraider21]

Doesn’t that loan relief then get treated as income that you get taxed on?

[Trill Clinton]

Doesn’t that loan relief then get treated as income that you get taxed on?

IIRC it depends on the profession the student goes into.

[DarrinS]

I know everyone on this site is financially stable, but in the real world that isn't the case. What is a stupid amount in your opinion and how would you advise a middle class parent living paycheck to paycheck to help their child navigate the student loan crisis?


The amount you borrow should definitely not exceed expected starting salary. Self-inflicted crisis averted.

[phxspurfan]

Or, if you're a good parent, don't let your kid get into a stupid amount of debt. :tu

I got into what you’d probably call a “stupid” amount of debt, i.e. more than $10. And now I have a career where I will earn more than 98% of people in the country over my working life, and can support not only my family but donate and support low income kids coming up from poverty. But hey, maybe everyone should follow your advice and clip coupons / save their low skilled/ lower middle class job wages to financial freedom.

[phxspurfan]

And yes, student loans / college tuition has gotten out of hand, even in the last 10-15 years since I was in uni. It is a system that has been abused with the promise of a better life for today’s generation of adolescents. It needs some type of solution to ensure a large percentage of people in the young generation aren’t saddled with debt their whole lives, because that will have national/global economic ramifications. If that solution includes some debt forgiveness I’m fine with that (even though I paid all my student debt off a long time ago).

A full solution should involve getting universities to lower tuitions to uninflated levels, control interest rates and impose limits on student loans, and encourage more kids in high school to explore trade schools. We need more people going into trades and much fewer English/Psych/Sociology majors and MBAs.

[FrostKing]

It is all bloated and somewhat backwards. You shouldn't need more than 3 maybe 4 semesters tops to learn majority of fields and professions. Maybe this is a side discussion about the inequality in K-12 education and that is why an entire year (or even two) is wasted on General Ed courses. And yes some classes are intended to mold (brainwash) errr I mean spread awareness.

[TheGreatYacht]

It is all bloated and somewhat backwards. You shouldn't need more than 3 maybe 4 semesters tops to learn majority of fields and professions. Maybe this is a side discussion about the inequality in K-12 education and that is why an entire year (or even two) is wasted on General Ed courses. And yes some classes are intended to mold (brainwash) errr I mean spread awareness.

Like the Holocaust guilt trips and Jewish victimhood brainwashing.

[DMC]

But college is a basic human right. It should be free.

[DMC]

And yes, student loans / college tuition has gotten out of hand, even in the last 10-15 years since I was in uni. It is a system that has been abused with the promise of a better life for today’s generation of adolescents. It needs some type of solution to ensure a large percentage of people in the young generation aren’t saddled with debt their whole lives, because that will have national/global economic ramifications. If that solution includes some debt forgiveness I’m fine with that (even though I paid all my student debt off a long time ago).

A full solution should involve getting universities to lower tuitions to uninflated levels, control interest rates and impose limits on student loans, and encourage more kids in high school to explore trade schools. We need more people going into trades and much fewer English/Psych/Sociology majors and MBAs.

Then who's going to get my coffee?

Bottom line: You borrow anything, you pay it back. Stop calling it a loan if it's never going to be repaid. That's what grants are for. Somewhere someone is paying for it.

Everyone in the chain has to accept less or even work for free to make it work. Instead, some just want a segment of the population to pay for everyone else. Oh but it's not socialism, no sir.

The government should run all colleges, and not make a profit (our debt and deficit should make the government a shoo-in). They should lower admission standards and not check citizenship. With that, some free housing, food vouchers and free medical care, I might just quit working.

[DMC]

I got into what you’d probably call a “stupid” amount of debt, i.e. more than $10. And now I have a career where I will earn more than 98% of people in the country over my working life, and can support not only my family but donate and support low income kids coming up from poverty. But hey, maybe everyone should follow your advice and clip coupons / save their low skilled/ lower middle class job wages to financial freedom.

I did the same, but coupled with the GI bill it wasn't that bad. It did take me about 15 years to pay it off though. Those early years are a bitch.

[TheGreatYacht]

Then who's going to get my coffee?

Bottom line: You borrow anything, you pay it back. Stop calling it a loan if it's never going to be repaid. That's what grants are for. Somewhere someone is paying for it.

Everyone in the chain has to accept less or even work for free to make it work. Instead, some just want a segment of the population to pay for everyone else. Oh but it's not socialism, no sir.

The government should run all colleges, and not make a profit (our debt and deficit should make the government a shoo-in). They should lower admission standards and not check citizenship. With that, some free housing, food vouchers and free medical care, I might just quit working.

You sure are the king of strawmans and assumptions :lol

[spurraider21]

The amount you borrow should definitely not exceed expected starting salary. Self-inflicted crisis averted.
easier said than done for certain professions.

in the LA area, for example, if you want to go to a reasonably competitive law school (basically any school besides La Verne), you're looking at a minimum of 150k in tuition over 3 years

[DarrinS]

easier said than done for certain professions.

in the LA area, for example, if you want to go to a reasonably competitive law school (basically any school besides La Verne), you're looking at a minimum of 150k in tuition over 3 years


I guess I would apply a different rule of thumb for doctors and lawyers.

[spurraider21]

I guess I would apply a different rule of thumb for doctors and lawyers.
its a case by case basis, tbh, but yeah i agree its moronic for people to overspend on private schools, for example. as an example that hits close to home for me... the cliche choice of good undergrad schools in the LA area is UCLA vs USC.

USC's annual tuition is something like 4x UCLA's. it drove me nuts when people got into both, and decided to go to USC (with loans!!). i mean sure if your parents have deep pockets and can put you through either, then by all means.

or besides public vs private, choosing the right major/degree is important. or those "professional students" who somehow are enrolled for like 6-7 years with nothing to show for it. tha fuck are they doing :lol... i worked at the student call center at UCLA and there was this one dude who said he had been enrolled in the undergrad for 8 years and then was complaining about money. its like... dude.

[AaronY]

1220465737132924928

[Will Hunting]

Imo you make the simple change of allowing student loan debt to be thrown out by filing for bankruptcy and the markets would get pretty efficient pretty damn quickly. $250k of student loan debt to a transgender studies major would become a thing of the past, and schools would get costs under control knowing that there isn’t a bottomless pit of debt out there.

[phxspurfan]

I did the same, but coupled with the GI bill it wasn't that bad. It did take me about 15 years to pay it off though. Those early years are a bitch.

Everybody got to pay their dues. Except for scumbags these days who expect 140-160k right out of undergrad

[DarrinS]

its a case by case basis, tbh, but yeah i agree its moronic for people to overspend on private schools, for example. as an example that hits close to home for me... the cliche choice of good undergrad schools in the LA area is UCLA vs USC.

USC's annual tuition is something like 4x UCLA's. it drove me nuts when people got into both, and decided to go to USC (with loans!!). i mean sure if your parents have deep pockets and can put you through either, then by all means.

or besides public vs private, choosing the right major/degree is important. or those "professional students" who somehow are enrolled for like 6-7 years with nothing to show for it. tha fuck are they doing :lol... i worked at the student call center at UCLA and there was this one dude who said he had been enrolled in the undergrad for 8 years and then was complaining about money. its like... dude.


When I was out there, Aikman was UCLA QB and Rodney Pete was USC. I wasn't a CA resident, so I went to LA Harbor college for two semesters. That school was ghetto AF.

My ex got to go to USC for free because her dad was a prof. She never finished. Lol

[DMC]

Everybody got to pay their dues. Except for scumbags these days who expect 140-160k right out of undergrad

I'm cool with people who over sell themselves, but not with people who want me to foot the bill for their queer studies degree.

[DMC]

Imo you make the simple change of allowing student loan debt to be thrown out by filing for bankruptcy and the markets would get pretty efficient pretty damn quickly. $250k of student loan debt to a transgender studies major would become a thing of the past, and schools would get costs under control knowing that there isn’t a bottomless pit of debt out there.

^ POTUS material

[phxspurfan]

Universities are rolling in money. No way you should ever donate a dime to them. Much less pay them 60k a year for any undergrad degree.

[DarrinS]

Universities are rolling in money. No way you should ever donate a dime to them. Much less pay them 60k a year for any undergrad degree.

My school calls me about once a year begging for money. It's laughable.

[DarrinS]

My school calls me about once a year begging for money. It's laughable.

And I graduated 25 years ago.

[Isitjustme?]

When I was out there, Aikman was UCLA QB and Rodney Pete was USC.
lol old

[DMC]

My school calls me about once a year begging for money. It's laughable.

I thought ITT went bankrupt? :lol

[spurraider21]

My school calls me about once a year begging for money. It's laughable.
:lol like i said, i used to work at the UCLA call center, and those are the calls we made.

now i get calls from them. i usually give $5 because i know as a caller they tracked our stats... i always direct it to UCLA's alzheimer research fund. never to the "general fund"

but what's even more hilarious is when i get calls from my law school... i tell them to fuck off since i'm still paying off my loans for their tuition even though they just received a massive 50mil donation

[DarrinS]

lol old


You will be too

[DarrinS]

I thought ITT went bankrupt? :lol

I had a friend who went there and his first job was repairing Motorola pagers.

Now, he's super wealthy and lives in Virginia.

[DarrinS]

:lol like i said, i used to work at the UCLA call center, and those are the calls we made.

now i get calls from them. i usually give $5 because i know as a caller they tracked our stats... i always direct it to UCLA's alzheimer research fund. never to the "general fund"

but what's even more hilarious is when i get calls from my law school... i tell them to fuck off since i'm still paying off my loans for their tuition even though they just received a massive 50mil donation



I don't give shit. I paid to go there. They aren't running a charity.

[baseline bum]

I had a friend who went there and his first job was repairing Motorola pagers.

Now, he's super wealthy and lives in Virginia.

I'd live in vagina if I was super wealthy too tbh

[DarrinS]

I'd live in vagina if I was super wealthy too tbh

:lol

[DMC]

Pagers are making a come back.

[Chucho]

I had a friend who went there and his first job was repairing Motorola pagers.

Now, he's super wealthy and lives in Virginia.

Yeah, I have a buddy who was like one of the last graduates before they closed. Now? He lives in Dubai, makes 6 figures and making more and more every year.

IT is a great field.