Cancel Student Loans to Stimulate Economy? (wholesale, bank, job, government)

[GregW]

We should remove the private banking sector from the student loan business. They have become simple usurers (used to be called loan sharks and were prosecuted) and are simply ripping off the future of the students and the country. College education should be financed by the Federal government and the loans made at the Federal discount rate with the interest fixed and paid back with a surcharge on the student’s income tax until the loan is paid back.

[HappyTexan]

Originally Posted by wheelsup

I agree with you but even at $15k in private loans for my wife, the 10% interest was killing her. She didn't make much out of college and it was either pay loans or rent. Or move in with the parents and make $7/hr at a bagel shop.

Not a very good position for graduates to be in.

I'm not saying we should cancel student loans, that is ridiculous, but we certainly do need to reign in the interest rates.

I'm going to play devil's advocate with your above post.
I would not take out a loan for 10%..no way.
I'd get a job and go to school part time ..1-2 classes plus books.
If you are working you are bringing in money. Going to school is giving you the training for your future. So it takes a bit more time to get that degree but once you do then you don't have a big debt over your head and you are much better off as you can start earning more money and start saving right away.

[HappyTexan]

I would also add that many students take out loans not only for tuition, books, dorm fees but also extra for "living expenses".

This was all good and well while in college thinking you'd get a high paying job and pay it all off but that is proving not to be so true these days.

Here's a link that tells you how easy it is to get a student loan..even parents of K-12 can get them and send their kids to private school.

Student Loans: Federal Stafford and PLUS, Private and Federal Consolidation Loans, and Private Student Loans - NextStudent.com

snippet:
"Private student loans are unsecured, credit-based loans available to undergraduate, graduate and continuing education students for tuition, fees, supplies, computers and living expenses. NextStudent also features private loans for parents of K–12 students attending a private elementary or secondary school."

[Bill Keegan]

Originally Posted by wheelsup

Well two months wouldn't make the interest on a 20k loan compound to 40k. So lets be fair. But the idea makes sense.

Also with the private loans, IIRC, they start compounding interest the day you take them out. So a student could feasibly get a loan to start college, and 4 years later the loan has compounded @ 10%. Not cool.

I don't believe that's true. Part of what makes a STUDENT loan a student loan is that the payment does not start until after you graduate or quit. I just did a quick search, and all the private student loans I find operate this way. Usually 6 months after graduating or enrolling in fewer than half the normal full time coarse load.

[Bill Keegan]

Originally Posted by GregW

We should remove the private banking sector from the student loan business. They have become simple usurers (used to be called loan sharks and were prosecuted) and are simply ripping off the future of the students and the country. College education should be financed by the Federal government and the loans made at the Federal discount rate with the interest fixed and paid back with a surcharge on the student’s income tax until the loan is paid back.

Loans made by the government I might go along with, but federal financing of higher education I would not. Look what they've done to the public schools at the elementary & secondary school systems. Waste on an enormous SCALE.

[colleeng47]

Originally Posted by acrylic

Well, obviously it won't be easy. But what else would I do? Not go to college and end up in a dead end loser job that doesn't get me anywhere like all the kids that I graduated with that aren't going to college are going to end up with? I swear, all my friends that didn't end up going to college are still working near minimum wage jobs full time. What kind of a life is that?

I'd rather accumulate debt through student loans and be a part of the solution to the bad economy after graduating by being someone that will enter the professional workforce.

Honestly, on all the job applications that I've seen that pay decent, a four year degree is a must. The most I can get without a four year degree here is not even $10 for what I'd care to do for the rest of my life.

A friend's nephew is making over $70,000 a year fixing luxury cars. He went to a voc-tech school and came out with NO student loans. Another friend of mine is currently in voc-tech school for auto repair and he has a job waiting for him when he finishes. Starting pay -- $42,000. Student Loans - $0.

Don't knock the people who don't go to college. A lot of college graduates are flipping hamburgers right now.

[rubber_factory]

Originally Posted by GregW

The current student loan program is a subsidy for the banking industry and the universities. It is no longer designed to help less wealthy people afford an education. I would like to see the program removed from the private sector completely.

I agree. I don't think it is the only problem, I just think our system does not require universities to control their costs or tuitions enough.

[colleeng47]

Originally Posted by rubber_factory

I agree. I don't think it is the only problem, I just think our system does not require universities to control their costs or tuitions enough.

I think it's similar to the housing bubble. Homeowners knew buyers would pay what they asked because they could get "funny" mortgages. So prices kept going up -- no motivation to keep them down. Now universities know if tuition goes up, students will just take out more loans. Again, no motivation to keep costs down. All those new stadiums and fancy classrooms have to be paid for. That's why I like a community college for the first two years. I think of it as a "no frills" education. And let's face it, when you get your 4 year degree, the diploma doesn't state that you only went there for 2 years.

[Morphous01]

Originally Posted by AsymptoticFaery

A friend of mine mentioned that a great idea for stimulating the economy would be to cancel all students loans, that way most people definitely get an edge up in the economy and can claim more of their paper net worth.

How do you personally feel this would effect the economy (including possibly your own financial standing) if student loans were canceled?

Do you feel this is a good viable solution or is it an unethical and ineffective idea?

I just don't see how we live in a world were "education" is so expensive. Why don't they just make education affordable so you wont have to take out loans in the first place..

Hate to break it to you but everything you learn in college you can learn at your local library or just google it so why do you pay 30k a year for the same stuff?? What, to get the experience living in a dorm with total strangers?? Forget it..

Also, this hole idea of a degree does not automatically mean you will make the big bucks. BEFORE this economy took a dive a old friend went as high as getting a masters in business administration his parents paid like 90k for his education and TO THIS DAY still has yet to land a decent paying job.

[evilnewbie]

The average public university per year is 6k.... NOT expensive... but expensive for the people who don't want to pay and want you to pay for them....