Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Collapse or draw-back of the Loan Programs, restricting New Loans themselves?
Withdrawal of the .gov guarantee? (if so, then the existing loans could go into bankruptcy)
Or a slow-down of new loan money to the Money Mill that may US Universities and College have become . . . meaning the Schools must cut the price and/or take a Big Cut in their Cash Flow?
Of the 1.2 Trillion dollars in outstanding federal student loans, 70% of that "asset" is owned by the U.S. Treasury. Directly. There's no ".gov" guarantee to withdraw from any 3rd party. Certainly, they could stop using contracted entities to collect the loans on the Treasury's behalf, but they'd still have to pay someone to do it, and legal title belongs to the Treasury in any case.
As for the other 30%, you run into the problem of contract law. Loans made under the old FFEL program were federally guaranteed yet privately held, yes, but the guarantee was explicitly contracted, not just something the government can willy-nilly withdraw now. If anything the contracts have allowed the FFEL lenders to get away with quite a bit as the language leans in their favor in terms of giving them discretion on when to assign a loan to the government, and even in some cases reaping well above-market interest rate returns (9.5%) at taxpayer cost.
There are non-federal loans (small, but seemingly growing as a sector after completely tanking between 2008-2011 or so), but those don't have any .gov guarantee, other than the broader law that sets a higher bar for bankruptcy discharge. But the government doesn't have any direct stake or fiscal obligation if those loans become bad debt as they do with FFEL.
As for the bankruptcy law, then certainly, yes, that could be amended. But it's quite hard to imagine Congress doing that, at least for federal loans, even if they were so inclined, because of the significant negative hit that would put on 10 year budget forecasts. They could change the law for non-federal student loans with no hit to the CBO forecasts, but lobbying dollars, and the make-up of the current Congress, would almost certainly make that difficult.
Now, could the loan programs collapse or could their be restrictions on new loans going forward? That's more possible, and there have been various proposals that would reshape the existing programs somewhat, but so far the major proposal out there (Sen. Alexander's, which does have some traction) would seem to only have radical impact on graduate education, and particularly on medical education.
Any number of Republicans would generally be on board with reducing the federal aid programs, if not killing the Department of Education (and Title IV) outright, but that seems to be mostly rhetoric, at least for now.
"Americans are flooding the government with appeals to have their student loans forgiven on the grounds that schools deceived them with false promises of a well-paying career—part of a growing protest against years of surging college costs."
It's not the federal loans that worry me, it's the private loans. No IBR, so even if you are stuck working at Starbucks for $8.00/hr your full payments will be due even if they are $500/month.
The only real protection for private loans is the statute of limitations.
We scrimped and saved, and my daughter worked as hard as she could getting great grades, making some money, keeping her scholarships, and in fact getting new ones during her time in college. She will graduate in May with no debt as a result of sacrifice, including no automobile at school. Meanwhile I see some of her classmates from HS and college driving newer cars than I have and going on vacations. Then they complain to her about the debt they will carry after graduation and how they want it forgiven. I must have raised her right, because she sees the fallacy in their arguments.
It is a cycle that we are in. When I was out of high school you could get a job that would pay the bills. You could work in construction, the oil fields, one of the many government contractors that support the Navy in the area. Many people did exactly that. I was one of those people. In the late 1990's I had contemplated going back to school. By 2000 I ended up going to school and working toward my goal of getting a Bachelors degree. I went on to get a Masters degree as well. I know a lot of others that were sucked in as well. Everyone was saying, "go back to school, get a degree, it will give you a better life." For some that worked out, for many that was not the case. When the economy dropped we still had a lot of people in school working toward completing those degrees they had set out to earn. That amazing economy wiped out a lot of the jobs. I remember during the mid 2000's we had lots of student nurses upon graduation would almost always have a job. By 2009 that had changed, the economy caught up to healthcare. We were not hiring like we used to. Those that were in school were not as lucky in finding work or in getting a job. The pay scale dropped as well. We had so many new RN's that we could offer less money. Starting pay that had been $33 an hour dropped down to $22 an hour. Here we are in 2016 and pay is up but hiring has not increased back to the rate it had been prior to 2009.
What do you do though when you are in a program of study and the market drops? Chances are you stay put and continue going to school. Student loan debt goes up, prospects go down, then to top it off, more people decide to go to school because they are out of work as well. When all these people graduate employers can offer them less because they have more people to choose from for the few jobs that they are offering.
Far from me to place blame anywhere. I do have a lot of student loan debt but for me I figure we just have to pay it back. I would love to unload it and can not wait for the day it is gone.
"Americans are flooding the government with appeals to have their student loans forgiven on the grounds that schools deceived them with false promises of a well-paying career—part of a growing protest against years of surging college costs."
I'll probably get reamed for this, but many of the "Students" being female were as easy to sell these "Pipe Dreams" as was easy to tell them "I'll respect and love you tomorrow" by their baby daddies who disappeared....The issue is not of ability, but gullibility...
I'll probably get reamed for this, but many of the "Students" being female were as easy to sell these "Pipe Dreams" as was easy to tell them "I'll respect and love you tomorrow" by their baby daddies who disappeared....The issue is not of ability, but gullibility...
It all comes back to the purpose of Higher Education.
Historically, the purpose of higher education was to prepare the student to be a better citizen, not for a financially secure future. Many academics, particularly in the Liberal Arts, argue that education is its own purpose. That era is behind us, never to return.
If I were a cynic, I'd say the purpose of Higher Education is three-fold:
It all comes back to the purpose of Higher Education.
Historically, the purpose of higher education was to prepare the student to be a better citizen, not for a financially secure future. Many academics, particularly in the Liberal Arts, argue that education is its own purpose. That era is behind us, never to return.
If I were a cynic, I'd say the purpose of Higher Education is three-fold:
Sex for the students
Football for the alumni
Parking spaces for the faculty
Right now it is a gigantic business, the object being too pack as many students as possible into a classroom taught by a low wage TA. The actual course curriculum is inconsequential.
It all comes back to the purpose of Higher Education.
Historically, the purpose of higher education was to prepare the student to be a better citizen, not for a financially secure future. Many academics, particularly in the Liberal Arts, argue that education is its own purpose. That era is behind us, never to return.
If I were a cynic, I'd say the purpose of Higher Education is three-fold:
"Americans are flooding the government with appeals to have their student loans forgiven on the grounds that schools deceived them with false promises of a well-paying career—part of a growing protest against years of surging college costs."
Obviously, "bubble" must be the economic word du jour among the doomster crowd.
As for the article, it's about students applying to the federal government for loan forgiveness based on the schools they attended defrauding them. These are almost entirely for-profit schools run by companies notorious for scamming students. The feds forced Corinthian to close its schools last year IIRC.
Quote:
So far, almost all of the borrowers applying for forgiveness under the 1994 program attended for-profit schools. Three-quarters went to Corinthian-owned institutions, while hundreds of others attended the Art Institutes, owned by Education Management Corp.; and ITT Technical Institutes, owned by ITT Educational Services Inc. All three have been the subject of federal investigations into illegal recruiting tactics in recent years.
Personally, I hope that the student activist group trying to get these individual claims rolled into a class action suit is successful, and that they win justice for the students they represent. Moreover, I would hope that part of the settlement would be that for-profit "schools" to be barred from participating in the federal guaranteed loan programs, which will close them up instantly, just like it did Corinthian. These for-profit leeches need to go.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
