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Another well-intentioned government program that is backfiring. The schools can charge anything they want because the kids can just get loans. They don't think about the repercussions after school. I know people who have 1,200 dollar monthly student loan payments. I'm not saying it is 100 percent the fault of the schools, people need to take responsibility for their own decisions and debt. But you can't ignore the fact that most schools are raising tuition to the point of absurdity simply because they know that the kids will get Uncle Sam to give them a loan.
Quite a few. Remember, the 2005 bankruptcy reform act eliminated the ability of debtors to have their private student loans discharged in bankruptcy.
So, banks can securitize and sell debt-backed "instruments" with the expectation that even if the borrower defaults, he'll become a lifetime piggy-bank of fees and penalties and interest payments and garnishments...
Yes. This was another parting gift from Dubya. Student loan debt is pretty much non-dischargible in bankruptcy. So that student is literally chained to their debt for the rest of their life. If they can't pay the debt, they have the choice of fleeing to Brazil or committing suicide.
I'm going to make sure my kids never fall into this student loan trap. I had one for a whole 2500 dollars and what a nightmare to deal with keeping it up to date.
Another well-intentioned government program that is backfiring. The schools can charge anything they want because the kids can just get loans. They don't think about the repercussions after school. I know people who have 1,200 dollar monthly student loan payments. I'm not saying it is 100 percent the fault of the schools, people need to take responsibility for their own decisions and debt. But you can't ignore the fact that most schools are raising tuition to the point of absurdity simply because they know that the kids will get Uncle Sam to give them a loan.
The first federal loans were direct loans, as suggested by Milton Friedman, in 1958. Then stepped in the corruption... the congress pushed for guaranteed loans (1965) over direct loans.
Following some reversal during President HW Bush's tenure, the congress in 1992 pushed for direct loans again as being fiscally responsible with a pilot program. Clinton adopted the direct lending program, as a part of his proposal for reducing deficits. But, in 1994, the republican congress pushed back for phase-out of direct lending, and in favor of guarantee loans. This was not done directly, but by eliminating the ability of Department of Education to promote direct lending approach. So direct lending or guarantee approach were two options.
The guarantee approach was more attractive for "profits" to colleges but fiscally irresponsible act on part of Congress. An investigative article on the subject: Big Money on Campus.
The direct lending approach was, perhaps, too efficient and fiscally responsible for many to like... in the 1960s and beginning in mid-1990s. The guarantee approach was here to take over.
See, BOTH implementations could be attributed to the government, a perfect example of government being capable of addressing "good intentions" with greater efficiency, and capable of disregarding efficiency and towards fiscal irresponsibility.
And it wasn't until 2010 proposal and signing of the law by President Obama, that direct lending approach would see a revival for the third time in about 50 years... from being recommended by Milton Friedman in 1958 to an attempted revival under President HW Bush and adoption of the idea as a part of deficit reduction plan by President Clinton and now by President Obama.
The question now is, how long before we see a push for repeal and going back to the "guarantee scheme"?
True and Gingrich seems to be full of similar promises, even worse because he's now talking about rewarding those who come here illegally and stay for 25 years or more -- just in time to get in on Social Security checks.
True and Gingrich seems to be full of similar promises, even worse because he's now talking about rewarding those who come here illegally and stay for 25 years or more -- just in time to get in on Social Security checks.
Gingrich was the "leader of the conservatives" that pushed for guarantee approach beginning in 1994, a push that lasted thru last year. See my previous post above.
Barry o will just put you in public service if you don't pay your loan. You'll just get one of those great jobs in the inner city for 10 years or jail!
4 pages already, don't wanna read em all to see if this has been covered, but not all student loans are backed by the government.
The only loans backed by the government are the Stafford loans, which have a hard cap. I don't know what that number is, but it's not very high. I think like 5k a year for Freshmen and sophs, and then higher for juniors and seniors. Any other loans the student takes out with a bank is just that - a loan from the bank. Which is why you can get a Stafford loan no matter what your credit is like, but have to pass a check in order to get a 3rd party student loan.
And at this juncture I"ll point out nobody holds a gun to your head and forces you to take out a loan, and certainly doesn't make you take out a loan for more than you need. This is where most students get themselves tripped up - they take out thousands of dollars more than they actually have to get, all so they can blow it on keggers and rims. Then whine when they're asked to pay it back.
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