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This program irritates a lot of people. And rightfully so. But you're mistaken if you think it doesn't benefit the government. I'll give you an example, one which I am familiar with because I've seen it time and again in my own agency.
A barred attorney 1st year is valued at about 60k a year according to your site. There's a glut of JDs out there. The government is hiring them in low cost of living areas (Detroit, Buffalo, Memphis etc) and holding them in low grades for a number of years before allowing them to be promoted to a "middle class" earning scale. They get the use and value of an attorney, but they won't give the person the title of attorney because that would require the government to hire them as a GS-11 off the bat.
Using a low cost of living area compared to the average 60k starting pay for a new law grad who's barred.
16000+21000+25000= 43k they saved in three years. This does not include the payments received under the IBR. New IBR programs are capped at 10% discretionary income, but the older version is 15%.
So for a single person making 35k a year, their discretionary income is anything over the poverty level. You get $6,200 standard deduction and poverty level for one person is $11,490. 35000-6200=28000, - 11490= 17310. 17310*.15=2596 in payments per year at a gs5. More as your income increases. For simplicity, we'll cap the person to a gs5.
GS-7 maxes out at around 57k in low cost areas, and you don't get pay increases every year except the first few years. After that, the amount of time between step increases, increases. It takes more than 10 years to get to the max pay of a gS-7. You can hold the JD as a GS-7 (which is very common) for as long as they're willing to stay put in a high unemployment, low income area. Back to capping the person as a gs5. (2596*10=25960)
43k + 25960 = 68960 the government saves over the course of 10 years, assuming the person never gets above a gs-7.
If they magically max out their GS7 in the first year of employment, you still get 3kX10 = 30k savings plus the IBR payments. But if you keep it as a gs-5 step one, for the course (who max out at about 45k) then you can multiply the 25k yearly income gap times 10 and look what you get? That's right... 250k. Or even 15k per year assuming they max their 5. (150k savings) Far more than what the person owed to the feds.
That's not factoring in what they actually get with the degree. As I said, they use the person as an attorney but withhold the title attorney so they don't have to pay them starting as a GS-11.
At the end of the day, some people are forgiven their loans and it's an absurd amount. But for many others, the government is essentially making them share croppers for 10 years.
And you're not factoring the true cost/benefit analysis.
This is disturbing news. This system encourages people to borrow more student debt and then promote non payment. People who should pay back get to walk away from their debt and likely never understand how to pay back loans. Then banks can encourage them to borrow more.
Americans have become infants, babies, children who want more but can't control themselves.
This is exactly what I posted on another thread
Instead of getting a job to start making payments (and paying income tax), they turn up their noses because they want big bucks right out of college. So they incur more debt by going to graduate school, expecting a bailout. In other words, it pays to be a perpetual student.
I actually just posted a very similar thread addressing this same issue. Long story short, I recently graduated undergrad with about $85K in student loan debt and no job prospects. So instead of working at Burger King as a college graduate and never being able to pay back my debt, I decided to go to graduate school. However, I have had quite a few professors recommend taking out as much debt as possible, and then entering this Public Loan Forgiveness program because you never have to pay the majority of the debt back. In fact, they were all saying they are going to get $150K or more (one professor was at $250K) forgiven under this same program. They make 120 straight minimum payments (essentially interest only), and then basically get the principal of the loan forgiven.
They are telling me to do it too and I have a lot of friends going for this same strategy, but I just worry because it sounds like a lot of people are doing this same plan, and I wonder how long the program will last if a ton of people are getting tens if not hundreds of thousands of dollars forgiven. I don't think the actual forgiveness starts until 2017 either.
Yes. Yours was the OP I responded to. And you said the jobs "paid nothing."
I stand by what I posted--Any job is better than no job. How about paying income taxes instead of anticipating as free a ride as you can get at everyone else's expense?
What a concept.
Oh, and as I said there...you won't find a job while you're perched on the computer.
I personally don't think it is reasonable, but a lot of other students do. You would be surprised how often I have heard in college over the past few years students saying now they aren't concerned about student loan debt because it is all going to fall on the "rich" taxpayers one day. So because of this, they take out as much debt as possible.
Wait until they apply for a mortgage and get turned down because their income/debt ratios are out of whack due to unpaid student loans.
By that logic every business turns the customers into profit centers. Can someone buy shoes without paying it and blame the retailer for selling it for profit? Your logic doesn't really stand.
Debt isn't always bad. A lot of businesses and individuals use that to get somewhere to increase their earning potential. What happens is that a lot of individuals take out loans when they absolutely cannot afford it and use the loans without clearly defined goals and strategies. if anything this education system can do a better job by teaching people financial concepts and strengthening financial literacy.
Take a look at the general education curricular in our universities. It's hard to find any course on financial literacy and life planning. How can our education institutions not teach these important notions to young people who actually needs this the most?
You are going to have one hell of a time trying to explain in good faith why an entire generation should be relegated to wage slavery to feed the insatiable greed of Wall Street bankers.
Wait until they apply for a mortgage and get turned down because their income/debt ratios are out of whack due to unpaid student loans.
This would depend on what they do with the money from the extra loans they took out. If they invested it, then it might be enough to put a huge amount down on that house and reduce their mortgage, thus allowing their DTI to be low enough to qualify.
Obviously if they blew the money on fast cars and fancy spring break trips then they're screwed.
I actually just posted a very similar thread addressing this same issue. Long story short, I recently graduated undergrad with about $85K in student loan debt and no job prospects. So instead of working at Burger King as a college graduate and never being able to pay back my debt, I decided to go to graduate school. However, I have had quite a few professors recommend taking out as much debt as possible, and then entering this Public Loan Forgiveness program because you never have to pay the majority of the debt back. In fact, they were all saying they are going to get $150K or more (one professor was at $250K) forgiven under this same program. They make 120 straight minimum payments (essentially interest only), and then basically get the principal of the loan forgiven.
They are telling me to do it too and I have a lot of friends going for this same strategy, but I just worry because it sounds like a lot of people are doing this same plan, and I wonder how long the program will last if a ton of people are getting tens if not hundreds of thousands of dollars forgiven. I don't think the actual forgiveness starts until 2017 either.
I always wonder how someone that is a professor at a university has such large student loan debt. What field is this in? Almost every field in the sciences provides funding for PhDs if you go to a quality program. I find it difficult to believe people that aren't going to these programs are securing these extremely difficult to get tenure track professor positions.
I always wonder how someone that is a professor at a university has such large student loan debt. What field is this in? Almost every field in the sciences provides funding for PhDs if you go to a quality program. I find it difficult to believe people that aren't going to these programs are securing these extremely difficult to get tenure track professor positions.
I don't think $250K is common, it is an extreme case. Lower amounts are common, though:
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), they turn up their noses because they want big bucks right out of college. So they incur more debt by going to graduate school, expecting a bailout. In other words, it pays to be a perpetual student.
