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I think the error you keep making is confusing the personal with the systemic. On a personal level, it would be ideal if all student debtors had plenty of money with which to pay off their loans in a timely manner.
On a systemic level, that just isn't happening - hence, we see rising default rates. That has systemic economic effects.
Simply screaming at individual debtors to pay back their loans (with money they don't have, for the most part) is not a solution or even a coherent response to the systemic problems associated with the student loan bubble.
And actually, student loan debts are often not honored - for one thing, they expire upon death. For another, an increasing number of former students are choosing to drop out of the "legitimate" economy altogether, or take jobs overseas, beyond easy reach of creditors.
While I don't agree with their methods, I don't think the US government as ultimate backstop creditor will bend on student loans which never expire.
The fed has recently (in 2012) authorized legislation to revoke passports of all citizens who owe overdue federal tax debts. Student loans may be next. Good luck to anyone who "drops out" of the economy without an identity.
The expiration on death may also be changed, as student load deadbeats may die with assets, which the US would want to attach, as is done with unpaid taxes. They would get first dibs, even before funeral expenses.
The US is up to its eyeballs in debt, and it wants to claw back anything and everyone. No more Uncle (Sam) Nice Guy.
The student loan borrowers who are being soaked with fees and interest should see their money be put to help others rather than to pad bloated government coffers. I've been paying $100-$150 per month for 10 years (plus tax refunds) on a $7K balance and my balance has shrunk a whopping $500 during this time.
The student loan borrowers who are being soaked with fees and interest should see their money be put to help others rather than to pad bloated government coffers. I've been paying $100-$150 per month for 10 years (plus tax refunds) on a $7K balance and my balance has shrunk a whopping $500 during this time.
I'm honestly not trying to dig into your personal finances....but come on....a $7,000 debt? Finance 101 dictates that if you decrease your monthly expenses by just 10% you could have that meager debt erased in no time.
I don't know how much you earn, but my (unsolicited) advice would be to drill down and get rid of that debt soon. You're well within reach.
Some people make bad decisions regarding student debt, but a lot of us don't and we're still screwed. Throughout high school the pressure is constantly on to go to college. For a lot of us, there's simply no other option. So we go to college, and unless you have rich parents you take out student loans. Working through college no longer pays the loans, they're too large.
I, admittedly, have more student loan debt than I should have, especially for my degree. I'm probably about 10,000 higher than it should have been, but that's because of living expenses related to going to school. (For the record, I work full time now and have always worked through college as much as possible).
I would love student loan forgiveness (partial). The plan I had seen capped it at 45,000 or so. That wouldn't cover all my debt but it would certainly help me build a life. It's not good for the country to have students trapped in repayment until they're 45 or 50. Thus, forgiveness (partial) is actually a necessity. Costs have gone so high, and debt accordingly, that for the good of the nation something has to be done to stabilize the situation.
I realize and sympathize with those who say it's unfair to those who repaid their debt. Well, using that argument it's unfair to ever lower taxes on one group and not the other. Life isn't fair. It could be sound economic policy (I'm not 100% sold yet) to forgive some of the outstanding loan debt that will never be repaid anyway, to free up those students to actually contribute to society instead of working dead-end jobs merely to pay their debt.
If Little John does not understand that loans must be repaid, he can go flip burgers, as he is NOT college material. He may get in, as they have seats to fill, but he should not have gotten in, and is wasting money.
Intelligent 18 years olds know the difference between a loan and a gift. They sign papers calling it a loan.
Whether they pay it off in 10,20, 25, or 50 years , it is a debt that must be honored.
I don't know about the Little John case. But in general, students know it's a loan, but let's be honest. When you're 18, 20, or 22, knowing it's a loan doesnt' change the fact that you don't know how much you're actually taking out.
For instance, most people feel the have to finish college. In fact, in my case, once I realized my career path is going to be an abnormally tough one, it was too late to quit, so I had to keep going and hope for the best.
I know that personally, while I knew I had to repay stuff, taking out tens of thousands in loans before you have house payments/rent/other debt/utilities/groceries/gas, etc. is where the trouble is. The student loan numbers are just so large they mean nothing to most people. Without knowing their actual future income and other costs, there's simply no way of knowing if taking out a loan for college is a disastrous mistake.
I could write pages and pages of what I think about student loans these days as well as other types of debt but I don't have the time or space I think.
As a caveat though--young people make impulsive, wrong decisions often. Hey, at least she kept the baby. But that's what young people do all the time. Your teens and your 20s are usually the time that you have "freedom" to do boneheaded things. I know I did. Made lots of mistakes. What I did have going for me was:
1. I had no student loan debt facing me at age 21.
2. I was young during an EXCELLENT economy.
3. I bought a house when lending standards where pretty darn stringent so I wasn't "given" a mortgage more than I could afford.
4. I am from an economically prosperous area so if I lost a job, there was another good one around the corner.
Because of items 1-4 above, I was able to survive my own personal bad decisions. I think young people these days have a different set of circumstances to survive and there is absolute ZERO room for any errors.
Great post. I share your feelings about stupid choices, but I appreciate you pointing out that the situation is a bit different now.
One of the things that I find both sad and frustrating is the "must go to fancy college for big $$$" thing which is sold to the parents and kids. The whole high school culture is so obsessed with status that they don't realize that caveat emptor applies in selecting schools. I went to community and state colleges through the PhD. I paid off my wife's loans, and I am still paying mine. Nearly done though. Point is, I did not go to foo foo private school, because I could not afford it. Why should I pay someone else's loans who did?
That said, I realize these are very tough times and prospects are quite poor for recent graduates. Far worse than anyone would have expected when they started school.
Come to think of it, this should be a mandatory course in college prep. classes. Once you actually get on campus, no one is going to counsel a customer to drop out, unless they are failing miserably. They should know the costs going into it. However, teenagers really don't think of the future consequences much. Anyhow, I would love to see a blunt Dave Ramsey type video that they had to watch (kind of like red asphalt for the new drivers) to give them the real dope on the financial costs of college.
It is touch though. I was extremely immature in high school, but somewhere about 18 a light went on, and I was quite practical about the whole thing. Quite black and white and quite personal. I still don't know what happened, or whether it happens to other kids. I was a foolish kid and pretty poor student in high school, and a level-headed young adult and a good student in college. Like two kids really. If the younger kid had been shown hot pictures of girls by the beach, he would have paid $80k a year to be there! The older kid went to the community college. Just sayin...
1) Teach them to never expect a handout or a bailout, even if their peers are getting one.
2) Teach them responsibility.
3) Have them get a job as soon as they are of legal working age. Doesn't matter what it is.
4) Restore business (not just fluffy marketing), trade and technical programs at the high school level, if not earlier. They would need to learn technical skills and what it takes to run modern machinery (how to use technology) across many sectors: manufacturing, automotive, plumbing, etc., in addition to hands-on-skills and any on-the-job training.
5) Teach basic technical know-how, writing skills (how to document things, employers want that), reading comprehension, and safety regulations (OSHA).
6) Teach them proper finance, not hokey-pokey debt-fueled nonsense.
7) Teach them how to deal with difficult people, particularly hot-tempered boss types.
8) Teach them the importance of adaptability. Not easy to do but the gold-watch era is over.
9) Give incentives to start businesses, not ship them overseas. Some of that is being talked about right now, so it's a start.
10) Teach liability training. It is an ever increasing litigious society and they will need to know these things, both in their personal and/or professional lives.
11) Encourage them to experiment and take calculated risks, stop telling them there is only one path; focus on the skills they posses and how they can extract those skills in REAL life to be successful. And successful doesn't necessarily mean a McMansion and a McLaren F1 in their driveway.
12) Tie education at the collegiate level to an actual job the degree requires from day one, not just "here's the degree, good luck."
Best Post on this Forum since 2012.
Sorry it took me this long to appreciate what was written then. Glad I found this thread so as to re-read this. If only our politicians had this much sense then maybe a sizable majority could believe in the educational advice / system again.
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