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Student Loans

I saw a debate here recently about student loans/forgiveness. It was interesting to see peoples responses in regard to Obama's statement about loan forgiveness. By and large the popular opinion was that it was the graduates responsibility to pay back.

This issue is affecting millions of young graduates and will continue to impact them for multiple years to come. First and foremost, loans cannot be forgiven outright due to the fiscal impact it would have on the crediting system. That said, more appropriate pay back options are necessary including retroactive shifting in the policy for private debtors. In 2005 student loan debt became one of the forms of debt that cannot be discharged in bankruptcy. It makes sense since there are no assets to put against outstanding student debt; one cannot take away the education a person has acquired.

These points above made, we are in a position where we must find a remedy. While debt burdens increase over $25,000 on average, the federal student loan debt is over $860 billion, and both the default and interest rates are at the highest they have been. Not focusing on a discussion on the need to make higher education more affordable, we need to focus on what this windfall will ultimately do to our economy from delayed buying power of graduates, depressed wages due to a stagnant economy. We are also faced with the possibility that a higher education bubble may pop when loans are more difficult to acquire, reducing both accessibility to higher education as well as the cash flow. Some would say is college necessary? The more relevant question is whether or not having a highly educated society is necessary in order to continue our growth in the global market.


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    Jun 4 2013: Although I don't receive the best education in my country, every time I read articles about student loans in the U.S. I feel blessed!

    I attend a public university where I pay annually L.E.219 ( approx 35 dollars!) for the tuition fees (Engineering faculty).
    To get to a decent public university here you've to get relatively high grades in high school. It doesn't matter if you're rich or poor. It's all about your score.
    And because most top students go to those univ's the overall reputation of our degree gets more credit and is considered to be one of the best in the job market. And that's why private universities struggle to offer something unique.

    To think that in some countries there's no chance for the poor to get a higher education is obnoxious. Maybe the one with a cure to cancer can't afford going to college, but we can't afford him not going to one. Higher education should be a right, not a privilege, and certainly not discriminating.
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    Jun 4 2013: The bubble was created by the government. The overall solution is to get the government out of the loan business period.
    The universities do not have to respond to the market place this also is a problem as with the tenure program, the you must publish imperative, donors, unions, regulations, accreditation. The solution is to circumvent the whole deal and get an education on line.
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    Jun 5 2013: Dan, Yeah, I put the last conversation on line about this. The thing that really bugged me was the size of the debit and that as it was explained to be by a "Really successful" person ... why should I pay ... there is no consequence. I have worked at the state and federal levels and many have never paid and their state and/or federal paychecks have never taken money out for the money owed. Since this is a matter of record ... a simple computer search could match the state / federal employee with the education debit.

    Obama's give aways are essentially buying votes. Get the federal out of states business. The fed has limited Constitutional responsibilities. Return to the Constitution.

    If you sign a contract for a house ... your held to it or kicked out ... You sign a contract to finance school then you owe it period. There should be a consequence. Your Mom and Dad are co-signers and believe me they are being held responsible for your debits.

    This "free" mentality is stupid. There is no free lunch ... get over it and get to work to pay your debits.

    Dan not personal against you ... just my opinion.

    I wish you well. Bob.
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    Jun 4 2013: As a tax payer I already pay for well over 50% of higher education cost via state and federal grants and loans and tax payer dollars that found state university. And now some grads want us tax payers to pay 100% of their higher education cost? First we had to pay for other people’s homes and now education, what next healthcare and cell phones?

    I say let the education bubble pop, it needs a correction. It is no different than any other industry.
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    Jun 4 2013: Hi Dan Obama is right.

    Student loan is an investment and not an expenditure.

    In my family buying alcohol and cigarettes is an expenditure and buying books is an investment.
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      Jun 4 2013: nice from a person with a legal degree. an entrepreneur also would know that not every investment pays off, the government having an especially poor track record. an economist would add that artificially raising demand drives up prices.

      moral of the story: there is something in legal education that makes you exceptionally capable to get political positions, yet it makes you exceptionally poor in decision making. troublesome combination.
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    Jun 4 2013: "loans cannot be forgiven outright due to the fiscal impact"

    it is like saying that bank robbery should not be allowed because it involves speeding or other traffic law violations. loan is a contract, and contracts should be respected. we don't need any more reason why not to forgive a loan.

    by the same logic, US government should transfer usd 1 million to my bank account, since it has negligible impact on the budget. i like the idea personally, but let's be frank, it would be wrong.

    "more appropriate pay back options are necessary"

    why? students knew in advance what the conditions are. they have agreed to them. or you want interests to raise to market levels? that would not be nice either, as the state is also bound by the contract.

    the solution would be to identify state grants and involvement as the source of the problem, name the politicians in favor of such involvement, and never ever vote for them again. i want the occupy protesters hold up signs like "government get out of student loans!" and "leave education alone". until then, you can't hope for positive change.
  • Jun 4 2013: The kids were never told the whole truth. As Kipling wrote ( mocified)
    If they ask you why________
    Tell them our (leaders) lied.