For fresh high-school graduates of limited means, I would suggest the following, unless you're offered a full scholarship: 1. First, delay college for one year. During that year, work in a very low-paying job. Share an apartment--don't live with your parents. At the end of the year you are independent and poor enough to qualify for state and federal grants, and you're still only 19 or 20. 2. Apply only to state colleges, preferably the less expensive, regional ones that offer a major you want but especially ones that offer the most free credit-hours for your grants. If, for example, you're from Texas and UT El Paso best fits those criteria, so be it. My urology surgeon went to some East Podunk State somewhere for his bachelor's. So what? For sure, his state university med school cost him, but he's paid if off long ago. My point is that vast fortunes should not be wasted on undergraduate college. (I did two master's degrees for free as well, by the way, on assistantships.)
Good job playing the system. This is exactly why are higher education system is functioning so well right now. Who would have thought bad incentives would produce such great results.
access to higher education should be earned by grades, SAT scores, and other measurable indices of quality and motivation, not purchased with dollars. Indices of ability and motivation are not perfect, nothing is, but using money to determine who gets a college degree (not to be confused with a college education) is simply a form of class warfare. The impact of the World War II GI bill demonstrated that smart, highly motivated poor people present a threat to the ruling class; a threat which has been effectively eliminated. I have a phd and a successful academic career but if I were coming up to day I would chose a life of crime, and be a very successful one
5
Here's a thought. Students should be shown whether they have the financial resources needed to attend AND GRADUATE from the school of their choice without incurring "too much" debt. If they don't have the resources they should be guided toward a more affordable alternative. Who should do this? Lot's of people guide students toward schools based on other factors such as their academic performance and emerging career interests. Shouldn't the ability to pay be just as important in making a school choice? It's really pretty easy to list the reasonable yearly costs of a school and help the student understand where resources to meet the cost might be found. This certainly would introduce an element of supply and demand in the "system" and if those rules still apply the cost of higher education will go down when more and more students select fewer and fewer schools they can't really afford.
3
https://mail.google.com/mail/u/0/?tab=wm#inbox/151b30d7c5a2fcd2
Tens of millions of Americans collectively owe $1.3 trillion in student debt.
In the past eight years, the federal government has quietly, almost imperceptibly, changed the rules of the loan game. It has made itself the primary bank for students and put in place an expansive new safety net.
Rather than owing for-profit lenders, students will owe dollars to the federal government. What the feds won't tell you is that since they own the debt they can wipe out the debt without defunding any other Federal program. How can this be. Simple. Our Federal government enjoys monetary sovereignty; it creates the dollar ex nihilo, and is constrained only by the specter of inflation, it can never, involuntarily, go broke. That's the basic meaning of monetary sovereignty.
Obama and his ilk would rather see the economy in the toilet instead of allowing student debt payments to stay in our pockets and we decide to save, invest, consume. Moreover, those debt payments to the Federal govt do not fund anything. They are destroyed just like Federal tax dollars.
Americans are just too unsophisticated to learn about what happened to our system of fiscal policy after Nixon abandoned the gold standard in 1971. He ushered in the paper dollar standard and with it the fact that the Federal government can pay for anything denominated in dollars and never needs revenue per se to fund any of its programs.
Tens of millions of Americans collectively owe $1.3 trillion in student debt.
In the past eight years, the federal government has quietly, almost imperceptibly, changed the rules of the loan game. It has made itself the primary bank for students and put in place an expansive new safety net.
Rather than owing for-profit lenders, students will owe dollars to the federal government. What the feds won't tell you is that since they own the debt they can wipe out the debt without defunding any other Federal program. How can this be. Simple. Our Federal government enjoys monetary sovereignty; it creates the dollar ex nihilo, and is constrained only by the specter of inflation, it can never, involuntarily, go broke. That's the basic meaning of monetary sovereignty.
Obama and his ilk would rather see the economy in the toilet instead of allowing student debt payments to stay in our pockets and we decide to save, invest, consume. Moreover, those debt payments to the Federal govt do not fund anything. They are destroyed just like Federal tax dollars.
Americans are just too unsophisticated to learn about what happened to our system of fiscal policy after Nixon abandoned the gold standard in 1971. He ushered in the paper dollar standard and with it the fact that the Federal government can pay for anything denominated in dollars and never needs revenue per se to fund any of its programs.
1
"only constrained by the specter of inflation" - I've seen this argument many times, and the question remains, how far do you push it? If the government with its monetary sovereignty is able to spend at will, then why not just give every citizen $10 million (or make up any other number) to spur the economy? That's only 3.3 thousand trillion. It doesn't matter, according to the thesis. And if the constraint is that it would surely cause inflation, then define exactly what amount we could receive and not have that outcome.
Fiat currency is only worth what we believe its worth, and if we destroy that belief in it by creating so much "debt", we are in a lot of trouble.
Fiat currency is only worth what we believe its worth, and if we destroy that belief in it by creating so much "debt", we are in a lot of trouble.
Regardless of the fact that some colleges are found to have "high default rates", the federal lending program produces a net profit for the government, a further fact of which Carey appears blissfully unaware, despite his weekly diatribes against the "taxpayers" "footing the bill" for (gasp!) student education. Yes, until Carey stops spreading his ignorance, I will continue to repeat that the federal government took over the federal student lending program in full in 2009, because the loans are extremely profitable, and it was a giveaway to the banks to allow them to make these loans on such favorable terms. Further, Mr. Carey indicates his intellectual dishonesty in calling many of this "default rates" defaults: on Mr. Carey's definition, if a student attends Medical School, or Law School, or Graduate School, or B-School, or Nursing School, or Ed School, or whatever, or pursues an MSLIS, an MFA, an MS, a Psy.D, or an MSW and so on, immediately post-graduation, or even just taking a fellowship, or doing a stint of teaching at a low-income school, or serves overseas and has their loans deferred, this counts as a grave calamity, contributing to the "non-repayment" rate. Nonsense. The proper method of accounting here is the one which the Federal Government actually employs: dollars in vs dollars out, which demonstrates some 50 billion annually to the taxpayers' gain. Cherry-picking data points which support your conclusion is the sign of great intellectual dishonesty.
2
A monetarily sovereign government like the U.S. never needs to save its dollars, earn a profit, or fund anything with "revenue" per se. There is in fact no need to fund the federal government which issues its dollars ex nihilo. Only those still bound by gold standard accounting and other related rubrics cling to the notion that our government needs to "save" earn "profits" etc.
1
It would be profitable if the loans were actually being repaid. One need to look no further than federal student aid's own data (studentaid.ed.gov > data center > student data) to see that less than a quarter, 22 percent, of the entire Direct loan portfolio is being fully repaid. The rest are in near perpetual forbearance or deferment (this accounts for about half), or are on a form of income based repayment schedule where the payments coming in do not cover the principal loan balance. It is hard to see how these loans could be profitable when less than a quarter are fully performing (amortizing).
1
Your comment is silly. How could the loan program be profitable for the government if a significant proportion of the loans are not being repaid. The money out in loans is not counted as a cash outflow because it is theoretically gong to be paid back. The interest income being paid by borrowers is counted as income, but the principle repayments are not. By government accounting standards, only the interest payments count.
The other factor you are ignoring is that the MDs who graduate with high student loan balanced owed to the federal government will work for two or three years as residents, earning $70,000 per year salaries and will make income based student loan payments that do not even cover the interest accruing. They can then work for a non-profit hospital chain for seven years and get the entire balance forgiven by the taxpayer. Not a bad deal for them.
The other factor you are ignoring is that the MDs who graduate with high student loan balanced owed to the federal government will work for two or three years as residents, earning $70,000 per year salaries and will make income based student loan payments that do not even cover the interest accruing. They can then work for a non-profit hospital chain for seven years and get the entire balance forgiven by the taxpayer. Not a bad deal for them.
This article hits home. I was, effectively, a 1st generation college student. I went to my state school, and my family made just enough money that we weren't poor, but the thought of putting two kids through college was laughable at best. I graduated with close to $50,000 in debt. I have a PhD now from an Ivy league school in a STEM field and am doing quite well. I suffered, though, before I went to graduate school. Financially, of, course, but mentally especially. An 18 year old from a lower middle class family cannot begin to conceive what this kind of debt is like. I'm one of the lucky ones, to be sure, but would I do it all over again? I like to think I'd be smarter, but, I'm smart already. What choice did I have?
5
America needs to come to terms with some harsh truths:
1) Not everyone should attend college
2) Most of our citizens are average or below average in academic ability
3) Living a decent, but unremarkable life is OK. Most of our children will not professionally Reach The Stars or marry their One True Love, and by creating a mythology where everyone's life should be AWESOME - amazing career, perfect spouse, huge house - has just created a generation that cannot settle for the respectable, average things that are realistically achievable for them, a generation where in reality only about the top 20% in attractiveness and academic talent are able to even come close meeting expectations.
4) Not every racial gap can be magically solved with money. Trying to solve racial gaps in anything, notably education and housing, by allowing people to take on irresponsible debts only makes those gaps worse.
1) Not everyone should attend college
2) Most of our citizens are average or below average in academic ability
3) Living a decent, but unremarkable life is OK. Most of our children will not professionally Reach The Stars or marry their One True Love, and by creating a mythology where everyone's life should be AWESOME - amazing career, perfect spouse, huge house - has just created a generation that cannot settle for the respectable, average things that are realistically achievable for them, a generation where in reality only about the top 20% in attractiveness and academic talent are able to even come close meeting expectations.
4) Not every racial gap can be magically solved with money. Trying to solve racial gaps in anything, notably education and housing, by allowing people to take on irresponsible debts only makes those gaps worse.
9
The fact that "These nonrepayment rates, moreover, do not include the private loans that many students take out..." is terrifying. Everyone I know how has education loans has private loans. And the private loans are usually much bigger in terms of dollar-amount than the federal loans.
2
Exactly what I was thinking, tkemp!
While it's more of a middle-class issue than that of the main focus of this article -- and parent loans are probably more likely to be paid back -- this issue is rarely mentioned, much less analyzed, in discussions of college financing.
Since student loans are capped at ~$7K/year. Many parents end up borrowing ~$100K/student over 4 years for mainline public or private universities. (Their costs are often very similar, as there's less middle-class financial aid from public college. But getting the courses needed to graduate in 4 years is more likely.)
While it's more of a middle-class issue than that of the main focus of this article -- and parent loans are probably more likely to be paid back -- this issue is rarely mentioned, much less analyzed, in discussions of college financing.
Since student loans are capped at ~$7K/year. Many parents end up borrowing ~$100K/student over 4 years for mainline public or private universities. (Their costs are often very similar, as there's less middle-class financial aid from public college. But getting the courses needed to graduate in 4 years is more likely.)
1
Either get the gov't out of the ed loan business altogether or force the college to underwrite 50% of all money borrowed so they'll have some skin in the game. If they then write the loan at all they will have an incentive to evaluate the merit of the applicant and steer him/her towards a remunerative degree that has a good chance of paying off the loan.
2
Or, perhaps, evaluate the college itself. I am astonished that Carey could write about this subject without addressing the current mendacity among putative academics. "Ivory Tower's" interview with Jamshed Bharucha at Cooper Union highlighted the failure - of both Bharucha, his college, and his industry in general - to recognize their responsibility to students as well as to tradition. Tufts' current battle fighting their own janitors underscores the greed of their administrators, earning twenty times the salary of their janitors. Similar corruption undermines even the best intentions to offer free higher education as long as its practitioners also practice "Greed is good."
2
If schools had to underwrite their student debt I guarantee you that we would see the end of 4 year bachelor degrees. Traditional degrees do not work in today's economy. colleges today have no incentive to graduate students, they just want to max out their enrollment numbers. If a college had to back their student barrowing, they would want to complete their degree as soon as possible in order to limit the exposure to that debt. Of the 140 credit hours I took for my degree I only ever use about 21 of them in my current job, something seriously has to change.
4
This article is proof we still have slavery in America.
Only the slave masters are different.
Only the slave masters are different.
11
This article lays out the problem well. The answer to the problem is that there are no goals and no objectives in a strategic sense. The government involvement means that there are conflicting goals and objectives. The institutional involvement is to generate as much money as possible. The parents want what's best for their children. The students have changing goals with constantly changing perceptions. The nation needs to develop a strategy.
1
At the end of the day policy makers are going to have to decide what is more important. Do you want to encourage everyone to go to college? Is the diversity of students in college the main goal? Or do we want to institute a set of standards that reasonably predict post-college success as a basis for student loans?
3
To avoid the high cost of college education, this is what I did in putting my three children through school. They have no debt and are all gainfully employed making great money.
1. I started a pre-paid 529c college program when they were born. The total cost to me while they grew up was about $300 per month for all three children.
2. They attended a community college for at least one year getting the basic "101's" out of the way. One plus one at a community college is the same as it is in a private college for a fraction of the price.
3. They attended a state school within the state they resided in. Low cost, in state tuition.
4. While in high school they applied for every scholarship they could find. Some were for $250-$500 each but these took care of books and incidental expenses. Guidance counselors would tell me that many of these scholarships are little known. Rotary Clubs, Veteran groups, corporations all have them.
5. They majored in either STEM or business curriculum, no liberal arts majors.
6. They worked part time either on campus or off earning additional funds to defray the costs.
7. I made them attend school all year long, not taking summer's off. Two of them graduated from the flagship university in my state in 3 years. They were still able to enjoy the college life of fraternities, tail gating, etc.
Again, none of them have any college debt. This method was a no brainier. Anyone can do it if they budget properly. Now on to grad school!
1. I started a pre-paid 529c college program when they were born. The total cost to me while they grew up was about $300 per month for all three children.
2. They attended a community college for at least one year getting the basic "101's" out of the way. One plus one at a community college is the same as it is in a private college for a fraction of the price.
3. They attended a state school within the state they resided in. Low cost, in state tuition.
4. While in high school they applied for every scholarship they could find. Some were for $250-$500 each but these took care of books and incidental expenses. Guidance counselors would tell me that many of these scholarships are little known. Rotary Clubs, Veteran groups, corporations all have them.
5. They majored in either STEM or business curriculum, no liberal arts majors.
6. They worked part time either on campus or off earning additional funds to defray the costs.
7. I made them attend school all year long, not taking summer's off. Two of them graduated from the flagship university in my state in 3 years. They were still able to enjoy the college life of fraternities, tail gating, etc.
Again, none of them have any college debt. This method was a no brainier. Anyone can do it if they budget properly. Now on to grad school!
2
This is great advice to give to responsible parents with young children. Neither of my parents went to college and did not help me pay for it. I walked through the whole process blindly.
Please look at the raw data before drawing conclusions. The offending for-profits are heavily laced with small businesses that do skills training. They don't offer degrees. These beauty colleges, barber schools, truck driving institutes should not be tracked as higher education nor should they be eligible for Pell Grants. For more detail please see...
http://www.adjunctularnoodling.com/all-the-colleges-arent-colleges-but-a...
http://www.adjunctularnoodling.com/all-the-colleges-arent-colleges-but-a...
7
"The nonrepayment category includes people who are only paying interest, have delayed making payments by enrolling in graduate school or are getting loan extensions."
it would be interesting to see the outstanding debt/median income ratio of these groups, and also of the group that defaults, during the first decade after graduation. this would be analogous to the outstanding debt on or the price of a median sized house/median income for home-buyers or the price/earnings ratio for a company's stock. we might be able to find evidence of a student debt "bubble".
home ownership and stocks were once (or many times) over-sold or over-promoted. a university education could be over-sold or over-promoted too.
it would be interesting to see the outstanding debt/median income ratio of these groups, and also of the group that defaults, during the first decade after graduation. this would be analogous to the outstanding debt on or the price of a median sized house/median income for home-buyers or the price/earnings ratio for a company's stock. we might be able to find evidence of a student debt "bubble".
home ownership and stocks were once (or many times) over-sold or over-promoted. a university education could be over-sold or over-promoted too.
1
I would gladly return my college education to be debt free if I could. Unless you have this kind of debt you really have no idea how debilitating it can be and your comments about personal responsibility just seem like a slap in the face. Why do you think people go to college in the first place? Maybe so they can take "personal responsibility" for their lives! Maybe all this propaganda about how much more a college grad earns and all that doodoo that is shoved down everyone's throat should be taken into account by those who like to judge people who are struggling. All this college education nonsense only works for rich people.
12
So why isn't this criminal?
5
Unfortunately the dynamics in the student loan market are a microcosm of everything else in the U.S. (and global) economy. It's all about debt and interest rates.
If there are no real qualifications to get debt, then more and more people people will take it on. Moreover, if interest rates are kept unsustainably low/go lower, then borrowers are more willing to take on debt because of "low monthly payments." Likewise, because of low monthly payments, all else equal, universities can increase tuition accordingly because monthly payments are deemed "affordable." This is a vicious circle that only ends when we've reached "max debt" which effectively occurs when debt is unserviceable even at 0% rates.
This is why at 15% interest rates, as we saw in the early 80's, there is reticence to take on too much debt and as such university inflation was in line with wage inflation. Likewise as rates fell, anything that was of limited supply (especially for high quality) purchased on credit, whether it be housing or even health-care, has skyrocketed.
The truth of the matter is that if you make student loans non-recourse debt and increase grants (tied to outcomes) to poorer households, a lot of the problems would be solved as it would force discipline on how money is spent.
If there are no real qualifications to get debt, then more and more people people will take it on. Moreover, if interest rates are kept unsustainably low/go lower, then borrowers are more willing to take on debt because of "low monthly payments." Likewise, because of low monthly payments, all else equal, universities can increase tuition accordingly because monthly payments are deemed "affordable." This is a vicious circle that only ends when we've reached "max debt" which effectively occurs when debt is unserviceable even at 0% rates.
This is why at 15% interest rates, as we saw in the early 80's, there is reticence to take on too much debt and as such university inflation was in line with wage inflation. Likewise as rates fell, anything that was of limited supply (especially for high quality) purchased on credit, whether it be housing or even health-care, has skyrocketed.
The truth of the matter is that if you make student loans non-recourse debt and increase grants (tied to outcomes) to poorer households, a lot of the problems would be solved as it would force discipline on how money is spent.
3
When I was an undergraduate in the 1980s, I had to sit down at a table with a financial aid officer who explained the differences between grants and loans. There was no discussion of what to expect in terms of monthly payments, and I had no idea what to expect in terms of wages upon graduation with my STEM degree. Later, I found the campus career center essentially useless for anything other than to sign up for interviews with the few recruiters who came by my mid-sized, out of the way, non-urban campus.
Fast forward to when I took out a single, small loan towards the end of my PhD program twenty-plus years later. I applied for the loan online, received notification online that the loan had been awarded, and the loan was deposited directly into my bank account. I never even saw a human throughout the process.
Fast forward to when I took out a single, small loan towards the end of my PhD program twenty-plus years later. I applied for the loan online, received notification online that the loan had been awarded, and the loan was deposited directly into my bank account. I never even saw a human throughout the process.
1
So, students and their parents take out loans for high-priced colleges, rather than going to lower cost colleges; they take out loans for studies and degrees that will not get them jobs (liberal arts, gender studies, Black studies, etc.). And, really, I've seen many of these student leans support a certain lifestyle at college. And they expect the rest of us to pay for that?
When will we ever ask people to assume personal responsibility for their actions?
College does cost too much and if fewer people pay for those high-priced colleges, the price will come down.
When will we ever ask people to assume personal responsibility for their actions?
College does cost too much and if fewer people pay for those high-priced colleges, the price will come down.
3
Did you even read the article? The whole point is that this is not restrictef to the scenarios you describe.
6
You appear to have only read about half the article.
6
What you present is a straw man argument. I graduated from a low-cost college with a STEM degree and a relatively modest student loan debt. I graduated with a 4.0 GPA. I think I attended two college parties during my 4-year program. I struggled to get a job related to my field and have since been burdened by monthly student loan payments that are disproportionately high relative to my current income-- which is not even half of the entry-level salary "promised" me during college.
4
Who is guilty of responsibility for ever-higher student debt? The vast majority of people on college campuses, that's who.
Growth in the salaries of college administrators and growth in the numbers of college administrators contributes to the cost of education, which has increased far beyond cost of living increases. Growth in the numbers of for-profit "colleges" and "universities" contributes to the cost. Growth in the numbers of fake "schools" that offer nothing of value to students is a huge problem.
Student loans support all these people - from the legitimate schools to the fake "schools". Student loans support students who never finish a degree because they are under-educated when they apply to a college. Look at the numbers of students who graduate high school in May/June and must take remedial English and math in August/September. Look at the number of students who can't finish a four year degree in four, five or six years.
Student loans support students who choose not to work because part-time jobs are generally evening, service jobs and work at those jobs cuts into party time. Student loans support students who could live at home and drive 20-30 minutes but want the freedom of living in an apartment. Student loans support students who use borrowed money for weekend trips and week-long Spring Break trips.
There are many problems with higher education in the USA. Start at the beginning, with the schools and the students.
Growth in the salaries of college administrators and growth in the numbers of college administrators contributes to the cost of education, which has increased far beyond cost of living increases. Growth in the numbers of for-profit "colleges" and "universities" contributes to the cost. Growth in the numbers of fake "schools" that offer nothing of value to students is a huge problem.
Student loans support all these people - from the legitimate schools to the fake "schools". Student loans support students who never finish a degree because they are under-educated when they apply to a college. Look at the numbers of students who graduate high school in May/June and must take remedial English and math in August/September. Look at the number of students who can't finish a four year degree in four, five or six years.
Student loans support students who choose not to work because part-time jobs are generally evening, service jobs and work at those jobs cuts into party time. Student loans support students who could live at home and drive 20-30 minutes but want the freedom of living in an apartment. Student loans support students who use borrowed money for weekend trips and week-long Spring Break trips.
There are many problems with higher education in the USA. Start at the beginning, with the schools and the students.
3
There is a simple reason College costs too much.
We have been living in a fantasy world about college since the 1970s.
We have been living in a fantasy world about college since the 1970s.
Loan limits should be pegged to the entry level salary for the field of study, the median salary after 10 years of employment, and job availability. If a student is choosing an occupation with low to middling income potential or one with low demand, they should not be allowed to borrow as much as the student preparing for a high-income, high-demand occupation. This would be instructive to freshmen who haven't adequately researched the real-life job prospects and pay scales of their chosen field and would also cut down on loan defaults. Many, if not most, high school graduates don't have a clue about the job market that awaits them after 4 or 5 years of college, so they can't make informed decisions about how much tuition debt to assume.
6
In 1987, my senior year at a national private urban university cost my folks 15K (room board tuition books,etc), which they paid for me. Adjusting for inflation (normal inflation, that is) that same academic year should now run about $31K, but that's not even close; it's now 62k for this school. This is not an ivy league school, believe me. Can someone explain to me what has happened in 30 years?
14
I went to school at a liberal arts college in the early 1980s and the prices have increased the same as you describe today. I am a professor now and can list the things that have driven the prices sky-high: 1) A huge increase in administration size and cost to run things like IT (remember we had typewriters back then for the most part!), expansion of student programs, affirmative action offices; 2) An arms race to increase the quality of food and living accommodations so students now have wireless, individual showers, improved and expensive food options, and 3) the financial aid is easier to get than ever, so schools grow faster in response to the growing funds available.
4
In addition the factors that Craig mentioned, many mid-tier colleges also decided that they would benefit if they charged top-tier tuition. Parents of quite a few high school seniors, it seemed, did not want their pride-and-joys to apply to or enroll in any "bargain" or "value" institutions.
For example, read this, from 2006: http://www.nytimes.com/2006/12/12/education/12tuition.html
For example, read this, from 2006: http://www.nytimes.com/2006/12/12/education/12tuition.html
Here's another insightful commentary, "The Price of Perception", written by a former president of Harvey Mudd College: http://www.nytimes.com/2011/04/17/education/edlife/edl-17notebook-t.html
The real problem is with the interest rats. I can imagine a graduate earning $25K/yr wringing his/her hands and despairing over the increased debt load every year as interest is added upon interest......
No student loan should carry an interest rate higher that 1/2 point above the Federal Reserve rate. Do we value our children's education or not? Let us help them pay for what they have learned by, 1) providing suitable jobs in their fields of study, 2) providing incomes that enable them to pay their loans, and 3) requiring universities to support graduates' job-hunting efforts for 10 years following graduation.
Then, again, colleges can simply have a pay-as-you-go system in which students may work part-time and study part-time for 8-10 years. That's what many of us had to do in the 50s and 60s. But it did take me ten years, with 2-3 course per semester, including summers.
Where there's a will, there's a way.
Too many young people are pressured by universities and by parents to finish as fast as possible to beat the competition and get ahead of one's peer group or cohort.
And we wonder when the next real estate bust will occur. None of the young adults with crushing student loan debt is in a position to take on a mortgage--particularly if already in default.
No student loan should carry an interest rate higher that 1/2 point above the Federal Reserve rate. Do we value our children's education or not? Let us help them pay for what they have learned by, 1) providing suitable jobs in their fields of study, 2) providing incomes that enable them to pay their loans, and 3) requiring universities to support graduates' job-hunting efforts for 10 years following graduation.
Then, again, colleges can simply have a pay-as-you-go system in which students may work part-time and study part-time for 8-10 years. That's what many of us had to do in the 50s and 60s. But it did take me ten years, with 2-3 course per semester, including summers.
Where there's a will, there's a way.
Too many young people are pressured by universities and by parents to finish as fast as possible to beat the competition and get ahead of one's peer group or cohort.
And we wonder when the next real estate bust will occur. None of the young adults with crushing student loan debt is in a position to take on a mortgage--particularly if already in default.
6
That college loans will be wiped-off the books in the near future is a virtual certainty.
The manner in which this will occur will be very similar to procedures already in place at many federal agencies.
Here’s how it will work:
The Department of Education will contract out for a new integrated management information
system capable of bringing together in one place all the data on outstanding college loans in the U.S. The new system will replace the dozens of such systems the Department currently employs. It will be housed in a picturesque building on the banks of the Potomac designed to handle the requirements of the complex super-computers that will be housed there, at an approximate cost of $1.5 billion to build and equip, not counting likely overruns.
In 3 to 5 years when the building is completed, the President of the U.S. and the head of the
Dept. of Education will attend the opening ceremony and red, white and blue ribbons will be cut. Tours of the building will be conducted for distinguished visitors. A male file clerk spotting a comely young woman in the crowd will turn around at his desk to get a better look at her and accidentally brush his computer keyboard with the sleeve of his jacket.
Voila!
The manner in which this will occur will be very similar to procedures already in place at many federal agencies.
Here’s how it will work:
The Department of Education will contract out for a new integrated management information
system capable of bringing together in one place all the data on outstanding college loans in the U.S. The new system will replace the dozens of such systems the Department currently employs. It will be housed in a picturesque building on the banks of the Potomac designed to handle the requirements of the complex super-computers that will be housed there, at an approximate cost of $1.5 billion to build and equip, not counting likely overruns.
In 3 to 5 years when the building is completed, the President of the U.S. and the head of the
Dept. of Education will attend the opening ceremony and red, white and blue ribbons will be cut. Tours of the building will be conducted for distinguished visitors. A male file clerk spotting a comely young woman in the crowd will turn around at his desk to get a better look at her and accidentally brush his computer keyboard with the sleeve of his jacket.
Voila!
5
"The new data may prompt Congress to revisit its system for ensuring that students who take on debt have a fighting chance to pay it back."
Well, I don't think so. This fraudulent system has been able to survive thru the decades only because of tacit or otherwise surreptitious support by our corrupt Congress.
Well, I don't think so. This fraudulent system has been able to survive thru the decades only because of tacit or otherwise surreptitious support by our corrupt Congress.
9
Agree........but if Congress says you must have a decent education in order to enter college, there would be terrible repercussions, as whoever spoke up about the number of students who graduate high school in May and enter remedial courses in August/September.
And if Congress tackled the problem of college administrative costs, costs that have risen far faster than inflation, the Congressman/woman would be persona non grata.
And if Congress tackled the problem of schools that offer little in the way of real education, the for-profit "colleges" and "universities", there would be editorial after editorial about taking away education from thousands of students.
And try advising students about the dearth of jobs in their "field of dreams".
Reality is tough. Life is tougher. The President and Congress who tells us the truth about education weaknesses and dearth of jobs would incite riots. We can't handle the truth.
And if Congress tackled the problem of college administrative costs, costs that have risen far faster than inflation, the Congressman/woman would be persona non grata.
And if Congress tackled the problem of schools that offer little in the way of real education, the for-profit "colleges" and "universities", there would be editorial after editorial about taking away education from thousands of students.
And try advising students about the dearth of jobs in their "field of dreams".
Reality is tough. Life is tougher. The President and Congress who tells us the truth about education weaknesses and dearth of jobs would incite riots. We can't handle the truth.
3
Excellent piece . Now explore it.
At the core two things stand out: Colleges, for profit schools and universities benefit from student debt which is largely unpaid and, there are no jobs for most graduates.
This economy is not good for most college graduate and certainly not good for any high school graduate or drop out. No matter what *spin* comes out of the White House tens of millions of American citizens, men and women, are unemployed or working part time or for low wages.
Please cut through the lies that are being told students about STEM employment and reveal the shameless greed of every person who supports increased immigration and the Visa program that steals jobs from American workers to give them to foreigners. This has been going on since the 1980's and is a plague on our society. Foreign employment has moved from the call centers to professional ranks. It is now taking jobs from our American citizens who are college graduates.
Do stories about IT workers (STEM) who are fired to make room for the imported Visa holders. Go after the Zuckerbergs et.al in the USA who insist there are no American workers intelligent and skillful enough for employment.
This is a crucial story. Please don't let it die.
At the core two things stand out: Colleges, for profit schools and universities benefit from student debt which is largely unpaid and, there are no jobs for most graduates.
This economy is not good for most college graduate and certainly not good for any high school graduate or drop out. No matter what *spin* comes out of the White House tens of millions of American citizens, men and women, are unemployed or working part time or for low wages.
Please cut through the lies that are being told students about STEM employment and reveal the shameless greed of every person who supports increased immigration and the Visa program that steals jobs from American workers to give them to foreigners. This has been going on since the 1980's and is a plague on our society. Foreign employment has moved from the call centers to professional ranks. It is now taking jobs from our American citizens who are college graduates.
Do stories about IT workers (STEM) who are fired to make room for the imported Visa holders. Go after the Zuckerbergs et.al in the USA who insist there are no American workers intelligent and skillful enough for employment.
This is a crucial story. Please don't let it die.
20
This is perhaps the most insightful posting that I have seen in the NYT in a long time. We idolize those that are destroying our society from within - whether they be Zuckerberg, Jobs, Imelt and Intel. These people are not patriots with concern for our country - they are mercenaries at best.
3
Unless we have a massive transformation of our political system, this is only going to get worse. While we, rightfully, fight to kill the job killing, democracy destroying TPP, an even more dangerous 'trade' agreement, TISA, is being negotiated which will massively increase the number of employees here under VISAs while American workers go jobless. The professional class who has, largely, ignored the damage done to large sectors of our workforce as they have survived relatively well under our current corporate run gov't. The pain is moving up the ladder and if TISA should get through (and there are powerful forces behind bringing it about, those 'safe' jobs aren't going to be so safe 5 or 10 years from now.
Good piece, Kevin, and I'm appalled at some of the comments which reveal a persistent lack of understanding among the public. Student loans have been used to elevate salaries of college administrators beyond all reason. Since it is a simple matter of arithmetic to determine that most of the money will never be repaid, the effect, apart from the extensive misery imposed on the young, is that the Federal Government is providing a direct wage subsidy, and a massive one. Further, student loan funds have been used as a stealth welfare program across the country. Many,many "students" have enrolled in college so that they can get money to eat, pay rent, buy a used car, etc. The loan funds are therefore sustaining hundreds of local economies, particularly in cities like San Diego, where a great proportion of the local economy consists of colleges, universities and trade schools.
15
Anecdotal of course, but it seems that it doesn't occur to many of the kids taking loans that they will indeed have to repay them. They get that money and buy nice cars, or new phones, or vacations, or use it for anything except actual school-related expenses.
Kids who take loans should be required to have a few hours of counselling about loans and the consequences of having one.
And it's insane that tuition is beyond the point of anyone's ability to work their way through school. 48% of public universities' budgets in Michigan came from state funding as recently as 2001; now it is 21% with tuition increases making up for the lost money.
We used to recognize education as a common good and we put our money where our mouths were. Now, we just say it.
Kids who take loans should be required to have a few hours of counselling about loans and the consequences of having one.
And it's insane that tuition is beyond the point of anyone's ability to work their way through school. 48% of public universities' budgets in Michigan came from state funding as recently as 2001; now it is 21% with tuition increases making up for the lost money.
We used to recognize education as a common good and we put our money where our mouths were. Now, we just say it.
8
Most of the loan money goes straight to the school. Oh, you are required to have counseling but mine consisted of an e-mail I saved but didn't read until later because I didn't realize that was actually what it was. But in a nut shell, no matter how badly the loan contractor messes up your loans it's your fault is pretty much the content of what you are sent.
3
Wait, what? I never saw any of my student loan money- it went straight to the school, just like everyone else I know. I don't understand how people in your area are using it for anything else, and even if they did, the school expenses had to be coming from somewhere. My guess is what you're assuming is loan money is actually mom and dad's money.
4
You don't have any experience with what you are discussing. You have to take entrance counseling to be approved for student loans. Also, the bit about students wasting student loan money is nothing but a straw man argument. I can assure you that all of my student loan money went into college-related expenses, along with most of my savings.
1
This could be somewhat misleading because many graduate fields take a long time to finish. I suspect the big picture is correvt, too many students with too much debt. Colleges are very liberal places generally, yet they are masters at extracting money from the government and from kids. Once these kids exit college, the indebted kids cannot afford to buy things which impacts the economy. What a mess.
10
I, too, also have issue with including delayed payments due to graduate school as "nonpayment". I deferred $14k in student loan debt for 6 years while finishing my PhD. A year later, I paid it off.
1
I don't think they are counting in school deferment negatively, but rather the other hardship deferments, nevertheless you have a point. However, there are many students who deliberately enroll in multiple unnecessary back to back Master's degrees (typically at online schools that have easy admission standards) to prolong living off the system and deferring their loans. Since the Stafford loan limits for graduate students are obscenely high and there is no limit on Graduate Plus loans, the system is ripe for abuse.
2
The problem is some people have actual hardships or issues with the loans and some people just spend their money elsewhere and don't pay the loans back. We need to separate the two and focus on the first group.
Makes you wonder when they wrote this legislation on cohort rule, whether it wasn't a total joke giveaway...like, hey, um, we're going to have to regulate you a bit more, wink wink. So here is a new rule with a loophole the size of the Lincoln tunnel, drive on through with your EZPass. And when you dont pay, no worries, the government will pick up the tab. Did it really take them 25 years to decide to finally calculate realistic repayment rates???? Crazy.
Of course, one could look at these private for profit junk schools as just simply a massive giveaway to construction industries and "education" administrators instead. I mean, hey, the economy is cratering, so why not bail it out backdoor via MOAR credit, and yeah, no worries, the taxpayers will eventually be good on it one day when we decide to really understand how little is going to be repaid by borrowers.
No matter how you look at this, it stinks of corruption and sleaze.
Of course, one could look at these private for profit junk schools as just simply a massive giveaway to construction industries and "education" administrators instead. I mean, hey, the economy is cratering, so why not bail it out backdoor via MOAR credit, and yeah, no worries, the taxpayers will eventually be good on it one day when we decide to really understand how little is going to be repaid by borrowers.
No matter how you look at this, it stinks of corruption and sleaze.
6
You know the sad part is...is when you graduate and your alma mater contacts you to donate to the school. I told them to take from the money I used for the education.
8
Why is there no link to the Department of Education report? I tried to find it on my own to no avail.
Two more disturbing trends contributing to massive student debt:
1. Jobs that didn't require a college degree a few decades ago now require one. Jobs that only required a bachelor's degree now require a master's, and so on. Universities are at the forefront of this trend. Do you really need a master's in library studies to be a librarian? Apparently so, according to those hiring, many of which are university libraries. The number of adjunct professors has skyrocketed. Even though the schools use them for cheap labor and often offer few benefits, they now require applicants to have a PhD whereas a master's used to be sufficient.
2. Programs are increasingly requiring an internship to graduate and are charging for the credits. Working in a real setting is undeniably valuable for a career in your planned field. However, why must students pay tuition to the school, perhaps incurring enormous debt, to work a job, often for someone else?
What happened to the idea of getting paid to work, not the other way around?
It’s difficult for this trend to reverse as both schools and employers love this setup. Schools get free tuition money, and employers get free labor.
Speaking of internships, in some fields, in order to get a full time paying job, you have to do an unpaid internship after graduating. Prime among the fields that exploit recent graduates is journalism/media--the very people who are decrying massive student debt.
1. Jobs that didn't require a college degree a few decades ago now require one. Jobs that only required a bachelor's degree now require a master's, and so on. Universities are at the forefront of this trend. Do you really need a master's in library studies to be a librarian? Apparently so, according to those hiring, many of which are university libraries. The number of adjunct professors has skyrocketed. Even though the schools use them for cheap labor and often offer few benefits, they now require applicants to have a PhD whereas a master's used to be sufficient.
2. Programs are increasingly requiring an internship to graduate and are charging for the credits. Working in a real setting is undeniably valuable for a career in your planned field. However, why must students pay tuition to the school, perhaps incurring enormous debt, to work a job, often for someone else?
What happened to the idea of getting paid to work, not the other way around?
It’s difficult for this trend to reverse as both schools and employers love this setup. Schools get free tuition money, and employers get free labor.
Speaking of internships, in some fields, in order to get a full time paying job, you have to do an unpaid internship after graduating. Prime among the fields that exploit recent graduates is journalism/media--the very people who are decrying massive student debt.
23
The inflation of educational "requirements" for jobs is a symptom of another systemic problem in this country: the dysfunctional employment marketplace. As corporations worshipping at the altar of Shareholder Value came to regard employees as mere commodity expenses to be reduced or eliminated, the function of "Human Resources" transformed from finding the best candidates to reducing the cost of acquiring the lowest-cost human commodities.
Downsized HR organizations rely on software to instantly and cheaply screen out the majority of job applicants. That way, the skeleton staff of humans only have to deal with the tiny fraction of applicants who match a lengthy (and often impossible) list of qualifications. Including degrees in the list of qualifications for jobs that actually do not require that level of education is an effective way to screen out the maximum number of applicants, so that humans only see a manageable number of "highly qualified" candidates.
The result is that people believe they need more education to get ahead in an increasingly competitive job market. Unfortunately, that education provides no assurance that they'll actually get jobs. But it practically guarantees they'll get deeper in debt. That suits universities and banks just fine.
(As for those internships, you don't need an MBA to recognize that it's better by far to have someone pay you for the privilege of working for you than to pay someone a salary and benefits to work for you.)
Downsized HR organizations rely on software to instantly and cheaply screen out the majority of job applicants. That way, the skeleton staff of humans only have to deal with the tiny fraction of applicants who match a lengthy (and often impossible) list of qualifications. Including degrees in the list of qualifications for jobs that actually do not require that level of education is an effective way to screen out the maximum number of applicants, so that humans only see a manageable number of "highly qualified" candidates.
The result is that people believe they need more education to get ahead in an increasingly competitive job market. Unfortunately, that education provides no assurance that they'll actually get jobs. But it practically guarantees they'll get deeper in debt. That suits universities and banks just fine.
(As for those internships, you don't need an MBA to recognize that it's better by far to have someone pay you for the privilege of working for you than to pay someone a salary and benefits to work for you.)
14
There is a difference here between debt defaults and debt burden. Many students from all types of institutions, socioeconomic situations, and levels of education feel burdened by their debt, but the debt default problem is becoming increasingly concentrated among a particular type of student: the lower-income student with limited college readiness.
That causes debt defaults to show up mostly in community colleges and for-profit institutions. That's where poorly-prepared students with limited means sign up. Because these students lack academic skills they are more likely to drop or fail out, and because they have little income they can't pay back even small loan balances (or choose not to because they feel they haven't gotten their money's worth).
Punishing the institutions that enroll these students just means that the institutions will go after more soldiers (who are funded by the DoD), or will stop enrolling many marginal students, basically making college an impossibility for them. Expecting such students to simply work more is not realistic. How can someone who failed to get the requisite skills in the slower-paced environment of high school be expected to gain them PLUS their college-level education while working two jobs? That's just not going to happen.
We have a difficult choice to make as a society. Do we deny these students college? Do we find an alternative way to prepare them? Do we pay their tuition for them? Or do we accept high default rates?
That causes debt defaults to show up mostly in community colleges and for-profit institutions. That's where poorly-prepared students with limited means sign up. Because these students lack academic skills they are more likely to drop or fail out, and because they have little income they can't pay back even small loan balances (or choose not to because they feel they haven't gotten their money's worth).
Punishing the institutions that enroll these students just means that the institutions will go after more soldiers (who are funded by the DoD), or will stop enrolling many marginal students, basically making college an impossibility for them. Expecting such students to simply work more is not realistic. How can someone who failed to get the requisite skills in the slower-paced environment of high school be expected to gain them PLUS their college-level education while working two jobs? That's just not going to happen.
We have a difficult choice to make as a society. Do we deny these students college? Do we find an alternative way to prepare them? Do we pay their tuition for them? Or do we accept high default rates?
5
Our society has already chosen to wrong its vulnerable youngsters: we admit under-prepared students to third-rate colleges, support them poorly or not at all, prop up their "dropout factories" with taxpayer-financed student loans, and watch the students drop away, crippled with debt. Higher education's dropout factories play a crucial role in sorting and stigmatizing poor and working-class students, a crucial role in creating our low-wage nation.
1
Well, this certainly reminds me of the subprime mortgage meltdown crisis which caused the near economic collapse of our country and many others. All the while it was going on, warnings were streaming into Congress, the Fed, and the regulators, warnings from legal services attorneys, consumer advocates, state attorneys general, consumer bankruptcy attorneys, the National Consumer Law Center, and the victims themselves that, like this student loan fiasco, too many loans were being made to financially unqualified borrower, that the house of cards would soon fall. But in every case everyone in charge found ways to keep it going, no matter what, just like with American National University here. They will not be pushed out of the system. Expect the same result: profits for them; a disaster for the students and the country.
8
Start looking at the bigger problem of the government charging students 8% on student loans. Victims of government's usurious loans make up the majority of those defaulting on student loans.
There are no jobs (outside of fraud banking and stripping) that make it possible for students to pay their 180K in loans with an 8% interest of pyramiding interest.
There are no jobs (outside of fraud banking and stripping) that make it possible for students to pay their 180K in loans with an 8% interest of pyramiding interest.
14
This article is a good start. We also need one showing how loan companies "repay" colleges that send business their way. Bribing universities is an old tradition - it usually involves underwriting a new building rather than paying off some official - but it should be no trouble for a determined journalist to find out who's paying off whom, and how.
3
These loans should be dis-chargeable in bankruptcy like all other loans, why is there no push to change this draconian law?
15
One of the biggest problem is with law schools. That must be addressed sooner rather than later. Taxpayers are on the hook for huge amounts. It is not fair to anyone for students to take out huge loans when most cannot jobs which would service the debt.
5
The colleges should be responsible for repayment of part of the loan when it is in default. Otherwise there is no incentive to quit victimizing students.
5
Taxpayers should get out of the student loan business. Exploitation of students and their families with loans during the past three or so decades has provided the "business model" leading to dramatic increases in tuition (and administrative costs), making it very difficult for students to work their way through college as was commonly done in the past. But even today, students without family support would be better off taking 6-8 years to complete a 4-year degree, working to support themselves and taking a class or two every semester, graduating debt-free while gaining valuable real-world experiences along the way.
1
Either way you still run in to one big issue that I notice with student loan holders. If you take out student loans you will be (should be) forgoing the next 10 years of buying or otherwise doing anything of significance (no wedding, no new car, no new house, no kids, etc.) if you are having trouble paying the loans back. And you have the same issue with taking 6-8 years to finish a degree. Also degree plans change over time and if you don't get your degree finished in the right time frame you may have to take additional new classes to finish.
1
Restoring bankruptcy rights would help. Funds for such a program could come from taxing the inheritances of millionaires and billionaires. And those taxed, after paying each year, would still be rich.
5
Income based repayment and pay as you earn (PAYE) are essentially the same thing as chapter 13 Bankruptcy - payments are limited to a small percentage of income regardless of the size of the debt and the balance is forgiven at the end of the payment period. The only difference is the length of the repayment period - 20-25 years, which we would expect for a taxpayer backed program. Someone with an exorbitantly high debt and or mediocre income, e.g. $150,000 or more making $60,000 or less, will qualify and will not come close to paying off their loan. These programs while well intentioned, remove any incentive to borrow responsibly. Contrary to much of the media coverage, students are not victims - they quite often demand the maximum amount possible to live on, remain perpetually enrolled in back to back master's degrees, either totally oblivious or all the while knowing this will be a financial burden down the road. The mistake is letting them do that.
3
You realize that there are limits to borrowing? Not sure how you borrow to pay for "back-to-back" masters degrees. One of them will suck up all your debt limit.
Working in the field, I have seen many students do this. The graduate plus loan has no limit and $138,500 is the Stafford cap, which is hardly a cap at all. It is not uncommon to see students go for fourth and fifth graduate degrees simply because they can.
High school seniors of all levels of ability do not have a good perspective about their aptitude for completing college and getting a job. There needs to be more ability-based eligibility for student loans and grants.
1
So you're saying that we should have some authority position over this 18 year-old that can help them make these key life decisions....
If only we had people who could fulfill that role
I wonder what they did in the olden days.
If only we had people who could fulfill that role
I wonder what they did in the olden days.
6
Such a misleading column... The reason for the student loan disaster is the bankruptcy "reform" legislation enacted in 2005 that makes student loan recipients ineligible for bankruptcy protection: Institutionalized predatory lending, with the nation's own children as the primary victims, aided and abetted by America's 24/7 propaganda machine, aka "the media".
15
Talk about a brain drain! This means we're hobbling the brightest, and most ambitious of poor students with unpayable loans. This debt will stress them, distract them and prevent them from moving forward in their lives. Many who could have gone on to Masters degrees or PhDs won't dare to try, when they're already hobbled by debt at the bachelor's level. Such a shame.
3
The brightest students pay absolutely nothing for grad work - they actually get paid to go to school.
The students in the article are far from the best and the brightest.
The students in the article are far from the best and the brightest.
2
No, not true. Those who fit demographic criteria get fellowships, and that's only at the best funded universities. Professional schools especially pay nothing in graduate scholarships, even at the doctoral level. Lawyers, engineers, architects, even physicians, are paid little, some of them nothing at all AFTER schooling is completed and before licensure. Social Work students have to do three days a week of "field work" while in school, most of it unpaid, and then suffer through at least three and often six years of low pay ($16-$18 an hour) before licensure. So no, the "best and the brightest" are not always funded, unless of course, they come from wealth.
3
Master's degrees may not often be funded, but only a fool would pay for a PhD. If a PhD program doesn't offer you tuition remission and a stipend, they are signaling to you that you aren't all that good, and you should not go to that school. Doctors can expect to earn it back--200k in loans may sound scary, but not when you consider physicians' salaries. Other Master's degrees are expensive: you have to do your homework to see if it is worth it. And law school has historically been a great bet, but isn't at the moment--I feel bad for those who caught that wave at the end.
2
With a decent income, we would like to pay for our kids to go to expensive private colleges like our parents did for us. Our parents didn't get any financial aid when we went to college but they both had pension plans and a good twenty years left before retirement from their stable jobs when we left for college. We have no pension and less than a decade until retirement from our less-secure jobs. Should our children get loans or use our meager retirement savings for college? When they're in our position they'll still be paying off the loans in addition to having no pension or retirement savings. It looks like we're reaching the culmination of an elaborate pyramid scheme.
17
Not sure why "expensive" would be one of the criteria that you desire for your children's education. Perhaps you mean "exclusive"?
Stupidity breeds stupidity. Attend a community college and finish at a four-year state school. Work part-time jobs to defray your cost. Millions did it; have no debt when they graduate. If (for some reason) you have debt; pay up. It is your responsibility to work one, two, three whatever jobs to pay the debt. Common sense to some unfortunately not for many as the article states.
7
If you can do that with your chosen career field and the credits transfer from community college to the 4 years college of you choice than yes, do that.
These loans should be dis-chargeable in bankruptcy like all other loans, why is there no push to change this draconian law?
5
These kids have no credit history, no earning and no assets - who do you think will provide them with loans that can be discharged via bankruptcy when they finish college.
Wait - let me guess - we should have the 1% adopt them.
Wait - let me guess - we should have the 1% adopt them.
2
It is a sign of this country's idiocy that we would bankrupt the next generation and scare off those who would want to get an education because it's forbiddingly expensive to do so. Other developed countries, where college education is understood to be an investment in the future, are not nearly so nearsighted.
13
Education has many problems including student loans, tuition prices, teacher shortages, low wages for teachers, mismanagement, consultants preying of grant money, demographics of neighborhoods and entire cities that put a kid at a significant disadvantage, and on and on.
In my mind, a great equalizer could be for the government to offer some very basic online degrees and certificates and or contract with online education delivery systems such as Coursera to offer free high school and college degrees.
Free online degrees sponsored and paid for by the government solves nearly every one of the issues above. Sure it creates other issues that may seem obvious and others that are not so obvious but at least it gives a great number of kids an alternative to high tuition, going to school in high-crime communities, and inadequate and undertrained teachers. It also gives parents and students relief from high tuition costs and underperforming schools.
The courses are already out there. It would be easy for the government to compile them into degree programs.
In my mind, a great equalizer could be for the government to offer some very basic online degrees and certificates and or contract with online education delivery systems such as Coursera to offer free high school and college degrees.
Free online degrees sponsored and paid for by the government solves nearly every one of the issues above. Sure it creates other issues that may seem obvious and others that are not so obvious but at least it gives a great number of kids an alternative to high tuition, going to school in high-crime communities, and inadequate and undertrained teachers. It also gives parents and students relief from high tuition costs and underperforming schools.
The courses are already out there. It would be easy for the government to compile them into degree programs.
1
Bill & Melinda Gates Fnd. reached out to underwrite accreditation to MOOC's including my Education project World Mentoring Academy(a MOOC) over a year ago. We have 180+ courses that align with Credit-by-Exam providing Free Education to students around the World with no US Taxpayer $'s. Using Credit-by-Exam, a student earned his Bachelors for less than $5,000(Textbooks & test fees) from Regionally Accredited Thomas Edison State College(NJ).
Currently students can earn a degree by:
*College attendance (on Campus or online)
*Credit by Exam (180+ AP/CLEP, DSST, NYU-SCPS, TECEP, ECC etc)
*Challenging Courses @ University
*Life/Work experiences.
Presidential candidates realize the importance of dealing with the cost of Higher Ed., and making promises to college students/parents of Free University by shifting the cost to Taxpayers/Voters. Given a Fed debt in excess of $18 trillion it is unlikely voters will support more Taxes & Debt.
Two years before Coursera, World Mentoring Academy's mission statement was to help students receive a high quality University education, at no cost to Students except Textbooks & Test fee's(which unfortunately are not under my control). California High School Student's can earn upto 36 University credits for $14 through Youngscholars.tv from Calif State Univ Domingous Hills( est. 15yrs ago). For over 6 yr's I've reached out to the Media to cover these projects, with no success, They would rather write about the problem.
Currently students can earn a degree by:
*College attendance (on Campus or online)
*Credit by Exam (180+ AP/CLEP, DSST, NYU-SCPS, TECEP, ECC etc)
*Challenging Courses @ University
*Life/Work experiences.
Presidential candidates realize the importance of dealing with the cost of Higher Ed., and making promises to college students/parents of Free University by shifting the cost to Taxpayers/Voters. Given a Fed debt in excess of $18 trillion it is unlikely voters will support more Taxes & Debt.
Two years before Coursera, World Mentoring Academy's mission statement was to help students receive a high quality University education, at no cost to Students except Textbooks & Test fee's(which unfortunately are not under my control). California High School Student's can earn upto 36 University credits for $14 through Youngscholars.tv from Calif State Univ Domingous Hills( est. 15yrs ago). For over 6 yr's I've reached out to the Media to cover these projects, with no success, They would rather write about the problem.
2
WASC Senior College and University Commission accredits Cal State Dominguez Hills and we are proud of the work they are doing to make education more accessible through their online Young Scholars Program. We also accredit Minerva University, a partially online college with high quality and more affordable tuition. These hybrid models reduce the cost of college and optimize students' in-classroom time. The future of education is digital; to what degree and how learning goes online is the question. Of course, there is no substitute for the in-person experience in education and more importantly, for teachers and administrators who genuinely care about their students.
I hate to sound like a Puritan scold, but we need to stigmatize debt like was in prior centuries. Today we see debt as good - government and personal borrowing stimulates the economy. But there is a downside to that. We can't borrow ourselves to permanent prosperity.
Colleges need to find a way to educate poor students without incurring debt - through scholarships, work-study programs, etc. The student loan gravy train can't continue indefinitely. In fact I predict the next financial crisis will be a student debt crisis.
Colleges need to find a way to educate poor students without incurring debt - through scholarships, work-study programs, etc. The student loan gravy train can't continue indefinitely. In fact I predict the next financial crisis will be a student debt crisis.
3
Trying to overhaul the entire educational system and the economy is a lot to tackle. But there are two immediate solutions that would make a huge difference while we work on those enormous problems.
1. Lower the interest rate.
2. Allow for the discharge of student loan debt through bankruptcy.
Why are we making it so impossible for people to repay their loans? That is a recipe for failure.
1. Lower the interest rate.
2. Allow for the discharge of student loan debt through bankruptcy.
Why are we making it so impossible for people to repay their loans? That is a recipe for failure.
12
We making it impossible for students to discharge their student loans, because otherwise many young people will take out $250,000 in loans, live lives of luxury, and pass the costs to the taxpayers, just as many people bought $500,000 homes on $50,000 in income.
That said, student loan interest rates should be renegotiated to much lower rates, below the prime rate, which is what they used to be.
That said, student loan interest rates should be renegotiated to much lower rates, below the prime rate, which is what they used to be.
1
A discharge of debt is not repayment.
Pay as You Earn or income based repayment allows you to "repay" your loan even with a monthly payment of zero based on your income, regardless of the size of he debt. The balance is forgiven at the end of the repayment period regardless of whether any principal was paid or not. This is already bankruptcy - Chapter 13 is very similar.
We are telling our kids that college is the only way to be successful which perversely sets up many for failure. We need to change the incentives for high schools and provide more vocational options.
11
College can be a life-changing experience that allows a person to access their innate abilities to reason, think critically, and to better understand the world around them. Not everyone needs to go to college, but everyone would be helped by becoming more aware of how they live in the world and what their contribution will be to it.
Community College and Gap Year.
CC should be the first choice for most students desiring post-secondary education. Calculus is exactly the same at the local CC as it is as Prestige U, despite the comparatively low price tag. I attended a community college and two universities to complete my degrees. The professors were equally good (equally demanding) at the Community College. From the STEM courses I took, I was well prepared to transfer as a junior, and I did so with an Associates degree.
In the case of one who wants to change majors, or decides that finishing a degree is not for them, far better to learn that while paying the lowest possible price for the first few years of higher education. We don't buy teenagers luxury cars for driver's ed, but many sign on for luxury-car level-debt in order to overpay for college. This is nuts!
A Gap Year is also worthwhile. Many don't belong in college and even among those who do, they may not be ready for it immediately upon collecting a High School diploma. A year of work to save money, to get exposure to life beyond academics, and to mature can make one a better student.
CC should be the first choice for most students desiring post-secondary education. Calculus is exactly the same at the local CC as it is as Prestige U, despite the comparatively low price tag. I attended a community college and two universities to complete my degrees. The professors were equally good (equally demanding) at the Community College. From the STEM courses I took, I was well prepared to transfer as a junior, and I did so with an Associates degree.
In the case of one who wants to change majors, or decides that finishing a degree is not for them, far better to learn that while paying the lowest possible price for the first few years of higher education. We don't buy teenagers luxury cars for driver's ed, but many sign on for luxury-car level-debt in order to overpay for college. This is nuts!
A Gap Year is also worthwhile. Many don't belong in college and even among those who do, they may not be ready for it immediately upon collecting a High School diploma. A year of work to save money, to get exposure to life beyond academics, and to mature can make one a better student.
15
I did both of those and they were some of the best decisions I ever made.
Then I went to law school.
Then I went to law school.
1
In addition to students who carry huge loan balances we have millions of adults and senior adults with less than $5000.00 in savings accounts. Add in those millions of people who carry a balance on their credit card(s) every month and you quickly see a nation drowning in self-inflicted excess brought on by the endless 24/7 drumbeat of the buy, buy, buy, television marketing industry.
10
It is also brought on by the flood of junk mail offering credit cards to virtually everyone.
If you haven't seen it yet, watch the documentary _Inside Job_, which won both at the Oscars and Cannes. This bi-partisan documentary attempts to present a balanced look at the 2008 recession. What most of us don't know is that the major banks actually like bad debt. As this documentary demonstrates, what banks do with debt is appalling, and nothing has been done to regulate the financial industry that caused the recession.
My fear is that the housing bubble was a small portion of a larger consumer credit bubble, which includes credit card and student loan debt. When that bubble bursts, as all do, our economy, which is already circling the drain, will crash harder than it did in 1929.
If you haven't seen it yet, watch the documentary _Inside Job_, which won both at the Oscars and Cannes. This bi-partisan documentary attempts to present a balanced look at the 2008 recession. What most of us don't know is that the major banks actually like bad debt. As this documentary demonstrates, what banks do with debt is appalling, and nothing has been done to regulate the financial industry that caused the recession.
My fear is that the housing bubble was a small portion of a larger consumer credit bubble, which includes credit card and student loan debt. When that bubble bursts, as all do, our economy, which is already circling the drain, will crash harder than it did in 1929.
1
This is sadly no surprise to me.
In the 80's I was a math professor at a regional state school. What I saw there was shocking and disturbing. (I tried to change it, but to no avail, and with much damage to myself and my family.)
Here is just some of what I saw.
* a math professor who told me that, after 5 years of teaching an intro course, she could finally always tell when the homework was wrong - but wasn't always able to tell why.
* a statistics professor who confused the most important theorem in statistics with a very simple fact.
I later understood how I could see all of this could be.
Major universities, from the sixties to this day, have unscrupulous professors, who are willing to accept big grants to "generate" American PhDs in math. (Today it is to get "English speaking" professors; yesterday, it was to catch the Russians.) Those unscrupulous professors will grant a PhD to almost anyone. Those PhD's go on to be "professors". That is what happens.
(More about this, and much else, can be found on my blog inside-higher-ed .)
Sadly, students at this university were willing to work hard and wanted to learn. Robbing them of their education is outrageous.
In the 80's I was a math professor at a regional state school. What I saw there was shocking and disturbing. (I tried to change it, but to no avail, and with much damage to myself and my family.)
Here is just some of what I saw.
* a math professor who told me that, after 5 years of teaching an intro course, she could finally always tell when the homework was wrong - but wasn't always able to tell why.
* a statistics professor who confused the most important theorem in statistics with a very simple fact.
I later understood how I could see all of this could be.
Major universities, from the sixties to this day, have unscrupulous professors, who are willing to accept big grants to "generate" American PhDs in math. (Today it is to get "English speaking" professors; yesterday, it was to catch the Russians.) Those unscrupulous professors will grant a PhD to almost anyone. Those PhD's go on to be "professors". That is what happens.
(More about this, and much else, can be found on my blog inside-higher-ed .)
Sadly, students at this university were willing to work hard and wanted to learn. Robbing them of their education is outrageous.
6
What does your statistical training tell you about generalizing a population's behavior from two data points?
1
And now we have a generation of people who are still paying off their student loans as they cosign on their children's student loans. The debt cycle continues.
22
If what you say is true, they didn't even learn from their experience.
1
Back a couple of years ago 60 minutes had a story on this issue particularly when concerning the for profit colleges in which many are owned by corporate conglomerates. The fact remains that many of the students of these colleges were given fabricated reports on job possibilities after graduation, hence, if the graduate can't find a job how can they pay back their loan?
One of the major for profit colleges, after many student graduate complaints about this issue and a government investigation, ultimately lost its license and was forced to close.
One of the major for profit colleges, after many student graduate complaints about this issue and a government investigation, ultimately lost its license and was forced to close.
7
The German system of education is free for students nationwide. However, Germany has national tests at the high school level at certain intervals to test their student's knowledge and practice level. A student has to pass to advance to the college level. consequently, only about 40% of the high school students may go to college.
for those who did not qualify for college, they are referred to the apprentice school. These students will learn a trade such as fixing BMW , Volkswagen and other precision machinery. The government pays the whole bill. But, they only allow qualified candidates to go on. Perhaps, we can do it here. However, some parents may object to it.
for those who did not qualify for college, they are referred to the apprentice school. These students will learn a trade such as fixing BMW , Volkswagen and other precision machinery. The government pays the whole bill. But, they only allow qualified candidates to go on. Perhaps, we can do it here. However, some parents may object to it.
59
A close friend grew up in Germany and told me of the apprenticeship/technical programs which he a graduate of and had a successful electronics design firm. In Germany their incredible growth can be attributed to "Mittlestang" or small technical business growth and this technology based training for the high school students contributes to that growth.
I have a math degree from Purdue and when I was in school many years ago, my tuition/fees were less than $200 per year. I worked my way through Purdue by working as a butcher. When I graduated I had money in the bank and no debt.
Today's graduates - some of them with degrees not worth the paper they are printed on are typically in debt for many thousands of dollars.
Why don't our politicians fix this problem - well these diploma mills make lots of money off their students and have highly paid lobbyists from Gucci Gulch in W DC.
I have a math degree from Purdue and when I was in school many years ago, my tuition/fees were less than $200 per year. I worked my way through Purdue by working as a butcher. When I graduated I had money in the bank and no debt.
Today's graduates - some of them with degrees not worth the paper they are printed on are typically in debt for many thousands of dollars.
Why don't our politicians fix this problem - well these diploma mills make lots of money off their students and have highly paid lobbyists from Gucci Gulch in W DC.
14
Parents will object? Try Republicans. No free stuff. And Democrats. Tests=bad, because they are biased, racially, gender-ly, and now also transgender-ly too. It's not fair!!
I'm not saying America is doomed, but. . . .
I'm not saying America is doomed, but. . . .
3
I lived in Germany and saw how it worked -- it works well.
1
I went back to school to finish an associates, get a bachelor's and ultimately a teacher's license 10 years ago. 60K later (10K of that is just interest) I cannot possibly see me ever paying this debt off. I teach and the salary is so meager I can only really afford the minimums and still eat. So either I get a part time job for the next 10 years and exhaust myself to try and put a dent in it or just resign myself to owing the feds till I'm 65 and they have to forgive the rest.
30
But they WON'T forgive the rest, I hate to break the news to you. They will garnish your Social Security up to a certain percentage. Then, even if age, health, disability makes you eligible for loan forgiveness, the "forgiven" loan will be taxed to you as a lump sum income, and how will you pay that tax?, and how will you adjust for the "income" allocated to you and its effects on senior benefits, such as drug prescription subsidies? A bankruptcy court is unlikely to grant relief, and discharge of the debt is almost impossible. I really don't know why the people saddled with these debts don't riot in the streets. One piece of advice, by the way, to consider - do not ever agree to consolidate your loans.
14
It's not only your debt but the fact that teachers' wages have been stripped of wages, i.e., since schools are making teachers pay large parts of their benefits and pensions in the past couple years, while also reducing or freezing salaries for several years with no cost of living increases. You are working at a deficit that is going to continue.
6
Ten years ago, I did pretty much the same thing. I'd finally gotten my degree, was dissatisfied with the work I was doing and went back to school to earn a teaching credential. I had assumed I could work while back in school. Nope. I assumed I would get the job of my dreams upon graduation. Nope.
With a mountain of debt, exceeding my yearly income, I had to live within my means. Which I did, for a really long time. Ten years later, I still owe Sallie Mae about $200 dollars, the rest of my college debt is gone. I drive an 18 year old Toyota, I'm saving for new wheels. I have the job of my dreams.
It is easy to borrow too much money in college. But as an adult, I knew that I had made those decision and for my own self-respect, needed to pay back the money. At $72 a month, I have three more months with Sallie Mae. The non-student borrowing, which was more costly, is long gone. It feels good.
With a mountain of debt, exceeding my yearly income, I had to live within my means. Which I did, for a really long time. Ten years later, I still owe Sallie Mae about $200 dollars, the rest of my college debt is gone. I drive an 18 year old Toyota, I'm saving for new wheels. I have the job of my dreams.
It is easy to borrow too much money in college. But as an adult, I knew that I had made those decision and for my own self-respect, needed to pay back the money. At $72 a month, I have three more months with Sallie Mae. The non-student borrowing, which was more costly, is long gone. It feels good.
4
I take her advice and look in the yellow pages. I find one -- COS -- Career Opportunities School.
The first one I spotted. I go to the school and I take some rinky dink test. 6 + 7 + 8 equals 21, right?
They tell me, "You are a man, you will deal craps," because a monkey can deal blackjack. So you better have a pretty face and a nice rack if you want the strip. Or would you rather rot downtown?
There was a $1682.00 grant involved and a $2600.00 dollar loan, for three games.
My only question was, "How soon can I get the money?"
"10 days." "Where do I sign?"
This school had recruiters and they were scraping guys right out of the gutter. The loans were federally insured. The school got their money regardless of default, courtesy of the US taxpayer.
Every Thursday guys would show up for disbursement and that was the last of them for another week. They should have called it Crack Opportunities School.
The school eventually lost their federal funding; they had too many defaults.
The first one I spotted. I go to the school and I take some rinky dink test. 6 + 7 + 8 equals 21, right?
They tell me, "You are a man, you will deal craps," because a monkey can deal blackjack. So you better have a pretty face and a nice rack if you want the strip. Or would you rather rot downtown?
There was a $1682.00 grant involved and a $2600.00 dollar loan, for three games.
My only question was, "How soon can I get the money?"
"10 days." "Where do I sign?"
This school had recruiters and they were scraping guys right out of the gutter. The loans were federally insured. The school got their money regardless of default, courtesy of the US taxpayer.
Every Thursday guys would show up for disbursement and that was the last of them for another week. They should have called it Crack Opportunities School.
The school eventually lost their federal funding; they had too many defaults.
6
Chris, I totally agree.
We are the generation that gets to witness the end of the American Dream. The2 numbers that you are about to see tell a story.
1. According to the Census Bureau, 69 percent of all children in the United States are living in a home that receives some form of aid from the federal government in 2013.
2. IT is hard to believe, but an astounding 59.4 percent of all American workers make less than $29,700 a year.
Ironically, 77% of all American still believe they are middle class!!
We are the generation that gets to witness the end of the American Dream. The2 numbers that you are about to see tell a story.
1. According to the Census Bureau, 69 percent of all children in the United States are living in a home that receives some form of aid from the federal government in 2013.
2. IT is hard to believe, but an astounding 59.4 percent of all American workers make less than $29,700 a year.
Ironically, 77% of all American still believe they are middle class!!
26
Know the game "one of these is not like the other"? The list of nondischargeable debts in federal bankruptcy consists of those resulting from illegal or dishonest activity: tax evasion, unpaid child support, debt accrued during fraudulent operations, personal injury resulting from drunk driving,...and student debt.
Why is it that almost every debt not incurred through illegal or dishonest means can be discharged in bankruptcy, yet student debt cannot?
The terms of federal loans are already pretty bad, but private loans are even worse. Higher interest rates for most people, more aggressive misleading marketing, no loan forgiveness programs. Private loans are not even discharged upon death, leaving families to absorb not just the lost income from the deceased member but also having to continue to pay back that debt.
Why is it that almost every debt not incurred through illegal or dishonest means can be discharged in bankruptcy, yet student debt cannot?
The terms of federal loans are already pretty bad, but private loans are even worse. Higher interest rates for most people, more aggressive misleading marketing, no loan forgiveness programs. Private loans are not even discharged upon death, leaving families to absorb not just the lost income from the deceased member but also having to continue to pay back that debt.
29
Why can't it be discharged? because student debt is different. Other debts, you must qualify for with FICO scores and good credit.
Student loans are given to TEENAGERS who have no assets or credit or skills or a job -- based on a BET that they will finish school and get a good job and repay the bank .... 10 years down the line or more.
If you let people go bankrupt, it would make sense for them to do so while they are broke and recent grads, and then stick the public with the huge bill for their education (in Gender Studies or Film Criticism). Later, when they did get some sort of job, they would pay back nothing.
BTW: private loans are most definitely discharged at death. The problem is that many parents co-sign student loans, meaning THEY accept the bills if the student cannot pay for any reason (including death). However, it is really very rare for a 18-22 year old to drop dead.
Student loans are given to TEENAGERS who have no assets or credit or skills or a job -- based on a BET that they will finish school and get a good job and repay the bank .... 10 years down the line or more.
If you let people go bankrupt, it would make sense for them to do so while they are broke and recent grads, and then stick the public with the huge bill for their education (in Gender Studies or Film Criticism). Later, when they did get some sort of job, they would pay back nothing.
BTW: private loans are most definitely discharged at death. The problem is that many parents co-sign student loans, meaning THEY accept the bills if the student cannot pay for any reason (including death). However, it is really very rare for a 18-22 year old to drop dead.
6
Nothing is free. If these were dischargeable in bankruptcy, we would collectively have to absorb this cost through higher taxes, more government borrowing or both, thus driving up the cost for everyone else with even higher interest rates/origination fees and this would further eliminate any incentive for the student to borrow responsibly or the school to help reduce indebtedness. Assuming that the students mentioned in the article not paying any principal account for half of the total loan portfolio, this would cost taxpayers somewhere around $600 Billion if they all took advantage of this.
2
You can blame the abuses of Ivy League professional school graduates in the 1970's for the laws that do not allow the discharge of student loans. Some of the elite realized that they could take out student loans to finance their MDs, PhDs, LLDs and MBAs and declare bankruptcy upon graduation. Since virtually every student graduating with student loans is bankrupt and/or insolvent upon graduation, they were able to get free education. It's a small wonder that Elizabeth Warren thinks it's a great idea. She is of the age when it was a common practice.
Just think of how much she has contributed to higher education, with her $350,000 salary for a part time job.
Just think of how much she has contributed to higher education, with her $350,000 salary for a part time job.
2
I have struggled under my student loan debt my entire adult life, watching it grow each year through compounded interest, consolidation, and userious fees added on by debt collectors during my late twenties when I defaulted for a few years and then consolidated.
My original loan balance from my undergraduate degree and graduate degrees amounted to around $40,000 dollars which is high but is a manageable amount since I ended up working in a decent paying profession. But through several detours and periods of hardship I ended up with a loan balance of over $200k twenty years later. I have been paying on these loans and will have to pay on these loans until I am well into retirement. Is this really the intent that the government had when it provided me an opportunity to better myself? Should banks be making so much money off of me? The answer to me is not clear. I am happy to pay back what I owe, but I do not understand why I have to pay so much extra than I owe. It has impacted my life in many ways and left me feeling hopeless and resentful.
My original loan balance from my undergraduate degree and graduate degrees amounted to around $40,000 dollars which is high but is a manageable amount since I ended up working in a decent paying profession. But through several detours and periods of hardship I ended up with a loan balance of over $200k twenty years later. I have been paying on these loans and will have to pay on these loans until I am well into retirement. Is this really the intent that the government had when it provided me an opportunity to better myself? Should banks be making so much money off of me? The answer to me is not clear. I am happy to pay back what I owe, but I do not understand why I have to pay so much extra than I owe. It has impacted my life in many ways and left me feeling hopeless and resentful.
88
don't pay
7
If they are federal loans, after 65 your done, the loan is forgiven. If that is any comfort.
1
I don't think you're correct that loans are forgiven after age 65! I would love to know where you got that info please.
1
Congress needs to do more than "revisit its system for ensuring that students who take on debt have a fighting chance to pay it back." They need to fix the dysfunctional and iniquitous "American Exceptional" system of higher education that requires so many young people to take on a lifetime debt burden to obtain what is a de facto requirement for any job that allows a decent life.
It is an inexcusable shame that the United States is the only "developed" nation in which students face what is effectively indentured servitude. (The shame is second only to being the only country whose citizens face bankruptcy from medical bills even if they pay exorbitant premiums for adequate insurance.) And to compound the shame, lenders bought a law preventing student loan debt from being relieved with bankruptcy regardless of circumstances, even as corporations (including those headed by Donald Trump) receive Wall Street plaudits for using bankruptcy as a strategic tool to create shareholder value by ridding themselves of creditors, unions, and employees.
Addressing the problem of lender abuse is ignoring the more fundamental problem of ensuring that qualified students receive the necessary education to contribute their full potential to society. Other countries regard providing that education as an investment in the public good. The United States regards higher education as an industry that can profit from excessive tuition. That's a disgrace!
It is an inexcusable shame that the United States is the only "developed" nation in which students face what is effectively indentured servitude. (The shame is second only to being the only country whose citizens face bankruptcy from medical bills even if they pay exorbitant premiums for adequate insurance.) And to compound the shame, lenders bought a law preventing student loan debt from being relieved with bankruptcy regardless of circumstances, even as corporations (including those headed by Donald Trump) receive Wall Street plaudits for using bankruptcy as a strategic tool to create shareholder value by ridding themselves of creditors, unions, and employees.
Addressing the problem of lender abuse is ignoring the more fundamental problem of ensuring that qualified students receive the necessary education to contribute their full potential to society. Other countries regard providing that education as an investment in the public good. The United States regards higher education as an industry that can profit from excessive tuition. That's a disgrace!
48
And this is happening so that universities can build more buildings to "compete" with each other and create fat layers of administrators between the students and the instructors. This one is on the universities but no one seems to address it with legislation.
4
And Congress gets paid (i.e., campaign contributions) when industry profits from their decisions. One need not be system scientist to see the greed and corruption in this nifty SCOTUS-blessed arrangement.
It is on the university administration. Believe me, we profs have less interest in having students in our classes who don't belong in college and having to constantly lower standards than anyone. Where I teach, professors' salaries were cut for two years, during which several six-figure new administrative positions were created. The faculty did not receive a pay increase, not even a cost of living increase, for 10 years, during which time more than 15 new six-figure administrative positions were created. I teach at a state college, by the way. Budgets and expenditures of state schools, by law, must be available to all taxpayers. Any time a state college or university adds staff or a building, it should be required to publish a justification for the expenditure. But taxpayers ignore the expenditures of public postsecondary education. We shouldn't.
The notion that everything in society should pay its way is nonsense. 50 years ago education was affordable for all because it was subsidized and educated Americans provided our economy and research institutions the needed workforce. The nation flourished. Foolishly we bought into the idea of cutting the college subsidies and now India or China can generate graduates so cheaply it isn't worth educating them in America. We are exporting our education system.
And small communities can't attract graduates especially in medicine. My dentist offered a promising intern and opportunity to earn into the dentist's practice while being paid well. Then the dentist learned the intern had nearly a $300,000 debt there was no way the dentist could meet the demands of the debt and provide the intern with living wages. The dentist's business is worthless. And our community has to hope the dentist will work for the rest of his life, since getting young dentists is unlikely.
We should realize that these are bad loans, just like the real estate loans of the Great Recession. The loans were sold to students who had no idea the real cost of the loans nor could they anticipate the job market they would face. Education is a national investment not a individual investment-- the risk is too great for the individual, but worth every penny to the nation. The loans should be forgiven. America should return to taxing ourselves to subsidize education.
And small communities can't attract graduates especially in medicine. My dentist offered a promising intern and opportunity to earn into the dentist's practice while being paid well. Then the dentist learned the intern had nearly a $300,000 debt there was no way the dentist could meet the demands of the debt and provide the intern with living wages. The dentist's business is worthless. And our community has to hope the dentist will work for the rest of his life, since getting young dentists is unlikely.
We should realize that these are bad loans, just like the real estate loans of the Great Recession. The loans were sold to students who had no idea the real cost of the loans nor could they anticipate the job market they would face. Education is a national investment not a individual investment-- the risk is too great for the individual, but worth every penny to the nation. The loans should be forgiven. America should return to taxing ourselves to subsidize education.
47
I'm sorry, but I want substantive reforms in university curriculum before we start paying anyone else's education. I say this as someone who paid off a relatively heavy debt for 10 years and was married to someone with very heavy student debt for 10 years, together. We don't need anyone with a degree in 'studies'. We don't need anyone with a psychology degree, there are too many around now for the few jobs available. Education colleges need to be totally revamped, they are way too easy, smart kids avoid them like the plague. Anyone just getting a plain biology or chemistry degree that isn't going to med school should realize there are few jobs available to a 4 year recipient and they will require more specialized education. My husband and I spend years paying off our loans and then saved like mad for our own kids. We are paying full freight for our kids, no financial help at all. We were the first in our families to go to college.
6
Please Robert. It's time for college students to become more responsible. I came here from Ireland, grew up in poverty and still went to college. My parents could not contribute to my college education. The loans were mine but I made sure that I was working towards a degree that had the highest possibility of a decent paying career. I worked 20 hrs a week while attending school and 60 hrs a week during the summer. I graduated at the top of my class with a mountain of debt even though I never went on spring break or toured Europe. All the debt was repaid by continuing to make sacrifices after I graduated. America was built by people that work hard and are responsible. Too many college students are having a good time but will never get a decent paying job. That is their fault not society's. We need more engineers, accountants and system analysts. There is no well paying careers for those students in urban studies. The $1.3 trillion of student debt is a bubble that was created by the government and irresponsible students and parents. Those of us that have obtained good degrees while working hard have no interest in paying the debts of those that have chosen a different path.
4
Obama can push for making student loans (past and present) to be consolidated under comparable consumer loan rates (1 to 3% per annum), where Fed Rates has been zero since 2009.
Obama should listen to Senator Warren on relieve student loan that has been major burden on countless borrowers.
The Department of Education should release the long awaiting legislation for 'debt forgiveness process' for profit college student loans and the whole student loan process should be streamlined with manageable loan rates (1 to 3% max) rather than 6 to 8% rates that has been the norm.
Obama should listen to Senator Warren on relieve student loan that has been major burden on countless borrowers.
The Department of Education should release the long awaiting legislation for 'debt forgiveness process' for profit college student loans and the whole student loan process should be streamlined with manageable loan rates (1 to 3% max) rather than 6 to 8% rates that has been the norm.
24
Republican fingerprints are all over this mess. Republic governors across the country have cut state spending on higher education, leading directly to tuition increases that outpace inflation. Why did they make these cuts? So they could afford to cut taxes on the wealthy and on corporations. So those groups make off like bandits, while the poor and middle class, striving for a better life, are left holding the student loan bag...and when they default, it falls into the laps of taxpayers at large (in other words, the average working Janes and Joes).
32
Thank you for writing about the medium-term non-repayment rate, rather than just the immediate default rate. It is higher education's dirty little secret.
Tuitions are so out of whack that may (even elite) colleges are encouraging students to consider deferrals and income-based repayment schemes as their Plan A, rather than a last resort.
And all of these stats do not even consider the many graduates who have managed to land decent jobs and make regular payments, but are left with so little cash that they find themselves bunking up with roommates well into their 30s.
Tuitions are so out of whack that may (even elite) colleges are encouraging students to consider deferrals and income-based repayment schemes as their Plan A, rather than a last resort.
And all of these stats do not even consider the many graduates who have managed to land decent jobs and make regular payments, but are left with so little cash that they find themselves bunking up with roommates well into their 30s.
11
Why is interest so high? When I asked for a four-month deferment earlier this year due to relocation and unemployment, I was informed that my loans would increase by $495 due to interest. From my financial perspective, that is huge. I cancelled the deferment. I'd rather risk poverty while attempting to pay off my loans than use a deferment.
13
The Academic-Financial Complex runs what I call a "pass-through" scheme. I understand the academic part well since I'm a former professor. Before I explain how it works, here is a quote from Bill Gross, someone who certainly understands the financial side.
"...Universities are run for the benefit of the adult establishment, both politically and financially, not students..." (Quoted with permission. See my blog inside-higher-ed for the link.)
So, how does this "pass-through" scheme work?
It's easy. Money passes through naïve "customers" (once quaintly called "students") to universities, then businesses and investment companies. "Student" borrowers then pay back the loans to investors.
Maybe we could just skip the faux-educational part.
We could require most young people to pay universities principal and investors interest on a monthly basis. The universities could continue with their building projects, hedge funds and entertainment businesses (aka "sports"). The young folks could party or work, or whatever. We would have a system similar to today's, but more efficient.
The reason I said "most" young people is that the rich and some of the talented and gifted would get to go to college just like before.
This whole scheme would be a little complicated but I'm sure there are professors who know how to work it all out. Of course, the young people would have to pay them for their time.
"...Universities are run for the benefit of the adult establishment, both politically and financially, not students..." (Quoted with permission. See my blog inside-higher-ed for the link.)
So, how does this "pass-through" scheme work?
It's easy. Money passes through naïve "customers" (once quaintly called "students") to universities, then businesses and investment companies. "Student" borrowers then pay back the loans to investors.
Maybe we could just skip the faux-educational part.
We could require most young people to pay universities principal and investors interest on a monthly basis. The universities could continue with their building projects, hedge funds and entertainment businesses (aka "sports"). The young folks could party or work, or whatever. We would have a system similar to today's, but more efficient.
The reason I said "most" young people is that the rich and some of the talented and gifted would get to go to college just like before.
This whole scheme would be a little complicated but I'm sure there are professors who know how to work it all out. Of course, the young people would have to pay them for their time.
16
Ironic but tragically true. Why saddle the poor sap in the middle when you can just suck yet more taxpayer dollars directly into private investment funds. Rinse and repeat for pharma, banking and defense complexes.
2
These for-profit “universities” are another example of private profit and public debt.
They make a lot of money off of taxpayer-subsidized loans, provide worthless degrees at huge costs, and saddle their graduates and the American taxpayer with the debt that provided them with their profits.
The most painful things are the lies they tell to the youth of this country. They promise a bright future with one of their degrees, when they really know they are just bilking the kids, just playing them for suckers. If the kids are in turn playing the system for a sucker…taking the money and running…they learned it from their parents and from the same corrupt system.
These “for-profits” sow the seeds of doubt and despair in a new generation of Americans by ensuring vocational failure and unmanageable debt. Many of these colleges are one step above loan-sharking, one step above a game of 3-card Monte.
And while it is all legal, it is a dishonestly and a deceitfulness that will come back at this country, with a vengeance.
They make a lot of money off of taxpayer-subsidized loans, provide worthless degrees at huge costs, and saddle their graduates and the American taxpayer with the debt that provided them with their profits.
The most painful things are the lies they tell to the youth of this country. They promise a bright future with one of their degrees, when they really know they are just bilking the kids, just playing them for suckers. If the kids are in turn playing the system for a sucker…taking the money and running…they learned it from their parents and from the same corrupt system.
These “for-profits” sow the seeds of doubt and despair in a new generation of Americans by ensuring vocational failure and unmanageable debt. Many of these colleges are one step above loan-sharking, one step above a game of 3-card Monte.
And while it is all legal, it is a dishonestly and a deceitfulness that will come back at this country, with a vengeance.
37
The average college grad leaves school owing a whopping....$26,000.
The unemployment rate among college grads is a very impressive 2.6% vs. 5.1% for the general population.
That's a very good deal.
The unemployment rate among college grads is a very impressive 2.6% vs. 5.1% for the general population.
That's a very good deal.
7
I would get government out of it, bundle and securitize the loans, sell them on Wall Street, and call Ben Bernanke in 5–7 years.
As a community college instructor, I read this blog and the posted comments with great interest.
First, the posters who stated that some people simply should not attend college is correct.
But nationwide, we have experienced a corporatization of postsecondary education that needs to be addressed. While colleges and universities advetize the concept of maintaining high standards and administrators vehemently deny efforts to lower standards, they use a back-door method of doing so. Faculty evaluations in some cases and simply "corporate" culture in others press faculty to both fill courses quickly and retain students.
The real danger in the fact that the nationwide grade average is now a B moving toward an A is not that B students are given an A. It is that F students are given a C.
As the number of administrators earning six-figure salaries continues to escalate nationwide, the interest on money instead of education grows by leaps and bounds, as does the cost of education. NYT has reported on this growth of administrative costs, which increase for no clear reason, but no one seems to care. Administrators' interest in money over education and the cost of these highly paid staff members definitely contribute to the student debt problem in terms of both the cost and quality of education, and the quality of education has an impact on graduate's ability to repay. But as long as "the business of America is business," the pattern will continue.
First, the posters who stated that some people simply should not attend college is correct.
But nationwide, we have experienced a corporatization of postsecondary education that needs to be addressed. While colleges and universities advetize the concept of maintaining high standards and administrators vehemently deny efforts to lower standards, they use a back-door method of doing so. Faculty evaluations in some cases and simply "corporate" culture in others press faculty to both fill courses quickly and retain students.
The real danger in the fact that the nationwide grade average is now a B moving toward an A is not that B students are given an A. It is that F students are given a C.
As the number of administrators earning six-figure salaries continues to escalate nationwide, the interest on money instead of education grows by leaps and bounds, as does the cost of education. NYT has reported on this growth of administrative costs, which increase for no clear reason, but no one seems to care. Administrators' interest in money over education and the cost of these highly paid staff members definitely contribute to the student debt problem in terms of both the cost and quality of education, and the quality of education has an impact on graduate's ability to repay. But as long as "the business of America is business," the pattern will continue.
59
Amen, Deb.
We've now convinced everyone that "education is key" to a middle class life. It's not. Key to a middle-class life for the many are 1. a national industrial policy that looks forward and privileges human citizens over other interests; 2. a national trade policy that does the same; and, 3. a minimum wage starting at about $15 and indexed to inflation, plus serious enforcement of existing labor law.
With all that, everyday idiots would have a shot. And long-suffering college profs could begin to end the academic race to the bottom they've been trapped in for two or three decades. Of course, there would be a need for fewer profs. Lots fewer.
The transition, though--that would be hard. We'd need some kind of WPA for all the folks with Master's Degrees in whiny identity politics. I'd be OK paying higher taxes for that.
We've now convinced everyone that "education is key" to a middle class life. It's not. Key to a middle-class life for the many are 1. a national industrial policy that looks forward and privileges human citizens over other interests; 2. a national trade policy that does the same; and, 3. a minimum wage starting at about $15 and indexed to inflation, plus serious enforcement of existing labor law.
With all that, everyday idiots would have a shot. And long-suffering college profs could begin to end the academic race to the bottom they've been trapped in for two or three decades. Of course, there would be a need for fewer profs. Lots fewer.
The transition, though--that would be hard. We'd need some kind of WPA for all the folks with Master's Degrees in whiny identity politics. I'd be OK paying higher taxes for that.
14
It's a terribly sad situation where college is seen only as a career move. The joy of education, the pleasure of learning and thinking, the exposure to a wider world view, the opportunity to develop and foster lifelong adult relationships that broaden our choices and chances - every person who wants that experience should be able to get it, not just the wealthy. Why does our country value education so little? It's an ugly system that we have now, saddling young people and their parents with crushing debt. I agree not all people should go or even want to go to college, but when the desire and ability is there, they shouldn't have to mortgage their futures for that experience.
11
Exactly, Mary. When I was in graduate school in the 1990s, profs and even administrations were opposed to college education being viewed solely as job training. Now that seems to be all that higher ed is about. Obama proposed tying financial aid to students' majors, financing only those majors that had a proven track record of serving as job training. That move would be disastrous for the arts, and would reduce higher ed to the level of business and technical schools.
Perhaps I'm prejudiced, but I believe community colleges hold the key. There is very little in the corporate world that could not be served as well by two-year degrees as by four-year degrees, which would decrease student debt immensely. But as long as corporations continue to require four-year degrees as qualifications necessary to work as a file clerk, there is little chance of moving in that direction.
The nation's lover affair with corporations needs to end. It becomes increasingly obvious that, not only is the affection not returned, but it is met with abuse of employees and consumers alike. American products are unreliable, and service is non-existent. But our government, instead of protecting citizens from these monsters, turns a blind eye to the abuse and even encourages it.
Perhaps I'm prejudiced, but I believe community colleges hold the key. There is very little in the corporate world that could not be served as well by two-year degrees as by four-year degrees, which would decrease student debt immensely. But as long as corporations continue to require four-year degrees as qualifications necessary to work as a file clerk, there is little chance of moving in that direction.
The nation's lover affair with corporations needs to end. It becomes increasingly obvious that, not only is the affection not returned, but it is met with abuse of employees and consumers alike. American products are unreliable, and service is non-existent. But our government, instead of protecting citizens from these monsters, turns a blind eye to the abuse and even encourages it.
3
Affirmative action has destroyed the traditionally black colleges. Any black guy or girl who is reasonably literate can get a full scholarship at a respectable college or university. That leaves very few qualified students for the poorly-funded historically black schools.
3
That is simply not true. HBCUs still graduate disproportionately more African American doctors, lawyers, judges, and engineers compared to TWIs. Only 22% of African American undergraduates attend HBCUs, but 80% of African American judges attended an HBCU. See:
http://tmcf.org/about-us/our-schools/hbcus
The problem is family wealth, or the lack thereof.
http://tmcf.org/about-us/our-schools/hbcus
The problem is family wealth, or the lack thereof.
9
Jonathan, where is that information available. Full scholarships for what, where? You can't make statements that are totally false. A black student must be just as qualified as any white to get a scholarship, SCOTUS made that perfectly clear in a number of recent cases, including Fischer v. University of Texas at Austin. The fact is minorities are still underrepresented and will be until the idea of "Reverse Discrimination" whatever that is, is purged from our culture.
1
All wealth is a reverse IOU. What someone pays you for anything is its only financial value. If no one will buy your house, your bonds, your stocks then they are worthless. When anyone issues an IOU then reneges that is when you see what the real value is. Why we cannot control any aspect of our economy that is this critical is a testament to how markets are not working. The market for higher ed is hyped, overvalued, and ridiculously overpriced. HOW can you have near zero inflation and wage escalation for 35 years while higher ed and healthcare are inflated double to quadruple the inflation and wage escalation rate almost every one of those 30 years?
11
That doesn't relate to the article. The institutions mentioned in the article generally have lower tuition than average. I work an HBCU where the tuition is less than 10,000, and the tuition plus expenses considerably less than 20,000. Cheaper than a year of day care. The problem my students have is lack of parental wealth, i.e., nobody to help them pay college costs or help them through a period of underemployment following graduation.
Again, like most readers of the New York Times, you are thinking of the most elite colleges when you think of tuition. They can charge as much as they do because the represent elite consumer goods, and they have low default rates because the people who attend them (a) have parents that can afford to pay (b) have parents who cannot really afford to pay, but will move heaven and earth not to let their kids default because they are wealthy enough pr financially savvy enough to know what that will do to their children's credit or (c) get subsidized by the university, which has a large or even staggering endowment.
Again, like most readers of the New York Times, you are thinking of the most elite colleges when you think of tuition. They can charge as much as they do because the represent elite consumer goods, and they have low default rates because the people who attend them (a) have parents that can afford to pay (b) have parents who cannot really afford to pay, but will move heaven and earth not to let their kids default because they are wealthy enough pr financially savvy enough to know what that will do to their children's credit or (c) get subsidized by the university, which has a large or even staggering endowment.
9
"The institutions mentioned in the article generally have lower tuition than average. I work an HBCU where the tuition is less than 10,000, and the tuition plus expenses considerably less than 20,000. Cheaper than a year of day care. "
20,000 is less than a year of day care? Is Bill Gates changing the diapers there? But seriously, your comment is kind of funny. Taking inflation into account, the most dirt cheap of dirt cheap universities today still cost more than the AVERAGE university in this generation's parents' generation.
20,000 is less than a year of day care? Is Bill Gates changing the diapers there? But seriously, your comment is kind of funny. Taking inflation into account, the most dirt cheap of dirt cheap universities today still cost more than the AVERAGE university in this generation's parents' generation.
1
Day care costs where are I live are about $15,000 a year per child, so yes, day care is pretty expensive. The workers are at minimum wage, and probably saddled with student loans, too, since many of them (in my experience) seem to be trying to go to school to try to pursue careers in early childhood development, teaching, nursing, or other regular jobs. Plus, they are women, so are never ever going to be paid what they are worth. But, I digress.
2
Chris and NYTimes:
You asked an excellent question: Is American Dream a gigantic fraud? Yes, it is. Today, the idea that the American dream has been replaced by an American nightmare has become the nation’s favourite way to discuss widespread inequality and downward social mobility.
We don't believe American Dream whatsoever, It is a big lie.
You asked an excellent question: Is American Dream a gigantic fraud? Yes, it is. Today, the idea that the American dream has been replaced by an American nightmare has become the nation’s favourite way to discuss widespread inequality and downward social mobility.
We don't believe American Dream whatsoever, It is a big lie.
44
The American Dream has become The American Nightmare as politicians - that's plural, meaning both political parties - have made it not just possible but desirable to export jobs and import goods and workers.
Bill Clinton's NAFTA caused the loss of millions of jobs. TPP will cause the loss of millions more. Legal immigration - with companies saying they cannot find US citizens to perform jobs - has allowed work visas to put or keep millions of Americans out of work, and illegal immigration has kept millions more unemployed or under-employed.
But the politicians become wealthy. Track the net worth of politicians as they go into office and compare with their net worth on leaving office, or on leaving the White House. Look at the Clintons' wealth, estimated at well over $100 million without their personal piggy bank, the B, H, & C Clinton Foundation (disclosure: I actively campaigned and voted for Bill Clinton). Compare with Harry Truman on accepting offers for corporate positions in his 1960 book, Mr. Citizen:
"I turned down all of those offers. I knew that they were not interested in hiring Harry Truman, the person, but what they wanted to hire was the former President of the United States. I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and the dignity of the office of the Presidency."
http://www.snopes.com/quotes/truman/truman.asp#4pHcGkqpDqrjZSPC.99
Bill Clinton's NAFTA caused the loss of millions of jobs. TPP will cause the loss of millions more. Legal immigration - with companies saying they cannot find US citizens to perform jobs - has allowed work visas to put or keep millions of Americans out of work, and illegal immigration has kept millions more unemployed or under-employed.
But the politicians become wealthy. Track the net worth of politicians as they go into office and compare with their net worth on leaving office, or on leaving the White House. Look at the Clintons' wealth, estimated at well over $100 million without their personal piggy bank, the B, H, & C Clinton Foundation (disclosure: I actively campaigned and voted for Bill Clinton). Compare with Harry Truman on accepting offers for corporate positions in his 1960 book, Mr. Citizen:
"I turned down all of those offers. I knew that they were not interested in hiring Harry Truman, the person, but what they wanted to hire was the former President of the United States. I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and the dignity of the office of the Presidency."
http://www.snopes.com/quotes/truman/truman.asp#4pHcGkqpDqrjZSPC.99
4
So many factors impact whether or not somone will be successful in college, see a return on their investment, and be able to pay back student loans. However, as someone who has a graduate degree from one of the best schools in the world, who has also attended a lower tier school, I can attest that there are students that just don't belong in college. At the lower tier school I attended I would estimate that at least 75% of the students lacked the necessary basic skills. I was also a teacher assistant at that school and regularly graded assignments that appeared to be from a 6th grader. Given our inability to prepare and prequalify these students, what can we do to ensure a reasonable chance of success? For starters the cohorts need to be more responsible for the debt that these students are incurring. A parent, guardian or possibly the school itself should be cosigners if the student does not have demonstrated credit history. Secondly, every student loan should be accompanied by a paid internship that runs concurrently with classroom work. The student would learn real skills, begin paying back debt, and continually demonstrate to an employer that they are suited for skilled work. Lastly, the for profit schools should not be eligible for federal student loans. If they want to provide credit to students they should figure out how to do so without federal loan guarantees.
21
Unfortunately this is a situation of ignorant parents raising ignorant children. Obviously, neither has done any research on the value of a college education which has and always will fluctuate depending on the times. Long term Career and degree planning is integral to a successful outcome; picking a college major just because you're interested in that subject is not sufficient. One must look at where the jobs are going, the changes in technology and where surpluses and deficits exist not only today but decades down the road.
These students are getting nothing out of college because they invested nothing into it to begin with.
These students are getting nothing out of college because they invested nothing into it to begin with.
6
Go, Kelly. I agree with the ignorant parents statement. Having a child means
you own fiscal responsibility for them, that means college too. If parents
save a little at a time (no vacations, eat in, drive old cars, etc) they can save for
tuition and not even be a part of this whole college loan mess.
you own fiscal responsibility for them, that means college too. If parents
save a little at a time (no vacations, eat in, drive old cars, etc) they can save for
tuition and not even be a part of this whole college loan mess.
1
Student loan debt is worse than the indentured servitude our country was founded on at the very beginning (outright slavery a bit later). At least they got a goat or a cow when they served their 4-7 year term
21
How about dispelling the notion that a college education is for everyone? No? Still believe that everyone ought to own their home?
Many of these students would have been far better off by spending less time, effort, and money to master a craft and be employed in a highly skilled trade instead.
Many of these students would have been far better off by spending less time, effort, and money to master a craft and be employed in a highly skilled trade instead.
43
... and then join a union!
9
The student load debt wouldn't exist;no jobs and not many career's after college.One cannot repay money when you have money to begin with.Most of these institutions are nothing more than money mills.Giving out worthless degrees and students going nowhere.Creditor's hounding you relentlessly,to no end.Work is what's needed,living wages.Not medicaid,medicare,endless managed care company's.To bring America back to its' glory days.
5
This is a nice sounding argument, but you're forgetting that "college" includes trade schools. Want to be a licensed esthetician, hairstylist, Massage therapist, phlebotomist, physician's assistant, diesel repair mechanic? Because you can get federal student loans to study those things. And you'll find it awfully hard to break into most of those lines of work without a degree or certificate or diploma.
6
The government will generously loan you $50K to get your STEM degree at Fly-By-Night U; then they will generously give away your potential job to a foreign worker on an H-1B visa.
All the wise guys get paid, and the sucker's left holding the bag.
All the wise guys get paid, and the sucker's left holding the bag.
106
Yes, the government shouldn't loan you the money to attend "Fly-By-Night U"; but blaming foreign job seekers for taking the job you aren't qualified for is not a valid argument.
For new borrowers, we need a reform of Dept. of Education lending practices, or at least a better way to educate people as to the huge time/financial commitment they are undertaking.
For past borrowers, we need better options for repayment, financing, and forgiveness. I borrowed approximately $17K in loans - well under the national average - and even making the standard repayment of over $200 a month (on a $20K AGI, by the way), I'm barely covering the interest. That borders on punitive for a person who has never missed a payment - or even paid late! And yet it's eating up nearly all of the income I have left to put towards savings every month. At this rate, it'll be over a decade before I can even think about saving to buy a house (or make any other kind of investment in my future).
Even just a modest reduction in interest rates would go so far towards alleviating the financial burden of debt. I borrowed, and I'll pay it back, but I expect a fair (or at least possible) deal.
For past borrowers, we need better options for repayment, financing, and forgiveness. I borrowed approximately $17K in loans - well under the national average - and even making the standard repayment of over $200 a month (on a $20K AGI, by the way), I'm barely covering the interest. That borders on punitive for a person who has never missed a payment - or even paid late! And yet it's eating up nearly all of the income I have left to put towards savings every month. At this rate, it'll be over a decade before I can even think about saving to buy a house (or make any other kind of investment in my future).
Even just a modest reduction in interest rates would go so far towards alleviating the financial burden of debt. I borrowed, and I'll pay it back, but I expect a fair (or at least possible) deal.
30
Even if your loans are at the highest federal rate of 6.8%, if you borrowed $17K and made the standard monthly payment of $195 per month, you will have fully discharged this loan in the standard ten years. That's exactly the way the loan system is supposed to work. I completely agree that the system needs to be reformed so that student loan interest is brought down to a more reasonable level, but you aren't "barely covering the interest." You made an investment in yourself and you're paying it off. Good on you.
3
Americans under age 25 make up the fastest-growing age group filing for bankruptcy since 90's. Bigger student loans, larger credit card debts and disappearing of Stable middle class jobs are the major factors of above robust trend in United States.
By the way. Is American Dream a gigantic fraud?
By the way. Is American Dream a gigantic fraud?
40
What you say is true - except that nobody can't file for bankruptcy on student loans - ever. If you can't pay, the interest grows and grows, so you can literally spend decades paying back 2-4 x the original debt, and have your credit rating ruined.
It's a sin.The interest rates are way above the fed rate - so the banks rake in the profits. It's usury of the poor, and what used to be the middle class.
It's a sin.The interest rates are way above the fed rate - so the banks rake in the profits. It's usury of the poor, and what used to be the middle class.
73
Bankruptcy won't wash away student loans, which can burden the former student for the rest of his/her life, sucking away a huge proportion of whatever earnings he or she might eventually have and leaving them insufficient income to live on (though their nominal income from the job disqualifies them from Medicaid or food stamps).
In other words, student debt has created a class of Americans whose efforts to better themselves via education resulted in permanent poverty.
In other words, student debt has created a class of Americans whose efforts to better themselves via education resulted in permanent poverty.
88
The loan interest rates on my student loans (all federal) are much higher than the current prime rate - 4.6% for my undergrad and 6.8% for grad school loans. By way of comparison, my car loan interest rate is 1.99%. If I qualified for a good car loan rate, why don't I qualify for lower student loan rates? And why won't the government adjust student loan interest rates so borrowers might stand a fighting chance of paying them off?
86