Aren’t people who went to college supposed to have an economic and other advantages over those who didn’t?
Proponents of student loan forgiveness want President Biden to use his authority immediately to forgive up to $50,000 in loans. Others want all loans forgiven.
The average student loan payment is $393. Those with higher payments and debt are typical those with advanced degrees, with higher earning power, with the potential to get a good return on their investment.
Have they thought this through? Of course they have, it’s good politics and naive progressive thinking. The estimated cost of forgiving $50,000 is $1 trillion. That’s half of the last stimulus package and virtually what we spend on Medicare in a year.
Start a business, buy a house, start a family? More likely buy a new car.
To me the idea of cancelling loans borrowed as an investment in education and future higher income, is absurd. But beyond that, how do you forgive any amount of student loans as of a given date without consequences for students still in school, for those starting school next Fall?
College financial aid is based on need, as flawed as that system may be. Now progressives want to ignore need and other factors by simply ignoring commitments made by students and their families.
If the accepted assumption of a college education’s economic value were true, why would any loan forgiveness be necessary? The fact is, it is true. People with college degrees and student debt have higher incomes than the national average
We are talking about handing $50,000 (of borrowed money) to people including those with professional degrees earning a good living, those who obtained economically useless degrees, those who obtained no degree and those who were not prepared for college to begin with.
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College is a scam / sham for many students. 55% of 2014 college grads are working in jobs that do not require a degree. These are probably the people who want the government to bail them out. At the current graduating rates there will never be enough jobs. Most high schools have closed their shop classes, because students are told that you need to have a college degree to make the big bucks. We now have a shortage of skilled trades technicians. But almost nothing is being done to fix this issue. Auto mechanics, plumbers, electricians, HVAC pay $20+ per hour. Wait times to get cars, plumbing, electrical and HVAC repaired are weeks, sometimes months in many of the larger metro areas. When are we going to be honest to our students and tell them the truth, many are just not college material and the jobs just are not there. The last 5 years I spent on active duty in the USAF, 1990 thru 1995, we were having to send new people to remedial English and Math classes, so they could perform jobs in Avionics on F-15 fighter aircraft. The public school system is failing many students and it looks like the college system is not doing much better.
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Price controls are not a good idea.
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Neither are blank checks as in guarantee student loans a good idea. Colleges will continue to raise tuition until students can no longer have the ability to pay. College tuition rose 100% between 2001 to 2019. Inflation during that same time period was only 44.4%. Some say tuition increase are need due to poor performs of the market and endowments, lack of government funding, and over demand for an education. One college raises tuition by 4% one year, the next college looks and says look what they did, can we get away with a tuition increase too. Students don’t care because they must get a college education and are told not to worry about the costs. You can get a loan and you will make more money and be able to pay it back.
So let them pay it back.
There is no cap on the amount on federal loans and there should be. There should not be a blank check to students because the colleges will raise tuition to get every penny they can until no one applies to the school.
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I started college in 1980 after 9 years in the Army and finished in 1986 with Master’s degree and $23,000 of student loan debt. It took 10 years to pay it off. I borrowed at rates between 8 and 9%. (Yikes!) To see historic Federal Student Loan rates, go here, You’ll be surprised.
https://www.savingforcollege.com/article/historical-federal-student-interest-rates-and-fees
Let’s look at some statistics to add perspective to today’s college debt ‘problem’.
According to the Bureau of Labor Statistics, among 2019 high school graduates ages 16 to 24, college enrollment rates for men and women were 62.0 percent and 69.8 percent, respectively. So 38% of men and 31.2% of high school grads didn’t enroll in college upon graduation.
https://www.bls.gov/news.release/hsgec.nr0.htm#:~:text=Recent%20High%20School%20Graduates%20and,enrolled%20in%20college%20in%20October.
Of those who enroll in college, 30% drop out before finishing their second year. 57% of those who enroll don’t graduate in 6 years.
The 2020-2021 federal student loan interest rate for undergraduates is 2.75%. (A bit less that the current 30-year mortgage rate.) The rates for unsubsidized graduate student loans and parent loans are higher — 4.30% and 5.30%, respectively.
https://www.nerdwallet.com/article/loans/student-loans/student-loan-interest-rates
Average student loan debt in 2020 is estimated to be about $37,500. Importantly, ‘only’ about 54% of college attendees take on debt and the average payment is $363/month. This means 46% of college attendees don’t have any debt. Of course, we see horror stories about law and medical students who graduate hundreds of thousands of dollars in debt. But nobody forced anyone to borrow a ridiculous amount of money.
https://www.investopedia.com/student-loan-debt-2019-statistics-and-outlook-4772007
What we have is a situation in which the 54% of people in debt for attending college are paying interest rates significantly lower than they were 35 years ago but the amount borrowed appears significantly higher.
Inflation, however, since 1986 when I graduated is 138% so in today’s dollars I graduated $53,000 in debt. So I had a higher debt load and paid a higher interest rate than today’s college graduates.
https://www.inflationtool.com/us-dollar
With this information, I have a few questions.
1. Why should college graduates today not be held to the same standard their parents and grandparents were? Adjusted for inflation, their parents borrowed a boatload of money at a higher rate but they paid it back.
2. Why should college attendees who borrowed federal money be treated differently that those who did not did not borrow? Basically, borrowers are being retroactively given an average $37,000 grant.
3. Why should college attendees who borrowed money get a government grant not available to those who didn’t go to college?
4. How are we going to handle college debt going forward?
Regarding existing federal loans, I emphatically do not support cancelling student debt. I think it must be paid back in full with a reduced interest rate equal to the CPI inflation rate effective when the program is changed.
Going forward, I’m open to a special financing program for healthcare professionals. We certainly need more.
But we should cap undergraduate college attendees’ ability to borrow from the federal government each year at an amount equal to the previous year’s average 4-year public university tuition (recalculated annually using the previous year’s figures). Caps for graduate and post-graduate programs would be based on average public grad school tuition. Also cap the interest rate at the CPI inflation rate. Continue to apply the existing payback scheme. If a student wants to attend a private university, the annual loan will be capped at the public university average.
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Fake Pocahontas Warren speak with forked tongue 🐍
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Giving out free $50k for college debt is just so wrong. It shows that the education was not worth the value it was suppose to be because otherwise students would have understood fully what they were getting into. Total lack of personal responsibility and critical thinking. It is a smack in the face of everyone who did pay for their college education and paid their student loans back.
Why does the federal government even have to guarantee student loans in the first place? Instead of paying $50k per student loan, why doesn’t the government just tell the lender to wipe out all the student debt?
Let’s look at this from another prospective. Why don’t we give every high school senior $50k for college every year? Why don’t we give every college $50k for every student that they have enrolled every year? Why doesn’t the government just offer free public colleges instead?
There are answers to these and many other questions, but they are not cheap. Each comes with unintended consequences from more national debt, to higher taxes, higher tuition, and loss of willing lenders. Each will not improve the quality of the education or improve student success rates.
Let’s review the last two decades of bailouts.
Bailed out the big banks and auto makers in the financial crisis of 2008.
Bailed out big businesses and tried bailing out small businesses in 2020
Gave $3200 to almost every man, women, and child during the on going covid-19 crisis.
Who is next to be bailed out?
Now Congress wants to give highly educated people $50k to bail them out?
How about $100k on mortgages? $20k for car loans? $10k for credit card debt? $5k for people who ordered swimming pools during Covid? Where will it end?
My solution is to only allow the college to charge tuition of 3x the actual annual wage earning of the prior year (as determined by BLS) by type of degree. Also, make the colleges guarantee the student loans themselves. Student standards will raise and more will earn degrees and colleges will grow smaller and leaner. Gone would be the Club Med dorms and the million dollar football teams. Gone would be degrees of no earning potential or those degrees will be earned at smaller and cheaper community colleges or tech schools once again. For the rest that still can’t afford a college educations, make them do public service or serve in the military to earn the right to a free college education like you can now.
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While I agree with the myriad of frustrations you’ve articulated, more government regulations and interference hinders the free market system, which is what allows good decisions to thrive and penalizes poor decisions. Sometimes I think that our leaders must be bright people because of the hard work it takes to become a leader. Then I think that they are not bright because of the policies they promote. Then I land on ulterior nefarious motives as the most likely explanation. I like the summary Richard makes by stating that all of this is “absurd”, def. “wildly unreasonable”. Let that set in as we ponder the future of our Republic with leaders who are motivated by nefarious motives or at very least, “not bright”. Similarly, I was speaking with my 30 year old son, an ambitious and hard working guy, who said how disheartening it is to watch some of his friends collect free stuff from the government while he works diligently to achieve similar results. Diligence should be rewarded. Thrift should be rewarded. Reliance on a broken government system is dangerous for we know the end result.
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Just keep in mind those banks and auto makers paid it all back with interest and profit for government
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And the bondholders took it in the shorts so the unions could continue making contributions to the democrats.
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The auto bailout was not exactly, a complete success RD –
Dec. 9, 2013, 4:45 PM CST
By TOM KRISHER
DETROIT — The U.S. government ended up losing $10.5 billion on the General Motors bailout, but it says the alternative would have been far worse.
The Treasury Department sold its final shares of the Detroit auto giant Monday, recovering $39 billion of the $49.5 billion it spent to save the dying automaker at the height of the financial crisis five years ago.
Without the bailout, the country would have lost more than 1 million jobs, and the economy could have slipped from recession into a depression, Treasury Secretary Jacob Lew said on a conference call with reporters.
Probably not a bad investment in only costing 10,000 to save each job.
Not sure we would of entered a depression, but I do believe the 5 trillion dollars that the government has spent on 3 so called covid relief bills, could lead to many unforeseen economic problems in the coming years.
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