OT: Today is National Student Debt Day

Submitted by L'Carpetron Do… on

http://www.politico.com/tipsheets/morning-education/2016/01/its-nationa…

Today is National Student Debt Day.  A group of student debt activists are convening in DC to bring attention to the student debt crisis that America is facing.  

Personally, I think this is really important and I believe student loans are a huge anchor weighing down the economy and I'm glad it's getting more attention.  I wanted to see what MgoBoard thought.  Discuss.

 

MGoBoard

Hab

January 28th, 2016 at 6:21 PM ^

Just because the issue of loan forgiveness somehow popped into the discussion:

 

Loan forgiveness isn't just out there to be had.  The gov't, for better or worse, has chosen certain fields to subsidize because there is a greater need for qualified people in those positions with whom the government (local, state, fed) cannot complete with to get the talent they want.  Teachers are the prime example here.  I would rather exceptional teachers to be free to take lower paying jobs to teach in those school districts in greater need of their services than have them trot off to higher paying private schools.  Though dollar for dollar, yes, the taxpayer is paying for their loan, but by no means is it "free".

Joined: 01/02/2015

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MGoStretch

January 28th, 2016 at 8:52 PM ^

This is a critical point that people almost always miss. People will often say, "well, back in my day, we paid off our loans on the strength of our own hard work, we didn't need handouts! I ain't paying your loans sonny!". Well, back then, college was a tiny fraction of the cost because state and federal tax dollars were supporting the school. So guess what? The generation before you gramps paid for A LOT of your school. And not only your education, but also for the folks that have less lucrative degrees like underwater basket weaving. At least now, with Public Service Loan Forgiveness, the government can incentivize useful and needed careers (urban teachers, rural pediatricians, etc...) instead of funding a bunch of basket weavers. So yes, I'll get off your lawn as soon as you get off your soapbox and realize you got a ton of government help in paying for school.

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MGoStretch

January 28th, 2016 at 1:25 PM ^

That's awesome. You're a lucky dude/gal that your dad was in a position to be able to make the money to help. I'm sure you were prudent with your money and worked your butt off as well. Not everyone is so fortunate to have those opportunities. As a first gen college grad, that sort of thing wasn't an option for me. So my microbiology, hospital and molecular epidemiology and medical degrees came with exorbitant loans (and pediatric subspecialty pay is not what folks think of when they picture doctors in mazarattis). Just my $0.02 but not everyone who could use some loan forgiveness is a pysch/interpretive dance major who needs a handout to open an organic yoga studio (apologies to psych/dance majors who have that particular dream).

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MGoBender

January 28th, 2016 at 1:40 PM ^

Exactly.  I don't want my loans to be washed away (I mean, sure if you're offering...).  I'm glad and happy to pay them back because the American Gov't invested in me.  I love my life, love my college experience, love my job and have no issue paying back those loans.

However, interest rates should be lower.  Interest rates for education shouldn't be higher than mortgages, cars, etc. My interest rates are 6.5%.  What's wrong with 3%?

Also, there's many programs out there that people aren't taking advantage of.  Federal Service Loan Forgiveness is a lot more encompassing than people realize. Basically, if you work for a non-profit for 10 years and make income-based payments for those 10 years, the remainder of your balance is wiped clean.  That seems like a pretty great program to me and I wish I got rolling in it sooner (instead of paying on a different, non-qualifying plan).

Joined: 03/26/2010

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OysterMonkey

January 28th, 2016 at 7:43 PM ^

Current federal student loan interest rates are at 4.29%. Not the best they've ever been, but not bad.

Loan interest rates on student loans are higher because a bank can't foreclose on your degree and sell it to someone else if you don't pay your loans back. It's a riskier investment for them.

Joined: 08/22/2009

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MGoBender

January 28th, 2016 at 8:59 PM ^

All my loans are fed loans.  A couple small ones are 5.5%, the vast majority are at 6.55%.

I think it was two summers ago that an interest rate drop got through congress?  Of course, they didn't apply that drop to people that already have fed loans (and are paying them off on time! why not reward the people doing it right and help them get to a point where they can pump money into the economy?!).

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L'Carpetron Do…

January 28th, 2016 at 1:25 PM ^

My beef is more with the interest.  I don't want it for free.  I just want to re-pay my balance and with a reasonable amount of interest.  

There are a lot of people who have basically paid back their tuition balance and then some.  And they're still paying off loans because the interest is so damn high.  That's not fair and that's what needs to change...

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Ryno2317

January 28th, 2016 at 1:12 PM ^

It's an investment in your future,  not a "crisis." 

I paid off every single dime of my student debt (U of M law school debt included) and have made many times that amount since getting my degree). 

Think of it as purchasing a franchise or investment property.  It does cost lots, however, it is worth it in the long run. 

As an aside, one of the reasons the cost of college has gone up so much IS the easy access to subsidized student loans and financial aid.  There is simply no push back from the consumer (i.e., the students) because they are not really paying for it at the time they are buying their education.  That's why the cost of college has gone up regardless of the quality of the education, economic climate, inflation, etc. 

Joined: 10/14/2013

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ypsituckyboy

January 28th, 2016 at 1:46 PM ^

Two suggestions that would help the problem (but certainly not alleviate it entirely):

1) Stay in-state. Too many people paying outrageous out-of-state rates when every state has multiple good schools from which to choose;

2) Pick a useful degree. Art, Music, English, etc. are great in theory but are quite difficult degrees to ply into a job.

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03 Blue 07

January 28th, 2016 at 4:03 PM ^

With respect to law school, that doesn't always hold up in my experience. The difference in tuition in Michigan is less than 5% between in-state and out-of-state for U of M. Note that those are per-semester tuition numbers they are showing, not per year: 

https://www.law.umich.edu/financialaid/pages/tuitionrates.aspx

Similar deal in Illinois, too, from what I recall; they doubled in-state law school tuition at the University of Illinois sometime around 2006. (I was an Illinois resident at the time, so this was important information)

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SaddestTailgateEver

January 28th, 2016 at 1:29 PM ^

That's fair for certain degree paths with high income potential (engineering, law, business, medicine, etc). Most of those require an advanced degree though. The problem is that for most everyone else college is not designed to specifically target a particular employment field but rather to create well-rounded, well-educated citizens who go into a variety of fields. Nevertheless it is still priced as if it were targeting a specific, higher-earning-potential-than-average field.



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cp4three2

January 28th, 2016 at 1:36 PM ^

Admittedly, I went to grad school after, you can be well rounded and get a liberal arts degree and find a job, especially if you went to Michigan. You might be disappointed with your starting salary, but once you start somewhere there's always room to rise. You also knew that you were taking out loands for the degree you're going after. 

 

Complaints about student loans come down to people complaining that they weren't stopped from making bad decisions. 

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Stu Daco

January 28th, 2016 at 2:11 PM ^

 

Complaints about student loans come down to people complaining that they weren't stopped from making bad decisions.

Even if that were true (which it isn't), don't you think universities bear at least some responsibility to help 17-year-olds avoid financially diastrous decisions?  Or at a minimum, not encourage them?  

The out-of-state tuition for the UM School of Music, Theatre, and Dance is about $44,000. Before someone enrolls in that program, couldn't the school provide a little financial counseling? Something to say "hey just you know, here are the careers in music, and this might be really tough for you to pay off"?

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cp4three2

January 28th, 2016 at 5:34 PM ^

They literally have departments filled with financial aid counselors that will talk you through all of this. You can go in tomorrow as a student and schedule an appointment. That's how I figured out my loan situation. 

 

Sure, are there reforms that can be made to help lower tuition or subsidize interest rates further? Sure. I work in public policy and this is one of the things I work on (because I'm also an academic). There are tons of ideas, but none of that means these students shouldn't think about what they're doing and be responsible enough to get help if they don't. 

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Ryno2317

January 28th, 2016 at 2:52 PM ^

Many people don't believe that they have to honor their obligations even when things go south for them.  I know someone very well who "gave back" his house to the bank in 2010.  He didn't do so because he could not pay the mortgage.  In fact, he had a great job paying lots of money.  Rather, he walked away because his house went so far down in value that he felt it didn't make sense to keep paying on an asset that was worth so little.  He also didn't worry about losing his down payment because he only put 5% down in the first place.  So, guess what . . . .he bought another house before his credit got hit due to the foreclosure.  Fast forward 5-years and his new house went up dramatically in value and he sold it for a huge profit.  To make matters worse, he recently got money from a class action settlement for being "defrauded" by the bank on his first house.  The long and short of it is that the bank took it in the pants as decided he didn't need to pay on his loan if his home value went down.  I don't like my friend anymore. 

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Ryno2317

January 28th, 2016 at 3:31 PM ^

No.  Don't respect him anymore because he took out a loan and promised to repay it.  Instead, even though he could pay, he decided to make Joe Public pay for it because it didn't work for him anymore.  You should not like him either unless you think the bank could have come at him in a hot housing market and changed the terms of the loan on him.  Young people,  Jesus.

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03 Blue 07

January 28th, 2016 at 4:12 PM ^

I'm curious about my fellow MLaw grad's stance on strategic default and strategic breach in the law and economics realm, from a conceptual perspective; i imagine he hates it(?), even in a corporate setting, because it's breaking a contract(?). If so, I do see the validity of such a point-- if contracts are meaningless, then what's the point of contract law? And, furthermore, our economy runs best when contracts are honored; it is inefficient for business to have contracts be meaningless.

But I balance it on the other side with the (compelling in certain instances) arguments in favor of strategic breach which are put forth by law and economics scholars...including those at M Law and the University of Chicago (hardly a bastion of liberal thought). I think there are times when strategic breach makes the most sense; in fact, one could say your buddy's decision is by far the most rational decision he could have made. If our society has a major problem with what he did, perhaps we should change the laws, rather than demonize the people acting rationally under the laws. 

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Stu Daco

January 28th, 2016 at 4:05 PM ^

Well the reason I can't see it is because you're hiding any semblance of a point behind the field of strawmen you keep building.

Nobody is arguing that these loans were taken out involuntarily.  Nobody is arguing that they should all be forgiven.  What we're asking is, given the situation, is there anything we can do to 1) alleviate the crippling burden of debt some people face and 2) prevent this problem moving forward?

Your response seems to be a very Brandonesque "fuck em" with no further analysis.  You remind me of the Counterpoint guy from Airplane.

 

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