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Thread: Obama to Announce Student Loan Relief Plan

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by Boo Radley View Post
    Many are doing that, but will still end up with too much debt. More debt than they can repay.

    What I gave you was a hypothethical, as I said for arguments sake. I'm 53. But I see students every day, and I pay attention. The math simply doesn't add up. And just like the housing crisis, we can bury our heads in the sand, throw around blame mindlessly, or we can start trying to figure out a reasonable and pratical solution. I'm betting we do nothing and then fain being stunned once it happens, because NO ONE saw it coming. Then of course we can throw around some more mindless blaming.
    So it would seem that I extended the Fountain of Youth to you for a moment

    One reason that the cost of education has skyrocketed is precisely because of access to student loans.

    You can see that student loans have grown by 511% since 1999. Meanwhile, disposable income has grown by just 73%. As this chart also shows, most outstanding student loan debt (82%!) was accrued by students over just the past decade.

    http://cdn.theatlantic.com/static/mt...%202011-q2.png
    This growing notion among those debtors that they should not be obligated for full repayment is absurd ! Why is their debt any more forgiveable than any other citizen's ? As I have noted, Obama taking these actions will only make all things worse, as he is fueling the bubble, creating moral hazards, and teeing up the economy for an even bigger hit.

    The way to drive down the price of education would be stop giving out student loans like candy, and certainly not forgive the debt, ie. shift it to other taxpayers.

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by Eighty Deuce View Post
    One reason that the cost of education has skyrocketed is precisely because of access to student loans.
    This is true, but is a different issue. Personally I think that our government should end the practice of loaning however much money students need for the full tuition at private schools. They could start by saying that, say, $40K is the maximum that students can borrow per year for college, then gradually cut that number back until it's more in line with what students pay at a state school. Not that I'm against federal assistance for students at private schools...but at most they should be eligible for loans for 150-200% the cost of a state school IMO. This would encourage private schools to cut their tuition back to more reasonable levels.

    Nevertheless, the debt overhang from student loans that currently exists still poses a major economic problem for our country, for the same reason that the mortgage debt overhang does. If a person's income goes disproportionately to paying off debts, then they have less money to spend on things that will grow the economy. We need some sort of solution in place for them.

    This growing notion among those debtors that they should not be obligated for full repayment is absurd ! Why is their debt any more forgiveable than any other citizen's ?
    It's not. In fact, it's LESS forgivable under the current system. Every other type of debt will be wiped out if a person declares bankruptcy, but not student debt. That stays with a person for their entire life until it's paid off. This is grossly unfair, and flies in the face of the whole reason that we have bankruptcy protection in this country. The only reason this exception exists is because the student loan companies lobbied for it.

    As I have noted, Obama taking these actions will only make all things worse, as he is fueling the bubble, creating moral hazards, and teeing up the economy for an even bigger hit.

    The way to drive down the price of education would be stop giving out student loans like candy, and certainly not forgive the debt, ie. shift it to other taxpayers.
    There are two separate problems here, that require two separate solutions. The first is the skyrocketing cost of an education, for which I agree with your assessment. The second is the debt crisis which still infects our economy, for which some sort of relief will be necessary.
    Last edited by Kandahar; 10-27-11 at 12:47 PM.
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    Re: Obama to Announce Student Loan Relief Plan

    The numbers were run by an economics correspondent today in The Atlantic magazine. And It turns out what he is offering the students is between $4.50 and $7.70 a month of relief." ...............If his audience had known how minuscule is the benefit, he would have been laughed out of that auditorium.





    Krauthammer: If Students Knew Truth Of Loan Plan, Obama Would've Been "Laughed Out Of Auditorium" | RealClearPolitics

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by fishinRod View Post
    The numbers were run by an economics correspondent today in The Atlantic magazine. And It turns out what he is offering the students is between $4.50 and $7.70 a month of relief." ...............If his audience had known how minuscule is the benefit, he would have been laughed out of that auditorium.
    Honestly I'm surprised it's even that much. When I ran the financial numbers for myself, I found that I would be WAYYYYY better off just paying my debt as scheduled, rather than taking advantage of this program (even if I was eligible for it, which apparently I'm not). But I agree, it's a pittance. It looks more like a campaign issue than a serious proposal to me.
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    Re: Obama to Announce Student Loan Relief Plan

    Everyone of you who are critisizing the President's college loan repayment plan have it WRONG! It's not more federal spending; it's not even a discount. It's a reduction in the out-of-pocket payments college student pay directly toward their federally guaranteed student loan.

    The loans ARE NOT forgiven. Those who borrowed the money will still have to pay it back only instead of making payments at the higher repayment amount including interest, the President has instead taken a program that's already written into law* (I'll have to do more research to find the exact piece of legislation that covers this) that allows students to instead pay up to 10% of their "discretionary income" to pay off their loan. In other words, repayment is based moreso on how much money the student makes vice a set repayment amount like, for example, a home mortgage.

    Example:

    $10,000 loan

    $500/wk income

    10% of 500 = $50

    So, if your repayment was $250/month you save $50 per month on your loan repayment. However, if on the other hand your repayment was $150/month, you might have to pay an additional $50 per month. Of course, there's also loan deferments.

    Bottom Line: Some student will benefit from the repayment measure (and I have to assume there will be many who qualify since most live on Ramen noodle diets and work part-time jobs to help pay for college and). Others may not, but it's a step in the right direction and it won't cost the government one dime of taxpayer money.

    To learn more about the President's college student loan repayment plan, go to:

    We Can't Wait to Help America's Graduates; or,

    Press Release: "Remarks by the President on College Affordability" (President's speech in Denver, CO on October 26, 2011)

    You can also learn more about the President's proposal and use the repayment calculator on the Federal Student Aide website to see if your revised repayment amount under the plan would provide you with savings.
    Last edited by Objective Voice; 10-27-11 at 01:23 PM.

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    Re: Obama to Announce Student Loan Relief Plan

    A politician appears to be bribing his constituents with other people's money.

    I hope this idea doesn't catch on because it could lead to irresponsible government spending.

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    Re: Obama to Announce Student Loan Relief Plan

    I thank you for the thoughtful response, but I have a couple points of disagreement.
    Quote Originally Posted by Kandahar View Post
    This is true, but is a different issue. Personally I think that our government should end the practice of loaning however much money students need for the full tuition at private schools. They could start by saying that, say, $40K is the maximum that students can borrow per year for college, then gradually cut that number back until it's more in line with what students pay at a state school. Not that I'm against federal assistance for students at private schools...but at most they should be eligible for loans for 150-200% the cost of a state school IMO. This would encourage private schools to cut their tuition back to more reasonable levels.
    I agree on all of the above in concept. Some students need to be compelled to make the tougher choices. As we are now seeing, too many took all the money they could get, for all the education they wanted, and now are finding out it was a mistake. I paid off all my loans long ago, btw.

    Nevertheless, the debt overhang from student loans that currently exists still poses a major economic problem for our country, for the same reason that the mortgage debt overhang does. If a person's income goes disproportionately to paying off debts, then they have less money to spend on things that will grow the economy. We need some sort of solution in place for them.
    Here i greatly disagree. The option is not to pay one's debt, or grow the economy. Defaulting on a loan hurts the economy far more than any benefit from spending the money elswhere. The cost of others paying your $50K default is far greater than any benefit they gain by your spending the $50K in lieu of paying your debt.

    It's not. In fact, it's LESS forgivable under the current system. Every other type of debt will be wiped out if a person declares bankruptcy, but not student debt. That stays with a person for their entire life until it's paid off. This is grossly unfair, and flies in the face of the whole reason that we have bankruptcy protection in this country. The only reason this exception exists is because the student loan companies lobbied for it.
    Yes, but that ignores the fact that one reason college loans were as accessable as they have been is precisely because of the bankruptcy exception. There is nothing at all unfair about it. It was a clear and understood provision of the loan. In similar sized large loans, such as a mortgage, you stop paying, at least the lender gets the house back. What colateral is there to loan some kid $200K ? Your notion of "unfairness" is a liberal thing, btw.

    There are two separate problems here, that require two separate solutions. The first is the skyrocketing cost of an education, for which I agree with your assessment. The second is the debt crisis which still infects our economy, for which some sort of relief will be necessary.
    Agreed that we need to realize there is a big problem here. We can anticipate it, draft out numbers, and then a best solution. However, DC seems to fail miserably at getting in front of such problems, as demonstrated by what Obama has done here. It is not dissimilar to the housing bubble.

    To break just a bit off topic, but things such as this are one reason folks gyrated towards such as Chris Christie for President. He seems to be able to communicate the problems to the here-and-now very well. Whether simply being unafraid to be "in your face" is all it is, or its some incredible secret political talent, many folks responded to it. There is a growing swell that do not want the can kicked anymore. I do not believe Obama wants anything to do with that process. I believe he fully understands that the way to diminish capitalism, and make us a social nanny state, is first and foremost to sink us all in debt. Its Alinsky 101, and it is exactly what he is doing.

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by Eighty Deuce View Post
    So it would seem that I extended the Fountain of Youth to you for a moment

    One reason that the cost of education has skyrocketed is precisely because of access to student loans.



    This growing notion among those debtors that they should not be obligated for full repayment is absurd ! Why is their debt any more forgiveable than any other citizen's ? As I have noted, Obama taking these actions will only make all things worse, as he is fueling the bubble, creating moral hazards, and teeing up the economy for an even bigger hit.

    The way to drive down the price of education would be stop giving out student loans like candy, and certainly not forgive the debt, ie. shift it to other taxpayers.
    You can stop loaning now. True. And it may help in the future. There will be however less graduates. Cost will not drop that much. It can't drop that much.

    But you still have those loans out there now that won't be paid.

    AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by Objective Voice View Post
    The loans ARE NOT forgiven.
    From one of you links:

    •25-YEAR CANCELLATION — If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be canceled.

    And I understand BHO has further changed this to 20 years. Is 'canceled' synonymous with 'forgiven'?

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    Re: Obama to Announce Student Loan Relief Plan

    Quote Originally Posted by Dickieboy View Post
    From one of you links:

    •25-YEAR CANCELLATION — If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be canceled.

    And I understand BHO has further changed this to 20 years. Is 'canceled' synonymous with 'forgiven'?
    If you've paid for 20-25 years, what eactly is there to forgive or cancel?

    AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.

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