2nd Term Part 5: Big Brotha

[unofan]

Re: 2nd Term Part 5: Big Brotha

And the down payment and collateral on a student loan are what percent of the original balance? Hard to foreclose or repo a degree in History. If you want the government to fund all college education then the number would be a few hundred billion a year as people will stop saving for college and get in line for the handout. Think of the votes you'd get for that!!

Student loans are also not discharged in bankruptcy, unlike every other form of debt.

 

[pirate]

Student loans are also not discharged in bankruptcy, unlike every other form of debt.

So, if they change that...do you raise rates on student loans to account for higher losses, raise the debt, cut other services or raise taxes?

Your call, which is it?

 

[walrus]

Re: 2nd Term Part 5: Big Brotha

So, if they change that...do you raise rates on student loans to account for higher losses, raise the debt, cut other services or raise taxes?

Your call, which is it?

They just changed it so you couldn't discharge the debt in bankruptcy, couldn't be more than a few years ago??

 

[Priceless]

Re: 2nd Term Part 5: Big Brotha

They just changed it so you couldn't discharge the debt in bankruptcy, couldn't be more than a few years ago??

2005

 

[walrus]

Re: 2nd Term Part 5: Big Brotha

2005

More than a few I guess

 

[Rover]

So, if they change that...do you raise rates on student loans to account for higher losses, raise the debt, cut other services or raise taxes?

Your call, which is it?

pirate its okay to admit that you didn't know student loans couldn't be discharged in bankrupcy.

So, while you don't have a hard asset backing the loan, the lender knows the borrower can't just walk away from it like a mortgage.

Now what you could do is an escalating rate, as in someone in debt over say 40K would pay a higher rate on the debt over that amount. This would have the effect of penalizing excessive borrowing, but allowing responsible students to get an education at prevailing interest rates (which are near historical lows).

 

[unofan]

So, if they change that...do you raise rates on student loans to account for higher losses, raise the debt, cut other services or raise taxes?

Your call, which is it?

Frankly, I like my wife's idea. In lieu of tuition, students make a binding pledge of 1-2% of their future income (or a higher percentage of any income over a set level such as the poverty line) to the college. If you hit it big, the college benefits. If you don't, you aren't saddled with 100k in loans you can't ever pay back.

 

[FlagDUDE08]

Re: 2nd Term Part 5: Big Brotha

Frankly, I like my wife's idea. In lieu of tuition, students make a binding pledge of 1-2% of their future income (or a higher percentage of any income over a set level such as the poverty line) to the college. If you hit it big, the college benefits. If you don't, you aren't saddled with 100k in loans you can't ever pay back.

So you basically become a slave to the college for life? No way. Pay your debt and then wipe your hands clean. If your wife's idea happened, no one would ever go to college.

Personally, I believe that no loan should be able to be discharged without doing something referenced in that masochistic Bruno Mars song. Responsibility should be expected when it comes to loans. I'm not suggesting turning to mafia rule on loans (obvious violation of the 8th amendment), but there are tools that are available to help with repayments, such as wage garnishment. If you are deeply underwater in debt, cut up the credit cards and live cheaply until that message of fiscal responsibility sinks in.

 

[SJHovey]

Re: 2nd Term Part 5: Big Brotha

I just don't think 6-7% interest rates on these loans is unreasonable.

First, interest rates are already creeping back up. Second, go try to borrow money from your bank with no collateral and then tell me what interest rate they charge you. I don't care what the prime rate is. I don't think you'd get 6% even for a used car loan, and there they'd at least have the crappy car as collateral.

We're talking loans to people without jobs, no credit history, no collateral, nothing. If these are great loans to be making, seems to me someone would "fill the void".

 

[FlagDUDE08]

Re: 2nd Term Part 5: Big Brotha

So, if they change that...do you raise rates on student loans to account for higher losses, raise the debt, cut other services or raise taxes?

Your call, which is it?

If that happened, I'd use the administrative money to set up a screening panel. Show a five year plan (10 year for bachelors+masters+PhD if applicable), and if it's feasible, you get the money. If it isn't, you don't get the loan. That'd bring your rate of nonpayment down from 20% to at most 10%, just by getting rid of the worthless majors. Oh, and your loan is screened again every year (whether through re-application or renewal), so if you change to a cake major, you don't get any more money.

 

[FlagDUDE08]

Re: 2nd Term Part 5: Big Brotha

I just don't think 6-7% interest rates on these loans is unreasonable.

First, interest rates are already creeping back up. Second, go try to borrow money from your bank with no collateral and then tell me what interest rate they charge you. I don't care what the prime rate is. I don't think you'd get 6% even for a used car loan, and there they'd at least have the crappy car as collateral.

We're talking loans to people without jobs, no credit history, no collateral, nothing. If these are great loans to be making, seems to me someone would "fill the void".

My car loan rate from 2011 was 6%, obviously the car was collateral. Granted, I made the bank unhappy by paying the thing off in 9 months instead of their 6 year term.

As for filling the void, that's what sites like LendingClub are for.

 

[SJHovey]

Re: 2nd Term Part 5: Big Brotha

If people are really unhappy about this, they can just get their state to create a state-owned bank to make cheap student loans. http://mystudentloanonline.nd.gov/loan_types/DEAL/

 

[Rover]

I just don't think 6-7% interest rates on these loans is unreasonable.

First, interest rates are already creeping back up. Second, go try to borrow money from your bank with no collateral and then tell me what interest rate they charge you. I don't care what the prime rate is. I don't think you'd get 6% even for a used car loan, and there they'd at least have the crappy car as collateral.

We're talking loans to people without jobs, no credit history, no collateral, nothing. If these are great loans to be making, seems to me someone would "fill the void".

Interest rates are in the low 4's. Not 7%. Next, unlike a car loan, you can't walk away from student loan debt. Its with you, sorta like if you borrow money from the local loanshark. You can't tell the guy "oh, sorry, I'm declaring bankrupcy". So the collateral on a student loan is your future earnings, whether you graduate in molecular science or astrophysics or not. I also believe they can garnish wages although I'll defer to the lawyers on that one.

Next, and I notice nobody on the right has covered this, but if you make it harder for working class Americans to attend college, that void will be filled by foreign students who pay the full ride. The colleges will take them, and they want to study in the US. So, the supply and demand equation holds. Only people getting screwed are Americans as we'll now be competing against these US educated professionals as they go back to their countries.

 

[FlagDUDE08]

Re: 2nd Term Part 5: Big Brotha

If people are really unhappy about this, they can just get their state to create a state-owned bank to make cheap student loans. http://mystudentloanonline.nd.gov/loan_types/DEAL/

Or they can set up their own bank and charge what they want.

 

[pirate]

Re: 2nd Term Part 5: Big Brotha

pirate its okay to admit that you didn't know student loans couldn't be discharged in bankrupcy.

So, while you don't have a hard asset backing the loan, the lender knows the borrower can't just walk away from it like a mortgage.

Now what you could do is an escalating rate, as in someone in debt over say 40K would pay a higher rate on the debt over that amount. This would have the effect of penalizing excessive borrowing, but allowing responsible students to get an education at prevailing interest rates (which are near historical lows).

That is one of the funniest things I've ever read. I also have kids of college age, so I know plenty about 529's, UTMA's, scholarships, grants and loans. Every one of my kids had accounts the day they were born and I've been contributing continually. I'm keenly aware of what levers I have at my disposal to pay for college and I monitor the comings and goings in DC regarding the subject.

Anybody that has read even 1 article on paying for college/student loans in the last few years will know the subject of non-discharge for bankruptcy is mentioned prevalently. Ask me any question you'd like on the subject.

Perhaps you are feeling bitter that you didn't know enough to include the cost of running the program or losses in your "it's all about the cost of funds and APR" theory? Of course, we can't run everything like a business, right?

You might want to nitpick me on other subjects, this is one I feel fairly well qualified to discuss.

 

[FlagDUDE08]

Re: 2nd Term Part 5: Big Brotha

Interest rates are in the low 4's. Not 7%. Next, unlike a car loan, you can't walk away from student loan debt. Its with you, sorta like if you borrow money from the local loanshark. You can't tell the guy "oh, sorry, I'm declaring bankrupcy". So the collateral on a student loan is your future earnings, whether you graduate in molecular science or astrophysics or not. I also believe they can garnish wages although I'll defer to the lawyers on that one.

Next, and I notice nobody on the right has covered this, but if you make it harder for working class Americans to attend college, that void will be filled by foreign students who pay the full ride. The colleges will take them, and they want to study in the US. So, the supply and demand equation holds. Only people getting screwed are Americans as we'll now be competing against these US educated professionals as they go back to their countries.

If you can't stand the heat, get out of the kitchen. Either take the chance or lose out. This isn't a game show, there's no reason for consolation gifts.

 

[Rover]

That is one of the funniest things I've ever read. I also have kids of college age, so I know plenty about 529's, UTMA's, scholarships, grants and loans. Every one of my kids had accounts the day they were born and I've been contributing continually. I'm keenly aware of what levers I have at my disposal to pay for college and I monitor the comings and goings in DC regarding the subject.

Anybody that has read even 1 article on paying for college/student loans in the last few years will know the subject of non-discharge for bankruptcy is mentioned prevalently. Ask me any question you'd like on the subject.

Perhaps you are feeling bitter that you didn't know enough to include the cost of running the program or losses in your "it's all about the cost of funds and APR" theory? Of course, we can't run everything like a business, right?

You might want to nitpick me on other subjects, this is one I feel fairly well qualified to discuss.

If this is one of the funniest things you've ever read, I respectfully suggest you get out of the house more. I thought conservatives were stiffs but this takes it to a whole new level!

If you have extensive knowledge of the college financing system, you might want to bring it to the forefront when you post because it ain't coming through from your comments.

Moving on, not sure what I'm supposed to be bitter about? Perhaps you have me confused with another poster.

Finallly though, I do notice once again a complete unwillingness out of our friends on the right to address supply and demand. IF you have less American college students via less funding, that gap will be filled due to high demand of overseas students to fill those spaces. Perhaps conservatism believes that this is a good thing, as the students who will not be able to afford college can then get lower wage jobs working for these now educated foreign professionals. If that is the mindset those on the right should own up to it.

 

[5mn_Major]

Re: 2nd Term Part 5: Big Brotha

I just don't think 6-7% interest rates on these loans is unreasonable.

First, interest rates are already creeping back up. Second, go try to borrow money from your bank with no collateral and then tell me what interest rate they charge you. I don't care what the prime rate is. I don't think you'd get 6% even for a used car loan, and there they'd at least have the crappy car as collateral.

We're talking loans to people without jobs, no credit history, no collateral, nothing. If these are great loans to be making, seems to me someone would "fill the void".

If you don't mind the taxpayers sharing the cost...there's a knowable answer. The difference in loan interest will cause some to not be able to qualify and others to default. What is the cost to society of x% less of skilled labor including a lower tax base.

I say cut the military, have the best education in the world, and get as many into it as possible. The net message is that if your investing in the future of this country, skilled workforce is the battlefield of the future.

 

[geezer]

Re: 2nd Term Part 5: Big Brotha

Finallly though, I do notice once again a complete unwillingness out of our friends on the right to address supply and demand. IF you have less American college students via less funding, that gap will be filled due to high demand of overseas students to fill those spaces. Perhaps conservatism believes that this is a good thing, as the students who will not be able to afford college can then get lower wage jobs working for these now educated foreign professionals. If that is the mindset those on the right should own up to it.

I've got to say, I don't get this constant drumbeat of terror over the "scary furriners" getting all our college. Really, what's the big deal? Why should they not be able to waste their money too on a crappy American education, if that's what they want? Who cares?
Also, take a closer look at rates on subsidized vs. unsubsidized loans. You're really missing the mark by quite a long ways. A mortgage for example is nowhere near an unsubsidized loan rate, which actually is around 7%. How is 18-year-old kid supposed to subsidize a student loan? A fair rate would be about 7% in the current financial environment.

 

[Rover]

I've got to say, I don't get this constant drumbeat of terror over the "scary furriners" getting all our college. Really, what's the big deal? Why should they not be able to waste their money too on a crappy American education, if that's what they want? Who cares?
Also, take a closer look at rates on subsidized vs. unsubsidized loans. You're really missing the mark by quite a long ways. A mortgage for example is nowhere near an unsubsidized loan rate, which actually is around 7%. How is 18-year-old kid supposed to subsidize a student loan? A fair rate would be about 7% in the current financial environment.

Who said anything about foreign students being scary? Feel free to post a quote. What I'm saying, matter of factly, is that if you cut student loans, or make them more expensive, you aren't going to change the cost of college because there is plenty of demand to fill those slots from overseas students. Even if they are the most virtuous people on earth, the end result is less educated Americans and more educated foreign students who will then go to work for competitor nations (China, India, etc) which will most likely cost American jobs.

So, to answer your question of "who cares", anybody concerned about American competitiveness. Apparently that's not you, but its something I'm sure paying attention to.

Lastly, again, kids taking out loans have little recourse to get rid of them. That's unlike an unsubsidized loan from a bank or a mortgage. You have to pay it off, so any earnings you make be it from Apple or Starbucks goes towards that.