While I'm a big fan of social programs to make things easier for the poor (let's go ahead and boost those food stamps and Medicaid coverage), I think we went down the wrong path as a society by insisting that everyone needs a college degree whether or not you have a plan for a degree or plan to pay for it. A 6 or 7% loan rate is a good way to start on the road back to sanity in that regard. Make sure you're thinking things through before you enroll.
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2nd Term Part 5: Big Brotha
- Thread starter geezer
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St. Clown
Liberal Rebel Scum, apparently
Re: 2nd Term Part 5: Big Brotha
The problem with cheap student loans is that they're a double-edged sword. As a society, we decided that we want more students to get a four-year degree. It's created an outward shift in demand, and a lesser outward shift in supply. That leads to increased prices. People see the increased prices, they clamor for more student aid. This tells colleges that their product has a relatively inelastic demand curve, so they're going to raise their prices some more, and the trend continues. So colleges continue to raise prices until all of a sudden, you've had 20 years of +10% annual tuition increases. People are seeing that it's now perhaps more beneficial to find schooling elsewhere, be it a tech school or whatever. All of this while we're trying to position ourselves as a high-tech society, which relies upon more scientists, engineers, etc. All the while our university students are more and more studying psychology, philosophy, and underwater basket weaving, and not those things we need. It will be interesting to see how these younger students end up. Too many of them are managing fast food joints, and we all know that it doesn't take a BA to do that.
The problem with cheap student loans is that they're a double-edged sword. As a society, we decided that we want more students to get a four-year degree. It's created an outward shift in demand, and a lesser outward shift in supply. That leads to increased prices. People see the increased prices, they clamor for more student aid. This tells colleges that their product has a relatively inelastic demand curve, so they're going to raise their prices some more, and the trend continues. So colleges continue to raise prices until all of a sudden, you've had 20 years of +10% annual tuition increases. People are seeing that it's now perhaps more beneficial to find schooling elsewhere, be it a tech school or whatever. All of this while we're trying to position ourselves as a high-tech society, which relies upon more scientists, engineers, etc. All the while our university students are more and more studying psychology, philosophy, and underwater basket weaving, and not those things we need. It will be interesting to see how these younger students end up. Too many of them are managing fast food joints, and we all know that it doesn't take a BA to do that.
Re: 2nd Term Part 5: Big Brotha
The idea that student loan rate hikes will discourage students from enrolling in unproductive majors has no practical application in the real world. Students should of course shop around, and should also try to get a degree in something that will earn a living. However, justifying a 50% increase in student loan rates under the guise of "Maybe students won't take out loans to major in philosophy now" is a feel good, BS cop out over the issue. The problem that the supply and demand crowd don't realize is that the demand will still be there. The problem is if working class kids can't afford to go to US colleges, foreign students - who pay the full ride - will. Then they will take their US based education back home to China, India, etc where they will be in direct competition with US workers for jobs.
In a simple world, yanking student loans = lower tuition bills. That simple world has a name: Fantasyland. Students no doubt need to be smarter about how they're spending their $$$. However as low as interest rates are now there's no way 6.8% is justified. 20 years ago, sure if rates where higher, but not at what market rates are at today.
The idea that student loan rate hikes will discourage students from enrolling in unproductive majors has no practical application in the real world. Students should of course shop around, and should also try to get a degree in something that will earn a living. However, justifying a 50% increase in student loan rates under the guise of "Maybe students won't take out loans to major in philosophy now" is a feel good, BS cop out over the issue. The problem that the supply and demand crowd don't realize is that the demand will still be there. The problem is if working class kids can't afford to go to US colleges, foreign students - who pay the full ride - will. Then they will take their US based education back home to China, India, etc where they will be in direct competition with US workers for jobs.
In a simple world, yanking student loans = lower tuition bills. That simple world has a name: Fantasyland. Students no doubt need to be smarter about how they're spending their $$$. However as low as interest rates are now there's no way 6.8% is justified. 20 years ago, sure if rates where higher, but not at what market rates are at today.
Re: 2nd Term Part 5: Big Brotha
Yeah.
Its really unfortunate when the state tells us that women's right to choose is prohibited, gays are refused equal treatment, freedom of expression needs to be censored, etc. Personally, I'd rather have the govt learn about me...than tell me what I can and can't do.
Yeah.
Its really unfortunate when the state tells us that women's right to choose is prohibited, gays are refused equal treatment, freedom of expression needs to be censored, etc. Personally, I'd rather have the govt learn about me...than tell me what I can and can't do.
FlagDUDE08
Banned
Re: 2nd Term Part 5: Big Brotha
Why does this sound so eerily familiar to another argument we had about six months ago... I believe I commonly used a portmanteau to describe it... I think it was "Taxmageddon"... It's the exact same argument, only the roles are reversed.
Why does this sound so eerily familiar to another argument we had about six months ago... I believe I commonly used a portmanteau to describe it... I think it was "Taxmageddon"... It's the exact same argument, only the roles are reversed.
ScoobyDoo
NPC
Re: 2nd Term Part 5: Big Brotha
Rich people would never take out a loan for that rate with the prime rate being 3.5. Ever.
Rich people would never take out a loan for that rate with the prime rate being 3.5. Ever.
Which I wouldn't have a problem with if interest rates were the same now as they were in 2007. However, they're not as anybody who's bought or refi'd a house can tell you.
FlagDUDE08
Banned
Re: 2nd Term Part 5: Big Brotha
There's one thing to remember, though: This is the government deciding to offer a loan. If someone can get financing somewhere else and not worry about the deferment clauses available through Stafford/Perkins (although I think one of those is a NYS student loan), it'd be better off to do it. At the end of the day, unless the government has created an artificial monopoly, they need to be competitive.
Of course, you can do what one of my friends did from back where I grew up and win the money on a game or reality show.
There's one thing to remember, though: This is the government deciding to offer a loan. If someone can get financing somewhere else and not worry about the deferment clauses available through Stafford/Perkins (although I think one of those is a NYS student loan), it'd be better off to do it. At the end of the day, unless the government has created an artificial monopoly, they need to be competitive.
Of course, you can do what one of my friends did from back where I grew up and win the money on a game or reality show.
FlagDUDE08
Banned
Re: 2nd Term Part 5: Big Brotha
Then get your loan from those people with those same rates you can get by buying or refinancing a house!
Heck, the more people they push there, the less the country is spending, yet still has the same benefit of extra revenue by means of income taxes.
Then get your loan from those people with those same rates you can get by buying or refinancing a house!
Heck, the more people they push there, the less the country is spending, yet still has the same benefit of extra revenue by means of income taxes.
ScoobyDoo
NPC
Re: 2nd Term Part 5: Big Brotha
Can't do that without assets. So, essentially this raise in rates for the folks trying to get ahead is another regressive tax. Excellent plan if you want the wage gap to continue to grow. The Republicans sure have won that battle the last 30 years.
Then get your loan from those people with those same rates you can get by buying or refinancing a house!
Can't do that without assets. So, essentially this raise in rates for the folks trying to get ahead is another regressive tax. Excellent plan if you want the wage gap to continue to grow. The Republicans sure have won that battle the last 30 years.
FlagDUDE08
Banned
Re: 2nd Term Part 5: Big Brotha
There's a couple things wrong with what you just typed. First off, the interest and payments doesn't start taking place until 6 to 9 months after graduation, depending on the type of loan (Stafford is one, Perkins is the other), so there's no existence of a wage gap, as the same opportunity is there no matter what the rate is (not to mention, these companies do sometimes give reductions for consecutive on time payments). Second, there's a very easy way to counteract the interest: Save up during those 6-9 months, and whatever is due on your loan, pay extra (I recommend $50-$100, but if you can do more, all the better; I think I was making around $1000 a month payments). You've just removed potential interest you have to pay off, which is much better than writing it off your income taxes, since there are limits there.
There's a couple things wrong with what you just typed. First off, the interest and payments doesn't start taking place until 6 to 9 months after graduation, depending on the type of loan (Stafford is one, Perkins is the other), so there's no existence of a wage gap, as the same opportunity is there no matter what the rate is (not to mention, these companies do sometimes give reductions for consecutive on time payments). Second, there's a very easy way to counteract the interest: Save up during those 6-9 months, and whatever is due on your loan, pay extra (I recommend $50-$100, but if you can do more, all the better; I think I was making around $1000 a month payments). You've just removed potential interest you have to pay off, which is much better than writing it off your income taxes, since there are limits there.
ScoobyDoo
NPC
Re: 2nd Term Part 5: Big Brotha
Wrong. Subsidized Stafford Loans don't accumulate interest right away but unsubsidized ones do. Most college students do not qualify for subsidized loans that cover all their college costs that they need loans for. I know, I'm sending one to college next year.
Wrong. Subsidized Stafford Loans don't accumulate interest right away but unsubsidized ones do. Most college students do not qualify for subsidized loans that cover all their college costs that they need loans for. I know, I'm sending one to college next year.
Re: 2nd Term Part 5: Big Brotha
Rich people qualify for no federal loans and the going rate for non-govt loans is greater than 6.8%. If they can't pay for college out of the cash they use to line their Bentley's with baby seal fur, they borrow at > 6.8% unless they have access to other lines of credit.
90% of all student loans are government issued so the only people 'making money' at 6.8% are tax payers. If servicing costs 4% and losses are 20% then tax payers are only losing ~17%...close enough for government work.
Rich people qualify for no federal loans and the going rate for non-govt loans is greater than 6.8%. If they can't pay for college out of the cash they use to line their Bentley's with baby seal fur, they borrow at > 6.8% unless they have access to other lines of credit.
90% of all student loans are government issued so the only people 'making money' at 6.8% are tax payers. If servicing costs 4% and losses are 20% then tax payers are only losing ~17%...close enough for government work.
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!!
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!!
walrus
Wind up workin' in a gas station
walrus
Wind up workin' in a gas station
Re: 2nd Term Part 5: Big Brotha
Scooby will find out soon enough, as much as 10% from what I've seen so far, 7.2 is the lowest I've seen
Re: 2nd Term Part 5: Big Brotha
So blame the Dems for only making it a temporary interest rate cut. They wrote the legislation.
Re: 2nd Term Part 5: Big Brotha
And I hope all goes well with him and his daughter on this next step for her. It is a big decision and people should not shy away from borrowing...like somebody said, depends on what you are paying for. Borrowing for a degree in biomechanical engineering is a good investment, even $100k. Borrowing $40k to major in Philosophy is a not so good idea unless the person has a clear path to a paying job out of school. And I don't mean at Starbucks.
There was a recent survey that said something like 38% of home buyers couldnt explain what APR meant. How many kids understand what compounded interest is and what their payment will be when they graduate?
As the poster said...look at which careers are growing and study one of those...Romney's kids can major in Anthropology or History...everybody else should major in computers, science or healthcare. If they don't know, then go to community college for 2 years to figure it out and then transfer to a state school.
And I hope all goes well with him and his daughter on this next step for her. It is a big decision and people should not shy away from borrowing...like somebody said, depends on what you are paying for. Borrowing for a degree in biomechanical engineering is a good investment, even $100k. Borrowing $40k to major in Philosophy is a not so good idea unless the person has a clear path to a paying job out of school. And I don't mean at Starbucks.
There was a recent survey that said something like 38% of home buyers couldnt explain what APR meant. How many kids understand what compounded interest is and what their payment will be when they graduate?
As the poster said...look at which careers are growing and study one of those...Romney's kids can major in Anthropology or History...everybody else should major in computers, science or healthcare. If they don't know, then go to community college for 2 years to figure it out and then transfer to a state school.
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