Skip to comments.Well-Off Will Benefit Most From Change to Student Debt Relief Plan, Study Says
Posted on 10/16/2012 5:55:10 AM PDT by reaganaut1
With nearly one in six student loan borrowers in default, the federal government is making changes to its income-based repayment plan to help borrowers with relatively high debt and low incomes keep up with their payments.
But a report that will be released on Tuesday by the New America Foundation, a nonprofit and nonpartisan policy institute, says the changes ultimately will provide only marginal help for low-income borrowers who are at the greatest risk of default.
Rather, the changes would provide big benefits to middle- and high-income borrowers, particularly for those seeking a graduate degree, the authors found. The report says that at least one financial planning company is telling law school students that the changes could allow them to write off $100,000 in student debt.
The New America Foundation report says the changes to income-based repayment could provide some benefits to all participants. But the primary beneficiaries would be high-income, high-debt participants who could make relatively small payments for 20 years and then have a large part of their debt forgiven, the authors said.
The foundation cites as an example advice given by financial planners such as the Advantage Group in California.
Stop wasting your money on student loan payments, says the Advantage Group Web site. The firm notes that an average graduate from California Western School of Law owes more than $145,000 in student loans, amounting to monthly payments of more than $1,690.
But the changes introduced by the Obama administration could allow a graduate making $70,000 a year to reduce monthly payments to $448 a month and have over $100,000 of debt forgiven, the Advantage Group says.
(Excerpt) Read more at nytimes.com ...
And tuition costs will continue to rise and rise and rise in spite of the universities having billions of dollars saved as endowments.
We need to get rid of student loans for college. Seriously. Subsidies for student loans and housing only push prices up. Education has turned into a racket when so many colleges have $20K or $40K per year price tags. Who the Hell can afford that without a student loan unless you are very wealthy? The market is completely distorted.
As will the salaries of administrators and the number of administrators and support-staff for administrators. (The main driver of tuition rises is not faculty salaries, which have stagnated, but the administrative superstructure that neither educates students nor advances human knowledge through research.)
High debt and low income?
Sounds like somebody made the wrong educational choices, and now the rest of us will help pay for it. And encourage more of this retardation at the same time.
It's difficult to hold down costs when you have high paid faculty teaching only 1 course a semester and most of that done by grad students.
That is an extremely telling chart. Not only is the government making it more expensive by pretending to make it “affordable” (in essence, presenting the open taxpayer-funded wallet to the schools) but higher education has something of a quasi-monopoly through the accrediting program. In most cases, a business degree is roughly the same regardless of which school it comes from. There is no true competition, and will be none as long as the liberal accrediting agencies control things.
History has shown that to be a simple truth.
When the government starts pouring money into anything the main effect is to drive costs up.
That is what happened to health care.
That is what created the boom in housing prices.
And that is what has caused the explosion in college costs.
But politicians and bureaucrats are too arrogant to believe history holds any lessons for them.
They know past efforts must have failed because there was no one as smart as them involved.
Let’s examine the argument utilized by ‘progressives’ in favor of expanding student loan programs: It offers otherwise disadvantaged students with an opportunity to gain the skills and knowledge necessary to gain lifelong employment at substantial compensation levels. Sounds rosy right?!? Well, if the purpose of funding this program is to give access to all of these ‘high paying’ jobs, why don’t the beneficiaries have the money to repay the loans?
The answer is simple. College education has become nothing more that a for profit machine that is feeding worthless pieces of paper to students. Why would the government back loans for a student to study ‘social sciences’ or ‘theater’ or any one of thousands of worthless pursuits? What is the ROI for such an endeavor? If we are in the midst of this ‘great recovery’ where are all of the jobs for these graduates? The supporting argument is diametrically opposed to reality.
Some level of loan guarantees is absolutely a worthy pursuit. Why not have a survey of industry needs completed every five years and offer loan guarantees only in the fields which it is determined there is an impending shortage of qualified employees? This would reduce the necessity of H1 visas and would provide a path to employment rather than a feel good piece of paper and a path to the need for lifelong subsistence benefits from the state.
If you took out loans to study in a field in which there are no jobs, tough crap. You made your bed, lie in it. Why should I have to pay for it?
the reason for the curve having an ever-increasing slope is that the system is self reinforcing. Positive feedback. If there were no government-backed college loans, the law of supply and demand, with its accompanying check on college majors that do not result in a financially viable career, would apply. I say that as a late-in-life grad student who is paying for my educaiton without government backed loans.
Government money alters and degrades the natural order of things.
At the same time it destroys self-corecting mechanisms that maintain balance and prevent gross excess and distortion.
When that happens the government attempts to solve the problem by pouring more money at it, exacerbating the problem.
The 800 pound gorilla is sitting in the middle of the room and no one is taking notice.
From 1978 on, there have been several laws place which changed the way colleges functioned.
Traditional classes for business and the higher mathematics/sciences as well as information technology education has not changed too much. Maybe an ethics class was added but it is pretty much the same. And who came out of these programs? Today’s businessmen, scientists and people who built the infrastructure of capitalism.
Now let’s look at the liberal arts programs. Hmm... what has changed? Black studies, womens studies, Indian tribal studies, latino studies, significant changes to social sciences, keynesian economics, re-writes of American history, sciences, mathematics and information technology that focused not on the true nature of the subject, but on social issues.
What’s the difference? Well, one of these required thousands of extra teachers, teachers assistants and students without the educational background to fill these programs. Which meant federal grants which in reality, like the mortgage crisis could never be paid back. In other words, how do we take students who cannot pass a history test and get them PHD’s.
The other program focused on students that were both extremely intelligent, came from families with money or based on their skills after college could pay back the loans they needed to get through school.
But most telling is who got hurt by all of this? Well, for one the American taxpayer, but two, middle class white families who made too much money for grants and scholarships, but didn’t make enough to pay for college for their kids.
How do I know this? I am in the third category. I am paying taxes so little Susie, who is a moron can get federal money to learn about what it is like being a woman while my son, who is pretty smart but not Harvard material is trying to scrape up enough money so he could attend college.
If anyone ever has the time, go look up scholarships for white, middle class kids. If you find anything please let me know, because I cannot find a damn thing.
Starve the beast and smaller loans will be needed to get the same education as always.