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Our Generous Uncle Sam: Lenient College Debt Rules Encourage Students To Keep Borrowing
Forbes ^ | May 8, 2014 | George Leef

Posted on 05/09/2014 10:03:47 AM PDT by reaganaut1

People keep talking about the high burden of college debt, which now surpasses credit card debt. And the federal government is doing something to help.

Unfortunately, what it is doing makes the problem worse.

Student loan debt has risen more than any other category, according to a February report by the Federal Reserve Bank of New York. That’s surprising because college enrollments (and also enrollments in many graduate and professional schools) have been declining.

So why is that student debt mountain still growing?

Instead of paying their debts down, many graduates are either keeping their loan balances steady or even allowing them to increase. About 17 percent of student borrowers are currently delinquent, but many more who aren’t officially delinquent have avoided that only by taking advantage of Uncle Sam’s generosity with taxpayer money.

One of the “generous” features of federal loans permits students to defer their payments. They can simply claim that they impose “economic hardship” or they can return to school. Just by enrolling half-time, the student can qualify for more loans and can use the money not just to pay for tuition, but to help cover living expenses.

This reflects political reality — politicians win more votes by being nice to college students than by watching out for the taxpayers.

People with mortgages can’t put off the payments just by saying that they impose a hardship, but mortgage lenders have their own money at risk and can’t indulge in foolish generosity. Politicians, on the other hand, don’t bear the costs of their follies.

Another feature of Uncle Sam’s generosity is the Pay As You Earn (PAYE) program.

(Excerpt) Read more at forbes.com ...


TOPICS: Culture/Society; Editorial; Government
KEYWORDS: college; georgeleef; studentloans

1 posted on 05/09/2014 10:03:47 AM PDT by reaganaut1
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To: reaganaut1

Borrow all you can while you can. This is akin to Obama’s immigration policy. Once you get all you can, he will wipe out the debt. What’s another trillion or so on the national debt along with another 10-20 million illegals made citizens.


2 posted on 05/09/2014 10:08:49 AM PDT by Mouton (The insurrection laws perpetuate what we have for a government now.)
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To: reaganaut1

I always remember student loans being the one area of government where they were really strict about being repaid. They would garnish anything and everything if a student didn’t pay. I guess, like so many other aspects of American life that require personal responsibility, that has gone by the wayside and student loans are just another social welfare transfer payment to be paid for by the “rich”.


3 posted on 05/09/2014 10:13:17 AM PDT by Opinionated Blowhard ("When the people find they can vote themselves money, that will herald the end of the republic.")
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To: Mouton

Mouton, I think some college students are counting on exactly that. They think there is a very good probability of these debts being wiped clean by government at some point. I can’t say I disagree, because both parties and especially Democrats love to use taxpayer money to reward their special interests.


4 posted on 05/09/2014 10:14:10 AM PDT by CitizenUSA (We can't have an American people that violate the law and then just walk away from it!)
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To: Mouton

I respectfully disagree. The Federal Government will NEVER forgive student loan debt. Oh, they’ll waive interest for a few years, come up with various programs to reduce principal for targeted groups right before elections and play other games, but this massive debt which creates such pliable group of serfs will never be relinquished. The Democrats might even come up with election-year debt amnesty proposals that they know Republicans will reject just to get juicy copy for campaign ads.

Consider what your average millennial kid with 100K+ debt for a “Women’s Studies” degree might do if that crushing burden was lifted. They might save money, buy a house, settle down and perhaps start a family. Next thing you know they’ll start caring about their community’s prosperity and the future opportunities for their children.

That sounds an awful lot like a potential Republican voter to me. Not going to happen.


5 posted on 05/09/2014 10:51:24 AM PDT by Junk Silver
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To: Junk Silver

OK, we will just disagree on that point. Good to do it in an amicable fashion.


6 posted on 05/09/2014 10:58:07 AM PDT by Mouton (The insurrection laws perpetuate what we have for a government now.)
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To: Junk Silver; Mouton
Income-Based Plan | Federal Student Aid

https://studentaid.ed.gov/repay-loans/understand/plans/income-based

Monthly Payments

Under this plan, your monthly payments are


7 posted on 05/09/2014 11:51:17 AM PDT by B4Ranch (Name your illness, do a Google & YouTube search with "hydrogen peroxide". Do it and be surprised.)
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