OT: Exposing the Student Loan Racket

[zk]

[quote=bubba99]Back in the day when I went to Berkeley…[/quote]

I’m pretty sure no one called “Bubba” has ever gone to Berkeley. (Insert emoticon indicating the previous is an attempt at humor)

[sdduuuude]

[quote=zk]Well, it is different from bailing out the banks. Risky investments by banks are not necessary for our country to be competitive. Availability of college, in my opinion, is.

Let’s assume, for the sake of argument, that student loans, the way they’re currently structured, are the reason that tuition costs have gone up. What do we do to fix it? I’m not sure what the answer is, but I know what it isn’t, and that’s making college unavailable to those who can’t pay cash for it.[/quote]

In your opinion. Not every opinion should be funded by the government.

One reason why we shouldn’t bail out the banks is because it keeps weak banks alive that shouldn’t be alive. Same with students and colleges. The loans keep people going to school who simply aren’t willing to work for it and it keeps schools in business who would otherwise go broke.

You don’t have to fix it, really. In fact, stopping the attempts to fix it may fix it.

Instead of borrowing cash from Uncle Sam, people can go to school part-time and work part time, they can room together to save money, they can find employers or bosses to sponsor them, borrow from relatives, work on research projects, work as an intern, and otherwise suffer a bit to get an education they really want. Or they can attend a 2-year program, or a trade school instead of a 4-year college.

I have a friend, now an IT Vice President, who came from nothing, lived in a 20-foot trailer in Encanto while he scrapped his way through SDSU, worked while he was in school, and made it in life. We need more of that and less of debt-financed education. If you aren’t willing to do that, then maybe college isn’t for you and I just don’t see how it is the responsibility of taxpayers to fund people’s schooling who aren’t willing to make the sacrafices.

Limiting per-student loans would certainly help. Limiting to less expensive programs would help. Limiting loans to those with the best grades who attend programs in schools that produce graduates who can actually use their education to get a well-paying job would help. Blank checks don’t help.

More and more student loans is simply not a sustainable way to get more people into school. It is just like government-sponsored programs to increase home ownership, which subsequently failed once the market realized that the value of the homes hadn’t gone up – only the amount of funding.

They made it easy for people to go into debt, so people spent more on houses, and the result is housing prices went up, which made it more difficult to increase home ownership.

[CDMA ENG]

[quote=bearishgurl][quote=CDMA ENG]Well… It seems to buy the following:

http://registrar.berkeley.edu/Default.aspx?PageID=feesched.html

Which is a tough pill to swallow…

CE[/quote]

Well, CE, not sure what you are implying here but FWIW, I was not a resident of CA at the time. I don’t know what UC tuition/fees were in that era but IIRC, SDSU (recently renamed from SD State College) was about $114-143 semester + fees (about $168 semester incl pkg). CA CC’s were “free.”

My 30 ACT score got me admitted to CU (Boulder, CO), which, IIRC, was about $850 – $900 tuition per semester + fees and books at the time. I had a FT job and lived over 40 miles from it and would have had to drive there in the snow on 2-lane roads. Even back then, living in Boulder was very expensive (and still is). There’s no way $4400 would have covered a year there (perhaps a $4400 loan + an annual “BEOG” grant of $2000 may have, if I qualified for it).

Yes, I could have worked and lived in Boulder but I doubt any job offered me would have been F/T or paid more than min wage. I made MUCH more $$ living in Denver.

When I later moved back to CA, I got a F/T job immediately and was no longer interested in attending college. In any case, I was ineligible for “resident-student tuition” for the first year.

Even as much as 15 years after HS graduation, I had MANY HS friends who I wrote and/or visited periodically who were not as well off as me or established in their own right (owned their own homes, etc) due to leaving the work world to attend college for several years. And many had student loans to pay off (although not as large as today’s loans). I wouldn’t have been able to swing buying my first property at such a young age if I had had student loans to pay off!

I concede that those days are long gone and that a college degree is now the new HS diploma (in employers’ eyes). It’s very sad that a college degree costs so much. I also think most employers are short-sighted in hiring a young, inexperienced college grad over an experienced HS grad or “Certificate” candidate. Most employers today automatically think the “college grad” candidate will be the better employee but nothing could be further from the truth. A candidate who will be “up and running” on the first day of work due to work experience and superior basic skills (which most college grads don’t have) is the better candidate.

I’m speaking of non-technical jobs here … in the business sector.[/quote]

I didn’t imply anything. I merely provided information to the thread and you went off on your usually… Whatever it is you call it.

It wasn’t aimed at anyone or anything. Just a quick sanity check of what a good,in-state, university cost.

Shit. Give it a rest for once.

CE

[montana]

[quote=UCGal]The other issue with student loans is that they are not dischargeable in bankruptcy.

Students are encouraged to take on this debt. Often they are young with little financial sense. So they just keep borrowing and not downsizing their lifestyle appropriately (as mentioned – putting living expenses on the student loans).

The biggest problem with student loans are that they are given to kids who’ve never lived on their own.

Financial education – the basics – should be mandatory in high school as part of the college requirements. Not just 2 years of a foreign language.[/quote]

Another issue is the ease at which a student can place their loans in deferment or forbearance after they get out of school. A student can easily get 36 months of deferment and 36 months of forbearance, and all the interest capitalizes upon entering repayment again. Only authorized periods of deferment will the government pay for the interest on the subsidized loans.

Borrowers that get out of school with $20K in debt, can easily have their balloon to $30K in debt by using these deferment and forbearance periods.

[scaredyclassic]

Do you pay interest on student loans while in school. If you have the money to pay off on graduation, is the loan costfree?

[zk]

[quote=sdduuuude][quote=zk]Well, it is different from bailing out the banks. Risky investments by banks are not necessary for our country to be competitive. Availability of college, in my opinion, is.

Let’s assume, for the sake of argument, that student loans, the way they’re currently structured, are the reason that tuition costs have gone up. What do we do to fix it? I’m not sure what the answer is, but I know what it isn’t, and that’s making college unavailable to those who can’t pay cash for it.[/quote]

In your opinion. Not every opinion should be funded by the government.

One reason why we shouldn’t bail out the banks is because it keeps weak banks alive that shouldn’t be alive. Same with students and colleges. The loans keep people going to school who simply aren’t willing to work for it and it keeps schools in business who would otherwise go broke.

You don’t have to fix it, really. In fact, stopping the attempts to fix it may fix it.

Instead of borrowing cash from Uncle Sam, people can go to school part-time and work part time, they can room together to save money, they can find employers or bosses to sponsor them, borrow from relatives, work on research projects, work as an intern, and otherwise suffer a bit to get an education they really want. Or they can attend a 2-year program, or a trade school instead of a 4-year college.

I have a friend, now an IT Vice President, who came from nothing, lived in a 20-foot trailer in Encanto while he scrapped his way through SDSU, worked while he was in school, and made it in life. We need more of that and less of debt-financed education. If you aren’t willing to do that, then maybe college isn’t for you and I just don’t see how it is the responsibility of taxpayers to fund people’s schooling who aren’t willing to make the sacrafices.

Limiting per-student loans would certainly help. Limiting to less expensive programs would help. Limiting loans to those with the best grades who attend programs in schools that produce graduates who can actually use their education to get a well-paying job would help. Blank checks don’t help.

More and more student loans is simply not a sustainable way to get more people into school. It is just like government-sponsored programs to increase home ownership, which subsequently failed once the market realized that the value of the homes hadn’t gone up – only the amount of funding.

They made it easy for people to go into debt, so people spent more on houses, and the result is housing prices went up, which made it more difficult to increase home ownership.[/quote]

I’m not advocating blank checks. And I agree that the system is broken and needs to be fixed. And I think a lot of the ideas you mention are good ones. But I think that, in the long run, after you get the system fixed, there should be a willingness to subsidize college education to a certain point. You’ll never have a perfect loan system where everyone pays every nickel back. You’ll never have a perfect university system where there’s not a nickel of waste. So those shouldn’t be our goals. Our goals should be to minimize the losses – and I agree that we have a lot of work to do there – but to continue to make college available to those who can’t pay cash for it. If it costs us some money in the short run, in the long run that money will more than be made up for in increased production and competitiveness with the rest of the world. (Whereas subsidizing risky investments by banks results in no such advantage.)

[UCGal]

[quote=walterwhite]Do you pay interest on student loans while in school. If you have the money to pay off on graduation, is the loan costfree?[/quote]
My understanding is there are two forms of student loans. The “better” one does not charge interest from the time it’s issued – but is much harder to get. The more easily obtained student loan starts the interest clock from the time of issuance.

This is based on listening to people call into financial shows and talk about their debt… Not from personal experience…

A quick google shows it’s a subsidized Stafford loan that has no interest while in school, vs an unsubsidized Stafford loan that starts the interest from the beginning.

[sdduuuude]

I consider myself a realistic idealist. I believe, in reality, that if all the government funding dried up for everything, people would step in and help in some way for those things that are most important to them.

I suspect those things are education, police, courts, the military, and maybe welfare for those who are truly messed up.

And, if I’m wrong, then whatever it is that doesn’t get private support – be it schools, or scholarships or the military – then they shouldn’t have been funded in the first place.

Thanks, zk. Twice in one day I have had reasonable discussions with people on Piggington. I’m so happy.

[bearishgurl]

[quote=walterwhite]Do you pay interest on student loans while in school. If you have the money to pay off on graduation, is the loan costfree?[/quote]

Uhh, no, scaredy. The old Perkins loan was 8.5 percent and more recently 6.5 percent. Not sure what the prevailing rate is.

[scaredyclassic]

my private adustable rate law school loans from 17 years ago are finishing up at 3.4%. weird.

i kinda remember posters from the 70s saying, “won’t it be a great day when the military has to hold a bake sale to buy a missile”.

i guess that’s sduuuude’s position; the people will step up and hold a bake sale or pass the hat if there’s a war, or a raffle if there is less than optimal policing going on in the area to buy a new cop car. o

of course, wealthier neighborhoods will do better at raising money for cops than the poorer districts, but why should poor people expect to get a response, anyway? as Public Enemy’ flavor flav said in the 90’s, “911 is a joke”. Evidently he prefers the private sector as he notes in his rap, since he calls a cab since a cab will come quicker than 911:

Hit me
Going going gone
Now I dialed 911 a long time ago
Don’t you see how late they’re reactin’
They only come and they come when they wanna
So get the morgue embalm the goner
They don’t care ’cause they stay paid anyway
They teach ya like an ace they can’t be betrayed
I know you stumble with no use people
If your life is on the line they you’re dead today
Late comings with the late comin’ stretcher
That’s a body bag in disguise y’all betcha
I call ’em body snatchers quick they come to fetch ya?
With an autopsy ambulance just to dissect ya
They are the kings ’cause they swing amputation
Lose your arms, your legs to them it’s compilation
I can prove it to you watch the rotation
It all adds up to a funky situation
So get up get, get get down
911 is a joke in yo town
Get up, get, get, get down
Late 911 wears the late crown

911 is a joke

Everyday they don’t never come correct
You can ask my man right here with the broken neck
He’s a witness to the job never bein’ done
He would’ve been in full in 8 9-11
Was a joke ’cause they always jokin’
They the token to your life when it’s croakin’
They need to be in a pawn shop on a
911 is a joke we don’t want ’em
I call a cab ’cause a cab will come quicker
The doctors huddle up and call a flea flicker
The reason that I say that ’cause they
Flick you off like fleas
They be laughin’ at ya while you’re crawlin’ on your knees
And to the strength so go the length
Thinkin’ you are first when you really are tenth
You better wake up and smell the real flavor
Cause 911 is a fake life saver

So get up, get, get get down
911 is a joke in yo town
Get up, get, get, get down
Late 911 wears the late crown

Ow, ow 911 is a joke

[Author]

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