The future of student loans

[Ava]

Of course I'm following the news closely regarding student loans. SL are my highest debt, more than the rest of my debt (mortgage and car note) ... combined!!!!

I'm trying to get a sense of where President Biden's administration will take us.

1- Nothing happens, the forbearance expires on December 31 and we go back to the same as before.

2- Trump lets the forbearance expire, President Biden retroactively reinstalls it until September 30, and then we go back to the same as before

3- All SL holders get a $10,000 reduction on their loans after forbearance

4- President Biden cancels loans for undergraduate degrees obtained at public and traditionally African American universities after forbearance

5- All SL holders get a $50,000 reduction on their loans after forbearance

Personally, I think we can expect an extension on the forbearance until September 30, 2021, and some sort of debt reduction, possibly all undergraduate debt, or maybe $10,000 for everybody.

I agree with the idea of cancelling $50,000 for everyone, but I know it won't happen.
I hope whatever relief we receive comes along significant student loan reform so we as a society don't end up in the same spot a few years from now.

[sesfw]

Ava ...... I'm not quite sure how to say this and what ever comes out, please don't take it wrong.

I keep thinking about my g-dtr and the royal screwing she accepted with her education.  About 10 years ago she graduated with a BS from university of Phoenix.  It's a for profit school and not the best, and her degree is in child psychology.  She and her BF wanted to live together and she didn't like the class sizes at ASU.  

Think she had around $20K SL when she left and now it's more than $50K with non payment and interest building.  At age 34 she is an unwed mother and ruined for life financially.  She and boyfriend are still living together and run a karaoke bar close to ASU and struggling financially.

What will these potential choices do with people like her? 

Going to be interesting.

[wvugurl26]

There is a bill floating around Congress to extend the 0% interest to next September. That could pass. I'm hoping that passes. I put my small raise towards increasing my payments under the 0% we've had this year. I forgot I was due for the raise so I decided to increase my payment.

If they do 0% through next September and I keep making the same payment, I would cut my balance in half. At that point we could probably shuffle things to just pay it off. I'm tired of paying on them. We make too much to write off the interest and 6.8% on something that is not dischargeable should be criminal.

[nidena]

From conversations and articles that I've seen, most people have no issue (mentally not financially) with paying their student loans.  It's the freaking interest that's a killer.  Like, if SLs were like auto loans or mortgages--set payments for a set period of time and then all is done--more would get paid off because they COULD be paid off.  With the way interest compounds, it's damn near impossible.

When I hear people say "They should know what they're getting into..." it pisses me off.  I've sat outside the Financial Aid office at my old school.  That person was a slick sales person, I often wondered if she thought she'd get a commission off how many low-income families she could suck into full financial aid.  Many people who get SLs don't deal with any kind of loan on the regular.  They pay rent for an apartment  and drive cars that were bought for a few hundred $$.  I'm not talking about people with SLs in general.  I'm talking about the ones I actually know/went to school with.

[Ava]

Nov 21, 2020 10:52:14 GMT -5 sesfw said:

Ava ...... I'm not quite sure how to say this and what ever comes out, please don't take it wrong.

I keep thinking about my g-dtr and the royal screwing she accepted with her education.  About 10 years ago she graduated with a BS from university of Phoenix.  It's a for profit school and not the best, and her degree is in child psychology.  She and her BF wanted to live together and she didn't like the class sizes at ASU.  

Think she had around $20K SL when she left and now it's more than $50K with non payment and interest building.  At age 34 she is an unwed mother and ruined for life financially.  She and boyfriend are still living together and run a karaoke bar close to ASU and struggling financially.

What will these potential choices do with people like her? 

Going to be interesting.

Shouldn't she gets some form of loan cancellation? U of P shouldn't be allowed to exist in this country.
She got swindled. I thought there was loan cancellation available for those who were deceived by for-profit universities.

[Ava]

Nov 21, 2020 10:58:16 GMT -5 wvugurl26 said:

There is a bill floating around Congress to extend the 0% interest to next September. That could pass. I'm hoping that passes. I put my small raise towards increasing my payments under the 0% we've had this year. I forgot I was due for the raise so I decided to increase my payment.

If they do 0% through next September and I keep making the same payment, I would cut my balance in half. At that point we could probably shuffle things to just pay it off. I'm tired of paying on them. We make too much to write off the interest and 6.8% on something that is not dischargeable should be criminal.

I thought about paying extra on the SL but still it would only make a small dent.
So I've decided to open a savings account and I'm putting the money there. Once I reach the car loan's balance I'll pay it off.
The car loan only has a 3% interest rate, but eats up $300 a month which is a lot for me.
So by paying it off earlier it make a bigger difference than sending the money to SLs.

I'm also tired of paying on the SLs. I've been paying for over 5 years and only covering interest so the loans don't balloon. I don't see any way out right now unless there's some sort of student loan cancellation.

[Ava]

Nov 21, 2020 11:25:49 GMT -5 nidena said:

From conversations and articles that I've seen, most people have no issue (mentally not financially) with paying their student loans.  It's the freaking interest that's a killer.  Like, if SLs were like auto loans or mortgages--set payments for a set period of time and then all is done--more would get paid off because they COULD be paid off.  With the way interest compounds, it's damn near impossible.

When I hear people say "They should know what they're getting into..." it pisses me off.  I've sat outside the Financial Aid office at my old school.  That person was a slick sales person, I often wondered if she thought she'd get a commission off how many low-income families she could suck into full financial aid.  Many people who get SLs don't deal with any kind of loan on the regular.  They pay rent for an apartment  and drive cars that were bought for a few hundred $$.  I'm not talking about people with SLs in general.  I'm talking about the ones I actually know/went to school with.

If it was affordable, fine.
My loans were all federal, some subsidized and some unsubsidized. The unsubsidized portion was accumulating interest from day 1. And I was working full time at a cafeteria, but the money I earned I needed to pay living expenses since I was on my own.
So I borrowed for school, and I ended up with a bigger debt than what I borrowed due to interest.
That's why I think the whole system needs an overhaul. Just cancelling debt now for borrowers does squat for those that come behind us.

[nidena]

A woman who worked at my school took out SLs in 1996.  She was in her mid-40s at the time.  Through life events, she moved a lot and it took years before all the paperwork made it to where she was.  She's not one to think about bills if there's no statement in front of her.    Because of that, it had reached a point where they were garnishing her wages to put money towards the SLs.  This was two years ago.  And the amount they're taking is making NO dent in the interest.  She's in her mid-70s now.  The SL company will have to write off her debt with her death whenever that happens.  I just can't imagine.  She gets Social Security and some part-time wages but there's no way those SLs will get paid back.  Honestly, I feel like SLs should be written off for anyone taking home SS who no longer has to file taxes or something like that.  SLs are worse than payday loans it seems like.

I was fortunate to have less than $7000 in them.  I graduated in May 2019, was able to take advantage of the interest free-ness this year, and paid both of them off last month.

[Deleted]

I have mixed feelings about this.  One of my questions is what happens in the future?  Is this a one-time forgiveness?  If so, won't both previous generations who paid off their loans themselves and future generations who will have to do the same have some resentment?  

And should graduate education be included?  Most people go to graduate school for career enhancement.  They get a higher salary and/or better job as a result.  Should taxpayers pay for that enhancement?
No strings (service) attached?

I just don't think we have this kind of money without substantially raising taxes.  Zero percent interest would at least require some skin in the game.

[Ava]

Nov 21, 2020 12:06:47 GMT -5 nidena said:

A woman who worked at my school took out SLs in 1996.  She was in her mid-40s at the time.  Through life events, she moved a lot and it took years before all the paperwork made it to where she was.  She's not one to think about bills if there's no statement in front of her.    Because of that, it had reached a point where they were garnishing her wages to put money towards the SLs.  This was two years ago.  And the amount they're taking is making NO dent in the interest.  She's in her mid-70s now.  The SL company will have to write off her debt with her death whenever that happens.  I just can't imagine.  She gets Social Security and some part-time wages but there's no way those SLs will get paid back.  Honestly, I feel like SLs should be written off for anyone taking home SS who no longer has to file taxes or something like that.  SLs are worse than payday loans it seems like.

I was fortunate to have less than $7000 in them.  I graduated in May 2019, was able to take advantage of the interest free-ness this year, and paid both of them off last month.

Congrats on the graduation and on paying off the student loans!!!

[Lizard Queen]

There has to be an incentive to borrow the least amount that works for the student. I think the interest rate on federal loans should equal the federal reserve rate, currently 0-0.25%, I'm not sure which. I don't think taxpayers should be funding spring break trips to tropical locales. I'm sure people here wouldn't take advantage like that, but you know there are students that would.

[Ava]

Nov 21, 2020 12:14:53 GMT -5 @bamafan1954 said:

I have mixed feelings about this.  One of my questions is what happens in the future?  Is this a one-time forgiveness?  If so, won't both previous generations who paid off their loans themselves and future generations who will have to do the same have some resentment?  

And should graduate education be included?  Most people go to graduate school for career enhancement.  They get a higher salary and/or better job as a result.  Should taxpayers pay for that enhancement?
No strings (service) attached?

I just don't think we have this kind of money without substantially raising taxes.  Zero percent interest would at least require some skin in the game.

I agree there should be considerable reform along with loan forgiveness. It doesn't make sense to forgive current borrowers and then saddle subsequent generation with the same problem.
Apparently, graduate education is not included because those borrowers are supposed to make more money and able to pay. But that's not always the case.
Anyway, starting with reform and debt cancellation for undergraduate is a huge start versus the situation we have right now.

[justme]

I don't see total forgiveness happening. Too many that paid off their debt would be angry and then what happens in 10 years of nothing else changes? We do it again after people took out loans expecting it to happen again. Even if we get the senate I don't see them being able to reform our college system enough where total loan forgiveness makes sense.

I think a set amount is more likely, but I personally think they'd be better off passing something that seriously caps the interest rate instead. This would actually save some people more than 10k, but I think more would get behind it because people would still be paying back their money. There is no reason besides greed for 100% guaranteed loans to be higher than mortgage rates or personal loan rates. Tie it to the treasury rate, maybe add 0.25% or something to cover administration and call it done. I've been saying this for years.

[jerseygirl]

Student loans enable colleges to raise tuition and still have students attend. The tuition increases are outrageous.
The problem would decrease if the underlying huge tuition increases didn’t continue
It’s like the problem with health care, insurance costs are outrageous but it’s a reflection of the underlying costs for hospitals medications etc.
Politicians say they will help with student loans and health insurance but they want to keep their golden geese of political contributions

[sesfw]

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

[NastyWoman]

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

Social workers and teacher in certain areas to name but a few

[justme]

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

I'm against that for a lot of reasons. For one there's too many jobs nowadays that require a college degree even though the job itself doesn't need it and it's crappy pay. Unless that's stopped (huge government intervention into businesses) I don't think it's right to put restrictions on majors. Furthermore, a lot of it is very area specific - most people settle where they went to school or at home and some areas might need X but in another area X is useless so why would you allow people to get a degree in X that is useless where they are? Not to mention this would funnel people into certain majors which the colleges couldn't handle without adding a lot of likely inexperienced professors to teach classes and then it would graduate an abundance of people in that are and flood the market and would result in a lot of people taking jobs that pay $36k even though they have $50k in SL because the government decided that they would get a higher salary. Is the government going to subsidize a lower salary after you picked a major where you were told you'd get a $50k job so $50k in student loans is ok? Plus there's plenty of majors that you don't *think* do anything, but you aren't thinking it through. Go a week without watching TV or movies or streaming channels, listening to anything (music, podcasts, news reports, weather reports, etc), or reading anything. Total media blackout across all means. And then come back to me and tell me that you're ok without anyone going to school for those "lesser" majors. And I'm probably missing some points too.

Now I would be ok with some more stringent reporting regarding each college's major, average student loan, average salary upon graduation, and average salary 5/10 years down the road. Give the people the information and reliable information. But you still have to let them make the decision. 

[Deleted]

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

You are missing the teaching profession.  Starting pay is abysmal.  Alabama got beginners to $40k only this year.  It tops out after 27 years at $52k.

But it is difficult not to have $50k in SL when tuition is $10k and your parents can't or won't pay for it.

So do we decide that only people who can afford college without loans should be teachers?  There is an element of "follow their dream" in many of the subject areas . . . art, music, etc.

[The Walk of the Penguin Mich]

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

Scientists?  Pay is lousy, especially first starting out.  I’m not sure what starting out in a lab is now, I’d guess less than $40k.  But I’m also guessing that many like being the recipients of what’s found. and developed.

[Lizard Queen]

Nov 21, 2020 18:00:27 GMT -5 @bamafan1954 said:

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

You are missing the teaching profession.  Starting pay is abysmal.  Alabama got beginners to $40k only this year.  It tops out after 27 years at $52k.

But it is difficult not to have $50k in SL when tuition is $10k and your parents can't or won't pay for it.

So do we decide that only people who can afford college without loans should be teachers?  There is an element of "follow their dream" in many of the subject areas . . . art, music, etc.

I've seen jobs for accountants start as low as $14/hr, and CPA's starting as low as $16/hr.

[TheOtherMe]

When I started preparing tax returns, with 30 years of experience at the IRS, but no experience as a return preparer, I was paid $14.  I did get a raises and retired at $20 an hour.

[Deleted]

Nov 21, 2020 18:12:47 GMT -5 Lizard Queen said:

Nov 21, 2020 18:00:27 GMT -5 @bamafan1954 said:

You are missing the teaching profession.  Starting pay is abysmal.  Alabama got beginners to $40k only this year.  It tops out after 27 years at $52k.

But it is difficult not to have $50k in SL when tuition is $10k and your parents can't or won't pay for it.

So do we decide that only people who can afford college without loans should be teachers?  There is an element of "follow their dream" in many of the subject areas . . . art, music, etc.

I've seen jobs for accountants start as low as $14/hr, and CPA's starting as low as $16/hr.

I didn't say that teaching was the only profession that has low starting salaries.  More telling is that in many parts of the country, the top of the pay scale isn't much better.  Plus, Montana and Oklahoma still start in the $31-33K range in 2020!

I was just answering the question of "What did I miss?"

But I guess your comment means that we shouldn't allow accountants to receive student loans either.  Being a CPA, at least in Alabama, is basically a graduate degree since it requires 30 more hours than normal to sit for the test (150 total).  By the way, my son is a CPA and has always earned more than I did as a teacher, including when he started.  He now earns significantly more, somewhere in the six figures.



ETA: I just double-checked the requirements.  They changed it in 2016.  You can sit for the exam with 120 hours and a bachelor's degree that includes X number of accounting credits.  Within 3 years of successfully completing all parts, you must get the additional 30 hours or you forfeit passing the exam.  So like I said, it is basically a graduate degree.  You aren't a CPA until you have passed the exam and gotten those extra 30 hours.  

[Lizard Queen]

Nov 21, 2020 18:55:54 GMT -5 @bamafan1954 said:

Nov 21, 2020 18:12:47 GMT -5 Lizard Queen said:

I've seen jobs for accountants start as low as $14/hr, and CPA's starting as low as $16/hr.

I didn't say that teaching was the only profession that has low starting salaries.  More telling is that in many parts of the country, the top of the pay scale isn't much better.  Plus, Montana and Oklahoma still start in the $31-33K range in 2020!

I was just answering the question of "What did I miss?"

But I guess your comment means that we shouldn't allow accountants to receive student loans either.  Being a CPA, at least in Alabama, is basically a graduate degree since it requires 30 more hours than normal to sit for the test (150 total).  By the way, my son is a CPA and has always earned more than I did as a teacher, including when he started.  He now earns significantly more, somewhere in the six figures.

Yes, it means the supply of accountants is too high that they only make that much. So, according to the criteria previously mentioned, they shouldn't get loans.

That low pay for a CPA is ridiculous. I don't have one, but that even makes me scoff. I don't know what those people (mostly recruiters) are thinking.

[NomoreDramaQ1015]

Nov 21, 2020 18:01:00 GMT -5 The Walk of the Penguin Mich said:

Nov 21, 2020 17:31:55 GMT -5 sesfw said:

but I personally think they'd be better off passing something that seriously caps the interest rate instead.

Another thing that might help with the SL situation is controlling what fields are eligible for the loans.  Too many people want to 'follow their dream' right now instead of getting a paying job to fund their dream.  My vocation is electronics, my avocation is music. I work in electronics to pay for my music.

It's not reasonable for someone to have $50K in SL for a job that pays $36K annually and not much room for income advancement.


What am I missing? ...........

Scientists?  Pay is lousy, especially first starting out.  I’m not sure what starting out in a lab is now, I’d guess less than $40k.  But I’m also guessing that many like being the recipients of what’s found. and developed.

This is Omaha and a private college but when my friend was still working there going rate for techs with my experience level was $26k.

That's okay nobody needs the research that leads to things like the next COVID vaccine.

[TheOtherMe]

The 150 credits to get certified as a CPA is nationwide. 

[wvugurl26]

Each state sets their rules for CPAs. Most say 150 hours though. I graduated with 148 hours in 4 years. I had 3 credits when I went in and I took two summer classes. It is possible but you can't take 12 credits a semester.

I was always told to limit borrowing to your expected first year salary. I know someone who went to my school as an out of state student in the education program which was a 5 year masters. Her parents couldn't help much so she borrowed heavily. 6 figures in loans to be a teacher and then she decided not to teach. Did more schooling of some kind and now works in a counseling position.

Her husband has his own set of loans from medical school.

I fully support reducing interest rates. If private companies don't like the rates, get out of the game. If students can't use those to pay ever increasing tuition then maybe rates come down.

[dippyegg]

Regarding loans , is this only for Stafford loans or will parent plus loans and other loans be included?

[sesfw]

From what I'm seeing university education costs are sorta uncontrolled.  Whatever amount the SL is, is how much the schools charge.  Not considering earning potential for payback.

Something is wrong with the system.

When I attended tech school in 1991, I earned an associate degree and had $17K in SL.  My earnings allowed me to pay it back and have a decent living also.

But I went to a different type of school that was geared for the job market.

[nidena]

Some crazy school math for you guys...

My college was recently bought by another school in the area.  Tuition dropped almost $20,000/yr for in-state students.

The email that went out a few weeks ago...

Dear Wesley Students,


Last month President Clark shared with you some of the benefits of Wesley College becoming part of Delaware State University in July of next year. Most notable is that starting in the Fall of 2021 your annual tuition will decline from $26,934 to either $9,138 if you are a Delawarean or $19,060 if you are from out-of-state.


In order to determine your lowest possible net cost of attendance for next fall, it is absolutely critical that you file a “FAFSA” (Free Application for Federal Student Aid) as soon as possible. Please include Wesley’s number of ##### and Delaware State University’s number of ##### on the application.


When you return after the Holiday break, the Financial Aid staff will be conducting several information sessions in the early part of the Spring semester that will explain the DSU scholarship program. The details of these scholarship programs can be found at this link: www.desu.edu/admissions/financial-aid. Everyone at Wesley and Delaware State wants you to return and complete your education.


We expect that virtually every student from Delaware will experience a lower net cost of attendance than you are presently paying. The majority of non-Delaware students also will benefit from the affiliation with Delaware State. Both
schools are committed to maximizing the likelihood that your net cost of attendance will be not increase beyond what it would have been.


I would like to take advantage of this opportunity to wish you and your family a Happy Thanksgiving. Please accept our best wishes for a successful first semester and an equally satisfactory college experience leading to a degree in
your chosen field.

[justme]

It's not that crazy as it sounds like it's going from a private school to a state school. While it's definitely decreased over the years, states to provide funding that covers a portion of state school's running costs. There may be some federal funding that flows through too, but I have no idea about that. Plus I know at least some states that have laws limiting liability that a state school would have which would greatly decrease insurance costs. Add in the fact that there's some overhead costs that decrease with economies of scale.

It's kind of how like when the company I work for buys up competitors we can offer pretty much the same product at a cheaper price because we're producing 20 times what the competitor was.