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Thread: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

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    Default US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

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    (snip)2012 is the year the student loan bubble finally popped. While on one hand the relentlessly rising total Federal student debt crossed $956 billion as of September 30, and was growing at a pace that will have put it over $1 trillion by the end of 2012, the one data point confirming the size, severity and ultimately bursting of this latest debt bubble was the disclosure in late November by the Fed that the percentage of 90+ day delinquent loans soared from under 9% to 11% in one quarter.





    Which is why we were not surprised to learn that the Federal government has now delivered yet another bailout program: this time focusing not on banks, or homeowners who bought McMansions and decided to not pay their mortgage, but on those millions of Americans, aged 18 to 80, that are drowning in student debt - debt, incidentally, which has been used to pay for drugs, motorcycles, games, tattoos, not to mention countless iProducts. Which also means that since there is no free lunch, all that will happen is that even more Federal Debt will be tacked on to replace discharged student debt loans, up to the total $1 trillion which will promptly soar far higher as more Americans take advantage of this latest government handout. But when the US will already have $22 trillion in debt this time in four years, who really is counting? After all, "it is only fair" that the taxpayer funded "free for all" bonanza must go on.

    The latest debt bailout, not surprisingly is not titled "Yet another taxpayer funded bailout for those who bought things they can't afford on credit" as that would not be very politically prudent, especially for those politicians who still have taxpaying citizens as their voters. Instead, its name is the much more PC: "Pay as You Earn Repayment Plan." Alas, it really should be called the former, because what it does is it incentivizes Americans to borrow even more Federal student loans, well aware that there will now always be a cap on the associated monthly interest payment which will never leave a mark regardless what the full underlying loan notional is. It also provides for full debt discharge should the borrowers end up with cushy Federal jobs - because the one thing the US government needs afford is more debt-saddled government workers.

    What is the "Pay as You Earn Repayment Plan"? The WSJ explains:


    A new federal program should make it easier for some recent college graduates to keep their student-loan payments manageable.

    The new option, known as the "Pay as You Earn Repayment Plan," lets eligible borrowers sharply lower their monthly loan payments and qualify for loan forgiveness quicker than they might otherwise.

    "It's a very good safety net for students who borrow too much," says Mark Kantrowitz, publisher of the financial-aid site FinAid.org. "If your debt exceeds your annual income, you will probably benefit."



    Pay as You Earn, which took effect on Dec. 21, "is designed to help offset the effects of the recession for student borrowers most likely to take a hit in this tough job market," says Lauren Asher, president of the Institute for College Access and Success, which has pushed for the creation of income-based repayment plans.

    Which in the New Normal, means everyone with a student loan will benefit. It also means, that courtesy of knowing this safety net is there, more and more people will take advantage of the government's latest generosity with other taxpayer's money.

    What are the terms of this new bailout?

    The new program comes at a time when rising student-loan balances—amid a still shaky job market—have weighed heavily on many families.

    Typically, federal student loans must be repaid within 10 years. At current interest rates, that can work out to a monthly payment of roughly $300 for a borrower with $26,000 in debt.

    Pay as You Earn, by contrast, limits student-loan payments to 10% of "discretionary income" as defined by government formulas. Borrowers who make regular payments could have the remaining unpaid amounts forgiven after 20 years.


    So much for student debt being non-dischargeable: borrow hundreds of thousands, but make your monthly payment of a hundred or so bucks, and in 20 years you will be debt free, courtesy of US taxpayers. Actually, scratch that: one doesn't even have to make a payment!

    In some cases, borrowers with low incomes could be required to make a zero-dollar payment and would still be considered current on their loan. Monthly payments can increase or decrease each year based on the borrower's income and family size.


    For those who think getting full debt forgiveness in 20 years is far too long, why there's a loophole for that too: just go "work" for Uncle Sam:

    Borrowers with public-service jobs may qualify for loan forgiveness after just 10 years.

    As for eligibility "constraints":

    To be eligible for the program, borrowers must have taken out their first federal student loan after Sept. 30, 2007, and received at least one federal student loan after Sept. 30, 2011. Borrowers also must meet eligibility cutoffs based on the size of their debt, their discretionary income and family size.

    The U.S. Department of Education's Pay As You Earn calculator, available at studentaid.gov, can help you determine if you qualify. Borrowers can apply for the program online or by contacting the loan servicer that collects their payments on behalf of the federal government.

    In other words, virtually all people who were responsible for the diagonal take off in the Federal student loan total in the current depression are now eligible for what will eventually be full debt discharge.

    So let's get this straight:

    1.go to some "everyone who applies is admitted" community college
    2.take on the biggest Federal loan one can get
    3.use the proceeds for everything besides the tuition (of course)
    4.be unable to find a job after graduation (naturally)
    5.plead poverty, accusing evil employers who don't hire those who majored in Foosball, and make "zero" payments while remaining in "compliance"
    6.get a job working for the government, wait ten years, and have the entire loan magically disappear.
    And there it is: incentives for the common, and very much broke, man in the New Normal.

    If there is anyone out there who thinks this will not result in a "charge it" feeding frenzy and that the Federal student loan total will not go absolutely parabolic going forward, please raise your hand.

    Of course, what is not discussed, is who is on the other side of all those forgiven loans. And the answer, dear taxpaying US readers, is starting at you in the mirror. Because all the Federal government will do is transfer the unfunded obligation, which has already been used to satisfy the purchase of goods and services, from one individual to the whole group.

    But when one is dealing with the government of a country that is no longer even fit to be defined as "banana", what is adding one more trillion between already insolvent counterparties.

    Finally, yes, this means the Fed just tacked on one more year of QE to its $1 trillion/year in US debt monetization, which also means the Fed's balance sheet will now also be used for to fund student loan forgiveness, among so many other things.

    Insolvent students of the world, unite!"(snip)

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    I have been going to school for three years, I have racked up 20,000 dollars in student debt.! IT SUCKS.. I started dancing over the summer did my fall semester which I fortunately got to skip the loan process.. but what the biggest kicker is to me out of the 20,000$ I owe.. I took out 15,000, 5,000$ in interest in three years.. So naturally the program would work because that is a decent amount to make back. However, if we are not making people payback how the hell do we expect to fund this??? There was one story I read where some my rented a loft in NY & furnished it pretty fancy 60,000year in student debt.. guy didnt even go to school.. I know people going to school for the most ridiculous things.. & now I understand why it is important to know basic math & obviously English skills.. but I think for that amount of student debt people are racking up maybe we should I don't be studying more in our degree than 2 years of prerequisite classes.. I mean isn't that what high school is for???

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    ^^^ well, from a purely pragmatic standpoint for dancers and camgirls with sizeable student loans, there now appears to be a strong incentive to A. borrow as much total student loan money as you can, B. report an income level which is fairly low ( thus making the monthly student loan payments very low ), and C. wait 20 years for the outstanding balance to be written off. An even better deal can be had if the college major allows for being hired at any sort of government job, which will result in the outstanding balance being written off in 10 years. In fact, a relative back in New York who has a Master's in Education ( and is unable to find a teaching job ) just signed up to study accounting instead. It seems that the state of New York is in the process of creating a whole bunch of new jobs dealing with the huge number of additional social welfare benefit payments and the state ObamaCare insurance exchange that has to be operating by 2014.

    The way my relative works out the numbers is this ...

    $10k existing student loan balance + $40k additional to complete accounting degree = $50k total student loan balance
    Probable pay rate average = $40k annual = $ 3,500 per month
    Probable 'disposable' monthly income ( given NY housing, energy and food costs at $2k per month ) = $1500
    Probable monthly student loan payment 10% of $1500 'disposable income' = $150
    120 months worth of $150 payments adds up to $18,000 paid over 10 years to completely satisfy the $50,000 loan plus accumulated interest ( which at present interest rates would grow to > $60,000 with $150 monthly payments ).
    net tax free 'profit' ( ex interest ) = $50k loan balance - $16,000 total payments = $32,000 or $3,200 per year for the 10 years ( which is equivalent to ~$5,000 per year of additional pre-tax income in New York )


    if we are not making people payback how the hell do we expect to fund this???
    your guess is as good as mine !!! Have the Fed print an extra trillion brand new dollars every year ( on top of the trillion plus which they are already printing ) out of thin air ? Increase tax rates on the 'rich', with the 'rich' defined as middle class people earning $75k per year or more in order to actually collect sufficient tax revenues ? Transfer 100% of outstanding student loans to the FED's balance sheet and pay off the losses via minting a 1 trillion dollar platinum coin ? Have the US gov't sell the outstanding loans to China, and then let Japan attack China ? Obviously I'm being a bit facetious because, as you point out, the trillion dollar amount of additional student loan 'losses' which must be absorbed by the US gov't = future US taxpayers CAN'T be paid off by any 'conventional' method.

    However, on the 'flip side', the Keynesians would undoubtedly point out that this bailout program will serve as an economic stimulus i.e. my relative in New York will be able to spend an extra $3,200 per year that would have otherwise had to go toward student loan payments, which in turn will foster economic growth, which in turn will provide new jobs, which in turn will generate new tax revenues etc. that will in fact exceed the cost of the $3,200 per year in US taxpayer 'subsidy' that my New York relative will in fact be receiving.
    Last edited by Melonie; 01-09-2013 at 12:58 PM.

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    All that math made my head hurt!!! Glad I'm not accounting major!!! I like the Trillion Dollar Platinum coin.. hey at least we would say money on paper!!

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    I agree that they could look at it as another way to provide "economic stimlui", since they can now waste the money on frivolous purchases..

    But I think the loans and college debt are entirely out of hand. I am a senior that is $27k in debt for undergrad, out of necessity (zero help from mom and dad and tuition just keeps going up) but every year it appalls me that they offer me nearly $23k in loans since that's "cost of attendance". I go to a HUGE university where half the kids are on mom and dad's money, yet they still take out all the loans they are able to get, and drive BMWs around. Most of these kids are sociology or psych majors with no job prospects and are going to write this all off on taxpayers. I for one would probably use the program, if I was to stop at my BS where I'd start out at around $31k, but I dislike that it's paid off after 20 years - what if they strike it big after that? Too bad, the $100,000 they owe is already gone!

    There's no accountability for anything these days with young people.

    On the other hand, the colleges themselves are ridiculous - they do things like charge $800 for a parking permit, and $5k to live in the dorms for a semester, and $300 for a textbook, then turn around and let a TA teach a class for $12 an hour.... Their greed is where the inflated costs are coming from.

    I have always liked Harvard''s policy of "If you're smart enough to get in, you pay what you can, and after that it's free". But I have a negative view on college anyway and think only people with X test score and Y IQ score should be allowed in at all... the hazards of being surrounded by idiots with government-loaned money makes you think like this
    "People jack off with the left hand and point with the right."

    "You can check out any time you like, but you can never leave."

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    I agree.. inflation is crazy the IQ material is crap!! Even better they charge 300$ for the 7th edition because they had to fix the typo in the 6th edition..

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    College in Puerto Rico is dirty cheap. More people in the US need to go down there if they want to further up their studies for less.

    I know is kinda offtopic but I'm offering a solution to lessen this huge debt.





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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    While this is off-topic, with the vast surplus of college graduates now vying for a comparatively small number of open positions, prospective employers are beginning to scrutinize not only what degree the applicant holds, but the SOURCE of that degree. I am told by businessmen acquaintances that this is now particularly the case where state funded colleges and for-profit colleges are concerned ... because in some cases academic standards have been 'compromised' in order for the college to achieve a certain minimum graduation rate. Thus a degree from a Puerto Rican college may be of very limited value when it comes to seeking a professional job on the 'mainland'.

    Circling back on-topic, with the bailout mechanism now in place, in point of fact the amount of student loan debt that a person runs up no longer matters. What DOES matter now is the amount of money they will actually be expected to pay toward their student loan for 10 / 20 years ... which is now a function of their 'disposable' income level after graduating from college, and no longer bears any direct relationship to the size of their total student loan debt nor to the size of the 'regular' monthly student loan payment amount. Thus from a purely selfish financial standpoint, it really doesn't matter anymore if a person chooses to go to a highly regarded private college by running up a $200,000 student loan debt, or chooses to go to a state college by running up a $60,000 student loan debt, since in the final analysis their actual monthly student loan payments are only going to be 10% of their future 'disposable' income level, and the length of the payments is only going to be 10 /20 years, regardless of how high the actual outstanding student loan balance still is at the end of those 10 / 20 years.

    Actually, there is an implied incentive to go for the $200,000 private college degree versus the $60,000 state college degree. And that incentive comes from the fact that, once the 10/20 years have passed and the student loan has been 'satisfied' regardless of the remaining outstanding balance, the private college graduate will get to keep 100% of the higher salary that typically goes along with a private college degree plus 10-20 years worth of work experience which they will earn for the remaining 20-30 years until reaching official retirement age.
    Last edited by Melonie; 01-10-2013 at 12:15 PM.

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    Quote Originally Posted by Selina M View Post
    I agree that they could look at it as another way to provide "economic stimlui", since they can now waste the money on frivolous purchases..

    But I think the loans and college debt are entirely out of hand. I am a senior that is $27k in debt for undergrad, out of necessity (zero help from mom and dad and tuition just keeps going up) but every year it appalls me that they offer me nearly $23k in loans since that's "cost of attendance". I go to a HUGE university where half the kids are on mom and dad's money, yet they still take out all the loans they are able to get, and drive BMWs around. Most of these kids are sociology or psych majors with no job prospects and are going to write this all off on taxpayers. I for one would probably use the program, if I was to stop at my BS where I'd start out at around $31k, but I dislike that it's paid off after 20 years - what if they strike it big after that? Too bad, the $100,000 they owe is already gone!

    There's no accountability for anything these days with young people.

    On the other hand, the colleges themselves are ridiculous - they do things like charge $800 for a parking permit, and $5k to live in the dorms for a semester, and $300 for a textbook, then turn around and let a TA teach a class for $12 an hour.... Their greed is where the inflated costs are coming from.

    I have always liked Harvard''s policy of "If you're smart enough to get in, you pay what you can, and after that it's free". But I have a negative view on college anyway and think only people with X test score and Y IQ score should be allowed in at all... the hazards of being surrounded by idiots with government-loaned money makes you think like this
    I feel the same way and am elitist I suppose because this whole idea of everyone should be in college annoys me. It's no exaggeration when I say I had students in my classes who could barely read and write. They really shouldn't be in college, they should have gone through a vocational program.

    Most of the colleges I attended charged ridiculous fees for everything, like one school charges $100 a semester for bus passes and around that amount every month for the gay student groups. I also felt both were wrong because I am not gay, and I never took the bus so why should I be charged for both? Another school charged a parking fee but many complained because they took the bus there. I drove there so I didn't complain about that.

    One of the dirty secrets though of my grad school is how many students getting teaching assistant jobs or work study jobs were foreign students. This angered me big time because there were so many qualified grad students (and to get into the program you needed a B average)who has to take out loans while the foreign students were getting tax payer money. Of course the sick irony is many of these students would graduate and go back to their countries with a job (many were Indian)or would stay in the USA as visaed workers.

    I'm actually going back to school to become a teacher but am looking into scholarships and stipends because I refuse to go into further debt.

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    actually Tyler Durden is rather (in)famous ... he has run a financial commentary / analysis website for many years and is connected with dozens of financial industry professionals. Granted that his positions usually aren't mainstream, but he certainly isn't the rank amateur you imply.

    In regard to your age speculation, what the law says is that student loan debt incurred after Sep 30 2007 is eligible for the 'bailout'. Indeed student loan debt incurred prior to that date will not be bailed out, but NEW / ADDITIONAL student loan debt would be eligible.

    Some of your assumptions are incorrect ... particularly the implication that student loan money is paid directly to the school in all cases. For a fact a lot of student loan money winds up directly in the hands of the students.

    Also your attempt to intermingle 'poverty' with the 'disposable income' based student loan monthly payments isn't necessarily true. At 'poverty' level, after paying for food, rent and other necessities, its entirely possible that the 10% of disposable income based monthly student loan payment amount could be ZERO. In my earlier example post, a college graduate earning a 'non-poverty' $40,000 per year would still have their monthly payments reduced to an amount that is arguably 1/3rd of the actual monthly amount required to pay the loan off in 10 years.

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    Point 3 - use it for everything but tuition - yes, this IS possible. Most of the spoiled brats at my school have their parents pay their tuition. The school still offers them the remaining $23k cost of attendance - the tuition of $11k, leaving them $12k in loans. Their tuiton being paid by mom and dad just makes them not qualify for grants. The money passes right on through the school to them. Sometimes they get a bit less (I think it's $8k-ish for freshmen) if the parents don't sign the parent loan (judging by the news, many of them do and end up paying it themselves when their kid can't find a job), but that's still $8k they don't NEED for school tuition or books and it increases by $1000 every year. Right there, at my relatively cheap state school, you can rack up $38k in loans plus 6.8% interest on the un-subsidized ones over 4 years, without a DIME going to tuition. Maybe your school is more strict on this, but mine asks for no accountability of what you spend it on or anything.

    Point 4 and 5 - we're not saying they are intentionally not finding a job or staying at a low pay grade, but they shouldn't be so stupid as to think they're going to take their BA in English and think they can pay off $50k in loans with it. This is MY issue with it. 60% of my school is kids in sociology, psychology (sorry - maybe the market is better where you are for psych degrees, but here nothing short of a PhD is getting hired for a big-kid job), English, "fine arts"/"humanities", etc. I've got no problem with an engineer taking out loans - they're gonna start out at a pretty damn good rate of pay and not pass the burden on to taxpayers.

    And Melonie is correct in her last paragraph. The 10% being "disposable income" is a little bit of a stretch. If someone has disposable income at all, 10% is a very tiny amount to have to pay off on a loan. If you net $40k a year, live (here, it'd be quite comfortably) at $1800 a month and still have $1500 in discretionary income, you're only liable for $150 of that a month, which won't even cover your interest on my aforementioned $38k loan. Hence, at the end of the 20 years, the taxpayers are still writing off your initial loan PLUS all the interest you've accrued at 6.8% of $38,000 plus the additional $784 in interest a year that compounds every year after. After 20 years, you haven't even paid your initial loan back, yet it's forgiven. This is being generous and assuming this BA in English graduate even lands a job that pays that well.

    The problem to me comes from the lack of personal accountability ("oh hey, I borrowed this, I should pay it back"), and the 10% being a very small cut. Oh, and the idiocy to get a degree in English/fine arts/whatever humanities degree with a high unemployment rate and low starting pay and think it's okay to rack up tens of thousands of debt to do it. Sorry to be harsh, but it is a terrible investment money-wise.
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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    ^^^ the only real 'kicker' might be that, 10/20 years from now, the US congress / IRS may decide that the $38,000 of as yet unrepaid student loan debt that is officially 'forgiven' in year 20 is also additional 'taxable income' ( on top of the person's other income ). That would effectively 'claw back' about 20-30% of the 'foregiven' student loan debt amount. There is precedent for this i.e. 'short sales' of real estate, non-bankruptcy protected 'settlements' re credit card debt etc.

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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    Quote Originally Posted by Melonie View Post
    Thus a degree from a Puerto Rican college may be of very limited value when it comes to seeking a professional job on the 'mainland'.
    .
    Right... Go and tell that to my uncle (who's a chemist in a very well known company making over 300K a year), my husband's pulmonary specialist, the former military lawyer that my ex hired to leave me with nothing, my mother (who's a nurse practitioner in Florida), a previous boss I had in an IT company in Austin (a Sr. systems administrator), one of my dad's cousins who works for the NRC, an upplerclassmate I had who now works for the FCC.

    They did all their studies in PR. I can keep naming people who came with degrees from over there who had no problem getting jobs. Colleges in PR are funded with federal money (the public ones) and have all the accreditation that all colleges (real colleges, not "for profits") in the mainland US have. People still need to pass the SAT or ACT to gain admission just like any college in the mainland US. They are no less than the ones in the mainland, but they just happen to be ridiculously cheap.





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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    ^^^ I think that you misinterpreted my point. It was not about what HAS happened in regard to the hiring of PR college graduates over the course of past years or decades. It is about what COULD happen for a future graduate of a PR college in today's economic environment. Every state college ( and the PR colleges you reference are basically state colleges, although the costs of subsidizing them are spread across taxpayers of all 50 states instead of a single state ) can claim highly successful past graduates. But they were initially hired when the US economy was in a far different condition than it is today i.e. it was growing, the 'service' economy was much smaller relative to heavy industry, the unemployment rate for college graduates in their chosen fields was essentially zero, etc. Today the economy is not growing in real terms, the 'service' economy comprises some 70% while heavy industry continues to shrink ( domestically at least ), the unemployment rate for college graduates in their chosen fields is at record highs, etc. Or stated another way, PhD's working as parking attendants, waiters, etc. are 'hidden' competition for all new college graduates for all future job openings in their chosen field even though the underemployed PhD's technically do not show up in the official unemployment rate.

    In a present / future economy where there are 10 college graduates available for every open position in their chosen field, employers are starting to question the possible differences in actual education re a graduate of an Ivy League college vs a graduate of a local state college with which the employer is very familiar versus a graduate of a distant state college which may or may not have 'dumbed down' its curriculum in order to bolster a higher graduation rate. I never said that PR colleges actually have done that, only that potential employers don't know for sure that PR colleges have NOT done that. And for the employer to find out the facts, it means extra cost and effort on the employer's part. So the employer's simplest, least 'risky' option would be to hire the Ivy League college graduate who is willing to work for the same rate of pay. THIS was my point. And lest I be falsely interpreted again, this is true for graduates of most state colleges throughout the country as well as 'state' colleges in Puerto Rico or any other US territory ( with the exception being particular extremely well known state colleges with nationwide highly respected 'reputations' ). Trust me that I'm not the least bit happy about this trend, since I am a state college graduate myself.

    Circling back on topic, with the federal student loan bailout now available, from a US taxpayer standpoint relative to low tuition rates at Puerto Rican colleges, the only real difference now is that US taxpayers are heavily subsidizing tuition costs immediately instead of heavily subsidizing tuition costs 10/20 years down the road. Well, the 'middle-men' in the student loan process ( and their fees ) are eliminated as well. But on the 'flip side', the federal student loan bailout now, for essentially the first time, also forces US taxpayers to subsidize PRIVATE college tuition costs. Thus, if one combines the hiring advantages of obtaining a degree from an Ivy League college, with the fact that the ACTUAL net cost of Ivy League college tuition will be greatly lowered ( i.e. the bailout program reducing the net payments toward student loans incurred to attend the Ivy League college before the student loan is forgiven to a small fraction of the actual total cost ), from a 'logical' standpoint future college students will be doing themselves a dis-service by attending state colleges if they can gain admission to a Private college ! Or, to put it bluntly, thanks to the student loan bailout program, the actual cost of tuition simply doesn't matter much anymore - but graduating from an Ivy League college versus a state college does matter to future employers !!!
    Last edited by Melonie; 01-12-2013 at 06:39 AM.

  19. #15
    God/dess Selina M's Avatar
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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    Quote Originally Posted by Melonie View Post
    ^^^ the only real 'kicker' might be that, 10/20 years from now, the US congress / IRS may decide that the $38,000 of as yet unrepaid student loan debt that is officially 'forgiven' in year 20 is also additional 'taxable income' ( on top of the person's other income ). That would effectively 'claw back' about 20-30% of the 'foregiven' student loan debt amount. There is precedent for this i.e. 'short sales' of real estate, non-bankruptcy protected 'settlements' re credit card debt etc.
    Oh yes, I have heard about that! People were complaining about it on the news (eye roll). So that would be fine, albeit really, really suck for the person. I think they should be given an option then, either continue paying on the loan or have it forgiven but you must pay off the "taxable income" tax within a year.
    I am all for teachers, nurses, police, etc. that serve in rural or low-income areas (like, Dangerous Minds status teachers) being forgiven with no tax liability though. That's probably a bias, but they are making a sacrifice to work in those places.

    @Jay - I totally agree with you. I think it varies on the degree and the employer. My state school is known as a huge party school (Arizona State if you hadn't guessed by my location) and our degrees are not taken quite as seriously as say, U of A or NAU. Some are, depending on specialty - the engineers here do very well, most of the physical sciences go into grad school, and my degree (Wildlife Ecology) has a pretty renowned program and has tons of connections. However, the big majors on the main campus (vs our more specialized satellite campuses) are not taken as seriously. If you graduate from a satellite you're okay, but they seem to regard main campus as "too easy" and the quality of our professors is known for being sub-par (hence, our grads don't know nearly as much as U of A in some subjects). If it's a choice between ASU and U of A grads with only a degree, no connections or prior jobs in the industry, 90% of the time they will take the U of A grad.

    On the other hand, I firmly intend on a Caribbean med school, which has the same stigma attached, and it is quite BS that people don't take it as seriously. Sure, they're a bit cheaper and a good option if you had some bad luck in undergrad and didn't keep a 4.0 GPA, but they don't hand out degrees to every Tom, Dick and Harry like people think. Grads still have to pass the USMLE and do clinicals, same as US. There is a huge stigma but 80% of their students get a US residency and some definitely get into hard specialties like dermatology, anesthesia and neurology. It's what you make of the school, your test scores and your clinical reviews and connections. I'm sure there's something equal for other careers, like chemistry you mentioned.

    One of the best doctors I've ever seen (and my dad has gone through probably 25 of them) was from India, taught himself English in college, did Caribbean med school and got a US residency. He was awesome and caring and thorough, and you would never have known he was a "lesser" foreign grad or from another country. Judge the person and their abilities, not their school.
    /end soapbox rant
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  20. #16
    Banned Eric Stoner's Avatar
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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    This is another " I Told You So " that is tied to the threads on both student loans and Obamacare. Both are aggravating a looming crisis in American health care that will directly affect most Dollar Den readers : a severe shortage of primary care doctors.

    There have been numerous studies laying out this problem. The latest ( ironically ) was produced by one of the parties responsible for the mess : the medical schools themselves. * The Association of American Medical Colleges estimates that by 2020 we will need 45,000 new primary care doctors to take care of a growing and aging population. But only 20 % of Med. School grads become primary care physicians. Despite an effort by Obamacare legislation to address the problem by increased funding for the National Health Service Corps , the problem is getting worse.

    It is pure economics. In the last decade the cost of medical school has increased by $100,000. Average student loan debt for med. school grads now averages $162,000 to
    $205,000. That is interest bearing debt that most interns and residents are unable to even start paying down so it grows while they continue their medical education. The average earnings for a primary care doctor is less than $200,000. Orthopedic surgeons average $420,000. Obviously the incentive is to go into the higher paying specialties and away from primary care.

    It gets worse. Obamacare REDUCES payments to doctors. Something Medicaid and Medicare have been doing for a while. The result ? Fewer and fewer doctors will even accept Medicare and Medicaid patients.

    To date, the only possible and partial solution I have read and heard about is an expansion of N.H.S.C. Just like the military gets its doctors through an combo of loan forgiveness and other financial incentives, so too could the government as a whole. Trade loan forgiveness for years of service as a primary care physician in underserved areas. More nurse practicioners would help also but they are NOT doctors.

    Btw, this is another story where the mainstream media has been asleep.


    * The medical schools in this country have definitely helped create the mess. Decades of suppressed admissions and no effort at cost control.

  21. #17
    Banned Melonie's Avatar
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    Default Re: US Student Loan Delinquencies set record - New Taxpayer Funded 'Bailout' planned

    ^^^ the implied financial incentives of the student loan bailout plus the ObamaCare changes for future doctors are as follows ...

    - newly graduated doctors will have a STRONG incentive to accept 'employee' positions at gov't run hospitals. As you indirectly point out, at the point 10 years after graduation, new doctors accepting 'employee' positions at gov't run hospitals will receive student loan forgiveness worth some $200k plus ... ON TOP OF having the 'employer' gov't run hospital pay their malpractice premiums in the meantime, plus receiving a 'guaranteed' salary that is independent of medicare / medicaid reimbursement rates.

    - newly graduated doctors will have a strong negative incentive to avoid going into private practice versus becoming an 'employee', to avoid accepting positions in privately owned US hospitals, to avoid joining a practice in a rural area etc. The reasons of course are sky-high malpractice insurance premiums, dictated medicaid / medicare 'reimbursement' rates that are sometimes lower than the actual cost of providing medical treatment for a large percentage of patients, 10 years worth of additional student loan payments before the student loan balance is forgiven etc.

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