Student Loans back in the news again... bail out time?

[madhatter256]

What was one of the central issues of the Occupy Wall Street movement, student loans are back in the spot light again now that Obama is putting his campaign in full throttle and is promising "relief" of some sort (yet again) to those who have a useless degree and a mountain of debt or someone who has a useful degree, a mountain a debt, but went to a bad school most companies don't hire from and has bad grades (2.0 average) and doesn't know crap about the material.

http://www.cnbc.com/id/47171658

Having gone to college and graduated and found a great paying job in my degree field I must say that I'm one of the lucky ones or maybe because I had the right stuff to begin with (ego-talk). Fortunately some of my good friends managed to find jobs as well, and are living the American life: Engaged and saving up to buy a home. Meanwhile, the ones I don't trust have not managed to get one, yet.

I'm learning that not everyone is college level material and having the funds to go to one does not make you college material.

So... should there be a bailout? No!

However, there should be reform. Right now I'm not happy with nelnet, which is the defacto student loan servicer. They have a check-box on their website that says "Do Not Advance Due Date", but it's grayed out. And if you mail the check and specific instructions, those get ignored and the due date is still extended. By telling it to no advance your due date, whatever money is left over, they spread the payment across so that as little as possible goes to the principal. Additionally, their minimum payment is different (smaller) than the minimum 10-year payment plan you get in the amortization schedule. Minimum payment is simply less only to cover interest and fees but keep the principal the same, so you basically pay for the loan forever because the principal never shrinks... I understand private loans are set up this way, but loans underwritten/owned by the government should encourage slightly higher minimum payments to ensure the loan gets paid off.

I also don't like how nel-net is set up. Which is a quasi-government/private corporation and simply has the best of both worlds... very little regulation/oversight.

[myv65]

Having graduated over 20 years ago, I'm woefully out of touch with the whole student load / financial aid office thing. At least one thing doesn't seem to have changed: High schools do an awful job with higher education planning / counseling. Before anyone gets a student loan for college, they should be required to take *and pass* a basic personal finance class.

I was incredibly stupid with my money back in the college days. I could have graduated with very little to no debt, but instead spent money on crap I didn't need because it was so easy to get deferred loans. I was incredibly fortunate to get a good degree and job, and paid off every last penny of school debt before I hit 30, getting married and buying a house and a couple of cars in the process to boot.

Sad to say, but the average Joe / Josephine has no concept of compound interest, time value of money, etc.

And no, there should not be yet another bail-out . . .

[Dutchcedar]

I wasn't aware that student loans had variable interest rates.

[madhatter256]

I wasn't aware that student loans had variable interest rates.

I have one from the that was switched into a variable rate prior to having it transferred over to DoE.

[Keven]

I wasn't aware that student loans had variable interest rates.

You want mine?

[AMDScooter]

Bottom line... they borrowed the money and need to pay it back. No more "bailouts". Freaking obama's takeover of that sect thru bammacare and now he's trying to buy the student vote back.

[madhatter256]

Modern version of Debtor's prison is on the rise: Fail to appear in court regarding your debt and you get the SWAT sent to your home

http://abovethelaw.com/2012/04/the-r...rt-appearance/

One practice that I know lawyers/doctors used to bring down student loan debt was pay off as much as possible with credit cards and then declare bankruptcy. The credit card debt is often erased depending how much student loan debt is left over to pay (sometimes at a manageable amount). Sure credit is ruined, but if you're young that can be fully recovered.

[Dutchcedar]

Bottom line... they borrowed the money and need to pay it back. No more "bailouts". Freaking obama's takeover of that sect thru bammacare and now he's trying to buy the student vote back.

I agree. But let's get real... this isn't about that. This is about votes.

Wisely, Romney says he's for keeping the interest rates the same.

Personally, I think raising the interest rate on a loan should be illegal. I know, it would make variable interest rate loans on mortgages illegal... and they should be.

[madhatter256]

I think that for banks to be more lenient and give the loans to anyone, they wanted to be able to do variable interest rates - it's like a burglar asking for your house key so they don't break into your property and they still steal you stuff.

[Cobra_nVidia]

I heard a good idea tying loan costs and things to the employment prospects of acquiring a degree. It's pretty sad that a lot of unemployment likely stems from universities/colleges offering completely useless degrees

I went to the top rated comprehensive universities in Canada (Guelph) for Science, which is where the school "excels". Landed a low-paying job requiring only a college lab degree after school, which I quit once the eye strain almost caused my eyes to bleed. Luckily, I never built up any debt.

Regardless, the asking price of most universities for tuition (and the subsequent loan costs) does seem a bit curious for those of us observant types who go to university. The professors are there doing "primary" research. Most of them don't have the time/talent/language skills to teach. Most of them don't have a broad enough knowledge of science to teach even 3rd year undergraduate courses well.

Since tuition doesn't cover textbooks or living expenses, what the hell are students paying for?

[Activate: AMD]

I don't understand why interest rates are so high on student loans when they're guaranteed and can't be discharged under bankruptcy. The bush administration passed legislation to protect lenders, but students got nothing in return.

The cost of higher education at this point is also insane. 7% year-on-year tuition hikes were the norm at my college while I was there, and I'll be damned if I have any idea where the extra money went.. probably some new feel-good arts center or some other BS. 50k-55k/yr is standard tuition at private colleges/universities.

[AMDScooter]

I don't understand why interest rates are so high on student loans when they're guaranteed and can't be discharged under bankruptcy. The bush administration passed legislation to protect lenders, but students got nothing in return.

The cost of higher education at this point is also insane. 7% year-on-year tuition hikes were the norm at my college while I was there, and I'll be damned if I have any idea where the extra money went.. probably some new feel-good arts center or some other BS. 50k-55k/yr is standard tuition at private colleges/universities.

No idea where the extra money went? I'll give ya a clue: Tenure and the Teachers Union.

[Activate: AMD]

No idea where the extra money went? I'll give ya a clue: Tenure and the Teachers Union.

Tenure has been a standard practice for the last 100 years. Professors don't teach enough courses, but tenure isn't the sole reason for the cost increase.. just because you can just jam your canned ideology into whatever argument you'd like doesn't mean it actually fits. The obsession with rankings is a major factor in costs. Schools like to game the ratings by reducing student:faculty ratio and things like that, even if such statistics are fairly meaningless. who cares if one school is 11:1 and another is 12:1?

[AMDScooter]

Tenure has been a standard practice for the last 100 years. Professors don't teach enough courses, but tenure isn't the sole reason for the cost increase.. just because you can just jam your canned ideology into whatever argument you'd like doesn't mean it actually fits. The obsession with rankings is a major factor in costs. Schools like to game the ratings by reducing student:faculty ratio and things like that, even if such statistics are fairly meaningless. who cares if one school is 11:1 and another is 12:1?

I SAID tenure and the teachers unions. Thanks for basing your response on full one half of what I said. I heard a dude once say:

just because you can just jam your canned ideology into whatever argument you'd like doesn't mean it actually fits

Perhaps you should take his advise.

[madhatter256]

No idea where the extra money went? I'll give ya a clue: Tenure and the Teachers Union.

Teachers Union in Universities is unheard of... don't get public schools mixed up lol. I know for sure there aren't any teachers unions at the university I graduated from.

You are either an adjunct or tenured professor.

Many of the adjunct professors I had also had jobs in their field, three of them were VPs in their companies. Tenured professors, like in all other colleges are responsible for bringing in research money - that is basically how you get tenure nowadays.

Lastly, most of that tuition money goes to the administration (i.e. Provosts, Deans, President of the University, etc.) - which salaries for those positions have skyrocketed over the last decade coincidentally when student loan lending practices loosened up. hmmmmm

Speaking of interest rate, on average I'm paying 6%, not the 3.4% - somehow the interest rate in the first loan is low (4%) and gradually goes up, up until the last loan I took out.... but yeah, 6% is average for most students who took federal loans if lended through a major bank.