Obama's Student Loan Fraud

[UltimateHoboW/Shotgun]

http://www.theatlantic.com/business/archive/2011/10/obamas-student-loan-order-saves-the-average-grad-less-than-10-a-month/247411/

Obama's Executive Orders

The president seeks to make the situation a little bit easier for some of those graduates. He will create an executive order that has three components.


•He will clear the way for borrowers with direct government loans and government-backed private loans to consolidate their balances. The White House estimates that this will cut the effective interest rate on student loans by up to 0.5%.
•He will limit the amount of student loan payments to 10% of a graduate's income. (Currently, the limit is 15%.)
•He will allow debt still outstanding after 20 years to be forgiven. (Currently, forgiveness occurs after 25 years.)

Those last two orders are really just the president moving up the timeline of existing legislation. Both changes are set to go into effect in 2014, but the president will order that they go into effect as of 2012.
.....
The Impact

Let's consider the impact of each of these orders.

Consolidation

The first would clearly be the most significant, because it is aimed at helping more student loan borrowers. How much would an interest rate reduction of up to 0.5% affect payments?

For the average borrower, the impact would be small. In 2011, Bachelor's degree recipients graduating with debt had an average balance of $27,204, according to an analysis done by finaid.org, based on Department of Education data. That average has ballooned from just $17,646 over the past decade.

Using these values as the high and low bounds of average student debt over the last ten years, the monthly savings for the average student loan borrower would be between $4.50 and $7.75 per month. Clearly, this isn't going to save the economy. While borrowers with bigger balances would save more, this is the average. And even someone with $100,000 in loans would only cut their monthly payments by $28.50.

[Requiem]

I don't think the funky math in the article is right, but reforming of the student loan process is a big plus.

[Garcia Bronco]

I don't think the funky math in the article is right, but reforming of the student loan process is a big plus.

?

what exactly is wrong with it? You borrow money for an education and then you have to pay it back.

I'll tell you that I also work in the student loan industry and for one of the tivas.

[alkemical]

I can't wait for the education bubble to pop.

[Requiem]

?

what exactly is wrong with it? You borrow money for an education and then you have to pay it back.

I'll tell you that I also work in the student loan industry and for one of the tivas.

Obviously. My wonder was/is questioning the average saving after the reforms.

When I consolidated, I didn't go on an income-based rate payment plan, but if I did -- I would figure that paying 5% less would amount to more than the 50 to 75 bucks a month the article states.

[Requiem]

I can't wait for the education bubble to pop.

What do you mean by this?

[Garcia Bronco]

What do you mean by this?

If he's talking about the bloated cost of an education I agree.

[Garcia Bronco]

Obviously. My wonder was/is questioning the average saving after the reforms.

When I consolidated, I didn't go on an income-based rate payment plan, but if I did -- I would figure that paying 5% less would amount to more than the 50 to 75 bucks a month the article states.

They're talking averages. It would vary from borrower to borrower.

[alkemical]

What do you mean by this?

Primer:

http://en.wikipedia.org/wiki/Higher_education_bubble

The higher education bubble is a speculative boom and bust phenomenon in the field of higher education. According to the theory, while college tuition payments are rising, the rate of return of a college degree is decreasing,[1] and the soundness of the student loan industry may be threatened by increasing default rates.[2] College students who fail to find employment at the level needed to pay back their loans in a reasonable amount of time have been compared to the debtors under sub-prime mortgages whose home are worth less than what is owed to the bank.[3]

In 1987, U.S. Secretary of Education William Bennett first suggested that the availability of loans may in fact be fueling an increase in tuition prices and an education bubble.[4] This "Bennett hypothesis" claims that readily available loans allow schools to increases tuition prices without regard to demand elasticity. College rankings are partially driven by spending levels,[5] and higher tuition prices are correlated with increased public perceptions of prestige.[6] Over the past thirty years, demand has increased as institutions improved facilities and provided more resources to students.[7] Additionally, schools tend to enroll fewer students as they improve student offerings and increase prices. This suggests that it is in schools' best interest to increase tuition prices as much as possible, so long as financial aid ensures an ability to pay on the part of students and parents.

A 2009 article in The Chronicle of Higher Education related concern from parents wondering whether it is worth the price to send their children to college.[8] The Economist in turn hypothesized that the bubble bursting may make it harder for colleges to fill their classes, and that some building projects will come to a halt.[9] The Boston Herald further suggested the possibility of mergers, closures and even bankruptcies of smaller colleges that have spent too much and taken on too much debt.[10] The National Review proposed that the bubble bursting may also bring down higher education prices.[11] Glenn Reynolds wrote in the Washington Examiner that those who have financed their educations with debt may be particularly hard-hit.[12]

[alkemical]

If he's talking about the bloated cost of an education I agree.

Pretty much. The investment doesn't always guarantee return - and often becomes a negative investment.

Not to mention, the racket that Schools use to raise tuition, and increase "funding" from State/Fed. They are double dipping, but due to their "status", it's often "ignored".

[Requiem]

They're talking averages. It would vary from borrower to borrower.

The average they brought up was roughly what I owe and the 5% difference would yield far more than what they were estimating.

[Garcia Bronco]

Primer:

http://en.wikipedia.org/wiki/Higher_education_bubble

Except in the Student Loan world...the debt does not operate like a home loan. You can defer payments, have forebearances, or consolidate loans at a reduced rate on an UNSECURED loan. And after 25 years you no longer have to pay it back.

While getting a degree and not finding a job can produce various hardships. Borrowers that cannot make payments on the loan are is typically the result of the inability of the borrower to sell themselves in the market place. Now either they got a weak degree, or they don't have the experience, both qualitative or quantitative, to get a job in their field of choice.

And no Art History is not a career
The Drama or theater college might not get you a stable career when yo uleave school

However Engineering, Computer Science, Medical, Vet, and Law will get you a job.


What I would like to see more of is the Government refusing the loan base on the choosen major at a particular school based on the potential ROI. And th emoney only gets paid to the school

We have people out there that get a student loan and never even pay it to a school for education.

[Requiem]

Borrowers that cannot make payments on the loan are is typically the result of the inability of the borrower to sell themselves in the market place.

Or the market place isn't good for employment at this time.

[Garcia Bronco]

Or the market place isn't good for employment at this time.

But it is good. We are at roughly 9 percent UE....which is only 3 percent below average and IMO our economy, which grew 2.5 percent in 3rd quarter, is sheding jobs it should have shed a long time ago. Especially in the public sector

[Requiem]

What I would like to see more of is the Government refusing the loan base on the choosen major at a particular school based on the potential ROI. And th emoney only gets paid to the school

We have people out there that get a student loan and never even pay it to a school for education.

People shouldn't be denied access to a loan for education because they want to major in a field that isn't known for being profitable or hard to gain specific employment in a market.

[Garcia Bronco]

Now those opportunities will vary from place to place, but I would say if the town you are living in doesn't have the opportunities; take the steps to move someplace where they do exist.

[Requiem]

But it is good. We are at roughly 9 percent UE....which is only 3 percent below average and IMO our economy, which grew 2.5 percent in 3rd quarter, is sheding jobs it should have shed a long time ago. Especially in the public sector

Nine percent is not good. Overall figure is irrelevant when the borrowers job market is on a local level.

[Garcia Bronco]

People shouldn't be denied access to a loan for education because they want to major in a field that isn't known for being profitable or hard to gain specific employment in a market.

I would disagree with that. Especially if they are using taxpayer money. Like any other loan out there, I would want to make sure whomever can repay the loan.

But the reality is student loans don't act that way and post 2008; only the DOE makes student loans. The Tivas only service the loan.

[Requiem]

I would disagree with that. Especially if they are using taxpayer money. Like any other loan out there, I would want to make sure whomever can repay the loan.

You can't be so sure based off of just the degree the person wants to obtain. That would be a terrible, myopic, line to base the decision off of.

[Requiem]

Now those opportunities will vary from place to place, but I would say if the town you are living in doesn't have the opportunities; take the steps to move someplace where they do exist.

That's the key thing, being in the right area. Kind of hilarious I left the most economically sound state, and a good paying job with benefits to come out and do seasonal work in Colorado, but hell -- I just wanted to live. :strong:

[Garcia Bronco]

That's the key thing, being in the right area. Kind of hilarious I left the most economically sound state, and a good paying job with benefits to come out and do seasonal work in Colorado, but hell -- I just wanted to live. :strong:

I know I asked you before, what are you trying to do from a job perspective?

Oh and good for you to make that decision. It can e a very hard thing to do.

[Requiem]

I know I asked you before, what are you trying to do from a job perspective?

Oh and good for you to make that decision. It can e a very hard thing to do.

I will dish you a PM soon. :wave:

[alkemical]

Except in the Student Loan world...the debt does not operate like a home loan. You can defer payments, have forebearances, or consolidate loans at a reduced rate on an UNSECURED loan. And after 25 years you no longer have to pay it back.

While getting a degree and not finding a job can produce various hardships. Borrowers that cannot make payments on the loan are is typically the result of the inability of the borrower to sell themselves in the market place. Now either they got a weak degree, or they don't have the experience, both qualitative or quantitative, to get a job in their field of choice.

And no Art History is not a career
The Drama or theater college might not get you a stable career when yo uleave school

However Engineering, Computer Science, Medical, Vet, and Law will get you a job.


What I would like to see more of is the Government refusing the loan base on the choosen major at a particular school based on the potential ROI. And th emoney only gets paid to the school

We have people out there that get a student loan and never even pay it to a school for education.


Which again, goes back to my point about the education bubble and the FOR profit mentality of educational institutions that oversell their services.

Look, it happens - Jobs are really hard to find right now (good paying ones) - they aren't plentiful or a plethora. If there were, the unemployment rate wouldn't be so ****ty.

[Requiem]

Which again, goes back to my point about the education bubble and the FOR profit mentality of educational institutions that oversell their services.

It is all about profit mentality now. We had scheduled a 3.5% decrease for Athletics at NDSU when we were creating the budget, but when the Athletic Director and his cronies came in and stated that such a decrease would drastically impair their ability to operate, the Senate changed their mind and approved Athletics to receive around a full percent or so more than the previous years funding.

What did they do with that extra percentage swing? Give coaches raises.

It was pathetic.

I'm talking hundreds of thousands of dollars that could have went towards general scholarships and other resources for incoming/returning students and it went to the schools biggest revenue generating department.

Typical.

[alkemical]

It is all about profit mentality now. We had scheduled a 3.5% decrease for Athletics at NDSU when we were creating the budget, but when the Athletic Director and his cronies came in and stated that such a decrease would drastically impair their ability to operate, the Senate changed their mind and approved Athletics to receive around a full percent or so more than the previous years funding.

What did they do with that extra percentage swing? Give coaches raises.

It was pathetic.

I'm talking hundreds of thousands of dollars that could have went towards general scholarships and other resources for incoming/returning students and it went to the schools biggest revenue generating department.

Typical.


I agree. I know the "chair" of PSU's salary (last I looked) was around $500k+/yr. That's not counting any other administrative/teaching staff. I just don't like the racket of how these schools get garuanteed $, over sell the kids in H.S. about investing thousands of $'s with them - only to find it wasn't maybe the best "investment" for them.

That, and the culture of degrees in the USA is nutty too - there's too much weight put on a degree sometimes. Not all jobs require a 4yr degree...or a masters.

[Fedaykin]

Except in the Student Loan world...the debt does not operate like a home loan. You can defer payments, have forebearances, or consolidate loans at a reduced rate on an UNSECURED loan. And after 25 years you no longer have to pay it back.

While getting a degree and not finding a job can produce various hardships. Borrowers that cannot make payments on the loan are is typically the result of the inability of the borrower to sell themselves in the market place. Now either they got a weak degree, or they don't have the experience, both qualitative or quantitative, to get a job in their field of choice.

And no Art History is not a career
The Drama or theater college might not get you a stable career when yo uleave school

However Engineering, Computer Science, Medical, Vet, and Law will get you a job.


What I would like to see more of is the Government refusing the loan base on the choosen major at a particular school based on the potential ROI. And th emoney only gets paid to the school

We have people out there that get a student loan and never even pay it to a school for education.

The bigger problem than the bubble is the changing expectation of a university education. A university education was not originally intended to be a vehicle primarily designed to get you a job -- the purpose was to become educated for its own sake. Hence the existence of majors like art history.

[Fedaykin]

I agree. I know the "chair" of PSU's salary (last I looked) was around $500k+/yr. That's not counting any other administrative/teaching staff. I just don't like the racket of how these schools get garuanteed $, over sell the kids in H.S. about investing thousands of $'s with them - only to find it wasn't maybe the best "investment" for them.

That, and the culture of degrees in the USA is nutty too - there's too much weight put on a degree sometimes. Not all jobs require a 4yr degree...or a masters.

It's not that there is too much weight put on a degree; it's that society (and the people getting said degrees) don't understand what a degree from a university means.

There's a reason there are specialized vocational schools for jobs (everything from mechanics to brain surgeons) that require more than a High School education. There's also a reason that those vocational schools don't give a rats ass if you have bachelor's or not.

University is not a job training course -- it's a place you go to become educated and learn how to think.

[Garcia Bronco]

The bigger problem than the bubble is the changing expectation of a university education. A university education was not originally intended to be a vehicle primarily designed to get you a job -- the purpose was to become educated for its own sake. Hence the existence of majors like art history.

Agreed. Absolutely

[Garcia Bronco]

I will dish you a PM soon. :wave:

Please do. If you are out are and I help, I would be glad to do so.

[Play2win]

I've said once, I'll say it again-- Higher education is one of the best investments a Nation can make in itself.

[Rigs11]

I've said once, I'll say it again-- Higher education is one of the best investments a Nation can make in itself.

You liberal commie pinko!this is America!:)

[Spider]

I've said once, I'll say it again-- Higher education is one of the best investments a Nation can make in itself.

you elitist ****ing liberal ..........