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05/28/2012

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Student Debt Is A Wasted Subsidy

You asked should the federal government continue to subsidize student loans? Also should subsidies shift from academics to vocational programs? I give you a far more significant question to ask:

"What will it take to transform the signalling effect of a college degree?"

We're seeing that our ever indebted young agents are failing credibly to convey the message that they're worth hiring to their principal party, the employers, on the mere basis of being college grads now. But among themselves the lousy reception that this signal is getting is not being recognized for what it is: "We got a glut of college grads in a down economy."

The degree no longer carries premium.

Why bother subsidizing what is no longer in demand?

Ask a mercantilist. They always have the right answer for this one.

Polly

I think I see the problem as twofold:

1. The dearth of decent-paying jobs available to high school graduates drives many who maybe should not go to college to do so in order to better their chances at financial success (which is in part a function of outsourcing manufacturing and telephone customer service positions)

2. Financial priorities for states and public universities are not in sync with what's best for their students. Why do we build gigantic student unions and fancy dorms? Supposedly they attract more alumni donor dollars. Why do we pay our football coaches millions of dollars? Why do we force a university with 7% of total state funds to take on 35% of a state budget lapse? Public universities are being forced to make up funding cuts with tuition - it's not that their professors are making tons of money, either; sometimes even professors' kids qualify for free and reduced lunches in the school districts. They end up focused on Big And Shiny instead of actually helping kids graduate not only with a degree but also with the skills they need to do something with that degree.

Solutions? I don't know.

Andy

at private colleges the debt burden is majorly less because their parents are wealthy enough to take much of their child's expense and most of the time it is the extra fun that kids want and spend a lot on that

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Wayne Morrise

I'm agree with having a minimum age for having a loan in students.

"what i suggest is that the minimum age bar for a loan applicant should be raised so as the college students do not get a loan as option for completing studies...
At the same time, college fee be made flexible..."

Very well said. We had so many options to complete our studies one of a million option is to support yourself by working.

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Lorenza

I am doing all online clasess at IVY TECH in indiana. As far as quality education i would probably say its not the greatest. But if you do your homework on time and really try, you should be able to pass the clasess. Its a little harder not having the hands on attention like with campus clasess but i LOVE the conveinence. I was able to work full time with overtime and do 4 clasess online last semester. It was hard, but you could plan out your whole week and not have to worry about going to clasess. You got your syllabus ahead of time so you knew what to expect as far as assignments. Some clasess you could even get ahead in. So with all that i Highly recommend it!!! I have never had anything come back plagarized. And ivy tech is super cheap as far as colleges go. Its somewhere in the range of 300-400 a class now. Thats for 3 credit hours.Quality wise it may not be the best but i forget 70% after a couple years anyways so. But that may be something you may want to consider. The one thing i would suggest is looking for used books online. I thought Ivy Tech books were high and had a hard time getting the ISBN numbers from the school, so i would email the professor to get it to look somewhere else for it. It can save a lot of money.Good luck!Also, ivy tech is accredited but i know some of there clasess won't transfer to some schools so you would want to look into that. Also sometimes the teacher requires you to take a proctored exam. Usually at the most twice a semester you would go to the school to take the test. I only had 1 of the 4 last semester require that. Was this answer helpful?

Rihwan

They are ALL SCAMS. Don't get ripped off.Go see a local non-profit debt celosounr. They will elp you with a budget and help you work with the creditors. No fast easy fixed.

Esther

If you have facebook, there is a group with 200+ tnshoaud members called: Cancel Student Loan Debt to Stimulate the Economy There is also a petition which you can find there.

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What has the credit reaipr person done? You paid them $900 and got nothing? I think you need to sue them also!The reason you are not getting anywhere is because you don't know the law, and don't know how to play the game. If you follow my instructions this problem will either go away within 60 days, or you will have an awsome lawsuit (and $1000).It goes like this .keep a log of everyone you talk to or who you send letters to. Send all letters by certified mail/return receipt to prove that they were notified. 1) Send letters to the collection agencies disputing this debt. Give them the facts. If this debt is on your history and it's not yours, tell them that. Send a copy of your drivers license to identify yourself (NEVER your social security card). They have 30 days to investigate this dispute.2) Send a letter to the creditor/collection agent who posted this to your account. Tell them you want this debt validated . See the sample letter I've listed below. That means they must send you copies of contracts, bills, receipts, and everything they used to show you have a legal obligation to pay this debt. 3) If they do not respond within 30 days, then send a copy of that letter, along with another dispute letter to the collection agency. Tell them they must remove this debt from your records due to improper/lack of validation .If they do respond, examine the paperwork they have. This is the evidence they will use in court if a lawsuit is filed. If it obviously does not prove this debt is yours, then procede with legal action.Note that if the credit reporting agencies are still posting this after you have sent your second dispute letter, they will also be included in your lawsuit.4) Trot down to the small claims court where you live, and file a $1000 claim against the creditor (and the reporting agencies) for violation of the Fair Credit Reporting Act. It is against the law to post unvalidated information to your credit history, and they can be held responsible for any damage this may have caused you (loss of a loan, higher interest payments, etc ).Read the links below for more info.Contact me with you email if I can be of more assistance.

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Dennis

betterschools, if you go back and read the first few sections of the HEA, such as 101, 102, on so on, and check on when the sueosctibns were last amended, you will see that you are incorrect. The only amending that has been done has been at the behest of the proprietary schools, by the masters in Congress, for example during the so-called Fed-Up initiative, which made the official definition of proprietary school part of IHEs for the first time. The changes have been all pro-proprietary, not anti-proprietary. And you are forgetting about the fiascos of 12hr rule, 50% rule, incentive comp, and so on. After 15 to 20 years of undefeated victories on legislative and regulatory fronts, the proprietaries were lulled into complacency that they would always be treated better than all other schools. Now that they are being treated the same for the first time in more than two decades, it is a cold splash of icy water on their faces. Only a few hundred schools have programs in both buckets, non-GE and GE programs. The language about certificate programs is decades' old. Yale doesn't even have an education curriculum, and I doubt that Okla. offers a lot of certificate programs. Hardly anyone pays sticker price, plus you are forgetting about the rather stringent federal borrowing limits (annual and aggregate) for students. Rulemaking is not how administrations get around Congress. Some statutory language is self-implementing such as the financial aid formula. Other statutory language needs to be filled in with regulation, or else there is no way for citizens, institutions, companies, and so on, to figure out how to comply. The statute provides only a vague framework. There is far too much vague stuff in there to get to each year, so the gov't and the community get together and prioritize. Yes, for many years the priority was to interpret things beyond the intent of the statute and thus far too loosely, at the behest of lenders, guarantee agencies, states, and institutions. If these players assumed that trend would last for 100 years, then they were grossly overconfident.You just make your stuff up as you go?

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Easy one, NEH. The huge increases in tuition, room and board, and books and supplies are driven by easy credit in the form of governmental subsidies that promote student borrowing. Colleges, like other businesses, charge whatever the market will bear, and, student loans allow colleges to jack up tuition (as Posner correctly notes above). The flood of cheap money in the form of governmentally subsidized student loans has created a higher education bubble not unlike the housing bubble created by governmentally subsidized home mortgage lending (e.g., Freddie and Fannie).

Pass4ged

If you make 2,500 a month and your payment is 1,500 a month... then you have 1,000 a month to live on.

When you both took out the loans you signed the forms saying you would repay... just like when you borrow to buy a car or a house. You wouldn't expect for your car lender to accept less than what you are suppose to pay... and as you know they could care less how much you have left over to live on after you make your car payments!!

You are going to have to find creative ways to cut your living expenses... for a very long time. Sell or get rid of anything that is costing you money. Food, clothing and shelter is all that you need to survive and you can even do things to cut those costs down to the bare minimum.

It varies from person to person of course, but you are going to have to figure out what is not optional. Phone, cell phone, internet, car, computer, your clothes dryer and even the hair cuts you get every 6 weeks are NOT necessities. Also both of you need to get second part time jobs to help get these debts down. Student loan debt never goes away. If you default, they will start garnishing your paychecks and hike your interest rates to outrageous amounts.

Unfortunately this is what excessive borrowing does to those who don't use EXTREME caution. Private student loans are evil.

This assures you can afford the payments without having to move into your parents garage to survive. (you might want to call and ask them if it's available)

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