Forum Post: School loans are wrong
Posted 12 years ago on Nov. 20, 2011, 10:52 a.m. EST by Wheresthebeef1776
(12)
This content is user submitted and not an official statement
In looking at the link to the 99%, I find a common thread of complaints about student loans and employment. Why don't you people occupy capital hill and demand that liberal politicians stop making student loans so easily available? The guaranteed loans only drive up the the cost of college so fat assed overpaid school administrators and professors can enjoy summer vacations and lavish pensions. I bet there is an academic professional standing right next to you as you read this.
I'll preface this by saying that I took out student loans.
There is nothing wrong with student loans. Just be careful about using them. Have realistic expectations about your financial life after college. If you don't want to take out loans, work through college, join the military to get the GI Bill, or get scholarships.
Student loans drives up the cost of tuition. Economics 101, cheap money = inflation
I think student loans should be treated as business loans. When you ask the bank for a loan you should have to produce a clear plan outlining the type of degree you are seeking, the type of job you can expect to have after obtaining that degree, and how that job will provide the income needed to pay off the loan. If one thinks they are smart enough to go to college, this should be a fairly straightforward thing to do. Without a clear, LOGICAL plan, their should be no loan.
It is like going to a bank and asking for a $80,000 business loan for a business of an "undecided" nature. You would be laughed out of the bank. Yet it is commonplace with student loans.
Or you idiots can stop taking them
The most important thing to change out of this movement is not the laws and policies, but the culture and the behavior of the US people by educating people and putting forth the misconceptions that got us into this mess. For instance, in the case of college debt, what got us into this mess was the idea that college of any sort is an absolute necessity. I am 27, and i remember that when I was graduating H.S. the perception was, if you weren't accepted to a college by graduation it is because you weren't good enough. I'd like to see more kids today and in the future graduate H.S. with a 3.0+ GPA and have 2200 SAT score but not be enrolled in college by Sept. Then when asked why, they can proudly say, "because I'm only 18 and I don't know what i want to be yet and I can't afford a $80K debt on a hunch." Go work in the real word for a bit after H.S. while living with you parents. You'll be better equipped to figure out what you want to be once you're out of the sheltered life of grade school. This will minimize the amount of kids choosing dead end majors because they are under the pressure of parents, teachers and society to go straight to college after H.S. under the advice, "Just study what it is you like to do with your spare time". Everyone doodled a lot in grade school b/c it was so BORING... that doesn't mean you should major in it. Maybe take some general classes at community college to gain some credits for later. The extra 3 yrs spent at mommy and daddy's from 18-20 yrs old will save you the 3 years you will spend back at Mommy and daddy's house at 23-25 yrs of age.
You do not sound like an OWS supporter. Why aren't you out in a cardboard box drinking a donated latte crying about you school loans?
Loans are not the problem. To some extent I could agree with the inflated prices of tuition, but I have worked in the financial department of a couple of Universities and am aware of how high the costs are to provide curriculum and quality professors to students. I would say the biggest problem is financial irresponsibility of students. People who wish to attend a college or university should definately take the time to research the type of degree they wish to earn and cross reference it with the compatibility it has to the jobs they find acceptable. It is so easy to conduct basic research to gain a general idea of the median salary and whether or not the particular jobs are in growing demand. Once this information is found the student should do a cost to benefit analysis. Find out how much should he/she really borrow for tuition. Studies show that University students who work 20 hours a week tend to maintain higher grades than the average student body. My background is not one that made paying for school very easy. My parents had a total of 9 children, and my father died when I was merely 13 years old. I worked a part time job the entire time I was in Middle School and High School. I was not able to save every penny I earned for my higher education since it was common that my mom would end up dipping into it to help with groceries at struggling times. I struggled through high school and did not score high enough grades to qualify for any scholarships I could find. At the age of 19 I found a job working in a warehouse. I worked so hard at gaining a good reputation that finally the manager gave me the opportunity to spend two years working abroad in Argentina, Paraguay, and Chile with one of their International Sales Reps. I did not speak Spanish and in fact flunked out of Spanish in high school. However, I grew very dedicated to learn Spanish and eventually became fluent in speaking, reading, and writing Spanish. When I returned to the U.S. I decided I needed to earn a degree. I began applying only for jobs with tuition reimbursement. I worked fulltime the entire time I attended school. I graduated with my bachelor degree in three years. I did not use a single student loan, but I made major sacrifices to accomplish doing so. I did not get to go skiing with my school friends, I did not get to live in the best housing. I settled on eating boring food I made myself. I did not go to the movies, or acquire a nice music collection. The car I drove to work and school was a real piece of crap. Even today I drive the same piece of crap car although I now have a job that pays me almost double the salary of the average income someone with a graduate degree earns. I work hard to live beneath my means in hopes to realize the true freedom capitalism gives those who work hard. I will gain the ability to choose how any surplus of my money is used. I am only entering my second year of working since finishing my degree. I have already spent my own money to buy 10 Xbox 360s for children weakened by cancer treatment. I pay for the airfare and hotel accomodations for myself and a friend who is also fluent in Spanish to lend our communication skills to doctors and dentists who volunteer thier time in poverty stricken areas of Mexico and Central America. Capitalism provides each individual with the ability to choose how their money is spent. In my earlier years I have seen people I know blow thier entire paychecks on weed and alcohol. At least a few of those same people I know are very supportive toward the OWS cause. They do not hesitate to say the rich people need to give more of their money to people in need, but I have never seen them give a dime. We all can do better, it's not just the people with money. We all have our own individual talents that can be shared.
Is the problem loans or the cost of higher education? I could argue (from seeing it happen) that some students are using loans for partying money, to improve their living conditions, or to make purchases unrelated to school by freeing up funds they would have had to put towards school.
I took out no loans to go to college, and paid as I went, however, I want to go to graduate school, but cant swing it so I would appreciate a low interest loan. My fear is that because im in my late forties, that by the time i finish school i wont have enough time left on earth to pay back the loans and would leave my family with debt. This is because graduate school is enourmously expensive, not because of the loans.
As long as the money is cheap, and ther is no risk to the lender losing it via bankruptcy then school tuitions will continue to rise disproportuately when compared to inflation. it is not like buying a car, because the federal government does not promise to pay the car dealership if you default on your loan. Look at every other facet of the economy, once the goverment subsidizes an activity the cost of the activity goes up disproportionately Consider the effect that government backed mortgages had on the housing market.
In florida a man was caught artificially raising home values well before the real housing bubble was created. The problem was greed and opportunity, not only by banks, but by developers and individuals looking to make a fast return on investment. This is why regulations are a necessity, just like the speed limit in front of schools and through neighborhoods. Government backed mortgages have been around for decades in the form of VA and FHA loans. The housing bubble was an opportunity to use the newly legal betting on loans that was the real toxin to the economy.
Other countries pay for school for students who pass a test, then require service for the priveledge of free school. Students who dont pass the test can go to out of country schools if their families can afford it, so most students take school more seriously. Many American students seem to treat college mainly as an extension of high school as a social gathering.... As an adult who started college at 30, I cant tell you how frustrating it was to do my homework then go to class where we had to do it again because of students who failed to read the text. The professor should have kicked them to the curb, but they get faulted for failing too many students. Why? Because the college wants that money.
I dont claim to know how to fix this... I simply do not put the blame on low interest loans, but on the institutions.
What is driving up their costs? They always had to pay faculty and maintain facilities, so what has changed?
When the government started backing loans it required the borrower to have20% down. The liberals in congress lead by Barney Frank changed the rules so that buyers could get a mortgage with as little as 1% down.
With my va loan i put nothing down. What is your point? We need to pay rent before we buy house? I saved money by buying a home. My rent was more than $100 a month higher than my mortgage plus taxes and insurance. The lender did try to fool me into thinking i could afford a grander place than the one i have, and approved me for more than even i realized was safe on my income. Dont forget when you buy a higher priced home, everyone in the deal makes more money off of you, so they all had something to gain...
You put no money down, so you had nothing to lose when the market turned sour. When millions are given no money down mortgages it has the effect of encouraging speculation. Speculation drives up home prices and leads to a housing bubble.
Have to disagree... The speculators were buying second homes on equity that was a fantasy...
Buying second homes with no money down mortgages.
Exactly! Equity loans are not ever low interest loans... So, no, the economy did not crash because of poor people getting loans. Or even because of individuals speculators taking out loans on equity created because of the false value bubble. The banks engaged in bundeling off groups of loans they expected to default, bet against them and made money for it when the loans did default, after setting people up with loans that pushed the limits of what an ethical banker would have given them.
It's the curriculums that do not give students real working life business skills when they get out, the lack of jobs when they get out, and the interest rates based on a system of usury that are the main problems with student loans.
To start young people out with a big debt as their welcome to the working world is immoral.
http://www.youtube.com/watch?v=4Z9WVZddH9w
Funny isn’t it? Elitism amongst academics seems to be ok...because they have a bully pulpit to preach from. How many Professors would be willing to take a pay cut so that more students could afford to go to school? Why dont the protestors protest against the school that charged them 10s of thousands of dollars a year in tuition? Why not protest the text book scam as it is? Professors write the books considered manadatory, then charge enormous fees for the books. Why not put those literary masterpieces on the open market for profit and provide them free to their students? The hypocrisy of it all sickens me.
Follow this analogy: If you purchased a car that you needed to get to work and the dealership dramatically overcharged you for the car and the government gave you a low interest loan to purchase the car so you could get a good job. Now, that car loan is an anchor around your neck. Do you blame the person who gave you the loan or the car dealer that ripped you off in the first place??? Your answer to this question should apply in exactly the same way to the student loan issue. After all, you do not require a college education any more or less than you require a car.
Your car loan analogy fails. First, the car loan is based upon the value of the car. Second, You can discharge a car loan in bankruptcy, Third, you can sell the car and pay back the loan. Fourth, if you don't pay the loan the government does not pay the dealership back. I could go on. The problem is government subsidies in general. You want cheaper medicine, take Medicare away, then the hospitals will be forced to charge what people can afford. Cheaper housing, stop section 8, then landlords will reduce rent to an amount that a person can pay. Why would a landlord rent his apartment to you for 750 a month when the federal government will pay 1,100?
I still stand by my analogy on the surface, the point is Universities make profits and professors make good money, no one ever seems to blame the instutions, at least not to the same degree they seem to blame corporate America. But I agree with your point, the more the government gets involved, the worse things get, despite good intentions.
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Eh, nobody is forced to take the loans. Just like nobody was forced to take the silly mortgages on homes that were immediately upside down. Mmmm, sound like people once again not taking responsibility for their own actions. Quit bitching and whining.
Eliminating loans would force universities to lower prices because no one would be able to go.
Making less money available would force schools to cut waste. Why are universities building luxury dorms? They are doing it to capture as many guaranteed student loans as possible. If loans could be discharged in bankruptcy, lenders would make sure that the loans were used to buy an appropriate education. Kids would be required to attend class and achieve grades, and overpriced schools would be forced to lower prices.
No, if loans could be forgiven, it would drive interest through the roof on the loans. Banks aren't going to hire detectives to do what you're thinking of, it's too costly.
What you want to do is way too much work and the market will do the same thing automatically if you couldn't take out loans. Supply and Demand.
No more loans shifts the demand line left, resulting in a lower equilibrium price. This is how the market works.
I did not say no more loans. I want the market to work, get the government out of the market and it will work. All loans in any business can be discharged if a person is bankrupt, the exception is goverment guaranteed school loans. Get the government out of the school loan business and the the market place take care of the rest.
Yeah, but I don't understand how bankruptcy forgiving loans helps keep college prices down.
No more federal loans would definitely bring down prices.
The availability of bankruptcy forces a lender to more closely scrutinize the loan recipient. No bank will loan to a business that is doomed to fail because the business may go bankrupt. As it stands, once you obtain a school loan it can never be discharged in bankruptcy, this reduces the lenders risk and allows them to lend without doing their due dilligence.
Oh, I see what you're saying now. Student loans are the only ones that can't be forgiven.
But I think private loans are wiped out during bankruptcy because they're not necessarily for education. Government loans can't be forgiven for sure though but I'm pretty sure private loans can be.
Get a private loan that has the same rules as any other loan. If you cannot pay it back then you go bankrupt. Once the private lenders realize that some of their loans will be discharged, the banks will be more careful about who they lend to and where the money is going. No more50k loans to study 16th century Russian literature. The lenders may also want to see the grades just to make sure the money is not being wasted. At my school there was plenty of fat that could have been trimmed. Today colleges are spending millions on luxorIous dorms and gormet dinning commons to entice foolish children to spend their college loans at their greedy institutions.
I don't need a private loan.
If nobody could afford to go to college without loans, and loans were eliminated, people would stop going to college and those institutions would have to lower their prices to stay in business.
Econ 101.
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