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Seems twisted to tax the rest of the country who decided not to or weren't able to participate in college in the first place
Earlier quoted context omitted.
Yeah that's a very good point. Interesting how they aren't easily discharged via bankruptcy. I may have to do some research on how exactly that got put in place and who was behind it...
It got put into place because they are high risk loans given out to people that have nothing to secure them with. If you could discharge them in bankruptcy, no one would offer them because huge percentages of people would go ahead and do so.
And society can have a discussion again on how much it values educating its populace.
Problem: Schools charge max loan value. Students can't pay them back.
Solution: Give away free money.
All the government has to do is nothing. Just stop doing things. Stop being involved. The problem will fix itself overnight if they did literally nothing.
Le sigh.
Earlier quoted context omitted.
If they're Federal loans with a often below-inflation interest rate, the actual good financial habit is often to not pay it off, and instead amass a) an emergency fund and b) sock the rest into retirement via an index fund or something similar.
That ignores risk and also financial burden. If you owe $2k every month to NelNet or another institution, it's much harder emotionally and financially to quit your job to travel the world or start your own company. We had Federal Loans and the interest rate was still 6.5%
Not having an emergency fund is about the riskiest thing you can do.
> If you owe $2k every month to NelNet or another institution, it's much harder emotionally and financially to quit your job to travel the world or start your own company.
The emergency fund helps with that. When built up, it should cover 6-12 months of zero income. Amassing it first means losing a job doesn't mean deferring payments on the student loans and winding up with years more payments to make as a result.
> We had Federal Loans and the interest rate was still 6.5%
One of my wife's student loans is at 2.5%. At 6.5%, it's not below inflation and paying it off makes more sense.
Part of the problem is that the last few generations have been told the same thing: blue collar jobs aren't "good" jobs. You need to go to college so you can get a "good" job sitting at a desk because those other jobs are below you. If you take one of those blue collar jobs then you've failed and aren't "achieving your potential". The grand irony in all of this is that the people who did go on to become plumbers, ele…
When I say deskilling, I'm talking about creating products that reduce the amount of skill required to do a task. This increases the pool of labor competing for the job. It also often increases how much a single person can get done in a given amount of time.
Compare PEX and copper pipe fitting.
As you are paying off your loans remember the high price of your education helped pay for not just a fancy diploma but also: Shiny new buildings, Hotel-like dorms, Professors making 400k, Administrators making 700k, a moped for every football player ...
Not sure I can imagine a football player on a moped, though.
Somehow we got twisted into this track of thought that everything must be individually accounted, and student became individually loaded with the debt of their education. And because students as a group are in a poor bargaining position for tuitions - the inflation of education costs skyrocketed. I think they are the only life cost that gives healthcare a run for it's money in it's ability to exceed (by multiples) both the growth in the economy, let alone the growth in personal incomes. This cannot continue.
Plans to give student aid to income below a certain threshold will only serve to further cause tuition inflation. It is a case where individual allocation of cost/debts is much less efficient and harmful to our economy than social allocation of the cost. I think we need to go back to funding public universities out of direct state and federal budgets so that public institutions can offer low or no tuitions. This way, gov't organizations with the budget leverage, with much better visibility and oversight can keep costs down at public universities. Low public university costs will also help cap the excesses of private tuitions via market competition.
Unwinding the current mess of student debt is also a huge issue, but should be undertaken too (but I'll leave that to some other time...)