I haven't seen anyone on here talking about the government inserting into the health care bill the takeover of student loans. The first casualties of this are coming soon. Sallie Mae will be cutting up to 1/3 of its employees. I expect that other student loan companies will be doing the same. There's some change for you.

http://www.indystar.com/article/20100329/BUSINESS/3290338/Reform-of-student-loans-hits-Sallie-Mae

This is good change.

This will save taxpayers money, or at the very least allow for more actual loans to be made instead of giving lenders free money for really doing nothing.

IggyPride00 wrote: This is good change.

This will save taxpayers money, or at the very least allow for more actual loans to be made instead of giving lenders free money for really doing nothing.

How? Loans being forgiven saves tax payer money?

2quik4u wrote:

IggyPride00 wrote: This is good change.

This will save taxpayers money, or at the very least allow for more actual loans to be made instead of giving lenders free money for really doing nothing.

How? Loans being forgiven saves tax payer money?

Every loan those lenders was making was guaranteed by the federal govt. We were on the hook whether students paid the loans or not.

When they defaulted. We paid the lenders off since the loans were guaranteed, and then when the companies pursued collection they kept whatever they managed to collect.

All along the way they had zero liability, and only stood to gain. It was a free slush fund.

The last thing higher education needs is more access to easy money.

The college financial aid program is a train wreck. FAFSA is a joke and the student loan system wasn't set up very well either.

This at least simplifies it a bit.

So what does the reform entail?

The link doesn't really speak of it.

I think it just cuts the banks out. As far as I've heard it really doesn't change anything except make the government the direct lender instead of lending with the bank's money. I'm probably wrong though so please mock me if I am.

queencitybuckeye wrote: The last thing higher education needs is more access to easy money.

Why do you say that? If you are thinking what I am thinking it is because institutions will just keep jacking up tuition and really extending the debt problem in this country.

LJ wrote:

queencitybuckeye wrote: The last thing higher education needs is more access to easy money.

Why do you say that? If you are thinking what I am thinking it is because institutions will just keep jacking up tuition and really extending the debt problem in this country.

Correct.

IggyPride00 wrote:

2quik4u wrote:

IggyPride00 wrote: This is good change.

This will save taxpayers money, or at the very least allow for more actual loans to be made instead of giving lenders free money for really doing nothing.

How? Loans being forgiven saves tax payer money?

Every loan those lenders was making was guaranteed by the federal govt. We were on the hook whether students paid the loans or not.

When they defaulted. We paid the lenders off since the loans were guaranteed, and then when the companies pursued collection they kept whatever they managed to collect.

All along the way they had zero liability, and only stood to gain. It was a free slush fund.

Ok so now people who can afford to pay the loans back will purposely pay the minimum every month hoping to get to the date where their loans will be forgiven.

2quik4u wrote:

IggyPride00 wrote:

2quik4u wrote:

IggyPride00 wrote: This is good change.

This will save taxpayers money, or at the very least allow for more actual loans to be made instead of giving lenders free money for really doing nothing.

How? Loans being forgiven saves tax payer money?

Every loan those lenders was making was guaranteed by the federal govt. We were on the hook whether students paid the loans or not.

When they defaulted. We paid the lenders off since the loans were guaranteed, and then when the companies pursued collection they kept whatever they managed to collect.

All along the way they had zero liability, and only stood to gain. It was a free slush fund.

Ok so now people who can afford to pay the loans back will purposely pay the minimum every month hoping to get to the date where their loans will be forgiven.

If they can afford to pay them back they will pay the whole amount by the date they are forgiven. If you are on an income based payment system with a 25 year period, paying the minimum that you can pay will get you to a $0 balance by the time you reach the 300th month.

LJ wrote:

queencitybuckeye wrote: The last thing higher education needs is more access to easy money.

Why do you say that? If you are thinking what I am thinking it is because institutions will just keep jacking up tuition and really extending the debt problem in this country.

that was my understanding too. i think the way it was explained to me was the schools dont make the same amount of money from students who pay with loans from the government as they do with others, which causes the schools to jack up the prices to make up for it.

I believe people who get a public job will only have to pay 10 years then there loans will be forgiven

Government taking over an entire program and being the sole provider of student loans.

What could possibly go wrong?

2quik4u wrote: I believe people who get a public job will only have to pay 10 years then there loans will be forgiven

and if you make enough to pay them they have to be paid off in 10 years at full repayment. But that is a completely different program, not many people do it.

Writerbuckeye wrote: Government taking over an entire program and being the sole provider of student loans.

What could possibly go wrong?

There is nothing stopping private businesses from making student loans.

They just don't get a full guarantee from the government that they will cut said bank a check for the full value of the defaulted loan.

If the banks don't want to play because the free lunch has been taken away, that is on them.

IggyPride00 wrote: There is nothing stopping private businesses from making student loans.

Except they would have to compete with an entity that is not confined by the rules of the free market. The feds have the power to hemorrhage cash on the backs of its citizens.

IggyPride00 wrote: They just don't get a full guarantee from the government that they will cut said bank a check for the full value of the defaulted loan.

The feds should have never been involved in this in the first place. They interfered in the free market by decreasing the banks risk in loaning money to high risk individuals. They got exactly what they paid for. Bailing out banks loans that government backing encouraged.

IggyPride00 wrote: If the banks don't want to play because the free lunch has been taken away, that is on them.

And now more of the free lunch passes on to colleges and universities in the form ever higher tuition. At least until that gets out of control and the government ends their free lunch by cutting out the middle man and starts directly providing higher education to all. I mean really why not, they would ensure fairness and equity in the whole process.

majorspark wrote:

IggyPride00 wrote: There is nothing stopping private businesses from making student loans.

Except they would have to compete with an entity that is not confined by the rules of the free market. The feds have the power to hemorrhage cash on the backs of its citizens.

IggyPride00 wrote: They just don't get a full guarantee from the government that they will cut said bank a check for the full value of the defaulted loan.

The feds should have never been involved in this in the first place. They interfered in the free market by decreasing the banks risk in loaning money to high risk individuals. They got exactly what they paid for. Bailing out banks loans that government backing encouraged.

IggyPride00 wrote: If the banks don't want to play because the free lunch has been taken away, that is on them.

And now more of the free lunch passes on to colleges and universities in the form ever higher tuition. At least until that gets out of control and the government ends their free lunch by cutting out the middle man and starts directly providing higher education to all. I mean really why not, they would ensure fairness and equity in the whole process.

And what the Universities teach. No thanks, it's bad enough already with the States.

Back a long time ago I borrowed 2,500 for student loan. The bank took 200 just for processing the loan. Cutting out the middle man on a loan that taxpayers are already on the hook for is good policy.

Government skewing a market and taking away real competition is NEVER good policy.

History has proven it.

Bigdogg wrote: Back a long time ago I borrowed 2,500 for student loan. The bank took 200 just for processing the loan. Cutting out the middle man on a loan that taxpayers are already on the hook for is good policy.

To some extent, I think this is probably true. The real concern here is that increasing the amount of cheap money available drives up tuition, though it doesn't drive up after-college earnings. This results in many people being able to go to college, but it increases the difficulty of paying the loans back after graduation.

It seems to me that the bigger problem in our country is not that people can't go to college, but that they can go and then are forever mired in debt. As I understand it, this policy addresses the former but exacerbates the latter.

fan_from_texas wrote:

Bigdogg wrote: Back a long time ago I borrowed 2,500 for student loan. The bank took 200 just for processing the loan. Cutting out the middle man on a loan that taxpayers are already on the hook for is good policy.

To some extent, I think this is probably true. The real concern here is that increasing the amount of cheap money available drives up tuition, though it doesn't drive up after-college earnings. This results in many people being able to go to college, but it increases the difficulty of paying the loans back after graduation.

It seems to me that the bigger problem in our country is not that people can't go to college, but that they can go and then are forever mired in debt. As I understand it, this policy addresses the former but exacerbates the latter.

I am not sure that there is a positive correlation between cheaper student loans and the increasing cost of tuition. There may be but I am not aware of it.
I have a daughter that finished college last year. She has a degree in business and marketing and 80,000 in loans. She is the second of our children to get a degree and I have one left. Both were good high school students but not good enough to get scholarships. Our income was too high for anything but the basic financial aide package. Ohio is one of the least affordable states to get a college education. The cost of college education needs to more affordable.

Bigdogg wrote: I am not sure that there is a positive correlation between cheaper student loans and the increasing cost of tuition. There may be but I am not aware of it.
I have a daughter that finished college last year. She has a degree in business and marketing and 80,000 in loans. She is the second of our children to get a degree and I have one left. Both were good high school students but not good enough to get scholarships. Our income was too high for anything but the basic financial aide package. Ohio is one of the least affordable states to get a college education. The cost of college education needs to more affordable.

My recollection (which I can't confirm right now, but will try to google later)is that several studies a few years ago showed a strong correlation between tuition costs and student loans. Anecdotally, from working in an admission's office, the growing trend is to bump up tuition and require the student from wealthy families to pay it all, while significantly discounting tuition for other students (poorer and/or more desirable because of stats or race) via grants/scholarships. It's essentially a two-tier pricing system that allows the school to earn its money by more or less requiring marginally qualified but wealthier students to foot the bill for poorer students.

Is there an easy way to make college more affordable? Any ideas on what to propose? $80k in loans @ 6% over 10 years is ~ $890/mo. That's a tough burden for most people coming straight out of college.

fan_from_texas wrote:

Bigdogg wrote: I am not sure that there is a positive correlation between cheaper student loans and the increasing cost of tuition. There may be but I am not aware of it.
I have a daughter that finished college last year. She has a degree in business and marketing and 80,000 in loans. She is the second of our children to get a degree and I have one left. Both were good high school students but not good enough to get scholarships. Our income was too high for anything but the basic financial aide package. Ohio is one of the least affordable states to get a college education. The cost of college education needs to more affordable.

My recollection (which I can't confirm right now, but will try to google later)is that several studies a few years ago showed a strong correlation between tuition costs and student loans. Anecdotally, from working in an admission's office, the growing trend is to bump up tuition and require the student from wealthy families to pay it all, while significantly discounting tuition for other students (poorer and/or more desirable because of stats or race) via grants/scholarships. It's essentially a two-tier pricing system that allows the school to earn its money by more or less requiring marginally qualified but wealthier students to foot the bill for poorer students.

Is there an easy way to make college more affordable? Any ideas on what to propose? $80k in loans @ 6% over 10 years is ~ $890/mo. That's a tough burden for most people coming straight out of college.

When my GF started OSU CVM in fall of 2006, the class of 2006 had just graduated with 28 debt free Dr's and an average debt of $125k. Her class, the class of 2010 will be graduating 5 debt free Dr's and an average debt of $152k