Do we need a student loan bailout?

[KingNothing]

But that encourages more spending and in turn more borrowing and taxation.

You can't blame people for acting rationally in a given scenario. What you have to do is change the rules of the game. Until you do that, do what you can to mitigate the consequences -- Represent the wishes of your constituency, and vote down things that you believe to be unconstitutional. To that end, a balanced budget amendment to the Constitution would be a really wonderful thing! Change the rules of the game!

It is counter-productive to the reported goal of trying to balance the budget.

It isn't, and you know it. The money is already in the budget to be spent. Earmarks just allocate what is already there.

 

[heavenlyboy34]

Hence my point -- allow them to do so. In addition to freeing debt-slaves, it would immediately force lenders to be more selective, which would mean less kids graduate with degrees in things that do not lead to jobs, which would mean less overall debt.

Everyone would gain, except for banks, colleges and politicians who demagogue higher education, which means it will never happen.

I suspect that if other loan industries operated the same way the student loan industry does, they wouldn't have much business at all. Who else would lend thousands of dollars with NO collateral to kids pursuing mostly useless degrees and will not likely to be able to find a job after graduation. Plus, the rate of people graduating on time (4 years or less) isn't so great and seems to get worse with time. Total scam that couldn't exist without government sponsorship. I wouldn't have pity on lenders if they had to eat their losses on bad loans.

 

[Zippyjuan]

You can't blame people for acting rationally in a given scenario. What you have to do is change the rules of the game. Until you do that, do what you can to mitigate the consequences -- Represent the wishes of your constituency, and vote down things that you believe to be unconstitutional. To that end, a balanced budget amendment to the Constitution would be a really wonderful thing! Change the rules of the game!



It isn't, and you know it. The money is already in the budget to be spent. Earmarks just allocate what is already there.

You are right that Congress (Ron Paul included) are doing what their constituents want them to (for the most part). People would like to see the budget get balanced (who would be against that?). But get to the details and they don't want their taxes raised and the don't want "their" programs cut in order go get there. So nothing gets done. We can't blame it all on Congreess.

 

[Zippyjuan]

I suspect that if other loan industries operated the same way the student loan industry does, they wouldn't have much business at all. Who else would lend thousands of dollars with NO collateral to kids pursuing mostly useless degrees and will not likely to be able to find a job after graduation. Plus, the rate of people graduating on time (4 years or less) isn't so great and seems to get worse with time. Total scam that couldn't exist without government sponsorship. I wouldn't have pity on lenders if they had to eat their losses on bad loans.

It has been a while since my student loan days, but I believe that if the student has no resources, that the parents need to cosign with their assets. They still need to qualify for a loan- they don't just hand them out to anybody.

 

[heavenlyboy34]

It has been a while since my student loan days, but I believe that if the student has no resources, that the parents need to cosign with their assets. They still need to qualify for a loan- they don't just hand them out to anybody.

That wasn't the case when I started (2000). I'm on the hook for everything. They do hand them out to anyone nowadays. If there's an exception, I don't know of it.

ETA:

Student loans with no cosigner requirements are easy to apply for, as we're mostly talking about Federal student loans. A simple FAFSA from has to be filled out. This form is used to determine eligibility and need for finance. Perkins loans and Stafford loans are among the leading aid options. Another major benefit of these loans is the low interest rate. To apply. head over to www.fafsa.ed.gov.

http://www.simpletuition.com/student/no_cosigner_student_loans.html

 

[Zippyjuan]

Thanks for the updated information.

 

[nobody's_hero]

Jordan:

Just let'em file bankruptcy. We used to do that in this country. It absolutely will ruin their credit ratings at a time when they may be looking at bigger purchases, but at least it gives them a fresh start.

Banks hate the idea of bankruptcy though. Liquidation of bad debt means they won't get their money back. They'd prefer a bailout because it means they can get paid back while socializing their losses. If you really want to help these kids, you DON'T want a bailout. You want bankruptcy to be possible in this country again.

Bankruptcy limits the damage to the lender and the borrower. A bailout requires printing of hundreds of billions of dollars to repay debt that should be liquidated, which means everyone suffers inflationary effects, even for those who have never stepped foot in a college.

Also bankruptcy would deflate college tuition prices, which is very much needed, while a bailout would just keep the dog-and-pony show going.

 

[seraphson]

Why tinker with symptoms when you can cure the disease? End the staggering government subsidization for college (to the extreme dismay of egalitarians I'd wager) and the bubble will deflate safely. This will probably also change the behavior of schools for the better as now they'll treat students as learners instead of dollar signs that pay uni pension funds. Quality will overtake quantity as it was.

 

[frodus24]

The new latest craze is this: completing your bachelor's degree in something useless. Then, a student returns to college to work on a second bachelor's degree. Or it could be an associates degree. The only aid usually available is federal student loans. Student's are maxing out their aggregate loan amounts of $57,500 and then turning to private loan lenders.

I have access to data that shows where student's attend college, what they borrowed and if they received Pell grant funds. It's really nothing more than a form of welfare. Keeps people going.