Record Surge in Past-Due Student Loans Adds to US Debt Burden

[SC Maintenance]

I don’t think banks should be loaning the money. Since it’s regulated by the feds, then the loans should come directly from the treasury at minimum to no interest, with a mandatory payback. Tuition capped at public universities. If you go private, then you pay what the banks want. Education is something we need to invest in rather than make it unobtainable due to cost.

The loans come from the federal government. That is exactly the problem.

If you follow finance, the old saying is the bond guys (credit) are always the smartest guys in the room.

The government guys are the smartest guys in the room said no one - ever.

 

[SubieRubyRoo]

I don’t think banks should be loaning the money. Since it’s regulated by the feds, then the loans should come directly from the treasury at minimum to no interest, with a mandatory payback. Tuition capped at public universities. If you go private, then you pay what the banks want. Education is something we need to invest in rather than make it unobtainable due to cost.

No way in h*** should the federal government be loaning TAXPAYER dollars. That means in order to fund student loans, they would have to increase taxes. Your proposal is essentially identical to the giveaway plan of the last admin!

 

[Dave Hess]

Most of the reason people fail to repay is because the interest rates. The person I know who pays $33,000 per year in interest had a higher balance than I did but $300 vs $33000 is insane.

$33,000 per year, was this for medical school ?

 

[trd1zz]

Why on earth would schools compete on price? Money is no object because they will lend it all to you. The SEC schools are flooded with out of state applicants that want to come. South Carolina Out of state tuition is over $37,000. Tuition and fees - nothing else. For a state school?

I honestly don't know anything about them, but if a secured home mortgage with good credit is approaching 7%, and Prime is 7.5%, I don't see a bank giving you an unsecured loan on anything for less than 6.39%, (the federal student loan rate)

I think money is an object though. I've spent 5 minutes on this but apparently the federally backed student loans are capped at $5500 - $7500 per borrower per year (for undergrad). Let's call it $7k... so where's the other $30k coming from to attend South Carolina? Either some other form of financial aid, scholarships, or the student or parents pay out of pocket, or the student or parents get a private loan. Seems like the loan with government backing is just a small piece of that pie.

 

[SC Maintenance]

No way in h*** should the federal government be loaning TAXPAYER dollars. That means in order to fund student loans, they would have to increase taxes.

Well, thats how it works now - so

 

[KrisZ]

No way in h*** should the federal government be loaning TAXPAYER dollars. That means in order to fund student loans, they would have to increase taxes. Your proposal is essentially identical to the giveaway plan of the last admin!

You do realize that’s what’s happening now right? That’s what fed guaranteed loans mean, except the taxpayer also has to pay the exorbitant interest to the bank in case of a default.

 

[Vil_Riker]

In normal countries the government funds education, it doesn't burden the student for the rest of their lives.

But the system we have is to inject unlimited money into universities using the students as a conduit with zero risk to the universities or the government screwing the students in the process.

 

[Vil_Riker]

No way in h*** should the federal government be loaning TAXPAYER dollars. That means in order to fund student loans, they would have to increase taxes. Your proposal is essentially identical to the giveaway plan of the last admin!

Loans are money creation from nothing, they don't come from taxpayers.

 

[Pew]

I think money is an object though. I've spent 5 minutes on this but apparently the federally backed student loans are capped at $5500 - $7500 per borrower per year (for undergrad). Let's call it $7k... so where's the other $30k coming from to attend South Carolina? Either some other form of financial aid, scholarships, or the student or parents pay out of pocket, or the student or parents get a private loan. Seems like the loan with government backing is just a small piece of that pie.

Subsidized has to show income need. Unsubsidized does not.

 

[SC Maintenance]

I think money is an object though. I've spent 5 minutes on this but apparently the federally backed student loans are capped at $5500 - $7500 per borrower per year (for undergrad). Let's call it $7k... so where's the other $30k coming from to attend South Carolina? Either some other form of financial aid, scholarships, or the student or parents pay out of pocket, or the student or parents get a private loan.

That is only one type of loan. There is subsidized, unsubsidized, Plus loans (for parents). If your parents are deadbeats you can get independent student loans, etc.

My daughter entered her masters a year ago. We always fill out Fafsa because you have to in order to get scholarships. Because she has a undergrad she is no longer considered my dependent. They automatically offered her like $17K for the semester. Obviously she did not accept it. Bank of dad is still open.

 

[JeffKeryk]

I just wrote a check for my oldest for classes at the community college. $3000 for 5 classes. That’s tuition, books and fees. Same basic/core classes as anywhere else. There’s absolutely no reason it should cost 5x more other than fleecing the public.

I think there should be a rule/law. If you are taking out loans for college (especially backed by the government) then you shouldn’t even be allowed into state or private institutions until you get into your discipline classes.

Our local community colleges are the best deal going, and the quality is flat-out excellent.

 

[mk378]

View attachment 293823

Those numbers are wrong. $2500 in 1950 inflates to $33,400 today. I didn't check any of the other ones with the first statement being obvious BS.

 

[ripcord]

Our local community colleges are the best deal going, and the quality is flat-out excellent.

Kids who transfer to a 4 year university after completing 2 years at a community college, on average, get better grades while at the university than the kids who started there.

 

[JeffKeryk]

Tuition at the community college I went to in 2010 was $130/credit hour. 15 years later it's $274. The University of Illinois - Chicago's tuition in 2010 was $3,700/year for undergrads. Now it's $14,000/year. They've outpaced inflation so much that we might as well make schools a legitimate business instead of a school since they're operating in that way now.

Currently $31 at De Anza and $46 at Cabrillo per unit here. Outstanding schools.

 

[ATex7239]

Our local community colleges are the best deal going, and the quality is flat-out excellent.

That’s likely because the focus is education and not the “college experience.” Big sprawling campus, fancy facilities, sporting events, fraternities and sororities, and such. Anytime I hear somebody talking about the “college experience” I usually think oh you mean drugs, alcohol, and debauchery. Yeah, one doesn't need to go college to do that.

 

[tbm5690]

Also, where are you going to get a unsecured loan from a bank for under a federally subsidized loan - which google says is currently 6.39%?

Because I find it very interesting, although a fringe example, I funded the vast majority of my education with private loans from Bank of North Dakota. It is a state-owned bank that funds citizens either in or out of state, and non-citizens that are attending ND schools. Current fixed rate APR is 6.26 and variable is 5.52. I "rolled the dice" with a variable rate 1.8% when I was in school from 2008-2012, and it never adjusted past 2.25%. All my federal options at that time were 6% plus. Different financial times for sure, but it looks like they stay pretty competitive still.

 

[JeffKeryk]

That’s likely because the focus is education and not the “college experience.” Big sprawling campus, fancy facilities, sporting events, fraternity and sororities, and such. Anytime I hear somebody talking about the “college experience” I usually think oh you mean drugs, alcohol, and debauchery. Yeah, one doesn't need to go college to do that.

The beauty of our Community Colleges is they offer class times based on demand. The local JCs offer tons of late afternoon and night classes for students like me who work.

West Valley College, near me in Saratoga, fueled the Valley with electronics techs. Back in the 70's the classes were full of Vietnam vets taking advantage of their benefits. Their work ethic was off the charts.
De Anza, in Cupertino, was the programmer school. Let's just say what they taught me took a broken man and made me into a tax paying productive member of society. And beyond my wildest dreams. I had an incredible career.

I love the JCs.

 

[SubieRubyRoo]

Well, thats how it works now - so

I know… it’s literally not permissible on its face and should be challenged in court.

Just like banks are not supposed to be able to loan deposits, until they created fractional reserve banking out of thin air.

 

[Pew]

Currently $31 at De Anza and $46 at Cabrillo per unit here. Outstanding schools.

That's so crazy, I've never heard of it priced so low in my life at $31/credit hour. At that price, there's no reason to not take some classes every now and then to stay fresh or learn new random subjects.

 

[trd1zz]

Subsidized has to show income need. Unsubsidized does not.

View attachment 293859

That is only one type of loan. There is subsidized, unsubsidized, Plus loans (for parents). If your parents are deadbeats you can get independent student loans, etc.

My daughter entered her masters a year ago. We always fill out Fafsa because you have to in order to get scholarships. Because she has a undergrad she is no longer considered my dependent. They automatically offered her like $17K for the semester. Obviously she did not accept it. Bank of dad is still open.

Even still it looks like the government backed combined borrowing amount is capped at $9500-$12500 per year (for undergrad)? (Unless I'm reading the chart wrong which is very possible). I'm assuming on a PLUS loan the parent is the borrower and not the student.

A lot of "government money" lended directly to the student, but a heck of a lot less than the remaining $25k you'll still need to come up with for South Carolina's undergrad tuition. That's a lot of money... I'd be considering other schools with lower tuition.