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

[SC Maintenance]

No, they don't. They come from the banks. It's just loan rules under federal control. This is why you cannot file student loans under bankruptcy. The feds get nothing, the banks profit. Why do you think the schools charge so much now? They can because they know the feds don't control the cost. The schools get their money, and if the student defaults, the banks lose out first. They then write off the loss and the taxpayer gets to pay the interest lost as well.

"All federal student aid programs – which include student loans, Pell Grants and work-study, for example – are funded by federal tax dollars paid by U.S. citizens.
Each year, Congress appropriates money to fund these programs as part of the annual budget process. Once the budget is finalized – passed by both the House of Representatives and Senate – and signed into law by the president, Congress electronically transfers the money from the Department of the Treasury to the Department of Education."

Consider yourself edumicated. No loan required.

https://www.usnews.com/education/bl...nt loans, Pell,to the Department of Education.

 

[Ursatdx]

Maybe the universities should guarantee the loans instead of US taxpayers. Universities can guarantee the loans with their endowments.

Agree.
Maybe the Universities should be required to find the students a job or have to offer them employment or compensation
until they do.
Bet the "Pakistanian Underwater Basket Weaving" course might be disappeared.
Might have an impact on the recruitment decisions.
Local colleges around here have grown immensely into huge universities in the last decade or so.
I'm always amazed at the $'s they spend on campus buildings and stadiums.

p.s. I paid for my Daughters 4 year nursing degree at Rutgers by changing oil.

edit: I typed the above before I read all the great responses.

 

[SC Maintenance]

I'm not disagreeing with you @ripcord, but the ability to make those calculations/estimates should be taught in high school.

Scott

They are, but they don't seem to stick.

 

[nickaluch]

Boston College undergrad and Tufts dental.

My nephew went to Tufts now a emergency room doctor great school

 

[SC Maintenance]

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.

This is an excellent question which I don't know the answer to. So I asked the boss - she is a high school teacher.

She said lots of kids start school and run out of money - because someone saved something but not enough. So maybe you get 12K loan and 12K from wherever, then your broke. Which is the worst of all worlds, you spent a lot and have nothing.

She said 2 year associate degree then college is a good route. The problem here at least is if you want to take something specific - like Engineering - that doesn't work - the courses won't transfer. But for a general degree it would be good.

She said if your special needs at all - public assistance, disability, etc - there are other programs that can help.

She said the really smart kids that are poor go to private schools, because there cheaper for them - they have all the endowments and such so if you get in that way its actually cheaper.

Lots of kids get into ROTC so they can do the military route. I had a neighbor that had all kinds of degrees the military had paid for. Sounds like a good way for some kids.

So thats what I know now.

 

[ripcord]

This is an excellent question which I don't know the answer to. So I asked the boss - she is a high school teacher.

She said lots of kids start school and run out of money - because someone saved something but not enough. So maybe you get 12K loan and 12K from wherever, then your broke. Which is the worst of all worlds, you spent a lot and have nothing.

She said 2 year associate degree then college is a good route. The problem here at least is if you want to take something specific - like Engineering - that doesn't work - the courses won't transfer. But for a general degree it would be good.

She said if your special needs at all - public assistance, disability, etc - there are other programs that can help.

She said the really smart kids that are poor go to private schools, because there cheaper for them - they have all the endowments and such so if you get in that way its actually cheaper.

Lots of kids get into ROTC so they can do the military route. I had a neighbor that had all kinds of degrees the military had paid for. Sounds like a good way for some kids.

So thats what I know now.

About getting specific degrees like engineering, there are many public universities that have cooperative programs with local community colleges that help ensure that those credits do transfer. At least that is the case here in Washington.

 

[SC Maintenance]

About getting specific degrees like engineering, there are many public universities that have cooperative programs with local community colleges that help ensure that those credits do transfer. At least that is the case here in Washington.

Not here, and having been through engineering - I really don't know how. You might get a couple courses to transfer, like Calc and physics, but even first year courses get pretty specific to your major. Unless somehow they offload some of those a tech college?

If you want to get into Medicine or Law, your pretty much going to need whatever variant the college is calling the Honors program, which is special classes and things - to get in.

I am in no way belittling it. If they can transfer then there is no reason not to - just make sure ahead of time. The other thing - one bad professor in community college can sink your GPA. If its a very competitive program - it might keep you out also.

 

[Dave Hess]

She is taking her masters in Comp Sci. She just trained her first AI model last semester. I hope the AI don't learn how to train themselves, or I spent a lot of money for nothing.

She has a bright future with AI advancements.

 

[ls1mike]

1 800 USA NAVY...who is 18 and signs on the dotted line with the blank check being up to your life. Some young dumb kid with no life experience. You expect them to do what they said they would. I was that guy, but I knew I couldn't afford college. You sign something at 18 you follow through. That is how i paid for college. My sympathy level is low if you go to some crazy expensive school. You have options.

The military isn't for everyone but I wouldn't be opposed to some type of public service if you want help with your student loans. Give something back, be a part of something bigger.

Having said that college has become a business. I'm not even sure where education falls on their list of priorities. It is too expensive and some of the people I see now are just being pushed out the door.

 

[eljefino]

Some, but not all, loan contracts had a "public service loan forgiveness" clause. Do something they defined as "good" for ten years, make minimum loan payments, then apply and get the rest of your loan forgiven.

Of course that "good" might be teaching elementary school, which pays poorly compared to private industry. So one may make actual financial sacrifices under good faith that their contract will be honored for their public service.

As these programs go, they didn't define "good" very well when writing the law, because the first applicants would have been ten years out when the law went into effect. So there was confusion by the end users if they qualified.

As things with shades of grey go, the Executive branch tried defining it. The Executive changed and the new guy has a different POV.

 

[JeffKeryk]

She is taking her masters in Comp Sci. She just trained her first AI model last semester. I hope the AI don't learn how to train themselves, or I spent a lot of money for nothing.

What a flat-out exciting career! I miss it.
All I get to do nowadays is talk to my Tesla Grok.

 

[alarmguy]

If the president of the USA can claim multiple bankruptcies I think student loans should be able to go to bankruptcy if needed

In that case, then the government should get out of the student loan business. As a taxpayer, I don’t want to pay for other people’s college.

Much worse is the vast majority of responsible students who take out credit will pay higher costs because of those who don’t pay their debts.

This has nothing to do with any other American or the President of the United States.
If students want the ability to claim bankruptcy, then they should go through all the credit checks and employment certifications to prove they could pay that loan back for an unsecured loan no less.

Obviously they can’t and that is why paying back a student loan is mandatory for the privilege of being given money on the Goodwill that it will be paid back with no proof of income, responsible credit or collateral.

 

[ls1mike]

Some, but not all, loan contracts had a "public service loan forgiveness" clause. Do something they defined as "good" for ten years, make minimum loan payments, then apply and get the rest of your loan forgiven.

Of course that "good" might be teaching elementary school, which pays poorly compared to private industry. So one may make actual financial sacrifices under good faith that their contract will be honored for their public service.

As these programs go, they didn't define "good" very well when writing the law, because the first applicants would have been ten years out when the law went into effect. So there was confusion by the end users if they qualified.

As things with shades of grey go, the Executive branch tried defining it. The Executive changed and the new guy has a different POV.

10 years seems excessive. 2,4, or 6 should be plenty depending on how much money you borrowed. 10? No.

 

[trd1zz]

This is an excellent question which I don't know the answer to. So I asked the boss - she is a high school teacher.

She said lots of kids start school and run out of money - because someone saved something but not enough. So maybe you get 12K loan and 12K from wherever, then your broke. Which is the worst of all worlds, you spent a lot and have nothing.

She said 2 year associate degree then college is a good route. The problem here at least is if you want to take something specific - like Engineering - that doesn't work - the courses won't transfer. But for a general degree it would be good.

She said if your special needs at all - public assistance, disability, etc - there are other programs that can help.

She said the really smart kids that are poor go to private schools, because there cheaper for them - they have all the endowments and such so if you get in that way its actually cheaper.

Lots of kids get into ROTC so they can do the military route. I had a neighbor that had all kinds of degrees the military had paid for. Sounds like a good way for some kids.

So thats what I know now.

All good ideas - for those who actually want to save money on education.

Back to original topic - The government capping undergraduate borrowing to a -maximum- of $12,500 per year (many will qualify for much less), is a cap that actually seems quite reasonable to me.

Meaning the government backed borrowing program isn't overloading an individual student with easy to get cheap debt, nor is the government participation in this space the primary driver for inflating tuition costs. The government simply isn't loaning enough money per student for this to be the case.

For those who want to attend a better (more expensive) school, which will cost much more than the government will lend you, the remainder, and -majority- of tuition costs must come from "elsewhere".

 

[SubieRubyRoo]

Go back and read my first reply about capping the cost.

No, not every kid does. However, for those that don't there is little to no financial assistance for them (Tech schools, etc). It is college we are talking about. The Purdue model would work just as well. But income fluctuates as well.

You last sentence sums alot of it up "if the school is actually interested in helping students". Problem is, they are not. All they care about is the financial gain they get. public as well as private (worse).

If government artificially caps the cost of anything (aka price controls), supply disappears because nobody can make a profit at anything and everyone walks away from making that good or service. Or, the quality disappears.

If there are going to be student loans, the college itself should be “loaning” the money. That way they’ve got skin in the game by only extending loans to “good” risks, but also keeping costs low because of the risk of dropouts/defaults.

Put colleges on an even playing field where there’s no Monopoly money involved, and the school has risk of injury due to dropouts/failures, and costs will come back to sanity. It’s easy for them to be flippant with students’ money when they’ve got hundreds of millions in endowments, tens of millions in payroll, and absolutely zero risk of losing money even if the student body suffers.