Obama education loan legislation

[Glenn W]

I must admit, I don't know the details of the education loan bill that Obama is expected to sign today. It would seem that there are some very good points to this education loan "reform" bill, but the devil is always in the details.

Although I am a strong advocate of the need for bankruptcy laws, I wonder if there are any protections (for the government) concerning bankruptcies. I guess this has always been a problem with student loans, but it would seem to be a good opportunity to reduce defaults.

The loan payment caps of 10% of income. I would hope that there are provisions to accelerate or increase the cap to those students that never complete their education (drop out).

I would hope that some better restrictions are put on Pell grants. IMO these have gotten a little out of control.

My philosophy has always been that I don't think citizens should have a governmental "right" to a college eduation, but all citizens should have an opportunity to get a college education should they so desire.---- a difficult public policy task, no doubt.

Here's a link to a brief summary of the bill's provisions:

http://finance.yahoo.com/news/Obama-...&asset=&ccode=

Your thoughts?

[Matuka Fly]

Since when has anything the Government did save money. When was the last time a Gov. project came in on budget. Usualy it is at least 5 to 10 times over budget. There are no details in this news report, how are we to discern any thing from the bill. Poor reporting again!

[Glenn W]

Since when has anything the Government did save money. When was the last time a Gov. project came in on budget. Usualy it is at least 5 to 10 times over budget. There are no details in this news report, how are we to discern any thing from the bill. Poor reporting again!

Matuka, I can understand that you do not regularly read financial industry snap shots. The linked reference was not intended to be a comprehensive report of the bill in question, but is rather, a quick little "head line" on the Yahoo Finance site.
I do agree with you on the governement's estimate as being unreliable, however, I don't know if savings can realistically be expected or not. I do know that banks loan servicing charges are fairly high, but I think these so called savings are a minor reason for the Bill. It would seem that the government's estimated savings are really published to justify no ( or minimal) increased costs to the government with the new legislation--- but I may be wrong.
Either way, there certainly are some merits to this bill, but I just don't know all the details within.

[Hatterized]

mr Glennn.....once i get my edjumikation handout.....(aka loan).....i is gonna use my FREE bus transit vouchers to go to my nearest ACORN office and get their advise on how i should invest my FREE edjumikation handout on anything but school.....

and on my way back home....i am gonna use my FREE food vouchers for a nice meal @ Ruth Chris'....u wanna join me....i'll treat since thanks to mr Obama i get lots of freebies.......and they dont care how/where i spend it..... he told me that US citizens foot the bill for my life of luxury and wasteful spending.....

[Glenn W]

mr Glennn.....once i get my edjumikation handout.....(aka loan).....i is gonna use my FREE bus transit vouchers to go to my nearest ACORN office and get their advise on how i should invest my FREE edjumikation handout on anything but school.....

and on my way back home....i am gonna use my FREE food vouchers for a nice meal @ Ruth Chris'....u wanna join me....i'll treat since thanks to mr Obama i get lots of freebies.......and they dont care how/where i spend it..... he told me that US citizens foot the bill for my life of luxury and wasteful spending.....

I paid the last of my education loans off just before I turned 41 years old. I couldn't have gone to undergraduate, let alone graduate school, without them. My interest rate was 7.00% so the State of Virginia did ok by me.
When did you pay your loans off?

[Hatterized]

I paid the last of my education loans off just before I turned 41 years old. I couldn't have gone to undergraduate, let alone graduate school, without them. My interest rate was 7.00% so the State of Virginia did ok by me.
When did you pay your loans off?

really..ya mean i gots to repay my loan......heck i aint never repaid any loan.....car ..house...nope.....cept for my liquor loan at the corner market for my 40 ouncers......and also my pharmacist who works on the corner and sells me white stuff in little plastic baggies that i smoke.....

ya see i believe in the school of ...ya keep paying me i will say i am still going.....think they call it the continued edjumikation program.....

ps ..i is 48 and figure i gots least nother 30 years of school not at my expense...since i get it subsidized and free...

[Reel Fanatic]

Glenn-

My only concern is that once again, the government has cut out the private sector to handle something that private lending companies used to handle. Once the concept of higher education financing came to light in 1935, it didn't take long before the federal government inserted itself into the process. Now, Uncle Sam is going to get the whole lot...with the exception of one bank. That bank just happens to be the Bank of North Dakota which is domiciled in the home state of Kent Conrad who was one of the hold outs on Healthcare Reform.

Why don't we just let the government do everything. It is patently obvious that we idiots in the private sector are completely incapable of doing anything right or well. With that being said, we can place our complete faith in the hands of people who come and go every 2 to 6 years and have probably never worked in the industries that they administer. By doing it that way we can guarantee that the decision makers will not have any prior biases or connections to anyone who may actually have any real understanding of anything. Therefore, all outcomes will be clean and pure...pure stupidity and pure arrogance.

At the end of the day, this government has decided that yet another profit center from a private sector industry has been deemed to be that of the government's. Our money is not their money. Supposedly, they work for us...at least that's what the founding fathers originally envisioned. This is nothing more than big government incrementalism...constantly nibbling away until it gets the whole pie. If and when North Dakota ever becomes a conservative state, that little perk will go away for The Bank of North Dakota.

[Dave Sikorski]

It must be nice to cause a problem, then swoop down and "fix" the problem, while actually causing more problems.

"My philosophy has always been that I don't think citizens should have a governmental "right" to a college eduation, but all citizens should have an opportunity to get a college education should they so desire.---- a difficult public policy task, no doubt."

Hardly a difficult policy if the education system in this country wasn't so loaded down with government control already. Your first instinct was right Glenn. There is no right to an college education in this country, and our citizens barely get any education from the K-12 public school system.

The entitled society we have built in this country believes it is a right to have a higher "education", and most put themselves into debt for a communications degree.

I sat next to a girl from JMU on a flight a few weeks ago that had paid $1200 to live in a rainforest for spring break and build a hut for folks in Belize. A noble act for sure and something that this world needs a whole lot more of. I then asked what her major was.

Social Work.

Someone explain to me why it makes sense for this young lady to pay $9688 per semester for 8 semesters to obtain a degree in social work? If I had time I'd dig up the class schedule. I'm guessing basket weaving and ping pong might be on the list.

Now lets look at this simple chart of potential salaries for social workers.



This is the big selling point of colleges. They tell you what you'll make starting out as if it's guaranteed. So now lauren....I think....will pay just shy of $80k in tuition, forget the other expenses of college, and might make 27k in her first year. That is of course if she is able to compete with the 20%+ of actual unemployed in this country. I bet these state governments that are cutting programs to make budgets and have the real challenge of fullfilling entitlement programs will really have social program funding in mind. Where will she be able to afford to live? Lord knows our local govts think developers are the devil and they'd rather fill the suburbs with million dollar mansions instead of somewhere for their children to live. Sure, move into the cities, the taxes aren't 2X+ what they are in the counties

I wish her the best for sure, but let's be real. She has been promised a bright future, will be in debt for the next 20 years, and might just find a job in her field if she's dipped in holy water. She has been preyed upon just like millions of young Americans.

Is this really what we want for our future generations? Sending them to institutions that do nothing more but grow dependent and entitled citizens? Keep the sheep happy and confident, we know best for them.

The idea that the President, or anyone around him has a clue is so laughable It will make you cry.

Our government and will continue on this path will push us away from the foundations of this country that made us great.

All we have in this country today is a heaping pile of mis-education, don't kid yourself.

-D

[Glenn W]

Reel, make no mistake about it-- I'm a capitalist and firmly know that free entrerprise is the most effecient market system there is. However, efficiency and fairness often do not coincide. Indeed, and sorry to bore all with accademics, but as one progresses from the mechanics of economics as an undergraduate to the philosophy of what economics really is, we learn that unbridled capitalism is not always in the best public interest.
Let's look at your apparent position that education loans should be left totally to the private sector: Unsecured personsally credit interest rates are in the 18% - 26% range for people with reason credit risk. Now let's assume you're a banker and an 18 year old kid comes in asking for an unsecured loan with payments deferred up to 6 years. No credit, no earnings, nothing. Now I would imagine you would thank him for coming in your bank, give him a calander and send him on his way. If by chance you could offer a loan, at what interest rate? Our society and technological revolution has placed a heavy weight on higher education generally. The view is that this will help our society as a whole in the long run. I happen to agree with this philosophy.

Dave, sorry, I don't understand your point at all. Is it by chance that the governement (or any lending autority) should only provide loans to programs that promise high income potential such as engineering, Accounting, etc.? What do we do with the need for education majors--- teachers never have made squat. Perhaps criminal justice majors, etc.? Maybe I just misunderstand your point?

[Reel Fanatic]

Glenn-

My point is that there are very few things that I want our government doing all by themselves...military, transportation, energy, etc... When the feds backed loans to make education an attainable achievement for anyone willing to work for it, that was a good thing because not everyone can get cheap credit. The problem now is that you can't go anywhere for an education loan except for the government.

One of the reasons for having the bank as the middleman is because they already had the people in place to underwrite the loans and worked strictly on commission. Furthermore, the consumer had a local person to be their advocate should a problem arise. My fear now is that your local advocate is going to be one of the thousands of new IRS agents.

Supposedly, this new move is supposed to be a cost savings but I don't see how when the federal government will have to duplicate that entire infrastructure (from underwriters to collection agents) and they will be on a government salary. I can't see where there is going to be any savings at all unless you only look at the commissions they won't be paying and ignore all of the other expenses of staffing up a new level of bureaucracy.