Welcome to College Confidential!

The leading college-bound community on the web

Sign Up For Free

Join for FREE, and start talking with other members, weighing in on community discussions, and more.

Also, by registering and logging in you'll see fewer ads and pesky welcome messages (like this one!)

As a CC member, you can:

  • Reply to threads, and start your own.
  • Post reviews of your campus visits.
  • Find hundreds of pages of informative articles.
  • Search from over 3 million scholarships.
Please take a moment to read our updated TOS, Privacy Policy, and Forum Rules.

Proposed changes in federal higher ed subsidies

greenwitchgreenwitch Registered User Posts: 6,854 Senior Member
I haven't seen this posted yet - considering the proposed budget for the Department of Education. The big headlines consider shifting money from public schools to voucher programs but there are other changes. Phasing out subsidized loans for students. Eliminating the Public Service Loan Forgiveness program, which was scheduled to complete its first forgivenesses this fall, etc.

Of course, it's not a done deal yet but I worry about it. I have a close friend who is 7+ years into the Forgiveness program and I've always been worried that the gov't could just pull the rug out at any time.

https://www.washingtonpost.com/news/grade-point/wp/2017/05/17/trump-and-devos-plan-to-reshape-higher-education-finance-heres-what-it-might-mean-for-you/?hpid=hp_hp-more-top-stories_edbudget-330pm:homepage/story#comments
«1

Replies to: Proposed changes in federal higher ed subsidies

  • thumper1thumper1 Registered User Posts: 62,635 Senior Member
    The Public Loan Forgiveness program extends to many fields...and makes it possible for some folks to actually practice their profession inna lower paying, and underserved area. Yikes.
  • greenwitchgreenwitch Registered User Posts: 6,854 Senior Member
    edited May 19
    It's particularly sleazy that it hasn't actually forgiven any loans yet and now it might be ended! If it's expected to be too expensive, a fairer solution would be to change it gradually and give credit for "time served", etc.
  • bluebayoubluebayou Registered User Posts: 24,136 Senior Member
    I believe all the indications are that the rug won't be pulled out under folks who are planning on forgiveness, and that have graduated. My read is that is only affects new loans, i.e., loans made next year. Of course, Congress can change any law any time, even retro if they desire. :-)
    The Public Loan Forgiveness program extends to many fields...and makes it possible for some folks to actually practice their profession inna lower paying, and underserved area. Yikes

    True, thumper, but like all programs, there are unintended consequences. Is it really good public policy to forgive loan balances for JD's starting at $180k base? (It's not like the US has a shortage of lawyers. In fact, the US Labor Bureau reports that we currently graduate 2x the number of newly-minted JD's that the market can absorb.)
  • thumper1thumper1 Registered User Posts: 62,635 Senior Member
    We could,dispute that until,the cows come home @bluebayou ...but I guess if it means that folks will get legal services who might not otherwise...or a community will have some family practice doctors...when otherwise they would not...well...I think thismis valuable.

    In the Stone Age...under an older plan...I worked in a priority school district for five years and my undergrad loans were fully forgiven. I was the first speech pathologist the district had ever had...they didn't have the salary resources to attract folks...but for me...the loan forgiveness was the tipping point.
  • MYOS1634MYOS1634 Registered User Posts: 30,514 Senior Member
    edited May 19
    Well, people who get the loan forgiveness service must work in low pay jobs or in underserved areas : this applies to social workers, teachers, doctors who work in medical deserts (especially rural areas)...
    So even if there are highly paid people in these professions, by definition the beneficiaries aren't them, at least for a given time that is specified in the loan forgiveness program.
    It makes a huge difference to young people who may want to work in these areas but know they can't because of the loans they took and wouldn't be able to pay back.
    The work-study program would also be cut in half - whereas it's not even serving all students who need it-, Perkins eliminated, etc.
  • bluebayoubluebayou Registered User Posts: 24,136 Senior Member
    but I guess if it means that folks will get legal services who might not otherwise...

    Except that there is zero evidence that such it actually works that way. Again, according to BLS, today we graduate 2x the number of lawyer that the country can absorb. In other words, ~50% of all law school grads cannot get a job which requires a JD, each and every year. We already have a massive surplus of lawyers in the society. They don't work in low pay jobs or underserved areas bcos they can't make a living.

    Moreover, unlike medicine -- and speech pathology, for that matter -- lawyering is not covered by insurance.

    Legal aid dollars are minuscule in comparison to what is spent on community health centers. (Not saying that is a bad thing.) Instead of encouraging Public Interest lawyers to attend NYU while assuming $300k in debt, only for the taxpayers to forgive the balance 10 years later, why not pump that money into Legal aid societies and/or grants to state public law schools?
    Well, people who get the loan forgiveness service must work in low pay jobs or in underserved areas : this applies to social workers, teachers, doctors who work in medical deserts (especially rural areas)...

    Agree in concept, but do they have to attend the most expensive private professional school? NYU and Columbia are really great, but why not a SUNY? And if someone has the grades to get into NYU, they'd surely receive a nice scholarship from a lower ranked school. (Hint-hint: less debt)

    fwiw: A few years ago, Georgetown Law had a video on their website in which a professor basically told the applicants that every student who was considering Public Interest should max out his/her loans every year even if they didn't need the money. Economically, that is the correct answer for the student -- and an unintended consequence of the forgiveness policy. Of course, GULC received a lot of bad press for their honesty and the video so they apologized and took it down. Regardless, the point is still discussed on blogs that focus on law school applicants and students.
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    @bluebayou: That "$180K base" you mentioned. Are you talking about salary or loans?
  • bluebayoubluebayou Registered User Posts: 24,136 Senior Member
    ^^starting salary of those in what is called Big Law. Generally, 1st year associates will earn a bonus of ~$10k on top of that base. Year 2 in lockstep firms is $190k base, nearly 4 times the US median. (And these folks need federal taxpayer help???)

    As an example, a poster in the blog focusing on law schools just reported that s/he has loans of ~$240k, will be using IBR/PAYE for as long as possible, and estimates that the feds will be forgving half of the interest due. That 1st year attorney is currently making ~$130k base in a mid-sized town.

    (Now, I take that analysis with a grain of salt since the vast majority of newly-minted JDs were liberal arts majors and therefore, compound interest is gobbledygook, but its just one anecdote of the unintended consequences....)
  • thumper1thumper1 Registered User Posts: 62,635 Senior Member
    edited May 20
    What "big law" firms are located in rural, underserved areas of this country?

    I'm not talking about NYC or D.C. I'm talking about rural areas or even semi rural areas where legal services, medical services, or even teachers are hard to find.

    This is about Loan Forgivness not IBR. Loan forgiveness gives just that...forgiveness of loans for those working in areas that are underserved...and where these services might otherwose not be found.

    Also, income based repayment cannot go on forever...and any amount forgiven at the end of the process is taxable income. Really...it's not a free ride.
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    @bluebayou: OK, so if a lawyer is entering IBR, almost by definition, he/she isn't entering Big Law. Likewise, someone making $180K wouldn't be entering a IBR program. So why then would the $180K base figure be germane?
  • romanigypsyeyesromanigypsyeyes Registered User Posts: 31,905 Senior Member
    Literally everything about this will screw poor students even more- at every level.

    Depressing, but absolutely expected. I assume this won't be the worst of it, either.
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    @romanigypsyeyes: I expect pretty crazy changes in society and governmental policy (swinging back and forth) depending on who is running the administration.
  • romanigypsyeyesromanigypsyeyes Registered User Posts: 31,905 Senior Member
    Sure, but as a poor student there wasn't much change for me between Bush and Obama. I don't think that would be the case if I was an undergrad now.
  • bluebayoubluebayou Registered User Posts: 24,136 Senior Member
    PT:

    per research:
    a lawyer who has median debt for law graduates ($140,000) and earnings at the 75th percentile for all lawyers, not just those working in PSLF-qualified jobs, and the amount forgiven jumps to $98,751. A lawyer earning at the 75th percentile has some of the highest earnings among all professions, yet New IBR and PSLF provide benefits large enough that high earnings still result in nearly $100,000 in loan forgiveness for typical levels of debt for law school graduates. A lawyer earning at the 50th percentile with that debt level stands to have $147,282 forgiven, which
    is more than he borrowed, due to interest accrual, even after discounting to a present value.

    http://www.edcentral.org/wp-content/uploads/2014/09/ZeroMarginalCost_140910_DelisleHolt.pdf
  • PurpleTitanPurpleTitan Registered User Posts: 9,999 Senior Member
    @romanigypsyeyes: Sorry, I meant going forward.

    We're entering a crisis period. Big changes in society coming.
«1
Sign In or Register to comment.