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Should Anyone Get a Student Loan?

Roger_DooleyRoger_Dooley 6084 replies100309 postsFounder Senior Member
WSJ: "Supporters of ready access to loans say lenders shouldn’t get to pick who gets an education. Critics say we end up hurting the students we are trying to help."
http://www.wsj.com/articles/should-anyone-be-eligible-for-student-loans-1456715824

This is a tough one. We saw what happened when banks started giving mortgages to anyone with a pulse, which is roughly the same standard as many education loans. It's hard to imagine that taxpayers are going to emerge unscathed from the current education debt crisis.

But, with the cost of college these days, lots of people would be frozen out of college completely without easy-to-get loans.

Colleges differ in results. Majors differ, too. But trying to pick winners and losers is tough, too. A CMU CompSci major is a good bet, but who can tell if the small LAC art history major will end up as a CEO or a barista?
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Replies to: Should Anyone Get a Student Loan?

  • mommdcmommdc 11277 replies30 postsRegistered User Senior Member
    Yes, the Pell eligible students should be able to take loans out at least. In our area the only commutable school costs almost $14,000 for tuition and fees. After Pell grant and maximum state grant there is still over $4,000 left to cover plus commuting costs and books.

    But school's FA offices should educate students that they don't have to take the full loan amount out.

    Taking full student loans so you can get a "refund" and then owe that money with interest after you graduate is shortsighted.
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  • mommdcmommdc 11277 replies30 postsRegistered User Senior Member
    Also students in professional school programs like PharmD or PA should be able to take out loans. Scholarships and FA are not always available for these programs and if parents have already helped with undergrad costs and have other siblings in college by then, it is unreasonable to expect these students to come up with $30,000 to $50,000 a year just for tuition, especially when the program is such that there really isn't time to work significant hours.
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  • yikesyikesyikesyikesyikesyikes 1837 replies129 postsForum Champion U. Michigan Forum Champion
    I think it would be dangerous to compare the mortgage crisis and the soon-to-come student debt crisis in the same lens, althought the financial implications may be similar. Easy mortgages were more of a measure of equality of outcome, easy to procure student loans has more to do with equality of opportunity- which is central to America's ethos. I think the federal government should expand its student loans program for loans to public universities while reducing itnerest rates for government student loans across the board.
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  • KKmamaKKmama 3041 replies41 postsRegistered User Senior Member
    Perhaps grades could be a factor for consideration after the first year?

    At the risk of sounding political denying loans to poorer people condemns them to remaining in poverty while loans give them a chance to escape. My daughter has a slew of them for her education degree. But then chose to serve in a poverty area to get the fed loans forgiven.

    @mommdc Pharm and PA students can get really good loans from Wells Fargo. They have special loans for people pursuing medical careers. My PA daughter was able to get loans at great rates without a consigner beginning with her fourth year of PA school. Good thing because that's when my husband's job/credential loss and a major accident forced us into bankruptcy.
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  • twoinanddonetwoinanddone 22433 replies14 postsRegistered User Senior Member
    Are private loans forgiven under her program @KKmama? I thought the forgiveness programs were only for federal loans to the student.

    How much lower can the rates go on student loans? On another thread, there is a complaint that the low interest rates on savings is killing the economy. If the savings rates go up, the lending rates will too, and the unsecured lending rates will go up more. The rates on Stafford and Perkins loans in 5% or less. That is low.

    If they restrict student loans to only public schools, what will that do to all the smaller private colleges or out of state applicants? Will students just say they can't afford it and go to their local schools?

    One way to control behavior would be to get rid of government sponsored private loans. If those weren't available, no one would have stories of $100k in students loans, payments of $2000 a month. Banks just wouldn't make the loans without the guarantee of no bankruptcy, no security. It's for their own good the government could reason. Sure there would be students who would have benefited from these loan and would have paid them back, but perhaps those students made other choices and went to a more affordable school and still became a psychologist or teacher or nurse from State U and not from Private U.
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  • KKmamaKKmama 3041 replies41 postsRegistered User Senior Member
    @twoinanddone:
    "Are private loans forgiven under her program @KKmama? I thought the forgiveness programs were only for federal loans to the student."

    "My daughter has a slew of them for her education degree. But then chose to serve in a poverty area to get the fed loans forgiven."
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  • twoinanddonetwoinanddone 22433 replies14 postsRegistered User Senior Member
    Oh, I thought you said your daughter had Wells Fargo loans.
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  • fallenchemistfallenchemist 24269 replies860 postsHonorary Super Mod Inactive
    Huh. I didn't realize that those are the only two choices for a LAC art history major.
    Don't be obtuse. Obviously he is just making a point by using extremes as examples, and thus the ability to repay the loans. You would have him list every job an Art History major might get?
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  • twoinanddonetwoinanddone 22433 replies14 postsRegistered User Senior Member
    Oh, I wish he would, my daughter is an Art History major (today, who know what tomorrow will bring).
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  • hebegebehebegebe 2661 replies37 postsRegistered User Senior Member
    edited March 2016
    Getting trained in a specific discipline, with little if any exposure to other disciplines and a narrower understanding of history, ideas and theories outside of your discipline, prepares you how to work in that field today.
    That's a generalization in itself.

    My initial degrees were a BS & MS in Electrical Engineering, from back when electrical engineers didn't learn much about computer science. But my 30+ year career has had stints in software development, field consultant, director of marketing, and now partner of an investment firm. Not a single job had anything to do with the nuts and bolts of electrical engineering.
    edited March 2016
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  • phunt01810phunt01810 103 replies3 postsRegistered User Junior Member
    "obtuse" Now that is a nice LAC word:)
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  • GMTplus7GMTplus7 14270 replies297 postsRegistered User Senior Member
    Mortgage borrows have to qualify for a loan, and the lender requires appraisal of the house.

    Maybe students should get a "studious rating score" the way borrows get a credit rating score. And types of majors should get appraised into buckets.


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  • mom2collegekidsmom2collegekids 83961 replies1009 postsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    I have a problem with those dependent students who are attending a CC who get a full or near-full Pell Grant also borrowing. I think it just encourages borrowing to move out. I don't like loans for CCs for anyone.

    I prefer that those who go to CCs have their loans put on hold, and be allowed to borrow $15k per year for junior and senior year.
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  • twoinanddonetwoinanddone 22433 replies14 postsRegistered User Senior Member
    Not all CC students are getting Pell grants to pay their CC tuition and fees and books. In Florida, several of the CC have dorms and all the expenses a 'regular' students has. Are you going to have different borrowing rules for all types of colleges? As it is, they can only borrow up to the COA so if the Pell covers it, they are done.

    Sometimes One-Size-Fits-All doesn't really work, but that's the system we have.
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  • khanamkhanam 592 replies11 postsRegistered User Member
    No. Student loans should be made on a purely 100% commercial methodology. If you decide to study engineering you will qualify for a higher loan than if you decide to study history because statistically engineering majors earn more whether they stay in engineering careers or change to other fields. It also costs the university more to graduate an engineer so the tuition fee for engineering or medical degree should also be higher - happens in the UK, why not here?

    If the govt. feels the economically disadvantaged deserve to have a chance at education by affording them greater access to funds, they should increase the pell grant and stafford loan limits. Pushing a social agenda on the private sector is reprehensible when the govt. is unable to fulfill its own social obligations. Pell grants have not kept pace with the cost of college and cover nothing. Thats the problem. This is how the politicians created the mortgage crisis.

    I also do not believe every kid should aspire to go to a 4 year college. A lot of kids should just go to community college and stop there. We should also reverse the job pre-requisite inflation that forces kids to try to get a 4 year degree and then be underemployed. There are many jobs that do not need 4 year degrees and yet everyone asks for those. Kids who do not have great grades/GPAs are not meant to get 4 year degrees. They drop out faster and cause a majority of the student loan defaults. There should be career opportunities for CC graduates.

    Finally forcing the cost of an education on parents is also ridiculous. Just like there is a limit on student indebtedness, there has to be a limit on parent indebtedness as well. Why do college costs increase year after year at a pace dramatically higher than inflation despite stagnant faculty wages?

    The problem is with the increasing college costs, the stagnant govt. programs and unnecessary inflation of credentials for standard jobs, not with access to finances.
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  • hebegebehebegebe 2661 replies37 postsRegistered User Senior Member
    Pell grants have not kept pace with the cost of college and cover nothing. Thats the problem. This is how the politicians created the mortgage crisis.
    You are mixing cause and effect here. Abundant student aid is the cause of runaway college costs, not the solution to prevent it.

    The explanation for this is simple. When a third party pays the cost, neither the buyer or the provider have any incentive to control the costs. This is why medical costs have gone out of control; most costs are paid through insurance, giving patients little reason to avoid treatment.

    In the student aid case, there are two possible third parties. The first is the government, which is providing Pell Grants, and the other, ironically, is the student taking out. I am calling the student a "third party" because 18-year olds don't have the maturity to understand what loan repayment really means.
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  • khanamkhanam 592 replies11 postsRegistered User Member
    edited March 2016
    @hebegebe good points, the insurance company example is particularly relevant.

    And i am actually also against abundant availability of private loans. those are causing the runaway costs. Pell grants are too little in comparison to total college costs now. For example your pell is only approx 6,000 vs up to 30,000 in parent loans...
    edited March 2016
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