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.

Major changes proposed for student loan program

partyof5partyof5 Registered User Posts: 2,674 Senior Member
I’ve never seen such blatant disregard for education in my life. If passed this will hurt a lot of folks and increase the wealth gap that we already have. I’m thankful I’m on my last child in college.

https://apple.news/AQdOMBJtXRcehTBExvvEGtw

A snippet,

“part of its plan to rein in student loans, graduate students and parents of undergraduates would face so far unspecified caps on how much they could borrow for tuition and living expenses—instead of borrowing whatever schools charge.
The change could cut into enrollment and potentially siphon off billions of dollars a year from universities.
The bill would also end loan-forgiveness programs for public-service employees, who currently can make 10 years of payments and then have their remaining debt forgiven, tax-free. It would also eliminate a program that ties monthly payments to income levels for private-sector workers. Current participants in both programs would be grandfathered in.”
«1

Replies to: Major changes proposed for student loan program

  • sylvan8798sylvan8798 Registered User Posts: 6,765 Senior Member
    The link has a paywall, @partyof5. Is there a transcript available?
  • partyof5partyof5 Registered User Posts: 2,674 Senior Member
    @sylvan8798 that’s odd because I don’t have WSJ subscription and I can pull it up. I wonder if it has something to do with it showing in my Apple news alerts?
  • tutumom2001tutumom2001 Registered User Posts: 1,196 Senior Member
    edited November 2017
    Excluding all of the provisions for the for-profits (which, IMO place the emphasis on money rather than education), not all of this is bad. The fact is, we really do need more skilled laborers. The article states that there is a need for 6 million, a figure I have seen repeatedly in other research. In the state where I live, it is absolutely difficult to find electricians, welders, steel workers, carpenters, plumbers and the like because most kids with any amount of skills sets seek 4-year degrees. If we want to reshore advanced manufacturing, we are going to need people with the skills needed to perform these jobs - because what we don't want are a lot of cut-and-sew operations. There is definitely value in promoting and funding 2-year and apprentice pathways for some students. Many of these professions pay a good middle-income salary, so I'm not sure that the wealth gap will necessarily increase. The current system has produced a large wealth gap, so maybe it is time to go back to the way things were when we did have a middle class. Right now, a receptionist position where I work requires a bachelor's degree. Let's be honest - should a bachelor's degree really be necessary to greet visitors and answer phones?

    What will be interesting to watch is how 4-year colleges and universities handle decreases in enrollment in regards to tuition rates. One thing my state is considering is funding colleges based on student performance and graduation rates. Thus, the more selective schools will keep their funding while it will be the let-everyone-in-and-give-them-remedial-courses schools that will falter. That won't be a bad thing.

    With decreasing enrollment, will colleges and universities lower tuition rates and/or seek more out-of-state students? Will this mean less money needed to borrow in the first place? That I can't answer.

    My take on this is twofold:
    1) For-profit universities don't need to be in the discussion. Their focus is to make money, not produce a skilled workforce.
    2) I hope this is gradually implemented. That way if it doesn't work the way it needs to, it won't be as difficult to reassess and regroup.
  • shortnukeshortnuke Registered User Posts: 520 Member
    I don't see how you can simultaneously allow borrowers to borrow whatever schools charge, AND have the kind of loan forgiveness plans that you're implying. It's simply not sustainable. If students can borrow whatever the schools want to charge and not have to worry about paying off the loan, then there is no reason to worry at all about the COA or the expected earning power that their majors will give them. The ease with which loans are made available to students is one of the reasons that tuition has been rising at an average rate of ~6% since the 1990's.

    I'm fine with providing some level of loan forgiveness, but I want to see it tied to professions where we have critical shortages. Nursing, education, and some of the critical trades would be prime examples. However, I think there needs to be limits to the amount that can be forgiven. It's not okay to borrow $200K to get a BA in history from a private university and expect 80% or more of it to be forgiven just because you're working at the DMV.
  • partyof5partyof5 Registered User Posts: 2,674 Senior Member
    @shortnuke overall Loans are not forgiven. I’m not sure where you get the idea that $200k can be borrowed and forgiven.

    Undergrad loans for the most part are capped at
    5500-fr
    6500-soph
    7500-jr and sr years.

    If you borrow more than that then you are getting private loans and they have to be repaid.
  • twoinanddonetwoinanddone Registered User Posts: 21,925 Senior Member
    It is possible to borrow more than the amounts above. There are (were) Perkins loans that could add $5000 per year. There are students whose parent can't qualify for PLUS loans so get an additional $4000 or $5000 per year. There are students who go more than 4 years and keep borrowing. A teacher may have been in schools for 7 years before ever entering the work force to start those 5-10 years of work needed for forgiveness.

    I think it would be hard to get to $200k, but not hard to get above $50k. Now they can get north of $100k if they borrow the $50k while in school and then go on minimum repayment plans for 10 year and then ask for forgiveness for all accrued interest. Grad school loans can be forgiven too, so with $50k of ungrad and another $50k in grad loans, easy to run up a $100k-150k write off.

    I don't have a problem with capping the forgiveness amount, or limiting what the 'public service' job is. Last year several lawyers working for the ABA sued because they were working for a non-profit so should get their loans forgiven. Really? Working in downtown Chicago at a nice office at a decent salary is not exactly hardship duty. Why should the federal government be subsidizing those jobs?
  • partyof5partyof5 Registered User Posts: 2,674 Senior Member
    @twoinanddone yes I know you can that’s why I said for the most part without getting into the details of perkins or parent bankruptcies. The main point was that the Bulk of Kids don’t go over the 27k in federal loans, nor are most entering fields where they qualify for forgiveness, let alone 200k worth of loans being forgiven.
  • romanigypsyeyesromanigypsyeyes Registered User Posts: 33,923 Senior Member
    As a poor student who used education, grants, and subsidized loans to crawl out of poverty, I'm absolutely disgusted. But not surprised. This has been happening for decades- it's just the first time that it's been this blatant and this close to passing.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,912 Forum Champion
    <<<<<<
    I’ve never seen such blatant disregard for education in my life. If passed this will hurt a lot of folks and increase the wealth gap that we already have. I’m thankful I’m on my last child in college.

    https://apple.news/AQdOMBJtXRcehTBExvvEGtw

    A snippet,

    “part of its plan to rein in student loans, graduate students and parents of undergraduates would face so far unspecified caps on how much they could borrow for tuition and living expenses—instead of borrowing whatever schools charge.
    The change could cut into enrollment and potentially siphon off billions of dollars a year from universities.
    The bill would also end loan-forgiveness programs for public-service employees, who currently can make 10 years of payments and then have their remaining debt forgiven, tax-free. It would also eliminate a program that ties monthly payments to income levels for private-sector workers. Current participants in both programs would be grandfathered in.”
    >>>>


    Not a blatant disregard for education....at all. Sounds like an attempt to bring some common sense to out-of-control student loan borrowing....too often borrowing far more than what's truly necessary.

    We have a student loan crisis.

    <<<
    don't have a problem with capping the forgiveness amount, or limiting what the 'public service' job is. Last year several lawyers working for the ABA sued because they were working for a non-profit so should get their loans forgiven. Really?
    >>>

    Good points.

    As for ending or changing IBR.....does the current system just look at an individual's income? Or is spouse's income looked at as well? And how are self-employed people's incomes looked at to determine IBR? Can they deduct the heck out of their incomes and pretend to have low incomes and then get iIBR?
  • twoinanddonetwoinanddone Registered User Posts: 21,925 Senior Member
    The main point was that the Bulk of Kids don’t go over the 27k in federal loans, nor are most entering fields where they qualify for forgiveness, let alone 200k worth of loans being forgiven.

    Then it won't matter to most students if they limit the forgiveness programs or limit the amount the parents can borrow for undergrad. I think Plus loans are not good for the taxpayers. I think families who who don't have the money shouldn't have unlimited borrowing ability and may have to pick more affordable schools. Should the governors of Maryland and Indiana be able to borrow unlimited amounts, over $350k for Maryland and I think about $150k for Indiana, just because their kids want to go to OOS schools? Well I think they should be able to borrow it - privately! and they should have to qualify for it. The federal government shouldn't be sponsoring their kids without ANY loan to income ratios coming into play.

    I meet all the qualifications to borrow full tuition at two schools for my kids to go the colleges of their choice in Plus loans. No lender but the US government would approve me as I don't have income. Yep, I could have Plus loans right now of close to $500k with only my signature and promise to repay (and it would be very unlikely I'd repay that amount before I die). I have no problem with the Plus loan program being limited to $20k total per kid with income qualification terms. If the schools my kids chose are too expensive with those limits, they'd need to find other schools. I have no problem with the teacher loan forgiveness program to be limited to the $30k in Direct loans or even restricting it to teaching at Title I schools.
  • ucbalumnusucbalumnus Registered User Posts: 76,728 Senior Member
    For a non-paywall article, would http://theweek.com/speedreads/740213/house-republicans-want-cap-student-borrowing-overhaul-federal-loans-program be about the proposal being discussed here?

    That article refers to a Wall Street Journal article at https://www.wsj.com/articles/house-gop-to-propose-sweeping-changes-to-higher-education-1511956800 .

    The article in The Week mentions this:
    The Week wrote:
    For-profit colleges are expected to reap many of the benefits of this proposal, The Journal notes. The Education Department would no longer be able to enforce the "gainful employment regulation," which looks at the debt-to-income ratio of students post-graduation when considering how much federal student aid for-profit education institutions should receive. Earlier this year, Sen. Sherrod Brown (D-Ohio) said this rule was "critical in holding for-profit schools accountable and we must continue fighting to make sure students come before profits."
  • partyof5partyof5 Registered User Posts: 2,674 Senior Member
    @mom2collegekids I framed it as a blatant disregard because this administration has shown that it could give a rat tails about doing the right thing. My radar goes up when they start talking about giving for profit schools more leeway. If it’s anything like the smoke and mirrors they call a “tax cut “ then no thanks.
    I like the income based repayment plans and they are quite popular as typically your income will increase.

    @twoinanddone I agree with you on PLUS loans. I think it’s crazy that they only look at your bill paying history and don’t take into account your debt to income ratio.

  • thumper1thumper1 Registered User Posts: 76,168 Senior Member
    This will be a huge headache for professional school students (doctors and dentists, for example) who can borrow more for their studies in Direct Loan money.

    You know...a doctor’s Loans come due when they are in residency...and earning about $60,000 a year. Making IBR has been a help to these still in training doctors...who will not far in the future be paying the full costs.

    And there aren’t really totally free rides for IBR folks. Any balance left after the allotted repayment period that is forgiven is already considered taxable income.


  • twoinanddonetwoinanddone Registered User Posts: 21,925 Senior Member
    IBR is taxable income if it is dismissed 20 or 25 years later. The income that is forgiven for public service after 5 or 10 years is not taxable income.

    If a doctor has a few low years on IBR, you have to assume that he'll be paying that back when he gets a job (and a high paying one) a few years out of residency. If he borrowed $100k, he might only pay a few thousand in the residency years, but will end up paying the entire amount borrowed eventually.
This discussion has been closed.