“For many recent graduates, repaying their education debt obligations can be a struggle. For some in New York, that struggle just got a little less cumbersome thanks to a recently launched student loan forgiveness program that aims to help the debtors land on their feet after graduation.” …
More: http://money.cnn.com/2016/01/04/pf/college/new-york-student-loan-forgiveness/
It’s mighty nice of our governor to hand out other people’s money to buy more votes.
It is only for federal loans for those on income based repayment.
NY’s STEM free tuition is turning out to be harmful for students who switch out of STEM but would have been eligible for other scholarships had they not gone with the NY STem offer. I wonder if this offer is better.
I’m sure unilaterally raising wages to $15 for everything that moves on campus will keep our SUNY system affordable???
@karencat, It will make it less affordable, not sure if you were being sarcastic or not, I hope you were
Who needs to fix bridges and pot holes when you can give taxpayers $$ to kids that prioritize luxury goods over their finance obligations.
I’ve been really torn on this one, I’m 8 years into full self pay for SUNY tuition for my 2 children. They made good decisions on majors and costs, yet I see so many of their friends who chose to attend much more expensive schools for less than well paying majors, celebrate this new program to make up for their ill preparedness, and families poor planning.
Again, it is more limited than the headline. Federal loans with income based repayment only.
Study after study shows that higher education still has an overwhelmingly positive ROI for the country as a whole. Some (Fareed Zakaria among them) have estimated that 20% of the population has the ability to handle college academics but not the financial means and/or information they’d need. At the moment, we have a surplus of workers without a college education (which is why blue-collar workers don’t fare too well in this job market) and a shortage of educated workers (hence the high premium for a college degree).
Education remains the surest path out of poverty. An added benefit is the reduced likelihood of a graduate voting for the likes of Donald Trump, voting for the candidate whose looks tickle his/her fancy, or not voting at all. Other social ills that are less prevalent in an educated populace include smoking, crime, drug use, obesity, teen pregnancy, racism, xenophobia, and NASCAR fandom. I could go on and on, but I don’t think any of this is news to most CC members.
The above is why, as a general rule, I favor anything our governor can do to encourage more people to go to college. Certainly, one can quibble with the incentives this program creates,* and some people who benefit from the program will be those who’ve made poor choices in paying for college. Even so, I don’t think choices made before the age of 20 should cripple a student’s finances well into middle age, and that outcome can be averted at a cost of less than $2 per NY resident. There are few things I’m more willing to spend public funds on than education. Gov. Cuomo won’t lose my vote over this program.
*One thing I really like is that this program helps recent graduates: it can’t be used to funnel a torrent of money to for-profit colleges with single-digit graduation rates.
Ultimately, it benefits New Yorkers too, since the freed-up income will go toward purchases… and consumption drives the economy.
(Since this is limited to young graduates who only make $50,000 a year or less, economic knowledge tells us this is a group that will “reinvest” any such money into purchases.)
The provision is that the graduates must live in the State = the money is staying instate… and this encourages college graduates (who on average make much more money than high school graduates, with higher earning potential, and thus bring higher tax revenues for the State) to stay in State and fuel the economy including in places that may not be “desirable” and which the State is trying to develop via tech (which, itself, needs college graduates, and thus stabilizing college graduates in those areas is good for industry hence creating a selling point for the state since industries can thus be certain to find qualified labor force easily.)
I think it is hardly uncommon or irresponsible for a student to max out on the 27k of Direct Loans. Also not uncommon or irresponsible to have an income of under 50k right out of college. So why the harsh judgment on this program? At least these students have finished college. What about the billions that go out in Pell Grants and TAP for students that drop out or fail out every year? I think the idea of this end user financial incentive is preferable to the FA handouts given for students that probably never should go to college to begin with.
The way I read the article, NY is going to pay the unpaid portion of the amount due if the student (making under $50k, graduated from a NY college, etc) signs up for an income based repayment program so that the amount not required to be paid is not deferred. If a payment was $100/mo but is only $10 on the IBR, the state of NY will pay the $90.
“Once enrolled in Get On Your Feet, the state will pay the difference between what the federal government covers under PAYE and the remaining loan payment”
Is this not right? (I don’t know what it means “what the federal government covers” since under IBR the federal govt doesn’t ‘cover’ anything, it just reduces the amount owed) If so, there is no money to be reinvested in NY. It was never going to be paid anyway since the grad doesn’t make enough to make the payment.
Valid points by you all, and I am mostly focused on the lack of planning and affordability calculations not provided to families and students in the middle and high school levels. I am on the local scholarship board, and still amazed at the lack of understanding of what college costs, both upfront and long term payback. Much of this could be avoided on the front end, rather than finding ways to help people on the back end. Am I being too simplistic? Or am I just feeling sour grapes that my family made value decisions that others did not.
The grad may not make enough to make the payment, but has to anyway, and therefore cuts on other things. It wouldn’t free up that much in their budget but it’d still mean money reinvested in the local economy.
But I don’t see that. If the payment is $100 and IBE reduces it to $10, it is not as if the student has $90 to spend. He didn’t have it to make the payment of $100, and he still doesn’t have it. I’m not reading this as the state of NY makes the $10 payment, but that it makes the $90 payment, keeping the student on schedule.
Is that not right?
I don’t know, I don’t understand it like this… but hopefully others will weigh in. I am really not sure!
@ucbalumnus, the money still comes from NY taxpayers, and even if it is federal dollars, that comes from federal tax payers. @MYOS, it is a net even if you take spending dollars from one and give it to another, there is NO gain for the economy. Economic growth only occurs from production, not wealth (existing capital) redistribution.
Considering the economy depends on consumer spending, more spending money to those most likely to spend it means economic growth, especially in low-growth area. Production that isn’t sold, services that aren’t taken&paid for, etc., don’t yield growth. The way money is spent can lead to growth or not, in one specific sector or not, etc.
MYOS, with all due respect, you don’t understand economics. I am sure you are a nice person, so we can just let this one rest.