private loans do not require that med students work or show income for their loans. private loans for med students are handled essentially like Grad Plus…there’s a trust that the student will graduate and earn good money since drop out rate is so low.
I don’t see that Grad Plus will be eliminated. I see that they will be limited. Im trying to find numbers. if there will be a $$ limit and it’s not too low, then it would supplement the Fed Direct amounts for grad students. but again, the student could do a private loan for rest of med school costs.
it appears to me is a strategy to force schools/grad schools/med/law schools to reign in costs. as long as people can borrow full COA no matter the COA, the schools will not feel the need to control/reduce costs. right now, it’s a free for all…
PSLF has been a failure because of how was designed by congress in 2007 which has caused too many to discover too late that their job or their repayments didn’t qualify. For example, if you started paying back during the grace period, those payments didn’t count. if you had your loans combined, say in year 6, you weren’t told that that action “restarted the clock” so you’d get that bad news 4 years later. people would “too late” find out that their jobs didn’t qualify or one job that they held during the repayment period didn’t qualify. Also, some had no idea that their private loans weren’t going to also be forgiven.
there were too many devils in the details.
PSLF is going to be replaced with something better.
“PSLF unfairly favors some career choices over others and is complicated for borrowers to navigate. This package would simplify repayment for all new undergraduate borrowers regardless of occupation and create a pathway for expedited debt forgiveness after 15 years of payments instead of after 20 years under current law. PSLF is part of a complex array of Federal aid programs that could benefit from the simplification of aid to needy students.”
i don’t think it’s a surprise to anyone that there’s just too much student loan debt period…whether it’s fed direct, parent plus and cosigned private loans for undergrad, or fed direct, grad plus and private for grad/med/law schools.
sometimes you have to limit the supply in order to “force” the businesses (schools) to adjust their prices. Right now, with no limits in place, people are borrowing up to $75k per year for undergrad and $100k+ per year for grad school…because they easily can.
the feds can’t order schools to reduce costs, but they can refuse to infinitely supply aid/loans for the schools’ ever-growing prices. once schools realize that the max that folks can borrow (thru direct/plus) is $XXXXX, then magically schools will get down to that number somehow, someway.
So far PSLF has bipartisan support in Congress. The WH budget says “PSLF unfairly favors some career choices over others . . …” The whole point of PSLF was to incentivize graduates to choose lower paying public service jobs. For example, both public defender and district attorney offices rely on the availability of PSLF to recruit law graduates, as do civil legal aid societies and court personnel offices. http://www.nlada.org/pslf-and-justice
The bigger problem in the future will not be the failure of PSLF to work, but the cost to the budget of it being a success. Which is the real reason that both prior and current administrations have tried to cap or eliminate it. The pslf subreddit is a great resource of information for anyone trying to use PSLF.
Existing borrowers with federal direct loans have provisions for PSLFwritten into the “Borrowers Rights and Responsibilities” provisions of their promissory notes, which is why so far even the proposals to eliminate PSLF apply to new borrowers, not existing ones.
“”whole point of PSLF was to incentivize graduates to choose lower paying public service jobs””
There’s a big flaw right there. Why shouldn’t someone who teaches or works in a private school or private hospital that serves low income qualify as well
Medical schools and law schools whose graduates have good job prospects are selective enough that even if the applicant pool were limited to students from wealthy families, they could still fill their classes even at current or higher tuition levels. But then physicians and lawyers would be even more skewed toward coming from wealth than they already are.
that’s not going to happen. med schools do not want to fill seats with rich kids. and there are already banks (WF, Citizens, Suntrust, Discover and more) that are more than willing to lend to future doctors if the fed Direct and Grad Plus loans don’t reach the $50k-80k+ that med students are borrowing per year.
I really think this is going to stop people from borrowing for rather useless or poor ROI grad degrees. we recently saw in the news some young woman who had over $200k in debt for gender studies masters degree and can’t find a job that pays enough to make the payments. Offering IBR is just silly in such a case because the big debt shouldn’t have been taken on in the first place!
relax folks. the tuition prices will correct themselves when the easily attained unlimited loans are not available.
I think the answer to your question is that this was the choice made by Congress in 2007, to provide debt forgiveness in exchange for working for certain qualifying employers. Congress can change those parameters or eliminate the program going forward for new borrowers. But for now a qualifying employer is:
yesterday I had a convo with someone who said that soon college will have free tuition and therefore no student loans will be needed in the near future and that all student loans would disappear, so (in her eyes) all student loans need to be cancelled because they won’t be needed at all ever again…scary that someone could be that shallow of a thinker.
even if instate public univs are “free”, people will still borrow for room, board, books, fees, etc.
and certainly the privates won’t be free and certainly OOS publics won’t be free to OOS students. when I asked her about those, she had a “deer caught in the headlights look.”
and of course then there’s grad/med/law/etc schools. those won’t be free…particularly not privates or OOS…and certainly not room, board and books, etc.
this is all just an exercise to cut off the infinite supply of easy loans which discourages schools from economizing and keeping costs under control.
I’m with @ucbalumnus on this. There will be plenty of full pay folks whose families can either help pay or consign loans. I don’t think costs will go down.
There is a misconception that colleges are charging more than they need to charge, and they will simply reduce tuition if people can’t borrow as much. If that was the case, there would be far fewer colleges in financial trouble. It costs a lot to run a college. Things are just not so simple.
It costs a lot to run a college, and it costs a lot to educate someone in certain fields. I hate the term “useless” degrees because it implies that debt is only a problem if it’s in a field you think has poor job prospects or is societally useless.
Guess what- doctors go bankrupt. Engineers go bankrupt. CS majors default on their loans. Nurses discover that they’ve borrowed more than they can handle, even though there’s supposed to be a nursing shortage and everyone can get exactly the job they want at the salary they think they deserve.
Labor markets don’t work that way, and debt does not distinguish between the assistant curator at a museum in Cincinnati OH who is paying off his loans dutifully- every single month, with both a BA in Art History and a Masters vs. the software engineer or computer scientist living in Palo Alto who has to decide between food and loan payments every month.
It’s crazy season right now- as parents and kids make all sorts of irrational decisions about which college to choose and how to finance it. A young neighbor of mine- really, a terrific young man-- academics not his thing but a really sweet guy- whose parents are ready to mortgage their home to the hilt because he got into an engineering program (third tier program, private, expensive) which is “his best shot at becoming an engineer”.
I’ve known the kid forever. He’d make a great speech therapist or guidance counselor with far less time and almost no debt at the local state college. (and then a Master’s, also at a public). But no- engineering because “it’s a golden ticket and who doesn’t borrow for an engineering degree?” For sure on the 5 or 6 year plan for the BS which nobody has bothered to calculate in terms of his costs.
The cases that make the newspapers always have some underlying issue besides the loans. Like the young person got a great job offer in Atlanta but wouldn’t leave Boston, or took the dough for the first year of grad school and bought a car…
I joined several parent groups for the schools DS is trying to choose between, and it is downright painful reading some of those posts now that the financial aid letters are coming out. Some people have obviously never spent 5 minutes with a Net Price Calculator or even looked up the cost of attendance it seems. Lots of shocked parents trying to figure out how to make the “dream” work and one wondering how they can get their kid 30K/year in student loans (for an out of state, state school). There is a lot of suggestions of “this is what we did/do”, which include some doozies like cashing in the retirement account…not just a 401K loan or a Roth contribution withdrawal, this is the whole pay the taxes and penalty be broke in old age deal. HELOCs, private loans, selling the house…one person mentioned local community college for 2 years and then transfer and got shot down immediately. I just don’t comment on those threads. They’re so “all-in” with that particular school that nothing matters but figuring out some way to finance it.
Harnessing the price signal to shift supply and demand does make sense. Yes, that may mean cuts to colleges and some may close.
Ideally, potential human capital with positive externalities would be subsidized and poor kids have some way to develop their human capital (you would think everyone would support as that as that would make this country richer overall but . . . nope).
Someone will provide loans to med school students. A few top b-schools and law schools (HBS, Stanford GSB, MIT Sloan, and I think Yale SOM as well as YLS, HLS, and SLS) meet full need. Pretty much everybody else offers big merit scholarships of some kind or another. Back in the day, it wasn't uncommon for many practicing lawyers to have worked their way through night law school to earn a JD (and plenty of folks still get a PT MBA). You will see high-quality PT, online, and hybrid grad degree programs proliferate (that allow people to work while earning a grad degree). GTech already offers an online CS master's for 4 figures. Even Harvard has relatively inexpensive master's (many with online classes) that you can get through their Extension School). JHU has an absolute ton of online master's. UIUC actually shut down their FT and PT (on-site) MBA programs to concentrate resources on their online MBA program that is much cheaper (and enrolls a lot more students).
Does any law school “meet full need” for ALL accepted students? My impression is that the aid available from most law schools – including public law schools – is a combination of some merit aid (tuition discount) plus student loans.
There are a handful of allegedly “meet full need” medical schools, but only Columbia and Cornell have eliminated the use of loans for low income students. And these programs still require family financial info (including step-parents, divorced non-custodial parents and their spouses) and calculate a family EFC that the student is responsible for regardless of the age of the student or the willingness/ability of the family members to pay their contribution.
The rest of “meets full need” medical programs (Pritkzer, Harvard, Stanford, Yale) require the student to first take out a “unit loan” of $30-45K/year (not entirely co-incidentally the max federal student for professional school is $45K/year) AND pay their family EFC before any institutional aid will be awarded.
As for "someone" providing loans to med students--my daughter investigated private loans as an alternative to the high interest unsub federal loans for med school, but although interest rates on private loans were lower, these private loans often had a low borrowing ceiling ($30K/year when med school COA can approach $100K/year) and they require beginning immediate repayment as soon as these loans were disbursed. (Impossible during med school itself and extremely difficult during residency when new doctors may not be earning enough to pay their living expenses in high COL areas. Due to how the Match system works, newly graduated doctors do NOT get to choose where they live so can't always opt to live in low COL areas.)
And what about students in healthcare professional schools--podiatry, optometry, dentistry? None of these programs promise to meet full need.
i think that there are colleges in trouble because they can’t get enough warm bodies to enroll and/or they don’t manage their budgets well.
Many are fielding athletic teams that are big money losers to the tune of millions of dollars every year (im not talking about big Div 1 schools that have successful football teams that are funding the schools’ entire athletic programs)
We shouldn’t be surprised to see that some colleges are struggling. we see stores, restaurants, etc, struggling and closing all the time. sometimes it’s the product, sometimes poor money management, etc. Colleges are no different.
we know that many privates have inflated tuition rates posted because many of them also give vanity scholarships to flatter nearly every acceptee.
States need to do a better job funding their public colleges and universities. They’ve been starving them for decades.
i have no sympathies for those opting for pricey OOS publics. It those prices want to be sky-high then fine. UCLA can charge OOS $100k per year for all I care. those paying that are making a luxury choice. No OOS or int’l student “needs” to go to UCLA or similar schools.