Comments on: Congress split over solution to student loan problem

By: Jon

Jon — Thu, 10 May 2012 02:05:50 +0000

Government ‘loan guarantees’ are the WORST example of “privatize the profit, socialize the loss”.

And this is the student loan industry that was recently found to have been bribing college counselors to push students into lucrative private loans?

Let them eat it. I like Danny’s idea.

By: Almandine

Almandine — Thu, 10 May 2012 00:32:46 +0000

Thanks Danny, but I think you’ll find that MOHELA is a loan servicer, not a loan provider. That is most generally left up to bona fide private sector lenders, with notable exceptions. The Federal govt does subsidize student loans and actually guarantees the Stafford and Perkins loans among others. So yeah, forgiveness equals a crew cut.

By: Danny Adams

Danny Adams — Wed, 09 May 2012 22:12:53 +0000

Almandine: While I meant that post as a joke, on a more serious note, guaranteed loans by private banks aren’t the only source of student loans; a lot of it comes outright from taxpayer dollars, via money appropriated by Congress to the Department of Education, funneled down through their “contractors” Direct Loans and MOHELA. It’s likely that ultimately paying back the private banks wouldn’t cost taxpayers any more than they’re already shelling out for the first kind.

However, that said, if this kind of forgiveness actually happened, a lot of institutions and people might indeed get a haircut because Federal student loans are actually an investment vehicle. As far as I know those investments AREN’T guaranteed, any more than most other kinds.

By: Almandine

Almandine — Tue, 08 May 2012 23:59:43 +0000

Yeah, what a hoot! The financial system tanks and the response is “do them before they do us!”

Just as simple bit of context: Did your hometown bank… the one you have money in… fund student loans?

By: Jim B.

Jim B. — Tue, 08 May 2012 23:46:05 +0000

LOL, Danny!…That was great!…The way things unfotunately seem to work now, only the big banks get their loans forgiven, and they get the bailouts…..but for hapless students, it’s either pay up or die trying.

By: Almandine

Almandine — Tue, 08 May 2012 20:02:47 +0000

So what about paying back the entities (banks, credit unions, etc)that actually forked over the money to begin with? Fractional reserve banking aside, they loaned deposits to the students and the govt only guaranteed those loans… which means, I guess, if the students are forgiven then we taxpayers get to pay them off.

By: Danny Adams

Danny Adams — Tue, 08 May 2012 19:53:37 +0000

Heck, the win-win solution for everybody, it seems to me, is just to forgive every single penny of every outstanding Federal student loan.

Liberals win because, well, some OWS folks have been arguing for this anyway.

Conservatives win because it will destroy the Department of Education and deny Big Government $1 trillion in future income.

Graduates win for obvious reasons.

And then whoever is president at the time will likely win too, because all that loan money will go back into the economy buying stuff, and the tenant of the Oval Office can take credit for whatever economic recovery this might engender.

See, simple as pie.

By: Jon

Jon — Tue, 08 May 2012 19:27:48 +0000

Sometimes I think Congressional gridlock is a good thing. As this site’s slogan states, “Nothing is safe … ” but when they can’t accomplish anything, they, at the very least, can’t deliberately make anything worse.

PS – Of course, many problems do get worse the longer you do nothing about them. See home or boat (or, in a larger sense, infrastructure) maintenance. J.

By: woody188

woody188 — Tue, 08 May 2012 17:08:48 +0000

Well said. The cost of education will decrease when fewer people are able to afford it, just like everything else.

By: Almandine

Almandine — Tue, 08 May 2012 15:33:58 +0000

“…Boehner has also said that a way must be found to renew the low-rate, given that half of all recent college graduates are unemployed or underemployed…”

Does that statement not argue against more student loans… as in, what is the value of a “college education”? That is, why do we need more college graduates if those we have can’t get a job?

Similarly, why do we need so many (4,084) colleges and universities in this country? Is that number (over 80 per state) not a clear indication that higher education has become bloated?

Is it also not clear that the number of colleges and the cost of a college education have skyrocketed because of the monetary inflation in higher education… driven by the increase in govt support of the college student population?

And ALL of this at a time when the wages and salaries available to US workers are in decline.

Who in his right mind would take on any education debt – no matter the interest costs – without this drumbeat of political gamesmanship that makes not doing so seem essentially UnAmerican?