Can't believe this isnt a bigger issue!!!!

[PharmDstudent]

I think he wanted to eliminate only government sponsored loans (not the existence of all loans). But this is just semantics (perhaps I shouldnt have said all, but, the fact that 95% of student loans are govt loans, it is pretty much all). Private loans would obviously not even begin to make up the difference, so the tuition would fall, schools would close, etc. Ron Paul is basically a badass, which is pretty cool given that he is 75 years old

He is. He sees through a lot of the bs.

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[vash1012]

I think most of the main issues with this topic have been brought up. Student loan rates are higher than mortage/auto loans because once that money is spent there is nothing to reclaim to recoup costs so its inherently risky. I 100% agree that relying on IBR when you don't absolutely have to is a mistake. I am pumping 45% of my income to loans right now which will save me probably $25,000 in interest. I would hate to have that juice cooking for 10 or 25 years only to have that program get cut like it most certainly will because there is 0 public support for it and then have to pay all that extra interest back.
If you ended up with more loans than you can afford to pay back working full time in an average paying career in your field, that is your fault. Not the government and not the tax payers. I have a pharmacist friend who makes exactly the same amount of money as I do who is using the IBR so he only makes 60% or so of the payment he would normally make. However he bought a new car and a new house and a bunch of new furniture right out of school so whether or not he "needs" IBR is up for debate. Personally I think IBR loan forgiveness is mostly abused except for the rare situations where people really take a huge paycut to work in a public service role.

 

[PharmDstudent]

Totally agree, and I'm pleased to find so much support for his ideas here.

As to the confusion about private student loans. I believe in a free market approach that Dr. Paul advocates, there would be no more private student loans either. You would just take out a regular loan to pay for school, just like any other loan. The loan wouldn't have privileged protection anymore just because it was taken out for school (in other words it could be discharged in bankruptcy). It would be treated like any other loan, and subject to the same standards of approval.

Privileged protection is absurd. So many people have nothing to show for their credit card debt, signature loans, and cash advances, yet why are those able to be discharged in bankruptcy?

 

[a runner]

The worst case scenario for students in this regard is not if the government defaults and drops its obligations to IBR, but if the government does not default and drops its obligations to IBR. That means, once more, the student is on the hook and as we know student debt is essentially for life.

It is a matter of personal analysis and opinion, but I for one do not place much trust in this program given the current state of government finances, operation and where I think it is heading. I also have my own plans so that I would never have to rely on such a program and I hope those will play out.

This is a good analysis. I have to agree to a certain extent, and that is the scary part of IBR.. the uncertainty. But I still believe the risk is relatively small and the potential benefits for my family (~$500k) are very great. In the end, I might get screwed and have to end up paying more, but it's a risk I'm willing to take because it greatly increases our standard of living during that 10 years of PSLF and especially afterwards, and it's essentially the only way I'll be able to afford to pay back my loans in less than 30 years.

The other good thing about this program is that the government sees the benefits right away (through less defaults) but won't start seeing many costs associated with the program until people start completing the program en masse (in 15-25 years). Hopefully by then my debt will be forgiven already because I'm doing PSLF+IBR which is less common than just IBR.

 

[a runner]

If you ended up with more loans than you can afford to pay back working full time in an average paying career in your field, that is your fault. Not the government and not the tax payers. I have a pharmacist friend who makes exactly the same amount of money as I do who is using the IBR so he only makes 60% or so of the payment he would normally make. However he bought a new car and a new house and a bunch of new furniture right out of school so whether or not he "needs" IBR is up for debate. Personally I think IBR loan forgiveness is mostly abused except for the rare situations where people really take a huge paycut to work in a public service role.

I can't say I disagree with your sentiments or that I feel IBR is justified, but the fact is it exists for now and if you feel the risk is worth it, you might as well take advantage of it.

Your comments could pretty much be applied to anything the government does. Bloat and largesse is what they're all about especially when it comes to their special interests. Does big ag. really need to be subsidized? Do most people who get food stamps not just go and spend the money they saved on food on other things they don't "need?" Does our military really protect us by being all over the world or is it to keep those 100's of thousands of defense jobs going? Does subsidizing education produce a more productive workforce or just a bunch of college educated hair dressers? And I could keep going, but you get the point.

Just because a program is seen as abused or useless doesn't mean it's going away. And just because you don't believe in the morality or legitimacy of a program (IBR, food stamps, medicare, medicaid) doesn't mean you're morally obligated not to use it. In fact, some people believe it's better to starve the beast to make it die faster so we can start over sooner.

 

[owlegrad]

0% would be nice...but be realistic...in comparison to other loan products....lets see im repeating myself which was already stated in my initial post....they are too high when you can get mortgages and car loans for less than HALF of a student loan rate...jeezuz christ...its like arguing with idiots on this board...

and there is no fricking market for student loans...its the govt and THATS IT...private loans are worse in fact!!!

You do not see the conflict in your post?

did i ever say it was a bigger issue than the national debt? reckless govt spending? financial instability in the us or around the world? health care reform? did i say it was the single biggest issue we have? where did i post stating this? maybe im mistaken?

i never stated that student loan interest rates are directly related to the job market? point to me where i posted this...maybe im mistaken?

reread my initial post...

You never said it was number one, you only said "and its a major issue NOW!!!". There is also the name of this thread. I disagree, there are many things that deserve to be higher. It may seem major to you or I but in the grand scheme of things it is quite minor to most people. I am curious what you think a fair interest rate is anyway?

You said "hopefully you can get a job to pay them off!!! who knows by the time you graduate the interest rate might be higher!!!" and "GOOD LUCK finding jobs when you get out with those high student loans along with crazy high interest rates!!!" Getting a job has nothing to do with interest rates. You have to pay back student loans regardless of interest rates. Bringing up the job market at all is pointless if we are discussing interest rates.

Can't wait to be told to read your first post again, as though the conversation has not progressed at all sense that post. I also can't wait to be reminded of the fact I am a student and apparently an idiot to boot.

 

[type b pharmD]

One interesting thing to note, Obama is planning to unveil an executive action on wednesday aimed at easing student loan repayment policies.

http://www.sltrib.com/sltrib/world/52768963-68/obama-president-republicans-executive.html.csp

 

[owlegrad]

One interesting thing to note, Obama is planning to unveil an executive action on wednesday aimed at easing student loan repayment policies.

http://www.sltrib.com/sltrib/world/52768963-68/obama-president-republicans-executive.html.csp

We should write a letter in support.

 

[PharmEcon]

We should write a letter in support.

Speak for yourself. The last thing I want is further usurpation of power by the executive branch to stop natural market forces from acting as they would, in turn probably creating worse long-term outcomes and potentially instability, all so that reelection prospects look better.

 

[type b pharmD]

Speak for yourself. The last thing I want is further usurpation of power by the executive branch to stop natural market forces from acting as they would, in turn probably creating worse long-term outcomes and potentially instability, all so that reelection prospects look better.

I love obama, and think it's nice that he's taking bold steps through the gridlock. National healthcare ftw

 

[PharmEcon]

I love obama, and think it's nice that he's taking bold steps through the gridlock. National healthcare ftw

Not sure how national healthcare is relevant to this discussion, but since you brought it up, how do you see ~40 million new customers for insurance companies at government cost without any major cost-cutting measures or systematic reform as a positive thing? Short-sighted if anything and as is often the case nowadays, it was nothing more than a special interest victory.

 

[type b pharmD]

Not sure how national healthcare is relevant to this discussion, but since you brought it up, how do you see ~40 million new customers for insurance companies at government cost as a positive thing? Short-sighted if anything and as is often the case nowadays, it was nothing more than a special interest victory.

I believe it will crash and fall apart within 15 years and result in complete socialization. The reason I support it is because imho, it was the only way to do it. The public and industry would not support a sudden change.

However since you brought it up, I believe the discussion about student loans does have some relationship to the discussion of the financing of public health and the health care economy as a whole. It costs a lot of money to train future doctors, regardless of overinflated prices and misaligned incentives. Without government incentives in the form of student loan subsidies, there is an argument to be made that there would be a severe shortage of providers for the future

 

[PharmEcon]

I believe it will crash and fall apart within 15 years and result in complete socialization. The reason I support it is because imho, it was the only way to do it. The public and industry would not support a sudden change

The only way to do what? Further empower the insurance companies?

 

[CuriousPharmD]

Other loans are backed by collateral. So when comparing loan products, you should be comparing student loans to other unsecured loans. Out of all the unsecured loans I have, students loans carry the lowest interest rate by far. Last time I checked, ~7-15% was the rate offered by my bank for other unsecured loans.

how are mortgages backed by collateral when there are 100000s of defaulted and foreclosed mortgages around the country...your telling me the banks are getting something in return for all these defaulted mortgages in terms of collateral???...do please educate me...

 

[type b pharmD]

how are mortgages backed by collateral when there are 100000s of defaulted and foreclosed mortgages around the country...your telling me the banks are getting something in return for all these defaulted mortgages in terms of collateral???...do please educate me...

There is a physical asset that can be seized and possessed by the mortgage loan holder. Thus, there is almost 0 chance that the loan will ever become 'worthless'. Unlike unsecured loans where there is always some reasonable risk that the borrower could simply bankrupt and wipe out the value of the loan.

Yes, the banks are getting physical ownership of the house, if they can prove that they own it.

It is highly unlikely that a bank would have to take a complete loss on a mortgage or car loan under most conceivable circumstances. (Not taking into account banks who have lost their mortgage documents obviously, which is just bad business practices). Thus, they can offer extremely low interest rates.

On an unsecured loan, there is always a decent chance that the lender would have to simply write off the loan as a complete loss, should the borrower choose not to repay it.

 

[PharmEcon]

how are mortgages backed by collateral when there are 100000s of defaulted and foreclosed mortgages around the country...your telling me the banks are getting something in return for all these defaulted mortgages in terms of collateral???...do please educate me...

The banks get the house. That is the collateral on a home mortgage, lol.

 

[type b pharmD]

The only way to do what? Further empower the insurance companies?

The only way to move to an ultimately completely socialized system.

 

[CuriousPharmD]

The worst case scenario for students in this regard is not if the government defaults and drops its obligations to IBR, but if the government does not default and drops its obligations to IBR. That means, once more, the student is on the hook and as we know student debt is essentially for life.

It is a matter of personal analysis and opinion, but I for one do not place much trust in this program given the current state of government finances, operation and where I think it is heading. I also have my own plans so that I would never have to rely on such a program and I hope those will play out.


Fairness is subjective. I don't think a lot of things are fair either when it comes to government policy and some groups (the ones that have bought out government) are most certainly better off than others as is. Unfortunately, all you can do is try to change the system or hedge so that you protect yourself. I plan on doing the latter.

like i said the way you are going to hedge the system by working 20 hours a week is not what the majority of graduates are doing...and way to foot the bill to the govt...

If I recall correctly, President Bush had something to do with the hike in the federal student loan interest rates.

another reason why i hate bush and makes his case for being one of the worst presidents and possible the worst president in us history....worst mistake this country made was electing him president and a huge reason why we're in this **** hole...

There's a reason why there is almost no market for private student loans... because the government has usurped the market! Also, most banks in their right minds would not make a loan to a 18-25 year old with no income, no co-signer, no collateral, and at a low rate (it has to be a low rate, otherwise nobody would use private loans when you have 6.8% low rate loans offered by the government). Just the fact that there is no private student loan market anymore should tell us that government student loan rates are too low! The private loan market isn't willing to compete at that low of an interest rate.

i recall a time when federal loans were at 3%...what reason was it that that idiot bush made it fixed at 6.8??

 

[owlegrad]

Speak for yourself. The last thing I want is further usurpation of power by the executive branch to stop natural market forces from acting as they would, in turn probably creating worse long-term outcomes and potentially instability, all so that reelection prospects look better.

I do speak for myself.

In a natural market, I would never be in school, no way I can afford graduate school without gov loans. So yeah, I do support gov intervention in the student loan market.

Not sure how national healthcare is relevant to this discussion, but since you brought it up, how do you see ~40 million new customers for insurance companies at government cost without any major cost-cutting measures or systematic reform as a positive thing? Short-sighted if anything and as is often the case nowadays, it was nothing more than a special interest victory.

I would call it a public health victory, but we can agree to disagree.

Our healthcare system is broken, the only thing worth considering is how to improve it. Insurance companies are a drain, the only reasonable system I can conceive involves dismantling them completely. Related to this is the issue of having a pay-per-serves model to begin with. And on and on and on...

 

[CuriousPharmD]

The banks get the house. That is the collateral on a home mortgage, lol.

yeah an in a lot of cases the house is worth 100k less than the mortgage or the car is worth less than the loan.

 

[CuriousPharmD]

You do not see the conflict in your post?



You never said it was number one, you only said "and its a major issue NOW!!!". There is also the name of this thread. I disagree, there are many things that deserve to be higher. It may seem major to you or I but in the grand scheme of things it is quite minor to most people. I am curious what you think a fair interest rate is anyway?

You said "hopefully you can get a job to pay them off!!! who knows by the time you graduate the interest rate might be higher!!!" and "GOOD LUCK finding jobs when you get out with those high student loans along with crazy high interest rates!!!" Getting a job has nothing to do with interest rates. You have to pay back student loans regardless of interest rates. Bringing up the job market at all is pointless if we are discussing interest rates.

Can't wait to be told to read your first post again, as though the conversation has not progressed at all sense that post. I also can't wait to be reminded of the fact I am a student and apparently an idiot to boot.

yeah its a major issue for me...and getting a job has nothing to do with interest rates obviously...but when you graduate with 100k in student loans at 8% and have no job or can only get a part time job...you will see the light and understand what im saying...enjoy pharm skool while your there...

 

[CuriousPharmD]

We should write a letter in support.

amen...can someone shed more light on this or update us on this situation after wednesday???

 

[PharmDstudent]

yeah its a major issue for me...and getting a job has nothing to do with interest rates obviously...but when you graduate with 100k in student loans at 8% and have no job or can only get a part time job...you will see the light and understand what im saying...enjoy pharm skool while your there...

I am in constant fear of losing my night job.

There SDN. I said it.

If your store's script count drops below a certain number, then you're no longer a 24 hour store, from what I understand. Perhaps it's an irrational fear, because my store is busy enough right now, but I worry nonetheless. If I didn't have six figures in student loan debt, I probably wouldn't worry, because it wouldn't matter - but I do have that kind of debt.

 

[WVUPharm2007]

This is an interesting problem. There is no problem with people worthy of an education being able to have access to it. But the same problem that presented during the housing crisis is presenting today. There needs to be a more strict regulatory system over any sort of government guaranteed loan. Of course, the REAL problem is that free education stops at 18. To compete in this modern world, you need a specialized education beyond a simple secondary education. In order to make a good life yourself (unless you have rich parents, naturally) you are essentially forced into into debt slavery. It's a sort of modern indentured servitude.

A free market approach, as usual, would be even more ******ed than what we have now and lead to a sort of corporate feudalism where those with economic leverage would control the world even more. Free market capitalism is just socialism for people that happen to own capital. Stupid people don't seem to realize this. Including Ron Paul, who is, without a doubt, one of the most blind ideologues this side of of the planet. I honest think that the man is incapable of accepting the fact that the world isn't some sterile place where every action is totally black and white. He's like Michael Moore with the facade of being a successful politician.

Eventually, the country will wake up and elect me president.

 

[PharmDstudent]

This is an interesting problem. There is no problem with people worthy of an education being able to have access to it. But the same problem that presented during the housing crisis is presenting today. There needs to be a more strict regulatory system over any sort of government guaranteed loan. Of course, the REAL problem is that free education stops at 18. To compete in this modern world, you need a specialized education beyond a simple secondary education. In order to make a good life yourself (unless you have rich parents, naturally) you are essentially forced into debt slavery. It's a sort of modern indentured servitude.

Of course. We're enslaved to debt and corporations enjoy the benefits of servitude.

Let's Occupy SDN. We are the 99%!

 

[WVUPharm2007]

Of course. We're enslaved to debt and corporations enjoy the benefits of servitude.

Let's Occupy SDN. We are the 99%!

Ah, yes, the occupiers. Mostly a bunch of hippies. But I predicted that would happen, didn't I? Well, I predicted a much more violent workers' uprising. These people are a kind of "kumbaya, the gubmint will convince the plutocracy to pay the middle class more, kumbaya" naive. But the violent uprising may very well happen still if wealth stratification doesn't correct itself. Because it gets worse and worse for the non-capital ownership class annually. I'm talking resistance sniper teams taking out the Walton heirs and ****. It could get messy. But that's well into the future. Hopefully a peaceful resolution will present itself. But that would require the plutocrats to admit that unchecked capitalism kind snuffs itself out. Which could take decades of education to stem the brainwashing.

Personally, I'm waiting for the Tea Party and the Occupiers to realize that they are furious about the same type of institution. That being a stratification of power and wealth. It doesn't matter which specific institution it is. But that's what they are out there for. They seem unable to get out of the dichotomous paradigm of gubmint versus plutocrats. A Wild West style free market (I'm told saying "Somalia-style free market" is over the top) or a statist solution isn't the answer. Eventually I hope they will realize that a vast amount of power needs to be taken from both and spread out more to workers' institutions. There needs to be a workers uprising where the middle class demands more resources from the monied class, en masse. The government can't help the middle class, directly.

But I say, good for them. We are finally discussing things that need discussed. But only some things.

 

[PharmDstudent]

Ah, yes, the occupiers. Mostly a bunch of hippies. But I predicted that would happen, didn't I? Well, I predicted a much more violent workers' uprising. These people are a kind of "kumbaya, the gubmint will convince the plutocracy to pay the middle class more, kumbaya" naive. But the violent uprising may very well happen still if wealth stratification doesn't correct itself. Because it gets worse and worse for the non-capital ownership class annually. I'm talking resistance sniper teams taking out the Walton heirs and ****. It could get messy. But that's well into the future. Hopefully a peaceful resolution will present itself. But that would require the plutocrats to admit that unchecked capitalism kind snuffs itself out. Which could take decades of education to stem the brainwashing.

Personally, I'm waiting for the Tea Party and the Occupiers to realize that they are furious about the same type of institution. That being a stratification of power and wealth. It doesn't matter which specific institution it is. But that's what they are out there for. They seem unable to get out of the dichotomous paradigm of gubmint versus plutocrats. A Wild West style free market (I'm told saying "Somalia-style free market" is over the top) or a statist solution isn't the answer. Eventually I hope they will realize that a vast amount of power needs to be taken from both and spread out more to workers' institutions. There needs to be a workers uprising where the middle class demands more resources from the monied class, en masse. The government can't help the middle class, directly.

But I say, good for them. We are finally discussing things that need discussed. But only some things.

Why is capitalism associated with wealth stratification? Isn't that more like a dictatorship?

I think what's more of a problem is exploitative practices. For example, Wal-Mart is cutting employee benefits, and yet, they're expecting "record highs". And have you heard about their interest in contracting people to stock their shelves?

 

[WVUPharm2007]

Why is capitalism associated with wealth stratification? Isn't that more like a dictatorship?

Show me a free market that wouldn't promote wealth stratification and I'll show you a magical gnome that speaks 85 languages and can fly.

 

[PharmDstudent]

Show me a free market that wouldn't promote wealth stratification and I'll show you a magical gnome that speaks 85 languages and can fly.

There are no "free market" right now. In the US, companies have to pay for Workmens Comp and match SS and Medicare.

 

[WVUPharm2007]

There are no "free market" right now. In the US, companies have to pay for Workmens Comp and match SS and Medicare.

Of course there isn't. No civilization is stupid enough to willingly attempt such an idiotic thing. Obviously roads and police and **** are necessary. Unless you are REALLY hardcore and think people should hire their own bodyguards rather than participate in a socialistic abomination such as a police force or national military.

Now sometimes a mass of land with inhabitants exists with no government and a free market emerges naturally. On current day Earth, we call this magical land Somalia. Where, as one would guess, those with economic power became war lords and began controlling the population as if they were their own personal serfs and cannon fodder.

There was a movie about it called Black Hawk Down.

 

[PharmDstudent]

Of course there isn't. No civilization is stupid enough to willingly attempt such an idiotic thing. Obviously roads and police and **** are necessary. Unless you are REALLY hardcore and think people should hire their own bodyguards rather than participate in a socialistic abomination such as a police force or national military.

Now sometimes a mass of land with inhabitants exists with no government and a free market emerges naturally. On current day Earth, we call this magical land Somalia. Where, as one would guess, those with economic power became war lords and began controlling the population as if they were their own personal serfs and cannon fodder.

There was a movie about it called Black Hawk Down.

So what are you advocating? Capitalism doesn't work. Dictatorships don't work. Socialism doesn't work. Communism doesn't work.

[YOUTUBE]http://www.youtube.com/watch?v=DG0mktY-GuM[/YOUTUBE]

 

[spacecowgirl]

The reason tuition is so high is because there is this societal notion (and no it is not just limited to students, but often to their parents, teachers, etc. too) that every child should go to a 4-year school and possibly grad school, etc. almost regardless of cost.

There is a practical element to this besides a "societal notion". How many jobs are there that provide a living wage and are unskilled or require 2-year technical degrees for manufacturing in the US these days? It's difficult to find a car, an item of clothing, an electronic or any plastic doo-dad that is made in the good old US of A. The glucometer I have on my desk was made in China, the battery for it made in Indonesia.

 

[SoylentGreen]

IBR is not going away. If it did, there would be a wave of defaults and the problem would no longer be swept under the rug. Who would that benefit?

 

[WVUPharm2007]

So what are you advocating? Capitalism doesn't work. Dictatorships don't work. Socialism doesn't work. Communism doesn't work.

A highly mixed economy that doesn't allow power to concentrate within the confines of a small institution.

It's what those of us that aren't intellectually infantile call "rational."

The idea that an ideology can be infallible or reliable in a highly dynamic world is stunting our growth. And by "our" I'm referring to Western Civilization. The loudmouth, politically active type can't admit that their economic religion of choice might have flaws. Everyone else doesn't care enough to put thought into it.

 

[xiphoid2010]

There is a practical element to this besides a "societal notion". How many jobs are there that provide a living wage and are unskilled or require 2-year technical degrees for manufacturing in the US these days? It's difficult to find a car, an item of clothing, an electronic or any plastic doo-dad that is made in the good old US of A. The glucometer I have on my desk was made in China, the battery for it made in Indonesia.

Even as an asian, who absolutely holds education as one of the highest priority of any society, I don't believe that everyone is entitled to 4 years of university education.

Meritocracy should still rule. Not everyone is born to be a college grad. If everyone becomes a white collar worker, there will be huge shortage of blue collar workforce. But then again, in a market economy, when blue collar wages shoots up, supply should increase naturally (theoretically).

 

[spacecowgirl]

My point is that there is a shortage of blue collar jobs.

 

[Kansas Pharmer]

My point is that there is a shortage of blue collar jobs.

Blue collar jobs in general, yes. Skilled laborers, no. I currently work in skilled labor and have done so for a large number of years. Across a number of specialties, employers are having extremely hard times trying to hire qualified/proper experienced candidates.

This all goes back to "everyone should have a college degree". If everyone goes to college and no one will take on trade schools or spend the time as an apprentice, we will lose our infrastructure. Think: plumbers, electricians, metal workers, framers, heavy equipment operators, and the list goes on and on and on.

 

[PharmDstudent]

A highly mixed economy that doesn't allow power to concentrate within the confines of a small institution.

It's what those of us that aren't intellectually infantile call "rational."

The idea that an ideology can be infallible or reliable in a highly dynamic world is stunting our growth. And by "our" I'm referring to Western Civilization. The loudmouth, politically active type can't admit that their economic religion of choice might have flaws. Everyone else doesn't care enough to put thought into it.

So how do you not allow "power to concentrate within the confines of a small institution"?
The implementation of it wouldn't be practical.

Blue collar jobs in general, yes. Skilled laborers, no. I currently work in skilled labor and have done so for a large number of years. Across a number of specialties, employers are having extremely hard times trying to hire qualified/proper experienced candidates.

This all goes back to "everyone should have a college degree". If everyone goes to college and no one will take on trade schools or spend the time as an apprentice, we will lose our infrastructure. Think: plumbers, electricians, metal workers, framers, heavy equipment operators, and the list goes on and on and on.

I have to call bs on these two with the current housing market. The electrician working on the house next door is bidding jobs at cost, so yeah...

I don't know very much about the rest, other than a former customer who was looking for qualified machinists and my cousin who is a machinist.

 

[PharmEcon]

The only way to move to an ultimately completely socialized system.

Why would we want that? Matter of opinion sure, but I for one do not support such a system.

like i said the way you are going to hedge the system by working 20 hours a week is not what the majority of graduates are doing...and way to foot the bill to the govt...

When did I say the hedge is working 20 hrs/week or taking advantage of a government program? I never said that and that is not my hedge. I am talking about hedging through the market, not the government.

I do speak for myself.

In a natural market, I would never be in school, no way I can afford graduate school without gov loans. So yeah, I do support gov intervention in the student loan market.

Well you can't really say you would never be in school considering tuition would be drastically lower, private capital for legitimate career seekers would likely be higher, and competition for those loans would be greater. The whole situation would be different. Sorry, but I am not a fan of letting the future subsidize me, especially when some of them are probably not even born yet. The current trend of tuition increases looks very much like an asset bubble, one that has beat inflation growth for decades several times over even with liberal inflation estimates and one that even beat housing price growth through 2006. If this bubble bursts, it is going to be a huge mess. "There ain't no such thing as a free lunch." Government realized it with housing and if it doesn't stop it probably will with education too. But as usual, it doesn't matter for current politicians because its all about the special interest money and getting reelected.

I would call it a public health victory, but we can agree to disagree.

Sure, but we'll see who was right in a couple decades

Our healthcare system is broken, the only thing worth considering is how to improve it. Insurance companies are a drain, the only reasonable system I can conceive involves dismantling them completely. Related to this is the issue of having a pay-per-serves model to begin with. And on and on and on...

Our healthcare system is broken because the market isn't allowed to work. This bill was largely pushed through not because of public support but because of special interest support- namely the insurance companies and bigpharma. A lot of the previously uninsured already qualified for state and federal programs, but had simply not applied. Furthermore, this bill does very little (if anything) to reduce costs and its not as if government produces anything of value- it takes its money right back from us, the people. A much better start to fixing the problem would have been to allow insurance competition across state lines, which would immediately increase choices for Americans and reduce costs due to insurance competition. But that will never happen because the insurance companies like their oligopolies in the market.

yeah an in a lot of cases the house is worth 100k less than the mortgage or the car is worth less than the loan.

So what? All I said is that there is collateral. In the case you mention it is currently toxic. What's your point? The bank knows full well the possibility going into making the loan.

 

[xtsukiyox]

Just out of curiosity, can anyone explain why exactly student loans are at 6.8%?

The reason unsecured debt is so high is because financial institutions realize they can bilk the consumer right now. Prime is essentially flat, so it costs them nothing to borrow money. They relend it at the price consumers are accustomed to paying (someone mentioned 7-15%), and that's 7-15% of profit, minus the amount they're paying for the loan servicing department.

They're also adjusting the floor rate & spread (P+X%) on adjustable rate credit devices to match what consumers expect to pay - I can't wait to see what happens when prime increases again. We'll have a ton of consumers stuck with run-up credit cards that pre-recession were ~P+5% and post-recession are in the range of P+9% - P+12%, non-default rates.

Is student loan interest a factor of a) Congress works slowly when only small constituencies benefit, b) Congress has trouble dynamically reacting to markets, c) some sort of crazy "close the budget" plan by bilking students, or d) pricing based on projections? Or e) none of the above?

I honestly don't have enough knowledge of the economics behind student loan rates to pick apart the reasons, but I'm suspecting A & B & I heard a little mention of C at one point.

 

[a runner]

Show me a free market that wouldn't promote wealth stratification and I'll show you a magical gnome that speaks 85 languages and can fly.

The reason we have so much wealth stratification in this country is not because of free market mechanisms. The severe stratification occurs through crony capitalism. Sure, in a real free market, you'd still have SOME stratification, but that is desirable, and besides, almost everyone would be better off so the minor stratification would matter less. The wealthiest people in this country become more wealthy through special treatment from DC by way of their lobbyists. And when the government has the power to give subsidies, add extra taxes to types of business they don't like, choose winners and losers, bail out, and pick favored industries, how can the lobbyists and special interests not end up in total power? The only way to eliminate this is to eliminate the massive power to regulate, tax excessively and discriminately, subsidize, and pick winners.

A big problem preventing some wealth equalization from happening are all the regulations and taxes on small businesses. If it were easier to start and maintain a business without getting stifled, then more people would rise into the middle and upper classes, but as it stands the only ones that can afford to compete in the severe regulatory environment we're in are the big corporations like Wags, CVS, Walmart, etc. Excessive regulation only helps the big guys. Just look at pharmacy, why are all the independents going away? Too much government involvement (regulations, taxes, Medicare/Medicaid reimbursements, etc.).

 

[owlegrad]

Well you can't really say you would never be in school considering tuition would be drastically lower, private capital for legitimate career seekers would likely be higher, and competition for those loans would be greater. The whole situation would be different. Sorry, but I am not a fan of letting the future subsidize me, especially when some of them are probably not even born yet. The current trend of tuition increases looks very much like an asset bubble, one that has beat inflation growth several times over even with liberal inflation estimates and one that even beat housing price growth through 2006. If this bubble bursts, it is going to be a huge mess. "There ain't no such thing as a free lunch." Government realized it with housing and if it doesn't stop it probably will with education too. But as usual, it doesn't matter for current politicians because its all about the special interest money and getting reelected.

I didn't realize we were just saying what we wished was true. Less student loan money could mean fewer schools, not cheaper tuition. I am not claiming the system is perfect, only that without federal student loans, I would still be working in a grocery store.

Our healthcare system is broken because the market isn't allowed to work. This bill was largely pushed through not because of public support but because of special interest support- namely the insurance companies and bigpharma. A lot of the previously uninsured already qualified for state and federal programs, but had simply not applied. Furthermore, this bill does very little (if anything) to reduce costs and its not as if government produces anything of value- it takes its money right back from us, the people. A much better start to fixing the problem would have been to allow insurance competition across state lines, which would immediately increase choices for Americans and reduce costs due to insurance competition. But that will never happen because the insurance companies like their oligopolies in the market.

I don't see it that way at all. Left to their own devices insurance companies have preexisting condition clauses, they refuse benefits at whim, etc. Insurance companies produce nothing, they only take money out of the healthcare market. Defending insurance companies makes no sense to me at all. They are toxic, the only way they make money is if they pay less in claims then they bring in. The conflict of interest is fundamental to their business model. It is intractable. They need to go.

 

[PharmEcon]

To those afraid of wealth stratification, I have 3 points:

1) If you are blaming capitalism or free markets for it, please remember that the US is not as capitalist as the politicians might like to think it is. Crony capitalism is rampant- government is in everything. Also, correlation does not equal causation.

2) More importantly though, income inequality is NOT the biggest worry. It never should be. Winston Churchill once said, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." This holds very true. There are some countries in Africa that have MUCH lower income inequality than the United States. Now let me ask you, would you rather live there or here since it is more "equal" there?

3) There is equality in material goods/wealth and there is equality in process. If you try to create the first through government, you will likely never have the second. Everyone will almost never be equal. That is the way of the world. It would be pretty boring if we all were anyway.

 

[npage148]

The reason we have so much wealth stratification in this country is not because of free market mechanisms. The severe stratification occurs through crony capitalism. Sure, in a real free market, you'd still have SOME stratification, but that is desirable, and besides, almost everyone would be better off so the minor stratification would matter less. The wealthiest people in this country become more wealthy through special treatment from DC by way of their lobbyists. And when the government has the power to give subsidies, add extra taxes to types of business they don't like, choose winners and losers, bail out, and pick favored industries, how can the lobbyists and special interests not end up in total power?

If it was a true free market society would the super wealthy just make the rules anyways regardless? So now it's being done under the guise of gov't regulation as opposed to unmasked control?

 

[npage148]

To those afraid of wealth stratification, I have 3 points:
2) More importantly though, income inequality is NOT the biggest worry. It never should be. Winston Churchill once said, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." This holds very true. There are some countries in Africa that have MUCH lower income inequality than the United States. Now let me ask you, would you rather live there or here since it is more "equal" there?

So what you're saying is that it's ok to have people living in poverty in our country becasue w/o the impoverished you can't have the rich? I don't see how it's ok to let people in the US die in abject poverty when other countries (all of Scandinavia) seem to maintain a very high standard of living for their wealthy despite strong social programs and a much lower income inequality?

Everybody loves the free market capitalistic system until they need help, then their stories change completely

 

[PharmEcon]

I didn't realize we were just saying what we wished was true. Less student loan money could mean fewer schools, not cheaper tuition. I am not claiming the system is perfect, only that without federal student loans, I would still be working in a grocery store.

1) Who said there would be less student loan money? Where do you think government gets its money?

2) Why do you think tuition has gotten so high in recent decades? Look at government loan growth and it correlates extremely well with tuition growth. If you don't believe me, please go take a look at economic analyses of this- this is a point that in academic economics is much more one-sided than it is in the mainstream public. Tuition growth has LARGELY been fueled by INCREASED government student loans because the willingness to pay of the students increases. The best way to reduce tuition is to reduce student loans.

3) Again you can't really assess what you'd be doing in that situation since you don't actually know what the situation would be. There are plenty of people decades ago who worked their way through school- nearly impossible now due to increased student loans and in turn, increased tuitions.

I don't see it that way at all. Left to their own devices insurance companies have preexisting condition clauses, they refuse benefits at whim, etc. Insurance companies produce nothing, they only take money out of the healthcare market. Defending insurance companies makes no sense to me at all. They are toxic, the only way they make money is if they pay less in claims then they bring in. The conflict of interest is fundamental to their business model. It is intractable. They need to go.

Absolutely not. They do produce something. They buy your risk for money. If they are so useless, why don't you just not buy any insurance?

Clearly you buy it to pass on your risk in exchange for some immediate money. Not too many people know this, but the majority of insurance companies don't even make money off of premiums- they make it off of investments made with those premiums. It is much like how commercial banks don't make money off of your deposits- they make money off of loans and investments made with that money.

 

[PharmEcon]

So what you're saying is that it's ok to have people living in poverty in our country becasue w/o the impoverished you can't have the rich? I don't see how it's ok to let people in the US die in abject poverty when other countries (all of Scandinavia) seem to maintain a very high standard of living for their wealthy despite strong social programs and a much lower income inequality?

Everybody loves the free market capitalistic system until they need help, then their stories change completely

I am okay with having different income levels. A lot of the poverty argument also depends on how you define poverty. MOST of the people considered poor in the US are RICH on the world scale. Trying to have everyone at the same income level, especially through government control, has been disastrous historically- I point you to India and China before their recent capitalist movements.

Furthermore, historically private philanthropy has been very strong in freer markets. It is because people do have compassion to help others and when they have extra money they aren't afraid to do so. It is because people like you do exist in the world.

 

[PharmaTope]

yeah its a major issue for me...and getting a job has nothing to do with interest rates obviously...but when you graduate with 100k in student loans at 8% and have no job or can only get a part time job...you will see the light and understand what im saying...enjoy pharm skool while your there...

yep! this guy makes a VALID POINT!

 

[npage148]

I am okay with having different income levels. A lot of the poverty argument also depends on how you define poverty. MOST of the people considered poor in the US are RICH on the world scale. Trying to have everyone at the same income level, especially through government control, has been disastrous historically- I point you to India and China before their recent capitalist movements.

Furthermore, historically private philanthropy has been very strong in freer markets. It is because people do have compassion to help others and when they have extra money they aren't afraid to do so. It is because people like you do exist in the world.

I love the argument, "the poors in this country have it so well, they could be be like poor in Africa and dying from malaria" If you need to use that argument to make yourself feel better then more power too you.

It's just a BS argument There's no reason that anyone in the US should be living in poverty, w/o electricity and indoor plumbing, or w/o healthcare.

 

[PharmEcon]

I love the argument, "the poors in this country have it so well, they could be be like poor in Africa and dying from malaria" If you need to use that argument to make yourself feel better then more power too you.

It's just a BS argument There's no reason that anyone in the US should be living in poverty, w/o electricity and indoor plumbing, or w/o healthcare.

How is that not a relevant argument? You completely throw aside my points because you don't want to move away from your previous position. Please tell me what you would do to help "reduce" poverty in this country.

Also please realize that I believe poverty would be lower in a freer market.