Something from The Atlantic:
The uptick in borrowers with repayment plans pegged to their incomes is one of the reasons the Congressional Budget Office in January and March estimated that student-loan debt will cost taxpayers an additional $66 billion in the period between 2015 and 2024. Given the income the government generates from various other federal student loan programs, it claims taxpayers still come out ahead in servicing student loans, particularly graduate student loans and those taken out by parents for their kids (though there’s a fierce debate over whether the government calculates its student debt revenue accurately).
calculates its student debt revenue accurately).
As more colleges wise up to income-based programs, they could charge higher tuition, with Uncle Sam swallowing their debt loads.
http://www.theatlantic.com/educatio...nt-debt-forgiveness-/401948/?utm_source=yahoo
I think the point is, students aren't paying these loans back. If you borrow $500,000 for medical school, pay back only $200,000 and at an effective interest rate that is closer to 1% or 2% and then the loan is forgiven, who is left swallowing the debt load?
The student is a largely disinterested third party who gets a degree, meanwhile there is a massive transfer of wealth to the institution, from the federal government (e.g. the taxpayers).
I think the point is, students aren't paying these loans back. If you borrow $500,000 for medical school, pay back only $200,000 and at an effective interest rate that is closer to 1% or 2% and then the loan is forgiven, who is left swallowing the debt load?
The student is a largely disinterested third party who gets a degree, meanwhile there is a massive transfer of wealth to the institution, from the federal government (e.g. the taxpayers).
If they don't forgive, then all the better. The price of going to graduate school simply becomes a permanent 10% tax on income. A person could move from California to Nevada and get a 10% bonus in saved income taxes, so the entire transaction is a wash and school becomes free.
If they don't forgive, then all the better. The price of going to graduate school simply becomes a permanent 10% tax on income. A person could move from California to Nevada and get a 10% bonus in saved income taxes, so the entire transaction is a wash and school becomes free.
I feel like the goalposts keep getting moved in this discussion.
Either the loans are forgiven, in which case you lose at most 1/3 of your stuff (and most likely considerably less) when it is forgiven, and the government gets the shaft. Or the loans are not forgiven, in which case they continue at negative amortization rates similar to a state income tax or sales tax until death, in which case the government gets the shaft.
In either case the student loan crisis is a crisis upon the government and not the student borrower.
When you owe $500 in student loans, that is your problem. When you owe $500,000 in student loans, that is the government's problem, and the government (not the consumer) will have to suffer the consequences.
she chose to become a public defender. who knew that allowing your loans to balloon to 250k so that you could make 50k was a bad idea? I feel no sympathy for people that make openly stupid financial decisions.
"“I would be living in a box and eating salt crackers” without income-based repayment, Ms. Van Kirk says. “It just wouldn’t be financially possible.”"
Um then why don't you do that, so you can actually honor the contract you signed?
I believe the person quoted at the bottom of your post was talking about paying her loans during residency. Pretty no one has ever made substantial loan payments during residency with the assumption that we'll make the bulk of our payments afterwards. Prior to income-based repayment, residents generally all used deferment. Could you pay $3k/month as a resident? I believe that was about my take home pay, and I trained in a place with slightly higher salaries than the national average.
As for the public defender, law schools used to have loan repayment programs for people who did public interest work. They've largely gotten rid of those programs because of the PSLF program. So under the old system, the public defender might still have borrowed more than she ever paid back, and the loans were then paid off by her school's program. Now the government takes the hit, and Tulane gets to charge more money and spend less funding their own loan repayment programs. In the legal profession, it's been understood that we need people to do work with low compensation, and we have to find a way to fund that. I agree that going to her state school versus Tulane would have made as much sense, unless she didn't have a state school -- there are no state law schools in a few states -- or if her state school was super expensive (which actually they're all way more expensive than they were just 10 years ago).
At Georgetown Law, the school actually makes the first ten years of IBR payments for you, if you work in legal public service. Georgetown of course just rolled those first 10 years of loan payments into the tuition and had the student get loans for that as well.
It is a genius system, really. Georgetown Law could charge a billion dollars tuition if they wanted to. Georgetown collects insane levels of full retail tuition, the student gets the education entirely for free, and after 10 years of public service the government is left holding the whole bag.
If public service medicine had predictable and low salaries like public service law, I'm sure medical schools would offer similar deals. It's win-win-lose!
How was your payment 3k a month?