Student Loan Forgiveness of 2012
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Hey everyone, I just ran across this on my FB. It seems to be a petition in support of a huge student loan support system.
"Created by Representative Hansen Clarke of Michigan has just introduced H.R. 4170, The Student Loan Forgiveness Act of 2012, in the House of Representatives - legislation designed to lend a helping hand to those struggling under massive amounts of student loan debt."
One thing that makes this batshit crazy is the private loan section. It states that if your private student loan debt is greater than your annual income, they will buy those loans and make them federal loans and drop the interest rate to 3.4%.
You then only pay 10% of your income for 10 years. If they are not paid off by then, they are all completely forgiven.
This sounds way too good to be true, but it is definitely worth reading! I /signed
http://signon.org/sign/support-the-student-loan.fb1?source=s.fb&r_by=1077273
"Created by Representative Hansen Clarke of Michigan has just introduced H.R. 4170, The Student Loan Forgiveness Act of 2012, in the House of Representatives - legislation designed to lend a helping hand to those struggling under massive amounts of student loan debt."
One thing that makes this batshit crazy is the private loan section. It states that if your private student loan debt is greater than your annual income, they will buy those loans and make them federal loans and drop the interest rate to 3.4%.
You then only pay 10% of your income for 10 years. If they are not paid off by then, they are all completely forgiven.
This sounds way too good to be true, but it is definitely worth reading! I /signed
http://signon.org/sign/support-the-student-loan.fb1?source=s.fb&r_by=1077273
Replies
"The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases."
It also reduces the public service years for forgiveness down to 5 years. Be a teacher, bus driver, or some other public service employee and have your $150k of student loan debt gone in 5 years.
The student loan system is the biggest scam in the entire country right now, and there are a lot of people that were suckered into it while trying to make a better life for themselves. Instead they are now indentured servants for life sense the interest rates are too high to ever pay off, and there is no bankruptcy protections or other ways to get out of them.
And if you default, god help you, because they will harass you and everyone related to you till the end of time.
Here in Canada there are many things like this in place already. If you can't afford to pay they will reduce your loan to something affordable for you.
If your loan is already pretty low they will give you a 6 month period of no payments and no interest...
You can re apply for this every 6 months if needed.
The bigger issue in the US is the private student loan system. The cost of schooling is so high that federal loans only cover a tiny fraction of your total costs. So you end up having a small portion of manageable (federal) loans, then a HUGE portion of private loans that are raping your every orifice.
I've had 7 calls in the past 2 days in regards to my student loans. This is after having them deffered for a year. There is serious need for reform in regards to student loans. I wasn't asking for a handout when I went to school but i do almost feel like I was robbed.
What pisses me off the most is that the majority of a university's expenses are pension and retirement plans for lecturers and faculty, and yet many private schools make out like they're supremely benevolent just because they're not increasing their tuition rates. It's the worst kind of fucking scam - and hundreds of thousands of students buy into it because they're preyed upon by fucking wolves.
Everyone seems to be looking around, scratching their heads, wondering why almost half of American college students can't even manage to graduate within six years. You've got the president going on about the value of community colleges, and then well-known and supposedly respected faculty openly criticize transfer students coming from two-year schools.
Arne Duncan and the rest of the Obama Administration should be fucking ashamed of higher education in America today.
When all college loans were private, the loans would be fairly small, and they were very particular about who would get one. Gambling doesn't work well in regards to investment, which is what a loan really is. Anyway, back then, college prices were much lower as a result of most people not having enough money. But now that the government is automating it all, and giving almost any loan, no matter how much, and disregarding if the person will be able to pay it ever, the colleges realize "We can keep on raising our prices, because the government will pick up the tab for the students anyway, and we'll get more money".
Now, needless to say, this will only lead to the whole thing exploding.
I mean, a private loaner would NEVER give money to a kid for him to go to college if they didn't know they'd get their money and then some.
This'll only end up with the government being in even more crazy debt.
I mean, I want my 100,000 forgiven as much as the next guy, but not like this.
You really think a bank wouldn't loan some random person with no cosigner $80,000 with an interest rate of 12%? Saying they would "NEVER" do that is far from the truth.
Tell me 10 people that couldn't go to school because they couldn't get a loan because a bank thought that the student wouldn't be able to pay it off. Can't?
Tell me 10,000 people who were given nearly hundreds of thousands of private loan dollars to pay for their horrifically inflated tuition and are now working bottom feeder jobs because they couldn't get a career in their industry. Where do I begin?
The key problem is the shit is too expensive to realistically repay and banks are funneling out tons of garbage loans that can't be repaid.
This is EXACTLY WHAT HAPPENED WITH THE HOUSING MARKET. House prices were inflated, banks kept giving out crazy fucking loans, then tons of people foreclosed and the housing market crashed.
Higher education is next.
But, regardless, the important part of my comment still stands:
"This'll only end up with the government being in even more crazy debt.
I mean, I want my 100,000 forgiven as much as the next guy, but not like this."
So, I'll change it. If people had to pay for college out-of-pocket it would be a lot cheaper, or at least less required by jobs.
That was basically the point. When people get assistance, and can then pay for it, the prices inch up until it's $100,000 or more. Which is totally taking advantage of the loan-system.
The writedowns are either going to be forced onto the lenders causing a huge cascade like the housing bubble, or are going to be absorbed in the federal budget and absolutely slaughter our federal finances and deficit. Neither of those will end remotely well.
Because the root of the issue is the universities having easy access to bottomless student loan funding, and growing their costs, tuitions and prices like a sponge to constantly absorb a little bit more. Bring the federal government into this with the endless supply of taxpayer's money (hey, we'll just print more if they can't keep paying!) and the problem will get worse, not better.
Revitalizing trade schools and apprenticeships and moving out a big chunk of the people who don't even belong in college will help. Not everybody should go to college. There are a lot of people who won't benefit from it because their strengths and goals are better served elsewhere. Reduce the problematically bloated enrollment figures, cut off the university's access to more and more and more money through bigger and bigger student loan ceilings, and things will slowly start to correct themselves.
It would simply stop them from hyper inflating their own loans and in turn lessen the need for government loans.
Can you explain exactly how you believe that would work?
There's a flaw in your plan there, I want to see if you recognize it when you map the results out in detail.
Im going to share two relevant anecdotes to set the stage for my conclusions. I just met a young lady working in a Barnes & Noble coffee shop. I was purchasing a copy of 3D Artist along with some coffee and she started a conversation about the video game industry. It turns out that she just graduated from Full Sail with a game-related degree. She is almost $75,000 in debt and desperately wants to get a job in the industry. She returned to live at home with her parents and had to find a job. I looked at her reel and her modeling, texturing, and lighting were quite good (I put her in touch with some people and sites that will hopefully enable her to get a job). She will have to make loan payments approaching $1000 a month for at least ten years! And there are many students in a similar predicament! The other case is a chiropractor that just launched his own clinic a couple of years ago. He has $130,000 in school loans! He has to pay $1000 a month for 30 years! It is not just the video game and CG industry that is impacted by the student debt issue. Student loan debt now exceeds consumer credit card debt in the U.S. Unbelievable!
Why did so many students opt for for profit schools (non-regionally accredited schools) instead of community colleges or in-state colleges and universities? No one forced anybody to choose an expensive school. No one forced anybody to sign loan papers. Stipulations about repayment were clearly explained at the time of signing. It appears that many of the for-profit schools spent a lot of money for marketing. These schools quickly realized that they could require an amount of tuition that was equal to the maximum amount of student loan money available (if the customer can get a loan for $X and needs what you sellyou can ask them to pay $X). In many of these schools recruiters were given bonuses for enrolling students (an illegal practice and now under investigation or in litigation in many states). If you could get a loan you could go to school. It was open-enrollment heaven for the schools charging the high tuition rates. There was no filter to screen applicants. Student loan debt is not exempted under U.S. Bankruptcy law.
What is the end result? Students that cannot find employment for the field that they were trained for cannot afford to make the loan payments. However, if you carefully review a lot of the cases you will discover that there was a prevailing attitude among many students that having degree = job. There still seems to be a general consensus among the public that you have to get a degree to get a good-paying job as well as an expectation that I have my degree, wheres my job? The schools did not (nor do they have to) provide a guarantee that you will get a job after graduating.
We created a system that provided loans for people that had dreams. But there was no screening filter (to ensure that dreams were not just pipe dreams, to dissuade people who did not have necessary qualifications, to counsel about other valid educational options such as community colleges, technical schools, in-state universities, or learning on your own, etc.). Too many people did not think about the loan repayments they would have to make later. Too much predatory marketing such as the tighten up the graphics or I cant believe we get paid to play games and a large population of people willing to believe it. Even after all the news blurbs, blogs, and postings on the Web why are people still willing to go into debt for $60,000 and up to get a degree for game art or related fields? As long as there are people willing to take out the loans there will be schools that are willing to take the money. Getting the word out doesnt seem to be working (perhaps it is getting drowned under all the marketing hype).
We dont want an implosion similar to the housing market. We dont want avenues of education reduced. We are facing a tough pickle.
ALL post-secondary education entities (public and private colleges) have been doing this. It's a pretty cut-and-dried law of economics that prices for x will increase to the maximum level customers will pay for it. If customers have the ability and the willingness to pay $10 for a banana, nobody is going to be selling bananas for $2. Bananas will be $10 - everywhere.
Imagine a sponge that represents sale price, in a pool of water that represents the market's purchasing power and willingness to apply that purchasing power for that good. The sponge will always expand to absorb as much water as possible. This is economics 101.
Well, that balances out pretty well when people stop buying something when it becomes more expensive than they can pay. It's a self-balancing equation provided that demand is self-limited by purchasing power.
But then we introduce federal student loans and fed subsidized student loans. They are literally an endless bucket of money. They're not effectively tied to the customer's purchasing power, they're derived from the lunacy of our federal budget, which is currently running on the notion of "when we run out of money we borrow more and if nobody will lend us some we print it." That's a whole other can of worms, but the bottom line is that with fed and fed-subsidized loans, up-front purchasing ability by customers became uncoupled from their actual ability to pay.
So what happens to the price of a commodity or a service when the customer has an effectively infinite checkbook? Prices rise out of control because they're trying to meet effectively unlimited up-front purchasing power.
This is the problem that led to the $2 billion lawsuit by the federal government against the company that owns the Art Institutes - they were shoveling enrollment into federal student loans as fast as they physically could, with no consideration or provision for the students' job prospects or likely ability to repay those loans. Students fail, loan is underwritten by the government, school gets the money whether the student repays or not. They took it to an (apparently illegal) extreme, but the same demand-price phenomenon is driving tuition and cost increases at every post-secondary learning institution in America.
It's being exacerbated by the fact that tens, maybe hundreds of thousands of people are going to college "to go to college" when they'd actually be much better served, and happier, and more successful, in an apprenticeship or trade school or other career route. That too has created an artificially and unsustainably inflated demand for college education, which has fed back into price expansion to soak up more of the available endless purchasing capacity...
...you see how it goes. It's a vicious spiral and right now student loans are a much worse bubble than the housing market. There are TRILLIONS in student loans outstanding, underwritten by both private lenders and the federal government - we, the taxpayers - that can't and won't be repaid.
If we try and throw the switch all at once, it'll make the 2008-2009 crash look like a weekend at the beach.
College and higher education has been a highly regarded and reasonable institution for the majority of human history. It's not our current generation's fault that that it was robbed from us by greedy bank loan schemes, that we should have had the good sense to not listen to our parents, not listen to all our teachers growing up who held education in such high regard. How can you expect those just entering the professional periods of their life to understand the ramifications of a sudden shift in student loan economics? They haven't even taken economics yet!
It's a little absurd to me how much blame has been put on the students for taking ridiculous loans (though maybe I'm biased). We didn't understand, these student loans only recently started getting out of hand and was largely out of the public consciousness at the time. I've never had a loan in my life, bought my first car with hard earned cash, but i was always taught college was a good investment so i went for it after falling in love with game dev in a QA job.
In theory the government is in place to prevent these sorts of catastrophes, to guide the economy with restrictions that prevent economic bubbles and collapses. Instead they've opened up the floodgates. I stress every day trying to find work and worrying about loans, and I feel it's largely out of my control. The brief stint that i found work as a 3d artist lasted 4 months before they liquidated the entire 3d team. I'm excited for an interview tomorrow that pays less than what i made before i went to school in a field completely unrelated to my degree. I just feel utterly defeated. I wont be able to do a lot of things an independent adult can do because a large portion of my check is going to loan debt, loan debt that stole 3 years of my life and at present gives almost no leverage against other poor saps who also have expensive degrees. I'd like to think i did very well in school, which makes it all the more harder to bear.
Of my three close friends who stayed behind in QA, 1 moved up to be a professional particle effects artist with no degree, and 2 others moved on to be lead game designers also with no degree. Outside of professions that explicitly require degrees for legal purposes they are fast becoming absolutely worthless, and as others are expressing in this thread, a sign that you're a fool.
Removed my whiny rant. I went off on a for-profit school tangent anyways.
Today the tables have turned a 180 degrees. If I had an 18 year old son right now, I would do everything in my power to convince him that if he went to college, he would most likely be paying 50-75% of his income to student loans. I would tell him to avoid college entirely unless you are 100% certain you will love what you're studying for. Hell, he'd have more money making $10 an hour with no student loans than he would of he was making 20 an hour with student loans.
I would tell him it would literally set him back 15 years financially.
I would like to say we have been lied to for our entire lives by our parents and teachers growing up, but that's not the case.
They wanted us to participate in the higher education system that existed when they were our age, not the one that exists today.
For all his posturing and pandering to Big Finance, President Obama has at least voiced his intentions regarding federal funding to private schools in light of perpetually increasing tuition fees.
The problem of regulation is not that of endless supplies of taxpayer money, it's of the political opposition. Mention regulation in the context of private schools and you're branded a socialist, or worse. Look at Romney's comments recently. What's even worse is that his views weren't just accepted, but applauded, by a factory full of blue-collar guys. Hardly his traditional voter base.
When a family earning up to $140,000 still needs to apply for scholarships so their child can go to a public university, it's time to stop the bullshit and admit that the system is broken.
I understand a lot of the arguments presented here. For me, going to school in the US and getting the loans opened up for me to be able to become a citizen, study a degree that in my country is not an option, and get into the market. I have been working in the industry for a while, both Movies and now games, and even tho i have a really high debt, if it wasn't for school, i would not be able to be here. I know a lot of people that try to break into the industry from outside, and there are laws that just make it so hard to get to work.
Anyways... just sharing from experience that this could make a difference, and i understand that some people put to shame degrees when they don't have to get a degree to get into the industry and are now leads or art directors or whatever. The thing to remember is that, i did go to school, i am now a lead, a citizen, an outstanding debt is still owed, and hopefully something like this can make my loans be ONE single loan, so i can pay it all off sooner than later.
Student loans are necessary for a lot of people to be able to attend a scool that isnt ITT Tech or ASU.
I don't know how any sane person, regardless of their political leanings or personal experience, could look at this data, and the higher education landscape in the U.S. in general, and find it anything less than completely fucking unbelievable.
Welcome to globalization. Getting a degree won't change that or help that, especially if you can't actually afford to pay for the degree.
Developed countries are going to need to invent a very revolutionary method of rewarding localization of labor sources to counteract the problem, because right now, when you and your high school diploma apply to anything except point-of-sale service jobs, you are competing with the entire global labor market. And that includes people in undeveloped hellholes who are willing to work for pennies per day.
I wasn't broke until after going to school, having a job for a bit, and then losing it during the current recession. I was repeatedly told whenever I'd bring up the costs, by everyone (parents, relatives, friends, advisers, everyone), that both of my degrees were an investment, and that I'd have a job right now in the field that I studied for, making enough money to easily pay these off and live a decent life. It even seemed like this was true for a bit when my Masters Degree resulted in me getting my first job that wasn't being a file clerk. This obviously didn't pan out though.
Anyways, would be interesting if this bill passed, but I doubt. I think more than anything they need more education for students about loans and how quickly things can get out of control.
And part of the problem is everyone always wants handouts. I'm not a dirty hippy and expect uncle sam to fix my dumb financial mistakes. I'm making a little more than $2k payments towards my loans each month. WAAyy more than what the minimum is. In fact.. i don't have to pay for the rest of the year already. I plan to have my loans and my wifes payed off in a couple years using a plan we made to help us make goals and plans for the future.
I know a lot of people in our industry who are odd about money too. They'll hand their money to a "professional" to invest and think they're making great plans for the future. Yet they'll make bare minimum payments on their loans. the interest they'll be paying on those loans for the next 30 years completely negates or atleast hacks away at the profits they made from the investments they might have done. When if you just get serious and throw money at the bad debt, it'll die sooner than later. and if you happen to be part of the crowd who get layed off/fired I'd rather have no school debt than have tons of loans to pay and investments that I can't even touch.
What does this mean, exactly? I agree completely that more emphasis needs to be placed on personal financial responsibility, but then you go on to say...
Whether you meant to or not, this came off as really smug and self-satisfied. It's wonderful that you and your wife can manage to accomplish those things, but a lot of people can't - and it's not always down to people being 'dirty hippies' or looking for handouts, it's because the cost of earning a degree at many institutions is wildly overinflated in comparison to the earnings potential of a given major.
Misleading prospective students with exaggerated employment prospects, hustling oversight organizations by providing bogus graduation rate data and jacking up tuition fees year after year are the real problems.
There will always be fiscally irresponsible people that slack off, produce crap work and graduate with a shitty GPA, then wonder why they can't find work in a competitive economy. However, using this minority as justification that the current system works is as misguided as the predatory lending people are rightfully complaining about.
yes, colleges claim alot and promise things that just don't happen. thats a problem because I was led to believe I'd be making 20-30k more than what I make now. when I realized what was going on I left and took the first job i could get.
not trying to sound smug or anything but my point is that until shit gets fixed and the govt gives you a nice check, bitching about it isn't going to do a damn thing. I simply meant that I basically overlook all the material crap that a lot of people see as must haves. I don't drive my car a lot, i've had the same car for 5 years, wife has had hers for 7. I don't eat out for lunch everyday, i bring leftovers from dinner the previous night. how many people do you work with that go out for lunch each day? Sorry, i didn't include my point about making large payments is that its not about how much money you make but how you use it.
a lot of us got into these bad loan situations, are in debt, cry for help and continue to make bad money decisions. So even if loans are to be forgiven, people will commit financial woes again somewhere.
but the bottom line is that, the govt shouldn't have to bail out the citizens every time a group of them are mislead or don't do their homework. I'll admit, I was young and dumb. yes my college might have been sneaky and misleading, shame on them, something should be done to make sure they can't fluff figures and expectations of their services. but if we start bailing out every one because they're fucking idiots, we're going to be in trouble. better to educate people in the first place rather than to bail them out after shit happens.
You say that people would commit financial woe in other areas, yet one of those areas you mentioned (lunch) is a huge economic stimulant, especially for small businesses.
The real financial woe is when you have so much inflated debt from student loans or medical bills that you are unable to spend your money elsewhere that actually helps keep capitalism alive.
Before I knew of all the communities (like PC) and all the tutorials out there (there's so much more now), I was suckered into attending one of the art institutes. The experience in itself was one of the best moments of my life, but these monthly payments are kickin' my aSS! Live and learn.
Bitching about it is really the only thing that we can do to help fix it. Unless one of us is also a member of the House or Senate (which would be awesome), we're only capable of talking about it, raising awareness of the bullshittery, creating petitions, calling local politicians, etc. :thumbup: There won't be a fix without public pressure and support.
I go to a community college. It's alright, in itself, but after reading everyone's experiences with AI and debt, I'm starting to appreciate that decision a lot more!
+1
I guess its a knee jerk reaction when people hear something will go up but once I had a look at the detail it turned out the old system like the one I am on is worse. This is because I will pay more each month than a new student and at the end of the day its often what you have to pay each month that counts the most.
oh dear god T_T
Its reading things like this and this whole subject really that make me wonder, it was harder for us to go to uni than our mothers and fathers generation and it many cases they didn't need to. So what's it going to be like for the generations below us? I dread to think.