Student loans and Obamas statements today..

Here is something that came out today from the Obama camp...

"Obama will also call for caps on some student loans, limiting a borrower's payments to 10 percent of his or her income, and forgiving all remaining debt after 10 years of payment for those in public service work — and 20 years for all others."

Ok I am going to do some math, so please correct me if I am wrong in my assumptions and calculations, both mathematically and philosophically.

Here is the tale of two students, students A and B.

Student A and B both go to Harvard for 4 years. Neither one of them earns a scholarship, so they take out student loans from Sallie Mae for example. The average cost per year to attend Harvard is $52,000. So each student will have to pay approximately $200,000 over their four years in school.

So Student A and B both owe Sallie Mae $200,000. Student A comes out swinging from college and lands an $80,000 job in the corporate world. So he is exempt from the "and forgiving all remaining debt after 10 years of payment for those in public service work " and is in the "20 year boat" Lets just assume Student A maintains his $80,000 salary for 10 years and is promoted to a $120,000 salary for another 10 years. So for the 10 years he is employeed at the $80,000 level, he pays 10 percent of his income or $80,000 total over that time frame. During his time working for $120,000, he pays a total of $120,000 to pay off his student loans! When it is all said and done, student A has paid back all his student loans! Good man.

Student B "struggles" a bit and gets a $50,000 job working in public service sector. He works for 10 years making $50,000. So over that 10 year period he pays back $50,000 toward his student loans. $200,000 (owed)-$50,000 (paid)=$150,000 still owed after 10 years....but he is to be forgiven all remaining debt after 10 years for those in public service work.

So who picks up the tab to pay Sallie Mae back the outstanding $150,000?

Wouldn't it be a solid plan to get a $200,000 loan, upon graduating go to work in the public service sector for 10 years, have your student loans forgiven, then move into the private sector to make more money? So one could basically dupe the american tax payers and have them pay off their loans?

This kind of burns my butt as my wife just finished paying off ALL of her students loans from college this month.

 

Really makes no sense at all. I figure I will be paying off my student loans for the next 20 years still.
But then again maybe it will only be 10 years : )

 

Maybe another way to look at it is the government will pay for part of your college education if you are willing to devote 10 years as a public school teacher, police officer, social services worker, children's aid worker, etc. I am actually good with the government investing in its citizens like that, even paying all of the tuition, as opposed to giving 1.4 trillion to financial institutions so they can continue the same insane practices that caused economic problems to begin with.

 

But Bruce, isn't "the government" really "me and you" in terms of who is paying for someone's outstanding debt to their student loans? The money is not going to just be there, we are going to be taxed in some manner. Shouldn't students think about their college choice prior to attending in terms of how it affects their pocket book? I see shopping for a college no different than purchasing a home or car. The consumer has to take the responsiblity to research their investment and should not expect someone else to pay for their decisions.

I have worked in the public service sector for over a decade now and if I had loans, I WOULD NOT want the government to forgive my debt. I incurred the debt, now it is my time to pay.

 

I would rather see my taxes invested in school teachers and law enforcement, to name a couple, than banking and finance or foreign countrys. Your good at searching for info. Check and see how much money our government gave away to foreign countrys in the last decade. Heck, just check how much we have given egypt in the last 10 years. Then ask yourself what that money could have done for our citizens. How many college degrees would foreign aid pay for? If you want to be upset look at foreign aid, not at the money invested in our own citizens.

The money we have given away in foreign aid could pay for the health care (and more) of all uninsured U.S. citizens.

 

Bruce,

"Check and see how much money our government gave away to foreign countrys in the last decade. Heck, just check how much we have given egypt in the last 10 years. Then ask yourself what that money could have done for our citizens. How many college degrees would foreign aid pay for? If you want to be upset look at foreign aid, not at the money invested in our own citizens.

The money we have given away in foreign aid could pay for the health care (and more) of all uninsured U.S. citizens. "

I will ALWAYS agree with you on the wasted money via foreign aid. It is pathetic that we choose to pay for other people and neglect our own. I know we have an image to uphold in order to remain the world's hegemon, but come on....

Here is one that will blow your mind...the bastards in North Korea, you know the one's that teach their children to sing songs about shooting americans while in school?

In response,
the United States in 1995 began providing the DPRK with foreign assistance, which
has totaled over $1 billion. This aid has consisted of energy assistance through the
Korean Peninsula Energy Development Organization (KEDO), food aid, and a small
amount of medical supplies. (See Table 1.)​

Table 1. U.S. Assistance to North Korea, 1995-2003

 

Brett,
Now you see what I am talking about. If we had spent that 1 billion on our own citizens I am sure we would have received a much better return on our investment. How many college degrees can we get for US citizens with 1 billion over 14 years? And they wouldn't even have to pay it back.

It's not Obama or Bush or Clinton or Bush or........it's all of them. If politicians would consider their own citizens a special interest, the special interest, this country would be in much better shape. But there is no money to be made in pandering to ordinary citizens.

 

Bruce, when we are "blackmailed" to send foreign aid to countries like North Korea, we lose. NK said they were going to be making nuclear warheads and the US "blinked" in the response, or showed fear. So we were blackmailed into sending them foreign aid. This is why I could never be President. I would say to North Korea, "You say you hate Americans, you aim your interballisitc missiles at our allies on occasion, so NOW you are deemed a threat to our nation.....if we see any evidence of ANY nuclear warheads being built, we are going to blow your capital city to pieces..then were are going to hunt you down (the leader) and kill you"

 

VS,
couldn't agree more with your feelings toward the situation...people need to understand that WE are the govt...we pay for any and all handouts (and the foreign country support is mind boggling)

But to answer one of your questions...I would still work as hard as I can to be Student A.
Over 20 year span net income after loan payments is $1,780,000. Student B (and let's assume the same 50% pay increase for yrs 10-20) would have net income of $1,150,000.
Student A still makes $630,000 more (or $31,500 per year) more than Student B by taking a risk...sounds good to me. (oh, and student A would also be paying more to the Govt to relieve the school loans of Student B).

...but again - how much can the govt really hand out...is the real point here.

 

Bz--I hear you on the monetary differential between both students and why it still pays to be Student A. But on principle alone I have a big problem with the proposed law.

 

http://www.vaughns-1-pagers.com/politics/us-foreign-aid.htm

 

I am an adult full time college student. I returned to college after nearly 20 years in finisih carpentry. I am majoring in Operations and Supply Chain Management. I expect to graduate with roughly 50k in loans. That is if I do not follow up with a masters program, which could run me another 20k.

I have no problem in paying for college/education. I think that it is an investment in my future, or the future of anyone attending a university. They say that the average college graduate will earn somewhere between 1 and 1.5 million more in their life as opposed to one who goes directly into the workforce. That seems as a pretty nice return on that investment.

I do not agree that we as taxpayers should be footing the bill for anyone to get a college education, not even teachers, police, IRS tax accountants, NO ONE! Why the heck should I be footing the bill for some of the laziest bunch of employees in America. We have enough problems with teachers strikes, police unions, and gov't employees in general. If we want to improve the quality of our gov't employees we should get rid of the unions and implement a system of merit pay. This crap of giving them pay increases for longevity or seniority is the down fall to the system and provides no incentive to acquire the best person for the job. Free college will do nothing but contribute to the problem.

 

Why should the taxpayer give you a low interest loan? You are borrowing taxpayer money and you don't even have to pay it back until after you end your schooling. The reason it is low interest is because it is guaranteed with taxpayer money. You didn't have to put up one dime of collateral. The taxpayer is footing the bill for your education until you pay it back, if you pay it back.

So teachers and police are the laziest bunch of employees in America? I am guessing you don't know any teachers or law enforcement officers. You do know why police officers wear bullet proof vests, don't you?

 

So what's their incentive to get a high paying job?

You could work as a pizza boy.....or do work under the table for 20yrs.....

Then....get a real job with your Harvard degree.....and never have to pay much at all "back".

Better yet.....you could do "non-profit" work (attorney/acct./etc...), then hang your own shield, after the time limit.

 

LOL I think the incentive to get a high paying job is the high pay.

 

With higher pay comes much higher taxes. Figure in the amount of taxes Student A would pay over 20 years as compared to Student B, and I bet the disparity between the overall earnings of each student would narrow considerably.

What I am trying to say is, a person earning around 100K a year will pay on average around 20K in taxes. A person earning 50K a year will pay around 8K a year in taxes.

So Student A pays on average 20K a year in taxes over 20 years, or around 400,000 total.

Student B pays on average 8K a year for 20 years, or 160,000 in total taxes.

So Student A pays 240K more in taxes over the same time period, plus losing out on the 150K in the original student loan issue I stated above as compared to Student B...So all in all Student A is out almost 400K as compared to Student B over a 20 year time period. That is a good $20,000 a year swing in Student B's favor.

 

Personally, I would rather be person A. Who would you rather be? Do you know anyone that would choose to be person B? Do you really think person B made out better than person A? Who will have a better retirement A or B? Who has a better health plan A or B? You can hypothesize all you want and maybe we hang around different people but I don't know anyone that choose B over A just to get out of paying back a student loan.

 

I agree with you Bruce, but it is the principle of the matter to me. The proposed law change in regard to student loans reeks of socialism.

 

I guess it is all in how you want to look at it. Like I said previously, if we are going to give away billions of dollars then I don't have a problem giving it to American citizens so they can get a college education. What does giving away billions and billions of your tax dollars to foreigners reek of?

 

Like I said before, I don't disagree with you on your foreign aid argument. It reeks of politicians padding their pockets with kickbacks and favors.