Students to feel pinch in debt deal

Discussion in 'General Distance Learning Discussions' started by imalcolm, Aug 2, 2011.

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  1. imalcolm

    imalcolm New Member

    Debt ceiling deal to hit grad students hard - Aug. 1, 2011
    More at the link.
     
  2. Pelican

    Pelican Member

    If the loans are cut off, then most graduate students will have less money, and less people will be able to complete a Master's degree. So, will the overall costs of graduate school decrease?
     
  3. Randell1234

    Randell1234 Moderator

    I doubt it but the value of having a graduate degree will go up.
     
  4. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    I expect not, since most people interested in graduate study will simply take out all unsubsidized loans instead. Almost no one ever thinks about the eventual repayment, no matter how much it will be.
     
  5. dlady

    dlady Active Member

    What is frustrating here is that it was the healthcare bill that ended private lending for education (odd but true). So, instead of the markets being able to step in and provide students loans, now only the government can by design, linking debt spending to education spending.

    Further, if you really look at the FSA system in place, it is very broken. If you attend say a low cost DL school, you can still take out more loans than just the program costs. So for example a 2-year online MBA that might cost a total of $5k all in often results in students loans around $40k to $60k.
     
  6. AUTiger00

    AUTiger00 New Member

    I've been listening to a lot of talk radio at work lately and there was an interesting case made yesterday for why tax payers are even paying for people's education. It might make me a hypocrite because I did use federal aid while in graduate school but I agreed with the host. Tax payers shouldn't be on the hook for someone else's education. You do away with the loan program and i guarantee tuition prices drop.
    In defense of the show host, he did work his way through college without utilizing loans.
     
  7. jts

    jts New Member

    In defense of everyone else, it's not always feasible for many/most people to "pay as they go" with tuition being so high. Especially now, when students have a hard time finding jobs in the first place...
     
  8. dlady

    dlady Active Member

    I think we should get rid of the department of education altogether. I didn’t realize that this was a general GOP viewpoint until very recently. Does that make it wrong? We could save $1T and let the states do their jobs at the same time.

    If we got rid of FSA also we would save another $1T over ten years. Let the banks and other institutions provide loans at competitive rates. Students still get access to the lowest cost loans available and we as a country save $2T over ten years. Plus then the market 'invisible hand' could correct some of these silly high tuition prices.

    What’s wrong with that?
     
  9. StefanM

    StefanM New Member

    The whole point of FSA is to enable individuals to pursue education who would otherwise be unable to do so. There is nothing stopping banks from offering loans at competitive rates now. The problem is that unsecured credit is very risky, and the rates reflect that, so the student loans in the marketplace have high rates and have stringent income requirements.

    Removing FSA would mean that many students simply would not go to college due to inability to pay. Sure, we can claim that they should "work their way through" college, but who can find a decent job in this economy? Even if you can find one, good luck on finding a job that accommodates a college schedule. After all, not everyone is suited for DL.

    Furthermore, large numbers of institutions would simply close under the shock of losing a major source of tuition revenue. Local economies would suffer from closures.

    All of this adds up to having a massive shock of the educational system, and very few benefits would emerge. Sure, tuition would probably go down at many schools, but they wouldn't be able to afford instructors.
     
  10. dlady

    dlady Active Member

    I think there is more to it, but I'm not really passionate about debating it...
     
  11. ITJD

    ITJD Active Member

    So my point here is not to debate your points, but rather to provide a series of counter points. This may meet the definition of debate, but I will not reply to counters to my points.

    I'm doing this because you make a decent argument for entitlement, but it's skewed in favor of the existing student loan system, which I'm not 100% behind given the current economic situation. In fact, I'm rather terrified that we're going to hit an aftershock recession that is far worse than we've experienced to date. Student loans will be the least of our issues then.

    1. Removing easy to access, completely defer-able loans from the marketplace will eventually lower tuition rates as a result of demand reduction and will likely speed up the adoption of online learning models and the instructor as mentor model.

    2. Most students end up with a $200 USD per month bill at the end of four years. Paying loans off immediately means that that payment grades over time and is small to begin with. I was making $125 part time after taxes a week as a customer service rep while going to Northeastern back in 1992. Are you telling me that others can't?

    3. This comes down to the basic question of "do you really want an education?" Are you going to school because you've got talent or because you want a free ride for a few years while you "figure things out"? People who want an education and are talented will get one, and people who can't "figure things out" will not get one immediately. This, with all secondary factors such as discrimination and social casting aside, is not at all unlike the way things were prior to FSA and truly isn't much different from the way things are now.. except you'll need to pay back your loans while in school.

    Oh well. There are something like 9000 colleges and universities in the country. That's way too many to begin with and a sign that there's something fundamentally wrong with the educational system; more schools in the US than anywhere else and our kids still aren't holding a torch to those coming out of advanced programs in other countries. (including those getting advanced educations here from other countries.)

    I would be happy to see some schools go.

    I can think of a few benefits:

    1. Only the people truly qualified to teach, will be teaching and those doing it for a second income or as an ego boost alone, won't be. This straight up will likely improve the education for people who do go to school.

    2. Only the people who truly want an education and are willing to start paying for it responsibly will be in the classrooms. This will likely improve the learning experience for those in the classrooms and likely improve outcomes.

    3. Most importantly, the loan system won't be contributing to crippling debt to anywhere near the amount it does now, because those who don't pay their first loans, won't get second ones. This is common sense and along with other saving measures, likely saves some semblance of the quality of life we're experiencing now, for my son.

    All the above said, we can agree to disagree. You've made good points.
     
  12. AUTiger00

    AUTiger00 New Member

    The problem with the FSA program is that it has inflated tuition prices. As the amount a student can borrow goes up, so does the tuition at most institutions. You can't argue there isn't a correlation. Do away with the FSA and access to "easy money" and tuition will drop. People who want an education will find a way to get one. Elite schools will still provide scholarships to the best and brightest, and lets be honest, there are a lot of kids in third- and forth-tier schools that have no business in a college classroom.

    Our society has beat the idea that you MUST get a college degree into the populations head and now every kid who can graduate from a public high school with a 2.5 GPA thinks they need to go $80k-$100k in debt in order to make something of themselves. We do a lot of kids (and the tax payers footing their tuition bill) a disservice by allowing them to acquire debt for a piece of paper that won't take them very far because regardless of whether they graduate or not once they are in an entry-level white collar job in the work force it becomes apparent rather quickly they aren't cut out for that line of work.

    I know many here think I come off as a heartless dick but the truth is somebody has to dig ditches. Better to be digging ditches without $100K in debt on your back.
     
  13. foobar

    foobar Member

    This is precisely the problem. A lot of the people that worked their way through school did so when tuition was much lower, even when adjusting for inflation. It was possible to cover tuition and living expenses working a part-time minimum wage job. That's not necessarily the case today. In many if not most states, their is a sizable gap between what a minimum wage job pays and tuition costs.

    Don't blame the schools! Many public institutions that used to receive 50 percent or more of their budgets from the state are receiving less than 20 percent with after cuts year after year - the missing state support is coming from tuition.

    Grades matter a lot more than they did fifteen or twenty years ago. A student that underperformed in the classroom due to work commitments back then still had a shot at a job after graduation. My students that work their way through school and graduate with low gpas find that employers like the fact that they worked their way through school but still hold their gpas against them. These students are left wondering why they bothered.
     
  14. NorCal

    NorCal Active Member

    Leave it to the folks at DegreeInfo to take a series of simple comments and turn them into a full on debate, lol.
     
  15. Abner

    Abner Well-Known Member

    I actually agree. Many young kids coming out of High School might be better served doing an OJT apprenticeship through a union or other organizations, like carpenters, electricians, plumbers, etc. Most unions pay for the training during the OJT phase, and upon completion of licenses, certificates, etc. the journeyman can make a good decent living wage with benefits. They can do all this without 50-100K hanging over their head (with interest).

    I also agree with your statement "People who want an education will find a way to get one." I obtained my education with no aid of any kind, I paid for it all out of pocket even though it took a LONG time. This may make me admittedly biased. Having said that, I think we should attempt to help people, but we need to cut WAY back. At the same time, I do think it is fair to recscind tax loopholes directed at oil companies for example, so they can sacrifice as well. Let's all share in the pain. It's time.

    Night!

    Abner
     
  16. major56

    major56 Active Member

    And that IDEA drumming via society has been equally, if not more so, promoted /marketed via the much subsidized, postsecondary education empire as well (e.g., a flood of capital leads to massive overcapacity, devastating entire industries). The old adage “Follow the money…” rings true yet again.

    We’ve all pretty much bought into the [idea] of formal academic education and its advocated grand importance. The postsecondary education industry has been over-financed, oversold and overbought— leading to a glut of degree holders as well as degree awarders in the marketplace. So in actuality, the degree plays little into a meaningful or relative differentiation as regards competitive advantage. The postsecondary degree has essentially been relegated to just another cost of doing business; its strategic importance has diminished.

    What makes a resource (e.g., degree) strategic - what gives it the capacity to be the basis for a sustained competitive advantage is— scarcity. We only gain an edge over rivals by having or doing something that they can't have or do. And as the opportunities for degree advantage continue to narrow, the consequences for overspending will only increase. Historian David S. Landes once wrote… "Optimism about a future of indefinite progress gave way to uncertainty and a sense of agony."
     
  17. Pelican

    Pelican Member

    Unsubsidized loans seem pointless. Can someone check my math?

    Let's say I need to borrow $3,000 for school. The bank gives me $3,000 up front, but the minimum monthly payment it $60. It takes me two years to graduate, so by the time I've finished my studies, I've already paid for half of the loan! But wait...I can't pay that $60 a month, because I'm in school, so I'll have borrow more money so that I can make the monthly payments while I am in school:

    Because I'd have to be paying the same money back, if I needed $3,000 for tuition, I'd actually need to take out $5808 in loans, before I'd actually have $3,000 which I could actually give to the school. That would leave me with $117 in monthly payments (totaling $2808 during the two years).

    So why would I want to borrow the money in the first place? Maybe I need more training for my job?

    Sure, lots of people get a Bachelor's degree not knowing what they want to do. But how many people actually go to graduate school without knowing what they want to do? After all, its not just a lot of time and money, but a lot of hard work and stress. I wouldn't sign up for that unless I absolutely had to. Do you really see the same crowd who go to school just for the parties at graduate school?
     
  18. Pelican

    Pelican Member

    Yeah, some people are making lots of money doing that. But are there really any jobs in this? If I have the skills, can I open the newspaper and nab a carpentry job?

    Shouldn't it be the other way around? More people should be getting advanced educations? With so many jobs moving overseas, shouldn't people be retraining in areas that can't be done more efficiently elsewhere?
     
  19. StefanM

    StefanM New Member

    Well, a carpentry job can't really be outsourced....

    One thing I do think is not emphasized enough is vocational/technical education.

    There is no reason for some marginal students with minimal interest in a college education to waste time and money getting a four-year degree. Many of these students could make good amounts of money by pursuing one and two-year technically oriented programs at community colleges. A student can usually get a solid credential for a few thousand dollars, and they will be entering the workforce sooner. Also, it's difficult to outsource mechanics, etc.
     
  20. eilla05

    eilla05 New Member

    Very good points! I know 2 people personally who have gotten in way over their heads for the job market and job in general that they will be able to get. One of them is 70k in debt for a bachelors in IT management from Devry, the other is going to be 25k in debt for an associates in Criminal Justice from Daymar college. Seriously what jobs are either of them going to get that is going to allow the repayment on that kind of debt? I might sound like an a$$ here when I say that they should have stricter requirements for allowing people to fall into the income based repayment for student loans because that is exactly what both of these people will do, And I honestly believe that this sort of thing is only making the problem worse overall for everyone.
    Something is wrong with our society in general if we make it acceptable for people and schools to allow this to happen.
     

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