Student loan reform 2013 white house petition

Dear Fellow Students,

I have started a petition at whitehouse.gov to ask President Obama to reform student loans and lock the interest rate at 1%. I urge you to please visit the petition at
http://wh.gov/QXwn and sign the petition. We have only 2 weeks to get the required signatures to have President Obama address this national issue. Please spread this information to College and Grad students around the country. I have exhausted Facebook, however we need more people to be passionate about the student loan crisis and encourage everyone we know to sign this petition now.

STUDENT LOAN REFORM PETITION 2013
http://wh.gov/QXwn

All The Best!

Richard Darsky

 

sorry for the delay in approving the post

 

The interest rate is not the problem, it is the increasing cost of tuition that is the issue. Limiting the interst rate will eventually decrease opportunities available as these financial institutions will choose to forgo student loan products as a 1% return will no longer be worth their trouble. As long as the vast array of government guaranteed loans exist, educational institutions will have no incentive to reform pricing.

The student loan "crisis" exists primarily because people take out loans to pursue degrees that do not produce the return on investment needed to sufficiently cover the debt.

 

As a collector on defaulted student loans...

... I must say that with the myriad of options available for repayment, it is far too often the case that the individual makes a conscious decision to ignore his/her debt. True, there are those who are in true financial difficulty and for whom any payment is burdensome, but even for those individuals there is relief (called an Administrative Resolution).

Having seen both sides as a student with loans and as a collector of delinquent loans, I can truly say that the rules are skewed in favor of the student. However, they do need to take responsibility and make a phone call to investigate what options may be available for their situation. No one put a gun to their head and made them sign a contract for repayment of a loan.

 

Excellent point. It seems many people do not want to take responsibility for their own actions these days. That goes for private citizens, students, and MNCs. The bailouts need to end.

 

I don't support the petition not because I do not have any student loans at this point. Eventually, I will have to take out some student loans for my Doctorate program. I do not support because students must understand the return on investment (ROI) for their education. If you cannot do a simple calculation, what is good with a college degree. Secondly, instead petition for lower interest rate or loan forgiveness; the real deal with tuition inflation. For example, Kelly Space, who graduated from Northeastern University with a Bachelor in Sociology. She owes $200,000.00; and she blamed that she was the first in family went to college. The real problem here is her decision not anybody else.

 

Unfortunately, you are wrong. The real problem here is that you, and I, and all the other taxpayers, are on the hook to pay off those loans if she can't do it.

And let's face it -- she probably won't be able to do it. She won't be able to find a high-paying job with that degree, and so the interest on that debt will accumulate faster than she can pay it off. So the taxpayers will have to make good.

Here's a question for you: do you think Kelli Space, as an 18-year old with no employable skills, would have been able to borrow $200,000 for a home loan, or a car loan, or any other kind of loan? Of course not. Any lenders would laugh in her face. Those would obviously be risky loans, right?

So -- how was she able to borrow $200,000 for an obviously risky student loan?

Because it's not risky to the lender. The lenders are guaranteed repayment -- by you, and me, and the other taxpayers.
That's the real problem.

If you want to stop obviously stupid loans, here are the options:

(1) tell the students (who are typically teenagers or in their early 20s) not to make stupid decisions.
(2) tell the lenders (who are much older and wiser) that there are no guarantees of repayment on a stupid loan.

Which of these is more likely to work?

 

The National Association of Colleges and Employers September 2011 salary survey reported 125 offers to candidates for bachelor's degrees in Sociology. The average starting salary offer was 36 792.

Fields the average starting offer for Sociology exceeds here include Social Work (32 852, n=51), Health & Related Sciences other than Nursing (35 568, n=80), and Secondary Education (34 973, n=71) (and actually all categories listed under Education, including Elementary and Special).

Sociology is no Petroleum Engineering (82 740, n=205, though this is a staggering outlier pummelling even other engineering fields. And I've read even here on DI, and it makes sense, that petroleum engineering is subject to a dramatic boom and bust cycle).

In between, it's true, there are a number of other fields with higher average starting salary reports. But Sociology still places above several respectable fields with direct links to good careers. And it isn't too far removed from some others whose market utility no one ever seems to question: how about International Business (40 926, n=102), or Chemistry (41 001, n=84).

NACE Salary Survey: A Survey of 2010-2011 Beginning Offers [pdf] (National Association of Colleges and Employers, Fall 2011; file hosted by Goucher College)

 

A rational lender will not loan $200,000 to a student who hopes to earn a future salary of $37,000. It's questionable whether someone could qualify for a $200,000 mortgage loan today with an income of $37,000. And that's a much less risky loan, because the bank can repossess the property in a default.

Now, during the real estate bubble, a few years ago, the banks did make $200,000 mortgage loans to people with low incomes and bad credit. And that turned out to be a bad idea too.

The international businessman or chemist has more potential for salary growth than a career in sociology. The international businessman can reasonably expect a higher salary after a few years of work experience; the chemist can reasonably expect a higher salary after a few years in graduate school. The sociologist starts at a lower level, and won't keep up, even with work experience or an advanced degree.

 

I have always been very responsible with spending, and regardless of the number of people who tried to tell me that no amount is "too much" for education, I have never bought into that. I am by no means a rich person and when I first started college at almost age 30, I was a truck stop waitress.

I must admit that I am not all that supportive of legislation that seems to reward (or at least have few or no consequences) for those that make bad decisions and are not responsible to pay back the loans they take out. The only time I ever took out any sort of educational loan was during the time period I did my student teaching. Extenuating circumstances and the need for childcare while I did this required me to borrow some money. I paid it back within a couple of years and have never borrowed for my own, or my children's education since that time. I also forced my children to take responsibility for their own loans, and highly encouraged them to take steps to assure their paths in life would lead them to be able to pay back any loans they took out.

Not that I think everyone should necessarily do it my way, I personally would have never signed up for a doctorate program if it meant I had to borrow money. I saved my money first, paid the tuition up front, received a 10% discount on the overall tuition, and locked in the rate for the duration of my program with NCU (which was about half what tuition is now for the same program).

 

Basically, I agree.

I think it's important to keep in mind that very, very few graduates of bachelor's degrees in sociology are getting jobs classed as "Sociologist."

I think the set of jobs a sharp sociology graduate can make competitive bids for has a not insignificant overlap with those for which the International Business graduate can bid. For two of the more obvious fits, think human resource professional, or market researcher.

With appropriate coursework completed – within their sociology programs – and competencies they can show, many graduates in sociology should be strong applicants for entry-level professional jobs in criminal justice, gerontology, other human services, policy analysis, technical communication, and/or general administration. This last in the government, nonprofit, and health sectors especially, though not, I think, exclusively.

A lot of this work still pays at decent middle-class levels, often enough, doesn't it? And many of these career paths still would seem to offer competitive opportunities for advancement and salary growth.

Also, for what it's worth, I'm pretty sure a larger share of the Sociology than the International Business grads go in to the public sector, which often makes up for some shortfall in salary with advantages in job security, pensions, and perhaps other benefits.

 

But even without such legislation, the people who make the bad decisions aren't responsible for paying back the stupid loans.

If they can't make the payments, then you are responsible. The loan is guaranteed by the US government, meaning taxpayers, meaning you. In effect, you (and me, and all the other taxpayers) co-signed all of those stupid loans. Without Uncle Sam as co-signer, there's no way that anyone lends $200,000 to a 19-year old girl just because she is interested in sociology.

 

I have nothing against a sociology degree by itself. If it gets you a decent middle-class job, that's great.

But it makes no sense to borrow $200,000 -- whether for a degree in sociology or business or chemistry -- so you can maybe qualify for a decent middle-class job. Those economics don't work (except, or course, for the lenders and the schools, who are guaranteed payment regardless of the student's outcome).

 

To be fair, our subject maintained satisfactory academic progress at, (finally graduating from), a high-tier national university. Just being interested, and admission anywhere, would have only gotten her a first term. She did put the work in to her education that the system needed to continue lending her money, for several years.

But the system is all messed up, we agree.