WTF? Govt rewarding bad behavior Part II

[Anonymous]

Anonymous wrote:Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.

Assuming that a successful college graduate would earn, on average, $80,000 per year over the course of the 20-year obligation period, the repayment burden under the new plan will total somewhere around $4,500 per year, or $90,000 for the life of the loan. A less successful graduate who earns say $50,000 per year, on average over the 20-year obligation period, would have a repayment burden of just $1,500 per year, or just $30,000 over the life of the loan.

For students anticipating an average income, Pay As You Earn provides an incentive to borrow heavily: If you’re only going to repay $30,000 to $90,000, why not borrow $200,000? Frugality will be for suckers.

Colleges and universities will have no incentive to control costs. Why not build that new rock-climbing wall or performing arts center? Students will enjoy it and taxpayers will pay for it.

And, like OP, for those saving it will be that much more expensive as a result. You, fuckers, should be outraged..but still have blinders on like you did in the housing fiasco!

Students have racked up $1 trillion in debt in an era when they thought they’d have to pay it back. Imagine how much they’ll borrow now that they won’t have to pay the full amount.

In a way, Obama is turning higher education in to a third-party payer system (not too dissimilar from our current health care system – which is also characterized by outsized cost increases).

Income-based repayment (IBR) is a “disaster” that could cost billions of dollars in the future. The Congressional Budget Office (CBO) estimates costs and revenues for a 10-year window: Since IBR’s costs kick in 10 to 20 years in the future, it’s being treated as free.

This allows current politicians to claim to be helping students, while forcing future politicians to figure out how to pay for it. Needless to say, that is not a healthy way to make policy. If current politicians want to help borrowers, they should be the ones sacrificing other priorities to do so.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

jsteele wrote:What exactly do you think Obama is offering in terms of "relief". It's really not much and I can't understand why anyone would be outraged by it.

American conservativism is based on greed, jealousy, and resentment. There's no rationality to it. Rather than a political philosophy it's become a fig-leaf for excusing the worst of our human vices. Want to give billions to bankers? That's a-ok! They're the hard-working winners of the world. Want to reduce unemployed people's mortgage rates? OUTRAGE!!

It would be funny if it weren't so disgusting. Remember, they're the values voters, though.

I don't think anyone is excusing the banks. However, some dude that bought a McMansion he couldn't afford in the first place, nah. For each single poor down-on-his luck guy--- there are a half-dozen educated people that got greedy and wanted it all. There were those of us offered very big loans in the early/mid 2000s that did our own math, went the conservative route and managed to still be able to pay our mortgage even with job loss. I had a guy bragging at work back in the day that he got qualified for a 1.5 million dollar house. He was a GS-14 like me. I distinctly recall saying "just because you Qualify doesn't mean you can afford it. Now you want me to bail his ass out too? Check what was in the driveways of many of those foreclosed Phoenix, Ftlauderdale houses.... Sure wasn't a 10-year old paid off Honda. Values. Old-fashioned. Don't buy what you can't afford. Work hard and save. Don't take the easy route. Personal responsibility. "they just were lucky". That's lazy talk, son.

Dude, you spend a lot of time feeling sorry for yourself. Instead of feeling relieved (and proud) that you were too smart to fall into this trap, you end up just looking for some way to feel sorry for yourself about the situation. I am grateful every day that I'm not in that guy's situation. Stop looking for opportunities for self-pity!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

jsteele wrote:What exactly do you think Obama is offering in terms of "relief". It's really not much and I can't understand why anyone would be outraged by it.

American conservativism is based on greed, jealousy, and resentment. There's no rationality to it. Rather than a political philosophy it's become a fig-leaf for excusing the worst of our human vices. Want to give billions to bankers? That's a-ok! They're the hard-working winners of the world. Want to reduce unemployed people's mortgage rates? OUTRAGE!!

It would be funny if it weren't so disgusting. Remember, they're the values voters, though.

I don't think anyone is excusing the banks. However, some dude that bought a McMansion he couldn't afford in the first place, nah. For each single poor down-on-his luck guy--- there are a half-dozen educated people that got greedy and wanted it all. There were those of us offered very big loans in the early/mid 2000s that did our own math, went the conservative route and managed to still be able to pay our mortgage even with job loss. I had a guy bragging at work back in the day that he got qualified for a 1.5 million dollar house. He was a GS-14 like me. I distinctly recall saying "just because you Qualify doesn't mean you can afford it. Now you want me to bail his ass out too? Check what was in the driveways of many of those foreclosed Phoenix, Ftlauderdale houses.... Sure wasn't a 10-year old paid off Honda. Values. Old-fashioned. Don't buy what you can't afford. Work hard and save. Don't take the easy route. Personal responsibility. "they just were lucky". That's lazy talk, son.

Dude, you spend a lot of time feeling sorry for yourself. Instead of feeling relieved (and proud) that you were too smart to fall into this trap, you end up just looking for some way to feel sorry for yourself about the situation. I am grateful every day that I'm not in that guy's situation. Stop looking for opportunities for self-pity!

You are a schmuck. I don't feel sorry for myself. I hate seeing people portray themselves as 'victims' when it was their own greed that got them there in the first place. We keep portraying extreeme materialism as a great thing and we sink deeper and deeper into debt. Keep spending money for luxury items we don't have the money for. Way to go!

[TheManWithAUsername]

Anonymous wrote:I don't think anyone is excusing the banks. However, some dude that bought a McMansion he couldn't afford in the first place, nah. For each single poor down-on-his luck guy--- there are a half-dozen educated people that got greedy and wanted it all.

Cite? I personally have no idea what the ratios are.

This isn't a simple question. I'm sure that there are borrowers for whom none of us would have sympathy and whom none of us would want to spare. I'm sure that there are borrowers whom we would all agree were unfairly manipulated. Again, I don't even have a gut idea about what the ratio is, and I wouldn't think to generalize. It's strange to me that you feel so confident in your judgment.

Two things I am confident of: 1) the lenders were usually bad actors; and 2) regardless, the bad loans were a bad thing for society. Since we can't reliably educate the consumers - and we're making no effort to, anyway - the only answer is to restrict the behavior of the lenders.

[TheManWithAUsername]

Anonymous wrote:Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.
***
This allows current politicians to claim to be helping students, while forcing future politicians to figure out how to pay for it. Needless to say, that is not a healthy way to make policy. If current politicians want to help borrowers, they should be the ones sacrificing other priorities to do so.

These look like very good points. Anyone have a good counter?

I like that Harkin quote. We have to break out of this ridiculous liberal arts BA system. You pay $700 a month for 20 years for the certification your ability to sit in a chair for several hours a day and to write a handful of essays per year. Students get few practical skills, employers get little useful information, and in exchange colleges get lots of money. I look at the signs of those 99%ers writing about their loans and their ridiculous degrees and I waver between contempt and deep sympathy.

[Anonymous]

TheManWithAUsername wrote:

Anonymous wrote:Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.
***
This allows current politicians to claim to be helping students, while forcing future politicians to figure out how to pay for it. Needless to say, that is not a healthy way to make policy. If current politicians want to help borrowers, they should be the ones sacrificing other priorities to do so.

These look like very good points. Anyone have a good counter?

I like that Harkin quote. We have to break out of this ridiculous liberal arts BA system. You pay $700 a month for 20 years for the certification your ability to sit in a chair for several hours a day and to write a handful of essays per year. Students get few practical skills, employers get little useful information, and in exchange colleges get lots of money. I look at the signs of those 99%ers writing about their loans and their ridiculous degrees and I waver between contempt and deep sympathy.

."The schools keep the money, the students keep the debt, and the taxpayers lose," said Sen. Tom Harkin, D-Iowa, who chairs the Senate Education Committee. "There's a lot of similarities between what's happening with student loans ... and the housing crisis."

Yes. Back to what the topic was originally about. I don't think you'll get many comments because, just like at the beginning of the housing/banking crisis, most people were kept in the dark. The financial aid loan sharks aren't allowed to advise a student/family from assuming too much debt or to look at other options.

[Anonymous]

This program is going to encourage students to take on more debt instead of making wise decisions about where they should go to school and who much they should borrow based upon their future earning potential. It will punish the responsible and reward the irresponsible all at the expense of the taxpayers.

[TheManWithAUsername]

Anonymous wrote:Am currently earning 6 figures on a theology major. I don't see why I should pay a higher interest rate than some underemployed IT major just because you think you know who is going to be successful in life. You really have a problem with bitterness.

I moved this from the metathread.

I won't defend the other PP's ideas, but I think the response to this is that the question should be, "Why should the government subsidize theology and other liberal arts degrees?" (The subsidy here is in the guarantee of the loan.) I support government investment in the hard sciences, but generally not in the liberal arts.

[Anonymous]

Anonymous wrote:Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.

Assuming that a successful college graduate would earn, on average, $80,000 per year over the course of the 20-year obligation period, the repayment burden under the new plan will total somewhere around $4,500 per year, or $90,000 for the life of the loan. A less successful graduate who earns say $50,000 per year, on average over the 20-year obligation period, would have a repayment burden of just $1,500 per year, or just $30,000 over the life of the loan.

For students anticipating an average income, Pay As You Earn provides an incentive to borrow heavily: If you’re only going to repay $30,000 to $90,000, why not borrow $200,000? Frugality will be for suckers.

Colleges and universities will have no incentive to control costs. Why not build that new rock-climbing wall or performing arts center? Students will enjoy it and taxpayers will pay for it.

Students have racked up $1 trillion in debt in an era when they thought they’d have to pay it back. Imagine how much they’ll borrow now that they won’t have to pay the full amount.

In a way, Obama is turning higher education in to a third-party payer system (not too dissimilar from our current health care system – which is also characterized by outsized cost increases).

Income-based repayment (IBR) is a “disaster” that could cost billions of dollars in the future. The Congressional Budget Office (CBO) estimates costs and revenues for a 10-year window: Since IBR’s costs kick in 10 to 20 years in the future, it’s being treated as free.

This allows current politicians to claim to be helping students, while forcing future politicians to figure out how to pay for it. Needless to say, that is not a healthy way to make policy. If current politicians want to help borrowers, they should be the ones sacrificing other priorities to do so.

As someone starting to save for college for 5 year olds (yet to set up college accounts), wouldn't it be savvy to not save anything in the child's name, have them take out the full federal loans and then give them the money to repay the loans at the minimal rate? At max, they'll have to pay back $90K on $200K borrowed assuming 80K income.
Quite frankly, it seems foolish to scrimp and save for college savings now.

[Anonymous]

pp Exactly and that is the problem with this plan. I discourages responsibility and just going to end up being one more drain on the taxpayers. Smoke and mirrors. Why is the press ignoring this?

[Anonymous]

"As Halloween quickly approaches, millions of households are preparing to dole out handfuls of candy to kids. Coincidentally, the White House is doing the same in the hopes of courting younger voters back into President Obama's corner for the 2012 election.

In the most blatant of raw political giveaways, Obama yesterday announced a plan that would consolidate and reduce student loan debt. It would allow people who hold both direct government student loans and government-backed private loans to consolidate their debts into one single government loan.

The second part of his plan would cap repayments at a fixed level. Current rules limit the payments of college graduates to 15% of their income, with all debt forgiven after 25 years of payments, but this move will allow borrowers to pay only 10% of income, with loans forgiven after 20 years, making it easier to incur more debt and not pay it off. According to the Associated Press, the plan will affect more than 1.5 million Americans.

As a policy, this plan is troubling and simply reinforces the culture of irresponsible borrowing that led to the housing bubble. Think about it: If you can take your private loans and roll them into a public program (that is, the Federal Family Education Loan Program) and those loans are eventually forgiven, then what's the point in responsibly paying them back?"

[Anonymous]

TheManWithAUsername wrote:

Anonymous wrote:Am currently earning 6 figures on a theology major. I don't see why I should pay a higher interest rate than some underemployed IT major just because you think you know who is going to be successful in life. You really have a problem with bitterness.

I moved this from the metathread.

I won't defend the other PP's ideas, but I think the response to this is that the question should be, "Why should the government subsidize theology and other liberal arts degrees?" (The subsidy here is in the guarantee of the loan.) I support government investment in the hard sciences, but generally not in the liberal arts.

Why? This seems an indefensible bias. The country needs liberal arts majors as much as it needs hard science majors. Many of us English majors end up in technical writing, teaching, drafting tests, journalism, or other communication jobs. Similar fields could be outlined for other so called soft majors.

Enginners can end up as under or unemployed as lib arters, AND their degrees generally take longer to achieve, thus costing more.

[Anonymous]

Anonymous wrote:
Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.
***
This allows current politicians to claim to be helping students, while forcing future politicians to figure out how to pay for it. Needless to say, that is not a healthy way to make policy. If current politicians want to help borrowers, they should be the ones sacrificing other priorities to do so.

These look like very good points. Anyone have a good counter? .

So, can anyone actually defend this plan on its merits?

[Anonymous]

Anonymous wrote:

TheManWithAUsername wrote:I won't defend the other PP's ideas, but I think the response to this is that the question should be, "Why should the government subsidize theology and other liberal arts degrees?" (The subsidy here is in the guarantee of the loan.) I support government investment in the hard sciences, but generally not in the liberal arts.

Why? This seems an indefensible bias. The country needs liberal arts majors as much as it needs hard science majors. Many of us English majors end up in technical writing, teaching, drafting tests, journalism, or other communication jobs. Similar fields could be outlined for other so called soft majors.

You picked probably the most useful of them. Art history and comparative lit, e.g., don't have those "similar fields" other than teaching them to others.

While getting that English BA that prepares you for one of those useful jobs, you still probably spend the majority of your time in classes that have nothing to do with the job, e.g. all those lit classes. The combination of the BA and the liberal arts is what makes it so relatively useless.

Here's an easy test. You're starting the first university in a very poor country, and it will be 100% publicly funded. You have no good reason to employ any kind of degree system like ours. What's your ratio of engineering or biology classes to classes in history or philosophy, which are relatively useful humanities? How many students would you fund to learn medicine before you funded your first student of comp lit? How many would you fund to learn basic, vital trades before funding comp lit or art history students?

Anonymous wrote:Enginners can end up as under or unemployed as lib arters

"Can?" Anything's possible for an individual, but the fact is that they aren't as often unemployed or underemployed: http://economix.blogs.nytimes.com/2011/05/19/the-college-majors-that-do-best-in-the-job-market/

I don't know if that's the point, though. The question is whether hard sciences or liberal arts are more important to society on average.

Anonymous wrote:AND their degrees generally take longer to achieve, thus costing more.

? What two things are you comparing? I guess a 3/2 engineering degree takes 25% more time than a BA in fine arts, but that's still a pretty easy call for me.

And one reason the 3/2 takes that long is that we force them to take a bunch of BS classes along the way. These are really apples and oranges. To compare, we would have to distill them down to the necessary classes, then question the utility of those.

[TheManWithAUsername]

^ That was me. I seem to be getting logged out more easily.