Student Loan Payment Pause 'Gone' Under Debt Ceiling Deal 399
Longtime Slashdot reader theodp writes: House Speaker Kevin McCarthy (R-CA) said on Sunday that the student loan payment pause is "gone" in the debt ceiling deal announced by the California Republican and President Biden late Saturday night. "The pause is gone within 60 days of this being signed. So that is another victory because that brings in $5 billion each month to the American public," McCarthy told Fox News on Sunday. McCarthy's remarks came after he and Biden came to an agreement in principle late Saturday to cap spending and raise the debt ceiling.
"What the president did, he went unconstitutionally and said he was going to waive certain people part of their debt for student loan, but then he paused everybody's student loan. So everybody who borrowed a student loan within 60 days of the signing is going to have to pay that back," McCarthy added. "The Supreme Court is taking up that case. But if the Supreme Court came back and said that was unconstitutional, the president could still say he's pausing, not waiving it. But now that this is in law, the Supreme Court decision will have to be upheld, that they would have to pay."
Earlier this month, the NY Times warned students and their families to "Expect Interest Rates on Federal Student Loans to Rise" to as high as 8.05% for new PLUS loans this fall. That news came as Apple, just days after a recent $90 billion share buyback, filed a prospectus with the SEC for a new $5 billion bond program with longer-term bonds expected to have a coupon rate of approximately 5%. The imbalance between loan rates for students and Apple shareholders was actually far more pronounced before the Fed fund rate hikes started last year in response to inflation. During the pandemic, Apple -- which reported around $166.3 billion in cash and investments on its balance sheet as of March 31 -- held a bond sale worth $14 billion for stock buybacks and dividends to benefit from borrowing rates as low as 0.70%. Direct PLUS student loan rates at that time were down to 5.30% for new loans but as high as 8.5% for existing loans (the U.S. Dept. of Education does not offer refinancing of its up-to-30-year fixed rate loans in times of much lower interest rates). Unlike the tax-deductible interest Apple pays, annual deductions on student loan interest are capped by the IRS at $2,500 (or lower, depending on the borrower's income).
Despite presumably benefiting from stock buybacks and dividends facilitated by Apple's low-interest bonds -- some of which carry rates as much as 90%+ lower than certain federal student loans -- some of the Senators identified as Apple shareholders by NBCLX are vehemently opposed to the idea of student loan relief for high interest-paying borrowers. Senator Shelley Capito (R-WV) opposes the program as "not fair", Senator Pat Toomey (R-PA) called it "grossly unfair", and other Apple-shareholder Senators joined (PDF) colleagues in a Supreme Court filing calling student loan relief "unnecessary".
"What the president did, he went unconstitutionally and said he was going to waive certain people part of their debt for student loan, but then he paused everybody's student loan. So everybody who borrowed a student loan within 60 days of the signing is going to have to pay that back," McCarthy added. "The Supreme Court is taking up that case. But if the Supreme Court came back and said that was unconstitutional, the president could still say he's pausing, not waiving it. But now that this is in law, the Supreme Court decision will have to be upheld, that they would have to pay."
Earlier this month, the NY Times warned students and their families to "Expect Interest Rates on Federal Student Loans to Rise" to as high as 8.05% for new PLUS loans this fall. That news came as Apple, just days after a recent $90 billion share buyback, filed a prospectus with the SEC for a new $5 billion bond program with longer-term bonds expected to have a coupon rate of approximately 5%. The imbalance between loan rates for students and Apple shareholders was actually far more pronounced before the Fed fund rate hikes started last year in response to inflation. During the pandemic, Apple -- which reported around $166.3 billion in cash and investments on its balance sheet as of March 31 -- held a bond sale worth $14 billion for stock buybacks and dividends to benefit from borrowing rates as low as 0.70%. Direct PLUS student loan rates at that time were down to 5.30% for new loans but as high as 8.5% for existing loans (the U.S. Dept. of Education does not offer refinancing of its up-to-30-year fixed rate loans in times of much lower interest rates). Unlike the tax-deductible interest Apple pays, annual deductions on student loan interest are capped by the IRS at $2,500 (or lower, depending on the borrower's income).
Despite presumably benefiting from stock buybacks and dividends facilitated by Apple's low-interest bonds -- some of which carry rates as much as 90%+ lower than certain federal student loans -- some of the Senators identified as Apple shareholders by NBCLX are vehemently opposed to the idea of student loan relief for high interest-paying borrowers. Senator Shelley Capito (R-WV) opposes the program as "not fair", Senator Pat Toomey (R-PA) called it "grossly unfair", and other Apple-shareholder Senators joined (PDF) colleagues in a Supreme Court filing calling student loan relief "unnecessary".
why do the schools and banks have 0% risk on them? (Score:5, Informative)
why do the schools and banks have 0% risk on them?
and have more or less umlimted room to jack up fees / books / dorm fees / etc? while takeing no risk if an student runs up an big bill with no hope of paying it back?
also WHY IS chapter 11 or 7 so hard to get on them as well?
Re: why do the schools and banks have 0% risk on t (Score:3)
Re:why do the schools and banks have 0% risk on th (Score:5, Informative)
The only reason anyone is willing to give an 18 year old that much money is BECAUSE they can't be discharged in bankruptcy.
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Some news org (Vice? NPR?) published a video report on it not that long ago. The journalist who looked it up spent months chasing down the likeliest candidate for the timeframe, and that person didn't deny it... but claimed they d
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Student loans were like $5-$10K at most before this change. This change enabled the explosion in college costs and commensurate loan amounts.
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They changed the law when government took over (Score:4, Informative)
Another failed aspect of the Johnson's Great Society plans. Private banks were loathe to lend money to students with nothing more than a promise to pay them back. This made student loans have high interest rates commensurate with other forms of "signature loans", i.e., loans without collateral. These rates were "too high" and government took over.
In the mid-70s, via Sallie Mae (1972), Congress basically took over the student loan industry by loan guarantees and by buying loans from banks but letting banks administer them, in much the same way that Fannie Mae and Freddie Mac bought mortgages (and we know how that turned out). It was a short time later that Sallie Mae loans were made non-dischargeable (1976 and made even harder in 1978)..Thus, they created more corporate cronyism that privatized the profits, but made the losses (defaults) the taxpayers' burden. A new program providing direct loans was started in 1992, and continued in parallel with the FFEL/Sallie Mae loans.
And then, in 2010, having had enough of "corporate greed", Obama and Congress federalized student loans, and since then the predatory student loan lender has been the federal government.
Re: why do the schools and banks have 0% risk on t (Score:4, Insightful)
Because if you let students go bankrupt to wipe their loans then no one would ever pay them.
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Here's a thought. How about a graduate tax? If a company wants to make having a degree a requirement for applicants, they can pay some money into a fund that helps offset tuition fees.
If they want skills they pay for them, if they don't really need them then there is an incentive to not require them.
The devil will be in the details, but something needs to change.
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The real question is why are they allowed to charge significantly more than the prime interest rate for a zero risk loan? The interest is supposedly in part to cover risk.
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The truth is student-loan debt is unsecured debt--there's nothing the repossess, there's no garnishment of wages that can attach, etc. Default rates on student loans are above 10% (2019). For every $100 loaned out, $10 is defaulted, so we'd have to charge 11.1% just to break even. Federal student loans interest rates for the 2017-2018 school year range from 4.45% to 7%, so the government (taxpayers) is already losing money on student loans.
Re:why do the schools and banks have 0% risk on th (Score:5, Informative)
Your assertion that defaults compromise "a significant portion of borrowers" is just plain factually incorrect. Stories are anecdotes, not data. They are not representative of the normal body, they are cherry-picked by the press to drive click-thru rates.
For 2017, data which was released by the Dept of Ed in 2020, the student loan default rate [lendedu.com] ranges from between 5.8% to 15.2% depending on the State the school is in. The data can be sliced many different ways, but the simple truth is the highest default rates are for "proprietary, for-profit" schools. Think barber and cosmetology college. The lowest are for four-year universities. I haven't done the math, but having a daughter that went thru cosmetology school I know the costs don't come anywhere NEAR to what a four-year degree costs at a public university. So, higher default rates on lower dollar amount loans skew the statistics to make them look worse than they are, if you want to know dollar default rate -- what taxpayers are on the hook for.
At the bottom of the page I cited there's a link to the 2019 report, which is on 2016 data. Official Dept of Ed (FSA) data can be found here [ed.gov], if you want to play with the spreadsheets.
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why do the schools and banks have 0% risk on them?
Huh? Schools do fail and this year has had multiple high profile bank failures.
and have more or less umlimted room to jack up fees / books / dorm fees / etc?
Not really, at a certain point students will go to cheaper institutions and you'll have no tuition to pay your bills.
The problem is the US seems to have a particular obsession with making sure you go to the "right school". So schools compete to be the "right school" by investing more and more (salaries, administration, dorms, sports teams, etc), which raises prices, and students still feel compelled to go to the "best" school. A
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As for the difficulty declaring bankruptcy, I'm guessing it's so students don't take out a massive loan, spend it all getting their education, walk out of school with zero assets and a highly marketable degree and then declare bankruptcy.
That's basically the reason. If you go to med school and become a successful doctor, it takes a few decades to pay off your loans. Filing for bankruptcy would be a better option for most.
Re: why do the schools and banks have 0% risk on t (Score:3, Insightful)
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and have more or less umlimted room to jack up fees / books / dorm fees / etc?
Tuition. Schools jack up tuition and, to a much much lessor extent, fees. The reason books are so expensive is mostly because of unregulated publishers jacking up prices on a captive audience, and partly because the subject matter can be very esoteric - these are specialist products and they don't have a lot of competition. Though there are kickback deals that publishers have with some schools. It's usually the poorest schools which make these deals, and subsequently screw over the poorest students.
As fo
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Not agree with this, but...
Back in the day, some high earning professions just declared bankruptcy after graduation. Since doctors, for example, had to spend many years in low income practitioner jobs, it was not a big loss for them. Then, instead of solving this correctly, government decided to side with financial institutions and banned bankruptcy for all student loans.
Of course this current situation is even worse for students. I would let these loans fail, but that means, becoming a doctor would require
Re:why do the schools and banks have 0% risk on th (Score:5, Insightful)
Re:why do the schools and banks have 0% risk on th (Score:5, Informative)
"As people do better, they start voting like Republicans - unless they have too much education and vote Democratic, which proves there can be too much of a good thing." -- Karl Rove
"I love the poorly educated. We’re the smartest people, we’re the most loyal people.” -- Donald Trump
Clear things up? There's a quote by some Republican (senator maybe?) where he flat out says that Republicans oppose education because educated voters vote democrat.
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"oppose education because educated voters vote democrat"
Yeah, I read all that stuff and wish I hadn't. I guess I'm too old or too stupid or something, but where I'm coming from here is: You want to get elected. If you're worried that the people who have more book-learnin' are not gonna vote for you, there's a simple solution - GET AHEAD OF THE CURVE and have a SMARTER solution to whatever problems are front and center to the populace. So, no matter how smart the population gets, they're gonna vote for you because you have a credible, achievable plan.
Why must the
Re:why do the schools and banks have 0% risk on th (Score:4, Insightful)
Why must these races be races to the bottom, when the same money could fund a race to the top?
Because coming up with and pushing through good solutions takes effort, while yelling how bad the 'other' side is takes almost zero effort. And us dumb Americans lap it up like crazy, for some reason.
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Hmmm....sounds like you are advocating a woke solution. Better to have the pop. stew in stupidity and remain inert than actually become educated. That way they become stable geniuses. When presented with a complex problem, they smile and proudly point to their lack of education as a reason for taking no responsibility for fixing the problem.
Watch CSpan's broadcast congressional hearings, quite of few of those dummies will preface a question with a disclaimer that they aren't good at math or science or (fill
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Why must these races be races to the bottom, when the same money could fund a race to the top? The race to the bottom drags down everyone.
Because some of them don't want to actually solve the problem.
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Why must these races be races to the bottom, when the same money could fund a race to the top?
It's always harder to build something than to break something.
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American politics seems to me like its unduly influenced by football. There's us and them and they're the enemy and you're a traitor if you vote for them sometimes. There are structural things about the US system that cause that very strong two-party system. US democracy is more or less a first draft, after all.
When people vote for parties, especially entrenched ones, they're not voting for good solutions to problems. They're voting to support their team.
Is it a coincidence that football is so important at
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Hence the freaking out about anything vaguelly related to philosophy, sociology or psychology being taught. Better to have a population that doesn't put too much thought into their positions in life if you want loyal enablers. Those damn uni grads start asking hard question about why the guys in suits pay less tax than the guys that work for the guys in suits.
Re:why do the schools and banks have 0% risk on th (Score:4, Insightful)
LOL. Truly educated voters do NOT vote for a party, they vote for a person.
Maybe in a country that doesn't use a winner-take-all election, and maybe in a country that isn't gerrymandered up the ass.
Truly educated voters understand that by and large you cannot vote for a person in the United States. You vote for a party, or you throw your vote away. All the talk about "but if enough people do it" is coming from the uneducated crowd. Tactical and strategic voting is disgusting, disheartening, and undemocratic, but that's how it works in the US. It was specifically crafted to be that way over hundreds of years -- though originally to give power to the "smoke-filled back room" that chose the candidates, more recently it's been subverted by the populists and demagogues.
Want to see a country where choice really matters, and you can vote for a person instead of a party? Replace FPTP elections with ranked choice. Make gerrymandering illegal. Get rid of the electoral college. Easy peasy.
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To help make sure the money was used for that, the loans could only be forgiven if the business maintained its employee count and compensation levels and
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Nevertheless it has become an online truism that it was merely a gift to employers. What justifies that position?
Because these are the same people who say handouts are bad while at the same time accepting handouts. Maybe, as the saying goes, these companies should have had six months of emergency funds on hand.
Further, large numbers of ppp loans were wholly forgiven even when conditions weren't met, while others had to fully pay back their loan. Is that fair? “If you take out a loan, you pay it bac
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PPP loans were not handouts. They were compensation for government-ordered shutdowns and other pandemic restrictions. Every restaurant in America other than drive-thrus and delivery-heavy spots would have gone out of business if not for the PPP assistance. Along with all theaters and entertainment venues. The restrictions lasted far longer than 6 months in many areas.
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PPP loans were not handouts. They were compensation for government-ordered shutdowns and other pandemic restrictions.
The government gave someone money and then didn't ask for it back. Handout.
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As I remember, there was no mechanism to verify if the business was actually affected by the shutdowns. You just say you had a dozen employees you would have to lay off and they'd give you the money in exchange for a promise to keep them.
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Probably because there were so many cases where the forgivable loans meant for "small" businesses went to businesses that are nothing like small and were forgiven even where the terms were not properly met. Only a few of the fraudsters (mostly small ones) have seen any consequences of note. See this [nbcnews.com].
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Sure, it did a lot of good. The program itself was necessary. It would have done more if congress and Trump hadn't resisted tightening up the verification. That is the part that got Congress blamed for being more in support of businesses grifting than it was for the employees.
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The main purpose of the PPP loans was for employers to keep employees on-roll even if unwarranted by financial condition (COVID) - In other words it was an indirect handout to employees.
That's bullshit even right on its face. It was a direct handout to businesses, and business owners. It was in no way whatsoever a handout to employees, because employees had to work for that money. What a stupid, bootlicking thing to say.
To help make sure the money was used for that, the loans could only be forgiven if the business maintained its employee count and compensation levels and at least 60% of the amount went to payroll.
That's an even dumber thing to say. Business or owner spends money they would have spent on payroll on something else, they spend the PPP money on payroll, guess what? They really didn't spend the money on payroll, they spent it on the something else.
I worked straight throu
Re:why do the schools and banks have 0% risk on th (Score:5, Insightful)
I like your sarcasm. ;)
Like with nearly anything, you tend to have problems at both ends of the spectrum.
First, simple economics: We have sold "education, any education" as the solution to poverty, low income, getting a higher income, etc... For literally generations.
But if we look at college graduates as a product that businesses buy(well, rent)? If the average person paid $0 for getting a college degree, then we'd still have some, but they'd be relatively rare. Ergo, they'd be expensive and businesses would carefully consider whether a position really needed a degree.
But today, college degrees are about as common as high school diplomas were sixty years ago. [statista.com] Thus we can get stupid shit like a business wanting a graduate degree in order to distribute their mail, for minimum wage.
Anyways, classic economic basic theory - after a point, the more of something you want, the more it's going to cost per unit. You can get a few college grads for just about free, but when you start pushing wanting 40% of the adult population to have a degree, it starts to get more expensive. Even as it gets more expensive, it also means less - because there is more supply.
It's gotten to the point where the trades often pay more.
But getting back to the conservative/liberal - I'd argue that you have schools taking advantage of students, who are looking to haul themselves out of the poverty trap they were born into, and don't know better because of all the advertising saying that college is the way out(if you don't go military). You have lots of students who figure out ways to do it cheaper, of course, but the occasional student falls into the trap(I know a couple). I did GI Bill for my degree.
But on the other hand, you also have those who deliberately use the loans and such to live unrealistically high on the hog for that period - then use every trick in the book to pay back the minimum amount possible and probably just die with the debt still unpaid. For example, get married, be the stay at home parent with no job, so no income, so no paying back the debt. Etc... Recently saw a story where the dude basically fled overseas to avoid the debt. Of course, his problem was that despite picking a career field that should have seen him employed rather readily, he couldn't find work. No idea of how much of that was on him(probably a lot, given that MOST people with degrees don't find work in their degree field these days), he could have probably widened his job search to outside of his degree field, but still requiring "a" degree. Other than Barista or such.
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They pull up their boot straps and pay off those loans by working 3 jobs
How could one complete a 4 year degree in less than 10 years while working 3 jobs? One has to compromise somewhere if the goal is to graduate while young enough to see a substantial increase in income.
never spending their money on anything frivolous like vacations and iPhones
You can argue back and forth on the vacation part. Most college students I knew while in college took their vacations with their families, so those vacations were an expression of the money their families had. Things may be different now. I certainly didn't take any extravagant vacations while in undergr
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Using the figures from my home state as an example.
2004 average out of state tuition was about 15,000.
2023 average out of state tuition was 32,000.
When I went to college in 2000, I was able to get by with no loans by working in the IT department of the school. You cannot do that now. and you sure as hell aren't paying off 32,000 JUST for tuition working during the summers. That number doesnt even include books, food, room and board, etc.
While there are still some ways to save money - first 2 years in a
Re:why do the schools and banks have 0% risk on th (Score:4, Insightful)
They pull up their boot straps and pay off those loans
The idea of pulling yourself up by your bootstraps was literally imagined as something you could not in fact do, so any time someone suggests it you know they're gaslighting.
Graduate Degree Needed (Score:2)
I feel like I need to go back and get a graduate degree to understand WTF McCarthy is trying to say.
Re: Graduate Degree Needed (Score:2, Interesting)
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+1 for using the word "foment"
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Ha! But you can't cause he cut the funding! Checkmate.
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Or just a good bullshit detector, really.
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Religious people are the first to try to take away food. Most of them chant the false (even by the Bible) mantra that works don't get you into heaven, so they justify themselves to do whatever evil they like.
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If you're a woman, it doesn't affect you.
If you're a woman, what happens to men doesn't affect you? Because men live on Mars and women live on Venus?
Please, explain to me why able-bodied, healthy men with no dependents between the ages of 29 and 54 deserve government handouts without an expectation of looking for work?
Have you been looking for work recently without an epic work history? It's shit out there.
I am unsurprised to see you in particular frothing about how things that will affect everyone indirectly don't affect everyone.
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What's the point in dragging Apple into this? (Score:5, Insightful)
Other than to get more clicks, I suppose. Maybe they should also complained about the money being given to Israel or Egypt while they're at it...
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That was my takeaway from the summary.... "WTF does this have to do with Apple?"
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Seems like. Especially funny is the bit where somehow Apple is bad because they offer a bond at 5%.
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I'm kind of glad they went on that pointless tangent, though, because now that I'm aware of those bonds I might check them out!
It was already gone from the Supreme Court (Score:2, Insightful)
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It's especially infuriating to have boomers who had their college paid for by state and federal subsidies without realizing it many of whom are practically salivating at the prospect of sticking it to the younger generations...
Those subsidies are available to the young people of today. You probably make too much for them to qualify because it's expected that you'll be helping to foot the bill.
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No they're not (Score:5, Informative)
Because the government didn't write checks to individuals and instead gave the money to the universities people don't realize how much those subsidies were paying for. Baby boomers and older gen xers got their college paid for by the government and then all the ladder up behind them. It's infuriating.
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Those subsidies are available to the young people of today. You probably make too much for them to qualify because it's expected that you'll be helping to foot the bill.
The programs still exist, but the value of them has been getting slashed repeatedly since the Reagan years. You've got 3 types of aid a available - grants, subsidized loans, and unsubsidized loans. We've shifted most aid from grants to unsubsidized loans.
College funding has also shifted from mostly government funded to mostly student funded. Students are now directly paying a far higher percentage of the cost than past generations have.
College costs today aren't even in the same ballpark as they were for me
Re:It was already gone from the Supreme Court (Score:5, Interesting)
College costs have exploded due to many factors, among them simple market distortions caused by easy money.
A simple example of market distortion: A McDonald's "meal deal" might be $5.95 or $7.45 or something in that range. But imagine that the government set up a table outside the store handing out vouchers for "One free Meal Deal, good on Meal Deals up to $10". Two things will inevitably happen: people will upgrade their normal order to a more expensive one (e.g, from a quarter-pounder meal to a double quarter-pounder with bacon), and McDonald's will quickly raise their meal-deal prices to $9.95.
Colleges are no different, they charge what the market will bear, and a distorted market with government subsidies will bear quite a lot.
To expound a bit on the college tuition stuff, which is a more complex distortion, as someone who spent a lot of time on college campuses (albeit mostly for football games over the last 30 years), I observed personally what I believe is a causal effect.
When my state (Georgia, at the time) and adjacent states instituted "education lottery" (Powerball and Megamillions...), they did so with a stipulation that education in the states would receive the lion's share of the proceeds, which was most clearly evident in the scholarships provided to all A and B students who chose to attend in-state schools. A couple of observable actions followed: in-state school attendance and class sizes exploded, competition to get into the flagship universities (University of Georgia and Georgia Tech) became almost overwhelming which led to second-tier schools like Valdosta State, Georgia State, Georgia Southern to expand dramatically as well, and housing shortages grew.
The influx of cash and the shortage of on- and near-campus housing created a market and the market responded and especially targeted well-off families that now had extra cash to spend (they had already saved for and could afford the normal costs of college, but now had $3K extra to spend, too).
Large apartment complexes grew up near campuses geared toward "rich" gen-z and millennial students, for whom living in a traditional dorm room would be an affront to their delicate senses. Parents could do the math and many realized that they could buy one of these condo apartments (which often held 4 students), put Junior in one room, rent out the other 3 rooms, take $3000-$5000 from lottery scholarships, take out a low-interest student loan for more "pocket money", take the depreciation and other costs, and Junior could live in a really nice apartment for four or 5 years (or longer if multiple children might go to the school). Selling the units once everyone graduated was never a problem (pay back the student loans). So more and more of these popped up, and the amenities continued to explode.
A secondary effect: grade inflation. Students who slipped below the Hope threshold would lose access to the scholarships. Teachers, especially high school teachers under pressure from parents, became loathe to give Junior the C or D he had earned. No teacher wanted to "cost" a family thousands of dollars, so they just started handing out B's no matter what the student actually deserved. The legislature even got into grade inflation act 4 or 5 years ago...they ordered that while the 3.0 GPA was still required, that A's would continue to earn 4.0 points, but B's would now earn 3.5 (instead of 3.0), and C's and D's would count as 2.5 and 1.5 respectively instead of 2.0 and 1.0.
For example of "luxury student housing"
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Studying. Hanging with friends. Binge-watching your favorite shows. A lot happens in your space and our cottages, townhomes, luxury flats, and brownstone floor plans a
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Now try a more normal situation. We've got none of that stuff going on here in NJ. The percent of our state budget allocated to funding colleges went from 8.5% in 1990 to about 4% now. Tuition is now expected to provide most of the funds.
Where I went to college, tuition alone is now 4x what it was when I graduated 20 years ago. It was already up 3x before they even did anything significant to improve the campus.
The root of this is all that colleges used to be mostly government funded, but now they're mostly
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The root of this is all that colleges used to be mostly government funded, but now they're mostly student funded.
Another big part is that executive salaries have ballooned. Not just the leadership of the college, but also the expensive consultants they bring in. The administrators have their own union and it is clearly far more powerful than the one the educators are in.
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Wow this post isn’t even slightly partisan.
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That's a good point. How much of a "giveaway" is this actually? I mean, the student loan program was supposed to start repayments when the court decision came out anyways, so dragging it into court was basically an excuse for Biden to make the giveaway even bigger - "You want to drag me into court over forgiving $10-20k per person in student loan debt? Fine, 0% interest and no required payments on student loans for even longer!"
With the decision expected to be out "at any time", that means that the actua
Re:It was already gone from the Supreme Court (Score:4, Informative)
While the overwhelming consensus among legal scholars is that what Biden did is constitutional and legal the current court is extremely partisan and their expected to ignore that and rule against it.
That is far from the truth. The Constitution does not give the President the authority to dispose of a trillion dollars of federal assets without congressional approval, and the idea that the law for making minor adjustments does is preposterous.
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1. Congress passes shit all the time that they haven't read or understood the full implications of. The law stands as written. If they want to take something back, they have to pass a new law fixing it.
2. Biden is, technically speaking, an elected official, not a bureaucrat.
3. He's hot trying to forgive all government-backed college loans, just a small subset of them.
4. "Take Care clause"? [wikipedia.org]. Never really heard this being an issue. You'd think that Trump would have been actually impeached over this b
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By forgiving student loans, even just a little bit, he's spending money, and only Congress can authorize spending money - its in the constitution.The President can not just decide a law does not need to be followed, or should not be enforced, he does have case-by-case discretion, but he can not, for example decide that immigration laws don't apply to anyone brought to this country as a minor.
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1. This law allows temporary relief, not permanent relief. Forgiving loans is permanent.
2. The argument is actually that the Secretary of Education does it. Bureaucrat.
3. His preferred criteria are worse, because they're crossways with the language of the law he is trying to use.
4. WHATABOUT ORANGE MAN BAD. Is your excuse always to hand-wave vaguely at the other guy?
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"Congress won't pass the law that I want" has NEVER been an excuse for the president to go do things that are not statutorily authorized.
By the time Biden got into office, COVID was no longer an emergency. He just refused to admit that. Now the emergency is officially over, and there is no basis to forgive loans.
60% of Americans wanted a default (Score:5, Insightful)
I would normally blame the education system here. God knows both my economics courses and my high School civics courses were less education and more propaganda ( basically a combination of capitalism ra ra ra and America fuck yeah) but in this case the media were constantly both sidesing these negotiations and acting like the Republicans were negotiating a good faith when they clearly were not. If the Republicans weren't so weak and ineffectual at this point and so incompetent I think they would have driven us over a cliff.
The crazy thing is that 60% is largely made up of social security recipients and Medicare enrollees. If Biden had just saved their asses by outmaneuvering McCarthy it would have found out what a default was when their checks didn't show up that month and when they're pills didn't show up either. In a sort of morbid way it's a problem that would solve itself fairly quickly though. In About 3 to 6 months without those pills....
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Why does the government need to borrow money to pay SS recipients? SS funds are separate from the general budget and COMPLETELY funded by the SS trust fund and on-going SS receipts from employers and employees.
Maybe because the "separate from the general budget" "trust fund" is "invested" in special US treasury bonds, which the US might not be redeeming if it defaults.
Re: Default is unconstitutional (Score:2)
Not that I totally follow the logic, but there was an argument made that the 14th ammendment only covers true soverign debt, i.e. it's illegal not to pay interest and principle on bonds. That was sort of the intent when it was passed, there was fear the southern states would simply refuse to pay for war debts after the civil war. There's apparently at least one Supreme Court decision that frames the ammendment in that light.
As that theory goes things like government payments/subsidies or other obligations a
Hmmm (Score:5, Insightful)
So that is another victory because that brings in $5 billion each month to the American public
If Kevin McCarthy is so concerned about spending then maybe he should trim down the bloated military budget.
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If Kevin McCarthy is so concerned about spending then maybe he should trim down the bloated military budget.
No you're falling for his front. Kevin McCarthy is concerned about people getting educated. We need to avoid educating the following generation as much as possible. God knows if they actually become smart they won't vote republican.
You are a Putin puppet! (Score:2)
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Right. Yet we aren't doing anything about Taiwan or other countries across the globe. It's about rare earth metals and natural gas. Just like we stayed in the middle east largely for oil concerns.
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Actual military budget is twice the advertised number. By counting elements like counter-intelligence, the VA, and the Department of Energy managing America's nuclear arsenal elsewhere in the budget.
https://www.motherjones.com/po... [motherjones.com]
If Only (Score:2)
If only Biden had actually exercised his power of executive order and made real substantive changes . . .
then we could actually be upset because he threw it away on a deal over the fake money ceiling.
Shadow Federal Jobs Program (Score:2)
Apples and Oranges (Score:5, Informative)
Apple issuing bonds at 5% while student loans are over 8% is a demonstration of risk. Student loan interest rates are higher because 1) The Student doesn't have a sufficient credit history and 2) With credit risks of defaults, it can take a long time to see repayment and they can be discharged in bankruptcy. [consumerfinance.gov]
A bond is usually secured by assets, which Apple has a lot of, and given the current cost of money for businesses, 5% is less than the WSJ Rate of 8.25 which is the typical measure of what businesses are charged for new lines of credit. Paying off lower-interest debt just made headroom to raise more capital and Apple isn't going anywhere, so it's a safe bet for an investor but keeps you barely ahead of inflation at 4.93%.
Still, an 8% loan with the Fed Prime Rate at 5.25% is cheap money, too cheap and the only reason it's that low is because the US Taxpayers guarantee the loan so lenders even don't have to worry about Bankruptcy. That needs to change and it's been long advocated that the Taxpayers get out of the student loan business, that would correct the interest rate problem by pushing more of the risk on the lenders and lowering education costs. There's been a direct correlation between the Taxypayers (via Congress) getting involved in student loan debt and higher education prices going up faster than the rate of inflation. [cato.org]
In 1987 thenSecretary of Education William J. Bennett argued that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.” The higher education establishment indignantly denied the claim.
That was 1987 before the Taxpayer was put on the hook for guaranteeing student loans, it's only gotten worse.
If the Administration were truly looking out for consumers they'd work with Congress to put caps on rates lenders charge on revolving debt. Rates over 18% in this economy are usury.
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Unlike the tax-deductible interest Apple pays, annual deductions on student loan interest are capped by the IRS at $2,500 (or lower, depending on the borrower's income).
A good part of *why* corporations like Apple are able to reach the point of being such low credit risk is special treatment like this. Interest paid on those bonds is excluded from taxable income. It is an expense incurred in the process of earning profits. If you take out a small business loan, you receive the same benefit. Education, which is for the same purpose, does not receive these same considerations above a certain threshold.
In
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A bond is usually secured by assets, which Apple has a lot of,
Not only that but a large part of those assets are cash being held overseas (probably invested into govt bonds in those countries). So these are weird bonds that are only being issued to get around a tax issue, which is why the interest rate is so low.
I don't know what the bond duration is but most longer term interest rates are lower than the Fed Prime Rate because markets predict that rates will start falling within a few years. e.g. 10y treasuries are ~3.8% so 5% is a reasonable risk premium on them stil
Why is it bad to ask people to pay their debts? (Score:5, Insightful)
If you buy a house with a mortgage, you are expected to pay it back. If you borrowed too much, nobody is going to rescue you and say, "Oh, you poor thing, you took out too big of a loan. You don't have to pay it back after all, your fellow taxpayers will pick up the tab."
Why is it wrong to ask students to repay the loans they take out to pay for their educations?
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Why is it wrong to ask students to repay the loans they take out to pay for their educations?
The problem is students defaulting on loans because they simply can't afford them. I don't know if you've noticed but grocery prices, rent, housing, and other utilities have skyrocketed in just three years. Wages have certainly not kept up with skyrocketing prices. Take your college tuition prices and run it through the inflation calculator and get back to me.
The same politicians who were forgiven for millions in PPP loans are crying because a student is getting a $10k break on crushing loan payments. Give
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The problem is students defaulting on loans because they simply can't afford them. I don't know if you've noticed but grocery prices, rent, housing, and other utilities have skyrocketed in just three years. Wages have certainly not kept up with skyrocketing prices. Take your college tuition prices and run it through the inflation calculator and get back to me.
How is that different from mortgage loans? Many people have taken out mortgage loans, who can't afford them, perhaps because of grocery prices or other costs that have "skyrocketed." The mortgage industry takes steps (because regulations force them to) to ensure that the borrower will be able to repay their mortgages. Student loans have no such safeguards, unfortunately, but they should.
Also, tuition costs are so high, to a great extent, *because* people are able to take out risky loans to pay those high tu
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The primary difference is that society doesn't care if someone lives in a house or an apartment, but it's in society's general interest that everyone has an education in order to be productive members of said society.
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If you need 2-4 more years of college education after 12 years of compulsory, free education, in order to function as a productive member of society... society is doing something terribly, terribly wrong.
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If you need 2-4 more years of college education after 12 years of compulsory, free education, in order to function as a productive member of society... society is doing something terribly, terribly wrong.
What? Things are getting more complicated, humans aren't getting smarter, why wouldn't humans need more school? Something is terribly, terribly wrong with your comment.
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How is that different from mortgage loans? Many people have taken out mortgage loans, who can't afford them, perhaps because of grocery prices or other costs that have "skyrocketed." The mortgage industry takes steps (because regulations force them to) to ensure that the borrower will be able to repay their mortgages. Student loans have no such safeguards, unfortunately, but they should.
A mortgage is backed by a physical asset. If people defaulted, you could recoup. And you don't give out a mortgage until people have had a chance to build up their finances.
There's no asset backing a college education and it comes before you start building up your finances. We used to realize the problem here and dealt with it at a society level rather than an individual level.
Also, tuition costs are so high, to a great extent, *because* people are able to take out risky loans to pay those high tuition prices. Forgiving the loans doesn't penalize universities one bit, they get to keep charging their ridiculous tuition rates as if money grows on trees. Make colleges eat half the cost of the forgiven loans, and I'll buy in to that proposal.
Student loans are high because past generations had their college education almost entirely government funded, but now it's almost e
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The same politicians who were forgiven for millions in PPP loans are crying because a student is getting a $10k break on crushing loan payments.
Just because PPP loans were a huge debacle, in which the government threw money at whoever held their hands out, doesn't mean we should repeat the money-burning process in all areas of government.
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Nobody held a gun to your head and forced you to write that comment, but you did it anyway.
We tell kids literally the whole time they are in school that they need to go to college. If it's not necessary, it's brainwashing.
With business bankruptcy and shareholder immunity? (Score:2)
How dare you ask that question. Someone can take out loans to start a business, see it fail, but won't have their Social Security checks garnished in 50 years to pay it back. Shareholders can with their votes run a company into the ground, literally kill people and poison the earth, and have their personal assets protected.
Yet you want students to be on the hook for live. Your priorities and morals are inverted. Plus, the entire subject is a farce when almost all student loans are held by the Feds. Meaning
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Yeah, you illustrate a good point - that student loans are a fudge designed to make it look like there is a capitalist solution to an area where capitalism fails.
Education is an example of a public good that can only really be provided by govt (like the military). Any idiot can see that one of the biggest differences between a wealthy country and a poor one is the general education level of the population. Everyone benefits by living in an educated society, but individual capitalists are not incentivised to
Why does college cost so much? (Score:2)
A house is something tangible that keeps the rain off your head. But college looks like some kind of racket.
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Why is it wrong to ask students to repay the loans they take out to pay for their educations?
You're asking the wrong question. The right question is why does anyone need to take on debt to pay for an education. AT ALL. And then when you realise how dumb fucking absurd it is to graduate in the USA under a mountain of debt you'd realise there's a net benefit to society to have educated people debt free enter the workforce.
Equating buying too large of a house with basic education shows you're in desperate need of the latter.
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If you buy a house with a mortgage, you are expected to pay it back. If you borrowed too much, nobody is going to rescue you and say, "Oh, you poor thing, you took out too big of a loan. You don't have to pay it back after all, your fellow taxpayers will pick up the tab."
Why is it wrong to ask students to repay the loans they take out to pay for their educations?
The problem with this comparison is that student loans don't play by the same rules as every other kind of loan of this size. They're not secured against anything because you cannot repo an education and people at that point in their life have few assets. Consequently they have the extraordinary provision that they cannot be extinguished in bankruptcy. Comparing them to mortgages is therefore somewhat disingenuous.
Student loans exist as a matter of policy because we want people to be educated. Unfortunately
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Because you're taxing intelligence and education.
Hence you're immediately discouraging such.
There will be people who "can't afford" to get educated, even though they are perfectly capable and even would be extremely profitable to the country in future years.
That's why one of the categories for immigration is basically teachers, lecturers, doctors, and highly-educated researchers. You WANT those people. So much that you basically carve out an exception to encourage them to immigrate to your country. They
Why invest in people if you can import H-1Bs? (Score:3)
We should make a law to send all those lazy idiots to other countries so they can work for a minimum wage while the H-1Bs are doing all the intelligent work here!