0% Student Loans

[MaggieD]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

 

[Middleground]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

Speaking as a Canadian, I could only wish we had such a program here.

 

[Mathematician]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

You'll have to make an adjustment to that plan, because not everyone is expecting a refund when they file their taxes. Furthermore, having an interest rate is incentive for the student to repay their loan as quickly as possible. Morally speaking, if you borrowed money from someone and you've gotten what the money was borrowed for then IMO you should pay them back as soon as you can.

 

[rocket88]

You'll have to make an adjustment to that plan, because not everyone is expecting a refund when they file their taxes. Furthermore, having an interest rate is incentive for the student to repay their loan as quickly as possible. Morally speaking, if you borrowed money from someone and you've gotten what the money was borrowed for then IMO you should pay them back as soon as you can.

Easy to fix. You have an onerous interest rate that gets tacked on to missed payments. Like 20%. That should be enough incentive. No interest as long as your payments are on time.

 

[justabubba]

use Elizabeth Warren's approach
whatever interest rate is charged to banks to borrow from the government should also be the rate of student borrowing

the feds can already offset one's tax return, or levy against their wage income, should they be in default of their student loan
the issue to be addressed is the interest rate students are obliged to pay
why should their be any higher than what the banks pay?

 

[MaggieD]

Easy to fix. You have an onerous interest rate that gets tacked on to missed payments. Like 20%. That should be enough incentive. No interest as long as your payments are on time.

A late fee would pass muster. 20% interest would never fly.

 

[Helix]

i'm for removing every possible financial disincentive to education. we need to develop our national intellectual resources so that we actually have a chance of solving serious problems on the horizon. i'd make it free if i could wave a wand and make it work somehow. zero percent loans is pretty much the absolute minimum we should be doing, so i certainly support it.

 

[rocket88]

A late fee would pass muster. 20% interest would never fly.

Perhaps not. But I do like the idea of attaching interest to late payments.

 

[justabubba]

Perhaps not. But I do like the idea of attaching interest to late payments.

yes, because people who are in a financial hole for reasons outside their own control (i.e., not enough jobs) need to be placed in an even deeper hole [/sarcasm for those who need this]

 

[spud_meister]

Speaking as a Canadian, I could only wish we had such a program here.

Speaking as an Australian, I do. :lol:

Interest free loan from the government, not from the banks, with repayments automatically deducted once you start earning over a certain amount.

 

[CanadaJohn]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

Perhaps private universities and colleges already do, but why can't they themselves be the issuer of loans at low or no interest? After all, they are selling a product, a product that has a finite shelf life - if you don't sell a space in a classroom, that space becomes worthless. Just like car companies who entice buyers with no money down, no interest loans, etc. to get their cars sold, let universities do that same.

Public universities and colleges could benefit from your suggestion, but I'd hate to see taxpayer dollars used to subsidize the likes of Harvard with billion dollar reserve funds and donations from alumni coming out the ying-yang.

 

[davidtaylorjr]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

No, that will only create even more debt.

 

[MaggieD]

Perhaps private universities and colleges already do, but why can't they themselves be the issuer of loans at low or no interest? After all, they are selling a product, a product that has a finite shelf life - if you don't sell a space in a classroom, that space becomes worthless. Just like car companies who entice buyers with no money down, no interest loans, etc. to get their cars sold, let universities do that same.

Public universities and colleges could benefit from your suggestion, but I'd hate to see taxpayer dollars used to subsidize the likes of Harvard with billion dollar reserve funds and donations from alumni coming out the ying-yang.

That's a good point. Why not some of the billions of dollars of revenue from their professional sports programs?

 

[MaggieD]

No, that will only create even more debt.

Tell me how it will create more.

 

[davidtaylorjr]

Tell me how it will create more.

Because there won't be any additional revenue to offset the loss of interest payments. Unless I missed something.

 

[CanadaJohn]

That's a good point. Why not some of the billions of dollars of revenue from their professional sports programs?

The other point I'd make is that surely private universities and colleges are confident that their graduates will get jobs, good paying jobs, immediately or soon after graduation so they should have no concern about the student paying back the loan. Public universities and community colleges, on down the line, may have more open admissions and perhaps less success at placing graduates, but even so, there should be some expectation on the part of the institution that what they're teaching is of value to the employers in America, so it should be good money spent and returned in time.

 

[roughdraft274]

A late fee would pass muster. 20% interest would never fly.

Nor should it. I'm fine with keeping interest rates low, even very low, but I think it only makes sense for there to be some kind of interest rate.

 

[MaggieD]

Because there won't be any additional revenue to offset the loss of interest payments. Unless I missed something.

Oh, I see. Well, I don't think the government should be in the "profit-making" business, David. Certainly in helping to provide college educations for its citizens. It certainly isn't in 99% of its other programs.

 

[Sisyphus]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

Not in my opinion. I'd advocate free education from K to PhD for all thusly inspired. My reasoning is two-fold:

1. It lessens our inequality of opportunity by removing the financial barrier which artificially prevents the cream from settling to the top. In the US, the children of the top 10% in earners have a better than 70% chance of themselves being in the top 10% of earners. The cost of higher Ed is creating a permanent underclass in the US.

2. It makes financial sense, which K-12 only does not. The average lifetime earnings of a high school graduate is not much greater than a non high school graduate, on average. Yet we invest heavily to create a marginally more valuable citizen, over their lifetime. If we did not fatigue after 12.5 years of free schooling, and invested in only 4 more years (Bachelor Degree), on average, that individual in their lifetime will earn over $1 Million more, paying roughly $300,000 in additional taxes and spending over $700,000 more into the economy. The payback to the Treasury is many fold, which Nordic Model countries figured out long ago.

 

[davidtaylorjr]

Oh, I see. Well, I don't think the government should be in the "profit-making" business, David. Certainly in helping to provide college educations for its citizens. It certainly isn't in 99% of its other programs.

If you haven't noticed, the Government hasn't made a profit in a LONG time....

 

[MaggieD]

If you haven't noticed, the Government hasn't made a profit in a LONG time....

Now, if I'da said that, you'da called me a smart ass.

 

[ttwtt78640]

As important as education is in the real world, should our government subsidize student loans so that these loans are given at 0% interest? I'm for it with a few caveats:

People with student loans will not receive income tax refunds until their loans are paid in full. Any refund or rebate they are entitled to will be used to pay down the balance of their student loans...in addition to their scheduled monthly payments.

When the student graduates from college and gets a job, his paycheck will be levied so that automatic payments will be taken out of his check every week/month/whatever.

What do you think?

That plan has (at least) one serious flaw. A FIT refund is not required, in fact, it simply amounts to giving the gov't an interest free loan. It is easy (and wise) to fill out your W-4 so that you actually owe a little FIT at the end of the year. Since the student loan is at ZERO interest it makes absolutely no sense to pay it off quickly, in fact, the opposite is true. Obviously that loan costs something to administer so it is truely less than zero (negative) interest - it costs more to do the payment paperwork than the interest rate covers. Who will do this "paycheck levying?" and at what cost?

 

[MaggieD]

That plan has (at least) one serious flaw. A FIT refund is not required, in fact, it simply amounts to giving the gov't an interest free loan. It is easy (and wise) to fill out your W-4 so that you actually owe a little FIT at the end of the year. Since the student loan is at ZERO interest it makes absolutely no sense to pay it off quickly, in fact, the opposite is true. Obviously that loan costs something to administer so it is truely less than zero (negative) interest - it costs more to do the payment paperwork than the interest rate covers. Who will do this "paycheck levying?" and at what cost?

That's a good point. You do realize, though, that lying about your number of exemptions should be a crime? In the case of public school education, K-12, students get a free ride. No loans required. No tuition paid by students at all. Why not college? Why not invest in the future of America?

I realize there would have to be parameters....required GPA's etc....but, if the government sees the tremendous value in a college education (which it does), then why is K-12 the only education provided free of charge? Free. No loans necessary. *shrug*

 

[ocean515]

Perhaps private universities and colleges already do, but why can't they themselves be the issuer of loans at low or no interest? After all, they are selling a product, a product that has a finite shelf life - if you don't sell a space in a classroom, that space becomes worthless. Just like car companies who entice buyers with no money down, no interest loans, etc. to get their cars sold, let universities do that same.

Public universities and colleges could benefit from your suggestion, but I'd hate to see taxpayer dollars used to subsidize the likes of Harvard with billion dollar reserve funds and donations from alumni coming out the ying-yang.

Your suggestion makes alot of sense CJ.

Tuition costs have skyrocketed over the years due to the ease at which students with no credit history have been able to borrow almost unlimited funds. There is nothing for a College or University to lose, because the students have demonstrated a willingness to borrow whatever it takes to attend.

With some risk in the transaction, I would guess tuition costs would be under greater control.

As it is now, it's a crime what these schools have done to the students who have bought into their story.

 

[ttwtt78640]

That's a good point. You do realize, though, that lying about your number of exemptions should be a crime? In the case of public school education, K-12, students get a free ride. No loans required. No tuition paid by students at all. Why not college? Why not invest in the future of America?

I realize there would have to be parameters....required GPA's etc....but, if the government sees the tremendous value in a college education (which it does), then why is K-12 the only education provided free of charge? Free. No loans necessary. *shrug*

Look at the drop out rate in K-12 and the ever increasing cost per student graduated for that "basic" education. If every moron can not only go to college "free" but also major in underwater basketweaving, or some equally unmarketable field, simply to live on a "loan" for 4 to 7 more years then who will really benefit? I would support trying this college loan plan, on a trial basis, for only basic tuition/book assistance (no "other expenses", room and board would be covered) and only for STEM degrees, but with one important caveat - if you do not pay off the loan within ten years then you will be forced to do full time community service work (paid at minimum wage) with $1/hour taken off the loan balance until that entire student loan is repaid.