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More profitable than Exxon?

sbrettt

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First of all, this is ridiculous. Secondly, I have an idea. I was thinking the government could take that $51 bill in profit and use to pay off student loan debt starting with people closest to paying off their loans, and then moving backwards from there. What do you guys think? Alternative ideas are welcome and invited.


Government student loan program more profitable than Exxon Mobil
 

Why? Shouldn't people be required to fulfill the obligations that they agreed to? And should we (the tax payer) benefit in the form of lower taxes from any profitable agency that the guberment has? Maybe we should just run the student loan program as if it were a non-profit, and lower interest rates, as to make it easier for student borrowers to repay their loans.

And if the guberment is making money from the student loan program, and if virtually everyone eventually pays their student loans, is there really any "crises" or issue with the program?

I've read lots of stories about new college grads being $100k in debt, but not in actual government student loan debt. Usually that total debt includes a new car, a bunch of credit cards, and other debt obligations that the student took on - possibly a loan from a private lender, such as a relative, which the student took the money and then pissed it away on something stupid. The $100,000 in guberment issued or guaranteed student loan for a BA degree is a myth. It's actually impossible to borrow that type of money for a bachelors degree as we have caps on the amount that a student can borrow through a guberment program. A bank loan which is spent on an expensive car, is not in any way a student loan, even if the borrower happened to be a student at the time. And what type of moron bank makes loans like that to someone who has little if any income? Heck, I've held the same job for 25 years, lived in the same place for well over 25 years, have a 6 figure income, and I can't get an unsecured loan for $100k.

My college student son will likely owe about $88,000 total in student loans if he completes the educational track that he currently has planned (he will finish his bachelors this year, after just 3 years and $18,000 in student loan debt, and enroll in a MBA/JD combined program starting next August, adding another $70k in student loan debt. Now granted that is getting mighty close to that $100k mark, but thats for a bachelors, a masters, and a doctorate all combined. His total student loan debt will be more or less equivilent to his first two years of entry level after tax pay. Thats not really that bad of a deal.
 
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Not that I'm against student loans or lowering the interest rate but the claim itself is absurd.

From the OP article "We're already in a $1 trillion student debt hole" meaning that there is a trillion dollars out there in loans that might not be collectible so the claim of the income is purely bull****. Now, if they can actually collect that missing trillion, then they can say the made a "profit".
 
I like this idea.
 

Just a couple things:

That article is a bit dated. It was based upon the doubling of interest rates which Congress has since addressed.

Second, your idea is backwards if you want to have the greatest economic impact--it would be better spent paying down principle on those who are just starting repayment as opposed to those finishing up repayment. It would have greater economic impact over the course of the borrower's payback period, similar to what happens if you pay just one extra house payment a month and have it applied all to principle.
 
Sounds good to me.
 
Dam* you specklebang and your clever insight!
 
As long as college students can borrow money for college, the cost won't seem real to them. They can, after all (so they think) easily pay back the loans when they graduate and get a real job. The problem is, those real jobs may not exist, but that's another issue.
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As long as the money doesn't seem real, is too easy to come by, there will be no incentive to lower the cost of college, and students will continue to graduate with huge debts to pay. $100 grand for a BA is absurd. It doesn't have to cost that much.

When I graduated in '64, loans were difficult to get and most of us paid our way as we went along. I had no money on graduation, but no debt either. That was the norm.

Graduating with a four year degree in four years was the norm, too.
 

How many people that you personally know have $100k in debt for just a bachelors degree? Thats a myth, and an absurd one at that.

The max in federal student loans for a bachelors is something around $28k. The $100k in federal student loan debt bachelors degree is a figment of someone's imagination. My kid, who has maxed out his federal loans each year, will graduate with just $18k in debt before grad school. Thats about the same cost as his car, and his payments will actually be lower than a typical car payment as the i-rate is lower, and it's amortized for a lot longer than normal car loans (I took 25 years to pay back my student loans).

I could write an article about the tshirt debt crises, claiming that people are going tens of thousands of dollars in debt to purchase a tshirt, and I'm sure that there would be lots of outrage over such "tshirt debt". Of course tshirts don't actually cost tens of thousands of dollars, nor will any lenders loan tens of thousands of dollars for someone to purchase just a tshirt, but reality is often not the goal of magazine articles or bloggers. Reality doesn't draw readers, outrageous claims do.
 

That does sound a lot better than a hundred grand, but didn't imagep say his son will owe $88 grand?

I'm really not sure just what the average might be today, but I do know my son (age 44 now) is still paying. I earned a MA back in '73, and still had no debt, just paid as I went along. It was a lot cheaper back then.
 

I know a couple (and I do mean couple, as in married), but their $100k+ in student loans was combined. Also, you're wrong about the limit. It's $57,500 for undergraduates and $138,500 for graduate students. Subsidized and Unsubsidized Loans | Federal Student Aid
 

You think that $88k is too much for a job that will likely pay at least double (or more) than the median wage? Again, thats for a bachelors, masters, and doctorate - which he should be able to complete all three in 6.5 years because of the community college classes he took during the summer (paid for by his own summer job), classes that he was able to exempt out of with testing, and doing the masters/doctorate as a joint program with "double dipped classes".

I paid off my student loans the same month I turned 47. the only time that the payments were a real hardship was the first couple of years after I started my business, when I litterally survived off of bread and Raman noodles. I could have paid the debt in full just a few years after that, but I didn't because the i-rate was lower than any other debt that I had, so paying it off early didn't make financial sense to me.
 
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It might be worth the money if the graduate really did get a job making double the median. If the major is something that is in demand currently, he just might. Most grads, however, don't, not any more.

Just what is the median wage, anyway?


Double that would be nearly $54 grand.
 
Putting any financial obstacle in between the student and his or her education is a mistake. Our national intellectual resources are even more vital than our energy resources.
 

OK, I looked at your source, you are correct for "independent" students, but I am correct for most traditional college age students who are receiving some support from their parents.
 

Wow, I wasn't aware that the median wage was that low now. I thought it was closer to $40k (for an average including all educational levels).

Within two years of finishing college I was making a tad over $30k, with just a bachelors, and probably below average grades in college - that was over 25 years ago. Adjusted for inflation that would be something approaching $60k today. Our middle class is sooooo screwed.
 
One of the perks of living in Canada is you would have to try rather hard to get anyway close to that level of debt especially in Quebec where tuition is 3000$.
 
0bserver92 said:
One of the perks of living in Canada is you would have to try rather hard to get anyway close to that level of debt especially in Quebec where tuition is 3000$.
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Tuition at the state colleges in California used to be zero.
Well, almost zero. When I was at Chico State College, I paid $50 a year in student fees.
Oh, but now we call them State universities instead.
 
0bserver92 said:
One of the perks of living in Canada is you would have to try rather hard to get anyway close to that level of debt especially in Quebec where tuition is 3000$.
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Tuition at our local community college is only $1300 per semester. In my state, we do have a state academic scholarship, which virtually all worthy students qualify for, and it ranges from $2,000 to $7,600 per year, depending upon the students achievement level in high school. The middle scholarship level is $5,000 a year, which would cover the entire cost of community college plus books, and still leave the student with some money for food and transportation.

Tuition at our 4 year state colleges is around $12k per year, but the most expensive private college in our state is priced at a little more than $50k including room and board (required of all students). My state kicks in an additional $2000/yr tuition grant for all students attending a private college. One private jr college in my county advertises "free" college for any student with at least a 3.0 gpa in high school plus a SAT (two part) score of 1000 (which is about the average score). It's not really free, but they will provide a scholarship to make up the difference between the tuition cost and any other scholarship or grant money.

College in the US isn't nearly as unaffordable as many make it out to be - it's just a matter of being willing to do whatever it takes (making decent grades in high school, joining the military, working a part time or summer job), and going to a college that is within ones budget.
 

Well that cost is for university here even the most prestigious ones. Community college is great if you want to be middle class.
 
0bserver92 said:
Well that cost is for university here even the most prestigious ones. Community college is great if you want to be middle class.
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Maybe. It all depends on what you study whether you can make it to middle class status that way or not. As Imagep says earlier, the middle class is soo screwed. It's getting more and more difficult to get to that level.

And the middle class is the backbone of this nation. Scary, isn't it?
 
0bserver92 said:
Well that cost is for university here even the most prestigious ones. Community college is great if you want to be middle class.
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Community college can also be an inexpensive stepping stone or bridge to a four year university. Let's face it, English 101 and "Sociology 101" are pretty much the same at community college as they are at Harvard. Community colleges can also be a great opportunity for university students to either get caught up or ahead by attending summer school.

When my kid to Psyc 101 at his major university, it was taught by a world famous researcher with a PhD in abnormal psycology, and he had 250 students in his class. When he took Sociology 101, he did it at community college, it was taught by a non-famous PhD in the Sociology, but with only 15 students in the class. Guess which class he learned more in?

Many 4 year colleges are hooked up with tech schools or community colleges with a bridge program. these community colleges have programs that are taylor designed to lead directly to a specific university curriculum, with no loss of credit hours (except for possibly some remedial classes). Sometimes the community college student can even participate in university extra-curriculars.
 

Well like I said that might be good for some careers making middle income but if you want degrees in business, accounting, aerospace engineering, etc. your not getting that at your local community college. Those paths also require getting connections that community colleges cannot offer.
 
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Community colleges are the best choice for most freshmen, at least economically and academically.

Plus, if they're still living at home, mom and dad still have some say as to what they may and may not do, which is a good thing whether the freshman thinks so or not.
 

I knocked out my requirments, english math that kinda of stuff at a CC then went on to an art school called Pratt.
 
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