State of the Union Education & Student Loans Part 3

[post105]

I could not figure out this either. The snake oil salesman peddling more socialism - and the funds are not there.

[freedomfighters2007]

I agree Post105

[ayanaweaver]

The "pay-as-you-go" method will also be helpful...cutting spending on programs that are wasteful can pay for ones that are more important. That is how we built the surplus in the 1990's. While wars are a necessary evil, they must be planned wisely b/c they are very expensive. Thanks for the dialogue!

[freedomfighters2007]

That is a problem for getting government funded student loans started. The federal government doesn't have enough income to pay for the regular budget. This year the regular budget is 1.56 trillion dollars short. So we have to deficit spend that much without any new programs. The debt forgiving is ok. But we need to keep using the private sector to make the loans at this time. Until we get the debt under control.

[ayanaweaver]

With all due respect the budget deficit argument is one that can be had every 4-8 years. The fact that we are short by that much is alarming but unreal...the US has been in a deficit before, this is not the first time. We have been in a deficit for the last 7 years, but no one made such a big fuss. It all boils down to the common person watching it on TV and the Gov't making the decsisons.

[freedomfighters2007]

After 9, 11 until 2009 We had a deficit of 647 billion dollars then in late 2008 Bush passed the Tarp Bringing the total deficit when Obama took over of 1.37 trillion dollars. With all due respect since jan 20 th 2009 now the deficit is 12.3 TRILLLION dollars and will climb to 14.3 trillion dollars in a few weeks. That is why can't afford any more debt. that's Trillion with a T.

[ayanaweaver]

Providing direct loans as opposed to subsidizing private loans will save almost $40 Billion. Direct loans already exist and have for some time. Educating Americans leads to better paying jobs, paying more in taxes, and eventually less government spending on social programs like Medicaid, AFDC, and rental assistance.

[freedomfighters2007]

@ayanaweaver How will making direct loans save 40 billion dollars.

[ayanaweaver]

The government currently pays the interest on all subsidized loans as long as the student is in school and for a grace period of 9 months after they graduate.  The gov't also guarantees 97% of the loan. Regardless to whether the student pays, the lender gets their money.The interest rate is currently fixed at 6.8%. If they move away from subsidizing private loans, students can pay their own interest.

[ayanaweaver]

The average college graduate lands a job that is at least $40K/yr. The average student would not have $250K in student loans. I would say maybe $50-100K. If they pay back $4K for 20 years that would be $80K, forgiving the other $20K is a drop in the bucket when you think that that money will now flow back into the economy. The gov't would make more money back if they give students an incentive to pay it back. Many students go into default and never pay.

[freedomfighters2007]

The main point is we don't have the money to spend all the money we are now spending on guarenteeing private loans on increasing Pell grants and tax credits and then adding to the gov deficit the expense of direct government loans.