Student Loan Costs
1.3 trillion dollar issues do not just go away, and
that is the amount of student loans owed to the
A prospective client called me today, he and his wife were graduated about a year ago.
Both have private and public student loans, though she has a government job and is on income based repayment plans for the government loans, with the prospect of forgiveness of any balance if she keeps her job for ten years, per the Public Service Loan Forgiveness provisions.
“I wish they had told us how much it would really cost.” he said.
$1,400 per month. Enough for a nice house payment, but, like tens of thousands, if not more, they cannot afford both.
As Glenn Reynolds of Instapundit is fond of saying, something that cannot last forever, won’t.
From the Investors’ Business Daily story linked to above:
The problem is, by subsidizing college with cheap loans, the government only drives the price of tuition higher. Colleges have hooked up to the government student-loan gravy train as never before, paying lavish salaries for do-nothing administrators and incompetent professors who in earlier, more-disciplined times would have been laughed out of the academy.
Yet, student loan cost keeps escalating.
last year average federal student loan debt stood at $30,650, a 17% rise since just 2013.
These are frequent themes for this here blog, the colleges take the money, risk free, whether grads get jobs or not. The government keeps lending, and student loan cost keeps getting worse.
And lending more money results in, more defaults.
In a study released last week, the Consumer Federation of America found that millions of people were in arrears on $137 billion in federal student loans in the first nine months of 2016, an increase of 14% from 2015
What Is the Way Out?
Not simple, that is for sure.
Whatever your views on the sanctity of contract, or, that a generation of Americans has been sold a bill of goods on the value of college, that 1.3 trillion dollars of student loan debt is NOT getting repaid.
So, stopping the bleeding is usually a good idea. The current higher education model is undergoing, and will undergo, vast changes due to online access to knowledge, and, teachers.
My friend Paul Jacob writes about one of the alternatives, Praxis. I have a nephew who went through the program and loved it.
We should not leave behind those stuck with the student loan cost.
Bankruptcy laws need to be changed.