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healthpellets
06-30-2012, 10:38 AM
Be aware.

http://www.chicagotribune.com/business/breaking/chi-no-more-grace-period-on-student-loans-20120628,0,4384922.story

College students are facing a roughly $20 billion increase in the cost of their federal loans, despite a much-heralded deal in Washington to contain the expense of higher education.

Starting Sunday, students hoping to earn the graduate degrees that have become mandatory for many white-collar jobs will become responsible for paying the interest on their federal loans while they are in school and immediately after they graduate. That means they'll have to pay an extra $18 billion out of pocket over the next decade.

Meanwhile, the government will no longer cover the interest on undergraduate loans during the six months after students finish school. That's expected to cost them more than $2 billion.

These changes have received little attention as lawmakers instead focus on preventing a spike in interest rates on federal student loans. They are the fallout of earlier political battles and compromises over broader issues such as the federal budget and the national debt ceiling. And they are forcing students such as Clarise McCants to make tough choices about how to pursue academic goals without jeopardizing financial security.

"I don't want to hastily make a decision that could waste thousands of dollars I don't have," said McCants, who said she will have to put off graduate school after finishing her undergraduate degree at Howard University in the spring. "That could kind of prove disastrous for my finances."

Much of the recent debate about the nation's soaring student debt burden has centered on how to prevent the interest rate on new federally subsidized undergraduate loans from doubling to 6.8 percent on Sunday. President Obama made the issue part of his stump speech at colleges nationwide, while Republican rival Mitt Romney also came out in support of the measure. This week, Senate leaders announced that they had finally reached a compromise on how to pay the estimated $6 billion cost of freezing the rate for one year. Congress is expected to approve the deal by Friday.

But the deal's benefits are being blunted by the two changes that will saddle students with higher costs.

Lawmakers ended a long-standing program that pays the interest on federally subsidized loans for six months after a student graduates from college. The change applies to new loans issued through July 2014.

Students who take out these loans over the next year will receive the lower interest rate â" but that amount will be charged to their bill as soon as they throw their graduation caps in the air. Students who apply for federal loans next year will be hit with a double whammy: a higher interest rate that begins after graduation.

"It really makes the loans kind of unpredictable and hard to understand for students and families when these changes are happening through the budget process," said Megan McClean, managing director of policy and federal relations for the National Association of Student Financial Aid Administrators, a trade group.

The outlook for students pursuing advanced degrees is even more grim.

As of Sunday, Uncle Sam will no longer pay the interest on new graduate loans while students are in school and for six months after they finish. The change comes as government data show that the average annual cost of a master's degree and professional programs in law and medicine has jumped by double digits. Enrollment in graduate programs has risen by 33 percent since 2000, to 2.8 million students.

The graduate loan subsidy is a casualty of last summer's debate over the national debt ceiling. Lawmakers eliminated the program to cover a shortfall in funding loans for low-income students.

"It's a difficult question, because as some experts point out . . . [subsidies are] a back-end benefit to students," said Julie Morgan, associate director for post-secondary education at the Center for American Progress. "They do save them money . . . but they don't encourage students to attend school."

Mechelle Sieglitz said she recently learned that she would have to rely on unsubsidized federal loans for her last year of divinity school, putting tuition out of reach. So she took a teaching job and is hoping to save enough money to finish her education later.

"Though I've been able to find ways around the system, I know a lot of kids are not going to be as fortunate and will have to drop out to avoid mounting tuition and shrinking options," she wrote.

Personal finance expert John Ulzheimer, head of consumer education for SmartCredit.com, said the changes to student loans are forcing many borrowers to have what he called an "economic come-to-Jesus moment" about what their degrees are worth.

Bryce Freeman, a student at the University of Florida at Gainesville, said the change to graduate loans will influence which schools he considers for a master's degree in public policy. Although Georgetown University and the University of California at Berkeley are appealing, the cost may put them out of reach.

"That's the million-dollar question," he said. "You have to find a balance between a program that's going to get you a good-paying job and one that makes sense financially."

Copyright © 2012, Reuters

prhom
06-30-2012, 10:57 AM
...the changes to student loans are forcing many borrowers to have what he called an "economic come-to-Jesus moment" about what their degrees are worth.

This is not a bad thing. Students have been handing over blank checks to universities for a long time now without any thought as to whether it's a good investment or not.

Silock
06-30-2012, 11:05 AM
Yeah, this pretty much fucking sucks.

Chiefs Pantalones
06-30-2012, 01:10 PM
I'm glad I graduated college before this. Either way it sucks and you're gonna owe no matter what but this is crazy. We have some friends that are lawyers who are also married and they owe over $150,000 together. Their kids will be paying for that and their own loan probably.

notorious
06-30-2012, 01:13 PM
I will never feel bad for a lawyer.

Guru
06-30-2012, 01:15 PM
My kids are so screwed. Between healthcare and this, we won't be able to help them at all.

Bump
06-30-2012, 01:20 PM
so why are they doing this? Were they losing money the way it was structured before or do they just want to make more money than they already are?

Personally, I think it's just to weed out students who didn't grow up rich. Class warfare.

Chiefs Pantalones
06-30-2012, 01:24 PM
Fuck Obama

Chiefs Pantalones
06-30-2012, 01:28 PM
I will never feel bad for a lawyer.

Lol no joke probably not the best example.

ThatRaceCardGuy
06-30-2012, 01:29 PM
**** Obama

Yes...everything is his fault...including natural disasters

BigMeatballDave
06-30-2012, 01:31 PM
Ahhhh. LOVE this government.

Roll out the red carpet for Corporate.

Shit on the rest of America.

BigMeatballDave
06-30-2012, 01:34 PM
Yes...everything is his fault...including natural disasters

I'm sure you blamed Bush for Katrina.

Just because you and Obama share the same skin tone, doesn't mean you have to agree with everything he's done.

You'd think Sandusky got a raw deal if he were black.

OJ is completely innocent.

notorious
06-30-2012, 01:43 PM
Welcome to the real world.

notorious
06-30-2012, 01:45 PM
Lol no joke probably not the best example.

:D Just breakin' balls. There are a lot of laywers that don't pull in 6 figure incomes until they put in quite a few years.

Setsuna
06-30-2012, 01:45 PM
Yes...everything is his fault...including natural disasters

Dude I'm so sick of your selective posting. You may be a Chiefs fan but you're ****ing useless otherwise.

And this really sucks. I thought I was getting the good end of the deal not graduating and coming out in this horrible economy. Now it's more advantageous to have graduated already. This looks bleak.

Chiefs Pantalones
06-30-2012, 02:00 PM
:D Just breakin' balls. There are a lot of laywers that don't pull in 6 figure incomes until they put in quite a few years.

They are well off but their student loans aren't their first bill priority. Sadly I'm the same :) I need to start putting more dough its way though.

Pitt Gorilla
06-30-2012, 02:19 PM
**** Obama

<iframe width="560" height="315" src="http://www.youtube.com/embed/vAFQIciWsF4" frameborder="0" allowfullscreen></iframe>

Guru
06-30-2012, 02:26 PM
Sickening

Ace Gunner
06-30-2012, 02:34 PM
I guess that idea of "investing in americans to compete with the rest of the world" isn't important anymore. Imagine that.

Fish
06-30-2012, 03:03 PM
Idiocracy is coming.....

mikey23545
06-30-2012, 03:12 PM
I guess that idea of "investing in americans to compete with the rest of the world" isn't important anymore. Imagine that.

LMAO

Cannibal
06-30-2012, 03:21 PM
My kids are so screwed. Between healthcare and this, we won't be able to help them at all.

I guess they should probably pull themselves up by their bootstraps.

Valiant
06-30-2012, 03:24 PM
Most students need to alter their view. There are other options, I never went fulltime until my last year of college. I worked fulltime, paid my own way plus money from work.

To get a four year loan, 100k in debt for your philosophy or whatever awkward degree in an overpopulated field is just bad planning.

I loath obama, but I am fine with this. Welcome to the real world. Ofcourse I have not read all the fine print. I am sure there is a clause exempting illegals from paying back if the vote democrat.

mikey23545
06-30-2012, 03:28 PM
so why are they doing this? Were they losing money the way it was structured before or do they just want to make more money than they already are?

Personally, I think it's just to weed out students who didn't grow up rich are incredible hairless pussies. Class warfare.


FYP.

sd4chiefs
06-30-2012, 03:45 PM
How did I get into the DC forum?

jjjayb
06-30-2012, 03:51 PM
Don't worry. This will be a great excuse for the government to take over secondary education. Soon enough you'll be able to go to US State to work on your degree.

Brainiac
06-30-2012, 04:05 PM
The sense of entitlement here is fascinating. Too many people want the government to provide something for them. This group wants welfare, that group wants free health care, another group wants food stamps, another group wants the government to pay every penny possible for their education, and all of the groups get outraged when somebody in government says "enough already".

Enough already.

If you can't afford to pay for four years at the most expensive colleges around, then go to a community college for a couple of years and get a part-time job. The whole student loan program is yet another government program wildly out of control.

scho63
06-30-2012, 04:11 PM
This is not a bad thing. Students have been handing over blank checks to universities for a long time now without any thought as to whether it's a good investment or not.

Spot on! :thumb:

Low rates and easy money keeps students piling into colleges and the universities constantly raising tuition. Once again, government gets involved and things go wrong.

notorious
06-30-2012, 04:12 PM
Was this thread created to lure all of the DC scum out into the open for the opportunity to completely eradicate them?

BigMeatballDave
06-30-2012, 04:28 PM
Schools lowering their tuition might help.

Messier
06-30-2012, 05:00 PM
I'm sure you blamed Bush for Katrina.

Just because you and Obama share the same skin tone, doesn't mean you have to agree with everything he's done.

You'd think Sandusky got a raw deal if he were black.

OJ is completely innocent.

I don't blame Bush for rain storm Katrina (as Jack Donaghy calls it), but I do blame him, along with several others for the response, and clean up failures.

Bump
06-30-2012, 05:04 PM
Most students need to alter their view. There are other options, I never went fulltime until my last year of college. I worked fulltime, paid my own way plus money from work.

To get a four year loan, 100k in debt for your philosophy or whatever awkward degree in an overpopulated field is just bad planning.

I loath obama, but I am fine with this. Welcome to the real world. Ofcourse I have not read all the fine print. I am sure there is a clause exempting illegals from paying back if the vote democrat.


Noooo

it used to be possible for middle class kids to go to college and poor ones if they worked hard enough at it, but now it is definitely NOT possible. Nobody here is asking for anything free, it's just calling out blatant greed that's going to hurt the next generation in the long run.

Guru
06-30-2012, 05:30 PM
The sense of entitlement here is fascinating. Too many people want the government to provide something for them. This group wants welfare, that group wants free health care, another group wants food stamps, another group wants the government to pay every penny possible for their education, and all of the groups get outraged when somebody in government says "enough already".

Enough already.

If you can't afford to pay for four years at the most expensive colleges around, then go to a community college for a couple of years and get a part-time job. The whole student loan program is yet another government program wildly out of control.

has nothing to do with entitlement. These days you have to get a degree just to work at video stores. They practically require college now yet they keep making it harder and harder to pay for. This isn't investing in the youth of America to compete globally. This is shutting the middle class and lower out of the equation altogether,.

Brainiac
06-30-2012, 06:17 PM
has nothing to do with entitlement. These days you have to get a degree just to work at video stores. They practically require college now yet they keep making it harder and harder to pay for. This isn't investing in the youth of America to compete globally. This is shutting the middle class and lower out of the equation altogether,.

You're missing the point. Did you even read the article? This doesn't keep anybody from going to college. All it does is (1) remove a deferment on paying interest on the loan if the student decides to get a Master's degree (18 of the 20 billion referred to in the article) and (2) start charging interest on the student loan immediately after the student graduates rather than 6 months later (the other 2 billion).

These are hardly drastic changes. This doesn't shut anybody out of an opportunity to go to college. These are small changes for each individual that add up to big savings for the taxpayers when you multiply the small changes by the number of student loans. The author of the article threw out numbers like $20 billion in order to invoke an emotion reaction.

I know, it would be peachy keen if the government would provide a free college education for everyone along with free health care and everything else. People want free stuff, and they complain when they don't get as much free stuff as they would like. I get that. But the fact is that practically anyone can get a college education if they really want it and they're willing to work for it. So don't claim that this is some sort of class warfare intended to prevent the middle class and lower class from attending college. That's just plain ludicrous.

Silock
06-30-2012, 06:44 PM
Speaking of missing the point -- it's not about getting free education. It's about not having to make payments until AFTER you've graduated and have a good job that you qualified for with your advanced degree. Those payments were never dodged. The student was always liable for them. They just got to wait before making the payments. Now, they can't.

Saul Good
06-30-2012, 06:59 PM
Noooo

it used to be possible for middle class kids to go to college and poor ones if they worked hard enough at it, but now it is definitely NOT possible. Nobody here is asking for anything free, it's just calling out blatant greed that's going to hurt the next generation in the long run.

It's not possible for middle class and poor kids to attend college anymore? Interesting.

Do you think that college attendance rates are dropping?

2bikemike
06-30-2012, 07:10 PM
has nothing to do with entitlement. These days you have to get a degree just to work at video stores. They practically require college now yet they keep making it harder and harder to pay for. This isn't investing in the youth of America to compete globally. This is shutting the middle class and lower out of the equation altogether,.

You know you don't have to go to college to make a good wage. As an example a power plant operator can easily make 6 figures. Another good paying job is an electrician. Journeyman electricians are making around $40/ hour.

This whole thing about pushing college is a freaking joke IMHO.

Cave Johnson
06-30-2012, 07:37 PM
Interesting article on the role of universities in the whole mess.

http://nplusonemag.com/death-by-degrees

cosmo20002
06-30-2012, 08:46 PM
Seems like one party is always mocking education--calling the educated "the elite" and so forth. This country needs to wake up and realize the important things are learned on talk radio and not the liberal hippie factories we call U.S. universities.

petegz28
06-30-2012, 08:48 PM
Seems like one party is always mocking education--calling the educated "the elite" and so forth. This country needs to wake up and realize the important things are learned on talk radio and not the liberal hippie factories we call U.S. universities.

Hopefully you are not implyin a degree automatically makes someone "more educated" beyond a very superficial level.

BucEyedPea
06-30-2012, 08:58 PM
This is not a bad thing. Students have been handing over blank checks to universities for a long time now without any thought as to whether it's a good investment or not.

Yup. This has also been a gravy train for the colleges allowing them to continually charge more. This is another area where govt artificially increases the demand curve. Now, they won't be able to do this as easily but it may be awhile before it shakes out. Hardly, anyone works their way through anymore which they were able to do at one time.

BucEyedPea
06-30-2012, 09:00 PM
Seems like one party is always mocking education--calling the educated "the elite" and so forth. This country needs to wake up and realize the important things are learned on talk radio and not the liberal hippie factories we call U.S. universities.

Ivory Towers where they dream up utopian ideas that don't work in the real world. Especially, our elite university's where the worst them get education—Obama, Krugman etc. Look at the mess they've made.

Setsuna
06-30-2012, 09:26 PM
You're missing the point. Did you even read the article? This doesn't keep anybody from going to college. All it does is (1) remove a deferment on paying interest on the loan if the student decides to get a Master's degree (18 of the 20 billion referred to in the article) and (2) start charging interest on the student loan immediately after the student graduates rather than 6 months later (the other 2 billion).

These are hardly drastic changes. This doesn't shut anybody out of an opportunity to go to college. These are small changes for each individual that add up to big savings for the taxpayers when you multiply the small changes by the number of student loans. The author of the article threw out numbers like $20 billion in order to invoke an emotion reaction.

I know, it would be peachy keen if the government would provide a free college education for everyone along with free health care and everything else. People want free stuff, and they complain when they don't get as much free stuff as they would like. I get that. But the fact is that practically anyone can get a college education if they really want it and they're willing to work for it. So don't claim that this is some sort of class warfare intended to prevent the middle class and lower class from attending college. That's just plain ludicrous.
You are dense as shit. Entitlement is the dumbest thing I've ever heard. People need that grace period to find their career job. Gain a few pay checks in order to prepare for paying these loans. Taking that away is going to make people's credit go to shit, not like it isn't already with this shit economy but let's make it so that you'll never make it back to 700 again. Fuck you.

Extra Point
06-30-2012, 09:28 PM
Ahhhh. LOVE this government.

Roll out the red carpet for Corporate.

Shit on the rest of America.

THIS!!!

patteeu
07-01-2012, 10:14 AM
so why are they doing this? Were they losing money the way it was structured before or do they just want to make more money than they already are?

Personally, I think it's just to weed out students who didn't grow up rich. Class warfare.

Who are "they"? If "they" means all of us, then yes we were losing money each time we made an interest payment on one of these loans so that the borrower didn't have to.

Brainiac
07-01-2012, 11:32 AM
You are dense as shit. Entitlement is the dumbest thing I've ever heard. People need that grace period to find their career job. Gain a few pay checks in order to prepare for paying these loans. Taking that away is going to make people's credit go to shit, not like it isn't already with this shit economy but let's make it so that you'll never make it back to 700 again. **** you.
Hold on, Nancy. I thought the big problem was that this change would make it impossible for the middle and lower classes to send their children to college. Now you've moved the goalposts and you're making the highly dubious claim that being charged interest on a student loan 6 months earlier is going to make people's credit go to shit.

Get your story straight.

Guru
07-01-2012, 12:14 PM
You're missing the point. Did you even read the article? This doesn't keep anybody from going to college. All it does is (1) remove a deferment on paying interest on the loan if the student decides to get a Master's degree (18 of the 20 billion referred to in the article) and (2) start charging interest on the student loan immediately after the student graduates rather than 6 months later (the other 2 billion).

These are hardly drastic changes. This doesn't shut anybody out of an opportunity to go to college. These are small changes for each individual that add up to big savings for the taxpayers when you multiply the small changes by the number of student loans. The author of the article threw out numbers like $20 billion in order to invoke an emotion reaction.

I know, it would be peachy keen if the government would provide a free college education for everyone along with free health care and everything else. People want free stuff, and they complain when they don't get as much free stuff as they would like. I get that. But the fact is that practically anyone can get a college education if they really want it and they're willing to work for it. So don't claim that this is some sort of class warfare intended to prevent the middle class and lower class from attending college. That's just plain ludicrous.
where the fuck did I say anything about wanting free stuff. Stop putting words in my mouth.

2bikemike
07-01-2012, 03:07 PM
Here is something I found to be pretty accurate as to the whole cost of education and student aid issue. I know its kinda long but it is a good read.


May/June 2012

Richard Vedder
Professor of Economics
Ohio University

Federal Student Aid and the Law of Unintended Consequences

RICHARD VEDDER is the Edwin and Ruth Kennedy Distinguished Professor of Economics at Ohio University and director of the Center for College Affordability and Productivity. He received his B.A. from Northwestern University and his M.A. and Ph.D. in economics from the University of Illinois. He has written for the Wall Street Journal, National Review, and Investor’s Business Daily, and is the author of several books, including The American Economy in Historical Perspective and Going Broke by Degree: Why College Costs Too Much.

The following is adapted from a speech delivered on May 10, 2012, at Hillsdale College’s Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship in Washington, D.C.

FEDERAL STUDENT financial assistance programs are costly, inefficient, byzantine, and fail to serve their desired objectives. In a word, they are dysfunctional, among the worst of many bad federal programs.

These programs are commonly rationalized on three grounds: on the grounds that assuring more young people a higher education has positive spillover effects for the country; on the grounds that higher education promotes equal economic opportunity (or, as the politicians say, that it is “a ticket to achieving the American Dream”); or on the grounds that too few students would go to college in the absence of federal loan programs, since private markets for loans to college students are defective.

All three of these arguments are dubious at best. The alleged positive spillover effects of sending more and more Americans to college are very difficult to measure. And as the late Milton Friedman suggested to me shortly before his death, they may be more than offset by negative spillover effects. Consider, for instance, the relationship between spending by state governments on higher education and their rate of economic growth. Controlling for other factors important in growth determination, the relationship between education spending and economic growth is negative or, at best, non-existent.

What about higher education being a vehicle for equal economic opportunity or income equality? Over the last four decades, a period in which the proportion of adults with four-year college degrees tripled, income equality has declined. (As a side note, I do not know the socially optimal level of economic inequality, and the tacit assumption that more such equality is always desirable is suspect; my point here is simply that, in reality, higher education today does not promote income equality.)

Finally, in regards to the argument that capital markets for student loans are defective, if financial institutions can lend to college students on credit cards and make car loans to college students in large numbers—which they do—there is no reason why they can’t also make student educational loans.

Despite the fact that the rationales for federal student financial assistance programs are very weak, these programs are growing rapidly. The Pell Grant program did much more than double in size between 2007 and 2010. Although it was designed to help poor people, it is now becoming a middle class entitlement. Student loans have been growing eight to ten percent a year for at least two decades, and, as is well publicized, now aggregate to one trillion dollars of debt outstanding—roughly $25,000 on average for the 40,000,000 holders of the debt. Astoundingly, student loan debt now exceeds credit card debt.

Nor is it correct to assume that most of this debt is held by young people in their twenties and early thirties. The median age of those with loan obligations today is around 33, and approximately 40 percent of the debt is held by people 40 years of age or older. So when politicians talk about maintaining low interest loans to help kids in college, more often than not the help is going to middle-aged individuals long gone from the halls of academia.

With this as an introduction, let me outline eight problems with federal student grant and loan programs. The list is not exclusive.

(1) Student loan interest rates are not set by the forces of supply and demand, but by the political process. Normally, interest rates are a price used to allocate scarce resources; but when that price is manipulated by politicians, it leads to distortions in the use of resources. Since student loan interest rates are always set at below-market rates, too much money is borrowed for college. Currently those interest rates are extremely low, with a key rate of 3.4 percent—which, after adjusting for inflation, is approximately zero. Moreover, both the president and Governor Romney say they want to continue that low interest rate after July 1, when it is supposed to double. This aggravates an already bad situation, and provides a perfect example of the fundamental problem facing our nation today: politicians pushing programs whose benefits are visible and immediate (even if illusory, as suggested above), while their extraordinarily high costs are less visible and more distant in time.

(2) In the real world, interest rates vary with the prospects that the borrower will repay the loan. In the surreal world of student loans, the brilliant student completing an electrical engineering degree at M.I.T. pays the same interest rate as the student majoring in ethnic studies at a state university who has a GPA below 2.0. The former student will almost certainly graduate and get a job paying $50,000 a year or more, whereas the odds are high the latter student will fail to graduate and will be lucky to make $30,000 a year.

Related to this problem, colleges themselves have no “skin in the game.” They are responsible for allowing loan commitments to occur, but they face no penalties or negative consequences when defaults are extremely high, imposing costs on taxpayers.

(3) Perhaps most importantly, federal student grant and loan programs have contributed to the tuition price explosion. When third parties pay a large part of the bill, at least temporarily, the customer’s demand for the service rises and he is not as sensitive to price as he would be if he were paying himself. Colleges and universities take advantage of that and raise their prices to capture the funds that ostensibly are designed to help students. This is what happened previously in health care, and is what is currently happening in higher education.

(4) The federal government now has a monopoly in providing student loans. Until recently, at least it farmed out the servicing of loans to a variety of private financial service firms, adding an element of competition in terms of quality of service, if not price. But the Obama administration, with its strong hostility to private enterprise, moved to establish a complete monopoly. One would think the example of the U.S. Postal Service today, losing taxpayer money hand over fist and incapable of making even the most obviously needed reforms, would be enough proof against the prudence of such a move. And remember: because of highly irresponsible fiscal policies, the federal government borrows 30 or 40 percent of the money it currently spends, much of that from overseas. Thus we are incurring long-term obligations to foreigners to finance loans to largely middle class Americans to go to college. This is not an appropriate use of public funds at a time of dangerously high federal budget deficits.

(5) Those applying for student loans or Pell Grants are compelled to complete the FAFSA form, which is extremely complex, involves more than 100 questions, and is used by colleges to administer scholarships (or, more accurately, tuition discounts). Thus colleges are given all sorts of highly personal and private information on incomes, wealth, debts, child support, and so forth. A car dealer who demanded such information so that he could see how badly he could gouge you would either be out of business or in jail within days or weeks. But it is commonplace in higher education because of federal student financial assistance programs.

(6) As federal programs have increased the number of students who enroll in college, the number of new college graduates now far exceeds the number of new managerial, technical and professional jobs—positions that college graduates have traditionally taken. A survey by Northeastern University estimates that 54 percent of recent college graduates are underemployed or unemployed. Thus we currently have 107,000 janitors and 16,000 parking lot attendants with bachelor’s degrees, not to mention bartenders, hair dressers, mail carriers, and so on. And many of those in these limited-income occupations are struggling to pay off student loan obligations.

Connected to this is the fact that more and more kids are going to college who lack the cognitive skills, the discipline, the academic preparation, or the ambition to succeed academically. They simply cannot or do not master well much of the rather complex materials that college students are expected to learn. As a result, many students either do not graduate or fail to graduate on time. I have estimated that only 40 percent or less of Pell Grant recipients get degrees within six years—an extremely high dropout or failure rate. No one has seriously questioned that statistic—a number, by the way, that the federal government does not publish, no doubt because it is embarrassingly low.

Also related is the fact that, in an attempt to minimize this problem, colleges have lowered standards, expecting students to read and write less while giving higher grades for lesser amounts of work. Surveys show that students spend on average less than 30 hours per week on academic work—less than they spend on recreation. As Richard Arum and Josipa Roksa show in their book Academically Adrift: Limited Learning on College Campuses, critical thinking skills among college seniors on average are little more than among freshmen.

(7) As suggested to me a couple of days ago by a North Carolina judge, based on a case in his courtroom, with so many funds so readily available there is a temptation and opportunity for persons to acquire low interest student loans with the intention of dropping out of school quickly to use the proceeds for other purposes. (In the North Carolina student loan fraud case, it was to start up a t-shirt business.)

(8) Lazy or mediocre students can get greater subsidies than hard-working and industrious ones. Take Pell Grants. A student who works extra hard and graduates with top grades after three years will receive only half as much money as a student who flunks several courses and takes six years to finish or doesn’t obtain a degree at all. In other words, for recipients of federal aid there are disincentives to excel.

* * *
If the Law of Unintended Consequences ever applied, it is in federal student financial assistance. Programs created with the noblest of intentions have failed to serve either their customers or the nation well. In the 1950s and 1960s, before these programs were large, American higher education enjoyed a Golden Age. Enrollments were rising, lower-income student access was growing, and American leadership in higher education was becoming well established. In other words, the system flourished without these programs. Subsequently, massive growth in federal spending and involvement in higher education has proved counterproductive.

With the ratio of debt to GDP rising nationally, and the federal government continuing to spend more and more taxpayer money on higher education at an unsustainable long-term pace, a re-thinking of federal student financial aid policies is a good place to start in meeting America’s economic crisis.

Setsuna
07-01-2012, 06:25 PM
Hold on, Nancy. I thought the big problem was that this change would make it impossible for the middle and lower classes to send their children to college. Now you've moved the goalposts and you're making the highly dubious claim that being charged interest on a student loan 6 months earlier is going to make people's credit go to shit.

Get your story straight.

WTF? When the fuck did I say shit about it not being affordable? You need to learn how to read dipshit because I for sure didn't say anything to that effect. You need to pay the fuck attention to basic English grammar and comprehension because you have failed horribly at it at this point.