Wait a second...the Federal student loan rate for 2020-2021 is 2.75%. Think about that. 2.75% for an unsecured loan to a person without a job who doesn’t have to even pay interest until he graduates. Thats about the same rate for a 30 year fully secured mortgage on a house with 20% equity as collateral to income qualified borrowers wh…
Wait a second...the Federal student loan rate for 2020-2021 is 2.75%. Think about that. 2.75% for an unsecured loan to a person without a job who doesn’t have to even pay interest until he graduates. Thats about the same rate for a 30 year fully secured mortgage on a house with 20% equity as collateral to income qualified borrowers who have to make their first payment in 30 days.
You want to talk subsidy? Go into a bank, tell them you are unemployed, won’t start working for 4 years and have no assets and want to borrow $100,000. After they stop laughing at you, they may give you a loan at 12% or more. And Tim will have a maturity rate far shorter than a student loan.
You’re not happy enough with this HUGE subsidy. Who said it’s as a consumption item? It’s a capital investment and like a house, you have to pay the bill.
But the subsidy is some flimflam job? Someone tricked you into it? They give you a below interest rate on advantageous terms and you complain that’s not enough?
More, more, more. Someone else has got to pay. Did you ever think that the attitude that makes a person view an advantageous lending deal that is already subsidized as not enough maybe the same attitude that made him fail as well?
You have ZERO knowledge of the student loan system clearly. The federal government has been book PROFITS of $50 Billion per year on this lending system since 2012. They have even been profiting on DEFAULTED loans since 2004, and probably even before. The only SUBSIDY happening here (ie people sucking money out of the government) is the servicers, collection companies, and obviously the COLLEGES...and even after they suck their ten pounds of flesh from the taxpayer, Uncle sam is STILL making money...and a LOT OF IT. You like to wag your finger at the borrowers sucked into this big-government, college lending SCAM, but all you accomplish by doing this is defending and perpetuating this lending scam, to their great benefit. Did you know that some of the government profits of this lending system are used to fund Obamacare? No of course you didn't. LOL. If and when this country actually does go socialist/communist (something I suspect you claim to fear), we'll have chest-beating, finger-wagging, up-by-your-bootstrappers LIKE YOU TO THANK!. Good job, comrade. I'll be sure to put you up for the USEFUL IDIOT MEDAL. Nice Job. Take a bow. Douche.
You know very well that under FCRA accounting rules, the government's "profits" on these loans do not reflect a risk-adjusted value. If government accounting rules required the same CECL charges that a bank would take, the annual losses have been - and would continue to be - substantial. FCRA also does not include any of the $30B+ administrative charges from running the origination program. I believe you know both of those things but prefer to mislead rather than inform. You are an advocate and a charlatan, not a truth teller.
I totally agree with this, except I think there needs to be a nominal payment because the Screamers and Crybabies (notice how the Koch Brothers trolls in cubicles hit these sites?) will make a bunch of noise if it's a total writeoff. I think what is fair is a surtax that brings today's federal marginal rates to about what they were in the 1970s, when college was essentially free. Fair is fair. A couple percent over $30,000 exempt, 15/20 years, five more for graduate. Cancel everything undergrad before 2001, graduate before 1996.
You missed the larger problem that the loan itself inflates the price of the tuition. Doesn't matter whether the interest is 2% or 20%. The loan itself is the problem. It's not a capital investment, it's a public service. There is no "asset" on the personal balance sheet. And in the 1970s, when the rate was 7%, US Treasury rates were north of 10%. So there should be 0% interest today to be fair.
To be “fair”? The rate now is 2.75%, or about 15% less than it would be if it were priced like any other unsecured personal loan. And it’s even probably a wider gap than that if yours could figure out how to price a personal loan that defers payment and interest accrual for four years and which, in the midst of a pandemic, the lender will not just defer payment on, but defer accrual of interest on.
The problem isn't that the subsidy isn't large enough. The problem is that there is no intelligent underwriting of the loan. Borrowers benefit when creditors with skin in the game reject loans that are unlikely to be repaid. Teenage borrowers would almost certainly benefit more than most borrowers from the intrusion of lender restraint.
While this is true, shyster politicians and shrewd bankers will denounce any restraint on lending. Their cries will resonate with the unlimited free diplomas for all dupes that equate a diploma to a golden ticket through life. Sigh.
Similar to how there is no underwriting requirement for Medicare. Anyone 65 who has 40 quarters gets it. Puff away and eat fast food and gallon size colas. No responsibility for their actions!!!!!!!! SMH.
I'm not a fan of this analogy. A lending transaction is a commercial transaction. A good loan is one that works out for both borrower and creditor. A bad loan is one that both borrower and creditor wishes had never been made. Students are not the winners when the government shovels money to them to pursue worthless degrees. That bears no resemblance to health insurance. Medical care was always going to be needed and provided. And I'm skeptical that unhealthy people that die sooner ultimately consume less health care than healthier people that die much later.
It's obvious that "student loans" are not a lending transaction at all, but a mandatory surtax, collected in arrears and with predatory interest, as an entrance fee for going to college. The point I am making is about the Screamers and Crybabies. There is MUCH more "moral hazard" in the Medicare system. And in the military industrial complex. Yet not a peep about that from these types. You are wrong that unhealthy people die sooner, and don't use Medicare. What happens is they go limping to the gate for Medicare after having used up emergency room care and other public programs like Medicaid, after they engage in the bad lifestyle choices. I am OK with people being able to make their lifestyle choices, and in favor of Medicare for All. I just don't see where the Screamer and Crybaby hypocrites come out of the woodwork about the student loans, but they're never out there about the fat diabetics who smoke, or the huge defense contractors who waste billions on top of billions on forever wars and stupid defense commitments that don't help us.
The interest isn't predatory. It's below market. But the availability of excess credit has caused the cost of the product to explode in ways that hurts everyone, cash buyers and borrowers alike.
I'm no expert in healthcare costs, but I think you're wrong about healthcare costs associated with unhealthy lifestyles. I remember first hearing these absurd claims about the costs imposed by smokers on the health system when the states were strong-arming the tobacco companies into litigation settlements. They were always dishonestly arrived at.
When I say predatory, I meant that it is not on the same real terms that the 1960s and 1970s borrowers received. It is also predatory in that it is being attached on to what amounts to a mandatory entrance ritual if the enrollee wants to attend---you want the seat, sign the note.
You are right that the presence of the loan system tends to make it worse for cash payers, but since they got all the big tax cuts, the government is effectively subsidizing their enrollment fee. In the 1960s, the less well off student would not have the loan and the more well off would have been paying higher taxes. Thus, this generation is being made to borrow for something that had been provided as part of taxes before.
Frankly, I am not someone who responds to arguments made on links. And so "dishonestly" has to be seen as just your opinion with regard to some assertion made about smoking and public health. Throughout history, dishonesty and immorality have been associated with the tobacco industry, and so it's tough to listen to any argument that they aren't given a fair shake---because they took advantage for too long. I am not sure that tobacco was a slave-harvested crop, but that would be one more thing to add on to the controversial history.
"It is also predatory in that it is being attached on to what amounts to a mandatory entrance ritual if the enrollee wants to attend---you want the seat, sign the note."
If I'm looking at the cost of the tuition determined by the University on one hand, and the cost of the loan package offered by the government, on the other hand, I know which one I would describe as predatory, and it's not the finance terms. In fact, if I could borrow from the government on those terms right now and use the loan for something other than education, I would do it. In a heartbeat. Notwithstanding the non-dischargeability.
"Frankly, I am not someone who responds to arguments made on links. And so "dishonestly" has to be seen as just your opinion with regard to some assertion made about smoking and public health."
It's not just my opinion, though. The first link is a research paper published in the New England Journal of Medicine that finds that for a given age smoker's health care coverage is more expensive than a non-smoker, but due to shorter life span their total health care costs are lower. The NEJM's conclusion: "If people stopped smoking, there would be a savings in health care costs, but only in the short term. Eventually, smoking cessation would lead to increased health care costs."
The second link is to a Finnish study that found the same thing. Dutch, Danish and Japanese studies that I didn't link all found the same thing. Studies have found the same thing with respect to obesity.
I want to be clear that I was not accusing you of dishonesty. Claims about the burden smokers imposed on public health care costs were manufactured to support the states' lawsuits against the tobacco companies in the '90s and received widespread press coverage from a fawning media incapable of anything but stenography. They took health care consumption expenses for a given age for smokers versus non-smokers and then extrapolated those savings out, as if the smokers' shortened life spans had no effect on their total healthcare consumption. But their headline conclusions falsely implied that smokers had higher lifetime health care costs, when the study itself was pointedly designed not to show lifetime health care costs at all.
I'm not defending tobacco (if I were, this is sure the hell not the way I would do it), just calling out politicized, narrative-driven research.
I appreciate what you are saying, and I did look at the New England Journal article. I want to point out that they said it depended on the "discount rate" used on the present value of future expenses of the survivor pool. At some discount rates--interestingly the ones that equate to long term equity returns or nominal GDP (closer to the 10% than the lower rates)--the nonsmokers never catch up to the smokers. They also said that there were non-monetary costs to smoking that were present and difficult to quantify. (I would put the effects of second-hand smoke and fetal damage at the top of those lists.)
My point is that people make ill-advised and costly personal decisions all the time that eat up tax dollars, yet the anti-student loan reform Screamers and Crybabies hardly make a peep about those wasted dollars and don't haul out the props for a self-praising morality play.
I still think there's a really big difference. Providing medicare and medicaid coverage to smokers and obese people is not what caused them to smoke or be obese and those people still benefit from the coverage. Providing easy credit to people to pursue non-viable degrees and careers is literally creating the market for many of these degrees. In the absence of this credit, a large number of these non-selective schools would not exist and the ones that did would have to find ways to deliver their product at vastly lower prices. Both borrower and lender would be better off.
Wait a second...the Federal student loan rate for 2020-2021 is 2.75%. Think about that. 2.75% for an unsecured loan to a person without a job who doesn’t have to even pay interest until he graduates. Thats about the same rate for a 30 year fully secured mortgage on a house with 20% equity as collateral to income qualified borrowers who have to make their first payment in 30 days.
You want to talk subsidy? Go into a bank, tell them you are unemployed, won’t start working for 4 years and have no assets and want to borrow $100,000. After they stop laughing at you, they may give you a loan at 12% or more. And Tim will have a maturity rate far shorter than a student loan.
You’re not happy enough with this HUGE subsidy. Who said it’s as a consumption item? It’s a capital investment and like a house, you have to pay the bill.
But the subsidy is some flimflam job? Someone tricked you into it? They give you a below interest rate on advantageous terms and you complain that’s not enough?
More, more, more. Someone else has got to pay. Did you ever think that the attitude that makes a person view an advantageous lending deal that is already subsidized as not enough maybe the same attitude that made him fail as well?
You have ZERO knowledge of the student loan system clearly. The federal government has been book PROFITS of $50 Billion per year on this lending system since 2012. They have even been profiting on DEFAULTED loans since 2004, and probably even before. The only SUBSIDY happening here (ie people sucking money out of the government) is the servicers, collection companies, and obviously the COLLEGES...and even after they suck their ten pounds of flesh from the taxpayer, Uncle sam is STILL making money...and a LOT OF IT. You like to wag your finger at the borrowers sucked into this big-government, college lending SCAM, but all you accomplish by doing this is defending and perpetuating this lending scam, to their great benefit. Did you know that some of the government profits of this lending system are used to fund Obamacare? No of course you didn't. LOL. If and when this country actually does go socialist/communist (something I suspect you claim to fear), we'll have chest-beating, finger-wagging, up-by-your-bootstrappers LIKE YOU TO THANK!. Good job, comrade. I'll be sure to put you up for the USEFUL IDIOT MEDAL. Nice Job. Take a bow. Douche.
https://studentloanjustice.medium.com/the-conservative-case-for-cancelling-student-loans-9e085a168972
promoting your own obscure (and erroneous) bloviation truly is pathetic.
Yes, this guy seems like a real narcissistic dick. He types in caps so we can realize he really means it!
Anything SUBSTANTIAL to say? lol
Lol. Lose the argument, attack on form. Nice.
Really? Please point out even ONE error in anything I have said!
You know very well that under FCRA accounting rules, the government's "profits" on these loans do not reflect a risk-adjusted value. If government accounting rules required the same CECL charges that a bank would take, the annual losses have been - and would continue to be - substantial. FCRA also does not include any of the $30B+ administrative charges from running the origination program. I believe you know both of those things but prefer to mislead rather than inform. You are an advocate and a charlatan, not a truth teller.
I totally agree with this, except I think there needs to be a nominal payment because the Screamers and Crybabies (notice how the Koch Brothers trolls in cubicles hit these sites?) will make a bunch of noise if it's a total writeoff. I think what is fair is a surtax that brings today's federal marginal rates to about what they were in the 1970s, when college was essentially free. Fair is fair. A couple percent over $30,000 exempt, 15/20 years, five more for graduate. Cancel everything undergrad before 2001, graduate before 1996.
You missed the larger problem that the loan itself inflates the price of the tuition. Doesn't matter whether the interest is 2% or 20%. The loan itself is the problem. It's not a capital investment, it's a public service. There is no "asset" on the personal balance sheet. And in the 1970s, when the rate was 7%, US Treasury rates were north of 10%. So there should be 0% interest today to be fair.
To be “fair”? The rate now is 2.75%, or about 15% less than it would be if it were priced like any other unsecured personal loan. And it’s even probably a wider gap than that if yours could figure out how to price a personal loan that defers payment and interest accrual for four years and which, in the midst of a pandemic, the lender will not just defer payment on, but defer accrual of interest on.
Fair is zero, because the loan is based on a price that was inflated because of the presence of the loan.
The problem isn't that the subsidy isn't large enough. The problem is that there is no intelligent underwriting of the loan. Borrowers benefit when creditors with skin in the game reject loans that are unlikely to be repaid. Teenage borrowers would almost certainly benefit more than most borrowers from the intrusion of lender restraint.
While this is true, shyster politicians and shrewd bankers will denounce any restraint on lending. Their cries will resonate with the unlimited free diplomas for all dupes that equate a diploma to a golden ticket through life. Sigh.
Similar to how there is no underwriting requirement for Medicare. Anyone 65 who has 40 quarters gets it. Puff away and eat fast food and gallon size colas. No responsibility for their actions!!!!!!!! SMH.
I'm not a fan of this analogy. A lending transaction is a commercial transaction. A good loan is one that works out for both borrower and creditor. A bad loan is one that both borrower and creditor wishes had never been made. Students are not the winners when the government shovels money to them to pursue worthless degrees. That bears no resemblance to health insurance. Medical care was always going to be needed and provided. And I'm skeptical that unhealthy people that die sooner ultimately consume less health care than healthier people that die much later.
It's obvious that "student loans" are not a lending transaction at all, but a mandatory surtax, collected in arrears and with predatory interest, as an entrance fee for going to college. The point I am making is about the Screamers and Crybabies. There is MUCH more "moral hazard" in the Medicare system. And in the military industrial complex. Yet not a peep about that from these types. You are wrong that unhealthy people die sooner, and don't use Medicare. What happens is they go limping to the gate for Medicare after having used up emergency room care and other public programs like Medicaid, after they engage in the bad lifestyle choices. I am OK with people being able to make their lifestyle choices, and in favor of Medicare for All. I just don't see where the Screamer and Crybaby hypocrites come out of the woodwork about the student loans, but they're never out there about the fat diabetics who smoke, or the huge defense contractors who waste billions on top of billions on forever wars and stupid defense commitments that don't help us.
The interest isn't predatory. It's below market. But the availability of excess credit has caused the cost of the product to explode in ways that hurts everyone, cash buyers and borrowers alike.
I'm no expert in healthcare costs, but I think you're wrong about healthcare costs associated with unhealthy lifestyles. I remember first hearing these absurd claims about the costs imposed by smokers on the health system when the states were strong-arming the tobacco companies into litigation settlements. They were always dishonestly arrived at.
https://www.nejm.org/doi/full/10.1056/NEJM199710093371506
https://bmjopen.bmj.com/content/2/6/e001678
When I say predatory, I meant that it is not on the same real terms that the 1960s and 1970s borrowers received. It is also predatory in that it is being attached on to what amounts to a mandatory entrance ritual if the enrollee wants to attend---you want the seat, sign the note.
You are right that the presence of the loan system tends to make it worse for cash payers, but since they got all the big tax cuts, the government is effectively subsidizing their enrollment fee. In the 1960s, the less well off student would not have the loan and the more well off would have been paying higher taxes. Thus, this generation is being made to borrow for something that had been provided as part of taxes before.
Frankly, I am not someone who responds to arguments made on links. And so "dishonestly" has to be seen as just your opinion with regard to some assertion made about smoking and public health. Throughout history, dishonesty and immorality have been associated with the tobacco industry, and so it's tough to listen to any argument that they aren't given a fair shake---because they took advantage for too long. I am not sure that tobacco was a slave-harvested crop, but that would be one more thing to add on to the controversial history.
"It is also predatory in that it is being attached on to what amounts to a mandatory entrance ritual if the enrollee wants to attend---you want the seat, sign the note."
If I'm looking at the cost of the tuition determined by the University on one hand, and the cost of the loan package offered by the government, on the other hand, I know which one I would describe as predatory, and it's not the finance terms. In fact, if I could borrow from the government on those terms right now and use the loan for something other than education, I would do it. In a heartbeat. Notwithstanding the non-dischargeability.
"Frankly, I am not someone who responds to arguments made on links. And so "dishonestly" has to be seen as just your opinion with regard to some assertion made about smoking and public health."
It's not just my opinion, though. The first link is a research paper published in the New England Journal of Medicine that finds that for a given age smoker's health care coverage is more expensive than a non-smoker, but due to shorter life span their total health care costs are lower. The NEJM's conclusion: "If people stopped smoking, there would be a savings in health care costs, but only in the short term. Eventually, smoking cessation would lead to increased health care costs."
The second link is to a Finnish study that found the same thing. Dutch, Danish and Japanese studies that I didn't link all found the same thing. Studies have found the same thing with respect to obesity.
I want to be clear that I was not accusing you of dishonesty. Claims about the burden smokers imposed on public health care costs were manufactured to support the states' lawsuits against the tobacco companies in the '90s and received widespread press coverage from a fawning media incapable of anything but stenography. They took health care consumption expenses for a given age for smokers versus non-smokers and then extrapolated those savings out, as if the smokers' shortened life spans had no effect on their total healthcare consumption. But their headline conclusions falsely implied that smokers had higher lifetime health care costs, when the study itself was pointedly designed not to show lifetime health care costs at all.
I'm not defending tobacco (if I were, this is sure the hell not the way I would do it), just calling out politicized, narrative-driven research.
I appreciate what you are saying, and I did look at the New England Journal article. I want to point out that they said it depended on the "discount rate" used on the present value of future expenses of the survivor pool. At some discount rates--interestingly the ones that equate to long term equity returns or nominal GDP (closer to the 10% than the lower rates)--the nonsmokers never catch up to the smokers. They also said that there were non-monetary costs to smoking that were present and difficult to quantify. (I would put the effects of second-hand smoke and fetal damage at the top of those lists.)
My point is that people make ill-advised and costly personal decisions all the time that eat up tax dollars, yet the anti-student loan reform Screamers and Crybabies hardly make a peep about those wasted dollars and don't haul out the props for a self-praising morality play.
I still think there's a really big difference. Providing medicare and medicaid coverage to smokers and obese people is not what caused them to smoke or be obese and those people still benefit from the coverage. Providing easy credit to people to pursue non-viable degrees and careers is literally creating the market for many of these degrees. In the absence of this credit, a large number of these non-selective schools would not exist and the ones that did would have to find ways to deliver their product at vastly lower prices. Both borrower and lender would be better off.