Opinion of Obama's new student loan relief program?

[angus]

http://www.msnbc.msn.com/id/45039424/ns/politics-white_house/t/obama-announces-student-loan-relief/#.Tq2oE7KyDzo

The two biggest things would be forgiving loans after 20 years of monthly repayments (25 years currently) and lowering the amount you need to pay to 10% of your annual discretionary income from 15%. Read the rest in the article.

The first is definitely a good idea, not so sure about the second.

I guess my initial reaction would be opposite yours, in the sense that the second idea sounds better than the first.

But they're both bad ideas.  All of this drives up education costs.  Faculty bitch and moan about "administration creep" and the like.  And, to be fair, there's some validity in that.  Higher education has outpaced the CPI and is one of the few sectors that outpaces even medical care.  And some of that is due to increased administrative costs.  But I think I'm with Ron Paul on this.  If the government acts as a guarantor of the tuition, then why not jack it up?  

Better we socialize state schools.  Give everyone who makes a certain effort in high school a taxpayer-funded college education.  Sure, good private can and will still exist.  And thrive.  But do away with the yoke of debt for state university students who put forth the effort.  Kill about five birds with one stone.

[angus]

Why is that?

Well, I can't say I read the article.  But I have heard of this.  Highlights on TV and in the WSJ.  And from what you posted.  Your first idea encourages a land of welchers.  It sets a bad precedent.  It says, borrow now, pay, or don't pay, later.  It's deeply rooted in our society that it's okay to be a nation of debters, and now we're adding to that that we should be a society of debters who don't make good on our debts. 

The second just says, if I understand it correctly, we know you're broke right now, so we're gonna forebear you a bit.  Maybe hold off.  We're a nation of debters, but by god we're not a nation of debters--or of sharks, for that matter--so why not just take a moment or two to get your house in order, take a breath, earn enough to pay the bills, and maybe even enough to take a trip to the caribbean and relax a little, but don't forget who brung you to the dance in the first place.

Still, in any case, it's all bad mojo.  And yes, the second part does make the first part more likely.  That's all the more reason not to like it.  If you think folks ought to be educated, then educate them.  Raise the revenue the same way as you would for high school or elementary school.  Banks could still make loans for those that get into $60000 per year private universities, and they're private deals that oughtn't to have anything to do with the government anyway, but if we're really in a model in which we expect 30 percent or more of our high school grads to complete a four-year university track, no matter their social class, then we ought to plan for it.  And creating a plan that both increases tuition for everyone (and simultaneously encourages welching) isn't really in the best interests of the society in the long run. 

That's just my initial impression.  As I posted elsewhere, I'm open to suggestion, even at my age.  But I've actually thought this one through a little bit even before I'd read your original post.

By the way, I'm not a collectivist or a Confucianist or a communist by any stretch, but I am a pragmatist.  And I'm a huge fan of good public education.  And I have a record of departing from the republicans/libertarians, at least on education issues, more often than not.

Some confucianism that I like:

"If you plan is for one year, plant rice; If you plan is for ten years, plant trees; If your plan is for a hundred years, educate your children."


A modern Chinese saying, told often among the Chinese, that I like even more:

"If a chinese person has three dollars, he'll spend one and save two.  If an American has three dollars, he'll borrow three dollars and spend six."

[angus]

The "student debt" problem could be fixed if people studying non-money making fields were given the shaft.

A valid philosophy, grasshopper.  Not one that I share, though.  

I pay about 4000 per year in property taxes to support the K-12 schools, but all I get for that expenditure is 600 graduates every year who are capable of operating the cash registers at the local Wal-Mart.  If it's just dollar-for-dollar that we're after, then stop there, because it's worth about 4000 dollars per year for me to have the satisfaction of knowing that every time I walk into a Wal-Mart, or a Barnes'n'Noble, or a McDonalds, that the person behind the register will be able to transact with me, in a matter of seconds, and serve me what I need.  

But I expect more than that.  I guess I'm with Nathan on this aspect of the question.  Education, in my opinion, is an end in itself.  Not a means to an end.  And, as an egalitarian, I have to say that it should be attainable to those with merit.  Not that we should punish the rich, or close private schools down, or expect employers to treat MIT grads the same as it treats Michigan State U grads.  But if you're really trying to take your university education seriously, not as a path to some higher material gain, and not using pell grants to buy weed, but really taking the education--a means to better understand the world around you, and contribute to its well-being in a way that may or may not be measurable--then in my opinion you should be treated the same whether you're an art major or an engineering major.  

[angus]

2.) Sadly, in terms of employment and the job market. Not all majors are treated equally. Even in a personal case, if a friend of yours needed a loan, I'm sure there's certain friends with whom you'd just write off "bad debt expense" and some would be "interest income".

3.) The idea of a kid taking out large sums of debt for a sociology degree for example.... doesn't sit well with me, even if he isn't poor. I was shocked that a salesperson where I worked took out $100k on a history degree. Of course it was probably good for us in the sense he was driven/motivated to get commissions to get that down.  Btw weren't we all cringing when people who obviously weren't able to pay back mortgage loans were given them anyway in 2003-2005?

Yes, there are those friends (or, more likely, relatives) to whom I "loan" money and I think of it, even as I loan the money in some cases, as a grant. 

I think we are in accord with respect to the problem.  Yes, credit (student loan and other loans as well) is too easy to come by.  We've discussed that elsewhere. 

I just think that the federal government ought not to be in the business of making student loans in the first place.  If you want to go to an expensive private college and can't afford it, you'll have to find a private lender, and abide by the terms.  But the guaranteed loan program is probably here to stay.  In any case, we shouldn't be encouraging welchers.  (I don't think you were suggesting that.  I was just saying that in response to the thread in general.) 

My solution would be to have those sociology majors and history majors with limited means but who make good grades go to state colleges and universities.  It's a state-by-state matter, but I would support taxpayer-subsidized public four-year college or university education for the residents of my state, provided that they demonstrate the appropriate aptitude and high-school achievement, in terms of grades and teacher recommendations.  I understand that it would raise my taxes, but no more than the amount that they'd be raised if we start giving money away (without strings attached) as was suggested by the Obama administration.  Also, the actual tuition would be set by binding referenda, or by the legislature, and we wouldn't see upward creep due to the prevalence of free federal money flowing into the state via tuition loans. 

Moreover, Obama seems to be bypassing congress.  This subverts the will of the people.  The whole point of the revolution was to remove kings, not create them.

The crucial question we must ask ourselves is whether we want to encourage more debt, or encourage more education.  I think we should certainly encourage education, but this proposal merely encourages debt--with the promise of debt forgiveness--and sets up a vicious cycle in which universities raise tuition in response to supply (free government money) and demand (a larger pool of potential students.)

Of course I continue to support grants for scientific and engineering research.  And, for that matter, for research in the social sciences and in the humanities.  After all, it costs so much less to pay for a plane ticket or a library card than it costs to build a nuclear reactor or a gene sequencer, so those humanities research projects won't be nearly as expensive as the physics, chemistry, and microbiology research.