Student Loan Forgiveness

[Mjenn]

I think that most of the programs I have seen and heard about have had a cap. Which I think is a good solution, but yes, an Ivy League student would still get more money because they pay more.

Personally I think if they can manage to get a few Ivy League students to these hard to fill positions they are lucky and that is kind of the point of the program. My issue is with the lawyer mills that charge a small fortune to pump out countless numbers of lawyers who have hundreds of thousands of dollars of debt from schools that exploit them but have no real chance of a good job, so need this debt forgiveness to survive.

[TrueMaroonGrind]

Agreed, but should there be a limit? Should the taxpayers be paying for both the guy who went to the state school and borrowed 30K and the girl who went to the Ivy League university and borrowed 200K?

If there is no limit on how much debt can be forgiven, there is zero incentive for anyone to choose a less costly school. For most people, price is a significant factor in selecting a college. I see no reason why that should be any different for folks who plan to take low paying jobs after they graduate. If anything, it should be more of a factor for those students but unlimited loan forgiveness turns that equation upside down.

My wife was going to get some of her student loan debt forgiven for teaching in low income, low performing schools in Mississippi. The max that could be forgiven was $15,000 dollars after teaching in the school for 5 years. Your administration had to recommend you for the $15,000. If they didn't you would get $5,500. There is a limit for some forgiveness programs, but I'm not sure if this is specific to teaching or specific to Mississippi.

[disneysteve]

I do have a few friends that got medical degrees and chose to move to remote areas to serve poor segments of the population as well as teachers who opted for Masters degrees and in exchange taught in bad neighborhoods for years. I think that is a fair exchange and a good incentive to fill otherwise hard to fill jobs. It is really a win-win.

Agreed, but should there be a limit? Should the taxpayers be paying for both the guy who went to the state school and borrowed 30K and the girl who went to the Ivy League university and borrowed 200K?

If there is no limit on how much debt can be forgiven, there is zero incentive for anyone to choose a less costly school. For most people, price is a significant factor in selecting a college. I see no reason why that should be any different for folks who plan to take low paying jobs after they graduate. If anything, it should be more of a factor for those students but unlimited loan forgiveness turns that equation upside down.

[Mjenn]

I think student debt forgiveness is a good thing and while sure, money borrowed is money owed, I certainly know many businesses and good business people that have finagled themselves out of various loans based on agreements and forgiveness.

My husband's student loans are all forgiven when he reaches 65 years old and all of his payments are based on a percentage of his income. I was rather shocked to realize he will probably pay off all of his debt by his 40th birthday. Given he borrowed close to the maximum (their university is free but they borrow living expenses) I think it will be hard for most people to have a great deal of debt forgiven at 65. You have to be a very low income earner!

I do have a few friends that got medical degrees and chose to move to remote areas to serve poor segments of the population as well as teachers who opted for Masters degrees and in exchange taught in bad neighborhoods for years. I think that is a fair exchange and a good incentive to fill otherwise hard to fill jobs. It is really a win-win.

[AJ444]

True, but did your employer have a cap on that benefit? Was there a maximum amount they would reimburse?

My employer has tuition reimbursement up to a certain amount. It is not unlimited.

No max, but the VP of my dept had to sign off on each class before I signed up for it. Cost them 25k over 3 years. I was a lucky, they cut the program while I was enrolled but let anyone already enrolled finish, this was back 01-04.

[disneysteve]

There isn't a limit on how much can be forgiven. The Obama administration floated the idea of a cap around $57k in a budget proposal, but they received a lot of push back from borrowers and universities.

Imagine that? Schools didn't want to lose a source of unlimited funding. Students didn't want to lose a perk that would let them borrow an unlimited amount and never have to repay it. What a surprise.

I have no problem with the forgiveness program in theory. I think the people that agree to work in underserved areas deserve adequate compensation and if they can't get it through salary, I'm fine with them getting it through loan forgiveness. I just don't think the amount should be unlimited.

[YULACU]

My employer at the time, an S&P 500 company paid for my MBA. I considered it part of my total compensation.

I view the forgiveness of loans for working in a government position as the same thing. What we really need to is come up with a number- the salary, benefits and loan forgiveness and then we can have a debate if it is appropriate for a job title.

I suspect there will be student loan reform in the near future. Perhaps they'll tie the amount forgiven to the job field, but it seems sorta administratively cumbersome.

[YULACU]

That said, however, is there any limit on how much can be borrowed or how much can be forgiven? If not, I think that's a problem. If someone plans to go into a low-paying public service job, they need to factor that in to their college selection process. There is absolutely nothing wrong with going to a good private school (we send our daughter to one) but only if you can afford it. If kids can go anywhere they want and know that they'll never have to pay the bill, that's an issue and it is something that contributes to rising college costs.

There isn't a limit on how much can be forgiven. The Obama administration floated the idea of a cap around $57k in a budget proposal, but they received a lot of push back from borrowers and universities.

While I went to a public university with a full tuition scholarship (undergrad) and a partial scholarship (law school), I know some lawyers who are in considerable student loan debt ($200k+). Some of them are attracted to the program primarily for the student loan forgiveness.

The program has also drawn some criticism for the "doctor loophole." I'm not well versed in the "doctor loophole" issue but it has something to do most hospitals qualifying as non-profits and the low pay doctors receive straight out of med school.

[msomnipotent]

I'm all for programs where you have to work in order to have some or all of your loans forgiven. My sister got her Masters for free for becoming a teacher and I think she earned every penny plus some. The schools she was assigned to were the ones you saw on the news, and not in a good way. The school she is currently at is supposed to be a better one. They found a shot up body on their property last week and I don't think it even made the news.

But going to college for free just because someone feels entitled to go is a definite no-no for me. I really think I would be compelled to actually get out and protest after writing all of my representatives if it came to that. We don't need a nation of Liberal Arts majors with a degree in "Invented Languages: Klingon and Beyond".

[disneysteve]

My employer at the time, an S&P 500 company paid for my MBA. I considered it part of my total compensation.

I view the forgiveness of loans for working in a government position as the same thing.

True, but did your employer have a cap on that benefit? Was there a maximum amount they would reimburse?

My employer has tuition reimbursement up to a certain amount. It is not unlimited.

[disneysteve]

True, no one held a gun to our heads except income based repayment and student loan forgiveness is actually part of the agreement we signed.

You borrow, you repay according to the agreement you signed. Who actually pays more than they have to?

This is really the most compelling defense of the loan forgiveness program. I was not aware of the fact that it is actually a part of the loan agreement. So it isn't like students borrow a bunch of money first and then decide, "Hey, if I take a public service job I can get a lot of it written off." It's actually part of the deal upfront.

That said, however, is there any limit on how much can be borrowed or how much can be forgiven? If not, I think that's a problem. If someone plans to go into a low-paying public service job, they need to factor that in to their college selection process. There is absolutely nothing wrong with going to a good private school (we send our daughter to one) but only if you can afford it. If kids can go anywhere they want and know that they'll never have to pay the bill, that's an issue and it is something that contributes to rising college costs.

[AJ444]

My employer at the time, an S&P 500 company paid for my MBA. I considered it part of my total compensation.

I view the forgiveness of loans for working in a government position as the same thing. What we really need to is come up with a number- the salary, benefits and loan forgiveness and then we can have a debate if it is appropriate for a job title.

[YULACU]

U borrowed, U repay, this means U.

Nobody held a gun to your head (or to any other borrower for anything financed) so pay your debt and move on with your life.

I own everything (aside from my mortgage, which will be gone by the time I'm 40) free and clear. May not be the shiniest or latest and greatest but it's all mine and nobody will be coming looking for a payment.

True, no one held a gun to our heads except income based repayment and student loan forgiveness is actually part of the agreement we signed.

You borrow, you repay according to the agreement you signed. Who actually pays more than they have to?

[YULACU]

Add to that, a more broad-based antipathy you see manifest when someone sees what they regard as "their tax money" paying for things of which they don't approve.

Personally, I've never found the various moral hazard arguments put forward to be all that compelling.

I would find the argument compelling if there weren't a public service obligation. My friend works as an attorney for child protective services. She makes less than $50k a year. That wage is not possible when you have to pay the full amount of your law school debt. I can't imagine people would see child protective service work as a waste of their tax money. If student loan forgiveness wasn't in place, the state would have to increase the wages for child protective service attorneys so someone pays for it directly or indirectly. Likewise I provide free legal services for veterans. I can't imagine many people would openly say they didn't want their tax money going towards this sort of service.

[PeggyHefferon]

I agree with greenskeeper