Student Loan Forgiveness

[Snicks]

I think the approach should be less on the loans. Let’s look at ways to offer the degree in a more economical way.

[Fishindude77]

I don't see anything inherently wrong with student loans. So long as you are at least 18 years old (an adult) and someone is willing to lend you money, feel free to borrow all you want, just remember it's your responsibility to pay it back.
I do think a lot of these kids in trouble with these loans is the result of bad parenting. Most parents saw this stuff going on and didn't step in to put a halt to it or counsel their kids on other strategies of paying for their education, taking a different career path, etc.

[LivingAlmostLarge]

Even if you look at private schools, the numbers don't have to be that bad. Our daughter's school was about 52K/year but she got about 22K in scholarship money so the net was 30K/year or 120K for 4 years. Yes, that's a lot of money, but if you save $350/month for 18 years with an average return of 5% which is certainly doable in a balanced portfolio, you'd have that 120K when college rolled around. And that's with taking zero loans. If you're okay with some modest and reasonable borrowing, the monthly savings needed is even lower. Plus if you live in a state where 529 contributions are tax deductible, it gets even easier.

ETA: I'm not suggesting that college is cheap or easily affordable for everyone. I'm just saying that there are definitely ways to handle it if you plan and prioritize.

$350 a month is a lot DS. It's $4200 a year that's more than I was saving for my kids at first and more than I want to save now. I think it's possible to oversave and until changes went into effect it's possible to have saved too much I think into college.

I think people need to focus on retirement anyway first. Too many people are worried about college, what about retirement? We haven't seen the 401k generation and no pension generation retire yet. Too many people still have pensions of some sort to really understand that you are completely on your own for retirement. That $350/month would be well spent to be directed to 401k.

But absolutely I don't agree with student loan forgiveness. Already people are too irresponsible. They should allow for bankruptcy for student loans then lenders would not be so irresponsible and lending out any amount of money. If parents had to cosign or people had to have a guarantee and could declare bankruptcy then we would likely see a tightening of loan standards for student loans. The people would be forced to evaluate how to best go to college within reasonable loan limits. Maybe schools couldn't charge so much.

Where I am I think tuition is $14k/year. But the room and board is another $14k. So $28k which is a lot. Probably easily $120k over 4 years. Not doable if you had to work and earn $30k/year working part-time. But definitely if you went to say community college first and then worked and lived at home? Then transferred for 2 years I think a degree is completely doable without loans.

One reason why it's not possible is because of how hard it is to get into the public university maybe where people live. So they don't have any option but paying room and board. So that can be pricey.

[disneysteve]

$350 a month is a lot DS. It's $4200 a year that's more than I was saving for my kids at first and more than I want to save now. I think it's possible to oversave and until changes went into effect it's possible to have saved too much I think into college.

Definitely. Sorry, my example was overly simplistic and didn't fully articulate my point. Yes, $350/month may be more than many families can do, but I also don't think the plan should be to fund 100% of college in the 529. It should be a combo of parental savings, student savings, current cash flow from parents and student during college, and perhaps a reasonable amount of borrowing. Also, you don't only have 18 years to save for college because you don't need the full 4-year bill on day one. We continued contributing to the 529 right into senior year And senior year made the final payment on May 1, so really almost 22 years total.

DD had a babysitting job throughout high school. She did some work over the summer. She also took out a total of 15K in loans. When you piece together everything - parent income, student income, scholarships, cash flow, and borrowing, college need not be overwhelming if you have a plan and choose a school that fits that plan.

[riverwed070707]

Definitely. Sorry, my example was overly simplistic and didn't fully articulate my point. Yes, $350/month may be more than many families can do, but I also don't think the plan should be to fund 100% of college in the 529. It should be a combo of parental savings, student savings, current cash flow from parents and student during college, and perhaps a reasonable amount of borrowing. Also, you don't only have 18 years to save for college because you don't need the full 4-year bill on day one. We continued contributing to the 529 right into senior year And senior year made the final payment on May 1, so really almost 22 years total.

DD had a babysitting job throughout high school. She did some work over the summer. She also took out a total of 15K in loans. When you piece together everything - parent income, student income, scholarships, cash flow, and borrowing, college need not be overwhelming if you have a plan and choose a school that fits that plan.

I like this approach if you decide to help fund your child's education. I think the problem with it is that if that's truly what it took, it puts higher education out of reach for a number of students. I worked hard in high school (at a job and I was a good student), had a mostly A average, graduated 18th in my class entirely behind kids who had above 4.0 averages because they took honors classes. I was smart but no one ever talked to me about taking advanced classes or why I might consider doing that. I applied for scholarships - lots and lots of scholarships because I knew I was entirely on my own to pay for college - but I didn't receive a single one. National, local, through my HS employer, not a single one. I also didn't qualify for FAFSA grants because my mom had gotten married when I was 16 and I had to count my stepdad's income on my form after knowing him less than a year. Nevermind kids who have home pressures that prevent them from doing their best in school, for many kids the info just isn't available to them to get scholarships or grants. Then combine that with the kids who's parent's aren't financially able or willing to save for college... I just don't agree that they should have to suffer because only kids whose parents saved can afford to go. And then there's parents like me who, despite some of my resentment over the system, I do feel making my own way helped me grow up and taught to me find my own way, built character. And for that reason I also don't plan to pay for DDs college. At minimum, I won't pay for it up front but would consider helping her knock down or wipe out her debt after graduation.

[LivingAlmostLarge]

But $120k is still a lot. $15k loans, working say $10k (how much DS) = %95k over 22 years. That $120k was already after scholarships which is substantial savings on your daughter's part and a huge contribution. But my point is $95k for parents even over 22 years is still $4300/year. People aren't saving 15% of say average salary $70k so $10k. How will people save for college?

[disneysteve]

But $120k is still a lot. $15k loans, working say $10k (how much DS) = %95k over 22 years. That $120k was already after scholarships which is substantial savings on your daughter's part and a huge contribution. But my point is $95k for parents even over 22 years is still $4300/year. People aren't saving 15% of say average salary $70k so $10k. How will people save for college?

Agreed. Not everyone can afford to send their kid to the 120K school, but that's not the only option out there. If you're making 50K or 70K, you need to choose an option that fits your budget. Maybe that's a state school or community college for at least part of the time.

We could have chosen a far more expensive school for DD but there was no reasonable way we could have afforded it (unless she would have gotten a far larger scholarship). Her school was about 52K/year but there are schools in the area that are over 70K/year. She understood that those places weren't on the list of options. If our means were such that the 52K school was out of reach, that wouldn't have been on the list either.

And again, it is at least in part a matter of priorities. We talk about that here all the time. If you choose a costly home or a fancy new car every 3 years that affects what's left for retirement and college. 99% of us can't have it all. We have to choose what matters to us most. My wife and I chose a modest home (1.5 times income). We buy used cars and keep them long term (my current car is 14 years old). We economize in a lot of other areas so that we can spend on things that are important to us, like DD's education and being able to retire comfortably some day.

[disneysteve]

I like this approach if you decide to help fund your child's education. I think the problem with it is that if that's truly what it took, it puts higher education out of reach for a number of students.

I applied for scholarships - lots and lots of scholarships because I knew I was entirely on my own to pay for college - but I didn't receive a single one.

I also didn't qualify for FAFSA grants because my mom had gotten married when I was 16 and I had to count my stepdad's income on my form after knowing him less than a year.

The scholarship my daughter got came directly from the school. She didn't have to apply for anything. It was entirely based on her grades in high school. Once in college, she also earned a couple of other scholarships, also without needing to apply for anything. The best thing parents can do is support and encourage their kids while in middle and high school to do the best they possibly can so that they get that merit-based aid when college comes along. We definitely didn't qualify for need-based aid.

Being on your own for college is tough, especially when they force you to include your parents' income info even though they are not contributing at all. That system sucks. Even when I went to college in the early 80s that was a problem for a couple of my friends. There needs to be some way to confirm your independence. Of course, back then it was actually possible to work your way through school with a part time job during the school year and full time over the summer. Today, that's far harder to accomplish except at the cheapest of schools because college costs have risen outrageously faster than wages. There's no way my daughter could have generated 30K/year on her own.

[disneysteve]

Another factor, of course, is how many kids you have. We had it easier since we only have one child but we have plenty of friends and relatives with 2 or 3 or even 5. I have no idea how some of those families will manage college costs. Even with state schools, that's a lot of money.

[docstudent]

Food insecurity is a real thing, right? The digital divide is a real thing, right? There is a way to make things just and how we approach loan forgiveness can radically shift income inequality in our society. We must first tackle the ugly historical frame that shape the lopsided economic divide in our society. I have an acquaintance that boasted about fully funding the college tuition of his son and grandchildren. I applauded him on being able to do such a wonderful thing for his family members. Then, he rambled on about the unfairness of federally sponsored loan forgivenesses programs. Let me give you the backstory on this character. First off, he purchased a modest home in a city in Southern California (in the early 70s). Over time, the home appreciated to over 4 million dollars. This same neighborhood excluded ethnic minorities and blocked opportunities to buy property. This is no fault of my acquaintance, but for him to not understand the why is terribly distressing. He argues that everyone should work hard, but a man that fails to recognize his privilege is a very dangerous species.

I have a six figure student loan balance and I do not regret it for one second. I know that my education will pay dividends in a multitude of ways. However, I am part of the PSLFP and my student loan will be waived after I make 120 on-time payments. Sorry, my dad never made more than 40G a year and there was no account reserved for me. Luckily, I’ve seen the world from a myriad of lenses and empathy is the most beautiful one of them all. These programs can transform the lives of people that grew up in economically depressed spaces and many of them will not spend their money on cars or other foolish items. In my case, I’ll pay approximately $70,000 and $50,000 will be written off. I come from a family that will transfer “0” wealth back to me!

[LivingAlmostLarge]

Food insecurity is a real thing, right? The digital divide is a real thing, right? There is a way to make things just and how we approach loan forgiveness can radically shift income inequality in our society. We must first tackle the ugly historical frame that shape the lopsided economic divide in our society. I have an acquaintance that boasted about fully funding the college tuition of his son and grandchildren. I applauded him on being able to do such a wonderful thing for his family members. Then, he rambled on about the unfairness of federally sponsored loan forgivenesses programs. Let me give you the backstory on this character. First off, he purchased a modest home in a city in Southern California (in the early 70s). Over time, the home appreciated to over 4 million dollars. This same neighborhood excluded ethnic minorities and blocked opportunities to buy property. This is no fault of my acquaintance, but for him to not understand the why is terribly distressing. He argues that everyone should work hard, but a man that fails to recognize his privilege is a very dangerous species.

I have a six figure student loan balance and I do not regret it for one second. I know that my education will pay dividends in a multitude of ways. However, I am part of the PSLFP and my student loan will be waived after I make 120 on-time payments. Sorry, my dad never made more than 40G a year and there was no account reserved for me. Luckily, I’ve seen the world from a myriad of lenses and empathy is the most beautiful one of them all. These programs can transform the lives of people that grew up in economically depressed spaces and many of them will not spend their money on cars or other foolish items. In my case, I’ll pay approximately $70,000 and $50,000 will be written off. I come from a family that will transfer “0” wealth back to me!

No I get it honestly I do. I just don't know though how to help people learn enough financial wherewithal to not take out in general $100k+ loans. That usually making those sort of decisions lead to other worse decisions down the line. The lack of awareness maybe? I'm not sure. My mom and myself were very fortunate in our circumstances that allowed me to get out of college any real debt $10k. But most people aren't. I just think that there are families out there that need help learning how to get ahead with nothing. And it can be done. There's a reason why a lot of immigrant families come with nothing and make massive amounts of money even without educations. I had a roommate whose parents came over from Taiwan, by the time I met her they owned two parking lots by wrigley field and 3 baskin and robbins. There were doing just fine. Same with another friend her parents owned 3 laundromats. And another owned a couple of restaurants and a gas station.

I am not quite sure but I think financial counseling as well as guidance counseling should be given when choosing college. Explanation about what you might make. What it might cost. But I don't necessarily think a wand should be waived and it forgiven. There are also a lot of people with 6 figure loans because their parents who could have afforded to save didn't!

[riverwed070707]

There are also a lot of people with 6 figure loans because their parents who could have afforded to save didn't!

And shouldn't have to. It is not a parents responsibility to absorb a $100k education if that's what the child chooses to do. While I want people of all income groups to have equal opportunities regardless of financial contributions by parents, no one NEEDS to spend $100k on an education maybe with the exception of becoming a doctor. Even law school can be done for less than that and I absolutely think future earnings and the ability to repay should be factored into what school you choose because it is the students responsibility. It isn't the parents fault the student has 6 figure loans, it's the students because they chose the path they took.

[docstudent]

I knew my parents were not going to be able to finance any part of my schooling. In addition, I opted to attend a top #15 graduate program and absolutely knew the price tag of the program. Also, I was not looking for the government to bail me out, I’ve worked for everything that I have. I simply took advantage of the PSLFP, but I had a plan to back back what I borrowed if the program did not exist.

I selected my program based on national reputation and alumni connections. As a result, I have been blessed to find employment opportunities with a six figure salary attached to it. As soon the pandemic broke out, I received multiple phone calls from colleagues and professors offering support if I needed it. I’m not saying the same thing doesn’t happen to graduates of other universities. However, I’ve learned that you’re not only paying for an education, but access to unlimited human capital. In a perfect world, economics would not prohibit marginalized, the poor...from seeking access to highly rated schools. I gambled on my potential and it was worth it, but I fully understand the flip side of the argument. I was so disadvantaged that it was worth the gamble.

[Thrif-t]

College funding is something you have to educate yourself on. We have 3 kids, don't have a high family income (less than 70k up until a few years ago), and managed to save $16k per kid, not a lot, but that paid for a little over 1 year tuition for each (youngest in college now his tuition runs about 12k/year).

I feel like a broken record but for those who maybe haven't caught my past posts our plan was always to pay a year, the kids pay a year, they get scholarships that cover a year and then take loans to cover a year. They all also took college classes in high school and earned free credits too.

Our second child just graduated in May she has 10k in loans, our oldest graduated last May(engineer) with 10k in loans (she paid them off before her 6 mos grace was up, so interest free!), we expect the recent grad to do the same, she'll be a nurse.

We qualify the American Opportunity Tax Credit, we get a credit of $2,500 year for every 4k in tuition we pay. After 4 years that's 10k that the government gives me to put towards my children's college education; for us that's almost a year free tuition.

Now they've changed things again with the 529; you can use those funds to pay up to 10k of student loans. In Ohio I get a state tax deduction for my 529 contributions, so now I'm going to take that $2500 I get back and deposit it in the 529, take the state tax deduction, let the money grow, and when our son graduates withdraw that money to pay his loans. So I'm using the Federal AOTC $ to put in my 529, to get a Ohio state tax deduction, let the money grow, not a lot but still it's free money right!, and then pay the loan.

Our oldest lived at home and commuted, middle had scholarships that covered room and board and lived at school, son worked to pay for an off campus apartment (he's coming back home for a year till we see what happens with this virus, not worth paying rent for online classes).

So if people sit down and plan, I'm sure they can come up with a way to pay for college for their kids. Most don't take the time sadly, but it can be done. Unless of course, you don't live in an area with multiple commuting options around.

[LivingAlmostLarge]

College funding is something you have to educate yourself on. We have 3 kids, don't have a high family income (less than 70k up until a few years ago), and managed to save $16k per kid, not a lot, but that paid for a little over 1 year tuition for each (youngest in college now his tuition runs about 12k/year).

I feel like a broken record but for those who maybe haven't caught my past posts our plan was always to pay a year, the kids pay a year, they get scholarships that cover a year and then take loans to cover a year. They all also took college classes in high school and earned free credits too.

Our second child just graduated in May she has 10k in loans, our oldest graduated last May(engineer) with 10k in loans (she paid them off before her 6 mos grace was up, so interest free!), we expect the recent grad to do the same, she'll be a nurse.

We qualify the American Opportunity Tax Credit, we get a credit of $2,500 year for every 4k in tuition we pay. After 4 years that's 10k that the government gives me to put towards my children's college education; for us that's almost a year free tuition.

Now they've changed things again with the 529; you can use those funds to pay up to 10k of student loans. In Ohio I get a state tax deduction for my 529 contributions, so now I'm going to take that $2500 I get back and deposit it in the 529, take the state tax deduction, let the money grow, and when our son graduates withdraw that money to pay his loans. So I'm using the Federal AOTC $ to put in my 529, to get a Ohio state tax deduction, let the money grow, not a lot but still it's free money right!, and then pay the loan.

Our oldest lived at home and commuted, middle had scholarships that covered room and board and lived at school, son worked to pay for an off campus apartment (he's coming back home for a year till we see what happens with this virus, not worth paying rent for online classes).

So if people sit down and plan, I'm sure they can come up with a way to pay for college for their kids. Most don't take the time sadly, but it can be done. Unless of course, you don't live in an area with multiple commuting options around.

that's pretty brilliant. You saved enough for a year and they borrowed a year, and working $12k/year is not unreasonable. That is same as us and very reasonable. And it also seems reasonable that you can get $12k in scholarships (never thought of it that way). But that's my point. I don't think people at all consider outside the box options. or they refuse to look at how to do it cheaply.

But riverwed, these are parents with more than enough money if they say drove accord instead of a mercedes could have helped their kids. But instead their income counts against them like you said and they still don't help. It just doesn't seem right.