Which student loans are you talking about? Government based and private?
Government loans certainly don’t pay the full cost of college. The maximums on loans haven’t changed lately. Yet college costs keep going up.
Private loans are a small fraction of the total spending on college and few students get them. 7% of undergrads ant public schools took private loans and that figure is half what it was just a few years ago.
Also, you do actually have to pay back student loans. You sound like its free money.
Student loan availability HAS contributed to the increase in for profit college revenues. The for profit colleges are just crooks exploiting the system and preying on ignorant students. The government shouldn’t be backing those schools nearly as much as they are. It should be much harder to qualify as a college to get the student loan and grant aid eligibility.
Not really. If you can keep your AGI below $18k (perhaps by maxing out 401k, IRA and HSA), then your income-based repayment terms are $0. After 20 years, your loan is forgiven by the government.
If you are every unemployed, you can get deferment for 1.5 years. If you ever just feel like not paying them, you can get 3 years worth of another kind of delayed payments.
If you’re making $50k a year and maxing out retirement accounts, you can go the full 20 years until forgiveness and pay back nothing.
Making $50k a year is the median income in most of the country and you can max out retirement accounts to get you down near $18k AGI. Unless you think the median person in this country is poor.
Not that it matters, since you said you have to pay student loans back, and I’m showing a nice way that you don’t. Earning $50k a year is a nice living in most of the country and you wind up with zero student loan debt owed before it’s forgiven.
Compared to your car loan analogy, you can’t push down the car loan repayment by lowering your income. That’s yet another reason why education costs have skyrocketed by not car costs.
Your argument is that student loans have inflated college.
Yet in the past 5 years student loan borrowing is down. So why have college costs continued to increase? If student loans make college go up then shouldn’t decreased borrowing cause that to reverse or at least stop? Yet it didn’t.
From 2001 to 2011 public research universities saw state and local funding drop from $11k per student to 8k per student. And in the same period net tuition went from $6k to 9k.
State funding dropped $3k and net tuition goes up 3k.
I had similar results when I plugged in the numbers under each proposal. A savings of about $2000 either way vs. current law. We don’t itemize and have 2 kids, but will only be able to claim an exemption for one of them for 2017.
I’m estimating about $2000 savings with the tax reform for my family as well. Its all due to the child credits not being phased out at our income level.
WE itemize and live in OR with high state income tax and have a hefty property tax rate too.
This isn’t entirely true. Unless you are eligible for the 10 yr ‘public-service’ forgiveness, the amount forgiven after 20 years will be considered income and you will owe tax on it. Don’t forget that it’s been ballooning for 20 years because you haven’t even paid the interest on it, so the amount forgiven will far exceed the amount you borrowed.
50,000 borrowed @ 6.8% would be 186,378.18 after 20 years.
[quote=“jerosen, post:318, topic:1661”]
If you remove financial aid it will not make the costs drop. [/quote]
I guess you can disbelieve in supply and demand if you’d like. I mean, if removing financial aid would not cause a single college student not to go, maybe we don’t need it after all. And if colleges do see declining attendance in the face of reduced aid, they will likely reduce their costs as a revenue maximizing response.
And the financial aid is not the reason costs have gone up. The #1 reason college costs have gone up over the years is reduced state spending for college.
And yet that would not explain why private college costs have risen, even more than state colleges, over recent decades, so arguably there’s a bigger more important factor at work here. Lots of stats below:
after inflation the NET price of nonprofit private colleges has dropped in the past 10 years :
Inflation adjusted net prices at privates are flat over the past 15 years. In teh same time 4 year public schools saw net prices go up over $2k after inflation.
I feel like this is an oversimplification and “from 2001 to 2011” numbers could be considered “cherry picked.” Using state budget numbers from 2011 could be misleading. Considering how long it takes to pass state budgets and how far out they go, 2011 is the year where we would expect state budgets to reflect some of the deepest cuts from the recession.* And the jump in enrollment was quite high in those years as well.
State funding in a lot of places has gone back up now that the recession is over. For instance, in Virginia, state spending on higher education in FY07 was $6,742,000,000. In FY16, it was $10,035,000,000. That’s a 49% increase. I’m sure there was an increase in enrollment over that time, but I doubt it was a 49% increase. http://jlarc.virginia.gov/pdfs/reports/Rpt487.pdf
So if the hypothesis of less state funding of $3k per student equaled a higher tuition of $3k, shouldn’t we have seen a decrease in tuition in the past couple years as state spending ramped back up? Why didn’t we? Because, simply speaking, more gov’t funding doesn’t drive the cost down and less gov’t funding doesn’t drive the cost down either. Less gov’t money isn’t treated as a shortfall that forces spending cuts, it causes price increases; while more gov’t money isn’t treated as windfall that forces saving for a rainy day or price decreases, it’s treated as license to spend even more.
*Keep in mind - “cuts” in gov’t funding speak is just cutting an increase. Cuts from the recession led to less money per student, but not necessarily less money to higher education in general.
EDIT TO ADD
I just looked it up. The undergrad enrollment for 4 year public colleges in VA went up 19% from 2001-2010 and up only 13% from 2007-2016. http://research.schev.edu/enrollment/E2_Report.asp
