In the News

[(A)musing anthropologist]

Hey all,

So my older sister very graciously sent me this link to a Forbes article discussing how Mr. Pres is looking to cap student loan payments at 10% of annual income... Generally I disagree with her political opinions (the latest argument being her lack of Obama-nthusiasm and my decidedly pro-Obama stance...)but no matter, she does keep me well informed

At any rate here is the link she sent me...I just wanted to share it because I know how keeping an eye on the going-ons of the world seems more difficult when your not educationally in situ (at least it is for me):

Obama Plans to Cut Student Loan Payments

Personally I have mixed feelings about this, as I think it can go one of two ways--can't everything?

1) I think this could be utterly fantastic for recent graduates, considering the economy and the likelihood of finding a job that will allow grads to be self sufficient and independent while paying of their loans. I think this is a rarity as it is, as I have witnessed several of my friends moving back home after receiving their masters because they can't afford rent AND loan payments with their job (whether it be their dream job, an entry level, or a wage slave gig). Few people are able to afford to live while carrying student loan payments on their backs...this could be decidedly good..

OR

2) On the flip side, this could just make federal funding that much more unattainable or "selective". Income/degree/field-profession may be scrutinized more causing larger amounts or quantities of loans to be awarded to those students/families that the government feels are more likely to be able to make higher payments (or any kind of payment as the case seems to be) when collection time rolls around. As a result, students may have to turn to more personal loans (which are not covered under this bill) which are based on credit and credit history....in short (HA!) I think THIS particular scenario could make higher education that much more exclusive and elusive for some...

I'm interested to see how this plays out..

Anyone else

Edited January 27, 2010 by (A)musing anthropologist

[twocosmicfish]

I think it is a good idea in principle - it allows people with loans the assurance that they will not be pushed too far below water - but I can see some problems with it.

First, people need to be comparing their intended career with their required tuition and seeing how they line up. If you are going into an area that averages $25k a year for grads, don't drop $200k on an education. This plan works best when it is helping people who planned well and got hurt by the economy, not people who chase their dreams off a cliff.

Second, it does not eliminate the loans, just postpones them. In many cases, 10% may not do any more than pay down the interest, so anyone taking advantage of this needs to be aware that the snowball is growing, and that if they do not find that better-paying job that they will still be paying on the loans when they retire.

I don't think it will significantly limit student loan availability for a while yet - it will depend on the total effect on loan repayment...