A Quiet Revolution in Helping Lift the Burden of Student Debt – NYTimes.com

Very important reading for students today. If you have a federal student loan you may be eligible for income based repayment capped at 10% (or so) of income and forgiveness after 10 years. If you do not have any federal student loans now, but are planning on some sort of student loans in the future, I recommend you consider the federal route given the information in this article.

http://www.nytimes.com/2015/01/25/upshot/a-quiet-revolution-in-helping-lift-the-burden-of-student-debt.html?abt=0002&abg=0

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2 thoughts on “A Quiet Revolution in Helping Lift the Burden of Student Debt – NYTimes.com

  1. “It’s unfair to burden hardworking taxpayers, many of whom have not had the opportunity to attend college, with that debt.” – Rep. Virginia Foxx (North Carolina)

    As if it were fair that younger generations will be saddled with paying the debt which benefited their generations. As more jobs/careers require degrees for higher pay, doesn’t it stand to reason that by educating more people they will earn more taxable wages and thus support the government, perhaps even more than the current “hardworking taxpayers, many of whom have not had the opportunity to attend college, with that debt”?

    • I agree that those who benefit should pay. However, who exactly benefits and who should pay is up for debate. To make a long story short, the top 1% income earners have benefitted via exponentially increasing income and the 99% have paid via taxes, tuition increases, student loan principal and interest repayment, and flat income over the last 40+ years.

      At the risk of comparing apples to oranges, when I graduated from Purdue University in 1994 I took a job with Motorola paying $37,100 per year (and that was among plenty other job opportunities at the time). That was 21 years ago. Now, I personally know of Sacramento State University business school graduates earning less than $40,000 with their Bachelor’s degree. I know I am talking about different people, different schools, and different degrees. However, I still claim that in general, education is more expensive while the availability of jobs and starting pay is much reduced.

      Jobs that pay at the 1% income level are not starting jobs. Those are jobs taken by people who profit by paying their workers as little as possible. Why else would Chrysler’s “Made in Detroit” 200 have engines made in Mexico? Why else would the formerly made in America Trek bicycles now be manufactured in Asia? Why else would Toyota open lower-wage non-union facilities? The Ford Fusion also had significant non-US input. See my “Cadence of Finance” presentation:

      https://efficientminds.wordpress.com/seminars/the-cadence-of-finance/

      In all of these examples management (the 1%) receives bonuses and higher pay for “cutting costs” and that means cutting the pay of the 99%. In all of the cases the one who benefits (the 1%) does so at the expense of the 99%. Unfortunately, the cost of being the 99% is manifesting threefold nowadays:

      1. You now have to pay more for education due to tuition increases outpacing inflation.

      2. To fund that higher cost of education you now must take on debt. Why? The income gap has been widening for a long time (since the 1970s and perhaps before). Your traditional source of education support (parents) just doesn’t have the money, not with 99% level income. Why don’t parents have the money? Tuition outpaces inflation but 99% income has not kept up. See “Aftershock” by Robert Reich.

      3. After you have paid more for education and taken out debt to pay, you have to fight for fewer lower paying jobs.

      I would venture to say the 1% also benefits from the interest paid on student loans. How? The 1% has disposable income to purchase financial securities tied to student loan interest repayment. It could be in the form of fancy derivatives. It could be in the former of owning shares of companies that finance and/or process students loans.

      I see the status quo of America’s operations as very problematic. The 1% receive more and more income via higher wages, bonuses, income from student loan interest via various financial securities, and lower taxes do to loophole exploitation and successful lobbying. Meanwhile the 99% continue to transfer wealth to the 1% via higher tuition expense, student loan interest, and lower wages.

      The sad part is, at events like the tea party tax protests I observed in Memphis, the 99% were pimped by the 1% to protest on their behalf. People who made less than $250,000 (and perhaps never will) were protesting tax increases on those who made more than $250,000. At the same time, they were protesting against their very own tax reductions. Perhaps irrationality is part of being human. But walking around in darkness is unwise.

      So I admit I sound a bit biased. No one has a monopoly on the truth. I will let the reader take my comments plus those from others and triangulate to the truth. My goal is to promote understanding. May the article, the reader’s comment above, and my comments here contribute to your understanding.

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