What would happen if the Federal Government stopped giving out student loans.

[Paul158]

We already give out 120 billion dollars in student aid for less fortunate students every year. Seems like the cost of college has gotten a little out of hand. The degrees that the colleges are offering many times do not translate to well-paying job opportunities. The colleges have no skin in the game. The federal government really sucks at giving out student loans. Joe Biden just paid off 6.1 Billion dollars in debt for fine art degrees. That makes about 150 Billion Dollars so far. If Joe gets reelected you can make that an even 1 trillion dollars before he is through. I would think banks would do a lot better about giving out student loans because they ask questions about you and your degree. Maybe ask how long you intend to take to get your 4 year degree. Maybe look at your grades. Maybe ask you if you intend to get a part time job or a job during the summer. They also make you have a cosigner who has money and good credit, sign their name. The bank has to answer to their shareholders if they give out bad loans. 

Edited May 3 by Paul158
missed a word.

[Paul158]

Are the colleges in charge of taking the loan applications? Then does someone at the college approve of the loan? Why are they giving out loans for 20K to 150K without any collateral or a co-signer with collateral? Who actually approves the loans?

[WrestlingRasta]

8 hours ago, Paul158 said:

 Joe Biden just paid off 6.1 Billion dollars in debt for fine art degrees. 

Source?  There were no engineering degrees, business degrees, education degrees, technology degrees in there.  That $6.1 billion dollars was earmarked specifically for fine arts degrees?

[Paul158]

2 minutes ago, WrestlingRasta said:

Source?  There were no engineering degrees, business degrees, education degrees, technology degrees in there.  That $6.1 billion dollars was earmarked specifically for fine arts degrees?

It was a college that at one time had around 30 campuses all over the country. The college closed its doors last year. It had been in financial trouble for some time. It was called The ART Institutes. Just google Joe Biden 6.1 billion dollar loan forgiveness. There several dozen sources listed. This is just one college.

[Paul158]

15 minutes ago, WrestlingRasta said:

Source?  There were no engineering degrees, business degrees, education degrees, technology degrees in there.  That $6.1 billion dollars was earmarked specifically for fine arts degrees?

There were no degrees  in any of areas you listed. Zero.

[WrestlingRasta]

Just now, Paul158 said:

There were no degrees  in any of areas you listed. Zero.

Thank you.  I just read a couple articles on it and thought I would share some more information on the story:

This is a result of a multiple state, multiple year investigation into the for-profit college, which found practices of manipulation, fraud, falsifying post-graduate rates, etc.   Report deemed them a predatory institution.

 

So this is certainly a much different scenario than they typical round of student loan forgiveness.  I for one am perfectly okay with this one.  I mean if we are going to bail out the banks for creating a huge housing bubble with predatory loans resulting in a trashed economy, I'm okay with bailing out those who were manipulated as teens by people supposed to be acting as professionals in an education setting.

[JimmyBT]

Are manipulated teens considered smart enough to vote in our elections? 

[ionel]

Do teens have parents?  

[WrestlingRasta]

13 minutes ago, ionel said:

Do teens have parents?  

So we don't want to talk about the corporation that was committing fraud, falsifying records, etc etc, because we want to focus on the parents who were also lied to.  YES! That will give us (what we think) is a legitimate reason to whine about the administration!

[JimmyBT]

Smart enough to vote yet not smart enough to understand what paying back a loan is. Got it. 

[ionel]

22 minutes ago, WrestlingRasta said:

So we don't want to talk about the corporation that was committing fraud, falsifying records, etc etc, because we want to focus on the parents who were also lied to.  YES! That will give us (what we think) is a legitimate reason to whine about the administration!

Should the federal government bail out everyone every time there's a shady situation.  Did these students learn less than the average art student? 

[WrestlingRasta]

18 minutes ago, ionel said:

Should the federal government bail out everyone every time there's a shady situation.  Did these students learn less than the average art student? 

Did I say that?  And how does that answer focus some accountability on the predators? Is this case about how much they learned, or about a corporation being fraudulent, falsifying data, and manipulating teens through lies?  Do we just simply not want to discuss the fraud? 
 

But to answer your question, no the gov’t should not bail out everytime there is a shady situation. 
 

Would you care to answer mine? 

[Wrestleknownothing]

Banks will not give out student loans because they are uncollateralized debt. The equivalent, on a much smaller scale per person, is credit card debt. Banks charge ~25% for credit card balances of much smaller sizes. That is why the govt is involved, to subsidize the loan, or it would not be made.

[Paul158]

These colleges received 1.4 Trillion dollars in federal and non-federal funding last year. That is a lot of money.  These colleges have 1 trillion dollars in their endowment funds. None of these dollars goes toward student loan forgiveness.

[Wrestleknownothing]

There is a large moral hazard here. Schools have an incentive to raise prices, offer non-marketable degrees, and push govt subsidized loans because there is no economic impact on the school. Student loan programs need re-working that puts at least some of the credit risk back on the schools.

[Wrestleknownothing]

1 minute ago, Paul158 said:

These colleges received 1.4 Trillion dollars in federal and non-federal funding last year. That is a lot of money.  These colleges have 1 trillion dollars in their endowment funds. None of these dollars goes toward student loan forgiveness.

Any idea if the funding goes to the schools with the largest endowments, or the other way around? 

Every now and then there is a push to remove the favorable tax treatment endowment investments recieve because too many of them are using too little of the money on student aid. I believe the original argument for favorable taxes was because the money was to be used on financial aid. 

As far as I know, the largest endowed schools have aleays successfully lobbied against this.

[Wrestleknownothing]

19 minutes ago, Paul158 said:

These colleges received 1.4 Trillion dollars in federal and non-federal funding last year. That is a lot of money.  These colleges have 1 trillion dollars in their endowment funds. None of these dollars goes toward student loan forgiveness.

Where did you get 1.4 trillion from? I got $203 billion. 

https://www.ibisworld.com/us/bed/government-funding-for-universities/4073/#:~:text=Federal%2C state and local grants,the government funding for universities.

And the largest endowments are generally at private schools which are not included here.

[ionel]

I'm always a bit skeptical of numbers like this $1.4T.  There are a lot of universities out there, whats it mean per university?  What are the funds going toward?  What I'm aware of at major research universities is the Federal funds recieved are competitive research projects.  You have to submit proposal application in specific areas NSF, USDA etc and competing against other teams of researcher, often multi university teams, to recieve funding.  Those should not be thrown into this $1.4T discussion.  

[ionel]

35 minutes ago, WrestlingRasta said:

Did I say that?  And how does that answer focus some accountability on the predators? Is this case about how much they learned, or about a corporation being fraudulent, falsifying data, and manipulating teens through lies?  Do we just simply not want to discuss the fraud? 
 

But to answer your question, no the gov’t should not bail out everytime there is a shady situation. 
 

Would you care to answer mine? 

Did I say you said that?  I'm not familiar with the details just read the big picture view.  How did they prey on teens, did they use their private emails to overwhelm them with deals and offers?  IMO many of the soft degrees (art, English, liesure studies, etc., look at what many athletes major in) at major public Us could be considered fraud given the cost versus potential employment/income stream.  Again did they learn more or less than the average student, where were the parents, what about the high school guidance counselors? 

[Paul158]

23 minutes ago, Wrestleknownothing said:

Where did you get 1.4 trillion from? I got $203 billion. 

https://www.ibisworld.com/us/bed/government-funding-for-universities/4073/#:~:text=Federal%2C state and local grants,the government funding for universities.

And the largest endowments are generally at private schools which are not included here.

203 billion would be federal revenue the rest of the 1.2 trillion is nonfederal revenue. I found it it on USAFACTS.org. It was an article from 2018 . It was 1.086 trillion then. I pro-rated it to 1.4 trillion in 2023. 

[WrestlingRasta]

22 minutes ago, ionel said:

Did I say you said that? So your answer to that particular question is no. And since you asked me that question in response to a completely different question, well you could see why I chose that reply.   I'm not familiar with the details just read the big picture view.  How did they prey on teens, did they use their private emails to overwhelm them with deals and offers? In the articles I read  (and explained in here) a lot of the fraud was in the job placement rates, jacking them up as much as 40%. That’s pretty significant.   IMO many of the soft degrees (art, English, liesure studies, etc., look at what many athletes major in) at major public Us could be considered fraud given the cost versus potential employment/income stream. So is that avoiding the question of don’t just not want to discuss the fraudulent behavior, or was that indirect answer within itself?  Again did they learn more or less than the average student, where were the parents, what about the high school guidance counselors? Do you really expect me to be able to answer those questions?  I mean you can’t even directly  answer my questions about your own thoughts.

Why get your information from an anonymous person on a message board when you can go out and get some info from various sources who actually investigated the case??  And why would you want to form such strong opinions before taking the time to learn anything about the topic? 
 

Seems like another case of: well it’s just easier for me to whine. Since you admittingly have not looked much into the case, but have already determined that the accountability and liability falls on those that were manipulated and lied to…I think we’ve taken this about as far as it can go.  Have a great weekend! 

Edited May 3 by WrestlingRasta

[Paul158]

26 minutes ago, ionel said:

I'm always a bit skeptical of numbers like this $1.4T.  There are a lot of universities out there, whats it mean per university?  What are the funds going toward?  What I'm aware of at major research universities is the Federal funds recieved are competitive research projects.  You have to submit proposal application in specific areas NSF, USDA etc and competing against other teams of researcher, often multi university teams, to recieve funding.  Those should not be thrown into this $1.4T discussion.  

200 billion is federal revenue.  the rest is nonfederal revenue. In the 200 Billion I am pretty sure it doesn't include the grants for research. It would be separate.

[Paul158]

56 minutes ago, Wrestleknownothing said:

Any idea if the funding goes to the schools with the largest endowments, or the other way around? 

Every now and then there is a push to remove the favorable tax treatment endowment investments recieve because too many of them are using too little of the money on student aid. I believe the original argument for favorable taxes was because the money was to be used on financial aid. 

As far as I know, the largest endowed schools have aleays successfully lobbied against this.

Endowment funds. Harvard does very well 39.8 B. Yale, Stanford and Texas sit at 29B. A good number of schools are over a billion dollars.

[ionel]

17 minutes ago, WrestlingRasta said:

Why get your information from an anonymous person on a message board when you can go out and get some info from various sources who actually investigated the case??  

Cleary we should shut down this board.  I was just asking questions.  Often one can learn more thru discussion with other folks and their opinions.  Its easy to find news reports/opinion with completely opposite conclusion of the same issue.   

[ionel]

2 minutes ago, Paul158 said:

Endowment funds. Harvard does very well 39.8 B. Yale, Stanford and Texas sit at 29B. A good number of schools are over a billion dollars.

Pretty sure Princeton still has a need based loan program.  If you qualify to be admitted and under certain income level you can take out a loan and if you graduate the loan is forgiven.  Funds coming from income off endowment.