The Problem and Solution of Student Loans

One thing that *REALLY* needs to be stressed in these discussions….this entire problem is mostly created by “for profit” schools.

Most of these are glorified “trade school” that someone figured out that by re-classifying themselves, and getting a couple laws passes, they could get in on that sweet, sweet, federal student loan money…which the for profit banks were more than happy to act as middle men for…loan approved, we’ll co-sign for you with the Feds…

So now we’ve kicked the private banks out of the process, but sadly still have the GOP to deal with before we can fix the situation. They are, of course, offering up a solution where interest rates can rise higher than the Dem solution (a fixed rate), which is estimated to cost those students a certain more amount of money (about $4,000,000,000 more).

I like the solution that Australia has come up with for this problem (student loans in general). What they do is offer the loans that are not tied to interest rates (fixed or otherwise), but instead tied to a person’s income. For example, when you start making $50,000/yr, you start paying back 4% of that to your loan balance. And it grades up to a high of (something like) 8% at about $75K. You pay that until the balance is done.

If you lose your new, first job and your income drops for a while, you aren’t crushed into poverty despite having a shiny new degree.

This is so much a better way to deal with the issue. It avoid the “staying in school just to stay in school” syndrome. It doesn’t punish “life circumstances” as much. It doesn’t punish “you know, this just isn’t for me” as much. And it still provides the opportunity for reward for a great many more people than would otherwise have it.

So there are better ways to deal with it. Unfortunately, as mentioned, we have the GOP. So we have to wait for them to introduce the idea. The Dems to agree to it. Obama to endorse it. The GOP to then turn against it until the last possible second, then *allow* the Dems to pass it despite their *very serious concerns* about the socialisms.

That’s how screwed up our politics are. We have a big problem, other people in the world have figured out a pretty smart solution to said problem, and we can’t go that route because GOP.

Harrumph.