Will Obama's student loans proposal affect your decision? Forum

[FunkyJD]

If you're listening to the State of the Union, you may have heard the President's proposals to cap the amount of personal income that can go towards student loans in a year, and zero out loans after 20 years -- 10 years if you go into public service. (I'm posting this after hearing it on the fly ... if I've mischaracterized this, I will edit/correct this later.)

Curious to know to what extent, if this were to pass in the near future and were applicable to you, it might affect your decisions as to where you attend law school. Would you be willing to assume more debt, if something similar to this were to pass? Would you be willing to attend certain schools at or near sticker that you might otherwise pass up on? Or would you maintain a similar posture in terms of willingness or aversion to go into debt for law school.

Edit: Here's the provision in question, courtesy of the Los Angeles Times:

[L]et’s tell another one million students that when they graduate, they will be required to pay only ten percent of their income on student loans, and all of their debt will be forgiven after twenty years – and forgiven after ten years if they choose a career in public service. Because in the United States of America, no one should go broke because they chose to go to college.

http://latimesblogs.latimes.com/washing ... eedfetcher

[SteelReserve]

I'm watching too, but I'm not sure if he meant that such loan programs would apply to GRAD students or just COLLEGE students.

That being said, I'm not sure any of this is a good idea because of cause and effect.

Cause: Govt increases aid to students/forgives after 20 years

Effect: Tuition skyrockets

There has to be a better way to address increasing tuition...

[vanwinkle]

This sounds like an extension of IBR, which already caps your loan payments at a reasonable level and forgives any outstanding debt after 10 years of PI work or 25 years of non-PI work. Expanding it will be good, but this isn't groundbreaking.

IBR did affect my decision to take on a large amount of debt to attend a T10 school, so I guess this will affect people's decisions, but it already has been.

[eye]

Also tuned in to the State of the Union.

Although that's a nice proposal, I have different priorities, no interest in biglaw and am not sure I want to practice law for the rest of my life. So no, I would stick to the cheaper public school with $$.

WTU?

[Doritos]

There has to be a better way to address increasing tuition...

tax the rich. world war 2 level baby! 94% for the mega rich

http://en.wikipedia.org/wiki/Income_tax ... es.5B21.5D

[09042014]

Its already 10/25, with 15% of discretionary spending.

So for people in PI you just get 5% more a year, and for private sector its five years earlier and 5% more. Not exactly game changing.

[twintipping_bumps]

Effect: Tuition skyrockets

To be fair, he did mention colleges/universities are responsible for mitigating the cost, although in a sort of passing manner. But still, $210k plus to attend a school with no aid - that's an enormous amount of money, and if you don't earn that much after graduation, it's going to take more than 20 yrs. to pay off as well as negatively impact the economy in term's of impeding a person's ability to do things like dine at a local restaurant or pay for court time at a local tennis club, which all participate in the economy's circulatory system.

I am already paying well over 10% of my income on 50k in student loans.

I would be very interested to see detailed language on this. Is it retroactive, ie will it include all federal loans already in place? Or will it only apply to loans subsequent to its institution?

In my opinion, anything to facilitate one of a nation's most important elements - it's ingenuity and ability to think, create, and develop - is crucial.

[BarbellDreams]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

[09042014]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

For law school at least, federal loans cover the total cost of attendance.

[beesknees]

I'm watching too, but I'm not sure if he meant that such loan programs would apply to GRAD students or just COLLEGE students.

That being said, I'm not sure any of this is a good idea because of cause and effect.

Cause: Govt increases aid to students/forgives after 20 years

Effect: Tuition skyrockets

There has to be a better way to address increasing tuition...

+10000

Increasing IBR only alleviates a symptom (ridiculous monthly loan payments) of a larger ailment (ridiculously expensive education).

I laughed bitterly when my SO's sister who is a PhD student at Cambridge, told me that her friends attending Cambridge Law (the top law school in the UK, according to The Times) pay about 15,000 pounds a year including their living expenses - it comes out to roughly $25-26k year total. The actual tuition is aroudn 6 thousand pounds per year, I believe. I cried when my German and Spanish friends tell me they paid roughly a few thousand euros in tuition for some of their countries' best universities. Why is our higher education soooooo incredibly expensive compared to these countries?

[vanwinkle]

Its already 10/25, with 15% of discretionary spending.

So for people in PI you just get 5% more a year, and for private sector its five years earlier and 5% more. Not exactly game changing.

Dude, when I graduate, I'd love to keep an extra 5% of my PI pittance if I can.

There is something wierd about the concept of giving exactly 10% of my income every year to a certain entity that provided for me and was responsible for all my success. It feels so familiar, like there should be a word for that kind of thing...

[ps494]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

Do you know how much federal is offered for the average LAW student.

[beesknees]

Its already 10/25, with 15% of discretionary spending.

So for people in PI you just get 5% more a year, and for private sector its five years earlier and 5% more. Not exactly game changing.

Dude, when I graduate, I'd love to keep an extra 5% of my PI pittance if I can.

There is something wierd about the concept of giving exactly 10% of my income every year to a certain entity that provided for me and was responsible for all my success. It feels so familiar, like there should be a word for that kind of thing...

Lol. So the state has replaced the church? Sounds right to me.

[Reinhardt]

Go to law school at sticker for the hell of it. Become a homemaker. Pay nothing. Am I missing something?

[FunkyJD]

Go to law school at sticker for the hell of it. Become a homemaker. Pay nothing. Am I missing something?

A millionaire spouse.

[thalassocrat]

Go to law school at sticker for the hell of it. Become a homemaker. Pay nothing. Am I missing something?

I assume they'll put some provisions in place to prevent that.

[twintipping_bumps]

Take your ability to think critically and your value of education to raise a child in an enriching environment, a child that then has the skills to go on and make tremendously important contributions to health care or energy conservation? But rather, that seems like a rather pessimistic view of a much needed attempt to deal with the sort of financial barrier placed in front of the type of thorough education that would allow a society to evolve. Were you suggesting that such a system would simply encourage people to attend school for thrills and giggles?

[RomeroLaw]

Omg. ya. that sounds exactly like tithing. this whole thing sounds like a giant clusterfuck. just one more thing our wonderful president says to make himself sound better, when really he does nothing but work towards compounding our nations debt.

[Anonymous Loser]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

I know I should be used to this by now, but do people still not understand how GradPLUS loans work or something?

[ps494]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

I know I should be used to this by now, but do people still not understand how GradPLUS loans work or something?

What do you mean?

[vanwinkle]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

I know I should be used to this by now, but do people still not understand how GradPLUS loans work or something?

What do you mean?

I think he means that people (like BarbellDreams, above) keep assuming you'll need to take out private loans to cover part of the expense of attending law school. GradPLUS loans are designed to cover all costs of tuition+COL that aren't covered by other federal loans or scholarships/grants. Its purpose is to provide government loans for everything so you don't need private loans for grad school.

[insidethetwenty]

Cause: Govt increases aid to students/forgives after 20 years

Effect: Tuition skyrockets

Bingo. Part of the reason tuition is so high already is because of student loans, especially subsidized ones. I know these loans provide opportunity, blah, blah, blah, but like any other form of "easy" credit, they push the price of the purchased goods (in this case tuition/education) into the stratosphere. See: any credit bubble ever.

[whuts4lunch]

I am a Florida resident and we have some decent inexpensive state options here (UF and FSU) that would maybe make sense for me to take over schools like Boston College, Emory, or WashU at full price. However, Obama's plan is going to make it so the relative gain for me taking UF or FSU over WashU/Emory/BC/GWU (haven't heard back from a lot of these places. this is hypothetical) is much lower. Also, if I attend FSU now and then Obama's plan goes through, students that otherwise would have attended UF/FSU will now choose places like BC, and then the student quality and reputation of the once good value schools will diminish. Then, as I attend school and enter the market, the rank/prestige of FSU will be lower than it otherwise would have been. I think that the cheap state schools are going to get crushed by this plan. UF and FSU will lose those top applicants that they were previously able to draw because of low tuition. So, not only will the discount be lower, but also the prestige of the degree.

On the flip side, if I choose WashU, then the plan won't go through and would probably regret not choosing FSU. Murphy's Law is infallible.

[Borhas]

It makes me a little bit more confident about a future career in public service

[blueberrymuffin]

Problem with all of this is that it likely doesn;t apply to private loans, and we all know that if you're paying near-sticker, you're taking those out more than the low amounts of federal offered.

I know I should be used to this by now, but do people still not understand how GradPLUS loans work or something?

What do you mean?

I think he means that people (like BarbellDreams, above) keep assuming you'll need to take out private loans to cover part of the expense of attending law school. GradPLUS loans are designed to cover all costs of tuition+COL that aren't covered by other federal loans or scholarships/grants. Its purpose is to provide government loans for everything so you don't need private loans for grad school.

Since we're explaining things here-
Aren't gradplus loans at a relatively high fixed rate? For someone with good credit, maybe it's better to get a private loan for the same amount at a lower rate? My understanding is that gradplus rates are higher because they don't cap the loans and don't take credit scores into consideration.

*edit* - credit check is required. but I don't think it receives as much weight as with private loans, and in any case it doesn't affect the interest rate.