U.S. Politics

[insanity]

http://patch.com/rhode-island/barrington/ri-congressmans-sweeping-college-loan-bill-would-eliminate-student-loan

Some good, some bad out of this.

The thought of letting students pay off their student loans with pretax money (similar to a 401k) is a good idea I think people could bet behind. It encourages people to take responsibility for their actions and pay their own loans off. It's a great idea

Limiting student loan payments to 4% of an individual's paycheck is kinda stupid, like really freaking stupid. Demanding 0% interest rates for student loans while allowing students to pay them off over 30 years is also absurd. I'm cool with stopping predatory lending, but the government would lose hundreds of billions (if not substantially more)  of dollars lending out trillions of dollars interest free for 30 years.

Not to mention if people can get 30 year 0 APR loans on student loans they would be extremely wise to borrow as much as humanly possible as those numbers are ridiculous. It would also let colleges price gouge even more than they already do.

Improving student loans is a noble go, but some of these ideas are freaking idiotic.

From my understanding england does something like this.  The amount you pay for your student loan depends on your salary if your job

[Ignatius J Reilly]

From my understanding england does something like this.  The amount you pay for your student loan depends on your salary if your job

 A few schools here have tried it with great results.

[dcm1602]

Not sure exactly how it works but we have something like that already.  the maximum they can make you pay is a percentage of your salary. I think currently it's 10 to 20% depending on where and how you got your loan

I feel like interest is absolutely necessary though for loans go work successfully

[Tommy]

That's ridiculous.

It's great actually. A throwaway class that's easy and impossible to fail unless you don't show up.

Although I still had to write a paper at the end. Basically had to review one of the NBA playoff games. It was so stupid.

[bojanglesman]

It's great actually. A throwaway class that's easy and impossible to fail unless you don't show up.

Although I still had to write a paper at the end. Basically had to review one of the NBA playoff games. It was so stupid.

Some of them aren't impossible to fail if you are obese.

[Tommy]

Some of them aren't impossible to fail if you are obese.

Just don't be obese.

[bojanglesman]

Just don't be obese.

Got it.

[Johnny English]

Not sure exactly how it works but we have something like that already.  the maximum they can make you pay is a percentage of your salary. I think currently it's 10 to 20% depending on where and how you got your loan

I feel like interest is absolutely necessary though for loans go work successfully

The UK is something like 10% of your annual salary once you're earning over a certain threshold, and the interest rate varies depending on your salary - the more you earn, the higher your interest rate.

[AlioTheFool]

I don't know details, but muslim banks are prohibited from charging interest and somehow they survive. I would think there would need to be regulations in place to ensure schools didn't suddenly drastically increase prices, and to prevent students from taking far more than they need, but that's doable.

Lowering the required percentage of income for repayment is a good idea too. It would free up more of a young person's income for investment/expenditure, which benefits the overall economy.

[dcm1602]

I don't know details, but muslim banks are prohibited from charging interest and somehow they survive. I would think there would need to be regulations in place to ensure schools didn't suddenly drastically increase prices, and to prevent students from taking far more than they need, but that's doable.

Lowering the required percentage of income for repayment is a good idea too. It would free up more of a young person's income for investment/expenditure, which benefits the overall economy.

No interest is absurd.. Low interest is feasible

It's literally impossible to lend money at 0% and not lose money (unless you're talking like selling a car and doing 0% APR for 3 years but that's different)

Essentially having government loans similar to what we have now and removing the profit and just making it cost neutral is really all you need.

If a student opts to pay a lower % of their salary or pay it off over a longer period of time the interest rates should reflect that.

It really would be a simple system that I think most people can get behind.

[AlioTheFool]

No interest is absurd.. Low interest is feasible

It's literally impossible to lend money at 0% and not lose money (unless you're talking like selling a car and doing 0% APR for 3 years but that's different)

Essentially having government loans similar to what we have now and removing the profit and just making it cost neutral is really all you need.

If a student opts to pay a lower % of their salary or pay it off over a longer period of time the interest rates should reflect that.

It really would be a simple system that I think most people can get behind.

Muslim banks are able to manage no-interest loans. Stop pretending it's impossible just because you don't like the idea.

We're not talking about a luxury item like a car here. We're talking about a necessity in the modern US economy. On top of that, you're freeing that person to spend that "saved" money directly in the economy, which generates tax revenue. It's an investment by the government.

The US government somehow finds funding for nuclear weapons that are likely to never be used--yet you don't complain about that sunk cost. I think investing in the future labor force is a reasonably more noble pursuit.

[Ignatius J Reilly]

No interest is absurd.. Low interest is feasible

It's literally impossible to lend money at 0% and not lose money (unless you're talking like selling a car and doing 0% APR for 3 years but that's different)

Essentially having government loans similar to what we have now and removing the profit and just making it cost neutral is really all you need.

If a student opts to pay a lower % of their salary or pay it off over a longer period of time the interest rates should reflect that.

It really would be a simple system that I think most people can get behind.

Nah, we should have free college for all and loan forgiveness because people were forced at gunpoint to take out predatory loans in the past.

I prefer ISAs.  Demand based pricing for colleges would absolutely get those schools to emphasize careers in tech with guaranteed salaries and push them to boost their relationships with the career center.  It's a win win.

[Johnny English]

I don't know details, but muslim banks are prohibited from charging interest and somehow they survive.

Sharia finance is interesting, they have ways around it. I believe the most common way is for them to assume asset ownership and effectively become the vendor. For example, let's say you needed to borrow $20K to buy a car. Rather than lending you $20K and charging you for the use of their money, the bank would actually buy the car for $20K and then agree to sell it to you for $24K, with an arrangement in place for you to make equal monthly payments of $400 for 60 months. This way the bank isn't charging interest, they're making profit on a capital sale and giving you an easy payment plan, neither of which are prevented by sharia. In practice it's exactly the same thing as a secured loan.

[dcm1602]

Muslim banks are able to manage no-interest loans. Stop pretending it's impossible just because you don't like the idea.

We're not talking about a luxury item like a car here. We're talking about a necessity in the modern US economy. On top of that, you're freeing that person to spend that "saved" money directly in the economy, which generates tax revenue. It's an investment by the government.

The US government somehow finds funding for nuclear weapons that are likely to never be used--yet you don't complain about that sunk cost. I think investing in the future labor force is a reasonably more noble pursuit.

You realize the United States is at a deficit right?  Which means in order to lend out money were effectively borrowing it from somebody else (probably China)  and paying them interest on it. Then factor in the time value of money, plus a percentage of people that will default. And you're talking about losing hundreds of billions of dollars.

Now I don't think we should try to profit off them. I think its completely not the governments place at all. But making it lose absurd amount of money is not the solution. Cost neutral is the only way you could get significant support from both parties

Plus you also need to understand if there's 0% interest it would be financially STUPID for people to do anything other than borrow as much money as possible and pay it off as slowly and long term as possible

[Tommy]

You realize the United States is at a deficit right?  Which means in order to lend out money were effectively borrowing it from somebody else (probably China)  and paying them interest on it. Then factor in the time value of money, plus a percentage of people that will default. And you're talking about losing hundreds of billions of dollars.

I hate when people bring up China when talking about US debt. We issue bonds when our expenditures are set to outpace receipts. And the vast majority of holders and people that take on US debt are US citizens and US funds. Probably a quarter of it is borrowed from foreign governments, and China represents about less than a quarter of a quarter of that.

Not saying we should keep issuing debt, but we can pretty much keep doing it because US debt is the safest form of investment in the world.