7 ms·

Eh I think the impact of the federal government on undergraduate costs is largely overstated. The limits for dependent students, which is most undergrads, is re

by tempsy 3y ago

Eh I think the impact of the federal government on undergraduate costs is largely overstated. The limits for dependent students, which is most undergrads, is really small over 4 years. https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized https://studentaid.gov/understand-aid/types/loans/subsidized... You can only borrow $31k over 4 years. That isn't a lot at all.

macdaknife 3y ago
I would disagree that 31K is not a lot of money, but then again, maybe it is not a lot of money and my opinion is warped. I think if the government took a few points off for performance as a preferred return on the massive endowments, all of this would go away.
- tempsy 3y ago
  it's $8k a year. that wouldn't even cover rent for a school year at this point. i think a lot of people seem to believe that the federal government is handing out $50k+ a school year when theres a very small limit. people who need to borrow likely have to tap private lenders.
  - kortilla 3y ago
    Please stop. You’re completely misinformed here on how much is available for students to loan. I know multiple people that took out massive PLUS loans from the government that carry interest, are not discharged in bankruptcy, and far exceeded the limits you are talking about ($70k a year for grad schools).
    - macdaknife 3y ago
      I would also add that a lot of loans end up rolled up into a package, which you are given no forbearance.
- deleted 3y ago
  [deleted]
FireBeyond 3y ago
This for federal loans. But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy, for example.
- tempsy 3y ago
  yeah, and we're talking about federal loans here. the government is not on the hook if a student defaults on a private loan. the critique was that tax payers were somehow on the hook for most undergraduate costs when $31k over 4 years barely pays for rent at this point.
  - kortilla 3y ago
    No, this is incorrect. The federal government is also the backstop for a majority of private student loans as well. https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121...
  - taeric 3y ago
    I can see how you think we were only talking of federally "backed" loans, but I did intend my expansion to be all loans the government has "protected." Which, as the other poster points out, is basically all of them.
    - dragonwriter 3y ago
      Federal loans are basically all of them to start with (over 92% of outstanding balances).
      - taeric 3y ago
        I had thought that I had private loans back in the day. Been a long time since I paid all of mine off, though, so I can't remember who they were through. (And, I fully grant that, even if I was private loans, 8% is still a non-zero number...)
taeric 3y ago
Wait, what? That is a misleading read of that page. Only if you have parents/guardians that can get a PLUS loan is that the limit. You have to look at the other column for everyone else. And that is the principal. With a short limit on how much of that can be subsidized, meaning the rest is accruing interest from day 1. Such that they amount you would owe will be laughably higher than even that number after your school. And that is assuming you don't have to then delay repayment for financial hardships.
- tempsy 3y ago
  how is it misleading? most undergrads are considered dependent, which means they can only borrow $31k in total over 4 years. beyond that they would need to tap alternative sources.
  - taeric 3y ago
    I'm interested in numbers backing up that claim? But, even with that, student debt is almost certainly including PLUS loans which, "The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received." So... yeah, very misleading read of that page.
  - dragonwriter 3y ago
    > how is it misleading? Because the limit cited only applies to students whose parents can get (federal, direct, and capped only by the school’s estimate of costs) PLUS loans, and yet is characteized as a limit of the impact of federal subsidies on school costs. A cap that only applies where another unlimited federal loan stream is available to the same student is, well, not a limit at all, when discussing federal impact on prices.
    - shkkmo 3y ago
      The cap when PLUS loans are not available is $57,500. The impact on prices is not just the direct, but the general understanding that private educational loans also could not be discharged in bankruptcy that was created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Courts have started to push back against that but there are only a handful of precedents.
dragonwriter 3y ago
There is no limit for dependent students of federal support through loans: the limits you cite are the limits for loans to the student for students whose parents are able to get PLUS loans. But PLUS loans themselves have no cap, so the amount of potential federal impact on potential costs for this population—which, as you note, is most undergraduate students—is infinite, not $31K over four years.
kortilla 3y ago
This is wrong. You’re mixing up subsidized loans with the ability to get loans. People can get unsubsidized loans that still come with the same constraints around inability to discharge in bankruptcy for vastly more money. It’s essentially all unsecured student loans (i.e. effectively the entire student loan market) that have this risk free model for lenders. It would all be completely toxic trash otherwise that no lender would issue. A student with no assets, no income, and no credit history to preserve has no downside to just declare bankruptcy after school and get $200k or whatever essentially for free.
- tempsy 3y ago
  No its not Literally says "Subsidized and Unsubsidized Aggregate Loan Limit $31,000-No more than $23,000 of this amount may be in subsidized loan" Just confirms most people have no clue how small the limits actually are.
  - monero-xmr 3y ago
    I am afraid you are woefully confused. A good friend had $150k in debt from undergrad and $200k in additional debt from law school, and this was 10 years ago.
    - boeingUH60 3y ago
      Your friend spent the cost of a new house on education, lol. There's only one country where I hear of things like this...
      - zo1 3y ago
        South Africa: now you've heard of two. Looked up the prices just now. Undergrad + postgrad can come up to the price of small town houses.
    - shkkmo 3y ago
      That would have likely been a mixture of direct loans (which have the current 31k limit for undergrad) and private loans.
deleted 3y ago
[deleted]

by tempsy 3y ago

macdaknife 3y ago

I would disagree that 31K is not a lot of money, but then again, maybe it is not a lot of money and my opinion is warped. I think if the government took a few points off for performance as a preferred return on the massive endowments, all of this would go away.

tempsy 3y ago
it's $8k a year. that wouldn't even cover rent for a school year at this point. i think a lot of people seem to believe that the federal government is handing out $50k+ a school year when theres a very small limit. people who need to borrow likely have to tap private lenders.
- kortilla 3y ago
  Please stop. You’re completely misinformed here on how much is available for students to loan. I know multiple people that took out massive PLUS loans from the government that carry interest, are not discharged in bankruptcy, and far exceeded the limits you are talking about ($70k a year for grad schools).
  - macdaknife 3y ago
    I would also add that a lot of loans end up rolled up into a package, which you are given no forbearance.
deleted 3y ago
[deleted]

FireBeyond 3y ago

This for federal loans. But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy, for example.

tempsy 3y ago
yeah, and we're talking about federal loans here. the government is not on the hook if a student defaults on a private loan. the critique was that tax payers were somehow on the hook for most undergraduate costs when $31k over 4 years barely pays for rent at this point.
- kortilla 3y ago
  No, this is incorrect. The federal government is also the backstop for a majority of private student loans as well. https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121...
- taeric 3y ago
  I can see how you think we were only talking of federally "backed" loans, but I did intend my expansion to be all loans the government has "protected." Which, as the other poster points out, is basically all of them.
  - dragonwriter 3y ago
    Federal loans are basically all of them to start with (over 92% of outstanding balances).
    - taeric 3y ago
      I had thought that I had private loans back in the day. Been a long time since I paid all of mine off, though, so I can't remember who they were through. (And, I fully grant that, even if I was private loans, 8% is still a non-zero number...)

taeric 3y ago

Wait, what? That is a misleading read of that page. Only if you have parents/guardians that can get a PLUS loan is that the limit. You have to look at the other column for everyone else. And that is the principal. With a short limit on how much of that can be subsidized, meaning the rest is accruing interest from day 1. Such that they amount you would owe will be laughably higher than even that number after your school. And that is assuming you don't have to then delay repayment for financial hardships.

tempsy 3y ago
how is it misleading? most undergrads are considered dependent, which means they can only borrow $31k in total over 4 years. beyond that they would need to tap alternative sources.
- taeric 3y ago
  I'm interested in numbers backing up that claim? But, even with that, student debt is almost certainly including PLUS loans which, "The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received." So... yeah, very misleading read of that page.
- dragonwriter 3y ago
  > how is it misleading? Because the limit cited only applies to students whose parents can get (federal, direct, and capped only by the school’s estimate of costs) PLUS loans, and yet is characteized as a limit of the impact of federal subsidies on school costs. A cap that only applies where another unlimited federal loan stream is available to the same student is, well, not a limit at all, when discussing federal impact on prices.
  - shkkmo 3y ago
    The cap when PLUS loans are not available is $57,500. The impact on prices is not just the direct, but the general understanding that private educational loans also could not be discharged in bankruptcy that was created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Courts have started to push back against that but there are only a handful of precedents.

dragonwriter 3y ago

There is no limit for dependent students of federal support through loans: the limits you cite are the limits for loans to the student for students whose parents are able to get PLUS loans. But PLUS loans themselves have no cap, so the amount of potential federal impact on potential costs for this population—which, as you note, is most undergraduate students—is infinite, not $31K over four years.

kortilla 3y ago

This is wrong. You’re mixing up subsidized loans with the ability to get loans. People can get unsubsidized loans that still come with the same constraints around inability to discharge in bankruptcy for vastly more money. It’s essentially all unsecured student loans (i.e. effectively the entire student loan market) that have this risk free model for lenders. It would all be completely toxic trash otherwise that no lender would issue. A student with no assets, no income, and no credit history to preserve has no downside to just declare bankruptcy after school and get $200k or whatever essentially for free.

tempsy 3y ago
No its not Literally says "Subsidized and Unsubsidized Aggregate Loan Limit $31,000-No more than $23,000 of this amount may be in subsidized loan" Just confirms most people have no clue how small the limits actually are.
- monero-xmr 3y ago
  I am afraid you are woefully confused. A good friend had $150k in debt from undergrad and $200k in additional debt from law school, and this was 10 years ago.
  - boeingUH60 3y ago
    Your friend spent the cost of a new house on education, lol. There's only one country where I hear of things like this...
    - zo1 3y ago
      South Africa: now you've heard of two. Looked up the prices just now. Undergrad + postgrad can come up to the price of small town houses.
  - shkkmo 3y ago
    That would have likely been a mixture of direct loans (which have the current 31k limit for undergrad) and private loans.

deleted 3y ago

[deleted]