> What's predatory about public loans.
It distorts prices and results in a suboptimal allocation of society’s resources, and results in people complaining about having a “degree” and having to sling coffee cups as their career.
It distorts prices and results in a suboptimal allocation of society’s resources, and results in people complaining about having a “degree” and having to sling coffee cups as their career.
Politician A says they want to help students by paying for their education, or at least some of it. This requires cash flow, which results in more taxes, or at the least, entries into the government’s debt figures. Either way it shows up on the balance sheet and can affect tax liabilities today.
Politician B says they want to help students, but they will instead have the government lend money to them, with zero under writing other than the “school” needing to be credentialed by some entity. The cash is spent, but an even bigger asset in the form of the debt is recorded, actually improving the balance sheet. Then you can whittle down whatever taxpayer subsidy is being given to the schools as is, and they can make up for it with tuition increases. Either way, government finances look good, and taxes can even be reduced.
The probability of that person digging themself out of that hole and being able to achieve the common expectations of a family, house, vacations, retirement, weekends, etc is pretty low.
And someone with $60k in public loans most certainly can dig themselves out of that hole, because repayment is capped at 10% of disposable income, and it is cancelled after 20 years.
The government under the Obama administration changed things so that "Federal" loans instead of being made by private organizations and backed by the government, were directly distributed from the treasury.
However even before this, there were separate Federal and private loans, and the only way to get to $200k (for undergrad) was to get unsubsidized private loans that weren't backed by the government.