https://studentaid.gov/understand-aid/types/loans/subsidized...
You can only borrow $31k over 4 years. That isn't a lot at all.
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.
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.
Looked up the prices just now. Undergrad + postgrad can come up to the price of small town houses.
> In January 2020, the U.S. Bankruptcy Court for the Southern District of New York discharged over $200,000 of student loan debt for one borrower. Then, in August 2020, a ruling by the 10th circuit federal appeals court based in Denver, Colorado eliminated $200,000 for a Colorado couple who held 11 private student loan accounts. And in September 2020, a judge for the U.S. Bankruptcy Court for the Southern District of New York ruled to enforce a prior bankruptcy discharge of a borrower’s $400,000 of federal student loans that a servicer had failed to carry out.
> These decisions could serve as a precedent for future bankruptcy cases involving student loans, says John Rao, an attorney with the National Consumer Law Center.
> "A lot of people, even some of the lawyers who represent consumers, thought for years that you really shouldn’t even try because there's not a chance you’ll win, but I think everyone is looking at it now with sort of a fresh look," Rao says.[0]
[0] https://www.nerdwallet.com/article/loans/student-loans/stude...
Graduate students are where it gets wild though.
For instance, when I was in college (undergrad) I took the maximum, but it wasn’t enough for me to pay tuition, rent, etc. Also those loans don’t pay during the summer, so you’ve to budget for that as well. My part time job tended to cut hours because there’s a high influx of kids who also want summer jobs, which meant less money overall for me. I ended up taking some more loans from Wells Fargo to make ends meet.
In hindsight, I should have got a better job instead of retail - some sort of office job. But I didn’t have a car, so I was limited in how far I could go.
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.
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.
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.
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.
I'm interested in how many students aren't able to have their family go in on PLUS loans. As that is still a gaping hole to relying on the page and limits linked.
But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy, for example.
Private education loans are mostly an issue for non-accredited schools, since usually you can cover the full costs, with better terms, with federal loans at accredited schools. They are also less than 8% of the volume of student loans. They are basically a whole different (and much smaller) policy issue.
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.
There essentially is no such thing as a “private” student loan anymore.
[0]: see sibling investopedia link
Regardless, I got them all payed off; and still have a massive distaste at how most discourse over this goes.
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.