Loan Monitor Is Accused of Ruthless Tactics on Student Debt
nytimes.com
nytimes.com
It's not hard to imagine a whole bunch of "desirable" activities that could be incentivized in this way. I am somewhat uncomfortable with that.
[1] http://studentaid.ed.gov/repay-loans/forgiveness-cancellatio...
[1] This number is likely to decrease as time goes on and more people take advantage of the loan forgiveness, but there's quite a cushion at the moment.
So it's not a bad policy because it incentivizes working for the public service. But it is a bad policy because it effectively pays people with higher student debt more, for no good reason.
I know the reason: The union pay scale that pays lousy old teachers much more than young good ones is politically untouchable.
I just don't like that kind of backdoor policymaking. For one thing, it doesn't incentivize universities to offer more affordable educations, since people like your friend become price-insensitive.
I think that is greatly simplifying a complicated problem. There are many reasons a teacher cannot get paid more in a low income school. They may be limited by the local government entity (state or municipality) or the environment may be very difficult. It can become equally politically problematic to adjust the payscale for low income schools as it can to incentivize working there.
>For one thing, it doesn't incentivize universities to offer more affordable educations, since people like your friend become price-insensitive.
Everyone who gets a college education is price insensitive and it has everything to do with loans, but likely little to do with the public service incentive. As long as loans are available and assistance is not, universities (most of which are public) will not have incentive to offer affordable educations. It's a serious problem, but one that has more to do with a culture of "Get an education and get a great job, even if you major in philosophy" than with "Be a teacher and we'll give you a break for serving the public good."
She loved it and it worked out great for us, but the education system is a disaster and I am glad she isnt teaching anymore.
I used to associate nonprofits with humanitarian works, almost like charities, but it's pretty obvious lately that in many cases they're just for-profit systems that have found loopholes to exploit.
A prime example of this: the NFL is a nonprofit.
That's, loosely, what 501(c)(3)s are.
> A prime example of this: the NFL is a nonprofit.
The NFL is a 501(c)(6), which is different than a 501(c)(3) -- 501(c)(6)s are basically associations of (generally, for-profit) business entities.
This "non-profits are good!" vibe is why these companies set themselves up that way. Instead of profits going to shareholders, they just go to the executives.
Can you explain how the NFL is a prime example of a nonprofit exploiting loopholes?
But in general, the teams make tons of money and have close zero profits. They use variations of "hollywood" accounting. Which might help explain the cognitive dissonance of profitless monopolies =D.
https://en.wikipedia.org/wiki/Sports_Broadcasting_Act_of_196...
Those are hardly loopholes, however, since the legislation worked exactly as Congress intended as far as I can tell.
Your allegations of "Hollywood" accounting seem more consistent with loophole exploitation, but I would like more concrete evidence other than the alleged dearth of team profits.
http://www.wallstreetoasis.com/blog/the-money-leagues-part-2...
Tax-exempt entities are also not-for-profit but not all non-profit entities are tax-exempt (Political parties, professional organizations, the NFL,...).
Check this instead: http://foundationcenter.org/findfunders/990finder/
Cole is right, and 'undue hardship' is highly subjective. However, as it stands only "hundreds try" to discharge their student loan debt through bankruptcy, and unknown how many succeed.
Undue hardship sounds like something we should be managing towards an overall level of 0.1% not 0.0% as they are now. I think the problem is that you can't achieve that on a case-by-case basis. Anything but impossible standards would blow past 0.1% in a heartbeat. I think you would need some sort of quota / ranking system and current law doesn't allow that.
What the story didn't talk [enough] about is how the income-based plans actually work. It sounds like there's an incredible amount of work that goes into calculating those plans (counting number of meals at McDonalds?). I don't know why that would be necessary. I assume you would just target a percentage of adjusted gross income. The whole point of the loan is to increase AGI so if AGI is systemically too low to repay the loans, the problem is with the economy or the educational system, not the individual.
It is a simple calculation. 15% of Discretionary Income. DI is calculated as AGI minus 150% of the federal poverty line. For instance, if someone is single and makes $35k per year, their monthly payment is capped at: (35-11.5×1.5)×.15/12 -> $222 per month.
What is complicated is when people say they can't make the income based repayments because of a hardship. That is when all the counting meals and extra bedrooms happens.
I'm wondering what the penalty was from getting sanctioned by the Judge. In some states, you can your license revoked by the state bar association. I thought it was odd they didn't mention what penalty the attorneys received as a result of the sanction
He's also fond of pointing out that medical students started this problem when a number of them declared bankruptcy right as they graduated med school and just before entering lucrative fields.
Source (among others) last page of: http://www.judiciary.senate.gov/pdf/12-3-20ColeTestimony.pdf
I don't see how the fact he grew up Pittsburgh and received forms of government assistance is relevant. Good for him but the income of his employer is heavily subsidized by student loans.
If the market doesn't exist (or can't exist) and we have sympathy for people who can't pay their loans back then we have to accept higher interest rates in returns. By having such strict laws on paying loans back, people with poor credit ratings through no fault of their own can get student loans.
Of course it would be great if people didn't need to go so far in debt to pay for school, but that's another story.
In New Zealand (as in many other countries) we have a very reasonable system whereby you repay student loans as a small percentage of your income after graduation, taken out of your paychecks until they are fully repaid. If you're unemployed, you don't have to be making repayments. This means no one is under undue strain month to month and seems like a much more humane approach.
I suspect that the norm is that most people who are delinquent on their student loans are just simply not paying them.
Professor Cole added that if it were easy to discharge student loans in bankruptcy, lenders would simply not lend money to students without clear assets or prospects.
Now there's an idea! </sarcasm>