Roughly Half of College Students Believe Their Student Loans Will Be Forgiven

[Maddy]

Nearly half of all America’s college students have deluded themselves into believing that the federal government will graciously forgive their student loans despite the fact that the federal government forgives only a very low percentage of student loans.

LendEDU, a student loan marketplace website, documented this startling disparity between belief and reality in a nationwide survey of 500 students currently attending America’s colleges and universities, reports the New York Post.

The survey shows that 49.8 percent of the students surveyed think they will be eligible for federal student loan forgiveness.

In reality, only about 10 percent of all college graduates will ever see any portion of their student loans forgiven under current loan forgiveness law.

This is a startling statistic when considered in conjunction with the sobering reality of what it means to pay back the $50,000 to $80,000 in debt that many students are amassing. This necessarily means that well over half of student loan borrowers have no frigging idea how they're going to pay back what they're borrowing.

http://dailycaller.com/2017/03/01/half- ... eir-loans/

[dualstow]

I know a veterinary student who had planned on (legally) getting out of his loans. Only now he's a consultant making buckets of money. I'm not sure how that works or what happens next. I guess he has to pay.

[Maddy]

Bailing out all student loans would be similar in magnitude to the TARP bailout of the big banks.

A recent news report stated that the U.S. government is backing $1 trillion. What do you do? Present taxpayers with a supplementary bill equivalent to 5% of the national debt?

[Libertarian666]

Bailing out all student loans would be similar in magnitude to the TARP bailout of the big banks.

A recent news report stated that the U.S. government is backing $1 trillion. What do you do? Present taxpayers with a supplementary bill equivalent to 5% of the national debt?

Nah, it's much easier. Just have the Fed buy all the student debt and cancel it.

Problem solved at no cost to the taxpayer!

[Tyler]

This is depressing, and clearly delusional. But with student debt increasing so quickly, who can blame kids for living in denial?



IMHO, this is a classic example of what happens when government distorts markets. For reference, Obama nationalized Sallie Mae in 2010 and kicked the private banks out of the federal student loan business because they wanted the interest for themselves. Clearly they didn't carry forward the same lending standards. Absent a feedback mechanism where a lender may actually (gasp!) deny a loan, we see what happened. And the colleges absolutely LOVE this arrangement, as they can increase tuition by leaps and bounds and bear absolutely no responsibility for the debt they've forced their own students into.

The best proposal I've heard to fix this situation is to 1) get the government out of the student loan business, 2) make student loans dischargeable in bankruptcy again, and 3) pass a law that places half of the financial responsibility for bankruptcy on the schools themselves. That would very quickly incentivize schools to both reduce tuition and also be a lot more selective about who they allow to rack up huge debt.

But in lieu of that, the best thing I can think of is simply to forward this article to every young person I know and educate them on just how serious a problem debt really is.

[Libertarian666]

Tyler, that certainly is a depressing chart. Do any of you understand the main cause? In other words, is it just that college expenses are increasing so quickly, or is it that nobody bothers to pay for it anymore, with the easy accessibility of loans?

It is an economic law that you can increase the price of xxx all you want, for virtually any value of xxx, if someone is willing to give (or lend, on easy terms) people unlimited amounts of money to buy xxx.

Examples: housing, college educations, health care...

[Tyler]

Interesting. Thanks.

It seems the debt growth took off in the private market several years before the Feds jumped in. Perhaps all those easy debt payments are what tempted them to get involved. So now there are two predators in the pool (three if you include the schools), with no incentive to cut off the tap.

Man, I'm glad school is in my rear view mirror.