Student loan programs and solving unpaid debt

5-18-2014: Sallie Mae (formerly SLM Corp) & Navient agreed to pay $97 million for violating federal laws regarding student loan interest rate caps for military personnel. The companies apologized and have even agreed to foot $173 million to correct the overcharges but where were the rate controls to begin with? WSJ-5/14/2014-C3

4-23-2014: Some student debt plans allow debt to be forgiven – this has resulted in a 40% increase in use of these student loan programs…that forgive debt after 10 years in public sector or non-profit employment or 20 years in the private sector…currently no limit on this debt…and maybe no limit on what some schools can charge students using these loans. Note: Total student loan debt totals near $1.1 Trillion. Source: WSJ, 4-22-2014, A1.

One honorable way that David Wessel in the Wall Street Journal (11-7-2013, A2) suggested to resolve unpaid federal student loan debt (which approximately 15% of all student loans go unpaid after 3 years) would be to base the repayment plan on the college graduate’s income and deduct the payment from their paycheck like social security deductions…which is fine in those cases where they get employed…but what happens if they aren’t employed?

Now, couple the underwater basket weaving, English, History, Social Science, and other certain “teacher” degrees, including others like biological degree in tsetse fly habitat, and degrees about shifts in populations, and other remotely useful degrees and you can understand that some graduates have no intention to ever work but rely on the educational system to generate a job for them to use the degree they got…

Also, we hear so much crap and hoopla over STEM (Science, Technology, Engineering, and Math) and our adaptation of these studies within our elementary and secondary educational systems, you would think that’s of relative importance to the growth and productivity of the country???

So here’s one take on making loans for college degrees….make loans available for STEM related studies but reduce the amount of student loans available for other degrees…scale it based on the “employability of the field of study”. Some loans could be extended for English majors, but at a reduced amount to pay half the required cost of a superior college and almost full amount at another lesser known institution…the student can till go to the superior one but pay half their “fair share”, or go to another one and come away with less debt and greater ability to repay that debt.

The only way this might be modified is that if there is a concrete, non-revocable commitment to hire an individual with a worthless degree after graduation, but daddy can’t commit that long in the future….bummer…dude!

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