Tag Archives: Federal Direct Student Loans

Details of the upcoming REPAYE student Loan Repayment plan.

PAYE and REPAYE

Is this the last you’ll hear about student debt repayment? Don’t bet on it! The politicians must have their say and so shall I. Before I start my rant, please watch my video so you’ll be up to speed.

So, this new REPAYE plan will allow millions more student loan borrowers to have much lower monthly payments and get the remainder of their loan balances forgiven in a few decades. Now these poor borrowers can get on with their lives, start families and buy houses. Good for the economy, right?
Well, not so much. Actually, this REPAYE plan and all income-based repayment plans which include forgiveness, simply shift the burden of ever-more-costly higher education to the taxpayers and remove the risk from the students and institutions. So no one has any incentive to control costs or reduce borrowing. Not a good idea!

As I write this blog post, the news is awash with Hillary Clinton’s “College Compact” proposal. More burden-shifting! Even if she does get elected, I cannot see how this gets enacted. Spoiler alert: the proposal gets hacked to death by the Republican congress.

The real fix for the problem of spiraling college costs is to delink getting a degree or certificate from the need for student loans. So, just how can we do that? How about changing the delivery system. In fact, that’s already happening. The delivery system for higher education is morphing into a blend of on-line and classroom instruction. The cost for this delivery system could be far cheaper than the mess we have today. The delivery system for specific job training is also getting ready for prime time. It will be nothing like 1950’s style trade schools. Today’s jobs require students to have a solid grasp of math, science, reading and communications skills. Forward-thinking employers are already setting up schools to educate their future employees. Students will learn specific skills that allow them to transition to jobs immediately after graduation. Aspects of a broader education will be woven into the curriculum to prepare students for future managerial jobs. Or at least, that is the hoped-for outcome.
Education prognosticators say that a college education or job certification is a necessity the young person’s future, and for the future of our country. This education and training needs to be efficiently delivered and efficiently received by the students. To that end, many young people who are ready to take basic college courses as early as the beginning of high school can receive free higher education through dual enrollment. These are courses that can get students free college credits that transfer to their state’s four-year universities, making student loans much less necessary. Dual enrollment for both college courses and job certification should be free in all states. Many states are well on the way to this goal.
The student loan system should have been phased out years ago before it got out of control. But, there is big, BIG money involved, both for the government (6.7% average loan interest) and for the schools. Especially the for-profit schools. This big money is the source of the push-back against new less costly delivery systems for higher education.
With parents and students getting very worried about student loans, it’s only a matter of time before the student loan bubble deflates. New loan repayment programs like PAYE and REPAYE will continue to push the problem off onto future taxpayers. Sadly, those taxpayers could be the very students who are thinking about taking out student loans right now.
To them I say “Don’t do it…find another way! No more student loans!”.