How many of you are like me and will probably die with a student loan balance? Are you constantly looking for a solution that will resolve your student loan repayment situations. There may be help and it may be soon. (I use the verb "may" with added caution.) In 2008, United States President, George W. Bush, signed into legislation a "Loan Forgiveness" bill that includes  students and graduates in the engineering field/profession. President Bush's desire was to encourage more of his citizens to enter into the engineering profession.

In a recent attempt to modify the student loan act and calm the public outcry, our federally elected officials are diligently structuring the Student Loan Forgiveness Act of 2012. Benefits of this act is imperative to know whether you qualify, or not, for specific deductions. In the link below, there are resources that should help you to determine your eligibility.

http://www.usnews.com/education/blogs/student-loan-ranger/2012/05/3...

Good luck to all of the engineers who are seeking relief. This may finally be it.

Natasha

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Tags: 2012, act, engineer, engineers, forgiveness, loan, of, student

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Comment by Natasha Townsend on June 5, 2012 at 7:54am

Well spoken Andrew!

If students had the where-withal on how student loans are structured, it would not be an attractive option when seeking funding. Student loans are calculated in a manner that makes it virtually impossible to pay-off. The student loans interest rates are compounded onto the principal (this varies depending upon the type of loan received, i.e. PLUS, subsidized or non-subsidized, and whether the borrower applies for deferment or forbearance, etc... ).  The principal amount keeps growing because the interest keeps being added to it. Even more so, the interest accrues daily. You will be so busy trying to pay off your interest to stop it from compounding to the principal amount, you'll never get to the principal.

In plain English, it is a viscous cycle resulting in the darn-near impossibility to pay-off your principal amount making it unrealistic to pay off your loan. Simply put, this is legal loan-sharking. Inasmuch, there is nothing that we can do about it.

So, since I have come to the reality that I will probably die with student loan debt, I am making preparations to have my student loans cremated with me.

Comment by Leslie Langnau on June 5, 2012 at 7:32am

Andrew, your comments are terrific.  Excellent points.  I am continually amazed at tuition rates--way over the top for many colleges and universities.  When I graduated from college, many years ago, I was able to obtain a job with a salary that was slightly above my total tuition cost, so paying it off was not as much of hardship as it is today.  Today, the ability of a graduate to obtain such a job is rare.  

Comment by Andrew Dreasler on June 5, 2012 at 7:02am

Before this turns into a shouting match of political dogma (Democrats/Poor people "No money for rich corporations, money for the people" -vs- Republicans/Rich People/Corporations "No money for people, money for businesses"), let us borrow a catch phrase from detective shows and "follow the money."

First let's look at the structure of student loans as compared against personal loans.  There are two key differences, 1) interest on student loans are tax-deductible, and 2) student loans cannot be dismissed in a bankruptcy.  Item 1 makes student loans attractive to students, as they will get a tax break while paying off the loan, and item 2 makes student loans attractive to banks because the loan is 'risk free,' the borrower cannot have a judge make the dept just 'go away.'  Student loans in general are attractive to colleges as it is guaranteed income for the time the student is enrolled, and it allows more students to afford to enroll.

Now let's look at who profits from student loans.  Colleges obviously profit as they get the lion's share of the loan money (Tuition, books & supplies bought through the college store.) Room & Board are a minor expense compares to tuition; most college towns are inexpensive to live in.  Banks profit as they get the interest money from the loans.  Students profit indirectly through the tax deduction for the interest, however, unless the deduction is enough to cause a change in tax bracket, this profit is rather small.  (Students also 'profit' from gaining skills and certifications, but those are 'intangible assets,' and beyond the scope of this discussion.)

So we have two institutions that are profiting from student loans, Colleges and Banks.  Are there things these institutions can do to increase their profits?  Yes, the Banks can issue loans to students who are 'bad credit risks' because the loans are 'risk free' to the banks, and Colleges can increase tuition rates, knowing that the banks will issue the student loans without question.  This causes an 'inadvertent collusion' between the Colleges and Banks; neither institution deliberately sought out to create this situation, but be each working in their own interests, they have effectively been working together to saddle students with greater and greater debt.  Remember that most colleges and banks are Corporations, who answer to effectively faceless shareholders who want nothing but more and more profit.  (Anyone with a 401(k) wants it to grow, anyone with a mutual fund wants it to grow, how many people even know what companies their fund managers have in their portfolio at any given time?)

Nobody did anything deliberately illegal, immoral, or unethical, but the way that the laws and institutions interact, there have been 'unintended consequences,' students walking out of college with a debt load greater than their expected lifetime earnings.  The somewhat recent downturn of the economy, which reset the earnings of many people downward, did not help matters either.  There is no one person to blame, nobody to drag over to "the ol' lynchin' tree," there is simply a big Gordian Knot of a problem.

The solution is not simple either, it would require a lot of work from several groups, and a lot more Corporate and Government Transparency than we have now.  If colleges were to provide prospective students with 'honest, open' statistics of the average salaries of alumni, instead of just using the salaries of the alumni who succeeded in getting a job in their field right from graduation, it would provide the prospective students with a better estimate of the return on their scholastic investment, and the banks would in turn be more 'open and honest' about the student loans, informing prospective student borrowers when the loan they are seeking would be greater than their expected increase in income from the education.  This alone wold not be a sustainable solution, as it has the colleges and banks working against the Corporate Philosophy of "More profit to please the shareholders," so there would need to be increased transparency with the shareholders, explaining that the reduced profits are part of a 'new ethics' that seeks slower, long-term growth, as producing fewer graduates with a greater ability to repay their loans benefits the economy over time, and a better economy will bean more potential students will be able to afford college in the future, in essence replacing the 'next quarter's gains' thinking with 'five/ten year plan' thinking.  The Government would also need to be more 'open and honest' about employment and unemployment statistics, acknowledging the amount of people who 'fall off the chart' in the unemployment statistics because they have either given up on the job search and become homeless or have run out of unemployment benefits and are now 'on their own.'

This is a bigger problem than the "I'll never be able to pay off my student loans." / "I don't want to pay more taxes because of defaulted student loans." argument.  It doesn't matter if you're Red or Blue, the problem, and it's solution is clearly Green.  (Green as in nonpartisan money/economics issues, not as in the Green party, I don't even know what stand, if any, they've made on the 'student loans issue.')

Comment by Bill Reeves on June 4, 2012 at 8:55am

Michael,

I agree with 75% of what you are saying. The problem is that other nations are subsidizing their engineering programs, and are graduating many more engineers than we are. So the question is, as a country, are we interested in continuing to lead the world in technological excellence or sit back and let the rising countries pass us. I, like you, paid my way through college with part time work and a few loans. I didn't own a car, and usually lived with a bunch of people to keep rent down. I would have completed the program faster and started my career sooner (a.k.a started paying taxes) if I didn't have to work my job. So there may be a good chance that earlier graduations could help offset the cost of the incentive. I am all for providing helping to deserving engineering candidates.

 

Comment by Michael W. Morgan on June 4, 2012 at 7:58am

Why, precisely, do you think you are entitled to have your student loans forgiven? What ever happened to paying your own way? While you all think there is an unlimited amount of money available to pay you to go to school, let me tell you there is not and that further subsidies will only contribute to the increases in the cost of college for others. There is no free lunch. IF the "government" (actually the TAXPAYER) was not proviing these outrageous subsidies for students like you, the cost of education would go down to the point that you, if your are qualified, could afford to go to school and you would be able to afford it. By providing subsidies, the politicians procure votes and the schools see an unlimited sink of funds for every marginal student. The schools lower standards to attract anyone that can just get to school instead of providing a high quality education of only the best students. Whine, you might, but not EVERYONE is college quality. While you may benefit in the short term by having these loans forgiven, you will loose in the long run because YOUR income will necessarily be heavily taxed, lowering YOUR standard of living, in order to pay for ALL of the loans.  Remember, there is no free lunch. If YOU are not paying your student loan, precisely WHO do you think IS? Do you think the President is paying? Where do you think he is getting the MONEY...? From the RICH...? There aren't eough RICH people to pay for your loans so the everyday taxpayer will have to pay and, if you and your ilk don't get jobs to pay taxes to help to pay these loans after your graduate, there will be no more money for ANYONE to go to college. Get a job and pay your own way..........that's what I did. It took me 13 years to get my degree, while I worked and raised a family. It was hard, I drove over 100 miles on the day I went to school. I am better for it. Try it, it will give you a sense of accomplishment because you will have done something instead of becoming another kind of welfare recipient.

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