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Obama's student loan proposal

Discussion in 'Sports and News' started by Dick Whitman, May 10, 2013.

  1. Dick Whitman

    Dick Whitman Well-Known Member

    Interesting stuff in today's WSJ. Unfortunately it's pay walled, but the gist is you'd pay 10 percent of after tax income. After 20 years, you're done.


    A couple thoughts:

    1) Didn't Clinton try something like this? I seem to recall the government basically lost its ass because the brain surgeons and investment bankers of the world opted out, leaving the government to collect on the salaries of social workers and teachers. Well, not teachers. YF says they're living high on the hog;

    2) Seems like a 20-year commitment would be a gamble. I have a lot of student loan debt. A lot. This would cut my current payment in half. But what about 10 years from now? What if I'm killing it? That 10 percent could add up.
  2. Baron Scicluna

    Baron Scicluna Well-Known Member

    I can't read the story with the paywall, but regarding No. 2, if you were killing it, wouldn't your loan just be paid off faster than 20 years with the 10 percent of after-tax income? Or is the proposal for 20 years, no early payoff, and you pay 10 percent no matter if you make $30K or $30 million?
  3. Dick Whitman

    Dick Whitman Well-Known Member

    Yeah, that's what I was thinking: The latter.

    I'll take another look to make sure. If it were the former, that's a good deal, no matter what you do and how much you make.
  4. BTExpress

    BTExpress Well-Known Member

    Sounds impossible. It's a loan, not an income tax.

    Say in 2014 you graduate with $50,000 in loans.

    You get a job making $40,000, and pay $4,000 (10% of $40,000) the first year.

    If your salary stays the same, you will have paid back the $50,000 (not counting interest) in year 13.

    If you win the lottery in 2016 and take home $122 million, I don't think they're doing to demand $12.2 million for the next 18 years.
  5. Boom_70

    Boom_70 Well-Known Member

    Bad for Mormons since they are suppose to give 10 % to the church. They will be
    living on 80 % income.
  6. doctorquant

    doctorquant Well-Known Member

    The proposal, as I understand it, is 10% of after-tax income. So only $36K of a $40K gross salary would be taxed for your hypothetical Mormon. Let's say he/she faced an effective tax rate of 10% ... he/she would owe $3,600 in taxes and would then be on the hook for a $3,240 student loan payment.
  7. Boom_70

    Boom_70 Well-Known Member

    If they went to BYU it would be a real win win.
  8. Football_Bat

    Football_Bat Well-Known Member

    Mormons don't own a monopoly on tithing.
  9. Mizzougrad96

    Mizzougrad96 Active Member

    I don't like it for the same reasons Dick is mentioning... Two people come from the same school, one goes into teaching and the other becomes a successful lawyer and one will play about four times what the other does.

    I'd rather see something where student loans would be forgiven if the person spends 4-6 years in the military, or as a teacher, or working for a non-profit or something like that...
  10. Mark2010

    Mark2010 Active Member

    The problem is on the borrowing end, not the payback end.

    If the government truly wants to make higher education more affordable/accessible, then they should do that. Cut the price of tuition, subsidize stuff, offer low or no interest loans. Stuff like that.

    But I don't favor a program where Bill and Tom each borrow the same amount of money, but Bill has to pay back twice what Tom does.
  11. Mark2010

    Mark2010 Active Member

    It's been an awfully long time since I was a student, but no way in Hades would I take out a student loan today.... or probably go to college at all, unless I had a realistic gameplan for paying for it.

    I see cases over and over again where someone racks up tens of thousands of dollars in debt as either an undergrad or grad student, and basically gets in so deep a hole it would take decades to pay it back. Is it really worth it? Not to me it isn't.
  12. LongTimeListener

    LongTimeListener Well-Known Member

    Do we really need a change from "pay back how much you owe"?
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