Saturday, November 5, 2011
The indebted ones
Student-loan systems in America and elsewhere are often badly designed for an extended period of high unemployment. In contrast to the housing crash, the risk from student debt is not of a sudden explosion in losses but of gradual financial suffocation. The pressure needs to be eased. Changes would lead to a repricing of student debt. That would be a bad thing for taxpayers, but a good thing overall. Just as borrowers need to understand the risks they are exposing themselves to, voters need to understand the liabilities that governments are taking on when they subsidize students.
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Im eager to see what the changes will do to our economy as a whole.
ReplyDeleteWell, obviously the current student loan system has a number of problems, both from the perspective of students and taxpayers. I liked the economist's suggestion of the income threshold system of repaying loans. I'm afraid that if you could wipe away student loans by declaring bankruptcy people would, which would hurt everyone in the end.
ReplyDeleteWhile the proposed policy change would be beneficial it does not get at the root of the problem which is the soaring cost of college. This is due to the perceived value of a degree being too high thus pushing millions of students into a system that is not meant to educate everyone. The fact is that not everyone needs or benefits from higher education.
ReplyDeleteI agree with the article that if changes would lead to a repricing of student debt. That would be a bad thing for taxpayers, but a good thing overall.
ReplyDeleteI think this policy would definately reliefe some finacial pressure on college student brought by the recession, but in the long run, it still cannot slove the high unemployment rate problem.
students loans seem to be the biggest cause of concern for many in today's world. Considering the high rates of unemployment, people are making attempts to increase their knowledge base by going back to school and the younger generation is keen to get educated as they realize that it would be tough to survive in the job market with out adequate skills. However, we need to make sure that these loans are easy to get and at the same time they have adequate backing. If not, this could lead to a bubble. This bubble similar to the housing bubble, could be more disastrous as it could have long term impacts on the economy, in terms of student-confidence and subsequent decisions that they make. Education is also an important factor in determining the quality of human capital in the economy. We need a good concrete policy on an issue as important as this.
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