Free College and Cancelling Student Debt

[Vlad the lad]

Before we can identify a solution to funding for higher education, we have to reach an understanding on what the purpose of education is in the first place. The primary purpose of education should be to prepare the next generation of people for entry into the economy in the manner that they find most rewarding (whatever that means to them, but presumably one that allows them to pay their own bills at the very least - NOTHING is free). STEM is a huge portion of that, but so are arts (music, dance, literature, painting, sculpting, etc.) If we are to continue to believe in a free society where a person can choose their own economic path, we, as a society, can't force even one person down a pre-determined path.

Without a public education system, this responsibility falls entirely on the parents of this person until they reach the age of majority (currently, 18 under US law). Hey, I'd love for my property taxes to drop, but I also enjoy knowing that every single child gets at least a minimal level of education. If I had a significantly reduced property tax rate, I could very easily send my kids to private schools. You might not be able to. Now your kid is illiterate and unemployable. Sure, my kids get a boost, but I still have to deal with your idiot spawn. I'd rather pay a little bit over time and dramatically reduce the number of economically less than useful people.

So, we accept public education as a necessary expense (codified as a guaranteed right of children in the state of Maryland to get a publicly funded education), instead of allowing millions of uneducated cretin who can't fit a round peg in a round hole.

The education requirements of our modern economy are VASTLY different than the economy of 100 years ago. Maryland only recently (3 years ago) made enrollment in a school program (either public, private, or home) until 18 compulsory. The exception being you have passed the GED, but you cannot sit for the test until you are 16. To be realistic, how many 18 year olds are educationally equipped to handle a full time job beyond retail or food service?

So, if we accept that high school is insufficient to prepare a functional work force, what do we do about it?

I'm in the boat for "expand public education funding for qualified applicants." Show academic aptitude (grades), and a reason for local society (read: your home state) to invest in you, get an education, and pay it back - get a job, pay taxes, contribute to your local society and economy. Left the local economy? Pay it back directly - cold hard cash. I don't care what you do, so long as it's A) legal, and B) something that someone else values (could mean literally anything - it just requires a transfer of money for goods or services).

We either need to increase the rigors of k-12 education to the point that a high school diploma is worth more than the piece of paper it's printed on, or we need to accept that post-secondary education is a requirement for basic employment beyond all but the lowest tiers of work.

I also may be a bit biased here, because I have 4 kids. I'm going to be spending a fortune educating these kids. I paid my way through college - a combination of scholarship money, student loans, and working full time while attending undergrad classes full time. It took me 5 1/2 years, partially because of taking time to settle on a major, partially due to the restricted time because of needing to work full time. I also paid back my loans in 7 years (3 years early, under the standard 10 year repayment plan).

Another quick note - anyone already has an existing loan must pay it back, but cap rates at reasonable amounts. If the loans are not dischargeable through bankruptcy (a big risk to the borrower), the lender should be willing to take a reduced lending fee (they have a higher chance of being repaid in full). Blanket loan forgiveness ought to be off the table entirely.

Sounds like you would be encouraging all families to ignore the college savings plan and just count on your neighbors (tax payers) to pay the bill

I have a daughter 1/2 way through college and a son two years away. My wife is a teacher and I don’t make much more. But over the past 20 years, we have avoided the big summer trips, the holiday long weekend at the ski slopes and fancy cars. Instead, we saved everything we could to make sure the kids could afford to go to college. We have enough saved up to pay for 4 years of tuition and housing for each of them. We have already gone through about 25% for her first two years. I am thinking the smart thing to do now, is tell the kids to get loans, and wait for the government to pay them off. I can then pass on 75k to each of them for a house down payment

[cvilleRaven]

Sounds like you would be encouraging all families to ignore the college savings plan and just count on your neighbors (tax payers) to pay the bill

I have a daughter 1/2 way through college and a son two years away. My wife is a teacher and I don’t make much more. But over the past 20 years, we have avoided the big summer trips, the holiday long weekend at the ski slopes and fancy cars. Instead, we saved everything we could to make sure the kids could afford to go to college. We have enough saved up to pay for 4 years of tuition and housing for each of them. We have already gone through about 25% for her first two years. I am thinking the smart thing to do now, is tell the kids to get loans, and wait for the government to pay them off. I can then pass on 75k to each of them for a house down payment

We've been putting money away in 529 plans for each of them. The oldest turns 10 in 2 weeks, so we've got quite a bit of time. With Maryland already covering community colleges for some students, and the general push for education funding reform, the writing is on the wall that things will be changing. We all benefit from a highly educated society (at least in theory).

This also goes back to how society views the role of education in the economy. If it's something to pass the time until a child reaches the legal age of majority, then the status quo is fine (who cares how the vast majority turn out, it's "not my problem.") If we view it as a necessary process to continuously feed capable workers into the economy, high school as it currently exists is insufficient. The remedy is to either make high school more rigorous, or provide funding for education beyond high school.

As for your case, the most prudent course of action may be to pay back loans with a 529 plan (added as a qualified expense in December 2019). If so, see if your kids can get loans, and then just pay the interest at the end of each year. If loans all get paid back by everybody, bank the rest of your 529 for some other purpose. If not, pay it off when they graduate. Unfortunately, only $10,000 (lifetime limit) can be used without penalties/taxes.

[blah3]

We've been putting money away in 529 plans for each of them. The oldest turns 10 in 2 weeks, so we've got quite a bit of time. With Maryland already covering community colleges for some students, and the general push for education funding reform, the writing is on the wall that things will be changing. We all benefit from a highly educated society (at least in theory).

This also goes back to how society views the role of education in the economy. If it's something to pass the time until a child reaches the legal age of majority, then the status quo is fine (who cares how the vast majority turn out, it's "not my problem.") If we view it as a necessary process to continuously feed capable workers into the economy, high school as it currently exists is insufficient. The remedy is to either make high school more rigorous, or provide funding for education beyond high school.

As for your case, the most prudent course of action may be to pay back loans with a 529 plan (added as a qualified expense in December 2019). If so, see if your kids can get loans, and then just pay the interest at the end of each year. If loans all get paid back by everybody, bank the rest of your 529 for some other purpose. If not, pay it off when they graduate. Unfortunately, only $10,000 (lifetime limit) can be used without penalties/taxes.

You wouldn’t use 529 to pay off loans, you use it to pay tuition so you won’t have to take loans or borrow less

[Vlad the lad]

You wouldn’t use 529 to pay off loans, you use it to pay tuition so you won’t have to take loans or borrow less

Why use the 529 money, when the left wants to pay off all loans. It makes more sense to save the savings and get a loan.

Also. Most people that have money to pay for college (like I have saved) do not have all of the savings in 529 plans. I opened three accounts for my kids college (because 18 years ago, I didn’t know if they would actually want to go to college )

I put 1/3 into educational IRA/529
I out 1/3 into a custodial account
I out 1/3 into a brokerage account

I am confirmed that most financially secure people did something similar

[cvilleRaven]

You wouldn’t use 529 to pay off loans, you use it to pay tuition so you won’t have to take loans or borrow less

Typically speaking, yes. However, as I posted in here, loan repayment was added as a qualifying expense for a lifetime limit of $10,000 in 2019.

[blah3]

Why use the 529 money, when the left wants to pay off all loans. It makes more sense to save the savings and get a loan.

Also. Most people that have money to pay for college (like I have saved) do not have all of the savings in 529 plans. I opened three accounts for my kids college (because 18 years ago, I didn’t know if they would actually want to go to college )

I put 1/3 into educational IRA/529
I out 1/3 into a custodial account
I out 1/3 into a brokerage account

I am confirmed that most financially secure people did something similar

You’re banking on something that may never happen. If it doesn’t you would be foolish to take a loan and get charged interest when you’ve already set aside money for it.

[cvilleRaven]

To get this branch of this thread back on to my point - what is the role of education? The rest of the arguments about the role of 529 and other investment accounts is immaterial at the moment.

What is the underlying purpose of a public education system?

And to go just a few steps more - should we even have a public education system? If we don't, how do you reconcile the need for education against impoverished areas and the tendency of people to procreate?

[Greg]

No one really cares about solving the education issue. Otherwise, we would be looking at the universities and asking why tuition is rising so fast. Instead of looking at lenders and wondering why they want to collect on loans

Tuition is rising so fast because of government money. If the government money were removed from education prices would come down because they would have to.

Simple economics. The more money chasing a product or service, the higher the price goes.

You can DIRECTLY correlate the cost of healthcare and education to the federal government's involvement starting in the 1960s. Both have greatly outpaced inflation since.

Meanwhile, the cost of TVs and computers go down while the quality skyrockets.

[jonboy79]

To get this branch of this thread back on to my point - what is the role of education? The rest of the arguments about the role of 529 and other investment accounts is immaterial at the moment.

What is the underlying purpose of a public education system?

And to go just a few steps more - should we even have a public education system? If we don't, how do you reconcile the need for education against impoverished areas and the tendency of people to procreate?

To turn youth members of society Into productive adults that benefit the future of the nation.

Yes, public schools should be offered as they currently are. Yes, private options should be available as they are.
I believe the K-12 age is sufficient in scope for the public provision, I simply believe that curriculum/structure could certainly use some assistance.


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[Ortizer]

To get this branch of this thread back on to my point - what is the role of education? The rest of the arguments about the role of 529 and other investment accounts is immaterial at the moment.

What is the underlying purpose of a public education system?

And to go just a few steps more - should we even have a public education system? If we don't, how do you reconcile the need for education against impoverished areas and the tendency of people to procreate?

I would say to mold children into functional members of society. Yes, teach academics, but also bring back consumer science and auto/metal shop, etc. Catering too hard to industry in school curriculum has in part led to a generation that lacks life skills.

Tuition is rising so fast because of government money. If the government money were removed from education prices would come down because they would have to.

Simple economics. The more money chasing a product or service, the higher the price goes.

You can DIRECTLY correlate the cost of healthcare and education to the federal government's involvement starting in the 1960s. Both have greatly outpaced inflation since.

Meanwhile, the cost of TVs and computers go down while the quality skyrockets.

The creation of research universities has also contributed to it as those facilities, while not necessarily required for undergraduate programs, do get paid for with undergraduate tuition and are quite expensive.

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[Ortizer]

The only way I could see public funded college working is if they treated it like Healthcare and basically set rates they would pay. Then the schools can comply, or have to make the case to parents why they're better than the options that do comply.

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[Greg]

I would say to mold children into functional members of society. Yes, teach academics, but also bring back consumer science and auto/metal shop, etc. Catering too hard to industry in school curriculum has in part led to a generation that lacks life skills. The creation of research universities has also contributed to it as those facilities, while not necessarily required for undergraduate programs, do get paid for with undergraduate tuition and are quite expensive.

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But they wouldn't be able to charge what they do and fund research if not for the ridiculous amounts of money from the government through grants, loans, etc.

Tuition would drop considerably if there were no federal funds involved because they would have zero customers at current rates. The federal government is CAUSING the student debt crisis, and giving it away for "FREE" would only make it worse.