Should PSLF be disbanded

[Kamban]

I know this is controversial. I agree with others here that people currently enrolled should be grandfathered.

Years ago it made sense to forgive loans for those committed to long years in low paying community service jobs. But that situation does not exist anymore in most cases.

In no other loan situation do you take a high loan amount and pay only small amounts for a certain period of time and expect the rest to be forgiven. Why should these federal loans be different?  Why should the public have to bear the burden for the rest of the loan amount.  Removing PSLF will cut down the number of people taking unnecessary high loan amounts and lenders loaning such insane amounts. The price of education will not rise well beyond inflation.

I have an issue with the not for profit institutions being called public service. What a load of crock. Every hospital, except a few, are not for profit. And they have aggressively acquired practices and built networks for themselves and prevented the smaller individual practices thriving and are cut out of the referral base, thus letting them wither and die or make them join them. And their salaries are often comparable to PP physicians, and in most cases higher since they can negotiate better payments from insurances rather than small groups.

Maybe the truly rural hospitals in dearth of physicians or the military should be given money in their budgets allocated to helping out people with loans and where clearly they show that their pay scale is much less than the average, whether tthat is PP income or in these so called not for profit hospitals that pay well above average.

As a side benefit we will not see people being kept awake at night wondering  whether the program will exist and if they should pay the loan rather than pay the small amounts in residency, and whether that would have been better off in Roth etc. Just one simple rule. Take the loan and pay it off in full.

[DMFA]

For government workers, at least, you could argue the government is already receiving value out of the employee's work (assuming they're paid less than an equivalent private-sector job) and therefore is getting back what they put into the loan principal, especially if the amount paid back over the life of the loan was greater than the initial principal.

However, as I understand it, this was passed more for those with bachelor's or master's college debt working for small government entities (like cities, counties, schools, etc).  I don't think they had super-high-earning 501(c)(3) professionals with super-high debt, like us, in mind.  Are there enough of us to "break" it?

You could argue that many of us wouldn't/couldn't have gone to medical school were it not for loans, and that this country's people need doctors, and that the government has to be responsive to the needs of the people...in which case there are many other solutions to that issue, such as defraying the cost of med school in the first place.

Otherwise I do indeed understand your point and think there could/should have been additional ways to address the issue of loan debt in poorly-paid non-profit/gov't workers.

There are actually a lot of for-profit hospitals out there: HCA, Tenet, HealthSouth, Community Health Systems, LifePoint...

[Craigy]

On one hand, what you people do is, in truth and in fact, a bona fide public service.  I don't care if you get paid well to do it.  This is the Lord's work.  The hours are brutal, the patients are terrible, the red tape is thick.  Nobody really feels bad for you either.  And for many of the years, you're making a paltry resident's salary, so you're barely getting compensated for your servitude.  That said, the distinction between a not-for-profit hospital and elsewhere is pretty arbitrary, nebulous at best.  Why should certain practitioners be allowed this while others, doing the same work, are capriciously left out?

On the other hand, I believe the gubmint is entirely responsible for the tremendous growth in the price of college.  Huge grants, free student loan money raining down on students who have no idea what they're doing, and on and on just allow universities to continue hiking up the price.  Programs like PSLF clearly contribute to that and create a perverse incentive to take as much student loans as you can and earn as little as you can for ~10 years.

As far as defraying the cost of medical school, med school has always been expensive, which is why most of them are state run and heavily state funded.  There's definitely a public interest in producing doctors despite the cost, but this cost should be directly borne or subsidized by the state in an efficient manner, not given as a 3rd or 4th party and be allowed to be lavishly wasted by the student who spends care free knowing that all will be forgiven.

So yeah ultimately this garbage should go away.  Like a lot of legislation, it was well intentioned but poorly considered and sloppily implemented.  It serves primarily to encourage irresponsible spending when you can least afford it, and sprinkles down benefits on those who are chosen by a high-handed authority.

[DMFA]

Craigy wrote:

On one hand, what you people do is, in truth and in fact, a bona fide public service.  I don’t care if you get paid well to do it.  This is the Lord’s work.  The hours are brutal, the patients are terrible, the red tape is thick.  Nobody really feels bad for you either.  And for many of the years, you’re making a paltry resident’s salary, so you’re barely getting compensated for your servitude.  That said, the distinction between a not-for-profit hospital and elsewhere is pretty arbitrary, nebulous at best.  Why should certain practitioners be allowed this while others, doing the same work, are capriciously left out?

On the other hand, I believe the gubmint is entirely responsible for the tremendous growth in the price of college.  Huge grants, free student loan money raining down on students who have no idea what they’re doing, and on and on just allow universities to continue hiking up the price.  Programs like PSLF clearly contribute to that and create a perverse incentive to take as much student loans as you can and earn as little as you can for ~10 years.

As far as defraying the cost of medical school, med school has always been expensive, which is why most of them are state run and heavily state funded.  There’s definitely a public interest in producing doctors despite the cost, but this cost should be directly borne or subsidized by the state in an efficient manner, not given as a 3rd or 4th party and be allowed to be lavishly wasted by the student who spends care free knowing that all will be forgiven.

So yeah ultimately this garbage should go away.  Like a lot of legislation, it was well intentioned but poorly considered and sloppily implemented.  It serves primarily to encourage irresponsible spending when you can least afford it, and sprinkles down benefits on those who are chosen by a high-handed authority.

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Who you callin' "you people?!?"

[Craigy]

DMFA wrote:

For government workers, at least, you could argue the government is already receiving value out of the employee’s work (assuming they’re paid less than an equivalent private-sector job) and therefore is getting back what they put into the loan principal, especially if the amount paid back over the life of the loan was greater than the initial principal.

However, as I understand it, this was passed more for those with bachelor’s or master’s college debt working for small government entities (like cities, counties, schools, etc).  I don’t think they had super-high-earning 501(c)(3) professionals with super-high debt, like us, in mind.  Are there enough of us to “break” it?

 

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Seems to me whenever I catch a whiff that most gov't employees are well paid, have great benefits and cush hours, etc.  There are definitely some lower salaries out there, but usually lower performance follows it.

The super-high earners I don't think were considered, but the super-high debt definitely should have been.  You don't have to earn an MD to also earn $250k or $400k or $600k of student loans.  Down the street from me, just four years of undergrad at Tulane will set you back about $250k, not even counting interest, and assuming you actually graduate in four years.  Go and spend another three or four years getting your phd in jazz art or underprivileged gender basket weaving, and you're walking out with half a million in debt easy and nobody asking to employ you, so you go put in 10 years behind a desk in some municipal office or vaguely charitable company twiddling your thumbs.  There's tons of those people out there.  Some of them were in college for 5 or 6 years like that and don't even emerge with a degree.  At least with PSLF a doctor makes a handful of meaningful payments back.

[Kamban]

DMFA wrote:

There are actually a lot of for-profit hospitals out there: HCA, Tenet, HealthSouth, Community Health Systems, LifePoint…

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Out of curiosity I looked up and out of 5564 registered hospitals in USA, there were only 1034 community for profit hospitals. There might have been a few for profit psychiatric and long term care hospitals but the percentage of for for profit hospitals is under 20% of all hospitals. Most are not for profit.

http://www.aha.org/research/rc/stat-studies/fast-facts.shtml

[DMFA]

Kamban wrote:

DMFA wrote:

There are actually a lot of for-profit hospitals out there: HCA, Tenet, HealthSouth, Community Health Systems, LifePoint… 

Click to expand…

Out of curiosity I looked up and out of 5564 registered hospitals in USA, there were only 1034 community for profit hospitals. There might have been a few for profit psychiatric and long term care hospitals but the percentage of for for profit hospitals is under 20% of all hospitals. Most are not for profit.

http://www.aha.org/research/rc/stat-studies/fast-facts.shtml

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I didn't say "most;" I said "a lot," which I admit is [intentionally] ambiguous because I didn't know exactly how many.   I think 18.6% is a pretty significant portion, right?  There is a lot of regionality [word?  meh, I'm inventing it] to for-profit hospital groups, esp in FL, TN, TX, probably owing to market forces and varying government regulations.  There is not much incentive for them to find new markets, I don't think, from what I remember reading from this article not from a peer-reviewed or official source.

Also, the AHA's report doesn't take into account the very many non-hospital healthcare entities, correct?

[DMFA]

Craigy wrote:

DMFA wrote:

For government workers, at least, you could argue the government is already receiving value out of the employee’s work (assuming they’re paid less than an equivalent private-sector job) and therefore is getting back what they put into the loan principal, especially if the amount paid back over the life of the loan was greater than the initial principal.

However, as I understand it, this was passed more for those with bachelor’s or master’s college debt working for small government entities (like cities, counties, schools, etc).  I don’t think they had super-high-earning 501(c)(3) professionals with super-high debt, like us, in mind.  Are there enough of us to “break” it?

 

Click to expand…

Seems to me whenever I catch a whiff that most gov’t employees are well paid, have great benefits and cush hours, etc.  There are definitely some lower salaries out there, but usually lower performance follows it.

The super-high earners I don’t think were considered, but the super-high debt definitely should have been.  You don’t have to earn an MD to also earn $250k or $400k or $600k of student loans.  Down the street from me, just four years of undergrad at Tulane will set you back about $250k, not even counting interest, and assuming you actually graduate in four years.  Go and spend another three or four years getting your phd in jazz art or underprivileged gender basket weaving, and you’re walking out with half a million in debt easy and nobody asking to employ you, so you go put in 10 years behind a desk in some municipal office or vaguely charitable company twiddling your thumbs.  There’s tons of those people out there.  Some of them were in college for 5 or 6 years like that and don’t even emerge with a degree.  At least with PSLF a doctor makes a handful of meaningful payments back.

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Which government?  The one whose bureaucracy must expand to meet the needs of the expanding bureaucracy, or the smaller municipality with the even smaller tax base?  But yes, your points are very good and I agree.

[Craigy]

DMFA wrote:

Craigy wrote:

DMFA wrote:

For government workers, at least, you could argue the government is already receiving value out of the employee’s work (assuming they’re paid less than an equivalent private-sector job) and therefore is getting back what they put into the loan principal, especially if the amount paid back over the life of the loan was greater than the initial principal.

However, as I understand it, this was passed more for those with bachelor’s or master’s college debt working for small government entities (like cities, counties, schools, etc).  I don’t think they had super-high-earning 501(c)(3) professionals with super-high debt, like us, in mind.  Are there enough of us to “break” it?

 

Click to expand…

Seems to me whenever I catch a whiff that most gov’t employees are well paid, have great benefits and cush hours, etc.  There are definitely some lower salaries out there, but usually lower performance follows it.

The super-high earners I don’t think were considered, but the super-high debt definitely should have been.  You don’t have to earn an MD to also earn $250k or $400k or $600k of student loans.  Down the street from me, just four years of undergrad at Tulane will set you back about $250k, not even counting interest, and assuming you actually graduate in four years.  Go and spend another three or four years getting your phd in jazz art or underprivileged gender basket weaving, and you’re walking out with half a million in debt easy and nobody asking to employ you, so you go put in 10 years behind a desk in some municipal office or vaguely charitable company twiddling your thumbs.  There’s tons of those people out there.  Some of them were in college for 5 or 6 years like that and don’t even emerge with a degree.  At least with PSLF a doctor makes a handful of meaningful payments back.

Click to expand…

Which government?  The one whose bureaucracy must expand to meet the needs of the expanding bureaucracy, or the smaller municipality with the even smaller tax base?  But yes, your points are very good and I agree.

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For real.

In my anecdotal experience, everybody in government is well paid, state, fed, local municipality, you name it.  Fed definitely the most.  But it seems like around here a fireman is a six-figure job plus benefits.  Teachers make a ton of money, much more than private, and with better benefits.  When I last looked at attorney jobs, all of them state and fed, were paying market salaries, save perhaps the new assistant district attorneys.  My brolo is an engineer for dept of transportation, and makes slightly sub-market salary but has good state benefits and self-admittedly works about half as hard as private sector.  The only guys who I don't think make enough are probably the new police recruits, but after awhile they make good money too.

I think the inspector at the parish permit office would tell you he makes a lot less than a typical contractor, but the inspector works a slow 30hrs a week behind a desk while a contractor is out in the sun saturday and sunday hustling to get the job done.

 

[The White Coat Investor]

Like a great portion of the tax code, I don't agree that it is good public policy. But we all have to play by the rules we are given.

Savers like high interest rates. Borrowers like low ones. Those who have already paid off their student loans are against forgiveness. Those who have not are for it.

I'm against the mortgage interest deduction too. But that doesn't mean I don't take it.

[Hatton]

Interesting thread.  I think PSLF is an example of a moral hazard.  It is well intentioned but definitely a driver in the escalating costs of higher education.

[retinadoc]

My feeling is that it is effectively a transfer payment from the poor to the wealthy. That does not strike me as fair.

[blowhard]

The White Coat Investor wrote:

Like a great portion of the tax code, I don’t agree that it is good public policy. But we all have to play by the rules we are given.

Savers like high interest rates. Borrowers like low ones. Those who have already paid off their student loans are against forgiveness. Those who have not are for it.

I’m against the mortgage interest deduction too. But that doesn’t mean I don’t take it.

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Well said.

I'm one of those who has already paid off almost $400k in student loans, and I think PSLF is unsustainable. However, had I qualified for it, I would have enrolled in it for sure.

 

 

[Craigy]

retinadoc wrote:

My feeling is that it is effectively a transfer payment from the poor to the wealthy. That does not strike me as fair.

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It's a transfer payment but I don't see how it's only for the wealthy.

[blowhard]

Craigy wrote:

retinadoc wrote:

My feeling is that it is effectively a transfer payment from the poor to the wealthy. That does not strike me as fair.

Click to expand…

It’s a transfer payment but I don’t see how it’s only for the wealthy.

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I think it would more accurate to say it disproportionately helps the wealthy, if you make the assumption that those with professional degrees have larger loans and larger incomes.