Student loans: Michael Lewis exposes some pretty nasty behavior regarding PSLF

[Nysoz]

CordMcNally wrote:

Nysoz wrote:

Why is a basketball/football coach the highest paid individual of most universities or public job of the state. 

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Because the amount of revenue that athletics (with football and basketball being the main two that often subsidize the other sports) bring in for a university is astounding.

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No argument with that fact. Maybe it's because I'm not a die hard college or professional sports enthusiast that I feel like our society over values athletes and other famous people (I will never understand the Kardashians). Their salaries have inflated just as much as C level positions.

[Nysoz]

Lordosis wrote:

Nysoz wrote:

Most of the politicians that are calling for high taxes on the rich are talking more about the uber rich. There’s probably less than a handful of people here that make more than $1M a year or have a net worth of $50M and we’re, as a whole on this forum, already in the 1% of society. I don’t get why facebook and others get mad at this idea as I’m sure none of those individuals would get effected by this tax. So the super majority of Americans wouldn’t get effected of this tax let alone someone making $15/hr.

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Just because the tax does not affect me does not mean that I agree with it from a philosophical point of view.  Many of those Uber rich worked hard to get there and paid a ton in tax on the way.  The”lets tax them some more” mentality does not sit well with me.  Also if you give an inch sooner or later they will try to take the mile and it will start to affect us.

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That's true, but government money has to come from somewhere. Either get more into the system or spend less.

Some of the uber rich worked hard for sure, but a lot of it is inherited as well. Those that did work hard, would you say they worked as hard as us or anyone else through school, residency, and our jobs? They definitely took chances and worked hard, but should that effort and chance net them 100-1000x our salary and net worth? I would venture that most of us already live really well, what do people do with that much money actually do with it?

[Lordosis]

Nysoz wrote:

Lordosis wrote:

Nysoz wrote:

Most of the politicians that are calling for high taxes on the rich are talking more about the uber rich. There’s probably less than a handful of people here that make more than $1M a year or have a net worth of $50M and we’re, as a whole on this forum, already in the 1% of society. I don’t get why facebook and others get mad at this idea as I’m sure none of those individuals would get effected by this tax. So the super majority of Americans wouldn’t get effected of this tax let alone someone making $15/hr.

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Just because the tax does not affect me does not mean that I agree with it from a philosophical point of view.  Many of those Uber rich worked hard to get there and paid a ton in tax on the way.  The”lets tax them some more” mentality does not sit well with me.  Also if you give an inch sooner or later they will try to take the mile and it will start to affect us.

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That’s true, but government money has to come from somewhere. Either get more into the system or spend less.

Some of the uber rich worked hard for sure, but a lot of it is inherited as well. Those that did work hard, would you say they worked as hard as us or anyone else through school, residency, and our jobs? They definitely took chances and worked hard, but should that effort and chance net them 100-1000x our salary and net worth? I would venture that most of us already live really well, what do people do with that much money actually do with it?

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I think we actually agree.

I am sure some worked harder and some not so much.  I am sure some took a big chance with big risks and others were handed it on a silver platter.  I am sure I could come up with a lot of things to do with more money.  We look at the uber rich and cannot imagine what they spend their money on.  What do you think the average american thinks of us?

People complain about not working harder because those last dollars are taxed at 30-40% or more depending on your state. If we expand that to our entrepreneurs who are taking these large risks to expand their businesses what if they figure it is not worth it.  Why push hard to succeed if half will be taken anyways?

 

[CordMcNally]

Nysoz wrote:

That’s true, but government money has to come from somewhere. Either get more into the system or spend less.

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We need to be encouraging the government to spend less. They're the family member who is asking other family members for money. Giving them more money isn't going to solve the problem.

 

Nysoz wrote:

Some of the uber rich worked hard for sure, but a lot of it is inherited as well. Those that did work hard, would you say they worked as hard as us or anyone else through school, residency, and our jobs? They definitely took chances and worked hard, but should that effort and chance net them 100-1000x our salary and net worth?

It's not arguable that the self-made uber rich have created much more value than likely any of us will create in our lives. You can get into the philosophical argument about how much a life is worth but the flow of money is easily tracked. Would you say that we work harder than a coal miner or a derrickhand on a rig? How hard you work isn't equal to the monetary value you create. Generally, people are compensated by the value they bring to the world. For those making 100-1000x our salaries, I'd say that they have earned it and do deserve it.

 

Nysoz wrote:

I would venture that most of us already live really well, what do people do with that much money actually do with it?

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That question is a slippery slope because the next question in that sequence is, "why do you need that much money?".

[Panscan]

if someone makes a product that enhances the lives of millions, yes they should be filthy rich. Who are you to say what someone should make? If you want to tax them similarly to others by removing deductions that's fine but I have no idea how thought processes regarding "should they have 100 or 1000x our net worth" take place.

Doctors aren't that special. Hard for people to admit.

[Nysoz]

CordMcNally wrote:

Nysoz wrote:

That’s true, but government money has to come from somewhere. Either get more into the system or spend less. 

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We need to be encouraging the government to spend less. They’re the family member who is asking other family members for money. Giving them more money isn’t going to solve the problem.

 

Nysoz wrote:

Some of the uber rich worked hard for sure, but a lot of it is inherited as well. Those that did work hard, would you say they worked as hard as us or anyone else through school, residency, and our jobs? They definitely took chances and worked hard, but should that effort and chance net them 100-1000x our salary and net worth?

It’s not arguable that the self-made uber rich have created much more value than likely any of us will create in our lives. You can get into the philosophical argument about how much a life is worth but the flow of money is easily tracked. Would you say that we work harder than a coal miner or a derrickhand on a rig? How hard you work isn’t equal to the monetary value you create. Generally, people are compensated by the value they bring to the world. For those making 100-1000x our salaries, I’d say that they have earned it and do deserve it.

 

Nysoz wrote:

I would venture that most of us already live really well, what do people do with that much money actually do with it? 

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That question is a slippery slope because the next question in that sequence is, “why do you need that much money?”.

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Sorry I don't know how to individually quote. Yes, absolutely agree that the government needs to spend less. The problem is that the way the budget is ran for some departments (from what I understand). Say they're allotted $100M dollars for something. The next year they can do it for $80M, but they know how hard it is to get an increase in budget so they inflate their costs to $100M so it doesn't get taken away from future budgets.

Medicare, Medicaid, social security, military/defense take up the majority of spending. The first 3 are just going to increase with the population aging and people living longer. Good luck convincing the average American to spend less on military. There's bound to be a ton of bloat in all the programs, but it's just going to cost more and more.

 

Yeah they've created more monetary value in the sense of creating jobs and value. They took risks and worked hard to do that and should be fairly compensated (which is undoubtedly complicated), not arguing that fact. The problem I feel like is the way their compensation has inflated in comparison to the general population and salaries.

"Since 1978, and adjusted for inflation, American workers have seen an 11.2 percent increase in compensation. During that same period, CEO’s have seen a 937 percent increase in earnings. That salary growth is even 70 percent faster than the rise in the stock market, according to the Economic Policy Institute." is from a CNBC website

 

Paycheck to paycheck, doctor rich, Uber rich are really different things. When talking about a percentage of net worth, inherent value of money aside, a person worth $50k not picking up a penny off the ground is the same as $5M and a dollar on the ground. When you're worth $100B, that's $20k on the ground. Now I'm using bill gates as an example. Super smart, hard working, changed the world, deserves to be rich and well off. He's worth about $100B now. When he dies, he's giving the all or the majority of it to charity. I argue that putting some of that money into the hands of workers that are struggling paycheck to paycheck over the past decade would benefit the economy and society more. Even if he wants to be greedy and spend it all, if he's living another 30 years, he has to spend $9M a day to eat up the principle not even counting any type of interest (I know his net worth isn't in cash). Just no one needs that much money. The trick is how to make things more fair and reasonable without going too far into socialism as well as who decides this.

[Tangler]

https://apple.news/AnxaNeOULQOez3t6aU7lJnQ

[wa2106]

Tangler wrote:

https://apple.news/AnxaNeOULQOez3t6aU7lJnQ

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Couldn't get past paywall even with outline.com.

Saw latest data in a forbes article this month showing only 338 borrowers have gotten loan forgiveness.  Not encouraging.

https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-borrowers-rejected-again-for-student-loan-forgiveness/#159d025fb16b

[EMscout]

The issue in my mind is the use of 501c3 as the determining factor for being public service. Not all 501c3s are equal. Turning back time the govt. should have determined certain public jobs and/or salary cut offs. That oversight has created a loophole and sparked the debate on the morality of having hundreds of thousands of dollars forgiven for high income earners. I paid off my loans early despite qualifying for PSLF (eventually).

These loans should only be allowed to be used for school related items and should never make it into bank accounts. If you need money for vacation or beer, get a job or ask your parents

[Tangler]

Sorry about the paywall thing, thanks for the other link. Essentially more evidence that PSLF is not happening for most people who qualify. I do think a subset of public servants are getting a bad deal. The discussion regarding who should qualify is complex and I have mixed feelings.

[hightower]

I feel genuinely sorry for a lot of people who dont have high paying careers and were under the impression PSLF would save them from their horrific loan burdens. My sister is one of them. She will never be able to pay off her loans if she doesn’t nt get pslf. And she has a very important job as a child psychologist and is very educated and hard working. Its really a shame this program is not working for people like her who could truly use a break.

[Tangler]

hightower wrote:

I feel genuinely sorry for a lot of people who dont have high paying careers and were under the impression PSLF would save them from their horrific loan burdens. My sister is one of them. She will never be able to pay off her loans if she doesn’t nt get pslf. And she has a very important job as a child psychologist and is very educated and hard working. Its really a shame this program is not working for people like her who could truly use a break.

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Yes! It seems like total baloney. It seems like deception was used to get people to do these jobs and people would have made different decisions (higher paying jobs, different career choices) had the "promise" of PSLF not been given. As I said, I personally paid off 300k and a pay a boatload of taxes (highest marginal tax rate) so I understand not being a huge fan of government spending and taxes but to actively screw someone over seems wrong and if you listen to that michael lewis podcast or read the article in the wall street journal or read the article in Forbes and look at the statistics of how few actually receive the benefit it seems really wrong. Your sister is getting a bad deal.

I really initiated this post as a warning to others who are considering borrowing a pile of cash to become a low paying public servant. I think the message should be clear: NO DON'T DO IT!

Unfortunately, you have one person you can depend on to destroy your debt and free you from indentured servitude and that person is not uncle Sam. (unless you are in the Military).

The government is not known for managing money well and this is another example.

[Tim]

@Tangler,
“actively screw someone over” in my opinion is the result rather than the original intent.
1) When “incentives” are offered, it comes with strings attached. Those strings can come back to bite your a$$.
2) When local, state, and national government entities provide services that aren’t needed by all, that usually ends up poorly ran and totally screwed up. Politics and economics subvert the original intention. What could go wrong?

I would have zero problem with a government “armed forces doctors program. Training and assignments.
“Incentives” leads to disappointments and harm.

[Tangler]

Tim wrote:

@tangler,
“actively screw someone over” in my opinion is the result rather than the original intent.
1) When “incentives” are offered, it comes with strings attached. Those strings can come back to bite your a$$.
2) When local, state, and national government entities provide services that aren’t needed by all, that usually ends up poorly ran and totally screwed up. Politics and economics subvert the original intention. What could go wrong?

I would have zero problem with a government “armed forces doctors program. Training and assignments.
“Incentives” leads to disappointments and harm.

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YES. Totally agree. Debt = Risk

Borrowing money to do anything = Risk. Sometimes Reward > Risk, but NOT always.

Debt for Education has traditionally been viewed as "good debt". I was told in 1993 that "borrowing money for education is a great investment......intelligent decision.......good debt......cannot go wrong borrowing money to become a doc......."

Now tuition is very high and increasing. At some point the risk will exceed the reward. When, where is that? How do you know? Also, there is a percentage of people who get into school that figure out at age 23-26, that this is doctor job.......not really a great fit for me. That poor person is now screwed. They have burned the boats by borrowing $ and have no other choice but to finish training and become an indentured servant.......

Aside from the morality issue or the personal responsibility issue, I just want people to be careful and make some smart decisions:

1. Go to the cheapest med school they get accepted to (I was accepted to 3 and went to the most expensive because it was ranked higher.......great advice from people not paying)

2. Borrow as little as possible and understand YOU will pay it back. (compound interest is a real thing)

3. If the amount of money looks insane and it worries you (and it should) then consider doing the military option and realize PSLF is not going to rescue a pediatrician making next to nothing with 500k in debt. You can easily win as a doc, and it is a great job, but you need to be careful. The schools have ZERO incentive to lower tuition or alert you to the real risk.

I just worry about people like the OP sister above. Seems like she may have been misled. I don't know the details of everyones situation. I am NOT a proponent of "free education for all" at the tax payers expense, but I also can imagine worse uses of money than paying off the student loans of a public servant who is a child psychologist. That Woman probably has a halo and probably does a ton of good for a lot of kids.

It is complicated, but things like the 7 minute rule.........(Michael Lewis interviewed a former worker who answered phones at a company who was providing customer service for PSLF and the worker claims she was given a bonus if she could end all calls in 7 minutes or less and do other things to minimize the likelihood that the caller received PSLF and thus she was incentivized to keep calls short and unhelpful) The podcast was the inspiration for this post (link above).

Personal responsibly = Important. You are responsible for your debt. PSLF is a joke (hope I am wrong)

The other thing I worry about is a kid who is in the middle of it. That kid needs encouragement and reading something like this could just put them into despair. Know this: If you are smart enough to make it into medical school, you are smart enough too clean up this mess. I am not that smart and I made a lot of really dumb mistakes and I will be able to retire in my 50s, so YES, you can win. Don't read this are freak out. That is NOT helpful. Listen to the WCI and live like a resident and you will be OK.

OK, sorry for the long post.

[CordMcNally]

Tangler wrote:

The schools have ZERO incentive to lower tuition or alert you to the real risk.

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That's the biggest problem I have. It's just a positive reinforcement circle between schools and the federal government. I wish it were mandatory for the schools to sit down with each student when they've selected a major and go over the financial costs and run some projections for them. It may not necessarily help everyone, but it certainly wouldn't hurt.