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Let me explain to you why the current #studentloans system is so corrupt and why if they are going to provide loan forgiveness they look at all student debt going back to 1998.
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The "Higher Education Amendments of 1998" was a bill passed by Bill Clinton to adjust the laws around federal student loans.
The main focus of the bill was to remove restrictions to giving these loans out so that everyone could "afford to go to college".
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The main focus of the bill was to remove restrictions to giving these loans out so that everyone could "afford to go to college".
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In order for this to pass the government made a few new stipulations to protect themselves when lending out money to put who would have previously not been qualified.
The biggest being that student loan debt could not be dissolved through bankruptcy.
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The biggest being that student loan debt could not be dissolved through bankruptcy.
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This is why so many people who took out loans are still stuck paying them back, because there is no way to get out from under the debt except to pay it off.
But it is not the real reason why college debt has become such a problem in the USA. That lays in the hands of states
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But it is not the real reason why college debt has become such a problem in the USA. That lays in the hands of states
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Prior to 1998 most "state universities" were propped up by tax revenue from the state. It is why they were cheaper to attend and operated similarly to public school. Many cost less than $10,000 a year to attend.
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After the "Higher Education Amendments of 1998" was passed funding to students became abundantly available. There was more demand to attend school than there was places for student to go to class. You saw many universities rapidly expanding to meet this new demand
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The expansion need provided the perfect excuse to raise tuition. The students were using borrowed funds anyway and still wanted a degree so very few opted out of taking on the debt.
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By 2001 states started to realize they had just stumbled upon a "cash cow" to stuff their coffers.
Since then most universities receive no state funding.
Tuition money is actually funneled out of the universities to cover other state budget deficits.
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Since then most universities receive no state funding.
Tuition money is actually funneled out of the universities to cover other state budget deficits.
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And we all know once a government thinks it has found a free money supply they will exploit it to the fullest.
From 2001-2015 college tuition increased on average of 8% per year. Meaning a school that cost $5k per year in 2001 cost $14,700 per year in 2015.
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From 2001-2015 college tuition increased on average of 8% per year. Meaning a school that cost $5k per year in 2001 cost $14,700 per year in 2015.
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Tuition has become a necessity to most states budgets. And tuition costs continue to rise because of it.
It has become a way to levy a huge tax on the working class right out of the gate when they turn 18.
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It has become a way to levy a huge tax on the working class right out of the gate when they turn 18.
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The federal government is not innocent in this either. The borrow the money for these loans at a 0% interest rate then charge between 4% and 8% to the students they lend the money to
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Knowing this is the case it becomes a very difficult system to unwind. In my opinion if they are going to forgive student debt they should go all they way back to 1998 when the bill was passed.
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They should also provide tax credits to anyone durring that time frame who paid off loans already, or who paid for college in cash, because everyone was equally impacted by the sphere of corruption.
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The real issue is how will statesmove forward if they no longer can rely on state university tuition to prop up their budgets.
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My guess is restrict college tuition with caps, or making state universities "free" would just take funding away from lower education like grade schools and high schools leaving the next generation EVEN FARTHER BEHIND.
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I'll link some more reading material below
