Unlike Congress.....

[RightIsWrong]

My wife came up with an idea to preempt a potential bubble that doesn't actually cost the taxpayers a penny and even sent it to the White House email address!

In a nutshell, here's the concept:

1. Create the equivilant of a pre-tax FSA account that is used solely for student loan debt

2. Allow companies to match up to a reasonable contribution and give them a tax deduction (This allows the company to retain talent and the potential employee to pay off their loans quicker)

Now, on the surface, it looks like it will cost the tax payers b/c the companies will get a tax break on their contributions. But in reality, more people will likely be willing to go to school or stay at jobs that offer this benefit longer which will help offset a company's training costs and their bottom line offsetting the initial tax break for the companies.

It might also get more people off of the welfare ranks and prevent the next default bubble, student loan defaults, from occuring or at least help mitigate the impact of those that do.

 

[EagleKeeper]

People in the welfare ranks are not the ones heading for/staying in college.

Their children may be able to break out of the cycle; not the parent.

 

[Patranus]

Unless I get a massive tax break, there is no way I would match payments into a student loan account.

 

[RightIsWrong]

Unless I get a massive tax break, there is no way I would match payments into a student loan account.

I'm guessing that you are speaking from a company's standpoint.

If that is the case, I would say that there is a reason that they match FSA and 401K account contributions. Apply the same rules to this.

At least this option truly will benefit the person. The FSA is lost if not used at the end of the year. A 401K flucuates with the market. That student loan debt, never goes away until paid. It is one way that a company can lure better talent and the talent can ensure that their money is actually benefiting them instead of some hedge fund or financial planning house.

 

[glenn1]

I don't see a problem with this, but don't know how well it would be adopted since if anything many companies are cutting back benefits now, not adding new ones.

 

[DrPizza]

Here's an idea: hold colleges a little more responsible. As it stands now, anyone can get a loan for any major, regardless of their readiness or ability to succeed in that major (and regardless of the employability of students graduating with that major."

My suggestion: If a college decides that student A is worthy of being accepted into their program, and student A needs to take remedial courses at college because they're not even ready for college, then:
*If the student succeeds in the remedial courses and successfully completes their degree, the college keeps the tuition money paid for via student loans which covered the remedial courses.
*If the student fails out of college during the first year, the college and student split that student loan debt 50/50. If the student fails out after 2 years, 40/60, etc.

It's like the biggest scam ever in much of higher education (this applies to some, but not all schools.) Make money by getting students to take the money out of the bank, give it to you, then watch the students fail, throw them out, repeat with another huge freshman class. (The problem is 10 times worse with for-profit colleges and universities.)


The total student loan money available that is federally subsidized should be capped. Not only that, but it should be capped *by area of major.* "Sorry, you want to major in 17th century French poetry? Your maximum annual loan is capped at $3000." "Hello, you want to major in electrical engineering? Your maximum annual loan is capped at $20k." "Oh, a psychology major? $1000"

If banks and other institutions want to loan out un-federally insured educational loans, let them take the risk of default, instead of the government.