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December 27, 2012
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Why Should I Pay Off My Debts?

:icontbschemer:
Why should I pay off my student debts if there's a chance that Obama will institute a policy of student loan forgiveness?

I can either pay off my debts early and have a chance of being punished for my responsibility by paying for everyone else's debts through my taxes while getting nothing for myself; or,

I can not pay my debts at all and continue accumulating 6% interest per year on the chance that Obama might make the taxpayers cover my costs.

In other words, just by remaining in power and making promises, Obama has created an economic incentive for me (and every other student) to engage in irresponsible financial behavior on the hope that we'll win the bailout lottery. This is one of the many ways a bad leader can cause economic damage without actually succeeding at passing anything, just by having the wrong philosophy. :omg:

In other words, suppose there's a 30% chance Obama could find a way to implement student debt forgiveness through executive powers, without going through Congress. If I have $30,000 in debt at a 6% interest rate, then at the end of Obama's term, I'd owe about $38,000 if nothing got paid off.

So If I choose to pay off nothing, I'd have a 70% chance of a -$38,000 value, and a 30% chance of a $0 value. That's an expected value of -$26,600.
If I choose to pay off everything ahead of time, I'd have a 100% chance of something between -$30,000 and -$38,000.

If the predicted chances are correct, I'm better off taking the irresponsible route, leaving me with a cost of $26,000, rather than a cost of $30,000-$38,000. Obama's presence in the White House gives me and plenty of other members of this economy good reason to be financially irresponsible and harm the country as a whole.
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Devious Comments

:iconalphamale1980:
Actually there are already several programs that will allow you to have your debt forgiven. Most require some kind of service like working at under serviced inner-city schools. But they ALL require you to be current on your student loans. Not staying current, disqualifies you for possible forgiveness (basically it proves that your an untrustworthy little shit). I'm sure any further programs will have similar clauses.
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:icontbschemer:
Of course, my loans are in deferral thanks to grad school. So, just to stay current, I don't have to pay a cent until 2016.

My biggest problem is interest accumulation.
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:iconbryosgirl:
bryosgirl Jan 1, 2013  Hobbyist Writer
It's naive to believe that loan forgiveness is incentive to be fiscally irresponsible. The bureacracy involved in these policies, not to mention the requirements for eligibility, are stringent, and only a small percentage of the people who are eligible will actually receive the go-ahead. By that point their credit rating will be shot to hell and back, putting credit-dependent goals such as owning a home, personal business or working in certain industries/companies on hold for at least a decade.
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:icontbschemer:
On the contrary, it's naive to believe that these programs will be so perfectly designed as to avoid incentivizing fiscal irresponsibility. I mean, it was exactly that sort of government-incentivized irresponsibility that caused the 2008 financial crash. Why should we believe that the new government programs will be perfect and incapable of causing unwanted side-effects?
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:iconbryosgirl:
bryosgirl Jan 3, 2013  Hobbyist Writer
I never said it would be perfect. In fact it is always the opposite. The past decade has shown just how much damage these forgiveness policies can cause to a national economy. Lenient credit policies paved the way to the cliff, but the introduction of forgiveness policies is what shoved us into a recession. Regardless of how you look at it, though, abusing social programs only screws yourself in the end.
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:iconyangfeili:
I'd be fine with debt forgiveness or other increases in financial support for education so long as it was accompanied by a MASSIVE increase in the academic admission standards. It's bad enough that all the dumb rich kids can get in. It's even worse with all the dumb poor kids dragging things down.
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:icontbschemer:
If you want higher admissions standards, then we need to stop giving out such easy loans.
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:iconmgonzales041090:
mgonzales041090 Dec 31, 2012  Student Traditional Artist
Giving out funding for an education based on a person's level of income is pretty fuckin' discriminatory dude. I'm of the school of thought that education is a right, and not a privilege. It's why I favor tuition free college, similar to certain European countries. Some fund the first 2 years, others fund the entire trip. We, as a country, have dropped in educational rankings. Education first. Books, not bombs! <3
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:iconjeysie:
Jeysie Dec 31, 2012  Hobbyist Writer
Plus logic dictates that if fewer people could afford to go to college, standards would drop even further, as colleges literally couldn't afford to turn away or flunk out the few people that could afford to go.
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:iconyangfeili:
Yeah, that's pretty much how I've figured it works. Government starts tossing around free money for students, the universities lower their standards in response to pack in more students, many of whom have no business being there and just ruin the experience for everyone else.

I've personally seen professors go to extraordinary lengths to fudge the numbers so that students don't fail. I'll never forget the absurdly easy class where the professor nevertheless ended up putting 100 percentage points of extra credit on the final. The extra credit section consisted of all the questions from the previously graded, corrected, and returned tests from earlier in the semester, so the students were basically being handed a free pass on the course.

In all fairness, I'm sure the professor was under pressure from the administration to make sure all the stragglers passed. Failing students don't bring in more of that sweet federal money next year. Better to keep them coming back rather than let them suffer the consequences of their own choices.

This was at a reasonably prestigious private university known for having higher academic standards than the other local universities. My family and friends tell me that it was even worse at the big "standard" public university that most people around here go to.
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