This is wrong. You’re mixing up subsidized loans with the ability to get loans.

People can get unsubsidized loans that still come with the same constraints around inability to discharge in bankruptcy for vastly more money.

It’s essentially all unsecured student loans (i.e. effectively the entire student loan market) that have this risk free model for lenders.

It would all be completely toxic trash otherwise that no lender would issue. A student with no assets, no income, and no credit history to preserve has no downside to just declare bankruptcy after school and get $200k or whatever essentially for free.

No its not

Literally says "Subsidized and Unsubsidized Aggregate Loan Limit $31,000-No more than $23,000 of this amount may be in subsidized loan"

Just confirms most people have no clue how small the limits actually are.

Those don't include private loans which can be co-signed by parents if needed, nor do they include PLUS loans where parents also take out loans. Colleges are also quite helpful in what you need to do to be declared independent for financial aide purposes, which almost doubles that limit.

Graduate students are where it gets wild though.

Private loans aren’t backed by the government though.

They do have protections in bankruptcy as student loans though so it isn't a normal unsecured risk for lenders. They're also not hard to get, which goes back to the point of easy money inflates tuition.

Again - the rules about student loans during bankruptcy apply to all student loans, including from private lenders.

That is not as clear cut as you make it. There have been rulings in the last several years that have allowed some private loans to be discharged in bankruptcy proceedings.

> In January 2020, the U.S. Bankruptcy Court for the Southern District of New York discharged over $200,000 of student loan debt for one borrower. Then, in August 2020, a ruling by the 10th circuit federal appeals court based in Denver, Colorado eliminated $200,000 for a Colorado couple who held 11 private student loan accounts. And in September 2020, a judge for the U.S. Bankruptcy Court for the Southern District of New York ruled to enforce a prior bankruptcy discharge of a borrower’s $400,000 of federal student loans that a servicer had failed to carry out.

> These decisions could serve as a precedent for future bankruptcy cases involving student loans, says John Rao, an attorney with the National Consumer Law Center.

> "A lot of people, even some of the lawyers who represent consumers, thought for years that you really shouldn’t even try because there's not a chance you’ll win, but I think everyone is looking at it now with sort of a fresh look," Rao says.[0]

[0] https://www.nerdwallet.com/article/loans/student-loans/stude...

Granted, this is getting very close to "the exceptions prove the rule." :D And this rule is spelled out fairly directly to be as hard as possible to discharge.

That’s the limit directly from the government. Depending on what you’re studying for, that might end up being lower than what you actually need.

For instance, when I was in college (undergrad) I took the maximum, but it wasn’t enough for me to pay tuition, rent, etc. Also those loans don’t pay during the summer, so you’ve to budget for that as well. My part time job tended to cut hours because there’s a high influx of kids who also want summer jobs, which meant less money overall for me. I ended up taking some more loans from Wells Fargo to make ends meet.

In hindsight, I should have got a better job instead of retail - some sort of office job. But I didn’t have a car, so I was limited in how far I could go.

I am afraid you are woefully confused. A good friend had $150k in debt from undergrad and $200k in additional debt from law school, and this was 10 years ago.

Your friend spent the cost of a new house on education, lol. There's only one country where I hear of things like this...

South Africa: now you've heard of two.

Looked up the prices just now. Undergrad + postgrad can come up to the price of small town houses.

That would have likely been a mixture of direct loans (which have the current 31k limit for undergrad) and private loans.

There is no limit for dependent students of federal support through loans: the limits you cite are the limits for loans to the student for students whose parents are able to get PLUS loans.

But PLUS loans themselves have no cap, so the amount of potential federal impact on potential costs for this population—which, as you note, is most undergraduate students—is infinite, not $31K over four years.

Wait, what? That is a misleading read of that page. Only if you have parents/guardians that can get a PLUS loan is that the limit. You have to look at the other column for everyone else.

And that is the principal. With a short limit on how much of that can be subsidized, meaning the rest is accruing interest from day 1. Such that they amount you would owe will be laughably higher than even that number after your school. And that is assuming you don't have to then delay repayment for financial hardships.

how is it misleading? most undergrads are considered dependent, which means they can only borrow $31k in total over 4 years. beyond that they would need to tap alternative sources.

I'm interested in numbers backing up that claim? But, even with that, student debt is almost certainly including PLUS loans which, "The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received." So... yeah, very misleading read of that page.

> how is it misleading?

Because the limit cited only applies to students whose parents can get (federal, direct, and capped only by the school’s estimate of costs) PLUS loans, and yet is characteized as a limit of the impact of federal subsidies on school costs.

A cap that only applies where another unlimited federal loan stream is available to the same student is, well, not a limit at all, when discussing federal impact on prices.

The cap when PLUS loans are not available is $57,500.

The impact on prices is not just the direct, but the general understanding that private educational loans also could not be discharged in bankruptcy that was created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Courts have started to push back against that but there are only a handful of precedents.

Another misleading point, though? As you can then go on to get 138500 for graduate/professional school.

I'm interested in how many students aren't able to have their family go in on PLUS loans. As that is still a gaping hole to relying on the page and limits linked.

This for federal loans.

But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy, for example.

yeah, and we're talking about federal loans here.

the government is not on the hook if a student defaults on a private loan. the critique was that tax payers were somehow on the hook for most undergraduate costs when $31k over 4 years barely pays for rent at this point.

No, this is incorrect. The federal government is also the backstop for a majority of private student loans as well. https://www.investopedia.com/articles/personal-finance/08121...

I can see how you think we were only talking of federally "backed" loans, but I did intend my expansion to be all loans the government has "protected." Which, as the other poster points out, is basically all of them.

Federal loans are basically all of them to start with (over 92% of outstanding balances).

I had thought that I had private loans back in the day. Been a long time since I paid all of mine off, though, so I can't remember who they were through. (And, I fully grant that, even if I was private loans, 8% is still a non-zero number...)

Before federal loans were all direct (Ford loans), there were federal loans issued through third-party lenders (Stafford loans) that otherwise worked the same way with the same kinds of loans (subsidized, unsubsidized, PLUS; for a while, both Stafford and Ford were offered at the same time, with identical terms.) These are collectively “federal” loans (and there are still balances on loans originated as Stafford loans) distinct from “private” loans.

I remember I maxed out my Stafford allocation, and then also had to get extra loans to cover my last year. Memory being what it is, I wouldn't be shocked if I am misremembering some.

Regardless, I got them all payed off; and still have a massive distaste at how most discourse over this goes.

The CBO estimates that the government is indeed “on the hook” for about 93%[0] of ALL student loans, despite not necessarily being the originator or servicer.

There essentially is no such thing as a “private” student loan anymore.

[0]: see sibling investopedia link

> But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy,

Private education loans are mostly an issue for non-accredited schools, since usually you can cover the full costs, with better terms, with federal loans at accredited schools. They are also less than 8% of the volume of student loans. They are basically a whole different (and much smaller) policy issue.

I would disagree that 31K is not a lot of money, but then again, maybe it is not a lot of money and my opinion is warped. I think if the government took a few points off for performance as a preferred return on the massive endowments, all of this would go away.

it's $8k a year. that wouldn't even cover rent for a school year at this point.

i think a lot of people seem to believe that the federal government is handing out $50k+ a school year when theres a very small limit. people who need to borrow likely have to tap private lenders.

Please stop. You’re completely misinformed here on how much is available for students to loan. I know multiple people that took out massive PLUS loans from the government that carry interest, are not discharged in bankruptcy, and far exceeded the limits you are talking about ($70k a year for grad schools).

I would also add that a lot of loans end up rolled up into a package, which you are given no forbearance.

It’s $57k just for undergrad for those with parents that are ineligible for PLUS loans, which is very common. This also doesn’t apply to non direct loans.

tl;dr You’re full of shit.