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The Delinquent Borrowers Leading a Student Loans Revolt

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Re: The Delinquent Borrowers Leading a Student Loans Revolt

#11

Post by Camillo »

SixSigma wrote: post #2

Those numbers are horrific. My entire UK degree debt will be about $60k at 3% and I won't have to make any repayments until I earn about $30k pa. For my degree it should be a net profit for me. For less well paid occupations one is insulated against low wages. I am happy that I contribute to the advancements in non vocational learning. My fellow students and I are said to contribute $40m pa to the local economy which…

It's based on supply and demand. Since anyone and their dog can get a student loan, and the federal government guarantees those loans, demand for college education is basically inelastic. You can keep raising prices without losing students: they're just going to borrow more money. It's basically the same mechanism as that of subprime loans, where anyone got to buy a house they couldn't afford, except that it's federally mandated.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#14

Post by cheriot »

There's two problems when students choose an institution:

1. Poor and too often manipulated information about a school's job placements.

2. Students are short sighted about debts and schools don't care because the money is government guaranteed.

Solvable problems! Have an independent party collect and report on job placement. Then tie a school's loan eligibility more closely to the ability of recent graduates to pay.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#15

Post by tomohawk »

Borrowing money is risky, and includes risks beyond a straight up cost/benefit analysis. It also makes the borrow more vulnerable (not just to the lender, but to others as well). It should never be entered into lightly.

I sympathize with these folks who have gotten themselves into this situation, but they did make the choice of their own free will. If they didn't do a proper analysis ahead of time, it doesn't seem fair to shift the cost of their decision onto others who did, or who are responsibly shouldering the burden that they took on.

There is a definite moral hazard in the current system (it encourages indebtedness and inflates the cost of education), but that doesn't make it right to create another moral hazard in trying to correct it.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#16

Post by evanpw »

SixSigma wrote: post #2

Those numbers are horrific. My entire UK degree debt will be about $60k at 3% and I won't have to make any repayments until I earn about $30k pa. For my degree it should be a net profit for me. For less well paid occupations one is insulated against low wages. I am happy that I contribute to the advancements in non vocational learning. My fellow students and I are said to contribute $40m pa to the local economy which…

That $45k / year is for private non-profit colleges, which are the most expensive kind (even worse than for-profit), and not the norm. For an in-state public University, the number is more like a quarter of that.

http://nces.ed.gov/programs/coe/indicator_cua.asp

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#17

Post by evanpw »

cheriot wrote: post #14

There's two problems when students choose an institution: 1. Poor and too often manipulated information about a school's job placements. 2. Students are short sighted about debts and schools don't care because the money is government guaranteed. Solvable problems! Have an independent party collect and report on job placement. Then tie a school's loan eligibility more closely to the ability of recent graduates to pay.

It seems like it would be even better to tie eligibility to the borrower's major. Return on education expenses are more closely related to what you study rather than where you study it: http://www.economist.com/blogs/graphicdetail/2015/03/daily-c...

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#18

Post by m_fayer »

tomohawk wrote: post #15

Borrowing money is risky, and includes risks beyond a straight up cost/benefit analysis. It also makes the borrow more vulnerable (not just to the lender, but to others as well). It should never be entered into lightly. I sympathize with these folks who have gotten themselves into this situation, but they did make the choice of their own free will. If they didn't do a proper analysis ahead of time, it doesn't seem fa…

For those trying to escape poverty, disadvantaged teenagers must choose between debt and the permanent surrender of their hopes and dreams. Hardly a situation where the borrower can be expected to make a dispassionate calculation, nor is it a situation where there's a clearly correct course to be found.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#19

Post by derpud »

keithpeter wrote: post #7
karissa wrote: post #4

Earlier quoted context omitted.

You're right, it isn't. It's largely a for-profit industry, even the 'non profit' colleges. Most teachers, especially adjuncts, make very little in comparison to what the students are paying -- look at NYU, 50k/year per student in a class of 20 where the teacher is paid 5k/class. The math doesn't add up.

Would a self organised University be possible in the US system? A group of teachers using cheap space and online communications to provide lectures/support/assessment with students then taking exams accredited by another institution? Possibly with sponsorship/organisational support from a voluntary sector organisation? That is basically how most Universities outside Oxford/Cambridge/Edinburgh/Aberdeen started in UK i…

Faculty would love to disintermediate the ever growing administration. Accreditation is an issue, and overcoming the importance of brand. Competing with the for profit niche might work though.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#20

Post by jrs235 »

cheriot wrote: post #13
Camillo wrote: post #9

The absurd student loan system is what fueled tuition inflation in America. It needs to be abolished.

Do poor students not get to go to college anymore or do you have another system in mind?

Federal and private grants would still be available for those that qualify same with scholarships.
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