The Delinquent Borrowers Leading a Student Loans Revolt • Hacker News Board

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#31

Post by WBrentWilliams » Sun, Oct 04, 2015, 2:12 PM UTC

saturdaysaint wrote: post #28

WBrentWilliams wrote: post #22

I like the way that these articles and the comments ignore the elephant in the room: The cost of living while attending college. Here is a data point for my local State University. I happen to work there, so I can verify that these numbers are pretty much correct. You can pay cheaper rent, but you'll pay back the difference in car mileage and/or roommate drama. Tuition is (roughly) 40 percent of the cost. What really…

The "books and supplies" section would be interesting to break down. How much of it is due to needlessly churning out new editions to cut off the used book market? In the age of the iPad, shouldn't someone be producing first rate, open source textbooks in core subjects? It's a pittance of the total, but that $1,200 (x4) could still add up to a lot with interest.

Let me answer that with a statement and an anecdote.

The statement: The proportion of costs I outlined, from my point of view, have always been true. I finished my first degree in 1997.

The anecdote: All the professors in my computer science program (I'm not going to name-drop, but I had some great teachers that insisted that I learn scheme, then Java, then C, then assembly) either had no required text or gave syllabi that referenced several versions of their listed texts. The context was that we were free to get the best deal possible on the texts.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#32

Post by littletimmy » Sun, Oct 04, 2015, 2:23 PM UTC

douche wrote: post #30

I have to be honest, if some kind of student-loan amnesty ever goes into effect, I'll be a little pissed that I prioritized paying mine off with my earnings for the first half-dozen years out of school. Just imagine what I could have done with those tens of thousands of dollars instead...

I know right! Someone else would be better off without making you worse off... The horror! If I can't have it, they can't!

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#33

Post by skywhopper » Sun, Oct 04, 2015, 2:27 PM UTC

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…

You act as if the consequences were clear. Whatever analysis even the most sober and risk-averse 18-year-old student did in 2005 about her student loans could not have predicted the massive economic flustercluck we've been through in the past 10 years. Flawed inflation and wage growth assumptions alone have already likely doubled the long-term cost of those loans, even if you assume the student found the job they were essentially promised when they committed to the deal. The fact is that these kids were misled by a delusional society and egged on by greedy loan providers and desperately underfunded state universities.

You call it a moral hazard to forgive the debt, but the students who took the loans are the least-bad actors in this scenario.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#34

Post by littletimmy » Sun, Oct 04, 2015, 2:28 PM UTC

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…

No. Society forced them into that choice.

What on earth makes you think the choice was not coerced? A student before the age of 18 is presented with an option. Here's one path - be in massive debt. Here's the other path - your hopes and dreams are shit. That's freedom? Hardly.

It's funny how all the moral hazard trolls come out of the woodwork as soon as something benefits poor people. Bank bailouts? No hazard. Corporate tax cuts? No hazard. Corporate subsidy? No hazard. Private prisons? No hazard. Help indentured slaves? HAZARD!

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#35

Post by evanpw » Sun, Oct 04, 2015, 2:29 PM UTC

UserRights wrote: post #25

Free Education is the primary attribute of a free and cultivated society. If you are living in a primitive country with no free (+higher) education, all available resources should be focused on reaching this goal as the most important evolutionary step. Many underdeveloped societies and failed states can be identified by looking at the education situation. In the worst cases education is held hostage by a leading gro…

Education is never free; it always consumes some resources. The question is who should pay the cost: the student or everyone else?

In cases where basically everyone needs the education to succeed in society and the positive externalities are large (e.g., teaching young children to read), I think that the case for "everyone else" paying is pretty strong. In cases where the education is mostly consumption (i.e., the benefits all go to the student), the case for subsidizing is weak (e.g., a trust-fund kid getting multiple PhDs in impractical fields to have something to do).

So the main issue becomes: where does a Bachelor's degree lie on this spectrum?

1. Fields of study are very heterogeneous. Some majors have a much larger return on investment than others, so subsidizing all "higher education" equally probably doesn't make sense.

2. Even in Western Europe, college attendance rates are only around 1/3. Is it right to have that 1/3 subsidized by the 2/3 who don't go to college, and who on average have lower income?

3. (More speculative) To some extent, the payoff to a college education is not because of what you learn, but in signaling that you're a smart, conscientious, perseverant person. In that case, a degree becomes less valuable the more people that have them, and the case for subsidizing what has become an arms race becomes a lot weaker.

4. If we spend a lot of money and effort propping up the current, very expensive, forms of higher education, we might discourage better ways of educating from emerging. One example is something like Coursera, where the marginal cost of adding one more student is basically zero, and everyone can learn from the very best educators in the field. Another would be separate institutions for education and for testing / accreditation. This would help with grade inflation, bring back the focus in the educational institutions to teaching rather than credentialing, and provide more accountability (% of graduates passing a common exam is a lot easier to compare than future income of graduates, and is less confounded by things like socio-economic status of students).

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#36

Post by littletimmy » Sun, Oct 04, 2015, 2:32 PM UTC

One way to deal with the student loans crisis is for a nationwide student loan bailout. You don't have to erase the loans, just refinance them at a much lower interest rate. Currently the rate is 7%, which is just insane. For a virtually no-risk loan, which cannot even be discharged in default, that is a terribly high rate.

Refinancing will be a transfer of wealth from the rich to the poor. Good for the economy, shores up consumption, and all that. Has the added side-benefit of freeing indentured slaves.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#37

Post by qntty » Sun, Oct 04, 2015, 2:37 PM UTC

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…

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

What I mean is this: a lender who cannot choose who to lend to wisely will be pushed out of a free market. If the people they are lending to cannot pay them back in large numbers, they have no one to blame but themselves.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#38

Post by deedubaya » Sun, Oct 04, 2015, 2:37 PM UTC

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…

Agreed. I feel for these students as well, as there are a lot of social pressures to go to college.

But that empathy is short lived. We all have a free will. All these students could do the math prior to the commitment (I did!) and see the mountain of debt they'd be in. To say that it was someone else's fault is just yet another cop-out of a generation where it is socially acceptable to walk away from commitments and refuse to accept responsibility.

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#39

Post by evanpw » Sun, Oct 04, 2015, 2:44 PM UTC

littletimmy wrote: post #36

One way to deal with the student loans crisis is for a nationwide student loan bailout. You don't have to erase the loans, just refinance them at a much lower interest rate. Currently the rate is 7%, which is just insane. For a virtually no-risk loan, which cannot even be discharged in default, that is a terribly high rate. Refinancing will be a transfer of wealth from the rich to the poor. Good for the economy, shor…

If the current interest rate is high compared to default risk, why hasn't some private company come in to undercut the government and make a killing? I don't think it's because the banks aren't greedy enough. My guess would be that it's because of the extremely high default rate on student loans, and the extremely favorable repayment terms that government loans offer: payments capped at 10% of discretionary income, and forgiveness after 20 years (10 if working in non-profit or government)[1].

[1] https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

Re: The Delinquent Borrowers Leading a Student Loans Revolt

#40

Post by tomohawk » Sun, Oct 04, 2015, 2:46 PM UTC

littletimmy wrote: post #34

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…

No. Society forced them into that choice. What on earth makes you think the choice was not coerced? A student before the age of 18 is presented with an option. Here's one path - be in massive debt. Here's the other path - your hopes and dreams are shit. That's freedom? Hardly. It's funny how all the moral hazard trolls come out of the woodwork as soon as something benefits poor people. Bank bailouts? No hazard. Corpo…

No. Ignorance is to blame. Can the 18 year old be expected to make good financial decision? Probably not, especially if they only have a government school education which most likely does not teach basic economics. However, does that 18 year old not have parents?

And what do we end up with when these 18 year olds become 23 year olds with a load of debt and still no basic idea of economics or understanding what it means to go into debt? We end end up with an even bigger problem.

Also, government is not society.