There's a simple solution, the Feds should cutoff loans for schools that don't get their students jobs. The government are the only ones that are able to accurately calculate which schools are completely worthless. In fact they should take it one step further and advertise to the whole world what percentage of students get jobs in their studied field and the average starting salary. That would finally put some market pressure on schools to do their damn job and teach useful skills.
More Than 40% of Student Borrowers Aren’t Making Payments
21–30 of 441 posts
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#22A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me.
Honestly it kind of reminds me of the whole Yelp minimum wage thing. Person knowingly takes a minimum wage job in the most expensive city in the world and is surprised a year later when that wasn't very much money and they're struggling. The simplest cost of living calculations would have said "moving to that city and taking that job is a really bad idea."
This isn't to say that there aren't things that need to change. Education reform is necessary as well as a living wage, but I'd also argue that basic financial literacy is also a requirement for being an adult and should be treated as such.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#23I wonder if there is investment vehicle I can short to make some profit if these loans do actually go bad?
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#24Earlier quoted context omitted.
The Department of Education sold my loan to a private company within a year or so of graduation. No rate change or anything, I just started logging in on a different web site to pay. Same thing with my wife and with many people I know.
This is terrifying. Did you get registered mail at least? Did the old web site tell you where to go? If you don't believe the notice you are given, you fail to pay. If you do believe whatever notice you get, you are vulnerable to fraud.
My mortgage has been sold at least 4 times since I got it about 3 years ago. Each time, I get a letter from the old company and the new company. Hopefully, that's what happened here.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#25Thats how its supposed to work, in the UK at least. Student Loans are like a distributed tax that only gets paid by the grads who earn enough to repay. edit: Also, in the UK, once you do earn enough, payment is automatic via deductions from payslips.
The article talks about many grads who could repay, but simply don't for whatever reason.
That is because they have other debt they are prioritizing over their student loans
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#26Sorry, but when there is no testing to determine if they borrowers can even complete the course of study they have chosen why should we expect any other result? If you wanted the best example of why college education should not be free this is it. I am all for community style colleges that could be free or heavily discounted but the idea that people can simply choose ask for their degree be paid for without first dem…
> This does not include demanding others support your flight of fancy
100% this. I presume you're talking about the entities who took a bet on foolishly giving out so much money, now expect to be reimbursed for their bad loans, and wish to invoke criminal enforcement for what should remain a civil dispute.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#27My wife is one of these borrowers. She has a master's degree in teaching. It cost her over $100k to get and she can't find job that would pay her enough that she'd be required to pay anything back. I've seen her loan repayment docs and her minimum payment due is $0 every month. While I think her decision to get a masters in education was a bad one (before we were married) I laugh at an institution that would loan her money for a field that doesn't pay, ask her to pay at least $0 a month and then complain that the loans are not being paid back. I just paid Navient the outstanding $18 they've been bounding her for and plan on paying them nothing again until my houses are paid off.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#28Around the world many institutions use factoring. https://en.wikipedia.org/wiki/Factoring_(finance) This converts receivables into cash by selling them a third party at a discount. This doesn't prevent the educational institutions from getting their cash. Not sure how it works in the US.
That doesn't make the problem any less worrisome. Factoring assumes that the company paying for an invoice will have the means to pay off the service rendered eventually (on a net 30/60/90 basis usually). Factoring helps to free up cashflow for the receiver, not necessarily guarantee that a remittance be satisfied. If the core value were the latter, the premiums go up so high that it's not really financially viable for most businesses to use factoring against their receivables. The problem with student debt is default, not cash flow.
Further, the problem isn't the educational institution getting paid, it's the lender (in this case the government, and thus the taxpayers) who lent out money to people without any historical context of their ability to pay off a loan. Hence the quote:
“On what planet does a financing vehicle with those kinds of terms and those kinds of performance metrics make sense,” he said.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#29"About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt"
I thought "default" is technically impossible with respect to student loans, your solvency matters not, you're obligated to pay it off even if takes your entire life (and/or life's earnings)?
This problem would get fixed very quickly if students were allowed to actually default on the loan and stop paying it, at which point it becomes a loss to the lender, like it is with any other loan. Then these loans wouldn't be handed out like candy to people who are not mature enough to understand what it takes to pay off $100K and thereby ruining their lives.
Re: More Than 40% of Student Borrowers Aren’t Making Payments
#30it's these 'for profit college' they have to go. i suspect most are total trash. also - with all these coding bootcamps popping up nowdays, im not sure if people are able to get govt student loans for these or what but it sounds like trouble. ppl are desperate to jump on the coding gold rush and the great salaries and job market. ppl are going to get fucked over big time.
first time i saw this[0] all kinds of warning bells went off. im sure there is a way forward so that people can learn and share the value created from software development job market but i think we should move fwd carefully. ppl will definitely get fd over.
but yea most of those 'for-profit' colleges are totally shady.
do they have everest college in the US? perfect example of this kind of bs. in canada they got shut down, but not before screwing over tons of people out of their money for years[1].
[0]: http://www.inc.com/maria-aspan/max-levchin-affirm-better-stu...
[1]: http://www.cbc.ca/news/business/everest-college-closure-no-s...