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More Than 40% of Student Borrowers Aren’t Making Payments

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Re: More Than 40% of Student Borrowers Aren’t Making Payments

#241

Post by bbarn »

This is a problem that only this generation, and maybe part of the one after it will need to face. The answer is simple, and we're on the cusp of getting there.

Like any other industry, education needs to be unbundled. The idea that you need to live in a dorm, in a psuedo-society, for four years, taking a broad set of courses is dated and helps nobody but those offering that experience. I predict in a generation we'll have the people making hiring decisions more and more jaded about the value of these educations and less likely to keep perpetuating the myth that you need a degree from a school to do a job. Instead, we'll see more and more certification programs, or micro-degrees, specializing in subjects that matter to the student.

I believe it to already be happening - I don't look at education except as an afterthought when reviewing resumes. I don't have a degree, and I'm doing well in my field. The types of jobs where I've ever been discriminated for not having a degree I don't think I would have enjoyed anyway. Working at a 5000 person company that cares more about your score on an HR system than what you could really offer them? No thanks.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#242

Post by itchyouch »

cryoshon wrote: post #85
rdtsc wrote: post #47

> The Education Department has assembled a “behavioral sciences unit” to study the psychology of borrowers and why they don’t repay. Ha! There is a bit of a hypocrisy there -- if big banks / companies piss away money and choose to strategically default then (and some even get bail-outs), it is just business. If people do it for whatever reason, well clearly the are immoral, deficient somehow, their psychology needs t…

>If people do it for whatever reason, well clearly the are immoral, deficient somehow, their psychology needs to be studied by a special committee. Yeah. There's also the marginal utility of money. The banks can piss away billions without really getting that hurt. Their debts are business agreements that can be broken under the profitable circumstances. Student loan payments each month hurt people far more, yet defau…

Those that can't pay it, simply can not, but those who can pay it don't want to suffer the individual penalties of doing so. Mess one's credit report up and now an individual has to hope not to get sued and harassed by collections calls and probably give up financing anything for the next 7 years whether it's a new credit card, car, or house.

There's also a small minority of people also savvy enough to pull off defaulting without the legal repercussions. Unless there is a coordinated effort, simply defaulting by one's self would be suicide.

There is also the risk/reward factor. Defaulting on 100-200k loans with no income? high risk, but also a high reward potential. Lawyers know you can extract blood from a stone. Defaulting on 5k worth of loans making 50-60k/year? High risk, low reward. Better to just make the payments for 1-3 years and be done with them.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#243

Post by Spooky23 »

Overtonwindow wrote: post #199
josephjrobison wrote: post #182

Earlier quoted context omitted.

Yea Plus Loans are the worst at 8% interest a year. Do I invest in index funds that average 7-8% or pay down student loans that guarantee you're relieving 8% interest a year. It's very disheartening to see one losing $1k/mo purely to interest. But also a big motivation to just make more money yearly.

Woah what loan are you speaking of??? My federal loan was about 3% in 2005.

In the 90s, some unsubsidized loans where north of 9%.

I was the oldest of the brood, and my parents didn't have any money, so I chose to go to SUNY whatever for something like $8k/year.

Graduated with $1,200 in debt, for my apartment deposit and repairs to my ancient car.

MANY of my friends who went to prestigious private schools got bait and switched on aid in their sophomore year and got stuck with loans that they are paying to this day.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#244

Post by quicklyfrozen »

rconti wrote: post #165
sh1ps wrote: post #22

A 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 th…

I was fairly financially literate, and I was fortunate to have a family who supported my education, and grandparents who wanted to do what it took to fund it. That said, it's a very ... odd process for most people. You're told to go to college, so you jump through the hoops; SATs, applications, etc. You choose a school. Now, hopefully as you're choosing a school, you're aware of costs and whether or not you can reaso…

And once you get that financial info from the schools you really don't have a lot of time to make a decision -- only a few weeks in many cases. Very little time to make a $160K+ commitment. (It took us a year to buy our first house and it wasn't much more then that...)

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#245

Post by tostitos1979 »

tsunamifury wrote: post #112
devonkim wrote: post #69

Earlier quoted context omitted.

They are conditional with having employment in the first place as well as if the government entity they are under has approval for such forgiveness. My wife doesn't qualify under most programs and given the glut of newer grads or veterans (she's been beaten out by veterans for 10 positions with 100+ applications referred - none of which were non-veterans according to the hiring committee we managed to find out) she's…

We all bare our burdens... you should be so lucky that your burden loves you.

Heh .. my wife also had a mountain of student loan debt. We saved like hell and deferred major purchases (specifically, no house). We're about to payoff the last of her loans and really happy about it. The challenging things are: (a) we were talking about getting a new car. Even though a car loan is nothing like a student loan (interest rate is much lower) and we do need to change our car, we're super queasy about getting back in the red , and (b) we're in our late 30s and property is unaffordable where we live. We're not keen to take a 600K mortgage (for a starter home) so will wait it out. We're both well-paid professionals but even then one person's loan made a big dent in our financial security. Also, the fact that we didn't own property before the real-estate boom/bubble, means we'll likely be financially stunted for life. Cest La Vie.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#246

Post by cylinder »

Overtonwindow wrote: post #199
josephjrobison wrote: post #182

Earlier quoted context omitted.

Yea Plus Loans are the worst at 8% interest a year. Do I invest in index funds that average 7-8% or pay down student loans that guarantee you're relieving 8% interest a year. It's very disheartening to see one losing $1k/mo purely to interest. But also a big motivation to just make more money yearly.

Woah what loan are you speaking of??? My federal loan was about 3% in 2005.

My loans average 7%. Federal.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#247

Post by serge2k »

AJ007 wrote: post #42
sh1ps wrote: post #22

A 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 th…

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

> When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school cheap (personally I don't fall in to that category out of personal choice, but most of my friends do.)

To some extent people make their own bad choices. I graduated with 30k-ish in debt (canadian). A reasonable sum considering the job options immediately available that wouldn't have been a possibility without a degree.

On the other hand I have a friend who went to the same school, but stayed to do a masters. He owes over 70. Still possible to pay down. While he's worried about that I'm 4 years out of school, 1/3 of the way through paying my loan off. We wound up with comparable jobs in terms of pay as well.

He's was in his mid-late 20s when he started as well. Not 17.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#248

Post by serge2k »

pmiller2 wrote: post #78
AJ007 wrote: post #42

Earlier quoted context omitted.

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

> A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. > I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school…

> Thirty years ago, a bachelor's degree might have been a ticket to a decent professional job, but those days are long past.

My CS degree definitely helped me out.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#249

Post by tostitos1979 »

maaku wrote: post #142
addled wrote: post #64

Earlier quoted context omitted.

Some of these income based payment plans have a forgiveness clause after 20-25 years, so it may still make sense.

Subject to many stipulations. One of them being that you are making regular payments...

Right ... I know many of my wife's friend's making minimum payments. I said no way .. we're paying the loan off first. I won't mention the amount but man, we could have bought a fleet of boats for that (think about what the average med student accrues in debt).

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#250

Post by serge2k »

alanh wrote: post #163
vonmoltke wrote: post #157

Earlier quoted context omitted.

I personally never got that message. I got the "you will go to college" message, but it came bundled with a "don't borrow $40,000 for college" message. In fact, I turned down my first choice school (Rose-Hulman) because I would have accrued $50,000 on loans over four years. That seems to be unfortunately typical now.

I really wanted to go to MIT, but I couldn’t believe my eyes when they were bragging that average student debt after graduation was “only” the price of a brand-new minivan or sports coupe.

That sounds quite reasonable actually. A degree can be a good investment. The right degree from MIT will open a lot of doors .
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