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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

#301

Post by reality_czech »

massysett wrote: post #226
reality_czech wrote: post #207

Earlier quoted context omitted.

I agree with this 100%. Student loan debt should not be treated specially. It should just be normal debt that you can discharge through bankruptcy. At that point, the incentives of schools and the incentives of students would be aligned. Schools would not lend huge sums to students unless they had confidence that the education those students got was adequate to prepare them to repay. And the situation would fix itsel…

Mostly it is the federal government doing the lending, not the schools. Eligibility is fixed by law and has nothing to do with ability to repay.

I agree that there are a lot of government loans for education-- another thing that ought to stop. The government shouldn't be a loan shark for young people.

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

#302

Post by ethanbond »

NDizzle wrote: post #131
shogun21 wrote: post #89

Earlier quoted context omitted.

I saw taking out student loans as just another hurdle I had I cross. Same with taking the ACT and writing admissions essays. I'm doing fine now and paying back my loans. But I wish I better understood APRs and monthly payments and what those numbers actually meant in context.

Did your parents never talk to you about this kind of thing? I have already had this discussion with my 10 year old. For what it's worth, I never went to college but I understand the importance of compound interest and understanding financial contracts which involve you.

I hope your ten year old has more options available than "go to college and take a gamble on being underwater" or "learn a vocation and hope you retire before it's swallowed by outsourcing or automation."

Despite the statistics, there is no obvious choice here. Why are the wise old people encouraging young people to choose the path their generation just got screwed out of? This generation of students has only ever heard of our parents longterm careers getting vanished by computers or foreigners.

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

#303

Post by [deleted] »

NDizzle wrote: post #131
shogun21 wrote: post #89

Earlier quoted context omitted.

I saw taking out student loans as just another hurdle I had I cross. Same with taking the ACT and writing admissions essays. I'm doing fine now and paying back my loans. But I wish I better understood APRs and monthly payments and what those numbers actually meant in context.

Did your parents never talk to you about this kind of thing? I have already had this discussion with my 10 year old. For what it's worth, I never went to college but I understand the importance of compound interest and understanding financial contracts which involve you.

[deleted]

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

#304

Post by warmblood »

sdegutis wrote: post #135
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…

Honestly, screw the modern "higher education" system. It's a business, pure and simple, designed to milk out every penny from kids and their parents, as much as humanly possible while still being "legal". It wasn't always so unbalanced, but that's the way it is today, and that's a crying shame.

Many would say that it's actually designed to milk the pennies from the federal government by proxy of the student and parent with a significant markup.

This is somewhat worse than simply taking from individuals because it implies a systemic breakage that someone is taking advantage of, possibly using political influence to keep that breakage from being fixed.

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

#305

Post by thegasman »

chadzawistowski wrote: post #279
ameyamk wrote: post #23

I wonder if there is investment vehicle I can short to make some profit if these loans do actually go bad?

Not really. Shamelessly copying a comment by /u/MasterCookSwag on reddit: THIS is the major piece everyone misses. Mortgages were such a disaster because banks held the debt securities thinking they were safe assets and they weren't. This caused a chain reaction of devaluation of balance sheet assets and paper losses which resulted in the collapse of some major institutions. It then caused credit to dry up so busines…

This isn't a strong argument to me. Student debt might not be collateralized the same way mortgages are (i.e. there's no house to repossess), but student debt is still an asset on a bank's book. If anything, student debt default seems to me more troublesome, as defaulted debt without collateral is more damaging to a balance sheet than debt with collateral.

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

#306

Post by devonkim »

tostitos1979 wrote: post #245
tsunamifury wrote: post #112

Earlier quoted context omitted.

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 ge…

I bought a place in 2007 after the start-up I was at exited. That was a very expensive lesson that you didn't have to learn at least. I can't think of an actually positive outcome to this lesson fundamentally that I couldn't have just learned with some Youtube videos. The emotional scarring is what's worse than the financial scars. We can always make some more money when we've got some time in life left, but life experiences are something nobody takes away from you no matter how much you want them to go away.

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

#307

Post by hodoublesy »

mrestko wrote: post #296
jonlucc wrote: post #193

Earlier quoted context omitted.

Most teachers should qualify for the Public Service Loan Forgiveness (PSLF) program, meaning any federal loans (not private) should be forgiven after 120 payments without incurring the tax burden. As far as I understand, the 120 payments could well be "payments" of $0 if the annual income is low and the borrower is on an income-based repayment plan. By the way, if you file taxes separately, they typically only take t…

The amount forgiven is counted as income for that year and is taxed as such. I believe this is what the preceding commenter was asking about.

There are various repayment options available, some incur a tax burden and some do not. The PSLF option does NOT incur a tax burden after 120 payments. It would be smart to research each option available to see what is best for your circumstance.

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

#308

Post by manyxcxi »

industriousthou wrote: post #261
pmiller2 wrote: post #78

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…

Non-college grad here (well, AA from a community college, but that doesn't really count). I get the impression that that some kids did really challenging programs or went to prestigious schools and that paid off really well, but a lot of kids bought into the "college = success" mantra. Every authority figure they knew was telling them that this was the only way to be successful and the schools were jacking up tuition…

> This is really a shocking dereliction of duty on the part of teachers and guidance counselors.

Playing devil's advocate for a second, what if the teachers and guidance counselors still believe it to be true? They're likely from a previous generation or two, where simply having a college degree opened up most doors.

Then again, what if having a college degree really is still better than not? You don't have to spend $300K on undergrad to get a degree- and I think that is what we should be pounding into kids' heads. That's great that you want to go to a private school for undergrad and two more years to get your masters so you can be a teacher, but paying 5-10% on $300-400K and topping out at $65K/year is a shitty economic deal. Go in-state and work while you study. Search for the grants, so many random grants go relatively unclaimed.

It's like buying a car- when you focus on the prospect of a low monthly payment and not the fact you're paying for 95 years, it's easy to hide how much money you're flushing down the toilet.

EDIT: I took on about $50K in school loans and worked a minimum 20 hours a week through uni. I worked as a motorcycle mechanic, farm hand on a dairy farm, tech support for the college, hardware testing for a lab, and all kinds of contract development work. Sometimes in the same week.

Some days it sucked, most of the time it was tolerable, and it was often pretty fun. I also learned something about my own intestinal fortitude that school never would've taught me.

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

#309

Post by TheOtherHobbes »

onion2k wrote: post #86
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…

What should really be surprising about the Yelp thing is that Yelp didn't understand what would happen. A company that spends money to recruit and train a member of staff but doesn't pay them enough to stay in their job is just throwing money away. That a company the size of Yelp can't see this really obvious situation arising is amazing. I'm surprised their HR people don't get fired over it.

HR is a profession where you're allowed to believe that someone with a math or robotics degree isn't a good fit for a programming job because there's not enough of that Computer Stuff in their background.

It's part of a very curious corporate phenomenon - above a certain level of power you're defined as competent by reason of your department and job title, irrespective of your actual ability.

You can be breathtakingly clueless, to the point of creating very negative consequences for the company that employs you, but you will never be held responsible for it.

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

#310

Post by quicklyfrozen »

20years wrote: post #295

Lots are talking about the tech bubble but I feel this is a much bigger bubble.

It certainly seems likely to break many of the private-but-not-elite schools as more students choose state schools. Many seem to cost just as much, if not more, then the ivies.
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