More Than 40% of Student Borrowers Aren’t Making Payments • Hacker News Board

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

#341

Post by slavik81 » Thu, Apr 07, 2016, 4:14 AM UTC

pmiller2 wrote: post #315

industriousthou wrote: post #261

Earlier quoted context omitted.

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…

> 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. Challenging programs have relatively little to do with it. It's almost 100% about the prestigious schools and the networks that come along with them: the old "it's not what you know; it's who you know," deal. > All that s…

> Challenging programs have relatively little to do with it. It's almost 100% about the prestigious schools and the networks that come along with them: the old "it's not what you know; it's who you know," deal.

I didn't go to a particularly prestigious school. I didn't know anybody at the job I got as a new grad. I individually made more money in my first year out of university than most families did mid-career. I was not unusual among those in my program.

A degree in engineering pays off in part because it's a challenging program.

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

#342

Post by Pinckney » Thu, Apr 07, 2016, 4:14 AM UTC

refurb wrote: post #337

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…

It should just be normal debt that you can discharge through bankruptcy. I think doing that would likely result in no loans for many students or at least higher interest rates. Hell, if I were 22 with $100K in student loan debt to be discharged, I'd be silly not to declare bankruptcy.

It's not clear to me that this would be a bad thing.

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

#343

Post by Broken_Hippo » Thu, Apr 07, 2016, 4:15 AM UTC

lliamander wrote: post #233

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…

Financial literacy is important, but honestly most of these loans shouldn't be given out in the first place. If I take out a loan for a house, I provide evidence that I will be able to pay it back, and there is the collateral of the house in case I don't. Banks won't give out a loan unless there is a reasonable chance that they will make a good return on their investment. As far as I can tell, banks are prevented fro…

That is the actual reason for the government giving student loans instead of the banks - there really isn't a good way to tell if someone will pay it back, and no one has had enough time to prove responsibility at that age. Most of the private loans require parents or others to co-sign for the loans, and sometimes they don't really understand what they are getting into.

Even the banks rely on a credit score based on how well you've paid back credit cards and other credit. One cannot prove responsibility simply by saving money and paying bills on time and living within one's means - if one does this, they go to the bank for a loan, and despite having saved a sizable chunk of down payment, get told they have no credit.

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

#344

Post by Pinckney » Thu, Apr 07, 2016, 4:22 AM UTC

alanh wrote: post #183

Rangi42 wrote: post #97

Earlier quoted context omitted.

Not everyone wants or needs to get a well-rounded liberal arts education. The problem is that undergraduate degrees are more and more a prerequisite for getting any job, so there's pressure to make it easy for poorer people to earn a degree. Towards that end we have loans, grants, scholarships, subsidized city colleges and state universities...

I am afraid you are wrong there. It’s a myth that the reason we have public funding of higher education is to help people get nice jobs. We have public funding of higher education because a better educated populace is a better democracy and a better public. It's an intrinsic value. See also: http://www.salon.com/2014/06/08/colleges_are_full_of_it_behi...

If that were the case, why can't you get federal aid as a non-degree seeking student? Do I need credentials to contribute to a better democracy?

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

#345

Post by Broken_Hippo » Thu, Apr 07, 2016, 4:23 AM UTC

nibs wrote: post #177

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…

More victimization of the people who take these loans on. If you can drive one ton of sheet metal 60 miles an hour among peers, you can understand that spending other people's money on something requires you pay it back. The problem is people think it is worth it, not that they are victims.

How many 16 year olds have a clear enough mind to realize how much responsibility driving is? And is there an actual choice for most people? McDonalds used to as on their application if you had transportation to and from work, and public transportation is non-existent in most places, and horrible in many others.

For example: I lived in one city that only had cab service. You could not rely on it to get to work on time. You could not order a cab in advance, and the wait time for a cab could be anywhere from 10 minutes to 2 hours. Many of the city's roads had no sidewalks, and bikers were required to share the road with cars and follow the same legal rules as cars - turn lanes and all. Which might not be so bad on a nice day, but during a snowstorm it would be downright treacherous.

Besides - one must prove, to an extent - that they can drive the cars and know rules of the roads. The same sort of thing is completely absent in schools. The most 'personal finance' training I recieved was in 8th grade - a 6 week course ran by a dude that owned a car dealership. We got extra credit if our parents went to look at a car, and more if they bought one.

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

#346

Post by dredmorbius » Thu, Apr 07, 2016, 4:25 AM UTC

bduerst wrote: post #280

dredmorbius wrote: post #123

Earlier quoted context omitted.

Information asymmetries put the burden of guilt on institutional actors. The educational and lending institutions which have a strong awareness of true costs and actual employment prospects. Over individual young students who don't, and are often relying on those institutions for information and guidance. Related: principle agent problem.

Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem. Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardia…

At 17 a student is precisely a minor. My understanding of current research is that full intellectual maturity is generally reached in the early 20s.

I said P-A was related. Not identical. Again: students are being advised and encouraged by parties with 1) vastly greater access to information, 2) vastly reduced risk (the loans are federally guaranteed in the US), and 3) benefitting from risk diversifictation over large numbers of incoming students.

Final proof: there seems to be rather a problem with the student loans business. Including numerous institutions convicted of fraud, and, if I can find the article somewhere, noncurrent payment rates of 40%. Oh, silly me, that's the very article we're discussing here.

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

#347

Post by batbomb » Thu, Apr 07, 2016, 4:30 AM UTC

pmiller2 wrote: post #315

industriousthou wrote: post #261

Earlier quoted context omitted.

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…

> 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. Challenging programs have relatively little to do with it. It's almost 100% about the prestigious schools and the networks that come along with them: the old "it's not what you know; it's who you know," deal. > All that s…

Many (most?) people can get into whatever the main land grant/public research university that exists in their respective state, even more so after a year of community college. In general, almost all of these schools offer a good quality education, especially if you avoid degree-mill majors (e.g. communications, psych, history, economics, etc...) and choose any critical thinking degree (STEM, Philosophy, maybe English/Lit).

If you aren't going to meet that bar, then it's probably not worth it to go to college because you're probably not going to learn much.

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

#348

Post by HillaryBriss » Thu, Apr 07, 2016, 4:33 AM UTC

alanh wrote: post #183

Rangi42 wrote: post #97

Earlier quoted context omitted.

Not everyone wants or needs to get a well-rounded liberal arts education. The problem is that undergraduate degrees are more and more a prerequisite for getting any job, so there's pressure to make it easy for poorer people to earn a degree. Towards that end we have loans, grants, scholarships, subsidized city colleges and state universities...

I am afraid you are wrong there. It’s a myth that the reason we have public funding of higher education is to help people get nice jobs. We have public funding of higher education because a better educated populace is a better democracy and a better public. It's an intrinsic value. See also: http://www.salon.com/2014/06/08/colleges_are_full_of_it_behi...

Something must be missing from the US formulation of "better democracy through education."

We spend a huge sum of money on "education" in the US, but the two-party, democratic government we have obtained for ourselves has left a huge fraction of the people dissatisfied and impoverished.

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

#349

Post by pmiller2 » Thu, Apr 07, 2016, 4:41 AM UTC

batbomb wrote: post #347

pmiller2 wrote: post #315

Earlier quoted context omitted.

> 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. Challenging programs have relatively little to do with it. It's almost 100% about the prestigious schools and the networks that come along with them: the old "it's not what you know; it's who you know," deal. > All that s…

Many (most?) people can get into whatever the main land grant/public research university that exists in their respective state, even more so after a year of community college. In general, almost all of these schools offer a good quality education, especially if you avoid degree-mill majors (e.g. communications, psych, history, economics, etc...) and choose any critical thinking degree (STEM, Philosophy, maybe English…

My post was not about getting a good quality education. In fact, my contention is that getting a good education is less relevant than the specific school and major one chooses. For a software developer just out of college, an EECS degree from Berkeley is going to beat a degree in (say) math, physics, or robotics from Podunk State, all else being equal. And, all else is rarely equal, because the Berkeley grad is going to have a way better network than the Podunk State grad.

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

#350

Post by sk5t » Thu, Apr 07, 2016, 4:52 AM UTC

iambateman wrote: post #313

kaonashi wrote: post #147

Earlier quoted context omitted.

They both bear responsibility, but only one party got the bailout.

I hear what you're saying, but bankruptcy is most certainly a bailout relative to debtors prison.

That's an interesting perspective, but the U.S.A. does not have debtors' prison. Only bad loans that are not repaid.