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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

#351

Post by nkurz »

thegasman wrote: post #305
chadzawistowski wrote: post #279

Earlier quoted context omitted.

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.

I think you are missing that the many (most?) student loans in the US are either made by the government (post-2010 direct loans) or are guaranteed by the government (pre-2010 guaranteed loans):

http://www.nolo.com/legal-encyclopedia/types-federal-student...

If the student defaults on a direct loan, the government is the one not being paid. If the student defaults on a guaranteed loan, the government pays the loan holder. Everyone wins! Except the for the credit blemished student and the US taxpayer, that is.

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

#352

Post by zeta0134 »

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…

This could not be more true. I'm of that very generation, went to an expensive technical school with no clue what I was getting myself into, and managed to flunk out in the first year.

Never even considered that possibility, because high school had been such a breeze, and now I'm stuck with a huge loan and nothing I can really do about it other than make payments. Minimum wage is difficult enough to deal with when you don't have an extra $200 coming out every month that you can't make go away.

Of course I know about all of this now; in hindsight I would never have made those decisions. So, that's a huge lesson learned. It's something I think society will come around on eventually, but a huge number of students bought into the trap blindly, and are now stuck without a good escape plan.

I've managed to get my life back together and I have things under control, but I'll be paying that loan off for the next 20 years if I'm quick about it. The only thing I've really gained is a strong distaste for the college system. I've had to learn to build my portfolio and sell myself to potential employers based on what I can do for them with my current skills, rather than what I have paid to put on my wall.

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

#353

Post by iofj »

__jal wrote: post #184
kdamken wrote: post #13

Not surprising. Lots of kids are holding out hoping that someone will get elected and wave a wand to magically erase the money they borrowed.

Or, you know, lots of kids can't find work that pays for shelter, food, clothes, transport, and interest on six figures. Despite being young and dumb, and told by most everyone that the only way they'd get such a job would be to, you know, take out those six figure loans. The post-2008 recovery has been a very poor recovery as far as jobs are concerned. Add in that wages for the less than six figure jobs have been st…

Really, according to government & the fed unemployment is pretty close to it's lowest in 10 years :

https://research.stlouisfed.org/fred2/series/UNRATE

Likewise, what are these people who can't find jobs doing ? They're not asking for unemployment benefits ...

https://research.stlouisfed.org/fred2/series/IC4WSA

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

#354

Post by mc32 »

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…

A compounding issue is that not all kids are made for higher ed. Some just don't have the aptitude, but the conduit towards vocational schools isn't there as it probably was long ago (we don't have the hauptschule/gymnasium system).

Unfortunately, such a system in the US would quickly run into trouble as schools would quickly get accused of funneling 'good' students one way and 'bad' students the other way and there would be accusations of unconscious bias of one type or another.

So we only have the "go to college/university" recommendation, for everyone, even students who clearly don't have the aptitude and would do better in a vocational school.

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

#355

Post by jdminhbg »

erichocean wrote: post #146
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 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. Student loans are the only legal way to sell yourself into "debt slavery"[0] in the United States. It's not the 17 year olds that are screwing up, it's society as a whole by even allowing this situation to exist. [0] https://en.wikipedia.org/wiki/Debt…

> Student loans are the only legal way to sell yourself into "debt slavery"[0] in the United States.

Do you mean that student loans are the only legal way to attain a loan whose collateral is your future earnings potential? Because if so that's very wrong.

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

#357

Post by nkurz »

sk5t wrote: post #350
iambateman wrote: post #313

Earlier quoted context omitted.

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.

the U.S.A. does not have debtors' prison

While true in theory, this may not be true in practice. There are several loopholes, one main one being that failure to pay fees and penalties assessed by the justice system itself can be a criminal offense. In some states a significant percentage (as high as 20%) of current prisoners are being held for failing to pay these LFO's (Legal Financial Obligations).

Here are a couple ACLU reports about the practice:

  In for a Penny: 
  The Rise of America’s New Debtors’ Prisons
https://www.aclu.org/files/assets/InForAPenny_web.pdf

  Modern Day Debtors Prisons: 
  The Ways Court-Imposed Debts Punish
  People for Being Poor
https://aclu-wa.org/sites/default/files/attachments/Modern%2...

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

#358

Post by zanny »

alanh wrote: post #294
serge2k wrote: post #250

Earlier quoted context omitted.

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

Do you think everyone who has gained an education should then be burdened by an inescapable bondage to a particular high-paying career? What if they decided they would rather be a teacher? A musician and band director? A serial backpacker? What if they are injured and can no longer take the 40, 50, 60 hours in a chair at the office it would require to maintain the level of salary? Just because a college degree is oft…

If you want to go to a very competitive school like MIT, probably. Generally the "best" schools are those that have better access to good professors, and resources that the brightest can best take advantage of. Now you can be bright and not want to make a lot of money out of MIT, but generally the assumption is that in capitalism if it is valuable it is worth money, and if you go into a job that pays a lot you are doing a more valuable job than if you were doing something that paid less.

If you want to go into a less competitive career, going into a less competitive school can make a lot sense, often because the less competitive schools can have better programs appealing to less lucrative fields because the pressure is less severe than it is for an MIT undergrad.

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

#359

Post by brandonmenc »

coryrc wrote: post #160
beatpanda wrote: post #110

Earlier quoted context omitted.

This is insulting. What choice do you think these kids have? A university degree is the only gateway to social mobility available to most young people in the United States, and at current prices, most of them can't actually afford it. What do you expect the kids to do? "Gee, I guess I'll just have to spend the rest of my life in the service industry, making other people rich." Give me a break. Of course they're going…

They have the choice to get a degree that actually makes money, not Studies or Art History.

Being indoctrinated with, "it doesn't matter what the degree is in, just that you have one," absolves them of at least some of the responsibility.

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

#360

Post by nuttinwrong »

tomc1985 wrote: post #329
speeder wrote: post #204

Earlier quoted context omitted.

I am from Brazil, and was victim of the same thing. Worse, I could if I had spent a year studying or so, join a free university, but even that was unnaceptable, the "right thing" to do was take a loan and dive in a expensive course. I finished college in 2009, I still don't got my first legal job, and I still have debts, I am struggling to buy medicine I need. Meanwhile everyone I know that ignored the "adults" and d…

No seal?

Gotta have a seal! lol
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