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White House rolls back protections for people in default on student loans

washingtonpost.com

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Re: White House rolls back protections for people in default on student loans

#81

Post by brianwawok »

x0x0 wrote: post #50
brianwawok wrote: post #36

Earlier quoted context omitted.

> The only reason I was able to pay my loans was because the Army paid them for me after I completed my term of service. I tried for years to find employment that could help me escape a life of poverty but could not. Okay, so then I must ask: What did you major in, what was your total debt, and did you research the career prospects of your major BEFORE going to college? Sometimes I think a basic mandatory form that c…

Yes, it's a good idea to take eighteen year olds (that have been told their whole lives that they should go to college) and push them make decisions whose negative consequences we never allow them to escape.

They do that every day on their own. They decide to smoke or not. Many choose to drink and drive. By 18 you easily have the power to ruin your life, or those of others. At 16 even, not the uncommon to see a 16 year old in the news for running over someone.

I propose we give them more information. Perhaps not the end all be all, but at least give them a hope to make a smart decision.

Re: White House rolls back protections for people in default on student loans

#82

Post by notahacker »

someguydave wrote: post #58
andr wrote: post #13

Earlier quoted context omitted.

A professional VC will be wrong about some 80% of the startups they fund. Yet you want to punish a teenager for not correctly evaluating the chances of receiving a well-paying job 4+ years into the future?

The VC is "punished" by his own (and his investor's) voluntary investment losses. Who covers the teenager's losses?

And the startup founder isn't punished for failing to earn enough money; the wealthy fund with the risk capital accepts the loss and moves on rather than pursuing the broke founders for the rest of their life with 16% penalty interest rates and invented collection costs and special legislation to exempt them from bankruptcy

Why are people lending to students expecting to not be punished for their voluntary investment losses?

Re: White House rolls back protections for people in default on student loans

#83

Post by madenine »

xor1 wrote: post #73
madenine wrote: post #56

Earlier quoted context omitted.

Its going to be a really rough bubble. There's no one source to point the finger at, but we've got ourselves in a spiral where: -More people are going to school -University costs have skyrocketed (mostly due to expanded administration services), which has increased the need for students to secure loans -Wage growth has been low/flat for a long time -A college degree has replaced a high school diploma/GED as a minimum…

>How do you fix that without blowing everything up and probably destroying the lives for a huge group of people who's only crime was being born in a certain set of years? A huge number of millennial college students who weren't fortunate enough to graduate into a tech career between 2007-2011 already went through this. It wouldn't be anything new. >Not to mention the economic implications of an entire generation goin…

Probably should've separated/clarified my last two sentences; I agree that its already happening, and that the system will blow up on its own eventually.

My questions are: Can we do something about to reverse it? If not can we do a "controlled demolition"? Is there even anyone in a position to do anything / is the train accelerating with no breaks and no one at the helm?

Re: White House rolls back protections for people in default on student loans

#84

Post by LeifCarrotson »

throwaway2016a wrote: post #42

I've always wondered if the fact we make it so essentially students are forced to repay their student debt (even if they are otherwise insolvent) contributes to higher cost of education. After all, you have a captive market that has to buy your service or deal with a higher risk of unemployment and a lending institution that doesn't take on any risk. What if we let students default on their loans? My bet: - Less peop…

Absolutely. There are three parties here: Schools, students, and lenders.

Schools set the​ price based on what they can get students to pay, which is a function of the willingness of lenders to give the students money.

Lenders approve borrowing students based on their likeliness to repay, which is currently very large due to the legal framework.

Students select college programs and loans based on a convoluted mix of 17-year-old wisdom, well-meaning advice suggesting they pursue their dreams, their ability to get the loan, and a hazy idea of future employment, income, and repayment.

It's obvious that increasing the penalties to the students after graduation is about the least effective measure you can take.

If students were allowed to discharge student loans through bankruptcy, that would still be a hefty penalty. Lenders would be less willing to give them money. With less money available, schools would have to charge less.

Re: White House rolls back protections for people in default on student loans

#85

Post by [deleted] »

oddlyaromatic wrote: post #76
PKop wrote: post #38

Earlier quoted context omitted.

Removing loan guarantees, and forcing students to scrutinize the value of the degree they are pursuing will improve the problem of students blindly doing what they've been told to do. If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it? Any possible improvement of the status quo is going to involve pain. Certainly universities themselves could start feeling some of it, as…

I come from a country where my education was paid for by other people's tax money. I studied the subjects where my curiosity was greatest, and though I don't work in that field now, I do rely on things I learned through my college experience almost every day, and they make me better at my current job. Overall they make me a better contributor to the world around me, and I also have this feeling of gratitude that my w…

[deleted]

Re: White House rolls back protections for people in default on student loans

#86

Post by [deleted] »

rsync wrote: post #69
cromwellian wrote: post #53

Costs of increased military spending in Trump's budget: $54 billion Estimated costs to make college tuition free for every citizen: $62 billion

Cost of second Iraq War = 2+ Trillion and counting : https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War

[deleted]

Re: White House rolls back protections for people in default on student loans

#87

Post by Terretta »

nhangen wrote: post #70
PKop wrote: post #38

Earlier quoted context omitted.

Removing loan guarantees, and forcing students to scrutinize the value of the degree they are pursuing will improve the problem of students blindly doing what they've been told to do. If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it? Any possible improvement of the status quo is going to involve pain. Certainly universities themselves could start feeling some of it, as…

Give me an example of a useless degree.

One could question the utility of the degrees not received by these folks:

http://www.businessinsider.com/top-100-entrepreneurs-who-mad...

Maybe 'unnecessary' is a better word, or maybe define usefulness as needed utility per time and money.

Re: White House rolls back protections for people in default on student loans

#88

Post by someguydave »

HarryHirsch wrote: post #74
someguydave wrote: post #71

Earlier quoted context omitted.

>Borrowers already have skin in the game. Lenders have none That's absolutely false. Lenders have skin in the game - they run the risk that the borrower fails to pay back the principal. That's why they charge risky borrowers more interest. If lenders truly had no skin in the game then loans would be nearly interest free.

If lenders truly had no skin in the game then loans would be nearly interest free. There's a testable hypothesis there: did rates for student loans go up much when they were made non-dischargeable? I'm too lazy to check.

It's a good point. I failed to caveat that my prediction might not be true: - in a situation where other "risk-free" investments are more profitable - in a situation where the supply of money lent is regulated or controlled enough to fail to bring down rates.

Re: White House rolls back protections for people in default on student loans

#89

Post by someguydave »

notahacker wrote: post #82
someguydave wrote: post #58

Earlier quoted context omitted.

The VC is "punished" by his own (and his investor's) voluntary investment losses. Who covers the teenager's losses?

And the startup founder isn't punished for failing to earn enough money; the wealthy fund with the risk capital accepts the loss and moves on rather than pursuing the broke founders for the rest of their life with 16% penalty interest rates and invented collection costs and special legislation to exempt them from bankruptcy Why are people lending to students expecting to not be punished for their voluntary investment…

>Why are people lending to students expecting to not be punished for their voluntary investment losses?

I don't think they should be.

Re: White House rolls back protections for people in default on student loans

#90

Post by thecpphorse »

PKop wrote: post #38
nhangen wrote: post #10

I'm surprised by the comments here. I am a fiscal conservative, but having taken and struggled to pay for student loans, and having hired people in the same situation, find that the lending programs are predatory by nature in that they know students will be unable to service the high monthly payments, and eventually default as a result. Do I think people should pay their debt? Yes, but these lenders are the same lend…

Removing loan guarantees, and forcing students to scrutinize the value of the degree they are pursuing will improve the problem of students blindly doing what they've been told to do. If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it? Any possible improvement of the status quo is going to involve pain. Certainly universities themselves could start feeling some of it, as…

Why should lenders not be punished for financing the useless degree? After all the availability of easy financing drives up the price of the useless education.

Remember, the "moral hazard" spoken of in financial bailouts is that the lenders aren't being punished for taking bad risks.

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