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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#101

Post by martalist »

secabeen wrote: post #50
mljoe wrote: post #39

Earlier quoted context omitted.

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate…

> the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject.

Paying tens of thousands of dollars per year to associate with others doing the same seems odd.

Re: US Household Debt Surpasses 2008 High

#102

Post by theptip »

austenallred wrote: post #70
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many. I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle cl…

> Considering that those loans don't even go away with bankruptcy

What? How does that work?

Edited to add: this link suggests you can make it go away, but you need to do some extra work: https://studentloanhero.com/featured/student-loan-bankruptcy...

Re: US Household Debt Surpasses 2008 High

#104

Post by ryandrake »

austenallred wrote: post #70
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

It sure feels like a bubble to me. I don't know how many friends I have with six figures of student loans and no career, but it's a lot. Considering that those loans don't even go away with bankruptcy, it's waaaay too many. I've noticed that younger students are starting to realize how much risk there is in something like that and shy away when my generation didn't. Maybe it's that I grew up in a "striving" middle cl…

I don't know, maybe it's different now, but my generation (went to school in the mid 90s) was not told to "just go to the best college no matter what": We were also advised to consider the cost and carefully choose a major so as to produce a positive expected ROI. Obviously nobody has a crystal ball and you can never tell when huge, industry-wrecking changes are coming, but it was well understood that majoring in Underwater Basket Weaving was not a great idea from a financial point of view. Have we forgotten this lesson?

Re: US Household Debt Surpasses 2008 High

#105

Post by Goronmon »

libria wrote: post #19
mdorazio wrote: post #3

For those who just read the title, the cause of this new high is ballooning student debt, not mortgages. Housing debt is still mostly declining.

Why is student loan debt not dischargable in bankruptcy? If it were, banks would be far less likely to issue them, students would find cheaper education alternatives, and universities would be forced to provide greater assistance.

Why is student loan debt not dischargable in bankruptcy?

Because there isn't a way to take back the knowledge/skills/information learned while in college. If you default on a home loan, then can take your house. If you default on a car loan, they can take your car.

What can they do when you default on your student loans?

Re: US Household Debt Surpasses 2008 High

#106

Post by Goronmon »

libria wrote: post #19
mdorazio wrote: post #3

For those who just read the title, the cause of this new high is ballooning student debt, not mortgages. Housing debt is still mostly declining.

Why is student loan debt not dischargable in bankruptcy? If it were, banks would be far less likely to issue them, students would find cheaper education alternatives, and universities would be forced to provide greater assistance.

>Why is student loan debt not dischargable in bankruptcy?

Because there isn't a way to take back the knowledge/skills/information learned while in college. If you default on a home loan, then can take your house. If you default on a car loan, they can take your car.

What can they do when you default on your student loans?

Re: US Household Debt Surpasses 2008 High

#107

Post by skewart »

caseysoftware wrote: post #81
theparanoid wrote: post #52

Earlier quoted context omitted.

University is about signalling not education (for the most part). University administrators are a large part of the cost increase.

We've had 30 (40?) years of educators looking down on blue collar jobs and gearing everything towards pushing everyone to university because it's a golden ticket to a successful life. What most people didn't realize is that university was an attribute of successful people, not a prerequisite to be successful.* People who might have been totally successful in vocational school or a variety of other things have been di…

This. The idea that college somehow intrinsically causes you to earn more money is completely wrong and absurd. It completely conflates causation and correlation. Yet it's frequently trotted out as a justification for taking on student loan debt (as it was in this article).

It's exactly the same as saying that people who own Ferraris make more money, so therefore the key to reducing poverty is increasing Ferrari ownership. And of course it's reasonable to take on hundreds of thousands of dollars in debt to buy that Ferrari because owning one will help you make more money.

As absurd as the Ferrari ownership push is, at a certain point, once enough people own them it does start to make sense for any given individual. I mean, who's going to hire the one weirdo who doesn't own a Ferrari?

Education arguably has a lot more intrinsic value than a luxury sports car. But a degree from an accredited institution is not the same as education.

Re: US Household Debt Surpasses 2008 High

#108

Post by Jach »

velodrome wrote: post #97
conanbatt wrote: post #68

Earlier quoted context omitted.

> Gov intervention is probably needed. The government interventino has been the problem, as you just exposed. Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves.

> Let people default on their student debt with 5 years of bad credit, and colleges will fix themselves. How can the colleges fix themselves? They are not the one's giving out the loans. Maybe that's how it should be... It forces the colleges to have a vested interest in their students' future.

Colleges will lower costs or give more scholarships when lenders can't give out arbitrary sums to anyone which must be paid back. That is, if colleges want the same attendance. It could be that they keep the same costs and only a few students can pay. That opens a lot of business potential for everyone else though.

Re: US Household Debt Surpasses 2008 High

#109

Post by slg »

tsunamifury wrote: post #7

This appears to be an even worse situation than 2008 because housing debt has gone down not because homes are cheaper, but that people can't buy homes. And other forms of debt with far smaller effect on net-wealth and GDP as well far harsher discharge terms are eating up the difference. This makes for the same (or more) debt load in an even riskier, more individually onerous, combination.

I don't want to say that student loans aren't a big problem or that there isn't a bubble, but I think the panic of a potential repeat of 2008 is missing a big portion of the mortgage crisis.

In 2008 there was a feedback loop that caused things to spiral out of control. Every house that was foreclosed on hit the market at a lower and lower price. This made it harder for people to refinance their existing mortgages. This was a huge problem because adjustable rate mortgages were all the rage leading up to 2008. The result was more foreclosures and then the loop repeated itself.

That isn't possible with student loans. If the student loan market pops, it will be awful for banks, it will be awful for the stock market, it will be awful for the country as a whole, but it isn't inherently going to make other people's student loans more difficult to pay off.

Re: US Household Debt Surpasses 2008 High

#110

Post by jlarocco »

manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

> There's a huge value in going to higher education, but the ever increasing cost and amount of debt people are taking on is setting everyone but the top 10% of graduates up for a life of being in debt, which is kind of horrifying. Especially since they are debts that are impossible to shed through bankruptcy.

I'm not sure you can make a blanket statement like that. The reason all these student loans have become a problem is that objectively a lot of degrees don't have a huge value. People are borrowing insane amounts to become the billionth undecided communications major and it doesn't make any sense at all.

It's almost like we've cut k-12 education funding (and quality) so low that people need to go to college just to get the education they should have received in high school.

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