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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#181

Post by swimfar »

slackingoff2017 wrote: post #144
Meekro wrote: post #118

Earlier quoted context omitted.

My experience was similar to yours. I immigrated from Russia at a young age so we had very little money. I attended a great college mostly on scholarship. My mom had always taught me to work hard and pick a major carefully, taking into account ROI. Thanks to merit-based scholarships and need-based aid, I graduated with minimal debt, despite attending a private college with a $45k per year sticker price. Thanks to a p…

Going to college without debt is not always possible. I tried everything to get scholarships to no avail. Picking a major with a good ROI is definitely possible. Assuming everyone can do what you did is foolish because there's not physically enough scholarships to go around. There's probably a much greater number of people equally puzzled why they have to go to community college because they couldn't get a scholarshi…

I think his point was that he went to a college he could afford. It's true that not everyone can get scholarships to pay for their entire education. But no one has to pay $40k+/year in tuition to get a good education.

Re: US Household Debt Surpasses 2008 High

#182

Post by crdb »

ryandrake wrote: post #104
austenallred wrote: post #70

Earlier quoted context omitted.

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 Und…

> not told to "just go to the best college no matter what"

> majoring in Underwater Basket Weaving was not a great idea from a financial point of view

I've met many people in places like McKinsey or Goldman Sachs (i.e. "elite" high paying jobs) with degrees from Oxford or Cambridge in Philosophy, English, Arch & Ant or Theology (in "decreasing usefulness"). Many more than, say, graduates in accounting or business administration from Manchester University, although a few might make it. Hell, I know a Harvard philosophy major who co-authored a very useful Haskell library.

My conclusions from anecdotal evidence:

- these universities, regardless of degree, encourage very hard, focused work, and teach and encourage critical thinking; both critical thinking and hard focused work are useful in all jobs;

- people overestimate the "technical" portion of most jobs, and how easily it can be taught (a law conversion course takes a mere few months in the UK, and banks routinely train thousands of fresh unqualified graduates every year);

- people overestimate the marketability of skills taught in most "useful" degrees especially outside its area of specialisation (e.g. is a medical major more qualified a strategy consultant than a philosophy major?);

- you gain access to a vast alumni network and its reputation (which includes world leaders, the CEO of the companies you apply to, etc.);

- the selective nature of admissions sends the market a signal about your "intrinsic" quality.

(edited to be more readable on mobile)

Obviously, if you want to become a specialist and you are sure of it, it is a better idea to study that field in the best place you gain admission to. But that has not been true of the vast majority of my former classmates.

In fact I watched a strange inversion whereby those who were certain they wanted to be engineers are now at McKinsey or banks and those who were certain they wanted to make tons of money in business are now working in "hard" engineering jobs (structural engineering, fluid dynamics for car companies, etc.).

Re: US Household Debt Surpasses 2008 High

#183

Post by pmiller2 »

lr4444lr wrote: post #161
vkou wrote: post #142

Earlier quoted context omitted.

And yet, nothing prevents me from maxing out my credit cards, and spending it all on whiskey and limousine rides... Or totaling my car (While only having liability insurance). Lenders charge a premium over the prime interest rate because of the risk that they will never get their money back. Student loans are backed by the federal government - there is zero risk for these lenders. They seem to be under the impression…

I upvoted you because I think you've put your finger on something, and I think part of the answer is a collective unspoken belief that people who may not be meritorious on past academic achievement and/or very low on the income spectrum should have an avenue to determine their own educational destiny through hard work if they pledge a return on the investment to help them get there. And because of an impression that…

Except the taxpayers don't really lose out on student loans unless the borrower gets the loans discharged. They have immense power to levy bank accounts, garnish wages, seize tax refunds, and even garnish Social Security payments. Practically speaking, unless the borrower dies or becomes totally and permanently disabled, the government will get theirs. Bankruptcy discharges are very rare, and with all those ways of collecting, not paying isn't an option, unless the borrower leaves the US, never to return.

Re: US Household Debt Surpasses 2008 High

#184

Post by lr4444lr »

ced wrote: post #131
ryandamm wrote: post #20

An alternative view, and one I happen to subscribe to: a balance sheet analysis shows that US debt must go up over time to support exogenous capital flows. Whether US debt grows in the housing sector, student loans, revolving debt, etc is a function of internal, domestic dynamics (including laws, local economic structure, etc). But the total capital flow into the US exceeds the outflow; that money ends up on a balanc…

I'd like to understand this better. There's two villages. A businessman from village B comes to village A and buys a store from Bob for 100$. Bob keeps the money for a rainy day. Where is debt increasing?

Not quite how it works. Ted deposits $100. The bank lends it out up to the multiple allowed by the fractional reserve system[0] to the businessman for the store, who has to pay interest on that mortgage, and interest must also be paid to Ted by the bank. Bob deposits the $100 himself back into the bank, which is loanable at a different fraction so that the series of additional deposits eventually converges. Presumably, the bank has set a base rate, adjusted for the lenders based on their risk, that will allow everyone to profit from this transaction. They do this many times over: Ted's deposit is a sliver of the overall money they lend into circulation if the store is only worth $100. There is only one store now, but had better be X times more wealth measured in stores by the time all of the loans are settled.

[0] http://www.investopedia.com/terms/f/fractionalreservebanking...

Re: US Household Debt Surpasses 2008 High

#185

Post by sjg007 »

jjawssd wrote: post #12

Germany provides excellent educational opportunities in many fields for American citizens at close to zero out of pocket expense for the student. Google "Germany Erasmus".

True... If you are a qualified American applicant you should definitely consider getting your degree in Europe/England. It's a different system, perspective but worthwhile in the end. Certainly cheaper.

Re: US Household Debt Surpasses 2008 High

#186

Post by cobookman »

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…

I've been curious if you could pay off student loans using a credit card. Then declare bankruptcy.

Re: US Household Debt Surpasses 2008 High

#187

Post by lz400 »

lr4444lr wrote: post #170
lz400 wrote: post #139

Earlier quoted context omitted.

I truly don't understand the USA sometimes. Don't you guys know that in Europe higher education is free? Well where I'm from there was a very low nominal cost but my father was a public servant so cost was waived, I literally studied CS for 0 cost. And these countries are able to afford it all! Magic! I don't understand how people in USA are not aware of this and literally rioting in the streets. At the very least sw…

Free for everybody, regardless of ability, who wants it, and in any course of study?

When I studied you had to pass an exam. Certain subjects had a very high bar. For example civil engineering. Can't get it without top grades and top results in the exam. Apart from that, some degrees had very low acceptance scores and many people tended to study some humanities or economics degree that largely won't use afterwards, just for the social pressure of being an uni graduate. It's arguably how much you want to subsidize these people and how good that is for society, I'd agree trade schools and other paths should be encouraged and there's too much silly status attached to an uni degree. Still, overall, the system works in pretty much every first world country.

Re: US Household Debt Surpasses 2008 High

#188

Post by lr4444lr »

pmiller2 wrote: post #183
lr4444lr wrote: post #161

Earlier quoted context omitted.

I upvoted you because I think you've put your finger on something, and I think part of the answer is a collective unspoken belief that people who may not be meritorious on past academic achievement and/or very low on the income spectrum should have an avenue to determine their own educational destiny through hard work if they pledge a return on the investment to help them get there. And because of an impression that…

Except the taxpayers don't really lose out on student loans unless the borrower gets the loans discharged. They have immense power to levy bank accounts, garnish wages, seize tax refunds, and even garnish Social Security payments. Practically speaking, unless the borrower dies or becomes totally and permanently disabled, the government will get theirs. Bankruptcy discharges are very rare, and with all those ways of c…

I'm not sure about that. Isn't the whole point of outfits like Navient that the govt. loses money by selling off billions of the obligations to servicers?

Re: US Household Debt Surpasses 2008 High

#189

Post by moduspol »

int_19h wrote: post #149
masterleep wrote: post #28

Earlier quoted context omitted.

The more the government subsidizes higher education, the more expensive it becomes.

It's the exact same story as with healthcare. If you try to implement welfare by throwing money at the private industry to make their product more affordable, the prices simply grow up (which is basic supply and demand stuff - more people with money = more demand). For this to actually work, you need to either regulate prices, or have a public-owned, government-run nonprofit with an explicit mandate to keep the price…

Or let it become a market again, like it was for our parents until these subsidies came along.

Re: US Household Debt Surpasses 2008 High

#190

Post by mds »

mjn wrote: post #117
ericd wrote: post #22

Earlier quoted context omitted.

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

In the case of the University of California system, it's almost 1:1 substitution, declines in per-student funding being matched by increases in tuition. Partly due to actual cuts to the UC budget since 2000, and partly due to funding not keeping up with increases in student numbers. The state government mandates these increases in student numbers, but in recent years has not been willing to fund accordingly. The mand…

On the UCOP topic, I worked for a UC school for 10+ years and I have no idea what value UCOP actually provides to the campuses, if any.

You'd think they would consolidate administrative services like payroll under UCOP, but UCOP doesn't even do their own (they outsource it to UCLA).

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