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The Great College Loan Swindle

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Re: The Great College Loan Swindle

#81

Post by readams »

KGIII wrote: post #38
readams wrote: post #34

Because of government loan guarantees, the cost of tuition will eventually rise to match the entire net present value of the expected lifetime earnings premium. This could easily be in the millions. Also, we can expect income-based repayment to become the norm, since most will not be able to afford the payments

I'm kind of fond of the idea of people paying a percentage of their income after they get their degree and for X number of years. I think that's a fantastic idea. For needed professions, it could be X - Y number of years. Inexpensive and attainable education would be a good thing, I should imagine.

This is the law in the us right now

Re: The Great College Loan Swindle

#82

Post by moduspol »

indubitable wrote: post #16
rayiner wrote: post #6

It’s interesting that the real perpetrators don’t get much of Taibbi’s scorn. The loan industry are just opportunists, and for the most part students loans have been taken over by the government anyway. The real criminals here are teachers, parents, and employers, who have created a culture where people are compelled to get completely unnecessary higher education. Here, you need a college degree to be an administrati…

And another way of looking at things is this problem would not exist if the government did not pass special rules that affect student loans, and only student loans. I think there are lots of sources of failure that lead up to the problem, but the vast majority are of good intentions. It's not hard to see why the government decided to create special rules. It enabled lenders to all but completely ensure profit on loan…

> Who cares who's fault it is? There's a problem that needs fixing is all that matters.

I care. We can't properly address the problem or learn from our mistakes if we don't know the cause.

We had colleges before federal student loan subsidies. Our parents went to school and paid for tuition with part time jobs. Then we had them, and decades later, the chickens have come home to roost. This is not rocket science--it's Economics 101.

We are letting bad ideas off the hook by not focusing on what the problem is, and as long as we let people pass blame, we can expect to continue seeing it again and again.

Re: The Great College Loan Swindle

#83

Post by Clubber »

Maarten88 wrote: post #58

I am always amazed at the level of acceptance for these types of injustice there is in the US. Even here, most discussion is about the economics of college degrees, and how to deal with it on an individual level. While the problem, it seems to me, is entirely one of political choice and justice, and the current situation seems very unfair. Young people from poorer backgrounds seem to be destined for slavery for a lar…

My question is why hasn't he been able to land a full time teaching job in ~14 years? It seems like a full time teaching job would alleviate a lot of that pressure, but the article doesn't seem to mention it.

I understand teachers probably make the lowest salaries in any degree required field, but they can keep their heads above water if they are fully employed. Many family members are teachers, and it's noble but thankless work.

Re: The Great College Loan Swindle

#84

Post by touchofevil »

It seems like the root problem is that students cannot declare bankruptcy on student loans. If they could do that then lenders would adjust for risk accordingly which would lower the availability of loans, which would in turn drive tuition down. I know there's an argument that students will just declare bankruptcy after graduating, but if that's the case then the solution would be to make bankruptcy less appealing via disincentives (more penalties for declaring bankruptcy).

Making student loans exempt from bankruptcy is distorting the loan markets and, in turn, tuition. If restricting the availability of loans creates a situation in which the higher education is unavailable to students without financial means, then the state should make free or very low cost higher education available to offset this. The solutions are so obvious that it's pretty clear that the financing of student loans is a giant con at this point.

Re: The Great College Loan Swindle

#85

Post by Clubber »

wolfgke wrote: post #26
Joe-Z wrote: post #25

Earlier quoted context omitted.

One can, but we're talking about 18-year-olds fresh out of high school here.

But the parents are surely not 18 years old and just out of highschool.

I would expect high school guidance councilors would be a resource for this decision as well.

Re: The Great College Loan Swindle

#86

Post by Clubber »

watwut wrote: post #42
wolfgke wrote: post #30

Earlier quoted context omitted.

> It is competitions and if you dont compete, you loose for sure. The wrong move in the game was in my opinion rather to give birth to children if you cannot afford their education.

The problem will he solved once there are no more young people. We already have less then two children per couple on average, so it is getting there. Then again, if your logic makes you claim that majority of population is wrong for having children (including lower middle class and employed honest workers) then maybe the problem is elsewhere.

Agree. If an economy is structured where the population can't even sustain itself, that's a sign of a huge systemic problem. People sure like to parrot that though.

Re: The Great College Loan Swindle

#87

Post by astura »

wolfgke wrote: post #30
watwut wrote: post #12

Earlier quoted context omitted.

Quoting the article: "Going to college doesn't guarantee a good job, far from it, but the data show that not going dooms most young people to an increasingly shallow pool of the very crappiest, lowest-paying jobs. There's a lot of stick, but not much carrot, in the education game. [...] the squeeze on the un-degreed grows tighter, increasing further that original negative incentive: Don't go to college, and you'll be…

> It is competitions and if you dont compete, you loose for sure. The wrong move in the game was in my opinion rather to give birth to children if you cannot afford their education.

Well between birth and college life might happen that reduces income - consider injury, illness, or death.

Personally, I don't think parents should pay for higher education. I wouldn't have taken mine seriously if I weren't paying for it myself. It gave me a healthy dose of the value of money.

Re: The Great College Loan Swindle

#88

Post by leetcrew »

touchofevil wrote: post #84

It seems like the root problem is that students cannot declare bankruptcy on student loans. If they could do that then lenders would adjust for risk accordingly which would lower the availability of loans, which would in turn drive tuition down. I know there's an argument that students will just declare bankruptcy after graduating, but if that's the case then the solution would be to make bankruptcy less appealing vi…

if students could declare bankruptcy there would probably be no student loans. there are already very few private loans available to students without substantial credit history or a cosigner. how could the numbers possibly work out?

to graduate in four years from a state university (paying in-state tuition) costs about $44k. a typical college freshman has close to zero assets and no credit. if they have any income, it's probably a part-time minimum wage job. assuming they don't qualify for any aid, these people need to borrow about $10k each year and likely won't pay any of it back until they get a degree.

now let's pause for a moment. how many ways can you get an unsecured $10k loan with limited to no credit history? they basically don't exist. you would need to build credit for a long time before you got a limit anywhere near that on a credit card, and their whole business model revolves around loaning people more money than they should.

now consider that in the US, about 40% of students fail to get their bachelors in 6 years. obviously these people will not be able to use the degree to obtain employment, and probably will not ever pay down the debt in full unless they enter a lucrative trade that didn't require the degree in the first place. if we assume that the students who graduate are able to repay the loan, they have to pay a significant amount of interest before the lender breaks even on the group of loans. and keep in mind that there's no guarantee that a student who graduates has acquired a degree that actually improves their earning potential.

so tl;dr: it is really hard to offer a reasonable loan of that size to an 18yo with no skills/assets who stands a substantial chance of either not finishing or finishing with a valueless (to the market) degree.

Re: The Great College Loan Swindle

#89

Post by lovich »

Maarten88 wrote: post #58

I am always amazed at the level of acceptance for these types of injustice there is in the US. Even here, most discussion is about the economics of college degrees, and how to deal with it on an individual level. While the problem, it seems to me, is entirely one of political choice and justice, and the current situation seems very unfair. Young people from poorer backgrounds seem to be destined for slavery for a lar…

In the US, most institutions like banks use it as an opportunity to take money. The government is filled with folks who either want to help or are actively hostile, but that ends up with the actual government response being indifferent at best as neither side can force their will

Re: The Great College Loan Swindle

#90

Post by sordidasset »

pinot wrote: post #43
KGIII wrote: post #38

Earlier quoted context omitted.

I'm kind of fond of the idea of people paying a percentage of their income after they get their degree and for X number of years. I think that's a fantastic idea. For needed professions, it could be X - Y number of years. Inexpensive and attainable education would be a good thing, I should imagine.

The x-years and y-% could be based on their future earnings. A sort of tiered system with “marginal” rates. I wonder if such a system could exist.

Is this a tongue-in-cheek discussion you guys are having about taxes?
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