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Student Debt Lawsuits Are a Lucrative Business

nytimes.com

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Re: Student Debt Lawsuits Are a Lucrative Business

#71

Post by tudelo »

kharms wrote: post #26
rayiner wrote: post #15

Earlier quoted context omitted.

It's hardly remarkable. Student loans are originated without regard to credit risk, at the same interest rate for all borrowers. Moreover, pretty much every student is eligible to declare bankruptcy soon (and often, long) after they graduate. Requiring loans to be freely originated on one hand, and permitting people to discharge them in bankruptcy on the other, would be completely unworkable. As to why we require loa…

>Student loans are originated without regard to credit risk, at the same interest rate for all borrowers. That's not entirely true. For undergraduate students, no more than $57,500 can be loaned from the government at a fixed 4.45% APR. This is what you're talking about. If you need more than $57k (which you would even at most state schools) you need to get a private loan. Private loans have variable APR based on you…

A fixed rate that changes, right? None of my loans ever had the same percentage as the year before. Small point though.

Re: Student Debt Lawsuits Are a Lucrative Business

#72

Post by tudelo »

amorphid wrote: post #28
arcanus wrote: post #3

It is remarkable that you cannot declare bankruptcy from student debt. We have essentially decoupled the price of college from the expected return.

As someone who exited a chapter 7 bankruptcy (all dischargeable debts wiped out) in 2010 with $140K USD in student loans, I can say with certainty that student loan debt sucks.

Oh wow. That must be some story about how you racked those up. I wish you luck.

Re: Student Debt Lawsuits Are a Lucrative Business

#73

Post by tudelo »

godelski wrote: post #70
aplummer wrote: post #33

I think this is another situation where you can look at the models in the UK, Europe, other similar countries to find solutions. If I grew up in the US and could have managed it, you can study in Germany as a foreigner for free. Other countries like Aus have a system where your loan is interest free and indexed with inflation, and you start paying it off after you make about $35k per year as a percent of income.

Here in America we gain interest while we are in school and have to start paying it off 6mo after we graduate. For context, that is the average time it takes a student to get a job (right when they are also paying moving costs and such). Payment used to initiate after 9mo after graduation.

Not all loans accumulate interest while attending school. Look at unsubsidized vs subsidized federal loans.

Re: Student Debt Lawsuits Are a Lucrative Business

#74

Post by trowawee »

GauntletWizard wrote: post #66
thebradbain wrote: post #63

Earlier quoted context omitted.

I'm a CS Major, but saying a degree is "worthless" is pretty narrow-minded, no? I'd argue (at least anecdotally) that most people getting into these "worthless" degrees know they won't make a ton of money - but for them, money isn't something they particularly care about. There's more ways to define success than in terms of money.

Several of the best mathematicians I've met had degrees in music theory; there's a surprising practicality to it in modern CS as the concepts translate well to machine learning.

This may very well be true, but I'd rather make an argument against this idea by pointing out that the relative worth of a field of study is not related to whether or not majoring in it will get Facebook to pay you $200k out of college to help them build out their marketing panopticon. It's disturbing how many people on HN don't seem to get that (not necessarily you, but other commenters in this thread are exemplifying this). It's good to have people who study art and music and philosophy and design because those fields enrich the human experience, and because the world would be a worse place without them.

Re: Student Debt Lawsuits Are a Lucrative Business

#75

Post by heifer2822 »

reverend_gonzo wrote: post #51
exabrial wrote: post #44

Good Lord. There are two issues with college tuition: The first problem is people are not shopping around for a college education. There are thousands of incredible colleges around the USA that will give you the same or better education as a pricey school on the coasts. I did my easiest credits at Bulter County Community, then Wichita State University, before finishing up at Kansas State University. I only took on ab…

The problem is a little bit more than people are paying too much for a worthless degree. It's that they are being given a loan that is backed by the US Government to get that worthless degree. If the government removes the backing and allows the free market to give loans and set interest rates, suddenly you'll see that the lowest rates will be for STEM degrees, and those who want to study music theory, art therapy, E…

If you remove the government backing you'll see more of a divide on the socioeconomics of who gets to go to college and who is too risky to lend to.

Re: Student Debt Lawsuits Are a Lucrative Business

#76

Post by edpazu »

exabrial wrote: post #44

Good Lord. There are two issues with college tuition: The first problem is people are not shopping around for a college education. There are thousands of incredible colleges around the USA that will give you the same or better education as a pricey school on the coasts. I did my easiest credits at Bulter County Community, then Wichita State University, before finishing up at Kansas State University. I only took on ab…

Happy to see another Wildcat around here!

Re: Student Debt Lawsuits Are a Lucrative Business

#77

Post by jaymzcampbell »

exabrial wrote: post #44

Good Lord. There are two issues with college tuition: The first problem is people are not shopping around for a college education. There are thousands of incredible colleges around the USA that will give you the same or better education as a pricey school on the coasts. I did my easiest credits at Bulter County Community, then Wichita State University, before finishing up at Kansas State University. I only took on ab…

> The second problem is people are paying way too much for a nearly useless degrees that some colleges offer

I agree with this but for many people I think they hit a wall whereby a degree is a minimum requirement for entry to a position even if everyone "knows" that it's not required.

In the UK this was made worse with a massive push for 50% of children to go to university [1] as a political target. Whilst that might've been a noble idea in principle, it further undermined apprenticeships and trade skills and led to the general public thinking if you don't go to university then there's something wrong with you. [2]

I did my first degree at Imperial "full time" and my second with the Open University 10 years later whilst earning - if I could do it all again I'd have gone straight into work and studied "part time" (I hate that phrase, it's really more like having 2 full time jobs IMO). The second time round I was also "paying as you go" for my courses which made me extremely mindful as to just what exactly it was costing me (FWIW it cost me about 20% of what my first one did and I was earning the entire time).

> Somewhere there should be a list of "Degrees you should not get if you're going to pay more than $x for" to help bright-eyed high school kids make good decisions.

Unfortunately I think even if such a list existed the people that need to actually read and think about it wouldn't be aware or interested in it. Of the 18 - 21 year olds I've talked to recently, aside from the aspiring medics and hopeful academics, a bunch of them view university as a time to work out what they want to do. That was ok 30 years ago but I think they're in for an extremely expensive lesson.

Then again hope for many millennials about the long term future is at an all time low so why even think about it. [3]

[1] http://news.bbc.co.uk/1/hi/education/1789500.stm

[2] https://www.theguardian.com/politics/2011/nov/02/parents-app...

[3] https://www.weforum.org/agenda/2017/01/wages-have-fallen-43-...

Re: Student Debt Lawsuits Are a Lucrative Business

#78

Post by madengr »

exabrial wrote: post #44

Good Lord. There are two issues with college tuition: The first problem is people are not shopping around for a college education. There are thousands of incredible colleges around the USA that will give you the same or better education as a pricey school on the coasts. I did my easiest credits at Bulter County Community, then Wichita State University, before finishing up at Kansas State University. I only took on ab…

My kids have two choices, and they both start with a K; KU (me) & KSU (wife). It has also better be engineering, hard sciences, accounting/actuary, or medical.

Re: Student Debt Lawsuits Are a Lucrative Business

#79

Post by madengr »

heifer2822 wrote: post #75
reverend_gonzo wrote: post #51

Earlier quoted context omitted.

The problem is a little bit more than people are paying too much for a worthless degree. It's that they are being given a loan that is backed by the US Government to get that worthless degree. If the government removes the backing and allows the free market to give loans and set interest rates, suddenly you'll see that the lowest rates will be for STEM degrees, and those who want to study music theory, art therapy, E…

If you remove the government backing you'll see more of a divide on the socioeconomics of who gets to go to college and who is too risky to lend to.

Anyone can go to college, given they meet the academic admission requirements, and are willing to work (extending it past 4 years).

Re: Student Debt Lawsuits Are a Lucrative Business

#80

Post by logfromblammo »

ChrisBland wrote: post #41
Posibyte wrote: post #35

Earlier quoted context omitted.

The bank should be entirely at fault here. If they looked at a student's request for a loan that said I'm taking a basket-weaving class at Cornell and I need $120k to attend then it's the bank's prerogative to look into the student's past performance, the rate of return for basket weavers, and the bias to which Cornell would prompt higher or lower returns in this area. Just like any area of lending, it's on the bank…

You and I are the bank, these loans are federal, no private bank is giving these loans out, you and I are and we are footing the bill when the natural default occurs

Private banks are giving the loans out. When they do, they keep the interest, but shovel the default risk onto the treasury without paying them to do it.

The Dep't of Education also gives out direct federal loans and grants, and sometimes those private banks service those loans, but federal financing is now not quite enough to pay for a whole degree, so private loans are filling the gap, at greater expense to the students.

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