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Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

bloomberg.com

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Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#41

Post by stevenwoo »

howard941 wrote: post #26

These should be low yield non junk but for some reason they're high risk/high yield in spite of the principle being backed by the full faith and credit of the US Govt. and bankruptcy non-dischargability. There's a strange disconnect between the risk and the yield.

This non-dischargeability of the student loan changes made by Congress baffles me and strikes me as terribly unfair, and I'll never be using a student loan.

I guess we should follow the money and ask whom does the bankruptcy non-dischargeability benefit?

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#42

Post by InitialLastName »

danaliv wrote: post #23
jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> Some (many?) would like to see a government funded system Depending on how the debt situation falls out, we might already have that. :-\

You're being sardonic, but socialism-by-bailout seems like an interesting experiment.

Next, we automatically bail out everyone with medical debt -> universal healthcare!

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#43

Post by jartelt »

murph-almighty wrote: post #5
mikeokner wrote: post #3

Typical shitty reporting from Bloomberg. Other than the dollar amount outstanding, there's nothing else in the article that draws any similarities to the junk bond market. It's about as meaningful as saying "Apple's market cap approaches the size of the US junk bond market" or "Student Loan Debt surpasses Apple's market cap in size." In fact, there isn't really any interesting information in the article at all. There…

At a minimum, a comparison of the default rate between the two would be nice.

The article does compare them (albeit without much detail).

“Delinquency rates on student loans are much higher than those on auto loans or mortgages, due to loose student loan underwriting standards, the unsecured nature of student debt, and the inability to charge off non-performing student loans in bankruptcy,” Goldman Sachs Group Inc. analysts Marty Young and Lotfi Karoui wrote in a note Tuesday. “The substantial majority of student loan default risk is borne by the U.S. Treasury.”

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#44

Post by Top19 »

aloukissas wrote: post #18

One statistic that's commonly left out of these discussions & articles is how late parents save for college. According to Sallie Mae ( http://news.salliemae.com/publication/how-america-saves-coll... ), most families don't start saving before their oldest child reaches 7 years old. This effectively robs 1/3 of the investment period's growth potential. Another one (as perhaps a consequence of the previous fact) is that…

Your point is interesting. That being said, ughh anyone who pushes this smacks of neoliberalism. Wow now parents have to save from the birth of their child.

When will it start being considered “responsible” to save 10 years before a child is born and if you don’t you’re irresponsible cuz you missed 10 years of growth.

When will it start being considered “responsible” to save for your grandkids college?

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#46

Post by latencyloser »

lawlessone wrote: post #6
PatientTrades wrote: post #4

There is plenty of blame to go around here. However a major cause of this has been the push by the left that college is the only path to success. Trade and vocational schools as well as military service are all great options for young adults who may not know exactly what they want to do with their life right away. Spending 4 years of your life taking on debt, simply because society tells you college is the path to su…

>as well as military service are all great options for young adults Getting shot at for an education doesn't seem that great. Better off just moving to a better country.

Anecdotal, but my mother was a mechanic, my uncle a cryptographer, another uncle was some type of police on base, my cousin is a drone pilot and just sits in an office like building despite technically being involved in combat I suppose. Several former colleagues mostly did admin-type work while enlisted. The last person I know to have actually seen combat was my grandfather in Korea--but he knew what he signed up for and it was fairly deliberate at the time, he had wanted to be like his cousin that had fought on Iwo Jima years prior who was also a volunteer. All used their GI bill to get an education.

My point being, there's tons of military jobs that don't involve violence. For each job that does require violence, dozens more auxiliary positions are required to support that job.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#47

Post by joshgachnang »

murph-almighty wrote: post #38
jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> you'd probably see a lot more STEM degrees and a lot fewer of everything else I honestly think art schools are going to start running into problems convincing people it's a good idea to pay 60k a year for minimal ROI. My cousin wants to go into stage drama, and I don't want to tell her to not pursue her dream, but I think it's a lot to ask her to put herself in debt for years for a piece of paper that says she can…

Same. My sister was looking at a $40k/yr private school photography degree. I sat her down and we discussed how much that was going to cost her when she graduated, what kind of job she'd need to pay it back in a reasonable time, etc. In the end, she started her own wedding photography company instead.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#48

Post by jedberg »

hfourm wrote: post #39
jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

Truthfully, depending on your definition of majority, most college students ARE already pursuing more profitable majors. https://nces.ed.gov/programs/digest/d16/tables/dt16_322.10.a... The "underwater basketweaving" so to say, may be at most 10-15% of current college graduates. I think the solution lies more with reducing the cost of college, open source textbooks, more elearning, etc. Regardless of government fundin…

You could do all those cost reduction things, but until you either decrease demand or decrease the supply of money, costs will never go down -- profits will just go up.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#49

Post by Tactic »

murph-almighty wrote: post #5
mikeokner wrote: post #3

Typical shitty reporting from Bloomberg. Other than the dollar amount outstanding, there's nothing else in the article that draws any similarities to the junk bond market. It's about as meaningful as saying "Apple's market cap approaches the size of the US junk bond market" or "Student Loan Debt surpasses Apple's market cap in size." In fact, there isn't really any interesting information in the article at all. There…

At a minimum, a comparison of the default rate between the two would be nice.

Just FYI the average default rate for the 2014 Cohort was 11.5% but that varies WIDELY depending upon the school from 0.10% to 56.20%.

Official numbers can be found at: https://www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#50

Post by kevin_thibedeau »

hfourm wrote: post #39
jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

Truthfully, depending on your definition of majority, most college students ARE already pursuing more profitable majors. https://nces.ed.gov/programs/digest/d16/tables/dt16_322.10.a... The "underwater basketweaving" so to say, may be at most 10-15% of current college graduates. I think the solution lies more with reducing the cost of college, open source textbooks, more elearning, etc. Regardless of government fundin…

Psychology is effectively today's basket weaving. There is an excess number of students receiving those degrees with no intent to work in the field. It's widely perceived as an "easy" degree which makes it worthless unless you continue on and make it into the limited space for a graduate program.
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