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

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

#71

Post by monkseal »

What feels so deceptive about the panic around student debt is the devil is the details. I think if you drill in median student loan debt for an UNDERGRADUATE is like $12k. That's less than a car loan and we don't have a panic about that.

Most of the debt is for graduate, PHDs, law and MDs or undergrads who attend expensive private universities. These people should make more money from that investment.

My point is overall average student loan debt or the overall outstanding amount owed is horrible way to look at it and talk about it. It creates an unnecessary panic.

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

#72

Post by ransom1538 »

ajross wrote: post #64
ransom1538 wrote: post #61

Easy solution. LET the students default. Seriously, if students could default like they can buying a used car there would be lower tuition and better attention to whom you give a loan to.

No offense, but that's ridiculous. There's money owed here. The schools already got it, the banks are owed it. Someone needs to make that right, you can't just "forgive" debt without some party taking a huge hit. Which one? I'm guessing the developed version of your proposal would be for the government to step in and make the payments to the banks. But.. that's ridiculous. If you want to throw around government money…

Wait. Isn't that how investing works? You invest hoping to get a return - but sometimes you don't. A loan in which students (or anyone) can't default is getting close to debtors prison. Whoever invested without caring who they gave the money to should, well, get those returns: $0.

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

#73

Post by rhino369 »

stevenwoo wrote: post #41
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?

It benefits people who can pay back students loans and people who need students loans to make extra money.

Before loans were non-dischargeable, you'd have students run up their debts and declare bankruptcy. This sort of fraudulent activity had no consequences since student loans are unsecured.

The result was that the private student loan market was small. Nobody was going to loan money they'd never get paid back.

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

#74

Post by grasshopperpurp »

ajross wrote: post #64
ransom1538 wrote: post #61

Easy solution. LET the students default. Seriously, if students could default like they can buying a used car there would be lower tuition and better attention to whom you give a loan to.

No offense, but that's ridiculous. There's money owed here. The schools already got it, the banks are owed it. Someone needs to make that right, you can't just "forgive" debt without some party taking a huge hit. Which one? I'm guessing the developed version of your proposal would be for the government to step in and make the payments to the banks. But.. that's ridiculous. If you want to throw around government money…

>No offense, but that's ridiculous. There's money owed here. The schools already got it, the banks are owed it. Someone needs to make that right, you can't just "forgive" debt without some party taking a huge hit. Which one?

No offense, but the banks should take on risk if they're charging interest. Right now, they can have their cake and eat it, too, which is stupid - no offense.

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

#75

Post by alexanderstears »

umbrellathorn wrote: post #51
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…

> for a useless degree they'll never use I went to school for such a degree. While I don't use it in my day to day now, I still consider it priceless. There's some inherent value added to a person who pursues to study a bit of humanities, history, philosophy and art in college apart from their major. Scholarly work really helps shape the way you look at life for the better. Part of this is that you really understand…

But did you need to go to school for that 'priceless' education? You can learn a lot about the humanities at your local library. Maybe it's not the same, but does a private school with a 60k tuition seem 'worth it' for humanities education when the alternative is a cheaper vocational education and self-study?

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

#76

Post by ProAm »

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…

Education doesn't always need to have an ROI, sometimes it's just worth what you spend on it.

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

#77

Post by erikpukinskis »

kevin_thibedeau wrote: post #50
hfourm wrote: post #39

Earlier quoted context omitted.

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.

Psychology is a superb background for both marketing and design. Possibly better than a marketing or design undergrad. It’s also a great lead-in to an MBA. Heck, I think it’s put you in good stead to get finance jobs. Have you studied psych before? I got a minor with my CS undergrad and all my psych classes were invaluable.

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

#78

Post by asddkk »

kevin_thibedeau wrote: post #50
hfourm wrote: post #39

Earlier quoted context omitted.

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.

So... I got an undergrad degree in psychology, but then went on to a doctoral program and got a PhD.

I'm not actually disputing your suggestion that a lot of students obtain the degree as a placeholder--it's a problem--but depending on the university, it's far from easy, and I know lots of students who obtain lots of degrees as placeholders. Students perceive that the degree is easy based on introductory psychology, but in a lot of programs, it quickly turns into statistics, neuroscience, and cognitive modeling with upper-level classes. Students coast for their first year or two and then sometime by their 3rd year start struggling.

Anyway, one of my frustrations after my doctoral degree is the stereotypes about the field. I've certainly had more experience with computer science, math, and statistics than most undergrads with those degrees (math might be different). I've worked with comp sci undergrads, and without meaning anything negative, I felt like I was teaching them about programming most of the time, rather than anything the other way around.

And yet, because of my degree, somehow people just assume that I'm interested in past lives therapy or something like that. What I do is closer to ML/AI/epidemiology than anything else. I've published papers in the areas of information theory and statistics, and coded in a large number of languages across various paradigms.

One shift that seems to have occurred since I was in undergrad is this idea that you are your degree. It's pernicious. The liberal arts philosophy is sort of along the lines of "get a degree in philosophy," take your advanced maths and statistics, and then learn more of it later, because the specific degree doesn't matter. But now we see college as an advanced job training program, and people assume that you are only qualified to do what you got your undergrad in. It's absurd.

I admit there's some limits--I'd wonder if an BFA could get deep experience in computer science, but who knows? I've seen all sorts of art projects that involve heavy coding, statistics / ML, and low-level hardware stuff, and know history faculty who are basically doing signal processing research. Coetzee, a nobel prize winner in literature, used to code.

At some level, the problem isn't these degrees all the time, it's the stereotypes about them and the people getting them.

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

#79

Post by JonFish85 »

To me, this is another implementation of the housing bubble:

- People see college graduates making a lot of money

- Politicians make it a priority to make it easier for people to get loans to go to college

- More people take out loans to go to college

- Colleges realize there is no downward pressure on price and raise tuition.

- Politicians continue to make it easy for people to go to college

- People take bigger loans to go to any school they wish

Until the music stops, things are sort of OK. People's kids can go to any school they can get into, regardless of cost. Colleges can raise their tuition with no consequences.

Politically it's a difficult problem, because the old solution of making more money available is getting out of hand, but what politician wants to stand up and tell people they can't go to the college of their dreams just because they can't afford it?

During the housing bubble, it was the cycle of "people want to own a home" => "politicians say everyone should be able to own a home and make loans available" => "companies make money packaging up these loans" => "prices go up" => "people can't afford homes" => "politicians make more money available". Until the music stops, everything is great -- everyone is making money, everyone is getting what they want. Then it unravels...

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

#80

Post by [deleted] »

jedberg wrote: post #27
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…

It's good in theory, but most new parents don't have the spare cash to start saving at birth, unless they are already fairly well off. I was lucky enough to have kids late in life and I can afford to put money in their college fund now, but most new parents sadly can't.

[deleted]
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