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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

#281
post #60
post #52

Earlier quoted context omitted.

I thought the point of student loan is to grant it to anyone regardless of if they can repay? If the loan is granted by looking at the student's future potential to repay, students would prefer majors/colleges with higher chance of getting a student loan.

If the word "loan" is in the name of the financial product, you are expected to repay. At some point we need to be upfront with high school graduate and tell them it is a bad idea to go study art history at a $40k a year no-name private college.

That's not true at all. A loan has a priced in risk of default.

The National Mortgage Lenders Association defaulted on their mortgage. Many business and corporations, large and small, go bankrupt and discharge debts. Only individual consumers get trapped in non-dischargable debt.

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

#282
post #76

Earlier quoted context omitted.

> 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.

It does when it costs hundreds of thousands of dollars.

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

#283
post #64

Earlier quoted context omitted.

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…

Having the government step in and pick up the tab isn't as ridiculous as you think. The majority cost increase (65%)[1] of higher education in the US over the last couple decades is due to a systematic defunding of government support for schools. It would be nice if we started investing in our country's education again. [1]2015 Study by the New York Federal Reserve - https://www.newyorkfed.org/medialibrary/media/rese…

How about the government lets the banks pick up the tab? Why should taxpayers bail out (wealthy, educated, intelligent) bankers who made bad loans?

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

#284
post #212
post #144

Earlier quoted context omitted.

Bankruptcy is yet another thing though. And I agree, by the way, the laws as written are unfair and don't help anyone. But bankruptcy isn't the ability to "walk away" from a loan. You literally need to be bankrupt: you can't hold any other assets beyond the statutory minums. Most people suffering with student debt aren't literally destitute (obviously some are), they just have a cash flow problem. Bankruptcy won't he…

I doubt that Drumpf was ever destitute when declaring bankruptcy. Students get off easy as far as assets go. they don't have any yet, so there's nothing to get rid of.

You probably get this a lot, but here is one more data point.

Almost nobody who uses the term "Drumpf" is taken seriously. It's the 2017 equivalent of using M$ to refer to Microsoft. It's a way to immediately get your opinion written off.

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

#285

Earlier quoted context omitted.

> I'd say "bite the bullet, and that's what banks get for giving out risky loans" but we know that's not going to play out that way, especially since the gov owns a fair portion. > Making tuition free is nice... I think it's funny that you have these two ideas so close together... The government owning most of the loans provides a very easy path to enabling free college retroactively: extinguish all the loans. The go…

That punishes everyone who took out private loans or worked to put themselves through college. Not to mention it hurts those who worked to pay down their loans earlier. There are a lot of ways of socializing the cost of education, doing it retroactively opens up a whole can of worms.

It's not "fair" but I think it's necessary. We are staring down the barrel of a loaded gun at this point.

I may be a little salty because I took the community-college-into-university approach to save on costs and made some sacrifices to send every extra penny I earned towards paying down debt.

But I also realize that the country is going to be much worse off if we continue to punish people for spending more than they could afford on university.

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

#286

Earlier quoted context omitted.

> Don't worry, your salary gives them a way out too. And I'm not just saying that to be snarky, I think it's very likely what will end up happening: you'll end up paying for their poor choices one way or another. If it's not directly via taxes to pay off their student loans, it'll fund their retirement. Social Security benefits, without any other retirement savings, puts you right around poverty level. I would not co…

I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job. I imagine there are many more people who have foregone retirement savings to pay off their massive college loans. Politically, the story would be something like this: why should you, a multi-millionaire SW engineer who hasn't paid taxes on your…

>>I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job.

It's interesting that you believe people with $5M+ networth would have service workers as neighbors. :)

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

#287

Earlier quoted context omitted.

> Yeah, but isn't that also the "problem" with subsidizing K-12 public school? Eh, 9-12 public school maybe. The dirty not-a-secret of K-8 is that it's effectively state-sponsored daycare as well as an educational system, so its role as a holding pen is a feature rather than a bug.

I find people who say things like this don't understand the great amount of good that elementary education provides. Basic literacy and mathematics skills are tough things to teach effectively. They're not at all difficult to provide if you have the time and resources to spend on your child, but many people do not (have the inclination or the time). Bad idea to punish the children of those people for their parents' d…

I think I was unclear, or you're rounding my view off to a very different one that I admit is common.

I'm a child of teachers, and I know quite a lot of people who teach in inner cities or narrowly made it out of impoverished towns because of good education. There's a reason I said "as well as an educational system", and I definitely don't believe the daycare role of schools is a reason to cut budgets or cut schooling.

Educating kids is hard. Many people lack the time, knowledge, and resources to substantially educate their children themselves. Many students benefit from years of often-repetitive teaching to ensure information is available when they're developmentally and environmentally ready for it. I don't doubt any of this, and I absolutely think public schooling is a sensible solution to it.

My point was only that "you could say K-12 education acts as a state sponsored vacation" misunderstands the role of schools as daycares. Non-educational time at school isn't a vacation, it's a public service for two-income households that struggle to afford daycare. I'm not talking about teaching kids math. I'm talking about the existence of three-recesses-per-day kindergarten, or middle schoolers sitting in voluntary, teacher-run study hall after school.

The district I grew up in had a public debate about whether to move to half-day kindergarten, where the two sides were "it'll cut school costs" and "it'll cost parents more in daycare". No one even claimed it was an educational debate, because less than half the day was spent on education. None of this has anything to do with whether teaching literacy in the Bronx is important.

I'm simply asserting that "provides childcare for free" is an intentional benefit, not an accidental drawback, of public schooling.

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

#288
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…

Have you read The Unincorporated Man? It's a sci-fi novel about a society like the one you're suggesting, where "investors" in humans such as parents and educators own shares in the person's future earnings. The novel/series casts this in various lights, mostly negative but with undeniable fairness and benefits. One question is where these shareholder cross the line into slaveowners. What is a reasonable rate of taxation? What can be reasonably demanded from the indebted?

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

#289

The fundamental problem here is that student loans have been declared a special debt not dischargeable through bankruptcy. At the same time, these loans can be Federally guaranteed through FFEL. This leads to $100K cooking schools promising to turn a recent dischargee from the Army into a pro-chef, sign here, here and here. If student loans were subject to bankruptcy banks would be more careful. Instead we have a pol…

Exactly. The lenders don't have enough skin in the game to make it worth negotiating with the colleges / universities to keep tuition down. The article mentions "loose student loan underwriting standards". That means the underwriters don't call the colleges on the carpet about grossly overpriced degree programs. So tuition spirals.

I blame the lenders as well but I get there differently.

With or without the threat of lendee bankruptcy, it isn’t in the interests of lenders to negotiate lower tuition. This doesn’t happen with houses. It’d never happen with tuition.

Instead this is just free money for the banks. Since it guaranteed they risk nothing.

Your no skin in the game is their lack of risk. I blame the lenders because they lobbied for this gift.

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