Student Loan Debt Is Now as Big as the U.S. Junk Bond Market • Hacker News Board

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

#391

Post by hkmurakami » Wed, Dec 06, 2017, 2:15 AM UTC

georgeecollins wrote: post #334

murph-almighty wrote: post #38

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…

There are some art and design schools who graduate students with great career prospects. In general people with really good modeling and animation skills can find work in entertainment. Not many people will pursue a career in drama, but I have worked with many people with that background who had great presentation and communication skills. This is an engineering heavy forum, but look around the place you work. Is eve…

Looking at current management may give you inaccurate data since the competitive environment for new grads has worsened compared to 20 years ago for humanities majors.

A better data point would be to look around entry level or mid level in non development roles (sales, marketing, HR/admin, etc.) and see what majors are represented there.

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

#392

Post by linkregister » Wed, Dec 06, 2017, 2:16 AM UTC

rsa4046 wrote: post #345

linkregister wrote: post #268

Earlier quoted context omitted.

I think it unravels over time. The feedback loop is very long. At some point, large amounts of young adults will accept loans that exceed the value-add of college by a significant amount. Then, those who chose not to attend college and pursued a trade will be more visibly affluent. The trend will swing the other way, universities will experience downward pressure on tuition, and trade schools will be inundated as uni…

Man, what an interesting discussion, and a lot of good points here. As someone involved in education in US (research faculty at major private school in the South), and more recently, in Germany, I've become increasingly concerned with the large number of students graduating these days with bachelor and graduate degrees with little hope of employment, holding huge debt they have scant chance of paying off in any short…

Agreed, having mandatory Physics and Chemistry classes seemed wasteful to me. I enjoyed them immensely, and I would have taken them as electives.

Most of my classmates didn’t get much out of them, and would have done better with personal finance classes or other practical classes instead.

For the time being, all but two or three college majors (zoology, social work, sadly enough) are still cost-effective over a lifetime, given the median undergraduate student loan amounts. This gap is closing however.

Trades shouldn’t be considered a complete panacea, pay varies widely by regions. Some trades only pay well in one or two places.

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

#393

Post by hkmurakami » Wed, Dec 06, 2017, 2:17 AM UTC

dnadler wrote: post #238

mattmanser wrote: post #97

Earlier quoted context omitted.

The thing I don't understand is, how does it unravel? It feels like politically acceptable short-termism of shunting education costs onto future generations. No-one's going to 'lose' money over it. Who will suffer? It doesn't look like it will be corporations that will suffer, save some institutions will close when the endless supply of money suddenly dries up. It looks to me like it will be governments, a political…

Yeah, as you say, it's not really a traditional "bubble". From what I can tell, a few entities will suffer, but not in a spectacular fashion. 1. The government may be forced to forgive a lot of debt, thus taxpayers will suffer. 2. Those making whose student debt payments are not proportional to their income will be an economic drag on the US. So there is no "bubble" to "pop". Rather, it looks like it's going to be a…

iirc 1 is already happening, as more loans "than expected" (roll eyes) are delinquent.

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

#394

Post by usrusr » Wed, Dec 06, 2017, 2:54 AM UTC

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…

Not just nice for the people who personally went through that change, but it is also valuable for the general public to have such people around. But balanced against having more people with crushing debt I fear that the net effect is negative. A strong "background radiation" of humanities education can have a very positive effect on democracy, it is pretty much the defining difference between a working democracy and a populist nightmare. But if student loans leaved those who have the education no other option than to maximally leverage it to get ahead of others, it will likely have the opposite effect. (I felt tempted to write weaponize instead of leverage.) Maybe humanities education is only stabilizing "background radiation" when it is wasted, on the level of personal economics?

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

#395

Post by stevenwoo » Wed, Dec 06, 2017, 3:14 AM UTC

JBlue42 wrote: post #318

WkndTriathlete wrote: post #110

Earlier quoted context omitted.

Strangely enough that proposal was floated around in earlier versions of the currently proposed tax bill: the 401(k) yearly contribution cap was going to drop from $18,000/year to $2,400/year. That would have driven savings into Roth 401(k)s/Roth IRAs so that the tax income would be realized sooner rather than later. I currently save at a 50/50 mix of 401(k)/Roth 401(k) just in case the scenario you described comes t…

I was a bit miffed to learn that the max contribution for an IRA and Roth IRA combined is only $5,500. I did some reading and understand the point of it but I would much prefer to be in control of my own money and where it is invested than some of the limited options given through an employer's 401k.

Plus you cannot contribute at all to an IRA once your income is above a number (132,000? last year) that is way below valley software average salary. It's kind of a way to encourage one to work for a company that has a 401K I guess.

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

#396

Post by stevenwoo » Wed, Dec 06, 2017, 3:19 AM UTC

yardie wrote: post #271

toomuchtodo wrote: post #180

Earlier quoted context omitted.

Medicare cuts->Elderly dying off faster->Voter demographic change. Law of unintended consequences? Possibly. I can see the political winds shifting back hard over the next 3 years. Enough Puerto Ricans might have moved to Florida already to turn the state blue. Won't know until next elections.

A lot of people Puerto Ricans are moving to traditionally blue Florida locations. SE Florida, Orlando, Tampa are the 3 most populous areas and all are strongly blue. Through gerrymandering they'll continue to get the same representation.

If these new residents makes the statewide elections close, things would be improved (because in general in close elections, candidates have to appeal to the tiny amount of voters on the other side that switch parties, so toning down extremism), plus as Puerto Ricans, they had pretty much no say in the federal government versus some say after they moved from the island to the mainland.

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

#397

Post by atom-morgan » Wed, Dec 06, 2017, 3:35 AM UTC

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…

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college

This is just another way of wording how you're paying your debt and who you're paying it to.

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

#398

Post by toomanybeersies » Wed, Dec 06, 2017, 3:45 AM UTC

vec wrote: post #198

ConceptJunkie wrote: post #155

Earlier quoted context omitted.

The problem with subsidizing college in any way, including the current student loan system is that it encourages people to go to college whether it makes sense or not, and as several people have mentioned in this discussion, in a lot of cases, it doesn't make sense. Anyone who is properly motivated should be able to go to college, but when I hear cries for a free college education, I can imagine that that would stimu…

Yeah, but isn't that also the "problem" with subsidizing K-12 public school? One doesn't need a high school education to wait tables or stock shelves, and most apprenticeships and trade schools could probably be started several years earlier without issue. We used to have this Enlightenment ideal of a Liberal Arts Education. It served as job training, sure, but it also tried to make its recipients better citizens and…

There's a lot of countries where it's not normal to keep going to school until you are 18.

In New Zealand, you can leave school when you're 16 and start an apprenticeship. I think that by 16, most people will know if they're definitely not going to be going to university, and I think that 11 years of schooling is enough to set people up with the basics for life. It's the point where (at least in New Zealand) you start specialising, picking specific subjects that are going to help you with, or be required for, university

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

#399

Post by berbec » Wed, Dec 06, 2017, 4:32 AM UTC

mattbrewsbytes wrote: post #230

berbec wrote: post #135

Earlier quoted context omitted.

They aren't securitized the way mortgages were, but you also can't walk away. Student loans are immune to bankruptcy so it follows you forever.

That is the major difference, mortgages had people underwater on actual physical things like property. They would go bankrupt and foreclose which would have a domino effect on other things. Student loans are ignored in bankruptcy and there is no domino if they fail to pay since a degree isn't transferable to another person. If there were to be a bubble burst, the people impacted are those that can't pay loans back an…

I'm not certain, but I believe they are backed by the fed, but issued by private lenders.

Any HNers currently in college? Is your loan from a federal institution or a private lender?

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

#400

Post by berbec » Wed, Dec 06, 2017, 4:34 AM UTC

workthrowaway27 wrote: post #154

berbec wrote: post #135

Earlier quoted context omitted.

They aren't securitized the way mortgages were, but you also can't walk away. Student loans are immune to bankruptcy so it follows you forever.

Right, and that doesn't seem good to me, but I don't think the fallout from student loans will be anywhere near the fallout from defaulted mortgages in 2008ish because they just aren't as as levered. So it's terrible for the people involved, but not directly bad for society as a whole (but probably still bad in its second and third order consequences).

I'd say it's less bad for the people involved - it "only" trashes their credit. It makes life difficult, for sure. I'm sub-400 I believe. But a mortgage foreclosure trashes your credit and you lose your home. I /just/ need to come up with 12 months security, so I essentially can never move.