Nearly 5M Americans in Default on Student Loans • Hacker News Board

Re: Nearly 5M Americans in Default on Student Loans

#51

Post by prostoalex » Thu, Dec 14, 2017, 5:29 AM UTC

ianai wrote: post #2

In the US people can’t clear student loans in bankruptcy. It’s a shame, I think, given the constant upward tick in tuition and lack of resulting careers. They can even go after the students parents.

You can make the student loans dischargeable in the event of a bankruptcy, but at that point their risk profile is no different than unsecured personal loans. Which for a person with low or non-existing credit history (i.e. any 18-year-old) would likely result in:

* requirement for high down payment - perhaps 50 to 75% of the tuition being covered by student or his parents (through home equity loans or retirement account loans)

* frequent and aggressive repayment schedule, starting perhaps 30 days after originating the loan

* high interest rate, perhaps front-loaded into repayment schedule due to higher than normal default rates

* aggressive monitoring of the events related to debt performance, where missed class, late homework, substandard grade or a behavioral citation could result in interest rate boost

* incentives and price control mechanisms enforced by the lender - your computer science class will have a low interest rate, but that music appreciation class or gender studies gotta be out-of-pocket

I think overall that would lower the enrollment rate and force the unbundling of academic offerings. Not necessarily a bad thing, but I can see some people being against it.

Re: Nearly 5M Americans in Default on Student Loans

#52

Post by superquest » Thu, Dec 14, 2017, 5:30 AM UTC

Top19 wrote: post #35

genzoman wrote: post #18

Before the internet, centralized places of knowledge were needed, and you'd need to attend that place to find said knowledge. Think about how access to music caused the price of albums to drop. Education had not seen a similar dip in cost even though the supply is 100 percent saturated. There's a dying class of professors who got in while tenure was still a thing that paid probably 1/10 of the cost for education kids…

Do you hate the liberal arts? Their importance in college was really emphasized after World War II, as many of the leading Nazis were seen as non-intellectuals without moral restraints developed by the study of history, philosophy, theology, etc. Liberal Arts should be cheap you’re right, but it also should be required.

A big problem with liberal arts currently is it is burgeoning with new fields of study that are truly political movements masquerading as scholarship -- where liberal arts should only be motivated by the search for truth.

So in a sense, the liberal arts aren't the liberal arts anymore.

Re: Nearly 5M Americans in Default on Student Loans

#53

Post by wildmusings » Thu, Dec 14, 2017, 5:31 AM UTC

akkat wrote: post #45

wildmusings wrote: post #36

Tuition, especially at private colleges, is totally out of control. But class sizes are up, not down. And the number of full professors is not growing. So where is the money going? To an explosive growth of administrative staff. My alma mater has almost one employee per student . There are many dozens of administrative departments, each with multiple deans and assistant deans and staff, and sometimes subdivisions eac…

What's the reason for that. I know administrative staff like that that are getting paid, but what would the current one decide to hire more staff? Unless there was some benefit the staff would prefer to keep the money for themselves rather than hire more people.

It is a law of bureaucracy that it always grows absent some constraining force. A few reasons come to mind:

1. Have a problem or a new political goal? Make a committee, open a new office, etc. This is how bureaucracies see the world.

2. Unproductive employees? You can't fire them because of HR policies and unionization, and more importantly, because there's no constraining force creating a culture of efficiency. So just hire more employees.

3. No one who rises to lead an organization then campaigns to diminish it in size. Everyone thinks they are important and that their work is important. Having more people working under you makes you more important. Having fewer makes you less important.

These are problems in for-profit organizations, but the market provides a constraining force. An inefficient company won't be able to compete with a more efficient one and will eventually go out of business. Also, shareholders will demand that expenses are cut so profits, and dividends or share price, goes up.

Re: Nearly 5M Americans in Default on Student Loans

#54

Post by pfranz » Thu, Dec 14, 2017, 5:31 AM UTC

Aron wrote: post #44

djsumdog wrote: post #24

Earlier quoted context omitted.

"The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating." -Thomas Jefferson I know I mention this book a lot on here, but _Debt: The First 5,000 Years_ is the most amazing book I've ever read on the history of debt, money and slavery. Debt relief has to come. Every great civilization throughout history has had to forgive debts. Curr…

"A debt is just the perversion of a promise...." That entire quote reads as completely incoherent to me. I feel like I would have to learn entirely new brands of logic and language to decipher it.

I haven't read the book he suggested, but the book's author created this podcast[1], which I'm told covers much of the same stuff. It's really fascinating and changes how you think about debt.

[1] http://www.bbc.co.uk/programmes/b05447pc

Re: Nearly 5M Americans in Default on Student Loans

#55

Post by nextstep » Thu, Dec 14, 2017, 5:36 AM UTC

djsumdog wrote: post #24

ggm wrote: post #7

Although by inclination what I want to do is rant about the iniquity of this kind of robo-debt in education, instead what I am thinking right now, is this: how does this compare overall to the rate of default in debt for other purposes? how does it compare to car loan debt? mortgage debt? I ask, because debt is the same, except in as much as student debt is in principle seeking a path to be able to repay it. The asse…

"The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating." -Thomas Jefferson I know I mention this book a lot on here, but _Debt: The First 5,000 Years_ is the most amazing book I've ever read on the history of debt, money and slavery. Debt relief has to come. Every great civilization throughout history has had to forgive debts. Curr…

You recommended “Debt” on here a while back and so I read it and just finished it this week. Amazing read! So interesting how the language of debt is tied up in our conceptualization of morality. I see this everywhere now, mostly recently in this aptly named startup trying to build debt instruments on the blockchain: https://dharma.io. After reading their whitepaper I think the irony of the name is lost on the authors.

Anyway, thanks for the recommendation!

Re: Nearly 5M Americans in Default on Student Loans

#56

Post by nulagrithom » Thu, Dec 14, 2017, 5:37 AM UTC

fancyfacebook wrote: post #22

ggm wrote: post #20

Earlier quoted context omitted.

good point. some debts follow you around for life. And after: my dad always said tax was a gamble, and he decided to ignore the final-demand letters which we found in his office after he died. In one sense, he "won" the bet. In another, viewing him as the tuple {himself, his estate} he didn't...

Tax isn't a self serving sociopathic "gamble" it's what allows you to go to school and drive on roads and use the internet. Don't dodge it as part of some insane game you were taught.

Don't be naive. If I don't pay my taxes this year the Internet and roads won't suddenly disappear. I'll still drive on the roads to work and use the Internet when I get there.

Not paying your taxes is absolutely a self-serving sociopathic gamble.

Re: Nearly 5M Americans in Default on Student Loans

#57

Post by prostoalex » Thu, Dec 14, 2017, 5:39 AM UTC

metilda wrote: post #19

nordsieck wrote: post #10

Earlier quoted context omitted.

> In the US people can’t clear student loans in bankruptcy. It’s a shame... Maybe you could explain this to me, because I really don't understand. Why do you think that it's a shame that people can't just discharge substantial, otherwise unsecured government loans? To me, the real shame is high school employees pushing college on marginal students. One of the few things worse than spending too much money on a not-par…

Bellevue College might be the biggest, but its far from the best. They tend to hire current UW professors to teach one class a quarter, stuff the rest of the dept with teachers that were able to get canned at the Seattle Colleges and UW satellites, and hope for the best. Many of my friends who went there have horror stories about their teachers which I'd be hard pressed to encounter at Seattle Central College or Nort…

US is pretty dismal at graduation rates overall - Department of Education is not even tracking the percent of graduates completing a 4-year degree in 4 years anymore, instead preferring a generous 6-year completion metric for a 4-year degree, which stands at 59% https://nces.ed.gov/fastfacts/display.asp?id=40

41% of all US undergraduate students have nothing material to show 6 years down the road except for the mounts of student debt. The quoted figure of 22% of those debts being in some kind of default starts looking optimistic.

Re: Nearly 5M Americans in Default on Student Loans

#58

Post by jstewartmobile » Thu, Dec 14, 2017, 5:41 AM UTC

Ex-wife was an english prof at a state university. They had students who came in with a 16 on their ACT, which really means they should still be in high school. They'd take remedial classes for a couple years, then most eventually filed academic bankruptcy.

Finance officer was telling me how for in-state students, the student is only paying around 20% of the actual tab, and that the state picks up the rest. Then there was the story from a few days ago where some poor lady ended up owing over $100k for a Even my own degree, in the "allegedly" hard subject computer engineering, first day of class would fill an auditorium. After midterms, class size would drop to just a handful of people.

So taxpayers on the hook for subsidies, former students paying obscene finance charges on a kind of debt that is almost unshakable, and little of that culminating in valuable skills and credentials...

Excluding the more selective institutions, higher ed is a racket, and the financing of it is an even bigger one.

Re: Nearly 5M Americans in Default on Student Loans

#59

Post by figgis » Thu, Dec 14, 2017, 5:51 AM UTC

logicchains wrote: post #49

fancyfacebook wrote: post #22

Earlier quoted context omitted.

Tax isn't a self serving sociopathic "gamble" it's what allows you to go to school and drive on roads and use the internet. Don't dodge it as part of some insane game you were taught.

Just because something was funded by taxes doesn't mean it wouldn't exist without taxes. When the Soviet Union liberalised, people there were shocked at buying privately produced bread. The limits of one's imagination do not constitute the limits of reality.

And just because something can be privatized doesn't mean it should..

Re: Nearly 5M Americans in Default on Student Loans

#60

Post by japhyr » Thu, Dec 14, 2017, 5:52 AM UTC

I'm a high school math teacher. As part of their high school math education, I encourage all of my students to do one of their projects on analyzing loans.

I ask them to pick an item they might take a loan out for, such as a car, a boat (we live in a small fishing town in Alaska), a house, or a student loan. They pick a realistic loan amount, APR, and term length. Then they run the numbers on the loan.

I demonstrate making a loan analysis spreadsheet, starting with an empty spreadsheet. Students then get the choice of making their own spreadsheet, modifying one that I've made with them, or using a loan calculator. By the end of a session, most of my students have become comfortable using a spreadsheet to analyze a loan. This lets them understand how all the various factors interact, and they can play with any loan they become interested in.

Students start out with no idea how banks and lending institutions determine monthly payments. They end up understanding loans better than many adults. They move away from "all loans are bad and predatory" and "loans are free money" to "some loans are fair, some are predatory, and I need to ask myself if a specific loan sets me up for a better life.

I wish someone had done this for me. When I took out student loans many years ago, I had no idea what my monthly payments would end up being. I was just told it would be worth while, and I trusted the people advising me. Students these days can't afford to blindly trust that student loans are going to make their lives better.