The Absurdity of Student Loan Debt • Hacker News Board

Re: The Absurdity of Student Loan Debt

#51

Post by peatmoss » Sat, Jun 16, 2018, 2:17 PM UTC

darkerside wrote: post #45

dpark wrote: post #29

Earlier quoted context omitted.

> is there never minimal cost-benefit analysis? Of course not. A huge portion of the population has essentially no understanding of finances, which is why they need to do things like call to ask why their loan balance is going up. Worse, there is a feeling of helplessness when finances seem like a mystery, hence in this case actually needing someone else to tell them to call and ask. This is why the cries of “free ma…

That's what bankruptcy is for. It's actually an elegant solution for uncontrolled personal debt. The problem is that we haven't figured out how to properly apply that tool (or an alternative) to higher education.

I keep waiting for an article wherein the author details their move overseas and renunciation of US citizenship to start a debt-free life in Germany or Australia.

Re: The Absurdity of Student Loan Debt

#52

Post by mijamo » Sat, Jun 16, 2018, 2:17 PM UTC

andrew_ wrote: post #32

Outrageous student loan debt, and the lack of means to pay for them after spending, has been an issue for at least 10 years now and has been thoroughly documented. It shouldn't be a mystery to anyone at this point, and it's baffling why people are still taking on these large debt loads for degrees and programs which don't have a snowball's chance in hell of paying off the debt in a reasonable amount of time. My own p…

Now imagine the same about drugs. Sure you an blame people for taking bad decisions and ruining their lives, but some systems or laws seem to prevent people from taking those decisions, or limit their impact. While other do the exact opposite. The US system seems to encourage people taking those bad decisions right now. I think the combo super easy loan + no bankruptcy + expensive university + "american dream" mentality is financially deadly.

Re: The Absurdity of Student Loan Debt

#53

Post by andrew_ » Sat, Jun 16, 2018, 2:18 PM UTC

dpark wrote: post #40

andrew_ wrote: post #32

Outrageous student loan debt, and the lack of means to pay for them after spending, has been an issue for at least 10 years now and has been thoroughly documented. It shouldn't be a mystery to anyone at this point, and it's baffling why people are still taking on these large debt loads for degrees and programs which don't have a snowball's chance in hell of paying off the debt in a reasonable amount of time. My own p…

How is it baffling when you literally did the same thing with credit card debt? People are generally bad with financial decisions because they are abstract and because good decisions typically require significant delayed gratification. Realistically, many sound financial decisions require putting off gratification forever , which is a hard pill to swallow. I ended up with a decent bit of debt for stupid reasons (e.g.…

> How is it baffling when you literally did the same thing with credit card debt?

I entered college when credit card companies were just starting to practice predatory sign-ups on campus and at college events. And many of the tactics they used back then have since been outlawed. That was also at a time when the wealth of information we now have in the internet did not exist. Given the myriad of channels to learn these days, it's baffling. Hell, how many different reviews do we read before making a decision on where to eat, or where to get our oil changed?

Re: The Absurdity of Student Loan Debt

#54

Post by darkerside » Sat, Jun 16, 2018, 2:18 PM UTC

The debt in this case was self imposed, and I'm completely confused about that. To follow a passion, why not take classes at a community college? I may be leaving empathy here, but but the decision seems inexcusably foolish.

Relatedly, I remain confused about why, in another common case for further education, parents are allowed to take these loans out on behalf of their children. College at this point serves a couple of purposes in society, but the financial driver is probably that it is a sign of successful parenting. If a parent can't afford to send their children to college, they should have to do so with a collateralized loan, not one they can saddle upon their child.

Re: The Absurdity of Student Loan Debt

#55

Post by klagermkii » Sat, Jun 16, 2018, 2:21 PM UTC

kryogen1c wrote: post #5

It troubles me that topics like this usually turn into FUD about the 1% instead of recognizing government interference and subsidation as the problem. The parable of the scorpion and frog [1] is exactly relevant. I wish Americans would stop shouting for more government to fix problems the government created in the first place. [1] https://en.m.wikipedia.org/wiki/The_Scorpion_and_the_Frog?wp...

The only way these companies can reclaim the money that they've lent to students is through the backing of the government, and the legal mechanisms that have been provided to them to use the state to collect money.

Isn't cancelling debt a form of less government interference, where the government will no longer allow its resources to be used to go after another person's property?

Re: The Absurdity of Student Loan Debt

#56

Post by anoncoward111 » Sat, Jun 16, 2018, 2:22 PM UTC

Awesome post :) There's a lot of victim blaming in the student loan debt world. Let me attempt to explain how we can fix the system.

1) Education is too expensive (especially relative to the value it delivers).

2) But, that money isn't even going towards the underpaid adjuncts who teach the classes. wtf??

3) Tuition expenses mostly go towards administrative salaries, very very old established professors, and buildings and services. This needs to change.

4) But it can't change, because you can't just open a college and get it accreditted easily. This is a regulated industry, just like the health insurance industry. You have to do the song and dance for months in front of regulators, who have their own interests in keeping competitors out.

So, all in all, the student gets screwed, the company that hires them receives questionable value add, and the college administrators and banks make a killing.

It is a massive wealth transfer that delivers little value.

Re: The Absurdity of Student Loan Debt

#57

Post by belorn » Sat, Jun 16, 2018, 2:24 PM UTC

bradleyjg wrote: post #46

belorn wrote: post #38

Earlier quoted context omitted.

.

I think you have an outdated model of student loans. There's no longer a government guaranteed bank issued student loan model (FFEL ended in 2010). Instead the overwhelming majority of student loans are made directly by the Department of Education. For better or worse the student loan issue is almost wholly about government action, not banks. Incidentally the same is true of mortgages post-2008. Again for better or w…

I did not know that but it doens't really change the conclusion. If the government left the banking sector alone then banks would have to handle loan and security as a matter of self preservation.

Looking from a historical perspective we are really running late on a dept-reseting event. Usually a civil war or bank run caused a reset on the economy once in a while but the latest period of government banks, global banks and banks too large to fail has so far been protected by government interference from the same fate. The result is that there is a lot more unsecured debt in the economy than a strict market based economy with no government interference would allow.

Re: The Absurdity of Student Loan Debt

#58

Post by peatmoss » Sat, Jun 16, 2018, 2:27 PM UTC

saas_co_de wrote: post #9

Just don't pay. It is shocking that people feel compelled to repay crooked loans issued by crooked banks run by people who are just playing a game of who can steal the most.

You’re being downvoted for what I suspect is a combination of moral disagreement and disagreement that one can practically do this without dire consequence.

But, this is an interesting thought exercise. I read some of these stories, and think to myself that living overseas for the rest of my life doesn’t sound too bad comparatively. I could even imagine a country seeking skilled immigrants might even pitch a citizenship path for people looking to start over.

Re: The Absurdity of Student Loan Debt

#59

Post by dpark » Sat, Jun 16, 2018, 2:33 PM UTC

anoncoward111 wrote: post #56

Awesome post :) There's a lot of victim blaming in the student loan debt world. Let me attempt to explain how we can fix the system. 1) Education is too expensive (especially relative to the value it delivers). 2) But, that money isn't even going towards the underpaid adjuncts who teach the classes. wtf?? 3) Tuition expenses mostly go towards administrative salaries, very very old established professors, and building…

> Tuition expenses mostly go towards administrative salaries, very very old established professors, and buildings...

At many (most?) universities, established professors make only slightly more than new hires because the budget simply isn’t there to pay significantly more and so the salary range compresses. And honestly, instructor pay seems like a good place to be spending money.

On the other hand, administration costs are out of hand. Some universities have crossed the 50% threshold and now spend more on administration than everything else combined.

Re: The Absurdity of Student Loan Debt

#60

Post by dpark » Sat, Jun 16, 2018, 2:41 PM UTC

Intermernet wrote: post #41

andrew_ wrote: post #32

Outrageous student loan debt, and the lack of means to pay for them after spending, has been an issue for at least 10 years now and has been thoroughly documented. It shouldn't be a mystery to anyone at this point, and it's baffling why people are still taking on these large debt loads for degrees and programs which don't have a snowball's chance in hell of paying off the debt in a reasonable amount of time. My own p…

As much as it's tempting to blame the author for the predicament she finds herself in, the reality is that those who offer these finance arrangements know that they're offering them to people who will be beholden to them for most of their lives. This is legal, but morally abhorrent. I don't know how to stop this trend, other than to tell a whole bunch of young people that they can't afford to learn further in the US…

This is accurate. All the talk about how to fund college ignores the fact that some degrees are not worth it in terms of financial cost/benefit. What does an MFA get you in actual earning potential? If the benefit is extremely low, no method of funding will make financial sense except if you can convince someone else to pay for it.

If you pick up $200k in student loan debt from an Ivy League school but leave with an engineering degree, you’ll probably be fine, even if that’s not really the cost effective option. If you leave school with $50k in loans and a degree that doesn’t get you a decent-earning job, crippling debt is now your life.