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The Absurdity of Student Loan Debt

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Re: The Absurdity of Student Loan Debt

#71

The first bill I received for my MFA loans was for $416. I panicked and applied for an income-based repayment plan, which, paired with my habitual underearning, lowered my payments to $96 a month. After five years of payments, I now owe more than what I originally borrowed because my payments haven’t even scratched the principal. Income based repayments forgives the loans and interest after 25 years. Original princip…

Keep in mind that under current law that forgiveness is taxable income to the borrower. So he'll still be left with one quarter to one half the forgiven principal, which by that time may well be greater than the original principal even in real terms.

Yes, but by then a person with a Masters in Fine Arts will be making $150,000 annual.

Of course, a Subway 6" combo will be $60 too.

Re: The Absurdity of Student Loan Debt

#72

Earlier quoted context omitted.

Keep in mind that under current law that forgiveness is taxable income to the borrower. So he'll still be left with one quarter to one half the forgiven principal, which by that time may well be greater than the original principal even in real terms.

Yes, but by then a person with a Masters in Fine Arts will be making $150,000 annual. Of course, a Subway 6" combo will be $60 too.

That’s why I said real terms. Grad PLUS loans are at 7%. CPI is at 2.8%.

Re: The Absurdity of Student Loan Debt

#73

Earlier quoted context omitted.

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…

> other than to tell a whole bunch of young people that they can't afford to learn further in the US educational system. There are tons of alternatives to funding a very expensive university through debt. Work part time, pick a cheaper school, get a bunch of credits at community college, or do all 3. And that is all without a single scholarship - of which there are many you may qualify for. It’s irresponsible to just…

Surely one can make an argument that having to do all of that, or rely on scholarships to get a tertiary education isn’t a great state of affairs for the future of our countries?

Re: The Absurdity of Student Loan Debt

#74

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…

Oh wait ... if only we had a university system for a few thousand years before student debt, that might provide insight into an alternative ! Oh wait ! We do !

Problems student debt tried to solve:

1) these systems do not let many people learn at all. Maybe 1-2% of the population gets higher education.

2) there is a large difference between institutions. And society's classes arrange around specific institutions one way or the other (price, geography, ...) (by which I mean the rich go to one school, the poor to another, with of course vastly different prospects). The institutions attended by the wealthy get the best professors, the best reputation, and their alumni get an advantage in the workplace.

(and let's just ignore that this is exactly the part that specific countries saved, and kept separately from whatever funding system they otherwise use for education: the part that worked best for the rich, like France's Ecole Nationale d'Administration, London School of Economics, and Germany's Bundesbank Hochschule. That's just peachy. Most of these schools you can only be referred into, you can't apply (or can't apply successfully), and they lead directly to the government's upper echelons)

3) There were much, much less study directions. Essentially anything you couldn't convince your parents to fund you learning for 2 or 4 years for could not sustainably be a university department. This resulted in much smaller arts, social studies, philosophy, archaeology, language, ... departments. Many people want to study those directions, but few feel like funding them.

4) Universities had perpetual funding problems, because everybody feels like regulating education. So the growth of administrators actually started before student loans were started. Whilst I don't agree with most idiots putting up this argument, there is a grain of truth to the idea that regulation forces universities into many unnecessary costs.

5) even the richest university directions, like economics departments in huge cities, weren't exactly swimming in cash. Therefore they focus on what brings in the bucks (more or less outsourced R&D for huge companies, creating spinoffs and some recruitment) ...

6) unwillingness of these departments to grow to the size people would like, and being pretty selective as a result (famously civil engineering and of course medicine)

Every proposal here essentially boils down to forcing education to be a reasonable investment, which will re-cause much of the above problems. If we're willing to do that, sure, but ... I don't think so.

Re: The Absurdity of Student Loan Debt

#75
post #26

Student loans should be dischargeable in bankruptcy after 10 years post-graduation (and not fully guaranteed past a certain amount, say $10K or $20K) -- hear me out. The common reason student loans are NOT allowed to be dischargeable is because, in the minute after graduating and without collateral, the student can declare bankruptcy with no effect (the vast majority are not buying a house within the time it would ta…

There isn't much of a market for market forces to act upon. The overwhelming majority of student loans are made directly by the government with terms and underwriting (or lack thereof) set by Congress, not competition.

It isn't specifically said, but I assumed that the parent was implicitly suggesting a switch back to private loans with market mechanisms instead of the current government loan mechanism.

Re: The Absurdity of Student Loan Debt

#76
post #75

Earlier quoted context omitted.

There isn't much of a market for market forces to act upon. The overwhelming majority of student loans are made directly by the government with terms and underwriting (or lack thereof) set by Congress, not competition.

It isn't specifically said, but I assumed that the parent was implicitly suggesting a switch back to private loans with market mechanisms instead of the current government loan mechanism.

If so, the post buried the lede. That’d be a bigger change than allowing them to be discharged in bankruptcy.

Re: The Absurdity of Student Loan Debt

#77

Earlier quoted context omitted.

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…

> other than to tell a whole bunch of young people that they can't afford to learn further in the US educational system. There are tons of alternatives to funding a very expensive university through debt. Work part time, pick a cheaper school, get a bunch of credits at community college, or do all 3. And that is all without a single scholarship - of which there are many you may qualify for. It’s irresponsible to just…

Ok but what about the people who already work one or two part time jobs, already picked the cheaper community college, already aren't buying $5 coffees from Starbucks daily, already don't eat out all the time, already don't pay for cable, already didn't buy a new iPhone this year?

Assuming everyone's already well off and just living above their means isn't very helpful when education itself is the thing that's costing above most people's means.

Re: The Absurdity of Student Loan Debt

#78
Either we figure out a way to fund education properly like taxes (which we already pay so it's a matter of relocating money at the government level only) or we end up in a system with millions of stupid people unprepared and unable to contribute to society enough to survive, let alone enough to give something back. We're already most of the way there and the society that we're creating, a society that values stupidity over knowledge yet feels entitled to all the benefits of knowledge and the technology knowledge creates, is frightening. The anti-intellectualism is frightening. The stupidity and almost inevitable poverty and violence that follow are even more frightening. You'd think the government would be more concerned about such a situation and would want to fix this, but like most political issues in our stupid-first society, this has become a partisan issue. I hope we figure out how to stop being a stupid-first society and figure out how to advance in the world before we turn the whole country into the third world shithole most of rural America has already become.

Re: The Absurdity of Student Loan Debt

#79
post #29
post #17

When people like Gillette take on debt, why is there never minimal cost-benefit analysis? Or do they ignore it? It's refreshing to read a reflection like hers.

> 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…

Exactly. Now if only there was a way to educate people about such things so they could make better decisions. Oh wait ...

Re: The Absurdity of Student Loan Debt

#80

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.

If you don't pay, it destroys your credit rating, which in many areas means you won't be able to rent a place to live from anything but a private party. I believe they could also potentially get an injunction against you and garnish your wages, but I'm not certain about that. Your college also may withhold your transcript, which can impact some employers who require that. Lots of ways they can make your life just as…

True. There are always consequences. But if you refuse to pay then you learn how to survive all of the threats you mention which is worth the cost. The point is that the vast majority of debts are legally invalid and unenforceable. They are just a con. Whether you chose to be a mark or not is up to you.
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