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The Student Debt Problem Is Worse Than We Imagined

nytimes.com

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Re: The Student Debt Problem Is Worse Than We Imagined

#161

Post by lovich »

SamReidHughes wrote: post #101
mmanfrin wrote: post #55

Earlier quoted context omitted.

I'm reminded of my old boss, a native Italian who had spent 7 years getting American citizenship. He was vehemently anti-immigrant and thought anything that helped "illegal immigrants" was a bad thing. Your opinion and his are, to me, examples of one of the worst forms of greed: greed with a reasonable excuse. It is rational and I cannot really fault you for feeling that way, but this form of greed makes fixing the p…

It is justice, not greed, that people have to pay back money they borrow.

The banks manipulate data and interest rates in violation of the law. Once the agreement has been broken by one side, how is it justice to make sure the other side follows the agreement to the letter?

Re: The Student Debt Problem Is Worse Than We Imagined

#162

Post by Amorymeltzer »

phil248 wrote: post #64

"...averaging $22,000 in debt by graduation" That is not very much money. That's a modest new car or a down payment on a small home in a cheap zip code. At low enough interest rates, that monthly bill will be less than most people's cell phone or cable bill. I think that's a reasonable price for something as unique and transformative as a college experience. There is obviously a serious problem here, but not necessar…

I think there are a few main issues with the arguments you're presenting here on the numbers.

First off, $22,000 isn't nothing. According to this[1], the rate for subsidized undergraduate Stafford loans climbed from 4.45% to 5.04%. Taking 4.5% over 25 and 10 years[2] gives monthly payments[3] of $122.28 and $228, respectively. That's definitely more than what my spouse and I pay each month for our phone bill (US, two smartphones, mid-tier data, major carrier). The total cost for 25 and 10 years at 4.5% comes to $36,685 and $27,361.

Second, saying that amount is just a "new car or down payment" might be true but those are major events and expenditures. Put another way, if it is equivalent to a nice new car or a down payment, having student loans means they can't do one of those things. That's the cost — not just the money, but something that affects their life for years because they've had to delay some other important purchase. The ripple effect means they build equity later, save less for retirement, etc.

Regardless of value or difficulty, the fact remains that these kids are indeed defaulting. TFA says that one out of every eight public school kids defaults on their loans, and there is no sign that rate it doing anything but increasing. As you say, this is a serious problem.

1: https://www.washingtonpost.com/news/grade-point/wp/2018/05/1...

2: https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsid...

3: https://www.bankrate.com/calculators/mortgages/loan-calculat...

Re: The Student Debt Problem Is Worse Than We Imagined

#163

Post by troupe »

thatjsguy wrote: post #146
troupe wrote: post #133

Earlier quoted context omitted.

So if person A got a degree that they can use to get a job with $40k of debt and has worked hard to pay it off, but person B has incurred $40k to get a degree that isn't going to lead to a job, you seem to think we can just forgive the debt of B without having any impact on A. Where do you think the money to pay for that debt will come from....well people who have jobs and are working. So basically person A has to pa…

So I dated a 41-year-old. He went to school about 15 years before I did. Know how much student loan debt he has? Zero. Zilch. Nada. In the amount of time it takes to reach the age necessary to acquire a learner’s permit, we inflated the cost of education into the stratosphere. Education used to be affordable. It is absolutely not impossible to go back. I’m curious to know how long you think education has been this un…

There are still schools out there that are very reasonably priced. However, lots of students go to more expensive schools that cost more BECAUSE they can get loans to do so. The best way to bring the cost down would be to stop using taxes to subsidize loans.

Re: The Student Debt Problem Is Worse Than We Imagined

#164

Post by vtange »

ryfia wrote: post #91
drcode wrote: post #34

Earlier quoted context omitted.

I must say, as someone who made quite a few sacrifices to pay off my school debt, I'll be pretty miffed if less responsible people from my same generation get a break on their loans.

I actually agree with you on this. Despite getting accepted to many top-tier universities (Berkeley, Yale, Rice), I chose to go to an in-state school with a generous scholarship so I could come out of school with very little loans. I sacrificed going to a really great school like Berkeley (and living in California!) so I would save money and not end up in so much debt. While I fully think that debt is a nondesirable…

I did the same, and found out that oddly enough my brother who went to a U.C. ended up getting a bonus state grant that slashed his loan burden lower than mine. In effect, he was entitled to a college with a higher cost than mine. We only found this out by comparing the paperwork into college; my brother didn't pick the U.C. knowing this beforehand.

I feel it just sends the wrong message to society if we build these gotchas and loopholes left and right like this to let people make financially bad decisions.

Re: The Student Debt Problem Is Worse Than We Imagined

#165

Post by troupe »

awocs wrote: post #159
troupe wrote: post #130

Earlier quoted context omitted.

It isn't that the game is rigged. It is that it assumes rational actors are making wise decisions about their future. Someone who carefully selects a degree that they know will let them pay back their loans is who the system is designed for. There are a lot of people who aren't behaving that way. The numbers are high enough that this isn't just a matter of some people having some hardship. This a large number of peop…

When it comes to society level discussion it seems that it is often assumed that people make irrational decisions. I am not sure that is true. For a lot of people it makes sense to take a chance on something unknown rather than to face likely failure. That is presumably also why they think the game is rigged. Because if you ask the average person who didn't go to college they probably aren't doing particularly well e…

If you look at the debt people are willing to acquire in pursuit of something like a degree in theater, it is hard to say it is rational behavior. They are taking a chance on something unknown rather than facing likely success with a career path that is in demand.

Re: The Student Debt Problem Is Worse Than We Imagined

#166

Post by vtange »

drcode wrote: post #34
acjohnson55 wrote: post #18

It's a damn shame we've let this crisis reach this scale. Along with healthcare, climate change, the debt, our inauguration, and so on, we've been essentially frozen for most of my life as politicians concern themselves more so with existential power struggle. The right wants to bring us back to the gilded age, the left makes headlines but is barely relevant, and the center is trying to squeeze bandaid solutions whil…

I must say, as someone who made quite a few sacrifices to pay off my school debt, I'll be pretty miffed if less responsible people from my same generation get a break on their loans.

Agree. I paid back my loans with money that could've really done better invested in stocks.

Imagine if someone could've paid his loans, but was irresponsible and just risked /lost it all in stocks. Not only can he file a capital loss in his tax form to pay less taxes like Trump has done, and now he gets his loans and debt cleared (also like Trump has done).

If the system aids people like that, why should there be anyone who responsibly avoids debt?

Re: The Student Debt Problem Is Worse Than We Imagined

#167

Post by debtfreer »

drcode wrote: post #34
acjohnson55 wrote: post #18

It's a damn shame we've let this crisis reach this scale. Along with healthcare, climate change, the debt, our inauguration, and so on, we've been essentially frozen for most of my life as politicians concern themselves more so with existential power struggle. The right wants to bring us back to the gilded age, the left makes headlines but is barely relevant, and the center is trying to squeeze bandaid solutions whil…

I must say, as someone who made quite a few sacrifices to pay off my school debt, I'll be pretty miffed if less responsible people from my same generation get a break on their loans.

Can I try to change your opinion?

Thousands of people are filing for bankruptcy every day which – by implication – are getting a break on loans that you would otherwise pay.

The issue is where debtors, who cannot presumably discharge their defaulted student loans in bankruptcy, begin to lose their savings, investments, and ability to stave off financial dependency on the government and become financially dependent on government programs now and into their retirement.

By saying that since you were able to pay your loans in 2018 and therefore most other people should be able to pay is like looking at any bad investment. If you allow people to remain indentured and fall into perpetual dependency on government programs (welfare, SNAP, Medicaid) due to their default or judgment-debtor status, the overall cost of that is projected to be much higher than if they could have been eligible for a partial or full discharge of the debt in 2018.

A bankruptcy prevents a bank from collecting interest. A judgment-debtor on financial assistance from the government is taking far more tax dollars from you than the bank is getting from the tax write-off on the charged-off debt.

Obviously, banks want their money, so they lobby for bankruptcy provisions to keep people indebted. They don't particularly care if the side-effect is the government demanding higher taxes from you to pay for government welfare programs.

Re: The Student Debt Problem Is Worse Than We Imagined

#168

Post by user5994461 »

harryh wrote: post #142
gamechangr wrote: post #113

I co-signed a loan for a friend who worked in as a Chemical Engineer for GE. Long story short, he had his Visa revoked, so I ended up on the hook for $16k of his student loans. I took a look at some of the financing terms and they are completely ridiculous. He paid $130 a month and at the end of the year he had only paid down $70 in principal. These terms should be criminal.

(130 * 12 - 70) / 16,000 = 9.375% That's a bit high but doesn't seem totally out of line for an unsecured loan.

Student loans are secure. They cannot be discharged through bankruptcy.

Re: The Student Debt Problem Is Worse Than We Imagined

#169

Post by thatjsguy »

troupe wrote: post #135
thatjsguy wrote: post #67

Earlier quoted context omitted.

Taxation has been around forever. Society gets to vote and decide how to divide up shared resources. I’m perfectly fine with tax dollars going to education (coupled with drastically-reduced tuition, like it used to be a short couple decades ago). I’m curious why everyone thinks it’s so impossible to have affordable education, when not even a generation ago we actually had it in the US.

It is still possible today. There are schools that are an extremely good value. I've even seen some state schools where you can graduate pretty much debt free working a part time minimum wage job during the school year and full time during the summer. If people were acting rationally they would be flocking to these schools. Instead they are taking on massive debt to go to expensive schools. So basically to answer you…

But who sets the price of tuition? The Boards of Regents/Governors/Trustees. Tuition used to be cheap _even at brand-name schools_.

Re: The Student Debt Problem Is Worse Than We Imagined

#170

Post by thatjsguy »

drcode wrote: post #137
darkerside wrote: post #132

Earlier quoted context omitted.

Economics not being a zero sum game, it can actually work that way. We can all be better off, and it's only win/lose in the most myopic of viewpoints.

In order to invoke the "not a zero sum" defense you have to also give a rational argument as to who specifically should hand over their money to pay for this and why their interests have less societal benefit, so that the sum of the transaction does indeed end up positive. Additionally, you have to explain why debt forgiveness does not lead to a "negative sum" scenario due to moral hazard.

So who was losing 20 years ago when you could pay for school with a summer job?
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