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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

#171

Post by jldugger »

imtringued wrote: post #97
jldugger wrote: post #36

Earlier quoted context omitted.

> First of all students need a way to declare bankruptcy. While I'm not for or against such a policy, I find it intriguing you think bankruptcy is free market ideology adjacent.

That's basic economics of lending. If X% of people default then you have to increase interest rates to cover the people that default. The increased interest rate will dissuade students from taking on degrees with lesser economic prospects. It's like adding back pressure or load shedding to a distributed system. It is better to drop or delay requests than let the entire system collapse under it's own weight.

> If X% of people default then you have to increase interest rates to cover the people that default.

Your borrowers can always default, even without bankruptcy protections. It's a good policy, I assume, but I'm not sure it's strictly speaking, part of the free market dogma.

Re: The Student Debt Problem Is Worse Than We Imagined

#172

Post by user5994461 »

imtringued wrote: post #97
jldugger wrote: post #36

Earlier quoted context omitted.

> First of all students need a way to declare bankruptcy. While I'm not for or against such a policy, I find it intriguing you think bankruptcy is free market ideology adjacent.

That's basic economics of lending. If X% of people default then you have to increase interest rates to cover the people that default. The increased interest rate will dissuade students from taking on degrees with lesser economic prospects. It's like adding back pressure or load shedding to a distributed system. It is better to drop or delay requests than let the entire system collapse under it's own weight.

It's the opposite. If people can default, then the bank has to avoid defaulters, staying away from financing expensive studies in dead end careers.

Otherwise the bank needs to get more defaulter, because they are more profitable than people who pay back.

Re: The Student Debt Problem Is Worse Than We Imagined

#173

Post by SamReidHughes »

jschwartzi wrote: post #151
SamReidHughes wrote: post #101

Earlier quoted context omitted.

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

No. You're turning people into serfs for the better part of their adult life for a decision they made as a teenager. That's not justice, that's cruelty.

$22K in debt isn't serfdom, that's the price of a Honda Civic. It takes few grand a year to keep up with interest.

Re: The Student Debt Problem Is Worse Than We Imagined

#174

Post by seanmcdirmid »

thatjsguy wrote: post #170
drcode wrote: post #137

Earlier quoted context omitted.

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?

It was the state tax payers (they were funding universities more aggressively), but we also didn’t have many fancy perks on campus back then (so kind of students also).

But who was really losing 20 years ago were underemployed administrators. There were much fewer of those cushy non-teaching non-research admin jobs.

Re: The Student Debt Problem Is Worse Than We Imagined

#175

Post by user5994461 »

rgbrenner wrote: post #12
redleggedfrog wrote: post #6

Earlier quoted context omitted.

1-2%? For some reason that seems high to me. Certainly one out of every 100 people I meet aren't programmers.

US workforce is 160m IT occupations: https://www.bls.gov/ooh/computer-and-information-technology/... 'Computer programmers', 'software developers' and 'web developers' will get you to 1%. I think wpdev_63's message applies to some additional IT positions than just programmers, so I think 1-2% is about right.

IT is much much wider than software developers.

Re: The Student Debt Problem Is Worse Than We Imagined

#176

Post by whatshisface »

Delmania wrote: post #61
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.

So, emotionally you may be angry, but realistically, how would that negatively impact your life?

The money to pay off the student loans will come from somewhere. Somewhere includes me. Should I ask you to buy me a new car if I spend everthing I have on what turns out to be a lemon? Can one investment firm ask another to cover the losses of its bad positions? Surely, if good and bad decisions are smoothed out to nothing then there's no reason left to make good, sometimes hard choices.

Re: The Student Debt Problem Is Worse Than We Imagined

#177

Post by [deleted] »

UncleEntity wrote: post #152
karmelapple wrote: post #75

Earlier quoted context omitted.

If someone majored in a degree that didn’t have great career prospects, should they suffer for that? Is college only for job training, or is it for something a little different? I’m not criticizing your viewpoint; as another commenter said, I understand some of the reasons you may hold this view. However, I do not feel that people who majored in, say, English - against their own likely knowledge that it would be diff…

> However, I do not feel that people who majored in, say, English ... should suffer because of the debt they incurred. Why shouldn't they face the responsibility for the decisions they made? That's the crux of the argument, really. Either people are forced to be responsible for their actions or they aren't...doubly so with student loans since they never really go away. And I'm saying this as someone who got a "worthl…

[deleted]

Re: The Student Debt Problem Is Worse Than We Imagined

#178

Post by darkerside »

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.

You're begging the question. I don't follow the assumption that anyone's interests have less societal benefit. Let's go with one example, taxpayers bail out student debt in tandem with some legislation that prevents moral hazard from being an issue. If that bailout prevents value destruction through economic collapse, or frees graduates to pursue vocations appropriate for their degree that could generate larger economic returns in the long run, there you have a rising tide lifting all boats. That scenario is loaded with assumptions, but my only aim is to open your mind to the possibility of a net win, not to describe an implementation.

And for the record, I get the feeling you've assumed that I support debt forgiveness. I don't, and the moral hazard involved does bother me. But I won't let that stop me from considering strong arguments in favor of it.

Re: The Student Debt Problem Is Worse Than We Imagined

#179

Post by gnicholas »

user5994461 wrote: post #168
harryh wrote: post #142

Earlier quoted context omitted.

(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.

That’s not what “secured” refers to. It means that if a loan is in default, the lender can seize an asset, like a house or some receivables.

The fact that student loans can’t be discharged in bankruptcy makes them less risky, but not nearly as safe as a secured loan where there is an asset backing it up.

Re: The Student Debt Problem Is Worse Than We Imagined

#180

Post by troupe »

thatjsguy wrote: post #169
troupe wrote: post #135

Earlier quoted context omitted.

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_.

Yes but if one school starts upgrading their dorms, student center, etc. kids starting spending their loan money there which makes the other schools try to do something a bit better. When there is almost unlimited money there is a race to be the top in spending on creating a cool college environment to attract more kids and their loan money.
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