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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

#311

Post by forapurpose »

pakitan wrote: post #230
forapurpose wrote: post #149

I know it's oversimplified, but it results from American business' assertion that the 'free market' is the best solution to all problems, and American acquiescence to it. In other words, it comes from try to squeeze profit from every damn thing, from people's health, to education, to privacy, to government services (i.e., 'privatization') to everything else. I think the free market is a great tool, but like every too…

Except that, the way education works in USA, has little to do with the "free market". The free market is vastly distorted by the government guaranteeing student loans. I can assure you the picture would be very different if lenders had to actually assess every single loan candidate and applicants had to put up some collateral for the loan. The endless stream of free money to the universities would then stop and the s…

IMO, this is yet another conservative argument to put more money in their own pockets (by reducing taxes, accomplished by reducing investment in education). No matter how cynical, the results of the argued policies are always the same.

Colleges are not victims of some Godlike invisible economic hand; they set their prices as they wish, and before this dogmatic obsession with the market, they set the prices to education as many people as they could - that was their mission, not money. Instead, they are acting as market participants selling a service for which there is inelastic demand - their customers almost can't say no; education is almost invaluable. Therefore they can raise their prices indefinitely - similar to health care.

The problem is not that we are funding students. The problem is market pricing for education.

Re: The Student Debt Problem Is Worse Than We Imagined

#312

Post by therealdrag0 »

Ygg2 wrote: post #268
dillondoyle wrote: post #238

Earlier quoted context omitted.

Being a good politician I think has two meanings which kind of drives this divide in opinion: 1) being good at getting elected 2) being good at getting things done It really does take experience, connections, networks, and skill to accomplish things in legislatures. Same with getting elected. The problem is in order to become #2, you have to become #1. Unless we as voters become far more informed and drastically chan…

Why not just cut out 1) all together. Let people get chosen randomly.

Imagine if your doctor was chosen randomly.

Re: The Student Debt Problem Is Worse Than We Imagined

#313

Post by rayiner »

ransom1538 wrote: post #245
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…

Just let students default. The problem would be solved in a week. Poor investments should get poor returns. You should be able to default on any loan out of human dignity.

That doesn’t “solve the problem.” 92% of student debt is owed to the federal government. And the federal government originates almost all new student debt. The poor returns thus will accrue to the taxpayer. But unlike other investors, however, the government won’t stop making these “poor investments.” Big College has convinced everyone that access to student loans without consideration for credit risk is the solution to every ill from technological change to racial inequality.

Re: The Student Debt Problem Is Worse Than We Imagined

#314

Post by volkl48 »

leoedin wrote: post #281
vilmosi wrote: post #277

Earlier quoted context omitted.

It's not bad. But it doesn't matter how much tuition costs or what degrees offer pay or not. Everyone will study whatever they want, borrow at 1000% interest if necessary or 1% interest for "profitable" degrees, and then dump the dept as soon as they graduate. Or am I missing something? Original question, what's stopping everyone from defaulting right after graduation?

What's to stop people defaulting on other unsecured loans, like credit cards? Some people do, but most people don't. Why? Because defaulting on a loan means a bad credit score and suddenly modern society becomes hard - no mortgage, no car loan, no more credit cards etc.

The difference is that other unsecure loans are only given out with some degree of expectation/evidence that the person will be able to repay them. A person with $10k/yr income does not get a $40k credit limit.

On the other hand, college loans are given out with zero consideration of that. You're just as eligible to take out tons of loans as a poor person majoring in underwater basket weaving as you are are getting a CS degree from Stanford. Even though those have very different probabilities of being able to repay them.

Re: The Student Debt Problem Is Worse Than We Imagined

#315

Post by mgleason_3 »

ransom1538 wrote: post #252
vilmosi wrote: post #251

Earlier quoted context omitted.

> Just let students default. It's not that easy. What's to stop everyone from defaulting?

Good question. EG Why doesn’t everyone default on a loan? This is asking “how do loans work”. Typically, a loan with interest is a gamble. You want to get your money back with a return. If you loan money you want to ensure you will get your money back by qualifying the applicant. There is a risk though because they might not pay it back, thus you increase the interest rate according to how qualified the loan is. Good…

Wait, why is this a good question? I mean the OP said “it’s not that simple” which says he/she has a DEEPER understanding of loans that the previous post.

The answer to the OPs question is obvious to someone who understands loans (“the same things that keep everyone from defaulting on every loan”).

So, isn’t it actually a dumb question? Or rhetorical, and since its obvious and adds nothing, it seems best to just ignore it.

The original US student loan program gave loans which could be defaulted on just like any other loan. So, maybe a better question would be “why did the US congress change the rules just for student loans?”

Re: The Student Debt Problem Is Worse Than We Imagined

#316

Post by intended »

ransom1538 wrote: post #252
vilmosi wrote: post #251

Earlier quoted context omitted.

> Just let students default. It's not that easy. What's to stop everyone from defaulting?

Good question. EG Why doesn’t everyone default on a loan? This is asking “how do loans work”. Typically, a loan with interest is a gamble. You want to get your money back with a return. If you loan money you want to ensure you will get your money back by qualifying the applicant. There is a risk though because they might not pay it back, thus you increase the interest rate according to how qualified the loan is. Good…

Tuition in your country has not expanded because of cheap loans.

People need jobs and you have a job shortage.

College is seen to be the best/only option for a middle class life - which is driving people to college.

College is not free in America. So people need to pay, but job pay is concentrated in certain fields, and any hitch in the process means that payment schedule gets extended.

To a certain extent, the problem is of course having loans.

But that would just make the main problem obvious - life is expensive and there’s now fewer ways to make a middle class life.

This is like the Indian job market- You are either a STEM / law/ CA / or bust.

Re: The Student Debt Problem Is Worse Than We Imagined

#317

Post by cmurf »

ransom1538 wrote: post #245
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…

Just let students default. The problem would be solved in a week. Poor investments should get poor returns. You should be able to default on any loan out of human dignity.

The Iceland solution, yes. Different scale of course, but also not nearly as bad for the world or Iceland as the bankers and investors who lost their shirts would have had everyone believe.

My big beef is that Bush 2 and Congressional Republicans saw this coming, and in 2005 changed bankruptcy law severely curtailing, specifically students, from declaring bankruptcy.

"2005 bankruptcy reform bill making private student loans nondischargeable"

"Many debtors will have to work out repayment plans instead of having their obligations erased in bankruptcy court under the law"

It's a much higher bar for a student to successfully claim hardship than other debtors as a result.

http://www.nbcnews.com/id/7575010/ns/business-personal_finan...

http://www.slate.com/blogs/moneybox/2015/04/16/student_loans...

Re: The Student Debt Problem Is Worse Than We Imagined

#318

Post by chiefofgxbxl »

bernardino wrote: post #222

I wonder how startups like Sofi ( https://www.sofi.com ) and Sixup ( https://sixup.com ) play into this. Are they better options than what the school offers in terms of loans, etc?

(Strictly speaking for myself, and my experience may not be representative of what others are experiencing).

I investigated Sofi as an option to consolidate my several loans into one. This would simplify my payments, and get me a lower interest rate.

Sofi's offer was actually a poor one for me. They would've provided one large loan as opposed to the numerous loans I have, but the rate was skewed so much toward the highest end of the spectrum.

I rejected the offer out of concern that I would be locked in to a single high-rate loan that looked good on paper because the rate was slightly lower than my highest rate. The nice thing about having numerous loans as I do now is that they are "compartmentalized". If I want to pay one of the loans off I can do that and lower my total monthly payments. But if I consolidated and had one large loan, if I pay 50% of that loan, it's not like 50% of my monthly payments go away.

Hopefully this makes sense. I'm not a financial guru, so maybe there's something I'm missing in this equation.

Re: The Student Debt Problem Is Worse Than We Imagined

#319

Post by njarboe »

v_lisivka wrote: post #244
njarboe wrote: post #205

Earlier quoted context omitted.

Large numbers of nuclear weapons means total war between nuclear powers will escalate very quickly to nuclear armageddon. This (MAD) has prevented total war for generations, but has very costly tail risks that people growing up in the post-Cold War era are not likely to appreciate.

Why nuclear? Why not chemical or biological WMD?

Chemical and biological really should not be grouped into the WMD label. They are not nearly as effective in the M and the D. See the saran attack on Tokyo. One small nuke would have been thousands of times more deadly. For a chemical attack to be as effective as a nuke one would need hundreds or thousands of bombs dropped on a single city. If you are going to do that then a firebombing raid can be much more effective for destruction. 300 B-29 caused more damage in a single night over Tokyo than either of the nuclear attacks later in the war (modern nukes are much bigger though).

Re: The Student Debt Problem Is Worse Than We Imagined

#320

Post by qubax »

lend000 wrote: post #33
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 often wonder how many problems would be fixed by adding a 2 term limit to the House and Senate.

The problem really isn't term limits. It's the cost of elections.

If we set 2 term limits, it would just mean that the corporate elite would just buy a new politician every 2 terms rather than buying a politician for 6 or more terms.

If you wanted to run for a political office. You'd need money. So who has money? And now you are beholden to the wealthy.

It's amazing when you think about it. We can no longer ever have a populist or independent president or congressman really. Because of the money needed to run for office.

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