Student-Loan Debt Is Crushing Millennials • Hacker News Board

Re: Student-Loan Debt Is Crushing Millennials

#41

Post by squirrelicus » Fri, Nov 02, 2018, 4:34 PM UTC

empath75 wrote: post #28

aglavine wrote: post #15

As a foreigner I don't get it. Why are students allowed to get a debt that they can't pay. Why they take it?

You're told from the day you start school that if you don't go to college, you're not going to 'make it'. There aren't enough scholarships to go around. So people will pay literally anything. And since they can't discharge the debt in bankruptcy, lenders will throw money at them.

Lenders are also required by the feds to throw money at them. They don't have a choice.

Cost of money went dramatically down, so tuition inflated something like 4x

Re: Student-Loan Debt Is Crushing Millennials

#42

Post by exabrial » Fri, Nov 02, 2018, 4:34 PM UTC

If creditors were allowed to discriminate based on risk factors [probably grades, attendance, degree field] we'd never be in this situation.

But, since these are government backed loans, people are pretty much guaranteed to be funded, no matter their risk factors, are and the taxpayers are going to foot the bill when they default.

Re: Student-Loan Debt Is Crushing Millennials

#43

Post by skizm » Fri, Nov 02, 2018, 4:35 PM UTC

aglavine wrote: post #15

As a foreigner I don't get it. Why are students allowed to get a debt that they can't pay. Why they take it?

It started as a way to give low income kids access to the same education opportunities as everyone else. Banks didn’t want to risk giving out loans to low income borrowers so the govt guaranteed the loans. Once this happened everyone started taking out loans to go to college since the banks now approved anyone since the repayment was guaranteed by the govt, and since schools now had so many more applicants they kept raising prices (supply and demand). Higher prices lead to more loans which lead to higher prices, etc.

Re: Student-Loan Debt Is Crushing Millennials

#44

Post by thrill » Fri, Nov 02, 2018, 4:35 PM UTC

gerbal wrote: post #16

YinglingLight wrote: post #7

Earlier quoted context omitted.

What's absurd about that? The bank has no salvageable assets to claim. They can't claim 4 years of European Literature from your mind.

Fortunately most of the debt is held by the US department of Education, and could easily be written off. (Minor inflationary effects asside).

So, your solution is to stick the taxpayers with the debt?

Re: Student-Loan Debt Is Crushing Millennials

#45

Post by epx » Fri, Nov 02, 2018, 4:35 PM UTC

Student debt plus the skyrocket price of real estate worldwide is killing this generation. Low interest means no retirement, also. How lucky I was to be able to save money in the 90s. Worried about my kid, though.

Re: Student-Loan Debt Is Crushing Millennials

#46

Post by shados » Fri, Nov 02, 2018, 4:35 PM UTC

ant6n wrote: post #24

skh wrote: post #3

Often times when student loans come up people blame exclusively the borrower. We should keep in mind that in a properly functioning lending market both the borrower and lender take on risk. The lender should not left out of the equation on who to blame. Both parties are at fault. But we don’t have a properly function student loan industry. Lenders assume very little risk in this market but they should not be absolved…

The actual problem is high tuition.

Yup. Which is partly because of near infinite free money that no one is really responsible for. Hindsight is 20/20, and not being American I don't have the whole history...but what I'm picturing with this situation is:

"Omg, it costs $5000 to get a degree! That means only the rich have access to education and increase the gap between rich and poor! We need a solution!"

"You can't just go giving education for free! Communism!"

"We never said that! Let's lend up to $5000 to anyone without the mean to pay for education! That will level the playing field and in the long term we get back the money, it's win all around!"

"Omg, it costs $10,000 to get a degree! Poor people can get loans, but they have to repay them in addition to paying $5,000 out of pocket! That divides the rich and the poor, etc etc! We should load up to $10,000 to even out the playing field! win win!"

"Omg, we have a student debt crisis!"

Like, did someone really not see it coming? Without some form of cost control, this is just government sponsored cost inflation. Because of where Im from Im just used to government paid education. It's not always as good, and there are a lot of friction, but costs are kept a little more under control. I guess you could also, in theory, just not have the loans at all, or much fewer, and if it had been that way from the beggining, cost wouldn't have gone up nearly as fast.

Re: Student-Loan Debt Is Crushing Millennials

#47

Post by pbrb » Fri, Nov 02, 2018, 4:36 PM UTC

ant6n wrote: post #24

skh wrote: post #3

Often times when student loans come up people blame exclusively the borrower. We should keep in mind that in a properly functioning lending market both the borrower and lender take on risk. The lender should not left out of the equation on who to blame. Both parties are at fault. But we don’t have a properly function student loan industry. Lenders assume very little risk in this market but they should not be absolved…

The actual problem is high tuition.

Absolutely agree, though I wonder if tuition has gotten so high because of the ability to take out massive loans to pay for it.

Re: Student-Loan Debt Is Crushing Millennials

#48

Post by Pharmakon » Fri, Nov 02, 2018, 4:37 PM UTC

MaupitiBlue wrote: post #20

vlunkr wrote: post #9

Earlier quoted context omitted.

To be fair, most people make the decision about where they go to school (and along with that, how much it costs) when they are barely adults and don't have a good grasp on finance. At least part of the blame falls on parents, and teachers who point them to expensive schools, and our culture which has praised expensive schools as a positive thing for a long time. I'm hoping the next generation will get better guidance…

The only part I disagree with is that it is ALL the parents’ fault. My point wasn’t necessarily that millennials are uniquely stupid, rather that the voting age should be at least 25.

It’s a mixed bag. On one hand young people put Corbyn in power, on the other they voted overwhelmingly against the Brexit old Boomers loved and voted for. I don’t think reducing the voting population is a good idea, especially to something absurd like 25, which is almost a decade after you can enlist to die abroad, drive a car, and drink alcohol.

Re: Student-Loan Debt Is Crushing Millennials

#49

Post by lovich » Fri, Nov 02, 2018, 4:37 PM UTC

MaupitiBlue wrote: post #30

skh wrote: post #3

Often times when student loans come up people blame exclusively the borrower. We should keep in mind that in a properly functioning lending market both the borrower and lender take on risk. The lender should not left out of the equation on who to blame. Both parties are at fault. But we don’t have a properly function student loan industry. Lenders assume very little risk in this market but they should not be absolved…

I don’t “blame” anyone. Millennials made a decision based on their preferences. Now they’ve changed their mind and want me to pick up the tab. No thanks.

As a society we've decide that people Then the law was changed as well so only student debt was not dischargeable in bankruptcy while every other type of debt is.

It's disengenous to imply that these were freely made choices. Well running capitalism relies on information parity between both sides and not interactions where it's all of society and a massive industry trying to convince undeveloped minds to make bad choices

Re: Student-Loan Debt Is Crushing Millennials

#50

Post by giardini » Fri, Nov 02, 2018, 4:37 PM UTC

MaupitiBlue wrote: post #5

Why do we encourage a group to vote who remind us daily about their inability to survey their options and make good decisions?

One must keep in mind that by definition half the population have an IQ less than 100. That is plenty for unscrupulous lendors to take advantage of.

Indeed the restoration of bankruptcy would solve this problem, albeit at great cost to former lendors.