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Student-Loan Debt Is Crushing Millennials

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Re: Student-Loan Debt Is Crushing Millennials

#71

Post by mikestew »

Jagat wrote: post #33
johnm1019 wrote: post #21

Earlier quoted context omitted.

Then I guess I have a "fully developed adult brain" (whatever that is) and certainly couldn't fully understand all the effects of taking out a $120k loan to take a risk on a degree in a subject I don't know (by definition, otherwise why am I going to school for it?) - let alone long term risks and opportunity cost assessments. I think it puts anyone looking to go to college and 'move up the ladder' in a very difficul…

Honest question. Why doesn't the lender require the borrower to explain how they plan to repay? Or why do they continue to lend large amounts for degrees where there's a low probability of getting a good salary after graduation. Or does the govt assume the risk of student loan defaults?

Why doesn't the lender require the borrower to explain how they plan to repay?

No lender ever asks that. Lenders ask themselves, "how will I be repayed? And in the case of default?" In most cases, the answers are "by the borrower" and "take the house or car, the sale of which will offset some of the loss".

In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash". There is zero incentive to determine how the borrower will repay.

Re: Student-Loan Debt Is Crushing Millennials

#72

Post by thrower123 »

thrower123 wrote: post #6

There are just so many poor bastards that spent lots of money on useless degrees. It is kind of a problem in the marriage market, because more women go to college and end up with massive college debt, which makes them financially unattractive.

I am curious why this is a hugely unpopular fact.

Re: Student-Loan Debt Is Crushing Millennials

#73

Post by skh »

moduspol wrote: post #59
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…

> Lenders [...] should not be absolved of blame or have less outrage directed at them. I was with you until this point. What part do you blame them for? The federal loan guarantees were created for the express purpose of allowing people who otherwise couldn't get the loans to get them. The lenders are doing exactly what they're supposed to, and would be expected. Lenders should be in the position of determining risk,…

Lenders, through lobbying and regulatory capture, created the system. At least as I see things.

Re: Student-Loan Debt Is Crushing Millennials

#74

Post by jki275 »

shados wrote: post #46
ant6n wrote: post #24

Earlier quoted context omitted.

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! Co…

You've definitely captured the essence of it.

Re: Student-Loan Debt Is Crushing Millennials

#75

Post by dragonwriter »

mikestew wrote: post #71
Jagat wrote: post #33

Earlier quoted context omitted.

Honest question. Why doesn't the lender require the borrower to explain how they plan to repay? Or why do they continue to lend large amounts for degrees where there's a low probability of getting a good salary after graduation. Or does the govt assume the risk of student loan defaults?

Why doesn't the lender require the borrower to explain how they plan to repay? No lender ever asks that. Lenders ask themselves , "how will I be repayed? And in the case of default?" In most cases, the answers are "by the borrower" and "take the house or car, the sale of which will offset some of the loss". In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash".…

> In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash".

No, it's not. While private student loans are still offered (sometimes, by predatory scammy for-profit schools themselves), none of them for quite a few years have been government guaranteed.

The former government guaranteed loan program has for some time had exactly one lender by law, the federal government itself.

Re: Student-Loan Debt Is Crushing Millennials

#76

Post by fetus8 »

lilactown wrote: post #56
MaupitiBlue wrote: post #30

Earlier quoted context omitted.

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.

I would say that many millennials made a decision based on information that perhaps wasn't true, and perhaps was given even in bad faith. Source: am a millennial and experienced the huge pressure to go to college, especially an expensive one.

I too, am a millennial. I grew up being told that the only serious option after high school was to go to college. That's just how life worked. I believed it, as most my family went to college immediately after high school.

Not only did my family perpetuate this idea, but my middle class suburban high school did as well. Our guidance counselors actively were involved with the local state universities. They spent a lot of time shoving the idea of attending college down your throat. Maybe they only did this with the higher performing students. I even was going on college tours in 10th grade, through programs at my high school. At the time, I really didn't think there was another option aside from college after high school.

Re: Student-Loan Debt Is Crushing Millennials

#77

Post by jniedrauer »

Jagat wrote: post #33
johnm1019 wrote: post #21

Earlier quoted context omitted.

Then I guess I have a "fully developed adult brain" (whatever that is) and certainly couldn't fully understand all the effects of taking out a $120k loan to take a risk on a degree in a subject I don't know (by definition, otherwise why am I going to school for it?) - let alone long term risks and opportunity cost assessments. I think it puts anyone looking to go to college and 'move up the ladder' in a very difficul…

Honest question. Why doesn't the lender require the borrower to explain how they plan to repay? Or why do they continue to lend large amounts for degrees where there's a low probability of getting a good salary after graduation. Or does the govt assume the risk of student loan defaults?

Student loan debt can't be discharged by bankruptcy. Lending in this situation is decently low risk. You're basically rent seeking with humans instead of land. Once you've got one, you can siphon off their excess productivity for decades. You'll get your money back in the long run.

Re: Student-Loan Debt Is Crushing Millennials

#78

Post by skh »

graeme wrote: post #32
ant6n wrote: post #24

Earlier quoted context omitted.

The actual problem is high tuition.

Easy access to unlimited loans is a major comtributor to high tuition.

I believe for public universities the cost driver has been an increase in administrators and a decrease in funding per student.

Re: Student-Loan Debt Is Crushing Millennials

#79

Post by Judgmentality »

thrill wrote: post #44
gerbal wrote: post #16

Earlier quoted context omitted.

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?

I feel like that's a small step towards rectifying the destruction of a generation. This country has too much inequality as it is.

Re: Student-Loan Debt Is Crushing Millennials

#80

Post by moduspol »

skh wrote: post #73
moduspol wrote: post #59

Earlier quoted context omitted.

> Lenders [...] should not be absolved of blame or have less outrage directed at them. I was with you until this point. What part do you blame them for? The federal loan guarantees were created for the express purpose of allowing people who otherwise couldn't get the loans to get them. The lenders are doing exactly what they're supposed to, and would be expected. Lenders should be in the position of determining risk,…

Lenders, through lobbying and regulatory capture, created the system. At least as I see things.

I don't doubt they contributed, but this isn't like a coal company getting emissions restrictions relaxed.

There's a pretty common world view that financial viability should not even be a concern in young people's choices of what field to pursue, and subscribers to that are what created this policy. Lenders benefit, but this is driven by what a large group of people want society to look like.

Even if the government subsidized all higher education and removed the lenders from the equation completely, we'd still have increasing numbers of young people graduating in their early and mid-twenties with degrees in fields like gender studies. They won't be in significant debt, but they're still comparatively behind by four years and woefully unprepared for the workforce.

Are the students better off from being financially enabled to get in that situation? Is society better off from enabling thousands of people to do it? I don't think so.

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