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What a Student Loan 'Bubble' Bursting Might Look Like

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Re: What a Student Loan 'Bubble' Bursting Might Look Like

#21

Post by csense »

I'm thinking the solution will be political, not economic.

Once there are enough people in enough pain that it turns them into single-issue voters on this issue, someone will create taxpayer-funded relief.

If it's a Democratic-led solution, it'll probably be in the form of massively expanded support for universities that eliminates the cost entirely, or reduces it to what one might be able to reasonably earn/save at a minimum wage job.

If it's a Republican-led solution, it'll probably be in the form of creating a tax-deferred savings account for college, combined with subsidized work-study program.

Both parties will probably agree to bail out degree holders who can't pay after a certain number of years. They will probably also force cost cutting reforms on schools.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#22

Post by rexpop »

csense wrote: post #21

I'm thinking the solution will be political, not economic. Once there are enough people in enough pain that it turns them into single-issue voters on this issue, someone will create taxpayer-funded relief. If it's a Democratic-led solution, it'll probably be in the form of massively expanded support for universities that eliminates the cost entirely, or reduces it to what one might be able to reasonably earn/save at…

Debt should be forgiven, not relieved. We should not reward the debtors for constructing this byzantine nightmare.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#23

Post by elliekelly »

jointpdf wrote: post #13
ep103 wrote: post #8

Aggregate student loan repayment should be capped as a percentage of yearly income. This should have been included as part of the same legislation that made student loans non-dischargable by bankruptcy. If you make 100k / year, and the rate is set at 10% (random number), 10k is the maximum amount you pay on your loans, regardless of the total amount you loans you have accrued. Currently, there is no downward pressure…

This exists—income based repayment plans. There are different types [1], but basically you pay a maximum 10% or 15% of your income, and the remaining balance is discharged after 20 or 25 years. AFAIK, it’s open to everyone—but you have to apply. It would probably help a lot of people avoid default if everyone was auto-enrolled in IBR. Also, there’s the public service loan forgiveness program (10 yrs public service jo…

> Also, there’s the public service loan forgiveness program (10 yrs public service job -> discharged loan balance).

DeVos's administration has only approved 206 borrowers for public service loan forgiveness.[1]

[1]https://www.usatoday.com/story/news/nation/2018/12/27/studen...

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#24

Post by 535188B17C93743 »

csense wrote: post #21

I'm thinking the solution will be political, not economic. Once there are enough people in enough pain that it turns them into single-issue voters on this issue, someone will create taxpayer-funded relief. If it's a Democratic-led solution, it'll probably be in the form of massively expanded support for universities that eliminates the cost entirely, or reduces it to what one might be able to reasonably earn/save at…

Isn't a 529 what you're describing?

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#25

Post by rexpop »

sys_64738 wrote: post #20
JamesBarney wrote: post #7

Summary of what a student loan bubble bursting would be from the article. The government would guarantee less student loans. This would be means some for profit institutions might shut down.

The govt shouldn’t guarantee any student loans. My tax dollars shouldn’t be an ATM for student tuition.

I am surprised to see this comment "faded." I suppose this means you've rubbed a moderator the wrong way. Administration of this website befuddles me.

At any rate, I completely agree: the wealth of the average taxpaying citizen should not be used to pay the blackmail of too-big-too-fail financial engines holding public education for ransom.

Blackmailers should be arrested, tried, and sentenced to community service. Their demands should not be met.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#26

Post by elliekelly »

sys_64738 wrote: post #20
JamesBarney wrote: post #7

Summary of what a student loan bubble bursting would be from the article. The government would guarantee less student loans. This would be means some for profit institutions might shut down.

The govt shouldn’t guarantee any student loans. My tax dollars shouldn’t be an ATM for student tuition.

> My tax dollars shouldn’t be an ATM for student tuition.

In theory tuition is a great way to spend tax dollars because it creates better educated citizens who will earn more money (and pay more taxes). In practice it does seem to be more like monopoly money that props up sub-par schools and provides even worse education to those who could benefit from it the most.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#27

Post by ThrustVectoring »

elliekelly wrote: post #26
sys_64738 wrote: post #20

Earlier quoted context omitted.

The govt shouldn’t guarantee any student loans. My tax dollars shouldn’t be an ATM for student tuition.

> My tax dollars shouldn’t be an ATM for student tuition. In theory tuition is a great way to spend tax dollars because it creates better educated citizens who will earn more money (and pay more taxes). In practice it does seem to be more like monopoly money that props up sub-par schools and provides even worse education to those who could benefit from it the most.

Depends on the theory. If you believe that college education is a positional good - that it allows people to be classified as middle-class and be prioritized for white collar work at the expense of non-college-educated competitors - then tax subsidies is the last thing you'd want to do.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#28

Post by rmason »

exabrial wrote: post #17

Just like the housing crisis... when are we going to learn that government backed debt is a terrible thing for our nation? Creditors _should_ turn away bad lendees or cap loan limits, or increase your interest rate based on risk factors. Some exmaples of this might be: * Limiting the amount of money you can be loaned for majors that don't have good job prospects. People should turn to grants for these types of educat…

Why shouldn't it cost less for an English or a philosophy degree than an engineering degree? The job prospects are not only worse but so are your lifetime earnings.

Or looking at it another way the English and philosophy majors are subsidizing the cost of an engineering degree.

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#29

Post by AnimalMuppet »

rexpop wrote: post #25
sys_64738 wrote: post #20

Earlier quoted context omitted.

The govt shouldn’t guarantee any student loans. My tax dollars shouldn’t be an ATM for student tuition.

I am surprised to see this comment "faded." I suppose this means you've rubbed a moderator the wrong way. Administration of this website befuddles me. At any rate, I completely agree: the wealth of the average taxpaying citizen should not be used to pay the blackmail of too-big-too-fail financial engines holding public education for ransom. Blackmailers should be arrested, tried, and sentenced to community service. T…

> I am surprised to see this comment "faded." I suppose this means you've rubbed a moderator the wrong way.

Not a moderator - a reader with enough karma to be able to downvote (500 karma, IIRC).

Re: What a Student Loan 'Bubble' Bursting Might Look Like

#30

Post by elliekelly »

ThrustVectoring wrote: post #27
elliekelly wrote: post #26

Earlier quoted context omitted.

> My tax dollars shouldn’t be an ATM for student tuition. In theory tuition is a great way to spend tax dollars because it creates better educated citizens who will earn more money (and pay more taxes). In practice it does seem to be more like monopoly money that props up sub-par schools and provides even worse education to those who could benefit from it the most.

Depends on the theory. If you believe that college education is a positional good - that it allows people to be classified as middle-class and be prioritized for white collar work at the expense of non-college-educated competitors - then tax subsidies is the last thing you'd want to do.

Wow. That's a really good point... subsidies lead to overconsumption and overconsumption of education leads to "degree inflation" which leads to... even more overconsumption of education.

Yikes.

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