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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

#51

Post by RussianCow »

konaraddio wrote: post #46

> Meanwhile, some people are more than happy to spend $100,000 on a graphic design degree that may get them a job paying roughly $40,000 a year > A lot of that has to do with what Goldfarb likes to call the narrative—one that convinced kids that the only route to middle-class respectability was to get a college degree and that suggested failing to do so meant having failed at the American dream of upward mobility. To…

I don't have any statistics to back this up, but I would guess that in many (most?) fields that don't absolutely require degrees for legal/other reasons, someone who spends 4 years actually working in their field is going to be in at least as good of shape as someone who spent those 4 years getting a degree (and maybe even better, depending on the field).

That said, getting that first job without the degree is the hard part—connections and luck play a huge role here. Everything after that becomes substantially easier, and the benefit of a degree becomes lower.

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

#52

Post by remote_phone »

seanmcdirmid wrote: post #6
number_six wrote: post #3

The fact that people can't ever discharge their loans makes it hard to imagine it "bursting" in the way that the housing market did in 2008. The whole notion of bursting is people collectively realizing their folly and everyone scrambling as quickly as possible to make out with whatever they've got left - like a run on a bank. In this case there is no bank to run on - people will just continue to have their wages/ben…

My mom discharged her student loan debt by passing away. They didn’t even go after her estate for some reason. The bar is higher, but not impossibly high.

I would consider Death the highest possible bar there is.

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

#54

Post by elliekelly »

pantalaimon wrote: post #45
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.

Would you say that in countries like Germany, where there is no tuition fee and university is funded with tax money, schools are sub-par because of that?

Definitely not but I think Germany puts forth considerable effort to make that happen. It's my understanding the the German equivalent of K-12 is much more uniform in the quality of education than what the 50 states provide. They also cap school fees that the government will cover so tuition doesn't increase at ridiculous rates. Since they're so diligent in the quality of K-12 education they can then set pretty high standards for admissions & administration of universities without disenfranchising lower-income students. Although a German friend of mine was recently telling me there's been a push to "ban" private K-12 schools (that charge tuition beyond what the government will cover) because many people find it distasteful that someone could "purchase" access to a better education. I would love the German education system but it would take a miracle to implement something similar in the U.S.

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

#55

Post by heyjudy »

acover wrote: post #16
nopriorarrests wrote: post #12

Earlier quoted context omitted.

>On the federal side, increasing defaults mostly reduce the difference between loans and grants Interesting tidbit here is that half (yes, half) of the US government's financial assets are student loans. It was discussed here previously -- https://news.ycombinator.com/item?id=16136330 . Something I find very hard to comprehend, tbh.

I believe this does not include most of the mortgages. For example, Fannie Mae has 3.35 trillion in assets, which dwarfs total student loans. https://en.wikipedia.org/wiki/Fannie_Mae

Including SGE's is a gray area of what's "business" and what's "commercial."

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

#56

Post by closetCS »

beefalo wrote: post #18
closetCS wrote: post #15

I don't see this here, but could a student debt bubble result not in a wave of defaults but as a contributing factor in a market slowdown or recession because the average borrower will have less disposable income to spend on other goods and products due to the insane debt payments? A wave of defaults most likely won't hurt any major institution except the federal government, but the lack of consumer spending seems li…

I've had similar conclusions when considdering this as well. These loans are not wiped out by bankruptcy so they will be a permanent drain to personal wealth indefinitely. I think we will see lasting effects as more and more young people are unable to invest, save for retirement, and buy real estate but there won't be a sudden shock to the economy like the mortgage bubble.

I think we are seeing this drain already occuring actually. The popular news sources are all reporting that millenials are struggling to buy homes and build savings, though this may be due to low wages rather than debt servicing costs

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

#57

Post by Kalium »

borkt wrote: post #41
qihqi wrote: post #38

Earlier quoted context omitted.

I am not sure if that is true. English professors are paid less than Eng ones and does not require expensive lab and equipment.

In all honesty, as a Materials Engineering student at a "learn by doing school", I could easily have done without the expensive lab equipment, but not without the library. I've always thought industry should be supporting the labs and having students perform some relatively basic work for them, for a random example Scanning Electron Microscope sample prep and basic analysis Edit: not a current student and graduated 1…

As I understand it, at a lot of schools facilities are supported by industry. To offer a non-engineering example, I was once in a Dunkin Donut-sponsored pastry instruction room at a culinary school.

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

#58

Post by njarboe »

Buldak wrote: post #44
qihqi wrote: post #38

Earlier quoted context omitted.

I am not sure if that is true. English professors are paid less than Eng ones and does not require expensive lab and equipment.

Yes, see here [1], for example. [1] http://crookedtimber.org/2013/08/14/humanities-science-is-no...

Not the case in US research universities where science professors bring in large grants from usually the federal government to fund machines and grad students. The university takes an "overhead" cut of these grants of around 50%. So if a grant is $150k then the professor gets 100k to spend and the University gets $50 (and pays for buildings, electricity, admin, etc). Most studies show that the overhead the universities take is a net plus for them over the cost of the services they provide.

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

#60

Post by exabrial »

JamesBarney wrote: post #37
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…

I don't think GPA has very much of any effect on lifetime earnings except by being a proxy for IQ and conscientiousness. Same with missing class, they don't reduce someone's lifetime earnings, they just tell you how conscientious they are. But extroversion is actually one of biggest contributors to lifetime earnings. Maybe if they miss a party we should increase their interest rate too.

Well the difference between a 3.0 and 4.4 isn't likely much, but a gpa of 1.5 would very much indicate failure to focus
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