Earlier quoted context omitted.
Because your loans have collateral to return (home, car) and education does not.
Education has yourself as return.
But the repo process for brain cells is a little too gruesome for bankers.
U.S. Stepping Up Enforcement on Delinquent Student Loans
101–110 of 161 posts
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#102Earlier quoted context omitted.
The assessing is done by the school as they are a trusted third party. And then the school inflates prices to bring in more money for the endowment and administration. The selling line is something like: "Don't want to have a shit life and no options? We didn't think so, so sign this paper and go cram for tests and don't worry about the bill. People with a degree earn more than those without." And then the jobs are s…
> The assessing is done by the school as they are a trusted third party. That might be for some loans, but from my understanding everybody is guaranteed a loan, regardless of their grades. The point was the government would back the loans so those who were less affluent could also go to school. The end result is we tried to help the poor, and screwed everybody else along the way. Not only did the poor get a bad deal,…
"but that simply how supply and demand works"
Are you sure? Because the normal way of thinking about "supply and demand" is to suggest that prices will go down if supply grows faster than demand, which is what happened for nearly all of the 20th Century. And if that process has stopped, then we need to ask why. Please consider the data here:
https://nces.ed.gov/programs/digest/d17/tables/dt17_302.60.a...
Try to explain these 3 data points:
(Young people in college)
1970 25.7%
1996 35.5%
2016 41.2%
There was no price surge when youth participation going to college went from 25% to 35% but there was a huge price surge when participation went from 35% to 41%. And the early surge is a much larger surge. So why did prices only go up during the latter era?
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#103Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…
The logic runs like this:
A secured loan should be easy and cheap to get, because if it goes bad, the lender can reposes the collateral. This is like your house and the truck; you ran up some debt, it didn't work out, you lost them both, but you also lost the debt.
An unsecured loan should be harder to get and pretty expensive, because it's riskier. If I run up $20k on my credit card paying for a fancy vacation, then can't pay, they can't take that vacation back from me. If I declare bankruptcy, I get a "free" vacation (I mean, not exactly, bankruptcy is complicated and expensive, but...) That's why credit cards run a 16% interest rate.
Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases.
> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different?
Education debt is different due to the combination of being inherently riskier than, say, a mortgage to buy a house, while still being something we want widely and cheaply available.
That being said, your biologist friend may have some better options if she looks into it.
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#104> Hypothetically, a member of the Class of 2019 with $50,000 in loans would owe about $550 per month over the next decade -- or $20 daily. (Assuming 6% annual interest and a 10-year term.)
This article misrepresents the nature of student debt in the United States. The average student graduates with 60% of the debt in Bloomberg's hypothetical scenario ($29,800) [0] with a fixed rate of 5.05% [1]. This leads to a monthly payment of ~$320 with a 10y term, 58% of Bloomberg's calculation. Student loan debt is absolutely a major problem, but it's important to rely on facts, not hypothetical scenarios.
[0] https://studentloanhero.com/student-loan-debt-statistics/
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#105I feel badly for the people that got sold college as an aspiration that they weren't qualified for, and dropped out after a couple of semesters.
I don't feel badly for the 30-somethings I know who racked up expensive private school loans, bumbled around through "finding themselves", failed startups, went back to school for more debt, traveled the world, and now are finding the bill for that irresponsibility coming due.
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#106I’m convinced you can’t fix the education problem in the US until you can fix the demand side as well. Where I live in Maryland, you can do two years at the local community college (which is excellent) for $8,000 in tuition and fees (total), before finishing up at a four year-college. Very few people take advantage of the opportunity. Why are people clamoring for free college when they’re not using the cheaper option…
Free college is an awful idea, honestly. That's not going to fix the problem, and will most likely make it significanly worse.
I think it's a great idea. It's always wise to invest in education. The student loans ARE an investment.
The only real problem with the student loans is that they gave them to people without concrete earning potential. They should have only gave out loans to educate people at real institutions (not U. of Phoenix eg) in practical areas like engineering or science. Instead, they gave a lot of loans to people who wouldn't have good employable potential post graduation.
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#107Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…
The logic runs like this: A secured loan should be easy and cheap to get, because if it goes bad, the lender can reposes the collateral. This is like your house and the truck; you ran up some debt, it didn't work out, you lost them both, but you also lost the debt. An unsecured loan should be harder to get and pretty expensive, because it's riskier. If I run up $20k on my credit card paying for a fancy vacation, then…
>Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases
You say that like there was some master central plan, but I doubt that's the case. Would love to know the history of how our whole "system" / tangle of rules etc came to be, timeline of events, etc
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#108Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…
We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked. No private bank would do this so it has to be government. But we want this to cost the government nothing, so the loan is uniquely inescapable. And we want Universities to charge essentially whatever they want, so the loan required is close to unlimited. We'd need to change one of those to fix the problem.…
> We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked
That doesn't mean the loan needs to be unlimited. Pretty much every story you hear about unreasonable loan repayments are from people who went to a private school and spent $50,000 a year on a major that doesn't have good job prospects. I went to a public state school and most of the people there were because it was cheaper than going to out of state schools or private schools and they majored in subject that had good job prospects.
A simple cap on college loans per major would force people to choose cheaper schools (like starting at community college and going in-state) and/or more job economical majors so they don't drown themselves in debt that they cannot pay off.
> Which leave one option, the one other developed continues use. Which is hammered with words like "socialist" or the like.
Except that solution involves subsidizing everyone to go to college despite how economically useful going to college is for each person. For a prime example, see this topic [0] where european colleges were losing all of their top AI professors because they wouldn't pay their AI professors market wages because they got paid at the same rate as un-economically useful majors.
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#109Earlier quoted context omitted.
Not as they currently do it, no, but I imagine (at least with future loans), it could have the penalty that the university would not issue your transcript or vouch for your degree when the loan became delinquent enough. That would be similar in spirit repossession (except that the bank couldn't sell it). But of course, they wouldn't get to take back any of that valuable knowledge and human capital you acquired there…
The whole point of repossession is that he bank can sell it to recover at least some of their loss. Without that, it’s just destructive punishment. You’d be making society poorer by restricting this person’s job prospects, with no gain anywhere to offset it.
I don’t know how you get “the whole point” as being that. The credit scoring system likewise doesn’t give the lender anything to resell and merely punishes the borrower, but we recognize it as having positive sum effects for the credit system. A program of revoking degrees would behave the same way.
(Even if you have criticisms of the credit score as it exists today, most at least see the merit of “hey, other lenders, this person doesn’t repay loans, proceed with caution.)
Re: U.S. Stepping Up Enforcement on Delinquent Student Loans
#110Earlier quoted context omitted.
Free college is an awful idea, honestly. That's not going to fix the problem, and will most likely make it significanly worse.
I think it's a great idea. It's always wise to invest in education. The student loans ARE an investment. The only real problem with the student loans is that they gave them to people without concrete earning potential. They should have only gave out loans to educate people at real institutions (not U. of Phoenix eg) in practical areas like engineering or science. Instead, they gave a lot of loans to people who wouldn…
That's exactly what I'm saying. Free college doesn't solve the problem, because the real problem isn't the cost of college, it's people pursuing degrees that aren't useful in the real world.