The student loan crisis is really an underemployment catastrophe • Hacker News Board

Re: The student loan crisis is really an underemployment catastrophe

#101

Post by lotsofpulp » Mon, Jun 17, 2019, 7:59 PM UTC

anovikov wrote: post #39

A little bit unrelated question: why are HE revolving loans so cheap, having negative CAGR? Some piece of economics i totally fail to understand.

They are guaranteed by taxpayers.

>Lots of student loans are also owned by pseudo government agencies or private companies with beneficial relationships with the Department of Education, such as NelNet Inc. (NYSE: NNI) and Sallie Mae (NYSE: SLM). Sallie Mae holds a lot of the loans made under the Federal Family Education Loan Program (FFELP), which was replaced by the federal government.

https://www.investopedia.com/articles/personal-finance/08121...

Re: The student loan crisis is really an underemployment catastrophe

#102

Post by war1025 » Mon, Jun 17, 2019, 7:59 PM UTC

michaelbrave wrote: post #97

war1025 wrote: post #58

Earlier quoted context omitted.

Middle class Americans can absolutely afford to have kids. People in certain metros maybe can't afford it, but living there is often a choice they explicitly make, or at the very least talk themselves into. Sure you make half as much working somewhere else, but the cost of living is also a quarter as much.

A lot of American's grew up middle class but aren't anymore, they still think of themselves as such but truly aren't. This is how most Millenials live, they are too broke to have kids, think of themselves as middle class because they grew up that way, even if in reality they aren't.

What do you consider middle class? That term is notoriously ill-defined.

Re: The student loan crisis is really an underemployment catastrophe

#103

Post by nostrebored » Mon, Jun 17, 2019, 8:03 PM UTC

brightball wrote: post #82

war1025 wrote: post #58

Earlier quoted context omitted.

Middle class Americans can absolutely afford to have kids. People in certain metros maybe can't afford it, but living there is often a choice they explicitly make, or at the very least talk themselves into. Sure you make half as much working somewhere else, but the cost of living is also a quarter as much.

Yep. That. Every time I read something about the cost of having kids I'm looking for some idea of where these people live. The single largest expense for kids is day care and that's only necessary if you have 2 working parents...and if one of those parents income doesn't more than justify the cost of daycare it's usually a better idea to have a stay at home. People seriously take for granted the financial value that…

Current income justifying day care is a short term and fallacious comparison. You need to look at long term potential. Leaving the labor force does more than just set you back the years you were gone.

Re: The student loan crisis is really an underemployment catastrophe

#104

Post by papln » Mon, Jun 17, 2019, 8:04 PM UTC

war1025 wrote: post #100

sdfsaf wrote: post #91

Earlier quoted context omitted.

A quarter? Dream on. We're living in the Midwest with an East coast salary (remote). I have no idea how other ppl here afford kids and manage to save. We spend $30k on day care and another $12k on health premiums alone.

Living in the Midwest on a Midwest salary ($85k/yr), currently 30 years old, have 3 kids, a stay at home wife, and a net worth that just peeked over $250k. Also, our work health insurance is shit, so $200 gets taken out of my paycheck each week for that, which puts it right around the $12k you mentioned. Daycare is stupid expensive. Healthcare is stupid expensive. We handle the former by having my wife stay home. The…

A single-income family with children and a stay-at-home parent isn't an unfortunate fact of life, it's a stable economic and social arrangement that promotes health and welfare of children, giving them a strong prospect for future success.

Re: The student loan crisis is really an underemployment catastrophe

#105

Post by war1025 » Mon, Jun 17, 2019, 8:05 PM UTC

nostrebored wrote: post #103

brightball wrote: post #82

Earlier quoted context omitted.

Yep. That. Every time I read something about the cost of having kids I'm looking for some idea of where these people live. The single largest expense for kids is day care and that's only necessary if you have 2 working parents...and if one of those parents income doesn't more than justify the cost of daycare it's usually a better idea to have a stay at home. People seriously take for granted the financial value that…

Current income justifying day care is a short term and fallacious comparison. You need to look at long term potential. Leaving the labor force does more than just set you back the years you were gone.

Also really depends what you are chasing, both as an individual and a family unit. It's an optimization problem where there are more variables than income.

Edit:

Personally, I think the whole financial independence movement is pretty interesting, and sometimes I get myself through the day by viewing it as my wife being financially independent. Which is halfway there as far as things go.

Re: The student loan crisis is really an underemployment catastrophe

#106

Post by zaroth » Mon, Jun 17, 2019, 8:06 PM UTC

throwaway2048 wrote: post #99

zaroth wrote: post #93

I’m looking at the Underemployment vs Unemployment of Recent College Grads graph, and then the following graph of Unemployment of Young Workers vs Recent Grads and they seem like they should share one of the curves in common, but the graphs are different? Underemployment rates for non-farm jobs in the US, 2005–2018 — Unemployment of Recent Grads Vs Unemployment rates for non-farm jobs in the US, 2005–2018 — Recent Gr…

Why should the principle not be discharged? Why is lending a virtually risk free position (which induces a massive moral hazard)

It’s non-dischargeable so that it can be offered to people with no collateral and who are otherwise entirely un-creditworthy.

Not surprisingly, this results in high delinquency rates!

The alternative is most people wouldn’t qualify for this level of debt, you would more highly subsidize cheaper public education, and private universities would have to rely entirely on endowments to provide financial aid to people who otherwise wouldn’t be able to afford to go.

At some point a $50k private undergraduate education (forget about $100k+!) is not for everyone, even if there are banks willing to write the check and put you into that kind of debt.

But think of the outcry if you were to limit the amount of educational debt someone could take on — for example by only making the first $20k non-dischargeable. It would fix the delinquency problem, drastically lower the total annual student loan rate, and cause private tuition prices overall to decline, but it would be called institutional racism.

I think we already went through this cycle with housing, when ~15 years ago politicians started saying that owning a home was a right and everyone should own one, regardless of ability to pay. Zero down, no income verification, guaranteed issue mortgages caused the housing bubble, and we see something nearly the same in education today saddling kids with debt way over their heads, except this time you can’t even walk away from it in exchange for a 7 year credit score hit.

Re: The student loan crisis is really an underemployment catastrophe

#107

Post by papln » Mon, Jun 17, 2019, 8:06 PM UTC

lemcoe9 wrote: post #16

lotsofpulp wrote: post #11

Earlier quoted context omitted.

With GPS/always on mobile data connections, the lender has a much easier time reclaiming the collateral and recouping their losses by selling or leasing it again.

I can absolutely confirm this. I have done work (not on this particular type of system, however) for many small-to-medium car dealerships, and they will spend roughly $400 to equip many of the vehicles in their inventory with ignition interlocks that can be disabled remotely. Here is their business cycle: 1. Purchase a used car from a customer for 80% of "fair market value." 2. Sell the car on a $0-down, 7-year note…

This is true (John Oliver covered in depth at https://www.youtube.com/watch?v=4U2eDJnwz_s), but has nothing to do with the $35K 6+-year loans on new cars.

Re: The student loan crisis is really an underemployment catastrophe

#108

Post by papln » Mon, Jun 17, 2019, 8:07 PM UTC

loganfrederick wrote: post #44

lotsofpulp wrote: post #30

Earlier quoted context omitted.

I don’t understand your use of the term “fair market value” in quotes, implying that it’s not the actual market value. If the seller and buyer are not under duress while selling and buying, why is the dealer not buying and selling at the market value?

Typically because there is an education and need asymmetry between the buyer and seller in a lot of these cases. If the car is maybe worth $3K cash, but a dealer can lease it to someone for $4K by requiring no money down but high interest rates on the loan/monthly payments, where does one say the "market value" is? The dealer is getting $4K (or more in the cases where they repossess the car and re-lease it) because t…

Yes, but that's covered by the 110%-80% sale spread and the onerous interest, fees, and repossession costs, not the car's market value.

Re: The student loan crisis is really an underemployment catastrophe

#109

Post by rotskoff » Mon, Jun 17, 2019, 8:08 PM UTC

jmpman wrote: post #9

H1B compete with the newly graduated college students. Before people say that there’s no problem with STEM graduates finding a job, I’ll counter that many of my coworkers 20 years ago didn’t have STEM degrees, and were previously English majors, business majors, etc. They were people with technical aptitude who realized they had picked a field of study that didn’t quite suit their financial aspirations. They were abl…

It's probably worthwhile to think about scale in this context: There are only 85000 H-1B visas issued each year by the US; 20k of those are reserved for people with advanced degrees [1]. Given that there are an estimated 3.87 million software developers working in the USA [2], this seems unlikely to be the root cause of the inability of some graduates to find entry level software jobs.

1. https://www.uscis.gov/working-united-states/temporary-worker... 2. https://en.wikipedia.org/wiki/Software_engineering_demograph...

Re: The student loan crisis is really an underemployment catastrophe

#110

Post by ikeyany » Mon, Jun 17, 2019, 8:09 PM UTC

war1025 wrote: post #58

ikeyany wrote: post #31

Earlier quoted context omitted.

For starters, H1Bs are cheaper to hire. Also, they're more desperate to stay in the US, so they won't demand too much and won't walk away from poor conditions. That also fixes with the population issue since middle class Americans can't really afford to have kids.

Middle class Americans can absolutely afford to have kids. People in certain metros maybe can't afford it, but living there is often a choice they explicitly make, or at the very least talk themselves into. Sure you make half as much working somewhere else, but the cost of living is also a quarter as much.

I should have clarified. Middle class Americans cannot afford to have kids if they want the type of lifestyle they grew up with. Someone who grew up in Boston will need to move further out; someone who grew up with a single mom in Austin can no longer afford to raise a kid there without a spouse.