311–320 of 771 posts
We know what happens when it is other people's money. Also fascinating is the increased room and board (square area requirement per student) due to the lack of experience sharing rooms in the family as family sizes have collapsed to sub replacement levels.
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Now I read that Wall Street is creating CDO's based on these loans, like they (continue to) do on mortgages. Some people die "early" without paying back these loans, and sometimes, they will owe more than they took out. Given the mounting problems with the numbers here, it seems a whole generation of people in the middle of this bubble are going to go to the grave while still owing on these loans. What happens to the…
One of the core elements of the 2008 meltdown was when someone abandoned a house, all the other houses in the neighborhood would see a substantial drop in their value. This made it more likely that other people would go underwater on their mortgage and also walk away. Education doesn’t have this kind of contagion. If you stop paying your student loans it has very little impact on the value on my education.
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I will say it again: Private high school costs have also gone up astronomically and there are no federal loans for them. [0] https://educationdata.org/average-cost-of-private-school
This says that the average private highschool tuition is $15,645. In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars). Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years.
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> But in general, you'd think the student loans would only be in trouble if there's a large increase in the unemployment rate. I thought the government guarantees these loans, but maybe I mis-read that, mis-understood, or something changed. I think the borrower is still on the hook and accrues fees if they don't pay but I also thought the federal government literally paid to keep the bank whole.
This is why I'm asking. If that's the case, then I think even I would want to invest heavily in them. As long as the US government continues to make the money printer go BRRRR, this is an investment vehicle that simply cannot fail. (Until it does, in which case it will do so in a most-spectacular fashion.)
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Private high school costs have also gone up astronomically and there are no federal loans for them. [0] https://educationdata.org/average-cost-of-private-school
This says that the average private highschool tuition is $15,645. In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars). Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years. Looks like doing the same thing for public 4 year college over the same…
Edit: it looks like there is an error on this page. The bar chart the numbers are much higher. Anecdotally, private high school is always more expensive than private elementary. That is what the bar chart shows but not the bullets.
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Federal loans are basically all of them to start with (over 92% of outstanding balances).
I had thought that I had private loans back in the day. Been a long time since I paid all of mine off, though, so I can't remember who they were through. (And, I fully grant that, even if I was private loans, 8% is still a non-zero number...)
Makes sense when you have student loans backed by the federal government. If an 18 year old with no money and no credit history gets accepted into a qualifying university, she will be able to receive a loan since the bank knows that the government will protect their investment if she fails to pay them back. So now young people have this easy access to credit, and universities can greatly increase tuition and fees wit…
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This says that the average private highschool tuition is $15,645. In 2003, the average private highschool tuition was $8,412 (Snyder, Dillow, & Hoffman, 2008), or $14,079 (in today's dollars). Please correct me if I've made some mistake, but plugging those numbers in shows that the annualized real increase in price is 0.5% per year over 20 years. Looks like doing the same thing for public 4 year college over the same…
The first bullet says: “$23,839 is the average annual tuition among the nation’s private K-12 schools.” Edit: it looks like there is an error on this page. The bar chart the numbers are much higher. Anecdotally, private high school is always more expensive than private elementary. That is what the bar chart shows but not the bullets.
Harvard has 2,000 students per year and a $50 billion endowment. That is enough to refund $500,000 to every student they've had for the past 50 years. Why are universities hoarding so much money? https://www.highereddive.com/news/how-20-largest-college-end... Why are universities hiring so many administrators in relation to professors and students? https://www.usnews.com/education/articles/one-culprit-in-ris...
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Well the CDOs are probably tranched, so there will be some portions that are safe. But in general, you'd think the student loans would only be in trouble if there's a large increase in the unemployment rate. You'd get a meltdown if the government were to announce a change in the laws.
> But in general, you'd think the student loans would only be in trouble if there's a large increase in the unemployment rate. I thought the government guarantees these loans, but maybe I mis-read that, mis-understood, or something changed. I think the borrower is still on the hook and accrues fees if they don't pay but I also thought the federal government literally paid to keep the bank whole.
Have to wonder how this interacts with the US healthcare system. As people get older they are more likely to have health problems that prevent them from working and cost a bunch of money.