Ripping Off Young America: The College-Loan Scandal • Hacker News Board

Re: Ripping Off Young America: The College-Loan Scandal

#121

Post by newbie12 » Fri, Aug 16, 2013, 6:37 PM UTC

apsec112 wrote: post #107

gxs wrote: post #7

Amazing, perspective is everything. I don't deny that college kids are being taken advantage of. Graduating from a small liberal arts college in South Dakota that no one's ever heard of with a degree is Culture Studies and 80k in debt really is a rip off. The flipside of this coin however is someone like me. My parents are immigrants and I was the first to go to school. To my parents, the fact that someone would be e…

Not to belittle your accomplishment, but you were very lucky to have parents who lived in California, which still has the best public colleges in the US. People whose parents lived in the other 49 states had to either go to a worse (sometimes much worse) school than Cal, or shell out $250K for a private degree.

California is so large it has many great public schools, but other states like Virginia (UVA and William & Mary) have public schools that rival the best in California, and most large states have an elite public school (Texas, Michigan, UNC, Georgia Tech, etc etc) that would be top tier in California. To some degree, California's support for its universities has slipped and the reputation is based on the past.

Re: Ripping Off Young America: The College-Loan Scandal

#122

Post by fnordfnordfnord » Fri, Aug 16, 2013, 6:39 PM UTC

twoodfin wrote: post #42

disgruntledphd2 wrote: post #31

Earlier quoted context omitted.

Really, I think he's somewhat wonderful. The way he marshals words in the service of outrage, anger and disenchantment with authority is extremely appealing to me, even when I disagree with him.

That's my problem with him. What do you learn from this article except to be outraged? Surely the folks perpetuating this system aren't all mustache-twirling villains: Somebody out there has a case to make for the current system, but Taibbi isn't at all interested in that case.

There were plenty of balanced articles about the faults of the student loan system. Nobody noticed, and now student loan debt has grown to be the largest source of consumer debt, even with the ease of obtaining credit cards, mortgages, and car loans.

Re: Ripping Off Young America: The College-Loan Scandal

#123

Post by wmf » Fri, Aug 16, 2013, 6:40 PM UTC

sp332 wrote: post #96

burntsushi wrote: post #53

Earlier quoted context omitted.

> The overall price of education is the root of the problem, and the price of education has little correlation to the availability of student loans (contrary to popular belief). Did you read the article? It provided a fairly sound argument supporting the conclusion that the availability of student loans and the price of tuition are quite related.

Fixing the lending problem might influence the overspending, but fixing the overspending would solve the problem much more directly.

You're basically saying let's ask people not to accept free money that's being thrown at them. That's not impossible, but I think restricting bad loans is more compatible with human nature.

Re: Ripping Off Young America: The College-Loan Scandal

#124

Post by gebe » Fri, Aug 16, 2013, 6:42 PM UTC

GFischer wrote: post #120

gxs wrote: post #7

Amazing, perspective is everything. I don't deny that college kids are being taken advantage of. Graduating from a small liberal arts college in South Dakota that no one's ever heard of with a degree is Culture Studies and 80k in debt really is a rip off. The flipside of this coin however is someone like me. My parents are immigrants and I was the first to go to school. To my parents, the fact that someone would be e…

"In some countries, you don't even have the OPTION to take out a loan to go to school" In some countries, like mine (Uruguay) university-level education is free :) (though postgraduate studies are paid). I think China is the biggest example of free university education. EDIT: I was wrong, about U$ 2000/year and rising apparently. At least our bazillion psychologists and communication majors (equivalent to the dreaded…

University education in China is not free, they have tuition costs as well.

Re: Ripping Off Young America: The College-Loan Scandal

#125

Post by wmf » Fri, Aug 16, 2013, 6:43 PM UTC

ethanbond wrote: post #44

AnIrishDuck wrote: post #38

Earlier quoted context omitted.

> Loans aren't at the root of the problem Loans absolutely are at the root of the problem. Not the abstract concept of loaning money, but the current implementation. The student loans legally allowed today are borderline usary. They provide a convenient way for lenders to sidestep bankruptcy protection. This leaves students with exact same problems society had before bankruptcy: it's far too easy for the unwary to si…

The overall price of education is the root of the problem, and the price of education has little correlation to the availability of student loans (contrary to popular belief). > Maybe it's time to cap total outstanding student debt to some reasonable expectation of when they can be repaid. I think that's a good start. Kind of resembling a loan-forgiveness mechanism (which there are already a few). It falls into the s…

There are studies about the lifetime value of various college degrees, so it should be possible to limit loans to some fraction of that.

Re: Ripping Off Young America: The College-Loan Scandal

#126

Post by JonFish85 » Fri, Aug 16, 2013, 6:43 PM UTC

Whatever happened to personal responsibility? You're 18, you can smoke, drive, join the army and take out gigantic loans you can't repay. It's a fine line between making it easy for everyone to go to college and making it easy for a mathematically disinclined person to take out a huge loan for a dumb reason.

It would be great for everyone to have the chance to go to some college. For some reason, people seem to immediately want to get the Porsche experience when they should be opting for the Honda. So should the government step in to say "hey you can't afford to go to X school because it's too expensive", or should the government allow people to take the risk? Should more be done to push people into in-state schools, where tuition is often orders of magnitude cheaper?

The people in the article bemoan how easy it is to just sign these documents. Whose fault is that? They didn't read what they're signing for? Isn't that their own damn fault? Couldn't you say the same about stupid car loans? Stupid short-term loans? No one forced them to go to college, especially not one that leaves them $40k in debt.

In my opinion, too much has been made of the "follow your dreams and let the rest sort itself out" is a big reason for this. Sometimes you have to weigh following your dreams and figure out if that's your life-long dream or just "hey that sounds like fun". Just because you get accepted to a great school doesn't mean you can afford it or should go there.

Re: Ripping Off Young America: The College-Loan Scandal

#127

Post by 7Figures2Commas » Fri, Aug 16, 2013, 6:44 PM UTC

newbie12 wrote: post #109

lmg643 wrote: post #103

Earlier quoted context omitted.

the core problem with college loans is that they are non-dischargeable. this means that no matter what the student's ultimate financial situation (long term unemployed, finances wiped out, etc) they still have to pay down the debt, and it can't be wiped out in bankruptcy. This stands in contrast to virtually every kind of loan out there, which can be discharged (written off). As a result, there is less risk for the l…

Student loans are unsecured, so if they could be discharged, the market rate would be akin to a credit card with a huge balance-- 15% to 20% a year in the current interest rate environment. Plus if they could be discharged, such action would become commonplace, a rite of passage at graduation.

Exactly. It amazes me how many people seem to believe that the solution to the student loan debt problem is to allow for discharge in bankruptcy.

Not only will this necessarily force lenders to increase the cost of these loans to borrowers, a lot of folks apparently don't understand that the biggest lender in this market is the federal government. Of the more than $1 trillion in student loans outstanding, about 85% have been provided by the federal government. Just over one in five federal student loans is already in default or delayed default. If the law is changed to permit discharge of these loans in bankruptcy, Student Loan Debt will become Mortgage Market 2.0.

Re: Ripping Off Young America: The College-Loan Scandal

#128

Post by RougeFemme » Fri, Aug 16, 2013, 6:45 PM UTC

newbie12 wrote: post #109

lmg643 wrote: post #103

Earlier quoted context omitted.

the core problem with college loans is that they are non-dischargeable. this means that no matter what the student's ultimate financial situation (long term unemployed, finances wiped out, etc) they still have to pay down the debt, and it can't be wiped out in bankruptcy. This stands in contrast to virtually every kind of loan out there, which can be discharged (written off). As a result, there is less risk for the l…

Student loans are unsecured, so if they could be discharged, the market rate would be akin to a credit card with a huge balance-- 15% to 20% a year in the current interest rate environment. Plus if they could be discharged, such action would become commonplace, a rite of passage at graduation.

But credit card debt can be discharged; why not student loan debt? The inability to discharge it is relatively recent, I believe - a compromise reached when the private banks were pulled out of the federal student loan loop. Also, if they could only be discharged during bankruptcy - as was the case before - there would be no concern about it becoming a rite of passage.

Re: Ripping Off Young America: The College-Loan Scandal

#129

Post by GFischer » Fri, Aug 16, 2013, 6:45 PM UTC

gebe wrote: post #124

GFischer wrote: post #120

Earlier quoted context omitted.

"In some countries, you don't even have the OPTION to take out a loan to go to school" In some countries, like mine (Uruguay) university-level education is free :) (though postgraduate studies are paid). I think China is the biggest example of free university education. EDIT: I was wrong, about U$ 2000/year and rising apparently. At least our bazillion psychologists and communication majors (equivalent to the dreaded…

University education in China is not free, they have tuition costs as well.

Sorry, I must have wrong information :( .

I'm 100% sure we don't have tuition here in Uruguay, and poorer students get state help.

However, five years after you graduate, you have to pay a mandatory special "university graduate tax" called "Fondo de Solidaridad" which helps pay for the poorer students, etc., so I guess it is a form of debt :) .

It's about U$ 200 every six months currently.

Re: Ripping Off Young America: The College-Loan Scandal

#130

Post by WalterBright » Fri, Aug 16, 2013, 6:46 PM UTC

TallGuyShort wrote: post #37

jacquesm wrote: post #11

One big problem I have with college loans is that people that sign up for it are not adequately informed on the long term consequences of their action. Since this is a loan for education one would expect that before being allowed to sign for the loan there would be a test that you'd have to pass to be able to apply. That would get rid of a lot of people that find out the hard way that they've borrowed themselves into…

I learnt how compound interest worked long before high school. I don't mean to sound unsympathetic, but the notion that people who have applied to and been accepted to a university wouldn't be capable of making simple cost/benefit decisions or understand the consequences of a loan should be laughable. The fact that so many people are apparently approaching graduating without yet having thought about the consequences…

The guy who taught me accounting used to be a car salesman. He told me that car lots don't make much selling cars, they make their bread by selling financing. And they do it to people who simply cannot understand the numbers.

It gets worse. He'd patiently explain the numbers to the customer, and they'd still sign up for the most expensive option. (They were motivated by the monthly payment amount - the term or the interest rate simply meant nothing to them.)

Being math challenged has severely negative consequences for ones' financial prospects.