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Ripping Off Young America: The College-Loan Scandal

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

#141

Post by danielweber »

ethanbond wrote: post #131
macspoofing wrote: post #71

Earlier quoted context omitted.

>and the price of education has little correlation to the availability of student loans (contrary to popular belief)... That's just blatantly wrong. The easy availability of student loans is what's driving education costs. The fact that lenders are willing to lend enormous amounts of money to people who may not be able to pay them back, tells you right there that there is quite a bit of market-distortion going on. Co…

http://www.washingtonpost.com/blogs/answer-sheet/post/the-ur... Lots of sources down at the bottom. EDIT: Also, I've yet to actually see any study that concludes direct causation between availability of loans and tuition prices. Yet somehow the burden of proof is on the naysayers?

"Government and colleges are not driving up college costs," government and colleges report.

That blog post, by the way, the source of the quote that Taibbi references in TFA. It's not even an op-ed, it's a guest post written on one individual WaPo blog.

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

#142

Post by 14113 »

JonFish85 wrote: post #126

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 immed…

Why should the government decide what school is right for you?

On the flip side, perhaps the government should refuse to provide loans for programmes without accreditation from a professional organisation?

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

#143

Post by 7Figures2Commas »

danielweber wrote: post #132
newbie12 wrote: post #109

Earlier quoted context omitted.

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.

such action would become commonplace, a rite of passage at graduation Good. Then people will stop lending students tens or hundreds of thousands of dollars. Then schools will lower their prices.

> Then people will stop lending students tens or hundreds of thousands of dollars...

Let's make your comment a little more accurate:

Then the federal government, which is responsible for ~85% of the student loan market, will have to stop lending students tens or hundreds of thousands of dollars, and there will be no end to the cries that millions of young Americans are being denied a college education by well-to-do politicians who are out-of-touch with the economic realities of the average American.

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

#144

Post by WalterBright »

minikites wrote: post #78
vaadu wrote: post #19

A degree that provides the recipient with little foundation for income should not be underwritten with tax dollars. You want a teaching or nursing degree, I'm there. If you want a degree in puppetry, not happening.

http://press.princeton.edu/titles/9112.html > Historically, the humanities have been central to education because they have rightly been seen as essential for creating competent democratic citizens. But recently, Nussbaum argues, thinking about the aims of education has gone disturbingly awry both in the United States and abroad. Anxiously focused on national economic growth, we increasingly treat education as though…

I categorically reject the notion that STEM does not teach critical thinking.

After all, STEM fields have a built in reality check for one's thoughts. If you design an airplane and it doesn't fly, you're forced to develop critical thinking skills so that doesn't happen again. Physical reality isn't going to bend to your thoughts.

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

#145

Post by dragonwriter »

wayne_h wrote: post #140
danielweber wrote: post #46

Earlier quoted context omitted.

Part of the reason prices have gone up so much is that credit has become so easy. 50 years ago, if you wanted to go to college, you went, and the prices were reasonable because people could not afford a lot of money for it, and no one would lend it to them. There is almost no downward price pressure on college costs, and there is upward price pressure: since the students don't care about the price, they always want t…

This was caused by government unintended consequences.... Some doctors graduated from med school with $100ks in loans. So they immediately filed for bankruptcy and cleared the debt. After a few years of work they were back in the bucks and debt-free. The loan industry had congress write some new laws (was it 2008 ish?). The package clamped down on debt-collectors calling at all hours. It also eliminated clearing coll…

I don't see the unintended consequences: financial companies asked Congress to write a law for the express purpose of insulating those companies from risk and increasing their profits and the results were that (1) borrowers couldn't discharge debts in bankruptcy, making the financial services companies more money, and (2) increased profitability led to more loans, helping drive up tuition costs increasing the average loan amount and making the financial services companies even more money.

Doesn't seem to be unintended consequences at all.

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

#146

Post by RyJones »

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.

Bankruptcy for newly-minted medical doctors and dentists used to be a rite of passage. The law was changed because of this. What comes around goes around.

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

#147

Post by ethanbond »

JackFr wrote: post #136
ethanbond wrote: post #44

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). > 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…

"the price of education has little correlation to the availability of student loans" Sure. And the bubble in home prices was a purely secular affair, with no correlation to the introduction of option ARMs, low doc/no doc loans and subprime credit availability.

Sure. Because the actual statistics don't matter as long as you can draw loose parallels between two somewhat similar situations.

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

#148

Post by 7Figures2Commas »

RougeFemme wrote: post #128
newbie12 wrote: post #109

Earlier quoted context omitted.

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.

The official overall unemployment rate for recent college graduates has been as high as 9.4% in the past three years. There is still significant underemployment, and many employed college graduates are in roles that don't even require college degrees. Most of the post-2008 college graduates who are fortunate enough to be employed are projected to have lower earnings than their pre-Great Recession counterparts.

As I noted in another comment, one in five federal student loans outstanding is already in default or delayed default, and that number does obviously not include the number of loans that are in deferral still accumulating interest. Put simply, there are a lot of people out there who likely could and would consider filing for bankruptcy if it allowed them to discharge this debt.

We can't have it both ways: if you want everybody who wants a college education to be able to obtain one, the federal government has to be in the lending business and it has to be all but impossible for borrowers to discharge their debt.

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

#149

Post by jellicle »

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.

That's a fine prediction. And yet, student loans were only made so hard to discharge due to changes in the law in 1996 and 2000. And prior to 1996 and 2000, student loans were offered at much less than the exorbitant rates you predict, and lenders made nice fat profits on them even so. And no, there was no significant abuse of the system - after all, there's always a judge involved in bankruptcy proceedings, who has the authority NOT to discharge debts if there's any reasonable prospect of them being paid off.

So... your prediction is wrong.

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

#150

Post by dllthomas »

WalterBright wrote: post #144
minikites wrote: post #78

Earlier quoted context omitted.

http://press.princeton.edu/titles/9112.html > Historically, the humanities have been central to education because they have rightly been seen as essential for creating competent democratic citizens. But recently, Nussbaum argues, thinking about the aims of education has gone disturbingly awry both in the United States and abroad. Anxiously focused on national economic growth, we increasingly treat education as though…

I categorically reject the notion that STEM does not teach critical thinking. After all, STEM fields have a built in reality check for one's thoughts. If you design an airplane and it doesn't fly, you're forced to develop critical thinking skills so that doesn't happen again. Physical reality isn't going to bend to your thoughts.

STEM training alone might allow for more compartmentalization than an alternate curriculum.
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