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The Student Loan Bubble is Starting To Burst

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Re: The Student Loan Bubble is Starting To Burst

#161

Post by bradleyjg »

msandford wrote: post #148
comicjk wrote: post #112

Earlier quoted context omitted.

> people went to college for at least 100 years prior to that law. This is the fallacy of comparing the upper classes of one period with the masses of another. A far smaller fraction of people went to college in the century before 1976, and those who did go from lower-class origins often did so through direct scholarships like the GI bill. The college loan market was not very viable at this time. None other than Milt…

Yeah that's a really good point! I've heard plenty of people talk about working their way through school by having a summer job to pay for room and board and tuition and that it was possible to do it that way, even if it was uncomfortable. That really sounds great but maybe a little bit too great: it's a good narrative about how things were better back in the olden days when things were still good and not fucked up.…

My dad worked his way though state schools (SUNY) for undergraduate and law school from 1968 - 1975.

A few things about your calculations. First back then, unlike now, no college degree didn't mean automatic minimum wage job. Second, he worked while in school, not just over the summer. Third small scholarships back then actually made a difference. Today if you get the national merit scholarship for doing well on the PSATs, it's meaningless at $2000. Back then he got a $500 a year regents scholarship and it really helped.

Re: The Student Loan Bubble is Starting To Burst

#162

Post by jack-r-abbit »

It is amazing the number of comments that talk about the problems of defaulting on loans and then place the blame in all sorts of places other than the people defaulting on loans. Unless you were forced at gun point to sign loan papers (or other scandalous things transpired), there isn't a lot that can convince me you are not solely responsible for your loan. I don't care if it is for an education, a house, a car or a new pair of sneakers... if you accepted money with the condition that you would pay it back, you are responsible for paying it back or suffer the consequences of not paying it back. In some cases, the consequences of not paying it back might be better than what would happen if you did pay it back (like starving to death because you can't afford to eat. or freezing to death because you can't pay for a place to live). I'm not saying that people don't find themselves in financial hard times and some times only have really horrible options to choose from. But some times I feel like people start out with default as an actual option in their minds. Like it is no big thing... just Plan B. It very much is a big thing and should be your Plan Z!

Re: The Student Loan Bubble is Starting To Burst

#164

Post by noise »

danteembermage wrote: post #31
abdophoto wrote: post #10

Every kid I come across that plans to go to college I tell them to find the cheapest route possible. Start at either a good community college or go to a public in-state school. You can still go to a good college for a reasonable price, but it seems more and more that kids are taking the more expensive route (dorms, out-of-state, etc).

Unfortunately you public in-state advice is almost now outdated; many privates are cost-competitive with public schools and it's not because the private schools are cheap. e.g.: http://www.nytimes.com/2011/09/29/nyregion/seton-hall-univer... This is definitely a trend in private education pricing as sticker shock is a real problem for students considering private schools and the privates compete for the same students…

Not entirely. From the article - 31,440 for Seton, 10,104 for Rutgers. They are saying max merit aid is 21,000 at Seton, so tuition w/max merit aid is 10,440. I don't know about Rutgers specifically, but it's not uncommon for public state schools to offer up to 8,000-10,000 merit aid, covering the bulk of the tuition. So you'd be looking at paying 10k/yr vs 0-2k/yr, still a huge difference.

This assumes no need-based financial aid, and doesn't touch on housing, which is assumed to be 10-13k these days regardless of public or private.

Re: The Student Loan Bubble is Starting To Burst

#165

Post by sliverstorm »

fnordfnordfnord wrote: post #160
sliverstorm wrote: post #103

Earlier quoted context omitted.

No one expects them to. The point is the credit card company accepts the risk of default on no-collateral loans in part because they have confidence (credit report) in the chances of being paid back, while a student typically has no such supporting evidence to back their case.

Those cards generate lots of fees. How can the CC have confidence in the credit report when they issue cards to people with virtually no credit. They are wildcatting. https://en.wikipedia.org/wiki/Wildcatter

Right, but just imagine the fees you'd need to establish on student loans to wildcat them!

Late billing fee: $10,000 Processing fee: $1,500 (Etc)

Re: The Student Loan Bubble is Starting To Burst

#166

Post by msandford »

acchow wrote: post #131
muzz wrote: post #73

Earlier quoted context omitted.

McKinsey says there will be a huge shortage of college graduates: http://www.mckinsey.com/insights/economic_studies/talent_ten...

Despite widespread knowledge of grade inflation and diploma devaluation, somehow a college degree is still used in discussions of employability. If it's easy to graduate once you've been admitted, increasing the number of graduates isn't going to help alleviate the "shortage of college graduates" because the real shortage is in talent.

That's really insightful.

Re: The Student Loan Bubble is Starting To Burst

#167

Post by imissmyjuno »

tzs wrote: post #30
abdophoto wrote: post #10

Every kid I come across that plans to go to college I tell them to find the cheapest route possible. Start at either a good community college or go to a public in-state school. You can still go to a good college for a reasonable price, but it seems more and more that kids are taking the more expensive route (dorms, out-of-state, etc).

For kids from poor or middle class families, Princeton, Harvard, Yale and Caltech will usually cost less than an in-state public school when it comes to what the student and his family actually have to pay. In-state public school has a lower sticker price, but have less non-loan need-based aid so students have to come up with a high percentage of the sticker price. The top private non-profit schools have higher stick…

That last example is meaningless in isolation. What percentage of Princeton students take out student loans (and how much)? I'd guess it's much smaller than in public schools.

Re: The Student Loan Bubble is Starting To Burst

#168

Post by jerf »

muzz wrote: post #43
prostoalex wrote: post #12

Pretty good overview and opinion of the status quo and historical retrospective here: http://online.wsj.com/article/SB1000142412788732416520457902... ? "Politicians subsidize the purchase of a good or service, prices inevitably rise in response to this pumped-up demand, and then the pols blame the provider of the good or service for responding to the incentives the politicians created. Think housing finance and medic…

Adding "$1 trillion in student loans to the federal balance sheet over a decade" is a result of direct lending, ie cutting out the middleman. It is also saving the taxpayer money to the tune of $70B over ten years.

It doesn't save the taxpayers any money if the government makes foolish loans that can't be repaid that nobody would have ever lent out if their own money was on the hook instead, nor does it save the taxpayers any money if the government provides easy, free money that causes unnaturally skyrocketing tuition followed by an unnatural higher ed crash.

An awfully expensive $70B over ten years, I think.

Re: The Student Loan Bubble is Starting To Burst

#169

Post by imissmyjuno »

unono wrote: post #120
prostoalex wrote: post #113

Earlier quoted context omitted.

Great, who wants to be the first patient to undergo a surgery by a doctor with a diploma from an app?

Gamers are better at (virtual) surgery than MDs http://www.popsci.com/gadgets/article/2012-11/teenage-gamers...

Alas, the question remains.

Re: The Student Loan Bubble is Starting To Burst

#170

Post by thwarted »

msandford wrote: post #148
comicjk wrote: post #112

Earlier quoted context omitted.

> people went to college for at least 100 years prior to that law. This is the fallacy of comparing the upper classes of one period with the masses of another. A far smaller fraction of people went to college in the century before 1976, and those who did go from lower-class origins often did so through direct scholarships like the GI bill. The college loan market was not very viable at this time. None other than Milt…

Yeah that's a really good point! I've heard plenty of people talk about working their way through school by having a summer job to pay for room and board and tuition and that it was possible to do it that way, even if it was uncomfortable. That really sounds great but maybe a little bit too great: it's a good narrative about how things were better back in the olden days when things were still good and not fucked up.…

I started college in 1993 and my parents (and the rest of my extended family) talked a lot about me getting a summer job to pay for college, that that was all I'd need to do. That was so far from the case (I did attend a university rather than a state school) but I remember pricing it out and coming to the conclusion that my family was really disconnected from reality.
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