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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

#271

Post by ctdonath »

superuser2 wrote: post #267
jlarocco wrote: post #265

Earlier quoted context omitted.

It's not really about high end schools. Harvard, Yale, and MIT can turn down anybody they want because they have a million overly qualified candidates. They can be selective and still fill their all of classes ten times over. But if tiny community colleges start turning people away when they have half empty classrooms, there will be a lot of negative press.

But it isn't about tiny community colleges, it's about for-profit schools, right? They could probably figure out how to sell it as "raising the bar," talk about providing a more individualized education, ride the negative press as actually increasing the value of their degrees, etc.

Enrollment is way down. Spin only goes so far.

Re: The Student Loan Bubble is Starting To Burst

#272

Post by enraged_camel »

bobbydavid wrote: post #150
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>Student loans only price in 1 & 2 because of the near impossibility of not paying the loans back. That, and there is virtually no way to accurately measure the default risk of those taking the loans. It would be very interesting to live in a world where your choice of major affected your loan rate. For example, as a political science major you would not be nearly as employable as a computer science major, which wou…

It's no problem for the bank of they can't accurately measure your risk of defaulting, as long as they can assess a group risk. So, say 4% of students fail to repay, the bank would use that number. Just like car insurance when you first start driving. They don't know (or care) if you're a good driver so they just average beginner drivers and base the price around that average.

Well, the average might be based on group risk. But car insurance companies still care about your individual situation as well as driving history.

Re: The Student Loan Bubble is Starting To Burst

#273

Post by BrandonMarc »

skylan_q wrote: post #140
muzz wrote: post #48

Earlier quoted context omitted.

Not sure you apply that definition at all. Education is not an asset-- it can't be transferred ie sold like a house can. Along the same lines, there is no incentive or ability to buy an extra degree in Vegas, Phoenix, or Miami, just because prices are going up there.

When there's a decrease in the loans going out, there's a decrease on the payments coming in at a future date. When there's a decrease in the loans going out, there's a decrease in the demand for education services causing a reduction in the quantity available. Repossession isn't a necessary condition for something to be in a bubble. Pulling demand forward and using laws/regulations/programs to funnel money into cert…

And, as has been discussed in another area of this thread, repossession of a college degree is possible. I'm not advocating it, but it would have a definite effect on incentives on both sides when making decisions about which college to attend, what degree to study, how much debt to borrow, and whether or not to repay it.

If student loan debt were bankrupt-able, and the degree revoke-able, I can see how that might remove some current problems (not that it wouldn't introduce others).

Re: The Student Loan Bubble is Starting To Burst

#274

Post by r00fus »

onebaddude wrote: post #223
r00fus wrote: post #199

Earlier quoted context omitted.

This is similar to a proposal by the Obama administration to prevent loan-milling by Wall St. owned private schools.

When will a "Godwin's Law" type rule be introduced for the inevitability that the problem being discussed eventually gets blamed on Wall Street?

As soon as Wall St. reigns in their tendency to profit off just about every thing they can imagine, legal or not [1] - seeing as they can just buy off the regulators or lawmakers.

[1] http://www.bloomberg.com/news/2013-03-31/money-laundering-ba...

Re: The Student Loan Bubble is Starting To Burst

#275

Post by jlgreco »

onebaddude wrote: post #224
jlgreco wrote: post #114

Earlier quoted context omitted.

"Despite dismal outcomes and high defaults, for-profit colleges enroll between 10 and 13 percent of students but receive 25 percent of all federal financial aid dollars. In 2009-10, this amounted to 25 percent of the total Department of Education student aid program funds." http://www.harkin.senate.gov/help/forprofitcolleges.cfm

I'm not sure that "student aid" and student loans are the same. This discussion also seems to be missing the fact that students who attend many of these for-profit schools are poorer and thus more likely to default, regardless of the quality of education obtained . Any study is useless without an adjustment made for median household income of the student (and perhaps high school GPA).

"Because 96 percent of students starting a for-profit college take federal student loans to attend a for-profit college (compared to 13 percent at community colleges), nearly all students who leave have student loan debt, even when they don't have a degree or diploma or increased earning power."

"Most for-profit colleges charge much higher tuition than comparable programs at community colleges and flagship State public universities. The investigation found Associate degree and certificate programs averaged four times the cost of degree programs at comparable community colleges. Bachelor's degree programs averaged 20 percent more than the cost of analogous programs at flagship public universities despite the credits being largely non-transferrable."

People going to public schools are getting loans for unjustifiably expensive 'educations' which are nearly universally absolutely worthless. That is why such a staggering number of people attending for-profit schools have trouble.

You can dig up more and more data, looking for a way to make for-profit schools look good, but all you are really doing is shoveling more data onto the heap of reasons why they are predatory shitheads.

Re: The Student Loan Bubble is Starting To Burst

#276

Post by rnernento »

dclowd9901 wrote: post #247
rnernento wrote: post #226

Earlier quoted context omitted.

Actually it is. Easy credit and the sentiment that any degree will pay off in the long run have inflated tuition prices to the point where they are not necessarily worth the investment. Similar to the house that was worth 600k and is now worth 300k the degree that costs 200k doesn't meet that value. It could potentially be worse than the housing market because there is no asset, just a piece of paper. Just like you s…

The question is "what's the consumer -- and thus larger macroeconomic -- impact?" The impact is that if you "bought" your education at the "high time," you lost nothing. What were you supposed to do? Wait until the bubble burst and hope to "cash in" on a cheaper education? Student loans are so cheap that the marginal impact of such a burst really only stands to impact greater lifetime earning potential of two distinc…

Universities are who's really going to take the hit here. When the free money dries up so will the number of students able to pay current prices for degrees. The effect on Academia and as a result research, innovation, etc. are still up in the air.

Re: The Student Loan Bubble is Starting To Burst

#277

Post by dnautics »

Toenex wrote: post #215
dnautics wrote: post #137

Earlier quoted context omitted.

oops, I rounded 12 down to 10 when I did my math!

Sorry which school did you go to? ;)

Uchicago math. Can't handle non integral mantissas or when they are greater than 6. At work, I do mostly biology, where everything is 1, 2, or 5 - close enough. One sig fig is par for the course, anything else would be an overoptimistic lie.

Re: The Student Loan Bubble is Starting To Burst

#278

Post by dnautics »

jlgreco wrote: post #275
onebaddude wrote: post #224

Earlier quoted context omitted.

I'm not sure that "student aid" and student loans are the same. This discussion also seems to be missing the fact that students who attend many of these for-profit schools are poorer and thus more likely to default, regardless of the quality of education obtained . Any study is useless without an adjustment made for median household income of the student (and perhaps high school GPA).

"Because 96 percent of students starting a for-profit college take federal student loans to attend a for-profit college (compared to 13 percent at community colleges), nearly all students who leave have student loan debt, even when they don't have a degree or diploma or increased earning power." "Most for-profit colleges charge much higher tuition than comparable programs at community colleges and flagship State publ…

we're not necessarily trying to make for-profit schools look good, we're just sick and tired of disproportionate attention being laid upon for-profit schools when non-profit schools (of a certain tier) are just as bad if not worse but seem to be escaping the amount of scrutiny they are due. The sins of for-profit schools are being used to whitewash institutions that hide under the nomenclature of their IRS designation.

Re: The Student Loan Bubble is Starting To Burst

#279

Post by Smirnoff »

rlanday wrote: post #240
Smirnoff wrote: post #213

Earlier quoted context omitted.

They go broke for many reasons: 1. US Healthcare is too expensive. Two weeks after I first came to the states, my wisdom teeth (all 4) started growing. I had to pull them out. That was a $2,000 bill and a good lesson to get insurance asap. If you get into a car accident and you don't have insurance, your bill might be about $25K. More if you need continuous care and more surgeries. 2. Doctors are doing unnecessary te…

I think even people with insurance pay $2,000 or somewhere in that ballpark to have their wisdom teeth removed. Dental insurance operates differently from health insurance in that there’s usually a fairly low yearly cap, so it’s not really insurance in the normal sense, and it usually pays for maybe half the cost of certain types of treatment, and you pay the rest out-of-pocket. Upper-middle class people with health…

I had a different experience with my dental insurance. My insurance (offered through my employer) was only ~$30 per month. Most of the preventative treatments were absolutely free. Apparently insurance companies discount preventative treatments heavily, so teeth cleaning, xray, and other stuff that would cost about $200-300 per tooth/event was literary free. Hell, even crowns, implants, and alike were discounted by 60-80% if I wanted to do that. I also had a nice cap overall. I visited my dentist many times and never had to pay more than $40 per visit.

But I agree, ortho/cosmetics is a different beast to deal with.

Re: The Student Loan Bubble is Starting To Burst

#280

Post by BrandonMarc »

kenster07 wrote: post #206

MOOC couldn't have come at a better time.

MOOC's are a response by the market to some of the problems of the current system. Time will tell just how well the MOOC phenomenon will turn out for us, but I suspect we're better off with them than we were before.
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