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False Advertising for College Is Pretty Much the Norm

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Re: False Advertising for College Is Pretty Much the Norm

#141

Post by Goronmon »

bedhead wrote: post #125
jwally wrote: post #92

The U.S. would do itself a huge favour by allowing student debt to be bankruptable. College prices can rise infinitely because there is an unlimited supply of AAA+ debt to feed it. Drop that rating to reality and investors don't buy the debt, loans don't get originated, demand for college at $250k dries up.

Who is going to lend tens of thousands of dollars to an 18 year old with no income, no assets, and no credit?

Who is going to lend tens of thousands of dollars to an 18 year old with no income, no assets, and no credit?

So, just to be clear 18 year olds getting tens of thousands in dischargeable loans is ridiculous, but 18 year olds getting tens of thousands in non-dischargeable loans makes total sense?

I mean, I understand why if you are a person making money off student loans, the latter is a great situation to have. But for anyone else, I'm not sure I agree that it's something we should fight for.

Re: False Advertising for College Is Pretty Much the Norm

#142

Post by douglaswlance »

mkirklions wrote: post #118
jwally wrote: post #92

The U.S. would do itself a huge favour by allowing student debt to be bankruptable. College prices can rise infinitely because there is an unlimited supply of AAA+ debt to feed it. Drop that rating to reality and investors don't buy the debt, loans don't get originated, demand for college at $250k dries up.

(I think) I'm a fan of getting rid of subsidized loans for education. It has only made the cost of education go up rather than make college affordable. But on the flip side, what can be expected from people with no ability to afford college at the new price? Ive been told over and over that my personal situation working full time on the midnight shift and going to college is 'unrealistic' for everyone to do. So whats…

The solution is to stop orienting our society around institutional learning. We have a global information network. We need to orient society around individual learning, not academia.

Kids living at home and taking (mostly) pre-programmed online courses should be the norm. It is vastly cheaper, and can deliver more consistently better results.

Re: False Advertising for College Is Pretty Much the Norm

#143

Post by murph-almighty »

kazagistar wrote: post #54
topkai22 wrote: post #36

The real problem with higher education is really how we finance it. Give the lenders the ability to discriminate based on major and borrowers the ability to default easier and all of a sudden you’ve got some banks seriously motivated to ensure students get economic return on their investments. Besides, it just shouldn’t take a decade or more for someone to discharge a bad debt. Student debt seems uniquely oppressive…

Discrimination on major, quality, and completion happens through fintech refinancing already. All the good borowers get scooped away into lower rates leaving all the toxic loans on the state supported books, and it's only a matter of time til it comes crashing down.

I find this line of logic tempting, but this seems to not apply to my scenario at all- hear me out.

Major: ECE Job: Software Engineer Debt: Some private variable rate, some public fixed rate. The highest private loans were originally around 100bp higher than my public, and eventually jumped to a 300bp gap, but by that point I had paid them off so it didn't impact me. Credit rating: Pretty high- no missed payments, multi-year-old account, has multiple lines of credit.

All of my re-fi offers, for the most part, have advertised lower interest rates than my private loans and the lower bound of their advertised rate was slightly less (50-100 bp) than my public loans. However, when I'd start going through the process my offered interest rate would end up around the median of the rate window they were offering, and refinancing would have been a wash.

This meant refinancing only would have made sense for my private loans, not public. By the time I had seen these offers, it didn't make sense for me to refinance because by that point I had paid off the highest interest private loans (as general debt repayment strategy suggests)!

I don't think the incentive to refinance from a government loan is there because those interest rates are already pretty good. Obviously, someone might make a poor decision and refinance with a higher rate "because it's easier" but if my case generalizes I can only see private lenders suffering because of higher rates.

On a side note, I also don't want to get rid of my government debt too soon in case some sort of policy change occurs in my favor. This isn't to say I'm not pursuing an aggressive debt strategy, just that my private loans are my higher priority.

Re: False Advertising for College Is Pretty Much the Norm

#144

Post by Bjartr »

reaperducer wrote: post #117
azemetre wrote: post #109

Earlier quoted context omitted.

Where are you getting this information from? Because nothing I am able to see points to people discharging their loans happening on a massive scale. The only "news article" [1] I can find that references this mentions 0.3% of student loans were discharged through bankruptcy in 1977 [2]. [1] https://www.linkedin.com/pulse/history-student-loans-bankrup... [2] http://harvardlawreview.org/wp-content/uploads/pdfs/vol126_s…

Seems be to be some serious revisionist history going on... Just because it’s not a link on the internet doesn’t mean it isn’t true. It was pretty much common knowledge when I was in school. I only knew a few pre-meds, but it certainly came up as a discussion topic more than once.

And just because something is common knowledge doesn't mean it's true, especially when you start taking about common knowledge within a group.

You don't have to link to a source on the internet either, citing a book or newspaper article would be sufficient.

Re: False Advertising for College Is Pretty Much the Norm

#145

Post by st26 »

azemetre wrote: post #109
kryogen1c wrote: post #104

Earlier quoted context omitted.

Used to be. Doctors and lawyers would go through a decade of school on loan and then discharge it all and start a lucrative practice. That's part of how we got here.

Where are you getting this information from? Because nothing I am able to see points to people discharging their loans happening on a massive scale. The only "news article" [1] I can find that references this mentions 0.3% of student loans were discharged through bankruptcy in 1977 [2]. [1] https://www.linkedin.com/pulse/history-student-loans-bankrup... [2] http://harvardlawreview.org/wp-content/uploads/pdfs/vol126_s…

Purely anecdotal, but I have a friend who went to veterinary school. The school had a literal class teaching all vet students to use IBR forgiveness to get their debt discharged.

It's not quite as abusive as what could have happened when student loans were dischargeable in bankruptcy- it takes 20 years and you're taxed on the forgiveness- but I thought it was quite perverse that the institution charging towering sums of money is teaching the students in blanket fashion how to avoid paying it off.

Re: False Advertising for College Is Pretty Much the Norm

#146

Post by randomdata »

toomanybeersies wrote: post #137
feverfew wrote: post #79

Earlier quoted context omitted.

I personally found that 13 (5-18) whole years of education was more than enough time to determine, at least academically, what I wanted to do in life. If you want to 'find yourself' take a gap year and do some self-study or self-reflection, without paying the inflated fees. Heck you can do a degree and still attend lectures in a different course even if you are not enrolled, if you seek to broaden your horizons. Did…

Academically I knew what I wanted to do when I finished high school. I wanted to be a software engineer, and I became one. It sound super fucking corny, but when I left home at 18, I didn't really know who I was as a person. University really helped me find that. It's not just the independence, but the fact that at university you have a lot of free time, and you have a lot of opportunities to meet and interact with p…

> I'm actually proud of the fact that in my circle of friends, I don't know anyone who's a software engineer.

Would you only know software engineers if you hadn't gone to university? I did not attend university and did not know another software engineer (outside of interacting with some online like on HN) until about 15 years into my career when a good friend started dating one. It does not really seem like the norm to only know software engineers. We're a pretty small segment of the population (~0.8% of the workforce).

Re: False Advertising for College Is Pretty Much the Norm

#147

Post by ameister14 »

azemetre wrote: post #109
kryogen1c wrote: post #104

Earlier quoted context omitted.

Used to be. Doctors and lawyers would go through a decade of school on loan and then discharge it all and start a lucrative practice. That's part of how we got here.

Where are you getting this information from? Because nothing I am able to see points to people discharging their loans happening on a massive scale. The only "news article" [1] I can find that references this mentions 0.3% of student loans were discharged through bankruptcy in 1977 [2]. [1] https://www.linkedin.com/pulse/history-student-loans-bankrup... [2] http://harvardlawreview.org/wp-content/uploads/pdfs/vol126_s…

>The only "news article" [1] I can find that references this mentions 0.3% of student loans were discharged through bankruptcy in 1977 [2].

It actually says something much stronger - it says that 0.3% of the value of all federal student loans given before 1977 had been discharged through bankruptcy, not in 1977. In 1977 wouldn't make sense because the amendments making it impossible to discharge student loan debt through bankruptcy were made in 1976.

Re: False Advertising for College Is Pretty Much the Norm

#148

Post by mcculley »

jwally wrote: post #92

The U.S. would do itself a huge favour by allowing student debt to be bankruptable. College prices can rise infinitely because there is an unlimited supply of AAA+ debt to feed it. Drop that rating to reality and investors don't buy the debt, loans don't get originated, demand for college at $250k dries up.

It would require huge political will to go against the existing system. I'm excited about Lambda School (https://lambdaschool.com). If they are successful, there should be lots of investors trying out similar models and destroying the existing system.

Re: False Advertising for College Is Pretty Much the Norm

#149

Post by bradleyjg »

jwally wrote: post #92

The U.S. would do itself a huge favour by allowing student debt to be bankruptable. College prices can rise infinitely because there is an unlimited supply of AAA+ debt to feed it. Drop that rating to reality and investors don't buy the debt, loans don't get originated, demand for college at $250k dries up.

It wouldn’t make much of a difference because the vast majority of student loans are issued by the federal government and not underwritten.

This seems to come up fairly often. I don’t think many people are aware of the enormous size of the state banking sector in the US between educational loans and continued dominance of the residential mortgage market.

Re: False Advertising for College Is Pretty Much the Norm

#150

Post by st26 »

jedberg wrote: post #42
topkai22 wrote: post #36

The real problem with higher education is really how we finance it. Give the lenders the ability to discriminate based on major and borrowers the ability to default easier and all of a sudden you’ve got some banks seriously motivated to ensure students get economic return on their investments. Besides, it just shouldn’t take a decade or more for someone to discharge a bad debt. Student debt seems uniquely oppressive…

That's how you get nothing but science and engineering majors, because most other majors don't have the ROI on average. But society is probably better off with some history and art majors too. We need to find a way to finance education that isn't based on future income.

There's a presumption, I think, in this scheme that if loans for art majors are less available or attractive, the cost of an art degree will decrease. In which case you'd reach some equilibrium where the loans are not very good, but the cost is not very high, and people would still get art degrees.
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