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Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

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141–150 of 372 posts

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#141
post #94

Earlier quoted context omitted.

> Why? Because education is not a luxury service that can be postponed or outright skipped, like lifestyle-tailored tourism, and education costs in the US have become a major societal and economical problem. > In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. That's a tautology, and entirely misses the point. The point…

"Education" is necessary up to a certain point. In America, up to highschool education is free and for the most part required. Why draw the line at a bachelors degree? Should Masters and PhDs be free and partially required? Based on how I framed the question I assume that you can tell that I draw the line at highschool education. I can however see the argument for raising it to bachelor's. However I would expect the…

> Based on how I framed the question I assume that you can tell that I draw the line at highschool education.

I'm asking out of curiosity and not trying to make a point or win any argument: Why do you draw your line there?

I wouldn't combine "free" and "partially required" though, as I don't see the need to conflate them. Where I live Masters and PhDs are free, but your required education is completed at age 15. Everything after that is completely optional, but free.

as in no tuition, but there are some administrative fees and books you need to buy, etc.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#142
Student loans program should continue for highly sought out program like medical, dentistry, computer science and others. But there are degree like physics, history and general education that doesn't have great employability. The university here will take all the money they can because at the end of the day this is just business for them. Students sometimes will take the easiest course because they can

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#143
post #95
post #72

Earlier quoted context omitted.

Public transportation is very bad in the U.S. Even in major cities. For the vast majority of people a car is a necessity in the U.S. Most Americans end up in debt to buy a car. Then there is insurance and the opportunity cost of the government having to spend a great deal of money on road maintenance that could otherwise be spent on things like education.

European cities have much higher population density, and the lower personal income (often via higher taxes and, ironically, worker protection laws) changes the tradeoff between driving and taking pub trans, so more people take the bus. The tradeoff is that a lot of people live in small boxes. And european governments have plenty of bs job creation engines like roadwork, too. Would be nice to have some data. One relat…

> europe has no spacex, google, tesla, nasa, coherent mars rovers, the list goes on...

The European Space Agency, Airbus, a huge number of car manufacturer, ... It's not surprising that the #1 economy in the world has more big company than the #3 one (when they decide to group). A lot can be said also about the American culture and politics when it comes to entrepreneurship. But presenting Europe like its devoid of any important industry is also outright false :) .

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#144

Earlier quoted context omitted.

> Why? Because education is not a luxury service that can be postponed or outright skipped, like lifestyle-tailored tourism, and education costs in the US have become a major societal and economical problem. > In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. That's a tautology, and entirely misses the point. The point…

Then taxpayers should pay for education itself. No reason for taxpayers to become lenders. The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. And, inevitably, like all times that society is enabled to pass the buck onto future generations or ignore externalities, society will take and consume all it can unti…

> The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt.

The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% (source: https://data.oecd.org/eduresource/public-spending-on-educati...)

Rather, university education in the U.S., like healthcare, is insanely expensive compared to other countries. Why is that?

1. Non-selective. We admit 70% of high school graduates to University whereas in Germany they admit 1/3.

2. Too long/unfocused. University education can last 5-6 years in the US for a bachelors, whereas in Germany it is limited to 3 years. You don't get to drift around as "undecided" and change your major, you apply to the school with a specific major. You don't get a lot of choice as to your electives and follow a pre-planned course of study (for the most part).

3. Too many frills. European schools don't have massive sports stadiums, athletic departments, or other amenities similar to US universities.

4. Too much staff. Our universities are massively overstaffed with everything from diversity officers to football coaches to teams of counselors.

Put this all together, and you have a very expensive, inefficient, gold-plated system focused on catering to student whims rather than to taxpayer efficiency. Of course tax payers don't want to pay for it -- why should they? If you want European style funding of universities, you need European-style spending levels and rigor. If you want an experience that is half as selective, takes twice as long, and offers absurd amenities that have nothing to do with university education, then you are going to have to pay for that out of your own pocket rather than asking for taxpayers to provide this experience for you.

The good news is that you can find relatively inexpensive higher education in the U.S. if you are a good student and are willing to attend community college for the first two years and a local state school for the rest. If you are good enough to be admitted to University in Europe, then in the U.S. you should be able to get a scholarship. Of course most US university students would never be admitted to University in Europe in the first place -- so having an option to pay a lot to go might be better than not having an option at all. But I suspect that we would be better off adopting a German style trade school system to absorb 50% of high school graduates as well as a more rigorous high school system, but that would require adoption of tracking and letting most students know that they are not going to be on the university track. In that type of environment, sure, taxpayers would be willing to fund the enterprise since they would only be spending 10% more than they are spending now to match German-level of tertiary education spending.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#146
post #23

My wife and I lived a very simple lifestyle for years (7ish) after college so we could pay off student loan debt. Awesome Ford Tempo car, local honeymoon, Studio apt for first 5 years, limited eating out. She has a masters (more loans), and is a teacher. So that made it even tighter. Is there any data on if folks with student loans are living above their means? I.e new TV’s, new car lease, vacations, ordering out. I…

In the UK you’re describing a very high cost lifestyle. Your own place? A car?

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#147

It seems like the majority of the commenters here are missing the point. The increasing rate of student loan default is not a result of kids who go to a four year college, graduate with an unmarketable degree in philosophy, fall on hard times and then can’t pay their bills. It's kids who go to barber or cosmetology school, take on $30k of debt, then realize they don't make enough money cutting hair to support themsel…

Speaking has someone who co-runs a hair salon, those numbers don't make sense. $30K should be a reasonable loan compared to how much a single stylist can make annually (easily $50K, up to six figures if they are any good). Just shopfitting a hair salon costs $10-20K. New or relocating salons do that routinely and will expect to recoup it comfortably in the first year.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#148

It seems like the majority of the commenters here are missing the point. The increasing rate of student loan default is not a result of kids who go to a four year college, graduate with an unmarketable degree in philosophy, fall on hard times and then can’t pay their bills. It's kids who go to barber or cosmetology school, take on $30k of debt, then realize they don't make enough money cutting hair to support themsel…

It costs $30K to go to Barber School in the US?

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#149
post #144

Earlier quoted context omitted.

Then taxpayers should pay for education itself. No reason for taxpayers to become lenders. The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. And, inevitably, like all times that society is enabled to pass the buck onto future generations or ignore externalities, society will take and consume all it can unti…

> The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% (source: https://data.oecd.org/eduresource/public-spending-on-educati... ) Rather, university education in the U…

> The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45%

US voters aren’t comparing taxes with Japan and Germany. They’re voting between politician A who says they will lower taxes, and does it by removing funding for higher education or politician B, who does provide higher education and hence has to collect higher taxes and politician A. Politician A can get away with this by claiming they still support students by providing government loans or government guaranteed private loans or whatever, but they don’t have to account for it in the same way politician B does.

I agree with all of your points, and I far prefer the German model too. But American voters seem to love debt, and low taxes, and rarely is a thought given to the future.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#150
post #144

Earlier quoted context omitted.

> The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% (source: https://data.oecd.org/eduresource/public-spending-on-educati... ) Rather, university education in the U…

> The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% US voters aren’t comparing taxes with Japan and Germany. They’re voting between politician A who says they will lower taxes, and does it by removing funding for higher education or politician B, who does provide higher education and hence has to collect higher taxes and pol…

Maybe American voters don't want to pay more for college education because they know how much it costs, and they feel they are already paying enough?

I think they are correct.

Reforming higher education means cutting spending first and foremost.

Shut down half the universities, lay off 1/3 of the staff in the rest, seize the endowments, close all the sports stadiums, fire most of the admins, force students to finish in 3 years, and then take the pile of money we are already spending on education and make that be the full tuition.

Voters concerned about high taxes would benefit from this, as would the top 50% of students. The bottom 50% of University students should be diverted to 2 year long trade schools, which can be built on the ruins of the shutdown universities, but staffed with craftsmen rather than professors. Industry can pay for 1/3 of it, students can pay for 1/3, and taxpayers can pay for the other third of the trade schools.

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