Student Loan Debt Is Now as Big as the U.S. Junk Bond Market • Hacker News Board

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#151

Post by WkndTriathlete » Tue, Dec 05, 2017, 5:51 PM UTC

etr-strike wrote: post #99

When the next recession strikes, interest rates have no place to go but into negative territory. The rates will be either explicitly negative, or effectively negative (inflation higher than interest rates). When that happens, bitcoin will be the only safe haven in the world to protect your wealth. The bubble people will be changing their tune very quick.

_The Economist_ has had several articles on countries that have experimented (temporarily) with negative interest rates and concluded those experiments didn't have much of an effect on those countries' respective economies.

Whatever your view of the Fed is they are generally smart and well-read people who have probably also read those articles or the research papers backing them, so I think it's unlikely that interest rates will ever go negative.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#152

Post by VeronicaJJ123 » Tue, Dec 05, 2017, 5:51 PM UTC

jackweirdy wrote: post #68

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. We could call it income tax :)

Most people do not go to college and still pay for income tax.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#153

Post by throwawayjava » Tue, Dec 05, 2017, 5:51 PM UTC

mywittyname wrote: post #140

chriskanan wrote: post #100

Earlier quoted context omitted.

While I agree that one can gain a great deal of enrichment from studying non-lucrative majors, I think people should highly consider double majoring in this case. I majored in computer science AND philosophy as an undergraduate. Doing both took under 5 years. I think a lot of people don't realize how little they will earn with their degrees compared to how high their debt load will be. That's not including people who…

Isn't a philosophy/CS double major kind of like a math/CS double major? In that it expands your knowledge in the same domain, rather than a completely new one would (like, for example, studying German literature or biology would). I remember helping my sister with her philosophy home work, and being surprised by the amount of elementary logic and set theory being taught.

That depends in large part on the philosophy department. More analytic [1] departments will teach lots of courses that could just as well be cross-listed as theoretical computer science courses.

But some departments are less analytic (e.g. departments heavy on [2] and [3] aren't too difficult to find in the US). In those departments, the mode of thinking is very different from what you'll experience in a CS course.

And in both cases, taking a lot of humanity courses will teach you how to write well. Which is definitely a skill that a lot of CS majors lack.

(Also, a course of study in analytic philosophy can definitely help round out a CS major that's too light on the theory courses.)

[1] https://en.wikipedia.org/wiki/Analytic_philosophy

[2] https://en.wikipedia.org/wiki/Continental_philosophy

[3] https://en.wikipedia.org/wiki/Classics

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#154

Post by workthrowaway27 » Tue, Dec 05, 2017, 5:52 PM UTC

berbec wrote: post #135

workthrowaway27 wrote: post #104

Earlier quoted context omitted.

But as far as I know student loans aren't securitized and leveraged in the same way as mortgages were, so I'm not sure that the fall out will be as bad. The root problem (as others have noted) is too many people are encouraged to go to college and even though most majors don't make economic sense students (rightly) feel that they need a college degree to be a competitive applicant for good jobs. Maybe I'm just in an…

They aren't securitized the way mortgages were, but you also can't walk away. Student loans are immune to bankruptcy so it follows you forever.

Right, and that doesn't seem good to me, but I don't think the fallout from student loans will be anywhere near the fallout from defaulted mortgages in 2008ish because they just aren't as as levered.

So it's terrible for the people involved, but not directly bad for society as a whole (but probably still bad in its second and third order consequences).

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#155

Post by ConceptJunkie » Tue, Dec 05, 2017, 5:52 PM UTC

jackweirdy wrote: post #68

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. We could call it income tax :)

The problem with subsidizing college in any way, including the current student loan system is that it encourages people to go to college whether it makes sense or not, and as several people have mentioned in this discussion, in a lot of cases, it doesn't make sense.

Anyone who is properly motivated should be able to go to college, but when I hear cries for a free college education, I can imagine that that would stimulate a huge influx of people who do that simply as an excuse to take a 4-year vacation (of sorts). People who are properly motivated and who have what it takes should be able to go to college, but it needs to cost something... just not as much as it does now.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#156

Post by jmilloy » Tue, Dec 05, 2017, 5:52 PM UTC

umbrellathorn wrote: post #51

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> for a useless degree they'll never use I went to school for such a degree. While I don't use it in my day to day now, I still consider it priceless. There's some inherent value added to a person who pursues to study a bit of humanities, history, philosophy and art in college apart from their major. Scholarly work really helps shape the way you look at life for the better. Part of this is that you really understand…

Sure, and the relationship you have with your dog is probably "priceless", too, but that doesn't mean it should be trivially easy to get a three-figure loan to bring one home, and that animal shelters should charge three figures per adoption.

I'm really not belittling your degree. I value such degrees highly. I also don't think they should cost so much, nor that the student-loan bubble should be allowed to facilitate charging you so much for it. Ideally fixing the system wouldn't eliminate such degrees, they would just decrease the cost to something reasonable.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#157

Post by maxxxxx » Tue, Dec 05, 2017, 5:52 PM UTC

danaliv wrote: post #33

I highly recommend Matthew Crawford's Shop Class as Soulcraft , which includes a discussion of how kids are railroaded into college even though it makes no sense for everyone to go. The destruction of vocational schools is a real problem here. And in a world where any work that doesn't require physical presence is ripe for offshoring, the loss of the vocations is problematic indeed. You can read the essay that starte…

For most people it's still the best bet to go to college if you want a career. Even in Germany with its strong vocational programs there is a long term trend of jobs going more and more to college graduates. My sister is "Bankkaufmann" and did OK when she started 25 years ago. Now the same job is only for people with a bachelors minimum.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#158

Post by ConceptJunkie » Tue, Dec 05, 2017, 5:53 PM UTC

VeronicaJJ123 wrote: post #152

jackweirdy wrote: post #68

Earlier quoted context omitted.

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. We could call it income tax :)

Most people do not go to college and still pay for income tax.

Income tax covers way more than education.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#159

Post by jedberg » Tue, Dec 05, 2017, 5:53 PM UTC

jackweirdy wrote: post #68

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. We could call it income tax :)

It would be similar, but it would be an additional tax that only college graduates pay and is entirely redirected back at the colleges.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#160

Post by grasshopperpurp » Tue, Dec 05, 2017, 5:54 PM UTC

sigstoat wrote: post #126

grasshopperpurp wrote: post #74

Earlier quoted context omitted.

>No offense, but that's ridiculous. There's money owed here. The schools already got it, the banks are owed it. Someone needs to make that right, you can't just "forgive" debt without some party taking a huge hit. Which one? No offense, but the banks should take on risk if they're charging interest. Right now, they can have their cake and eat it, too, which is stupid - no offense.

> No offense, but the banks should take on risk if they're charging interest. Right now, they can have their cake and eat it, too, which is stupid - no offense. i'll skip the faux politeness of "no offense" and just point out that this is foolish. even if payback is literally guaranteed, interest is still required, because money now is worth more than money later, due to opportunity costs. the US federal government,…

My argument is not that the banks shouldn't collect interest; my argument is that they should accept risk.

>You'd think a surefire bailout would decrease resistance to debtor relief. But investors want timely payments; they fear federal relief programs might slow cash flow from an otherwise "bulletproof asset class." This creates twisted incentives, especially for SLABS players involved in loan servicing: They often have a stake in borrowers defaulting rather than paying smaller amounts over a longer period of time.

It's perverse policy — bankers are pampered because student debtors are hounded and pounded. To help borrowers, the government should facilitate bankruptcy reform and expand federal relief programs. But we have deeper problems: Lenders, servicers, collectors and investors prosper while students suffer because schools increasingly rely on private tuition rather than public funding.

http://www.rollingstone.com/politics/news/how-wall-street-pr...