Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Student Loans Are A Drag On The Economy

business.time.com

Post reply on HN
Print view View original

151–160 of 181 posts

Re: Student Loans Are A Drag On The Economy

#151

Post by nirnira »

srean wrote: post #148
nirnira wrote: post #120

Earlier quoted context omitted.

Thanks for the clarification, but it sounds like the net effect is exactly the same: bad loans are made, money is lost, the taxpayer is forced to subsidise the indiscriminate purchase of education. As always with such schemes, there is an ongoing push to implement them in as complicated and opaque a fashion as possible, to try and hide the naked fact of what is going on. So no one will admit "we take money from taxpa…

It seems to me that you have a-priori decided to whip a particular horse regardless of the context/relevance. Not arguing that particular horse should not be whipped, but its not the main horse in the race that is being discussed.

Sorry, I have no idea what you're talking about. I've simply been trying to show that these allegedly disconnected economic phenomena (government lending, high fees, high students loans, defaults, political pressure to drop interest rates) are actually all the result of a single misguided policy direction.

Re: Student Loans Are A Drag On The Economy

#152

Post by Glyptodon »

Crake wrote: post #105
drabiega wrote: post #102

Earlier quoted context omitted.

Maybe the community colleges in your area are different. I attend a state run college which gets a number of these types of transfer students from a few nearby community colleges. Even at my school the standard of education is not particularly high but the transfers from community colleges regularly drop out or need remedial classes because they paid half the price and got one tenth the education.

It depends a lot on the field. At my community college, the STEM classes had standards. Totally incompetent people disappeared after a semester or two of going up the coursework chain. Meanwhile, the liberal arts professors had to deal with people that couldn't write a coherent sentence if their life depended on it, even in advanced classes. However, I constantly read similarly demented and completely mangled english…

In my state the universities must accept equivalent course credit from in-system community colleges. And within my own city it's widely accepted that 1st and 2nd year calculus classes at community college will have vastly better quality of teaching than you'd get taking them at the 4 year. (This reputation doesn't apply to other subjects.)

Re: Student Loans Are A Drag On The Economy

#153

Post by scarecrowbob »

qwerta wrote: post #36
transfire wrote: post #2

The issue is even worse than this article suggests. The article focuses on graduates. But students who fail to graduate, for whatever reason, are even worse off. They usually can't payoff their debt, so they go into default and have their credit destroyed for the rest of their lives. They can't try to go back to school later because they can't get new loans, and, with the latest laws, can't even transfer the credits…

I think one can not go into personal bankruptcy for student loans...

You are correct, but you can default, which carries worse penalties and still does not discharge the debt:

http://www.asa.org/in-default/consequences/

Re: Student Loans Are A Drag On The Economy

#154

Post by delucain »

sjg007 wrote: post #15
ck2 wrote: post #3

It blows my mind that it costs $400k to become a quality dentist in the USA these days. No wonder I see people train overseas and then just get a license here. How is health care ever going to be affordable in this country if the doctors and dentists have to carry so much debt?

Americans could do the same, go abroad, get a degree and come back.

One of my wife's friends is attending a college in Ireland. The cost of flying to Ireland and back twice a year, room and board, books, and tuition is roughly the same as they would have paid for tuition at their local state university.

Re: Student Loans Are A Drag On The Economy

#155

Post by jjoonathan »

refurb wrote: post #149
carbocation wrote: post #53

Earlier quoted context omitted.

> The other two thirds come from drug price overruns (US drug buyers pay twice as much as single-payer countries which have much more size = bargaining power) As an infuriating elaboration on your point, the United States has a huge single payer in Medicare that is by law prevented from effectively negotiating drug price.

Medicare isn't allowed to negotiate, but it automatically gets the average selling price, inclusive of all discounts. Disproportionate share hospitals get 23.1% discount. It's not like the US gov't isn't extracting it's share. Medicaid IS allow to negotiate and has federally mandated discounts. Medicaid covers more people in the US than ANY of the Canadian provinces who do negotiate. What does that tell you?

Methodology is important. See here: http://www.law.cornell.edu/uscode/text/42/1395w-3a

> the manufacturer’s “average sales price” means ... sales to all purchasers ... in the United States ... divided by the total number of such units

So it looks like the ASP is fixed to the shit price that results from fragmented bargaining by US companies. A 23% discount on a 100% markup = drug companies laughing all the way to the bank.

As for Medicaid, I'm not familiar enough to answer. Do they get decent prices or is there similar corruption at play?

Re: Student Loans Are A Drag On The Economy

#156

Post by gojomo »

rwallace wrote: post #115
nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

I agree with what you said about the toxic market and the poisonous blend of state and capitalism - I'm a moderate libertarian, but the evidence overwhelmingly indicates if you're not going to have genuine capitalism in a sector, you are actually better off with honest socialism like we have in Europe than with pretend capitalism which gives you the worst of both worlds. I must, however, take issue with your last sen…

You could also tax degrees: http://econlog.econlib.org/archives/2012/09/degree_pollutio....

Re: Student Loans Are A Drag On The Economy

#157

Post by bradleyjg »

ds9 wrote: post #109
nirnira wrote: post #81

Why are student loans so high, the market so ridden with defaults, and the price of education so high? I think (well, I'm a little more certain than that) the answer is basic economics. Here's my take: You (America) have a government that offers discount loans - i.e. loans with poor prospects/low interests rates - in the hope of driving a higher allocation of capital to education than would occur in a pure private le…

"the psychological effect of borrowing from the government - I think people tend to feel safer doing this than borrowing from an obviously competitive private firm. If you read the article, the casual attitude of student debtors to defaulting on their loans shows this - the government has no teeth. The private firm goes bankrupt if it doesn't get a return on investment. " All of the above is incorrect. (a) Student lo…

> (a) Student loans in the US are mostly not from the government in the first place, they are from private investors or banks that the schools have made deals with. The USG role is guaranteeing them.

Your information is several years out of date. Prior to July 2010, the bulk of student loans were made through the Federal Family Education Loan Program (FFELP) which were as you describe. But that program was eliminated in the Health Care and Education Reconciliation Act of 2010. Since then all Stafford, Perkins, and PLUS loans (i.e. the lion's share of all student loans) are made directly by the federal government.

Only non-program student loans are no made by private banks, and they are not government guaranteed -- though they are still non-dischargeable in bankruptcy. Such loans only accounted for only around 5% of the total borrowed last year.

In addition, many of the loans issued privately prior to July 2010 made their way into the government's hands during the financial crisis, so that of all outstanding student loan debt around 85% of it is currently held by the government.

Refs: http://www.asa.org/policy/resources/stats/ http://febp.newamerica.net/background-analysis/federal-stude... http://files.consumerfinance.gov/f/201207_cfpb_Reports_Priva...

Re: Student Loans Are A Drag On The Economy

#158

Post by mkhpalm »

I'm always amazed that all these articles seem to miss the fact that the dept of education is the one who decides loan caps for federally backed student loans. Its easy to see that the increase in tuition is directly related to those increases when you're in, say, medical school. Its not so easy to see tuition increases when you're at a 4 year school with many disciplines to obfuscate the increases. The only question I have is why does the government believe that so many of these fields have graduates seeing 300% increases in salary? No number I've seen even remotely suggest the rate that they're approving things. So why are they doing it?

That is the question journalists should be asking.

Re: Student Loans Are A Drag On The Economy

#159

Post by goggles99 »

enraged_camel wrote: post #25
Glyptodon wrote: post #18

Meh. This is (mostly) the students' and the families' who abet their stupid decisions fault. If you go to an in-state community college and then matriculate to an in-state university in my state the total cost of college is (~$4500 for 2 years of CC living at home + ~$25000 for 2 years of closest to home in-state school) ~$30000 + the cost of living at home. Meanwhile people continue to whine about sending their kids…

Wow. I like you blamed this entire mess on students and parents. >>The real issue is that people feel entitled to the best schools and will so make absurd decisions to enable it Nonsense. People want to send their kids to the best schools because the best schools are the gatekeepers to the upper class. Someone who graduates from an Ivy League school gets to build a network with affluent alumni and has a high chance o…

>Nonsense. People want to send their kids to the best schools because the best schools are the gatekeepers to the upper class. Someone who graduates from an Ivy League school gets to build a network with affluent alumni and has a high chance of landing a job that pays six-figures right off the bat. Someone who goes to a merely good state school though? There is a very good chance they won't even find a job after graduation.

If this is the case then these people need to quit whining. It's their choice - this is like saying that you need to mortgage your house to join a yacht or country club so you can make connections. Some people just have to work harder than others to make it, life isn't fair cry me a river. Many people from cheaper institutions are better at making connections because they excel in the personality and charm dept (thus they have the advantage). Is that fair? Many poorer people make it big because they are smarter or luckier... Is that fair? Your argument just shows how blatantly ridiculous this is.

People are complaining that education is so expensive and yet they are going to the most expensive school is ridiculous. This is like complaining that your Mercedes was too expensive when you could have bought a more reliable and efficient car for less money.

Re: Student Loans Are A Drag On The Economy

#160

Post by goggles99 »

>* $400,000 in student loans. “If the money weren’t a problem I would live on my own,” says Rong. “My debt is hanging over my mind. I’m taking that all on myself.”*

How typical, someone complaining that education is so expensive and yet they are going to the most expensive school. This is ridiculous. This is like complaining that your Mercedes was too expensive when you could have bought a more reliable and efficient car for less money.

The article states that the average year at college today costs $18,497, yet this guy is going to rack up $400k in dept over 6 years? by my math that is $111k. This guy is spending 4 times the average and crying foul.

I personally know a dentist who worked part time all through school, he went to community college, state university, private grad/dental university and has the same diploma that this guy will have on his wall... The difference - the guy I know only had $40k in debt upon exiting school. He paid it off in two years (by the time he was 26). I'd say he did things the right way.

Post reply on HN