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

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

#161

Post by dillonmckay »

rhino369 wrote: post #47
diogenescynic wrote: post #38

Earlier quoted context omitted.

Why was it necessary to change student loans to being non-dischargeable in bankruptcy? That is a recent change and it shifts the burden from banks having to evaluate the loans they are making which would likely mean fewer loans and thus less money earned from interest. It seems like student loans should be treated like any other unsecured loan. And really student loans shouldn’t even be necessary for public universit…

>Why was it necessary to change student loans to being non-dischargeable in bankruptcy? To keep interest rates on student loans low and to make sure the loans are available to 18 year olds with no credit history. There was a real problem with medical students racking up huge sums, declaring bankruptcy when they were making low money during residency, but then making 6 figure salaries a few years later. >It seems like…

So, to lump medical degrees discharged in bankruptcy as a risk to undergrad loan financing is a bit disingenuous.

Not addressed to you, personally.

Lots of options here.

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

#162

Post by dillonmckay »

Clubber wrote: post #41
diogenescynic wrote: post #38

Earlier quoted context omitted.

Why was it necessary to change student loans to being non-dischargeable in bankruptcy? That is a recent change and it shifts the burden from banks having to evaluate the loans they are making which would likely mean fewer loans and thus less money earned from interest. It seems like student loans should be treated like any other unsecured loan. And really student loans shouldn’t even be necessary for public universit…

>Why was it necessary to change student loans to being non-dischargeable in bankruptcy? I believe it was something along the lines of people borrowing for law degrees then discharging the debt right after graduation with the knowledge gained from their new degree. I'm sure it was done in other degrees as well.

So, nothing to do with undergraduate degrees?

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

#163

Post by dillonmckay »

toomuchtodo wrote: post #40
jrs235 wrote: post #18

Earlier quoted context omitted.

Yes. To default just don't pay. What I think you meant to ask was is there a way to escape repayment (get the debts wiped out in bankruptcy). Yes. It is possible to ask and get a judge to wipe out the student debt loan but the bar is usually fairly high and unlikely. Can it be done en masses or exploited. Not likely. You'd likely need Congress' involvement. Good luck with that and good luck with Devos.

I have wondered if the right person in the right place could go Mr Robot on the Dept of Education’s loan data, nuking all borrower data (prod, backups, everything). “Non Congressional Sanctioned Forgiveness” thought experiment.

Unfortunately, much of the debt was improperly resold, and collections agencies attempt to collect on debts they have no legal rights to.

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

#164

Post by grecy »

iso947 wrote: post #153
grecy wrote: post #152

Earlier quoted context omitted.

Because the US is a for-profit society, not one focused on improving the lives of citizens. Companies are making billions on health insurance, education, etc. It won't change because they want to hold onto their profits.

In that case why is school free?

Elementary and secondary are free to keep people going to work (i.e. it's child minding), and to keep children out of the workforce.

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

#165

Post by apatters »

eli_gottlieb wrote: post #124
apatters wrote: post #102

Earlier quoted context omitted.

Sure, the most relatable problem is that a lot of college grads have debts they can't pay off. That's not really the focus of the article though, which is an introduction to a potentially calamitous systemic problem. The 2008 crash happened because there were about $1.7T of mortgage-backed securities (MBS) floating around in the financial system. These were essentially sliced up pieces of numerous mortgages that had…

Right, so the difference here is that you can be foreclosed on, and the bank takes your house. You can even go bankrupt when you lose your house. But you can't get out of student loan debt via bankruptcy, nor lose the education. I figure the banks figure they're going to be fine, because rather than the SLABS market collapsing, it'll just suffer a correction: the enforced debt peonage of making payments all one's lif…

Except that all of those angry debtors can vote, and elect representatives who change the applicable laws. So one way things are different this time around is that government action could precipitate events in unpredictable ways.

Remember Bernie is talking about straight up forgiveness: the debt just disappears. He probably won't be the next President but student loan reform (including existing loans) is a hot topic for many candidates.

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

#166

Post by Shivetya »

so in other words, when the government steps in and interferes with the loan market it just balloons costs and lacks the oversight it should have; because it was a quasi government agency which caused a big portion of the mess in the mortgage industry one with many connections to members of Congress

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

#167

Post by Shivetya »

magnusss wrote: post #83

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…

welcome to the rent seeking effects of occupational licensing, where you have to put more hours to do hair than be an EMT in some areas. either to pad the pockets of those providing the "education" or those in the industry looking to keep competition low.

I would love to see how many of these loans go towards low wage jobs all because licensing issues force people into this racket

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

#168

Post by swebs »

adventskalender wrote: post #137
afarrell wrote: post #121

Earlier quoted context omitted.

From data collected over 2014-2018, the US spent $10,586 USD/capita on healthcare and Sweden spent $5,447 USD/capita on healthcare. Source: https://data.oecd.org/healthres/health-spending.htm

That may be so, but doesn't necessarily imply that health care is more expensive in the US. It's possible that in the US they simply spend more money on useless things, or do more screenings with better technology, for example. Many things can go wrong with interpreting such statistics, see also my comment here: https://news.ycombinator.com/item?id=21760725 Afaik, some of the best (and also most expensive) medical pr…

In Sweden, you pay taxes for healthcare and everyone receives healthcare.

In the USA, you pay taxes for healthcare, but only the old and the poor receive that tax funded healthcare. So the average taxpayer has to buy their own health insurance in addition.

The linked chart also shows a clear correlation with Purchasing Power Parity, which also should be accounted for.

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

#169

Post by CathedralBorrow »

ponsin wrote: post #151
CathedralBorrow wrote: post #141

Earlier quoted context omitted.

> 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. Ever…

I draw my line there because I know of many people who would have a very fulfilling career doing things that only require a high school education (such as cashiers, customer service representatives, and construction workers). I assume that those people also would not gain much from college since having knowing them in highschool, they do not gain that much from formal education (lack of motivation to study, lack of i…

There are a lot of assumptions in there that I don't think are necessarily founded. Is knowing someone enough for you to make assumptions about whether they will gain much from higher education? That seems awfully judgmental to me.

I'll also add that this: "However in those countries there are a lack of people who are qualified to work in highly educated fields and a surplus of blue collar workers." is absolutely not the case in the European country where I live. When you talk about the state of "those countries", what countries are you talking about and what are you basing that statement on?

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

#170

Post by ssivark »

the-dude wrote: post #126
avalys wrote: post #110

Earlier quoted context omitted.

You’re not comparing equivalent quantities. GDP is an annual figure (Gross Domestic Product ), and you are comparing it to total outstanding debts that are paid off over decades. Total asset value of the US economy is about $270T with about $150T in outstanding debt. So the relative proportions are not as extreme as you’re representing.

If the value disappears overnight, wouldn't it be fair to compare it to the yearly figures?

If it disappears "overnight", then would the right comparison be to daily GDP? which would increase the computed percentages by a factor of 365.

Clearly it is not sensible to compare two quantities with different dimensions of $ and $/time. It is like comparing distance (miles) to speed (miles/hr). Changing units to (meters/sec) doesn't change the absurdity in any way.

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