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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

#181

Post by lotsofpulp »

Graham24 wrote: post #148
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…

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

An apple can cost $30k if someone is willing to pay it. I’m sure there are more reasonable prices, many community colleges are far cheaper.

Problem is 18 year old that down know how to do a simple cash flow analysis being given tens of thousands of dollars as they see fit, as long as it’s at a “school”, however that’s defined. Obviously the “schools” have figured out how to best benefit from the hydrant of money available to them.

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

#182

Post by dna_polymerase »

planetzero wrote: post #15

We need to get rid of student loans. The problem is that Universities don't ever need to worry about a student defaulting and can keep increasing the prices of tuition with impunity. If they default, they don't care, because the money is already in the bank. If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done…

What I read and heard in the past few weeks about this hints at another solution. Instead of getting rid of student loans and college tuition fees, we need to improve the situation for students and open the market for other players.

Apparently the Department of Education chooses the loan service for borrowers, thus enabling a de-facto monopoly for Navient [0]. Now, if we had a functioning market people could choose better solutions, and better standards would prevail. Also data could be made public enabling students to choose a college that showed better performance for graduates careers [1].

[0]: https://www.youtube.com/watch?v=RjWWTTMj0xw [1]: https://www.theguardian.com/money/2017/sep/06/us-student-deb...

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

#183

Post by bumby »

roenxi wrote: post #173
eggie wrote: post #172

Earlier quoted context omitted.

> If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done due to free market forces. This is a hypothetical but classic example of how regulation is required to support a free market.

A free market? Nobody but nobody would be stupid enough to lend money to students in a free market. The student would be an infeasible credit risk. They have no money or assets. There is no free market here.

I heard an interesting proposal recently that sounded like venture capital for education. Students would receive tuition money and the lender would receive a percentage of their post graduation salary for a specified number of years.

Even without novel approaches students already get non-subsidized lines of credit so I don’t think it’s unheard of

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

#184

Post by sokoloff »

lotsofpulp wrote: post #177
rsj_hn wrote: post #150

Earlier quoted context omitted.

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…

> Reforming higher education means cutting spending first and foremost. This has already occurred and continues to be cut further. What also happened however, is the legislature promised lenders that taxpayers would pay for all student loans. Of course this doesn’t get accounted in cash flow, because you can just assume more people will pay back their loans than actually will. So now you have a situation where a lend…

Are private student loans backed by a federal guarantee of repayment? I didn’t think they were (and federal loans are definitely not infinite).

A student who is unable to repay their private loans before death leaves the lender without the money I think.

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

#185

Post by imtringued »

treden wrote: post #95
sykick wrote: 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…

>that seems less surprising the longer I live here, is that europe has no spacex, google, tesla, nasa, coherent mars rovers

These lists are meaningless. I can do the same thing and get smug about Intel, TSMC and Samsung buying EUV equipment from Europe.

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

#186

Post by lowercased »

lotsofpulp wrote: post #177
rsj_hn wrote: post #150

Earlier quoted context omitted.

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…

> Reforming higher education means cutting spending first and foremost. This has already occurred and continues to be cut further. What also happened however, is the legislature promised lenders that taxpayers would pay for all student loans. Of course this doesn’t get accounted in cash flow, because you can just assume more people will pay back their loans than actually will. So now you have a situation where a lend…

I don't think "reducing taxpayer funding" is the 'cutting spending' the parent comment meant. I think they meant actual reduction of admin, buildings, rec centers, etc.

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

#187

Post by sokoloff »

joe_the_user wrote: post #109
ponsin wrote: post #63

Earlier quoted context omitted.

Why? If I take out a loan in order to go on a cruise, the cruise company is not responsible if I default. In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. If responsibility fell on the university, then they could just refuse to accept people who take out loans. The result being that only rich people could go to colleg…

If I take out a loan in order to go on a cruise, the cruise company is not responsible if I default. Aside from the other points, this isn't an honest of the overall situation of industries and credit. For example, The real estate industry and the car industry are highly focused on the buyer's ability to pay. The company might not be legally responsible for a buyer who defaults and it may a different company making t…

In my experience, those two industries are highly focused on the buyer’s ability to qualify for the loan and much, much less concerned with the ability to pay the loan.

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

#188

Post by sokoloff »

foota wrote: post #122
adventskalender wrote: post #112

Earlier quoted context omitted.

Why wouldn't it be the responsibility of the students to not take out loans for stupid degrees? And also the responsibility of the banks for giving out the loans only for useful studies? I don't see any party here that needs rescuing by the government.

It doesn't matter who is responsible for the situation, if it presents a large risk to the economy it should be mitigated.

Alcohol, tobacco, obesity, and general unhealthy lifestyle likely underpins more risk to the economy than student lending. It’s perhaps more “priced in”, but otherwise seems much more serious.

Drug abuse is less long-term priced in and likely also has higher aggregate risk as well.

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

#189

Post by moduspol »

eggie wrote: post #172
planetzero wrote: post #15

We need to get rid of student loans. The problem is that Universities don't ever need to worry about a student defaulting and can keep increasing the prices of tuition with impunity. If they default, they don't care, because the money is already in the bank. If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done…

> If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done due to free market forces. This is a hypothetical but classic example of how regulation is required to support a free market.

It's federally guaranteed student loans that got us here! It wasn't like this for our parents.

This comment is an example of how any amount of problems caused by government intervention can be framed as a need for more government intervention.

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

#190

Post by C1sc0cat »

planetzero wrote: post #15

We need to get rid of student loans. The problem is that Universities don't ever need to worry about a student defaulting and can keep increasing the prices of tuition with impunity. If they default, they don't care, because the money is already in the bank. If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done…

Depends how you implement the UK';s system is basically a graduate tax which seems fairer.

I suspect that Labours ideas of scraping it will just lead to higher taxes for all ie poorer non graduates subsidising middle calss kids, or they will ration degree places

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