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U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

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Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#191

Post by dvtv75 »

verbify wrote: post #189
skwosh wrote: post #117

There seems to be a strong sentiment in this thread that the only value provided by education is the contribution to career (e.g. that loans should only be provided for financially viable courses, that studying arts is as useful to one's career as studying finger painting, etc). This just seems so wrong. Optimising for vocational training means you're effectively tuning out the abstract arts and sciences and... oh, t…

There are still people in the US without access to clean water. In some parts of the country, primary and secondary school education is abysmal. As far as I'm concerned, it's a question of priorities. Sure, I love the humanities, but the government only has so many tax dollars, and studying Shakespeare in university is not a priority.

So if the government stops wasteful funding of those fields considered to be not profitable, then these problems will be fixed?

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#192

Post by candiodari »

hackinthebochs wrote: post #76
wernercd wrote: post #37

Earlier quoted context omitted.

> Why we treat student loan debt debt as being different Where is the collateral? You buy a house, don't pay... you lose the house. You buy an education, don't pay... you... lose the education? No bank is going to give money for degrees without a realistic change of getting paid back. They have no fear of getting paid back because you CANT remove the debt via bankruptcy. I think there needs to be a different approach…

>No bank is going to give money for degrees without a realistic change of getting paid back. Then they shouldn't. A big part of the problem is that the negative externalities of loans are all but eliminated from the issuer and completely placed on the borrower, only that these borrowers almost always unaware or don't fully appreciate the risk. If we allowed student loans to be shed through bankruptcy then companies w…

> If we allowed student loans to be shed through bankruptcy then companies would stop giving out $100k loans for art degrees and history degrees.

> Why don't we let them?

You've answered your own question, no ? Or at least pointed out one big center of opposition. Additionally, universities themselves will vehemently oppose this of course.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#193

Post by Sacho »

Daishiman wrote: post #90
nickjarboe wrote: post #80

Earlier quoted context omitted.

The US has a very complicated system of multiple, income-based, student loan repayment schemes[1]. 20 to 25 years of repayment based on many factors. It is so complicated the government has created a "Repayment Estimator"[2] to help people choose the best plan. At a glance it looks similar to the New Zealand 8%. Seems like most systems evolve to where they are impossible for a human understand. See tax code, social s…

> Seems like most systems evolve to where they are impossible for a human understand. See tax code, social security, Obamacare, etc. That's because the US is characterized by a Republican party with wholly obstructionist goals which make the worst possible consessions for those who do wish for an effective social safety net to be in place, effectively being able to say "I told you so" when the watered-down systems in…

What would an effective social safety net look like in this case, without Republican party interference?

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#194

Post by ssalazar »

rahimnathwani wrote: post #81
toomanybeersies wrote: post #6

Every time I read articles about student loans in the USA, the options are always presented as either the current state, or free tuition. Why are interest free student loans never floated as an option? Here in New Zealand, our student loans are provided by the government and are interest free as long as we reside in New Zealand. It means that people who don't do tertiary education, or who do a trade, don't subsidise…

"Why are interest free student loans never floated as an option?" Imagine what would happen if the US government made student loans interest free. Who would gain, and who would lose? (1) Students could afford to take out larger loans (as the repayments would be more affordable with 0% interest vs. 4.66% interest) (2) As a result of (1) colleges could charge higher tuition fees, without reducing the number of students…

Yeah this. I believe a huge reason college education is already so expensive is that so much "easy" money can flow from the government to cover tuition costs through students (and their parents) who don't always understand the long-term consequences of their decisions. Its only later that the people left holding the bag (graduates) realize that the money is not so easy.

Increased subsidizing of college education will only make the overall costs (whether to students or to the government) rise unless additional controls to reduce tuition are in place.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#195

Post by Super_Jambo »

ssalazar wrote: post #190
Pyxl101 wrote: post #164

Earlier quoted context omitted.

> Earning a high level of income makes life extraordinarily comfortable, to the point where it is easy to become complacent and stop trying to really contribute to society in a meaningful way. Earning a high level of income in general already signifies that a person is contributing to society in a meaningful way. Their income is reflective of the service provided to others. All corporations exist to better the lives…

> Earning a high level of income in general already signifies that a person is contributing to society in a meaningful way. Their income is reflective of the service provided to others. Yeahhh no, income is a laughable measure of one's contribution to society. Labor is a market as any other, and salary is a function both of the value provided as well as supply vs. demand. In the Valley, VC-funded technology companies…

> income is a laughable measure of one's contribution to society.

Whilst you're currently correct I think we should be constraining our markets so that you are not.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#196

Post by skwosh »

Lazare wrote: post #184
skwosh wrote: post #117

There seems to be a strong sentiment in this thread that the only value provided by education is the contribution to career (e.g. that loans should only be provided for financially viable courses, that studying arts is as useful to one's career as studying finger painting, etc). This just seems so wrong. Optimising for vocational training means you're effectively tuning out the abstract arts and sciences and... oh, t…

Okay, but how does that translate into policy? Fact 1: Education in the US is very expensive, in large part because the ready availability of loans removes most downwards pressure on prices. Fact 2: If you are loaned money to obtain a degree which is not economically valued then you will not be able to pay it back. Fact 3: If you loan people money without expecting people to pay it back, then it's not a loan, it's a…

If I was designing policy?

Really all I'm talking about is not defunding/sidelining Arts etc "because it's not financially viable".

The idea is really to provide a well rounded education, (giving students a broader perspective on the world, a stronger vocabulary for expressing ideas, etc), as opposed to a purely career focused one. I think it would be detrimental to culture and society in general if everyone was groomed from high-school to only ever consider the safe, paved, career footpath.

This may take the form of allowing for more electives in vocational courses, encouragement to take double degrees, or eliminating barriers for later study (letting people change their minds, or even just reskilling when the robots take over).

What I was meant by "subsidisation" is just the "somewhat" free education that exists in some places today, but has been more prevalent/widespread in the past. And while prioritising vocational degrees is fine to some extent, crippling participation in the Arts by making those qualifications prohibitively expensive (by not providing loans) is a bad idea imo.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#197

Post by forgetsusername »

Godel_unicode wrote: post #160
hueving wrote: post #141

Earlier quoted context omitted.

When it comes to student loans though, they should be given on someone's potential ability to actually pay them back, which is dependent on future career prospects. I'm not against Arts or offering scholarships/grants for them. What I'm against is allowing a person to take out $160,000 of debt at 6% interest for an education that will land them a job as an administrative assistant. They will most likely carry that de…

This. Banks give home/auto/business loans based on value of the home and ability to pay. Why not have similar metrics for education?

In home and auto loans, the asset purchased acts as collateral. Business loans, especially for small businesses, are difficult to get. If it were easier, I'm sure we'd have a problem similar to the student loan situation.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#198

Post by Lazare »

75j wrote: post #40
paulddraper wrote: post #5

The Wall Street bailout was only...what, a trillion? If we bailed out real estate speculators, I wouldn't be surprised if something happened with college grads. Unfortunately. I hate assuming responsibly for monetary decisions other than mine, but judging the trend, that's where we're headed.

So, I am not at all an expert in finance, but there are claims (from Jill Stein for example) that the real cost of the bailout was much, much higher. Here's a Mother Jones article that takes this position: http://www.motherjones.com/politics/2009/12/behind-real-size... Can someone with more knowledge break down whether or not this is accurate?

Those are very old numbers trying to estimate the total size of the bailout, and the total potential downside. They aren't trying to estimate the actual net cost, nor are they trying to compare it to the total potential downside of the alternatives.

So it's technically right, in a sense (or it was when it was written last decade), but it isn't trying to answer the question you're asking, it's horribly outdated, and it's larded with weasel words.

"[T]hese guarantees could have potentially cost the federal government more than $3 trillion..." but actually didn't. "[T]he government's potential exposure from the PPIF is between $500 million and $1 trillion..." but they ended up turning a profit on it. "As of December 21, 2009, $117.5 billion of that has been repaid..." and subsequently the rest of it was too. "The Treasury has bought $200 million in preferred stock from Fannie Mae" and then ended up quasi-nationalizing it and has since been making a hefty profit on it.

And so on, and so forth. What the report shows is that the financial crisis had enormous potential price tags attached to it, but the bills never ended up coming due. Whether that was luck or skill remains to be shown. :)

> the real cost of the bailout was much, much higher

No. You can argue about the true underlying risks, and the proper risk adjusted interest rate to nominally charge when lending government funds to a quasi-government entity with an effective government guarantee, and the option value of the bailout, and you can argue that it, on balance, cost a few billion, or quite a few billion, or maybe even turned a profit. I think the CBO scored it at $60 billion a while back; I'd lean towards the "cost a couple hundred billion" answer, but it's ultimately too complicated a question to ever really have an answer. Especially if you try and estimate the cost compared to some other policy. :)

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#199

Post by badminton1 »

Education makes extensive use of debt factoring for risky loans.

Factoring is selling client debt at a discount for instant cash. The financial institutions that buy the debt are usually responsible for collecting unless they decide to pass it around again.

So in a sense, universities are sort covered against losses from that kind of debt, not students.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#200

Post by throw2016 »

A healthy and future ready society needs an educated and literate population. From that it becomes a social goal and a social good with multi generational run off effects that can't be measured in pure short term economics.

That one of the richest countries in the world should shy away from this responsibility is a bit galling, more so because it seems to be purely so that bankers can make some money.

You can't have a country purely of corporations and workers and the US has been moving in this dubious and dystopic direction for decades now. You need to build a society or everyone loses, eventually.

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