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U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

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Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#191

Post by TomK32 »

mycorrhizal wrote: post #187
why-el wrote: post #148

Earlier quoted context omitted.

This is a conversation about education. The EU, with all its faults, is leaps and bounds ahead of the US in the democratization of education, even though the US was the nation that pioneered the field in the first place. Goes to show how extreme the whole political spectrum of the US has gotten.

Aren't a lot of these European countries a lot more pragmatic (cut throat?) about who can go to college? For example in Germany, I was under the impression that around adolescence they start dividing people into the university path people and the non-university path people. I don't think this type of system would go over well in the US with its individualism/"control your own destiny" mindset. I'm not saying the Euro…

We have this in Austria but if you are dedicated to take the lower school paths and later decided to get extra education to go the Uni, there's nothing that stops you. There's nothing unusual in a mid-20 taking evening school and going to uni two or three year. And not just that, if you dropped out with nothing at all, evening school allows you to get even the lowest ranking of the three paths: Hauptschulabschluss. The cost for you? Nothing!

When you have finished your Hauptschule or Realschule (lowest and mid path) you usually start a job but part-time you also go to a job-school (Berufsschule) where you learn more specific things that are useful for your job. This dual-education works great and is being exported to other countries where german manufacturers get active but don't find the skilled workers they are used to.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#192

Post by AlkurahCepheus »

pxeboot wrote: post #150
rubyn00bie wrote: post #138

Let it burn down. No one should pay back their student loan debt. Seriously, just stop. This is a scheme in which they've fucked over a large portion of the population with the skyrocketing prices of education. Further, this education is the regularly accepted means of increasing your production. Society says you have to do this, and then continuously increases the price, without reason. The gist of this is; some shi…

This would be beautiful to see. Considering the scope of the population affected, there would be little to no recourse if everybody collectively decided to stop paying at the same time. If you trash every millennials credit score, the scores would become worthless.

And then the government will step in. They will tell everybody that these companies are too big to fail, and hence the market rules don't apply to them. And eventually the government will bail them out--with tax payers money. https://www.youtube.com/watch?v=Bu2wNKlVRzE

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#193

Post by ethbro »

lordnacho wrote: post #158
gnicholas wrote: post #147

Earlier quoted context omitted.

I’m curious about the juxtaposition of the indebting of young people and the rich gaining in wealth and power. Is there a causal linkage between student loan debt and the rich getting richer? It’s true that we could levy higher taxes on the rich to pay for college, but as others have pointed out, part of the problem of spiraling costs is the heavy governmental subsidies. Or am I missing the point on how these two thi…

The connection is that people who have debt out of college tend to need to take whatever job they can find. This worsens their negotiating position vs a situation where they don't have any obligations. Wealthy people tend to be owners of businesses (directly or indirectly) that buy this labor, and they have a better negotiating position. Young people with all the time in the world, an education, and no debt are also…

The secondary effects of this are definitely under-reported (and possible under-appreciated).

In essence, what we're talking about here is a massive wealth transfer from people seeking post-secondary education to those offering that education (sometimes public, sometimes private)... except (critically) the effects are future loaded.

We've indebted an entire generation, but it's an invisible anchor dragging on their economic aspirations.

If you ask me, we should do three things to fix this: (1) haircut absolute public loan amounts to a manageable amount in exchange for public service (more funding & new opportunities), (2) haircut private loans to a manageable amount (too bad, they shouldn't be able to offload risk to the public and keep their profits), funded by new taxes on underperforming (read: abnormally large numbers of deliquent loans) private loan vendors AND institutions generating said loans (both of whom benefited from originating poor quality loans), (3) continue efforts to tie government-guaranteed loan eligibility to positive outcomes (your graduates don't find jobs in their fields, your program(s) are no longer eligible for loan guarantees).

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#194

Post by pbiggar »

monting wrote: post #135
RGamma wrote: post #127

From a European perspective I can only shake my head at this. It doesn't seem like a good idea at all to indebt a significant part of the young population (which I presume creates a lot of avoidable stress) while the rich gain in wealth and power year after year. But I guess longer-term thinking has been thrown overboard in economic decision/policy making anyway, because that would make the numbers not grow fast enou…

Don’t mean to sound defensive (I’m not American), and I mostly agree with you. But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.

> But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.

The purpose of the EU is to prevent war. The EU hasn't had a war in 75 years. That is the longest that Europe hasn't been at war in its recorded history.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#195

Post by Kephael »

wtvanhest wrote: post #4

If you add up the total cost of all education institutions in the US, multiply by 4 years, then build a payment structure based on that number, there is simply not enough income left over in the corhort of new grads (first 10 years out of school) to pay the debt service. The problem has nothing to do with liberal art majors, or irresponsible borrowing. The problem is entirely driven by an excessive cost structure of…

It's irresponsible to borrow when you will not have the means to pay back the debt. Most college graduates end up underemployed or unemployed after earning a degree in a non-rigorous major from a mediocre school. With only a BS degree and ~$30k debt, a professional job can easily pay this off. If the market could price the loans properly, perhaps they'd be discouraged from taking out the loans. Realistically, a loan would not be made in the first place.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#196

Post by iguy »

rjf72 wrote: post #175
TrinaryWorksToo wrote: post #84

Earlier quoted context omitted.

Won't people then plan to go bankrupt? Although perhaps that will allow a better equilibrium.

Like you mention it'd simply create an equilibrium. People would declare bankruptcy when the discomfort of repaying the loans exceeded the discomfort of declaring bankruptcy. If I lend you an unsecured $10 which you then expend on something personal and materially intangible (such as an education) you're not going to declare bankruptcy to get rid of that $10 debt. If I lend you an unsecured $1,000,000, you almost cer…

The problem IMHO is that the "discomfort of declaring bankruptcy" is hard to predict. Right now it caries some social stigma I believe, but that could change. I don't think that's a great mechanism for deciding who pays back the loan and who doesn't... and my suggestion in all such threads is that this should be tied to future income, which the lender will then become very interested in predicting.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#197

Post by jandrewrogers »

nickthemagicman wrote: post #182
asdfasgasdgasdg wrote: post #177

Earlier quoted context omitted.

That would be the end of poor people going to college in this country, at least under the current legislative regime. The only reason anyone loans money to poor people to go to college right now is because they know the recipients can't get out from under the loans. A no-collateral loan to someone with few assets or prospects just wouldn't happen if that provision in the law didn't exist. Or the interest rate would b…

Yeah we'd have to do something crazy like say fund it....like we do K-12...

The US spends considerably more on K-12 than the rest of the developed world. It isn't obvious to me that this allows you to avoid the problem of unreasonable cost.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#198

Post by TomK32 »

holografix wrote: post #154
monting wrote: post #135

Earlier quoted context omitted.

Don’t mean to sound defensive (I’m not American), and I mostly agree with you. But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.

Also non-American and non-European here. My impression is that the EU is getting itself into a huge mess mainly due to abused good intentions taking in immigrants and as a byproduct of the GFC and Middle East’s proxy American x Russian war. While the Americans seem to not be operating as a democracy for a while and are instead a Corporocracy. It became fairly obvious after the GFC. The three “super powers” in the wor…

First of all, a lot of those arriving and asking for asylum are sent back because they don't qualify.

Moving on, we Europeans are making a decent profit from selling weapons to the Middle East and African countries. We might as well take on those refugees driven out by the violence our weapons cause.

Europe's history, even the years since WWII, is full of migrations: Post-war displacement affected more than 10 million people, refugees from East to West Germany, Brits fleeing the rain for sunny France and Spain (they are a few hundred thousands), Hungary 1956 dispersed 200,000 hungarians of which 70,000 crossed this little bridge https://en.wikipedia.org/wiki/Br%C3%BCcke_von_Andau and the last decade saw a massive flow of young people from southern Europe to the north which causes long-lasting problems for the southern countries. The list goes and and will go on. Some EU countries have 10% or more of EU-nationals in their population which in my eyes will become a hot topic in terms of higher level elections as right now you are only allowed to participate in local elections if you are not a native.

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#199

Post by TrinaryWorksToo »

iguy wrote: post #196
rjf72 wrote: post #175

Earlier quoted context omitted.

Like you mention it'd simply create an equilibrium. People would declare bankruptcy when the discomfort of repaying the loans exceeded the discomfort of declaring bankruptcy. If I lend you an unsecured $10 which you then expend on something personal and materially intangible (such as an education) you're not going to declare bankruptcy to get rid of that $10 debt. If I lend you an unsecured $1,000,000, you almost cer…

The problem IMHO is that the "discomfort of declaring bankruptcy" is hard to predict. Right now it caries some social stigma I believe, but that could change. I don't think that's a great mechanism for deciding who pays back the loan and who doesn't... and my suggestion in all such threads is that this should be tied to future income, which the lender will then become very interested in predicting.

Does declaring bankruptcy increase interest rates for the debtor? That could be enough incentive for it to be discomfortable

Re: U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

#200

Post by twoodfin »

AlkurahCepheus wrote: post #192
pxeboot wrote: post #150

Earlier quoted context omitted.

This would be beautiful to see. Considering the scope of the population affected, there would be little to no recourse if everybody collectively decided to stop paying at the same time. If you trash every millennials credit score, the scores would become worthless.

And then the government will step in. They will tell everybody that these companies are too big to fail, and hence the market rules don't apply to them. And eventually the government will bail them out--with tax payers money. https://www.youtube.com/watch?v=Bu2wNKlVRzE

“These companies” are the US Federal government, at least for undergraduate loans. The Department of Education took over all federally guaranteed loans (the vast majority of undergraduate loans) almost a decade ago. They’re only serviced by private companies, who wouldn’t need a bailout; it would only be the taxpayer on the hook.
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