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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

#191

Post by sokoloff »

apatters wrote: post #165
eli_gottlieb wrote: post #124

Earlier quoted context omitted.

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…

Any forgiveness is likely to be executed by the forgiving entity paying off the loans.

The federal government is not going to use a pen to steal trillions of dollars from lenders holding contracts for repayment. That’s a banana republic action.

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

#192

Post by C1sc0cat »

azhenley wrote: post #27
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…

Some universities have started doing income share agreements. They front the tuition cost for a portion of your future income. Depending on your degree program, they will take X percentage for Y years. Purdue was in the news for being one of the first: https://www.purdue.edu/dfa/types-of-aid/income-share-agreeme... Planet Money had a nice podcast about how they work: https://www.npr.org/sections/money/2019/03/29/7081…

Mm factional indenture lovely NOT

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

#193

Post by C1sc0cat »

rwmj wrote: post #147
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…

Speaking has someone who co-runs a hair salon, those numbers don't make sense. $30K should be a reasonable loan compared to how much a single stylist can make annually (easily $50K, up to six figures if they are any good). Just shopfitting a hair salon costs $10-20K. New or relocating salons do that routinely and will expect to recoup it comfortably in the first year.

Why do you need a degree for a "trade" should not the industry have apprentices for that.

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

#194

Post by [deleted] »

zrail wrote: post #105
pgcj_poster wrote: post #99

Earlier quoted context omitted.

Black Americans are poorer than most other groups, and I suspect that they're less likely to get parental support paying for college.

Let’s be very clear: Black Americans are poorer because of racist policies that kept them out of the huge post-WWII governmental benefit programs. Things like the GI bill and veteran home loans, and homeownership in general were white-only for many years, allowing that group to build generational wealth that continues to this day.

[deleted]

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

#195

Post by C1sc0cat »

rayiner wrote: post #30

All this talk about student loan forgiveness is an unnecessary solution to a problem that’s not really that bad: https://www.nytimes.com/2018/04/02/upshot/an-international-f... Average BA holders in the US graduate with $28,000 in debt, versus $21,000 in Sweden. The Swedish system is basically like our income-based-repayment, which we have had since the 1980s. Except, as you’d expect with Sweden, there is less paperw…

And also you dont get non graduates subsidising graduates

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

#196

Post by qrbLPHiKpiux »

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…

As an employer, I take resumes and CV’s very seriously. I do not even consider an online degree or a Cracker Jack one, also.

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

#197

Post by dsfyu404ed »

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.

Is the regulation you're speaking of regulation that un-does the regulation that provides federal loan to anyone with a pulse who wants to major in journalism (or some other degree for a low paid field) and prevents borrowers from getting rid of said loans in bankruptcy?

Make no mistake, we regulated ourselves into this mess. Many people at the time predicted the current situation. More money chasing something drives up the price of that something. It's now pretty clear that we should have funded the schools instead of providing subsidized loans for the students.

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

#198

Post by sokoloff »

eli_gottlieb wrote: post #127
gwright wrote: post #54

Earlier quoted context omitted.

Because it is an unsecured loan. It would be too easy for a newly minted graduate to declare bankruptcy, discharge the loan, and move on with their life. The only entity stupid enough to loan money to students in that world would be the government.

So what? If making a loan would be stupid, that loan shouldn't be made.

We could return to a world where only the upper and upper middle class could go to elite colleges.

Despite the fact that be more likely to help than hurt my family, I think it’s undesirable societal policy.

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

#199

Post by dsfyu404ed »

C1sc0cat wrote: post #193
rwmj wrote: post #147

Earlier quoted context omitted.

Speaking has someone who co-runs a hair salon, those numbers don't make sense. $30K should be a reasonable loan compared to how much a single stylist can make annually (easily $50K, up to six figures if they are any good). Just shopfitting a hair salon costs $10-20K. New or relocating salons do that routinely and will expect to recoup it comfortably in the first year.

Why do you need a degree for a "trade" should not the industry have apprentices for that.

Regulatory capture. In many states the industry successfully lobbied for licensing requirements on the (questionable) basis of it being necessary for public health.

While the basis for regulation makes sense on paper anyone who's done anything with a low margin service industry knows that whether good practices are followed in a particular workplace has almost nothing to do with education (everyone knows how to keep things clean) and everything to do with management (does management actually want these things done or does it consider them a waste of time).

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

#200

Post by sokoloff »

diogenescynic wrote: post #38
rayiner wrote: post #30

All this talk about student loan forgiveness is an unnecessary solution to a problem that’s not really that bad: https://www.nytimes.com/2018/04/02/upshot/an-international-f... Average BA holders in the US graduate with $28,000 in debt, versus $21,000 in Sweden. The Swedish system is basically like our income-based-repayment, which we have had since the 1980s. Except, as you’d expect with Sweden, there is less paperw…

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…

> And really student loans shouldn’t even be necessary for public universities but that’s another point.

Set aside the education component entirely. It costs money to be housed, fed, entertained, and consume other things. That’s getting paid for somehow and that somehow is often borrowing for undergrads.

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