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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

#21

Post by Keverw »

I think the solution is ending loans for college. I don't think an 18-year-old with no assets, or even a stable job or no job at all should be given that much money for college. No bank would give them a loan for a house. At least you can foreclose on a house and take it back. You can't take back someone's education.

Plus every time the department of education gives out more money, colleges raise prices.

Imagine how much a television would cost if the government said everyone must have a television. They're older people who tell me back in their day they could work at a restaurant and pay for college debt free. Get the government out of the student loan business and let the free market decide.

If no money is being printed for students to go to colleges, fewer people will go to college and therefore the schools will be forced to compete for student's business. Therefore college will be much more affordable for the people who wish to go.

I totally agree with our President-Elect about getting rid of the DoE, along with Common core. Let things be up to the states.

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

#22

Post by melling »

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.

Wasn't most of that money repaid with interest?

https://en.m.wikipedia.org/wiki/Troubled_Asset_Relief_Progra...

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

#23

Post by GarrisonPrime »

dublinben wrote: post #8
meddlepal wrote: post #4

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

Ah, but what about in 20-25 years when all of those who couldn't pay off the debt will suddenly have all of it "forgiven", and suddenly find themselves with a huge tax bill seeing that forgiven balance as income?

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

#24

Post by GarrisonPrime »

Retric wrote: post #14
dublinben wrote: post #8

Earlier quoted context omitted.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

Wouldn't one have to abandon US citizenship? From what I understand, that's a very long uphill struggle, and likely impossible if you have significant debt.

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

#25

Post by rayiner »

We don't need student debt reform (and I say that as someone who has a lot of student debt). Student loan debt is a middle/upper middle class problem. 2/3 of millennials don't have a college degree, disproportionately in the lower and lower middle class. The majority have no student debt. Public money spent on college or debt reform would be a regressive benefit to those who are already better off than the median person. It would be better to spend that money figuring out how to improve the plight of working class people for whom college isn't in the cards.

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

#26

Post by caf »

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…

Well, it's still a subsidy, it's just much less of one than completely free tuition would be. If the Government wasn't loaning that money interest-free, it could in principle reduce its issued bonds by that amount, so the subsidy is the value of the bond rate faced by the NZ Government - plus the present value of the expected defaults.

The idea of linking repayment to income is called an "income-contingent loan". It's a great idea for University tuition, because it reduces the loan to a system for reclaiming a proportion of the private benefits that accrue to the student from the additional education. This removes some of the risk faced by the student that they might put a lot of resources into education but then fail to realise the expected benefits (eg. through serious illness, a broader economic collapse etc).

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

#27

Post by hartator »

colordrops wrote: post #18
hartator wrote: post #15

> Officially, the nation owes $1.26 trillion in student loan debt. The nation doesn't owe anything, I would rather said past students who still have loans owe this money.

It's a synecdoche.

I don't think it is, to allow blur between the society and the individuals is not something without consequences.

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

#29

Post by GarrisonPrime »

taurath wrote: post #9
andrewclunn wrote: post #3

Queue the political debate over whether this is a failure to provide secondary education to our citizens, or an artificial inflation in its cost by attempting to do so.

Other countries don't have this problem. There is no debate to be had - the US can't control costs

Agreed. That's the same core problem with the US health care system as well.

Yet in both cases, education and health care, control of costs is pretty much not discussed at all. The only narrative we seem to hear is along the lines of "find more money to pay for it".

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

#30

Post by cconroy »

dublinben wrote: post #8
meddlepal wrote: post #4

Anyone have any idea what the 20 to 50 year implications are for this? I imagine this will crush the economy eventually if millennials cannot pay it off.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

I agree with you except I am not sure about two conspiring forces at work here: Technology eating into professional jobs like xray techs, lawyers, etc., and colleges giving the degree in name only (nominally) were graduates more and more are not sufficiently trained and educated despite the degree. This makes for a spectacular bubble when the defaults and nonpayments reach critical mass.

Edit: P.S. this is just my guess and any data on this would be interesting.

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