Student Loan Debt Is Now as Big as the U.S. Junk Bond Market • Hacker News Board

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#21

Post by nsriv » Tue, Dec 05, 2017, 4:40 PM UTC

duncan-donuts wrote: post #7

I wonder how educators are handling this. When I was set to graduate high school a decade ago we spent a portion of our home room hour planning our collegiate futures. I think I may have been the exception -- where my advisor stressed that we had to do something. Too often I hear that, "college is the only option." I personally never experienced that, but I wonder if educators are stressing that 4 year universities a…

In upstate Western NY there's definitely a big push towards offering kids the option of vocational school. Kids I work with generally have their minds made up about it by 11th grade, but there are two interesting phenomena. Many students don't want to study for exams, and so make the choice to go vocational out of laziness, being unaware of the professional certification regime. I also see many students whose parents want them to go vocational, but they've been sold on the college experience so relentlessly that they will go anyways.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#22

Post by jedberg » Tue, Dec 05, 2017, 4:40 PM UTC

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back.

We need a fundamental shift in the way college is paid for. Some (many?) would like to see a government funded system, others would like to see the removal of subsidized loans to bring prices back down (and leaving many unable to afford college in its wake).

Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. Of course with that system, colleges would bias towards people who are pursuing profitable majors, so you'd probably see a lot more STEM degrees and a lot fewer of everything else, until it got oversaturated, but there is a very long lead time between "too many degrees" and "no one studies this anymore".

In other words, the fundamental problem is that we tell kids that college is the only path, creating insanely high demand for the product, when in reality there would be plenty of people much better served learning a trade or skill instead of four years doing something hate for a useless degree they'll never use.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#23

Post by danaliv » Tue, Dec 05, 2017, 4:42 PM UTC

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> Some (many?) would like to see a government funded system

Depending on how the debt situation falls out, we might already have that. :-\

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#24

Post by fredgrott » Tue, Dec 05, 2017, 4:43 PM UTC

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

my State, Indian does a partial free-2 year degree program in that the AP courses taken in HS qualify as a full 2-year degree if you take enough of them in HS and pass the exams..no college tuition payment required

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#25

Post by habosa » Tue, Dec 05, 2017, 4:43 PM UTC

aloukissas wrote: post #18

One statistic that's commonly left out of these discussions & articles is how late parents save for college. According to Sallie Mae ( http://news.salliemae.com/publication/how-america-saves-coll... ), most families don't start saving before their oldest child reaches 7 years old. This effectively robs 1/3 of the investment period's growth potential. Another one (as perhaps a consequence of the previous fact) is that…

On the one hand, yes that's late. On the other hand it's sort of insane how you need to start putting money away for a child's education when they're only seven years old! You have no idea if the child will even want to go to college, how much their college of choice will cost, etc.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#26

Post by howard941 » Tue, Dec 05, 2017, 4:43 PM UTC

These should be low yield non junk but for some reason they're high risk/high yield in spite of the principle being backed by the full faith and credit of the US Govt. and bankruptcy non-dischargability. There's a strange disconnect between the risk and the yield.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#27

Post by jedberg » Tue, Dec 05, 2017, 4:43 PM UTC

aloukissas wrote: post #18

One statistic that's commonly left out of these discussions & articles is how late parents save for college. According to Sallie Mae ( http://news.salliemae.com/publication/how-america-saves-coll... ), most families don't start saving before their oldest child reaches 7 years old. This effectively robs 1/3 of the investment period's growth potential. Another one (as perhaps a consequence of the previous fact) is that…

It's good in theory, but most new parents don't have the spare cash to start saving at birth, unless they are already fairly well off.

I was lucky enough to have kids late in life and I can afford to put money in their college fund now, but most new parents sadly can't.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#28

Post by aaavl2821 » Tue, Dec 05, 2017, 4:43 PM UTC

cantankerous wrote: post #20

zjaffee wrote: post #15

Earlier quoted context omitted.

People neglect to realize that a master plumber can make just as much as a software engineer should they have the skillset to be on the right kind of projects.

FWIW: It's probably easier to become a software engineer than it is to become a master plumber.

For some people. Others just can't get their heads around programming

Though point taken about how hard it can be to get certified for some of those trades

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#29

Post by cantankerous » Tue, Dec 05, 2017, 4:44 PM UTC

PatientTrades wrote: post #4

There is plenty of blame to go around here. However a major cause of this has been the push by the left that college is the only path to success. Trade and vocational schools as well as military service are all great options for young adults who may not know exactly what they want to do with their life right away. Spending 4 years of your life taking on debt, simply because society tells you college is the path to su…

If by "the left" you also mean every prominent suburban area in America, then yes!

It's right to bring up the military and the trades as viable options, but let's not oversell that stuff. The trades aren't just a shoo-in easy crack at six figures like folks spout off. You gotta work for that master-tradesman slot. It'd probably take you 10+ years to get there if you're good enough. The trades are designed to limit the number of people entering them...it's part of why they make so much money. It's also incredibly hard work and tears up your body as you age.

I think the drawbacks to joining the military are pretty obvious and go without saying.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#30

Post by mantas » Tue, Dec 05, 2017, 4:44 PM UTC

aloukissas wrote: post #18

One statistic that's commonly left out of these discussions & articles is how late parents save for college. According to Sallie Mae ( http://news.salliemae.com/publication/how-america-saves-coll... ), most families don't start saving before their oldest child reaches 7 years old. This effectively robs 1/3 of the investment period's growth potential. Another one (as perhaps a consequence of the previous fact) is that…

Another statistic is that in quite a few places in the world families don't have to save money for kids' education at all. Looking from Europe, it looks like a weird cultural artefact. If someone I knew did this, my reaction would be "wtf, why don't you pay off your mortgage or go on vacation?".