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Ripping Off Young America: The College-Loan Scandal

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Re: Ripping Off Young America: The College-Loan Scandal

#261

Post by BrandonMarc »

Not only has Congress almost completely stripped students of their right to disgorge their debts through bankruptcy (amazing, when one considers that even gamblers can declare bankruptcy!), it has also restricted the students' ability to refinance loans. Even Truth in Lending Act requirements – which normally require lenders to fully disclose future costs to would-be customers – don't cover certain student loans.

Not so surprising. With high tuition costs, and practices like the above ensuring the amount will almost always be back 100% or more ... and the recipient of these payments, the original entity billing the tuition in the first place? The government.

Of course the government pulls out every trick they can to ensure their loans never go unpaid.

Re: Ripping Off Young America: The College-Loan Scandal

#262

Post by gte910h »

danielweber wrote: post #54
gte910h wrote: post #21

Earlier quoted context omitted.

I'm fine if costs stay where they are....as long as there is a mandatory forgiveness 15 or so years past graduation. Then lenders will discriminate based on major (as it should be) and not fund english degrees and other such things that we have a glut of.

Why 15 years? Let people declare bankruptcy and cancel all their loans. The worry back in the 70's was that people would get a lot of loans and then declare bankruptcy after graduation and then no one would lend money and no one would afford school. I can see why they were worried about that. We got something much much much worse. If students could declare bankruptcy, people would still make educational loans, but on…

I believe that's the period Australia's program has. In addition it also caps repayment at a fraction of income. I was suggesting a system that's working. (I've had it explained to me, I'm not an Australian).

Re: Ripping Off Young America: The College-Loan Scandal

#263

Post by danielweber »

ominous_prime wrote: post #192
JonFish85 wrote: post #171

Earlier quoted context omitted.

I agree that college isn't perceived as a choice, but I do question why it's the fault of anyone but the student if they apply only to $50k/yr schools, ignoring whatever their state schools are. Is it the schools' fault for accepting students who can't afford it? Is it the loan companies' fault for trying to provide loans for students who likely can't pay them back? If so, should loan companies be able to discriminat…

Up until recently (at least I hope it's finally starting to change) students were told that money doesn't matter, just borrow as much as you need because college is always worth it. After years of hearing this repeated to them, they do think they are making the responsible choice.

For a long time it was true that college was always worth the money.

Colleges were not places of opulence: they were spartan collections of smart hard-thinking people. If you were smart enough you could go there with them. You would pay a small amount of money, but everything was done very simply, so it was cheap.

Even for the people doing things like art history, it was still a good value, because there were so few people doing art history that many could find jobs doing that. And even if you couldn't get an art history job, hey, you still had a college degree: not many people had that, and you didn't get it to make money, you got it because you liked the pursuit of knowledge. That was a valuable signal.

As soon as people expected it to always be worth the money, that's when the seeds for disaster were sown. There was no reason for a college to not charge more and more and more, because the students kept on coming. They even saw a higher price tag as an indication of excellence.

Likewise, going to college is no longer an indication of a strong pursuit of knowledge, or even basic smarts.

It's a giant credential chase, and the people a credential chase hurts the most are the poor.

Re: Ripping Off Young America: The College-Loan Scandal

#264

Post by BrandonMarc »

citricsquid wrote: post #137
JonFish85 wrote: post #126

Whatever happened to personal responsibility? You're 18, you can smoke, drive, join the army and take out gigantic loans you can't repay. It's a fine line between making it easy for everyone to go to college and making it easy for a mathematically disinclined person to take out a huge loan for a dumb reason. It would be great for everyone to have the chance to go to some college. For some reason, people seem to immed…

From the first day of school children are taught two things, to obey authority and if you want to make something of yourself, go to college. A large number of people go to college because they believe that is what they have to do, they've had it drilled into their heads that if you want to be successful, you go to college. If you can go to college, whatever the cost, you go to college. No one is forced at gun point t…

What they are not taught is personal finance. Schools just don't teach it, with rare exceptions. I guess they figure it's up to parents to teach that, but when 7 out of 10 US households live paycheck to paycheck, parents don't know much about personal finance, either.

The good news is there are some solutions out there, and they're slowly gaining traction in a grass-roots style. One example is schools teaching the "Foundations in Personal Finance" curriculum [1].

But to make a big difference quickly, it needs to be more than just some schools here and there, but a national mandate to teach these sorts of things.

But ... I'm not going to hold my breath. To that end, I help volunteer leading these sorts of classes. Small moves.

----------------------------------------

http://www.daveramsey.com/school/foundations/

Re: Ripping Off Young America: The College-Loan Scandal

#265

Post by danielweber »

TallGuyShort wrote: post #68
tghw wrote: post #50

What really breaks this is that the current education bubble is essentially unpoppable. Until lenders start losing more by allowing people to default on student loans, they have no incentive to turn down anyone. And with all of that money so readily available, colleges can keep increasing tuition, since the loans will always provide enough students to fill their classes. The problem with fixing this, however, is that…

I agree with this comment so much! The negative stigma of "only" doing high school is so harmful. Take welders for instance. It's an honest job, provides a useful and necessary service. If somebody finds welding interesting enough to occupy them and satisfy their career ambitions, it's a smart decision not to go to college. They will contribute to society just as well for their choice.

Employers are allowed to discriminate against people with "only" a high school education.

This is not so bad in a society where 10% of the people have a college degree. Because there are still a lot of smart -- to say nothing of hard-working -- people who don't go to college.

It is bad in a society with 70% of people have a college degree. What kind of idiot weirdo doesn't go to college?[1]

[1] NB: I really don't subscribe to that view, but employers do, for rational reasons.

Re: Ripping Off Young America: The College-Loan Scandal

#266

Post by danielweber »

scott_s wrote: post #247
scott_s wrote: post #104

The NY Times did a seven-part series last year that I felt was a much more thorough and nuanced treatment of the topic: http://www.nytimes.com/2012/05/13/business/student-loans-wei...

Also, "For Poor, Leap to College Often Ends in a Hard Fall": http://www.nytimes.com/2012/12/23/education/poor-students-st...

I said it before, but this points it out all the more: the educational credential race hurts the poor the hardest.

Even if college was cheap and guaranteed to graduate, it would still be the poor who could least end up able to sacrifice 4-9 years of their life on it.

Re: Ripping Off Young America: The College-Loan Scandal

#267

Post by ihsw »

Zimahl wrote: post #243
JPKab wrote: post #70

Earlier quoted context omitted.

Wait a minute: Why won't it solve any problems??? If universities are funded by the salaries of their graduates, then 1) they have to ensure that graduates have decent earning potential, so bloated programs which are sending students to flooded markets (I'm looking at you Psychology) will have to shrink drastically while engineering, and god forbid, vocational education would grow, and 2) Colleges will no longer have…

The problem isn't that there are student loans - people take loans out for many other things and have no problem with those. The problem is that the repayments are killing the spending power of the middle-class. Where does paying back a loan or paying back a fixed amount of income differ? Do you honestly think that the gov't is going to curb the costs of education? More than likely the gov't will just jack the repaym…

It does away with the Sword[1] and instead opts for an olive branch -- some cannot risk the sword (great debt) for a reward (greater career opportunities), and they will now have a new opportunity.

By the same token, the Sword will never be held to the throat (bankruptcy). A happy worker is a productive worker.

[1] http://en.wikipedia.org/wiki/Sword_of_Damacles

Re: Ripping Off Young America: The College-Loan Scandal

#268

Post by L_Rahman »

enraged_camel wrote: post #244
zeteo wrote: post #226

Earlier quoted context omitted.

That would be fine and dandy, except employers discriminate against lower-tuition schools and even those are getting more expensive each year.

This is absolutely true. Graduating from a top tier (most of the time that means private) school will give the person a tremendous amount of leverage in their job search, and greatly increase their chances of landing a high-paying job. What that means is that telling the students to "just go to a lower-tuition school" simply perpetuates the current class system and undermines social mobility.

It's not just job search. One of the things I've discovered in the process of interviews + networking in the consulting and finance industries is that the graduates from the elite schools are their own tribe.

We all seek each other out when we're starting out and that provides an invaluable personal network to start off and grow with. I feel bad for the few people I see who aren't from the feeder private Ivy League tier schools because they have to start from nothing and even if they're successful they'll constantly face barriers.

Re: Ripping Off Young America: The College-Loan Scandal

#269

Post by johnchristopher »

donaldc wrote: post #160
johnchristopher wrote: post #26

Earlier quoted context omitted.

> In some countries, you don't even have the OPTION to take out a loan to go to school. You either have the money and you go, or you don't and it is that much harder to climb the social ladder. > I'm not sure which evil is worse, but I'm damn glad I was offered those loans. You are stacking only two options against each other. There are countries where there are no schools and countries where school is being paid by…

Of course between no school and school with loans the choice is clear (in an (post-)industrialized country, mind you). Doesn't always seem clear to me. The whole point of the article was that you could be saddled with loan payments for a very, very long time with little to no improvement in job prospects.

> Doesn't always seem clear to me.

Yes it is because grand-parent stated he wanted to go to school (that's how I read it) and that statement of mine is a follow-up to that train of thought where I pointed there are more than 2 options.

Re: Ripping Off Young America: The College-Loan Scandal

#270

Post by 108 »

arjie wrote: post #222
GFischer wrote: post #120

Earlier quoted context omitted.

"In some countries, you don't even have the OPTION to take out a loan to go to school" In some countries, like mine (Uruguay) university-level education is free :) (though postgraduate studies are paid). I think China is the biggest example of free university education. EDIT: I was wrong, about U$ 2000/year and rising apparently. At least our bazillion psychologists and communication majors (equivalent to the dreaded…

> I was wrong about China, but apparently it is free in India. Yeah, if you can get into the limited government education programs. Most people pay oodles of money to be educated in private colleges 'affiliated' to universities. Let's take the example of Tamil Nadu (a prosperous Southern state in India). Compare the colleges that comprise Anna University ( http://en.wikipedia.org/wiki/Anna_University#Campus_and_coll.…

>> I was wrong about China, but apparently it is free in India.

Education is NOT free in India, has never been. This is exactly why Wikipedia should not be a citation source. Anyone can edit wrong information and it never gets corrected, perpetuating wrong information. Here are better links to newspaper articles: * http://www.indianexpress.com/news/from-unemployment-to-innov... * http://www.thehindu.com/opinion/open-page/who-should-be-ente... * http://www.thehindu.com/news/national/financial-muscle-buys-... * An earlier HN thread "Students are the victims and culprits of India’s broken higher education system", https://news.ycombinator.com/item?id=5756142 , http://qz.com/86903/students-are-the-victims-and-culprits-of... * An Open Letter to India’s Graduating Classes, By MOHIT CHANDRA, http://india.blogs.nytimes.com/2012/05/23/an-open-letter-to-...

In India, some government education institutes are heavily subsidized (think IIT and the state REC's) but the rest of the private colleges you have to BUY seats - so your parents financial clout decides if you get to study at a good university or NOT.

Edit: Ironically, Wikipedia has a page on Capitation fees in India: https://en.wikipedia.org/wiki/Capitation_fee#Capitation_fees...

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