More Than 40% of Student Borrowers Aren’t Making Payments • Hacker News Board

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#271

Post by TWAndrews » Thu, Apr 07, 2016, 1:08 AM UTC

AJ007 wrote: post #42

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

Yes. My nephew is a Junior and starting to look at schools and my main message to him is "wherever you can minimize your debt."

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#272

Post by bduerst » Thu, Apr 07, 2016, 1:09 AM UTC

AJ007 wrote: post #42

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

It will only change if there is an alternative.

As it stands now, the "Brand" of having a university degree on your resume is still one of the signals used in hiring candidates for jobs.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#273

Post by [deleted] » Thu, Apr 07, 2016, 1:11 AM UTC

mountaineer22 wrote: post #262

dragontamer wrote: post #133

Earlier quoted context omitted.

Without help from the government, those loans would have never happened at those rates. If you don't like FAFSA loans, you are perfectly willing to go to any bank (or maybe a rich uncle) and get another loan (or convince your rich uncle to bankroll you). But for the vast majority of people, FAFSA is the only way to pay for college. And taking out 8% or 9%+ loans from NON-FAFSA institutions is a lot worse than taking…

It is an artificial government subsidy, used to fund "non-profit" real estate development.

[deleted]

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#274

Post by mountaineer22 » Thu, Apr 07, 2016, 1:12 AM UTC

dragontamer wrote: post #158

maaku wrote: post #136

Earlier quoted context omitted.

> Education department doesn't have any enforcement arm as far as I'm aware. The IRS will garnish wages for student loans.

Yes. IRS. Not Department of Education. IRS is in Department of Treasury, run by Treasury Secretary Timothy Geithner. On the other hand, a study conducted by the Department of Education, run by Education Secretary John King Jr, makes a lot of sense. and is hardly malicious at all. Department of Education wanting to know the effectiveness of their FAFSA loan program (and why or why not people are able to pay those loan…

Sallie Mae was created in 1972 as a government sponsored enterprise.

https://en.wikipedia.org/wiki/Government-sponsored_enterpris...

It didn't become private until 2004, and wasn't expected to be private until 2008.

It is much more than a private company with some Government support.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#275

Post by brobinson » Thu, Apr 07, 2016, 1:16 AM UTC

Overtonwindow wrote: post #199

josephjrobison wrote: post #182

Earlier quoted context omitted.

Yea Plus Loans are the worst at 8% interest a year. Do I invest in index funds that average 7-8% or pay down student loans that guarantee you're relieving 8% interest a year. It's very disheartening to see one losing $1k/mo purely to interest. But also a big motivation to just make more money yearly.

Woah what loan are you speaking of??? My federal loan was about 3% in 2005.

My federal student loan I got in 2003 was at 3.6%. My parents had good credit and co-signed.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#276

Post by chadzawistowski » Thu, Apr 07, 2016, 1:16 AM UTC

eellpp wrote: post #144

dv_dt wrote: post #116

Earlier quoted context omitted.

And what of quantative easing where trillions of assets of banks (including junk mortgage backed securities) were purchased by the Fed, relieving banks of the full impact of their actions?

How about gov do quantitative easing for these student loans. Basically provide contracts and various incentives for companies that are employing these students who have loans. Also to various vendors like house owners etc who provide service to these students. This would create a negative impact on students who did not took loans or got good jobs and paid up in time etc. But that's how largely it was done for QE als…

"QE for the people" is essentially just Basic Income.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#277

Post by Unklejoe » Thu, Apr 07, 2016, 1:17 AM UTC

kin wrote: post #173

I also noticed while doing taxes that if I borrow money, I'm going to pay interest on that money I borrow. One of the incentives to this self investment is that I can deduct the interest that I pay. However, apparently, if your salary is above a certain threshold, you don't qualify for education deductions and credits. It's a first world problem, I know, but I just found out and it kind of sucked.

The same thing happened to me. I think they phase you out of the student loan interest deduction after you pass $65,000 taxable income. I'm actually going to increase my 401k contribution to try to retain more of that deduction.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#278

Post by relaytheurgency » Thu, Apr 07, 2016, 1:18 AM UTC

guelo wrote: post #21

There's a simple solution, the Feds should cutoff loans for schools that don't get their students jobs. The government are the only ones that are able to accurately calculate which schools are completely worthless. In fact they should take it one step further and advertise to the whole world what percentage of students get jobs in their studied field and the average starting salary. That would finally put some market…

Kansas is rolling out a website now that shows salaries for different majors at different universities in state.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#279

Post by chadzawistowski » Thu, Apr 07, 2016, 1:19 AM UTC

ameyamk wrote: post #23

I wonder if there is investment vehicle I can short to make some profit if these loans do actually go bad?

Not really.

Shamelessly copying a comment by /u/MasterCookSwag on reddit:

THIS is the major piece everyone misses. Mortgages were such a disaster because banks held the debt securities thinking they were safe assets and they weren't. This caused a chain reaction of devaluation of balance sheet assets and paper losses which resulted in the collapse of some major institutions. It then caused credit to dry up so businesses couldn't borrow and a crisis of confidence in the fundamentals of the economy.

Student debt won't do any of these things because the underlying structure is not even remotely similar. What student debt will do is represent a long term suck on the taxpayer both directly(through payments) and indirectly(through defaults). This will result in a drag on GDP. There is no way to short this and there won't be a collapse. That doesn't make it not a bad thing.

https://www.reddit.com/r/explainlikeimfive/comments/4cj937/e...

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#280

Post by bduerst » Thu, Apr 07, 2016, 1:19 AM UTC

dredmorbius wrote: post #123

caseysoftware wrote: post #101

Earlier quoted context omitted.

> I laugh at an institution that would loan her money for a field that doesn't pay That doesn't speak well to her judgement either.

Information asymmetries put the burden of guilt on institutional actors. The educational and lending institutions which have a strong awareness of true costs and actual employment prospects. Over individual young students who don't, and are often relying on those institutions for information and guidance. Related: principle agent problem.

Unless the educational and lending institutions are contractually agreeing to the loan on behalf of the students, it's not a p:a problem.

Salary and career signals are publicly available. If a student happens to rack up six figure loans for a career that can't support it, then that is ignorance on their part. At 17-18, they're not exactly minors, and even if you do consider them a minor the fault lay on their guardians (parents).