Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says • Hacker News Board

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

#271

Post by phatfish » Wed, Dec 11, 2019, 2:28 PM UTC

C1sc0cat wrote: post #190

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…

Depends how you implement the UK';s system is basically a graduate tax which seems fairer. I suspect that Labours ideas of scraping it will just lead to higher taxes for all ie poorer non graduates subsidising middle calss kids, or they will ration degree places

Why would it be just "poor non-graduates" subsidising "middle class kids"?

An potential extra tax burden can be allocated from wherever the government sees fit. Like a digital services tax or closing loopholes that are conveniently left open for global corporations.

Do you worry that the healthy poor people are subsidising the middle class sick ones through the NHS? Or that poor careful drivers are subsidising the cost of accidents for the middle class careless ones via their insurance company?

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

#272

Post by greedo » Wed, Dec 11, 2019, 2:28 PM UTC

hermitdev wrote: post #56

m463 wrote: post #39

Earlier quoted context omitted.

> Is there any data on if folks with student loans are living above their means? Literally every single friend of mine bought a new car when they graduated from college and got a job. Anecdotal, but I suspect it is more common than people realize. It doesn't mean they were living above their means, but I think buying a new car at the start might be a financial misstep.

I think it depends on the car and the job. I graduated in 2003 and had to buy a car. I was driving an 88 Chevy Blazer that was starting to hit around $750 per month in maintenance. Final straw was when a cylinder was losing compression. This was already on an SUV that had its engine rebuilt and had more than 165K miles on it. It had a Kelly Blue Book value of about $100. So, couple months out of college, I bought a m…

"didn't have a great salary, probably around $100K"

I think you're incredibly disconnected from what most people are making four years after graduating.

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

#273

Post by Gunax » Wed, Dec 11, 2019, 2:28 PM UTC

rsj_hn wrote: post #144

lotsofpulp wrote: post #120

Earlier quoted context omitted.

Then taxpayers should pay for education itself. No reason for taxpayers to become lenders. The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. And, inevitably, like all times that society is enabled to pass the buck onto future generations or ignore externalities, society will take and consume all it can unti…

> The real problem is voters want lower taxes, and some genius figured out a way to tout lower taxes and tax payer assistance to students, hence student loan debt. The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% (source: https://data.oecd.org/eduresource/public-spending-on-educati... ) Rather, university education in the U…

Does 'US government' include states? I am too lazy to look up stats, but I imagine most education costs are borne by states in the US.

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

#274

Post by SeanAppleby » Wed, Dec 11, 2019, 2:28 PM UTC

rblatz wrote: post #51

azhenley wrote: post #27

Earlier quoted context omitted.

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…

How does that work for people who receive a large portion of their compensation in things like equity in a private company that is extremely hard to value? Would these plans result in the proliferation of odd compensation schemes to get around these repayment plans?

Couldn't you just use income reported to the IRS? Then any odd payment scheme to get around repayment terms would necessarily be tax evasion, which is much more serious and lets you lean on the IRS for enforcement and legislation.

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

#275

Post by bumby » Wed, Dec 11, 2019, 2:31 PM UTC

rsj_hn wrote: post #150

lotsofpulp wrote: post #149

Earlier quoted context omitted.

> The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% US voters aren’t comparing taxes with Japan and Germany. They’re voting between politician A who says they will lower taxes, and does it by removing funding for higher education or politician B, who does provide higher education and hence has to collect higher taxes and pol…

Maybe American voters don't want to pay more for college education because they know how much it costs, and they feel they are already paying enough? I think they are correct. Reforming higher education means cutting spending first and foremost. Shut down half the universities, lay off 1/3 of the staff in the rest, seize the endowments, close all the sports stadiums, fire most of the admins, force students to finish…

Besides the draconian tone, why should university students get a full-ride in tuition and trade students be required to pay 1/3?

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

#276

Post by frockington1 » Wed, Dec 11, 2019, 2:31 PM UTC

auiya wrote: post #262

I think the student lending fiasco will be far worse than the sub-prime lending crisis. Although the amount of liquid assets and equity in the sub-prime lending debacle was an order of magnitude larger than the student loan crisis, the outcome for the student loan crisis isn't quite so clear yet. Allow me to paint a scenario... There is a significant difference between the two lending fiascos, but mostly in how the f…

Sounds like real estate investment in high density and highly educated cities would be optimal here given your assessment. Any other opportunities you can see? Personally I think this may increase class mobility. A lot of middle class ____ Studies majors will be shifted down and creating opportunities/openings for those who didn't go to college and instead have trade skills and work experience

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

#277

Post by mhb » Wed, Dec 11, 2019, 2:32 PM UTC

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

Not just that. You can imagine additional benefits if the incentives of the parties involved are realigned. It would be in the interest of lenders to evaluate the readiness of students to attend college. This would potentially lead to better, less gamable testing.

It might make less sense, from a lender's perspective, for a student to go straight from high school to college. Instead perhaps they would want to see evidence from a couple of years of life outside of school that their loan would be repaid. The potential student would need to make a case to the lender and herself.

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

#278

Post by ladyattis » Wed, Dec 11, 2019, 2:35 PM UTC

I won't lie, I have six figure student loan debt. It was all my own stupid making but what I think it's worrying is how fast people are willing to defend the loan system as is for education as employers continue to inflate requirements and certification processes when often such work can be learned on the job (programming IMO should be a trade school equivalent job and not something you go to university for unless it's for something related to pure science or an engineering discipline). So I expect the whole loan crisis to come to a head come the next recession. For me, I'm not so sure I'll be able to climb out of the hole I made for myself but I just wish politicians at minimum would prevent others from digging their own for the future.

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

#279

Post by frockington1 » Wed, Dec 11, 2019, 2:38 PM UTC

brewdad wrote: post #76

rotrux wrote: post #34

People have been talking about this for at least a decade & I wonder when the shoe will actually drop.

With my luck, in about 5.5 years when my kid is done with his bachelor's degree. Free college for all coming in Fall 2025!

Highly doubt that will ever happen. Imagine trying to sell the idea to non-college educated, parents who have paid for college, or former-students who have paid off loans. It might get a few cheers at a primary rally but I highly doubt it would ever gain enough traction to get through the house and the senate

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

#280

Post by Gunax » Wed, Dec 11, 2019, 2:41 PM UTC

rsj_hn wrote: post #150

lotsofpulp wrote: post #149

Earlier quoted context omitted.

> The facts don't support this claim. U.S. government spending on tertiary education is 0.91% of GDP compared to Germany's 1.0% and Japan's 0.45% US voters aren’t comparing taxes with Japan and Germany. They’re voting between politician A who says they will lower taxes, and does it by removing funding for higher education or politician B, who does provide higher education and hence has to collect higher taxes and pol…

Maybe American voters don't want to pay more for college education because they know how much it costs, and they feel they are already paying enough? I think they are correct. Reforming higher education means cutting spending first and foremost. Shut down half the universities, lay off 1/3 of the staff in the rest, seize the endowments, close all the sports stadiums, fire most of the admins, force students to finish…

I whole-heartedly agree. But it's politically untenable, and not just because of unions and sports fans.

Any limit to university education in the US butts up with class (read: race) and inequality issues. I would love to close all of the over-priced and educationally dubious for-profit institutions. But any semblance that we are limiting educational attainment to the educational-haves is unacceptable.

The market for what HNers regard as an education (4-year degrees from established public or private universities) is really only like half of the post-secondary education market.

If you offer Johnny $20,000 to attend Purdue, you have to give everyone $20,000, regardless of their school-choice, aptitude, likelihood to graduate, or future income projections. To do so otherwise puts society in the unfortunate position of deciding who gets to pursue the American Dream.