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Tuition costs have risen 710% since 1983

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Re: Tuition costs have risen 710% since 1983

#271

Post by jedberg »

gameman144 wrote: post #259
jedberg wrote: post #221

Earlier quoted context omitted.

The interest rates would be so high that it wouldn't make sense for a promising student to take that loan. If you're a loan company and someone comes to you asking for $100,000, and they have no credit and no family with assets, even with a 4.0 GPA and perfect SATs, they are still a huge risk.

This seems fine to me. If someone has no assets and no reasonable prospects to pay back $100,000 of debt, then saddling them with $100,000 of debt is a bad idea. Additionally, discharging student loans in bankruptcy should absolutely not be a way to get off scot-free, it's meant as an escape valve. If your options are the terrible downsides of declaring bankruptcy and the terrible downsides of a life in extreme debt,…

Right but see the problem is how does a really smart poor person get an education so they can become a really smart rich person?

Re: Tuition costs have risen 710% since 1983

#273

Post by Armisael16 »

TheRealDunkirk wrote: post #135
GartzenDeHaes wrote: post #36

Earlier quoted context omitted.

> lenders that are taking on too much risk The lenders are taking no risks since these loans cannot be discharged through bankruptcy. There are also very large late fees and penalties that can triple (or more) the amount owed.

Now I read that Wall Street is creating CDO's based on these loans, like they (continue to) do on mortgages. Some people die "early" without paying back these loans, and sometimes, they will owe more than they took out. Given the mounting problems with the numbers here, it seems a whole generation of people in the middle of this bubble are going to go to the grave while still owing on these loans. What happens to the…

One of the core elements of the 2008 meltdown was when someone abandoned a house, all the other houses in the neighborhood would see a substantial drop in their value. This made it more likely that other people would go underwater on their mortgage and also walk away.

Education doesn’t have this kind of contagion. If you stop paying your student loans it has very little impact on the value on my education.

Re: Tuition costs have risen 710% since 1983

#274

Post by tick_tock_tick »

jurassic wrote: post #44

Government lending and a lack of price controls are the ultimate root cause. The government extends near-unlimited credit to student borrowers that goes way beyond their credit-worthiness, academic performance, graduation rates for the school, prospects for employment based on field of study, etc. And universities have clued into the fact that students who can pay any price, will pay any price. The ceiling of what st…

> Think rent control for tuition.

The only thing economists from every politic view can agree is horrible?

Re: Tuition costs have risen 710% since 1983

#275

Post by dragonwriter »

taeric wrote: post #150
tempsy wrote: post #110

Earlier quoted context omitted.

yeah, and we're talking about federal loans here. the government is not on the hook if a student defaults on a private loan. the critique was that tax payers were somehow on the hook for most undergraduate costs when $31k over 4 years barely pays for rent at this point.

I can see how you think we were only talking of federally "backed" loans, but I did intend my expansion to be all loans the government has "protected." Which, as the other poster points out, is basically all of them.

Federal loans are basically all of them to start with (over 92% of outstanding balances).

Re: Tuition costs have risen 710% since 1983

#276

Post by JamesLeonis »

TheRealDunkirk wrote: post #135
GartzenDeHaes wrote: post #36

Earlier quoted context omitted.

> lenders that are taking on too much risk The lenders are taking no risks since these loans cannot be discharged through bankruptcy. There are also very large late fees and penalties that can triple (or more) the amount owed.

Now I read that Wall Street is creating CDO's based on these loans, like they (continue to) do on mortgages. Some people die "early" without paying back these loans, and sometimes, they will owe more than they took out. Given the mounting problems with the numbers here, it seems a whole generation of people in the middle of this bubble are going to go to the grave while still owing on these loans. What happens to the…

> Now I read that Wall Street is creating CDO's based on these loans

The official term is SLABS: Student Loan Asset Backed Securities. Here's a recent paper on the subject.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3631953

Re: Tuition costs have risen 710% since 1983

#277

Post by taeric »

tylerhou wrote: post #193
GartzenDeHaes wrote: post #36

Earlier quoted context omitted.

> lenders that are taking on too much risk The lenders are taking no risks since these loans cannot be discharged through bankruptcy. There are also very large late fees and penalties that can triple (or more) the amount owed.

Student loans can be discharged through bankruptcy, if you pass hardship requirements. - https://studentaid.gov/manage-loans/forgiveness-cancellation... - https://www.consumerfinance.gov/about-us/blog/busting-myths-...

I'd love to see numbers on how many are actually discharged. My understanding is this is almost as akin to saying that the lottery does, in fact, pay out.

Re: Tuition costs have risen 710% since 1983

#278

Post by TheRealDunkirk »

reaperman wrote: post #246
lordnacho wrote: post #210

Earlier quoted context omitted.

Well the CDOs are probably tranched, so there will be some portions that are safe. But in general, you'd think the student loans would only be in trouble if there's a large increase in the unemployment rate. You'd get a meltdown if the government were to announce a change in the laws.

> But in general, you'd think the student loans would only be in trouble if there's a large increase in the unemployment rate. I thought the government guarantees these loans, but maybe I mis-read that, mis-understood, or something changed. I think the borrower is still on the hook and accrues fees if they don't pay but I also thought the federal government literally paid to keep the bank whole.

This is why I'm asking. If that's the case, then I think even I would want to invest heavily in them. As long as the US government continues to make the money printer go BRRRR, this is an investment vehicle that simply cannot fail. (Until it does, in which case it will do so in a most-spectacular fashion.)

Re: Tuition costs have risen 710% since 1983

#279

Post by jedberg »

mrguyorama wrote: post #264
jedberg wrote: post #145

Earlier quoted context omitted.

That's how things used to be. It means that only rich people can go to college, because they are the only ones who can afford it. Prices can only come down so far. The college still has to pay professors and maintain facilities. There needs to be a middle ground where we support poor but promising students in a way that doesn't inflate prices. I don't know what that solution is.

A good first start would be to ban college sports as a commercial endeavor

Not sure how this helps? In most schools the sports programs subsidize attendance for a lot of kids, and proportionally more underprivileged kids.

Re: Tuition costs have risen 710% since 1983

#280

Post by [deleted] »

willcipriano wrote: post #180
Xeronate wrote: post #162

Earlier quoted context omitted.

Seems wrong to influence your son's decision based on your financial situation rather than his desires/passions. Of course if he's naturally interested in the trades then sure.

Most people desire not being poor over most other things.

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