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

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

#281

Post by alexgmcm »

iso947 wrote: post #146
psaux wrote: post #23

My wife and I lived a very simple lifestyle for years (7ish) after college so we could pay off student loan debt. Awesome Ford Tempo car, local honeymoon, Studio apt for first 5 years, limited eating out. She has a masters (more loans), and is a teacher. So that made it even tighter. Is there any data on if folks with student loans are living above their means? I.e new TV’s, new car lease, vacations, ordering out. I…

In the UK you’re describing a very high cost lifestyle. Your own place? A car?

Yeah, but they also describe $100k as a 'not great' salary.

Good luck ever earning that much in the UK, let alone a few years after graduating.

I think Americans don't realise just how much richer the USA is than most of the world, including Western Europe.

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

#282

Post by Nursie »

ladyattis wrote: post #278

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…

> (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).

I learned way more in my degree about software principles and about theory than I could in years on the job. Computer Science degrees may not prepare people directly for software development in the workplace, but they do lead you to a greater understanding of what's around and underneath you that you're just not going to get commercially coding.

I'm not saying everyone has to do it, but I am going to say it helped me tremendously to be a better creator of software.

(--edit-- I'm also going to say that I was part of the last year of students that didn't have to pay for their degree's at all in England, I appreciate the value proposition is different when you have to take on debt to do the course.)

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

#283

Post by robotnixon »

astura wrote: post #237
Graham24 wrote: post #148

Earlier quoted context omitted.

It costs $30K to go to Barber School in the US?

No, in my area the public school system offers cosmetology school for free. I'm sure there's some fancy for profit private schools that cost $30k though.

For a lot of the programs through the public school system you need to enroll as a junior in high school. So if you don't choose that career by the ripe old age of 16 or 17 then public school isn't an option. A high school senior who decides to go into cosmetology only has the option of paying for school or finding a two-year unpaid apprenticeship.

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

#284

Post by auiya »

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…

I guess one could make the argument that our steadily rising healthcare costs are the reason take-home wages have been stagnant since the '60s. Companies are steadily paying more and more in healthcare costs and can't afford to raise wages much (if you believe the C-level propaganda). A big reason for the healthcare crisis is the industrialization of our food production chain. Amazing how scaling up mass-production of our food supply has all kinds of awful unintended cascading effects.

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

#285

Post by Accujack »

SeanAppleby wrote: post #274
rblatz wrote: post #51

Earlier quoted context omitted.

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.

Many forms of what you call "tax evasion" are in fact legal in the US.

Lots of very, very wealthy people have no "income" at all, which means they don't pay taxes.

The problem is that "income" is narrowly defined (for a reason) so things like someone owning a large corporation which triples in value over a year making them a billionaire on paper don't even show up on taxes because officially that person hasn't "made" that money until they sell the corporation. Even when they do, it's taxed at a lower rate than "income" because it's a different "kind" of money.

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

#286

Post by dpau »

gambiting wrote: post #128
ponsin wrote: post #63

Earlier quoted context omitted.

Why? If I take out a loan in order to go on a cruise, the cruise company is not responsible if I default. In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. If responsibility fell on the university, then they could just refuse to accept people who take out loans. The result being that only rich people could go to colleg…

>>Why? If I take out a loan in order to go on a cruise, the cruise company is not responsible if I default. Imagine if everyone in the United States who wanted to go on a cruise was guaranteed to be given a loan to go on a cruise, regardless of the cost of said cruise or their personal circumstances. In that scenario, obviously cruise companies would increase prices, since their clients will always get the money to p…

not only that, in this scenario society would expect and pressure all young people to go on a cruise before they were eligible to join society.

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

#287

Post by auiya »

frockington1 wrote: post #276
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

> Sounds like real estate investment in high density and highly educated cities would be optimal here given your assessment

There are stock market ETFs which do precisely this.

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

#288

Post by Whatarethese »

rayiner wrote: post #21
ethagknight wrote: post #3

Except in the subprime debacle, millions of people could declare bankruptcy and walk away. With student loans. The debtors are simply screwed with no recourse. That’s a big difference.

On the flip side, a lot of those student loans are subject to income based repayment.

That still accrue interest at crazy high rates.

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

#289

Post by davidclark22 »

scottishfiction wrote: post #269
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…

This is how student loans in the UK work. "You’ll repay 9% of your income above the repayment threshold – earn less and you won’t repay. Once you leave your course, you’ll only repay when your income is above the repayment threshold. The current UK threshold is £25,725 a year, £2,143 a month, or £494 a week." [0] [0]: https://www.ucas.com/student-finance-england/repaying-your-s...

The US has a similar repayment program called Pay As You Earn (PAYE). It ties your payment amount to 10% of your income that is above 150% of the federal poverty level. This only applies to federal loans (not private loans) and requires opt-in, which probably causes a lot of people to not do it.

https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

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

#290

Post by linuxftw »

vxxzy wrote: post #239
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…

This is simply untrue. They do care. For institutions with high default rates (greater than 30%), they risk missing out on the federal student loans (imo gravy train). [0]. It appears that this time around, a good number of technical/trade related institutions lost out. [0] [0]: https://www.ed.gov/news/press-releases/national-federal-stud...

No. They've completely gamed the system, so technically most people aren't 'defaulting' they're just paying almost nothing, forever [1].

1: https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

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