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U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

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Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#31

Post by cstejerean »

krisroadruck wrote: post #13

I'm curious why we treat student loan debt as being special. We don't make a huge deal out of people taking on other debt and then being unable to pay for it. I think probably if anything, what we should have are better controls for what types of degrees you are allowed to take a loan out for. If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up…

Because it cannot be discharged in bankruptcy. So there is no incentive for the lender to make sure your degree will earn you enough money to pay it back.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#32

Post by brobinson »

Retric wrote: post #14
dublinben wrote: post #8

Earlier quoted context omitted.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

>the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.

https://travel.state.gov/content/travel/en/legal-considerati...

I guess if you successfully renounced you could just try to avoid having any contact with the US ever again...

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#33

Post by chime »

krisroadruck wrote: post #13

I'm curious why we treat student loan debt as being special. We don't make a huge deal out of people taking on other debt and then being unable to pay for it. I think probably if anything, what we should have are better controls for what types of degrees you are allowed to take a loan out for. If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up…

> I'm curious why we treat student loan debt as being special.

Because you can no longer declare bankruptcy to erase student debt.

> If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up for it, rather than getting a loan, just like there are qualifications for other loans, like auto or mortgages which look at both the value of the asset vs its sale price, and your ability to pay.

Now only the rich can send their kids to art school.

> TL;DR - When handing out student loans, we should consider aptitude (how likely is the person to graduate) & the career potential of the degree as qualifiers.

So people like my wife who didn't do that great in high school because of poor family environment would never be able to prove their true abilities in college. She was the valedictorian of her masters program. Without student loans, she'd be making 1/5th of her salary but you couldn't tell that a decade ago.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#34

Post by youdounderstand »

Keverw wrote: post #21

I think the solution is ending loans for college. I don't think an 18-year-old with no assets, or even a stable job or no job at all should be given that much money for college. No bank would give them a loan for a house. At least you can foreclose on a house and take it back. You can't take back someone's education. Plus every time the department of education gives out more money, colleges raise prices. Imagine how…

That just means your parents wealth will dictate your future even more.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#36

Post by Retric »

GarrisonPrime wrote: post #24
Retric wrote: post #14

Earlier quoted context omitted.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

Wouldn't one have to abandon US citizenship? From what I understand, that's a very long uphill struggle, and likely impossible if you have significant debt.

In theory it's an obstacle in practice if you have no significant assets it's easy. Remember all those undocumented immigrants into the US other countries have the same thing.

Now, sure you can't come back to the US without problems. But, plenty of countries are happy to take young well educated workers looking to start over.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#37

Post by wernercd »

krisroadruck wrote: post #13

I'm curious why we treat student loan debt as being special. We don't make a huge deal out of people taking on other debt and then being unable to pay for it. I think probably if anything, what we should have are better controls for what types of degrees you are allowed to take a loan out for. If your degree of choice is unlikely to yield the kind of return that will pay for it, then you should be required to save up…

> Why we treat student loan debt debt as being different

Where is the collateral? You buy a house, don't pay... you lose the house.

You buy an education, don't pay... you... lose the education?

No bank is going to give money for degrees without a realistic change of getting paid back. They have no fear of getting paid back because you CANT remove the debt via bankruptcy.

I think there needs to be a different approach because it IS different... but the "you can never remove this debt" is too much.

My personal opinion:

Give some sort of limit - 10/20/30 years? - and some sort of max% of income - 10%?. If the loan isn't paid off by the end of the limit at a max % of income, then the loan can then be discharged by bankruptcy.

That would remove loans for "crap" courses (finger painting) except for those that pay for it out of pocket. Banks would still give loans for courses that lead to real jobs. Kids could still take shit degrees if they can pay for them (although, those would dry up).

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#38

Post by Keverw »

youdounderstand wrote: post #34
Keverw wrote: post #21

I think the solution is ending loans for college. I don't think an 18-year-old with no assets, or even a stable job or no job at all should be given that much money for college. No bank would give them a loan for a house. At least you can foreclose on a house and take it back. You can't take back someone's education. Plus every time the department of education gives out more money, colleges raise prices. Imagine how…

That just means your parents wealth will dictate your future even more.

What does parent wealth have to do with it? I watched this documentary years ago. https://www.youtube.com/watch?v=kC_RYgkkmcM I totally agree with this film.

Apparently back in the old days you could work a part time job, and pay for college at night debt free. If the gov keeps handing out loans, then what incentive do schools have to keep their prices low and compete with each other?

Oh and then the presidents of some colleges are paid more than the president of the United States. I guess appointing 4,000 people, managing the military, a bunch of departments across the country, etc is easier than managing a bunch of kids by their logic. Oh and don't forget we gotta build a nice stadium so I can put my name on it too!

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#39

Post by geomark »

Retric wrote: post #14
dublinben wrote: post #8

Earlier quoted context omitted.

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not. The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

Interesting idea. But that seems pretty tough unless the new grad has a much sought after skill and speaks the language in the destination country.

Re: U.S. Citizens Now Hold About $1.3 Trillion in Student Loan Debt

#40

Post by 75j »

paulddraper wrote: post #5

The Wall Street bailout was only...what, a trillion? If we bailed out real estate speculators, I wouldn't be surprised if something happened with college grads. Unfortunately. I hate assuming responsibly for monetary decisions other than mine, but judging the trend, that's where we're headed.

So, I am not at all an expert in finance, but there are claims (from Jill Stein for example) that the real cost of the bailout was much, much higher.

Here's a Mother Jones article that takes this position:

http://www.motherjones.com/politics/2009/12/behind-real-size...

Can someone with more knowledge break down whether or not this is accurate?

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