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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

#311

Post by rwmj »

astura wrote: post #220
rwmj wrote: post #147

Earlier quoted context omitted.

Speaking has someone who co-runs a hair salon, those numbers don't make sense. $30K should be a reasonable loan compared to how much a single stylist can make annually (easily $50K, up to six figures if they are any good). Just shopfitting a hair salon costs $10-20K. New or relocating salons do that routinely and will expect to recoup it comfortably in the first year.

Maybe in some high end markets or very high end or speciality salons, but I'm having a very, very hard time seeing an average stylists making 50k, let alone six figures(!!) anywhere I've ever lived. The BLS says that the 2018 median pay is $24,830 per year. https://www.bls.gov/ooh/personal-care-and-service/mobile/bar... FWIW all my peers that I went to high school with who got their cosmetology license 1) did so for…

That average will be brought by junior stylists, but someone who goes to college shouldn't start as a junior (or only for a very short time). Juniors are usually the ones who start at 16 with no training at all. They're not allowed to do anything more complicated than making coffee for the customers and washing hair, and are paid accordingly.

Also not all stylists work full time because it's a relatively well-paid job. One of the colleagues at the salon I was talking about has worked a 3 day week for years, and another works 2 days a week (but she does have another job).

On your other point about older hairstylists, it's a very physical job where you stand in an awkward pose for long hours. Many retire (or semi-retire into salon ownership and doing occasional special customers) by their 50s.

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

#312

Post by rwmj »

C1sc0cat wrote: post #193
rwmj wrote: post #147

Earlier quoted context omitted.

Speaking has someone who co-runs a hair salon, those numbers don't make sense. $30K should be a reasonable loan compared to how much a single stylist can make annually (easily $50K, up to six figures if they are any good). Just shopfitting a hair salon costs $10-20K. New or relocating salons do that routinely and will expect to recoup it comfortably in the first year.

Why do you need a degree for a "trade" should not the industry have apprentices for that.

In Japan you need to do a 2 year course before starting as a hair stylist. In the UK anyone can set up (although they may have difficulty getting insurance so will probably be operating without).

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

#313

Post by lotsofpulp »

frockington1 wrote: post #213
lotsofpulp wrote: post #125

Earlier quoted context omitted.

> So our solution to a problem backfired and we found out that federally guaranteed loans aren't the solution to "college should be available to everyone." This was already known, but since simply providing taxpayer funded education results in increases of government expenses and hence higher taxes, we of course went with the Byzantine route of indebting people who don’t even know what amortization is to the tune of…

I don't think its unrealistic for an 18 year old to understand debt. Also, how are they being tricked into hundreds of thousands of dollars of ? State schools start around 15k/year and provide bachelors degrees. I've never understood these stories of people graduating (non-PhD/Lawyer)with so much debt

I didn't claim they were tricked, I think anyone that comes graduates high school should be able to understand amortizations and model cash flows in a spreadsheet so they now how much they need to earn to pay for their loans. But they don't. And neither do their parents. And a few clicks later, they are given $50k+/year to go to whatever "school" they want.

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

#314

Post by dev-ns8 »

iamkroot wrote: post #171
iso947 wrote: post #145

In the US, school is free from Kindergarten to grade 12. Why isn’t college free?

It's not free, it's subsidized by the government. An important distinction.

Is anything in this economic system "free" ?

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

#315

Post by DataWorker »

nicoburns wrote: post #297
moduspol wrote: post #266

Earlier quoted context omitted.

> And your comment is an example of assuming that government regulation is at best a necessary evil and something to be avoided if at all possible. The role of government regulation is a separate question, but we're really jumping the shark when we can't even acknowledge basic cause and effect. It's not surprising that government policy making tons of student loan money available led to more students being willing to…

> It's not surprising that government policy making tons of student loan money available led to more students being willing to take out bigger loans. This is like Markets 101. Totally agree with you on this. > It's tough to take opponents seriously when basic, predictable side effects of favored policies are ignored just to recommend heavier-handed policies of the same kind. It seems likely to me that the side effect…

So no true Scotsman? “Regulation never works well because it’s never the right kind of regulation.”

In what world do the regulated parties not oppose being regulated? If there’s no opposition to a regulation then it probably isn’t needed.

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

#316

Post by distances »

petre wrote: post #84
godelski wrote: post #78

Earlier quoted context omitted.

This is part of the issue. Loan providers pretty much have to give everyone loans. But the only way this can happen is by guaranteeing these loans, federally and legally. So our solution to a problem backfired and we found out that federally guaranteed loans aren't the solution to "college should be available to everyone." Maybe it is time to look for a different solution. And maybe time to clean up the mess that the…

Maybe partially state/federal funded education programs or free college education is the solution. We have that in Europe with some limits (only the first degree can be free) and it's working just fine. If you want private education and you can pay for it, that's fine.

> with some limits (only the first degree can be free)

Some countries do, some don't. I know several people with two free master's degrees, and some people basically collect them and PhDs as a hobby through their lifetimes -- a very small minority obviously, as most are quite done after the first.

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

#317

Post by afarrell »

adventskalender wrote: post #222
swebs wrote: post #168

Earlier quoted context omitted.

In Sweden, you pay taxes for healthcare and everyone receives healthcare. In the USA, you pay taxes for healthcare, but only the old and the poor receive that tax funded healthcare. So the average taxpayer has to buy their own health insurance in addition. The linked chart also shows a clear correlation with Purchasing Power Parity, which also should be accounted for.

" So the average taxpayer has to buy their own health insurance in addition." How the money is collected is pretty irrelevant (indirectly via taxes or directly by the insurance company or physician). What matters is the overall cost.

It is relevant due to the complexity and uncertainty imposed. When I lived in the US, I didn't have a way of learning how much an interaction with a medical system would cost me. Now that I live in the UK, I do.

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

#318

Post by ummonk »

jointpdf wrote: post #300
scottishfiction wrote: post #269

Earlier quoted context omitted.

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...

I haven’t seen this mentioned in this thread yet, but there are income-based repayment plans for US loans. There are different plans, but it works much the same way as above, roughly: if you earn above a income threshold (~$20k), then you pay 10% of your income until a) the loan is repaid or b) 20 years have passed (remaining balance is discharged. But, you have to apply for these programs, and many people don’t know…

The problem is that the federal government (with taxpayer money) is acting as a middle man here. So universities don't have an incentive to make their students employable.

If universities were getting paid directly based on income, that would create the right incentives.

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

#319

Post by fzeroracer »

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…

The fact that we have to look at education from the perspective of whether or not we can find a job contributing to the coffers of rich executives is remarkably warped.

Education should be done for educations sake. Actual bullshit degrees come from universities seeking profit over education and even if you removed government loans from the equation they would still exist.

The idea that everything would somehow be fixed if loans were removed is a delusional one as long as there is a profit motivation for universities. Because it's easy to create McDegrees and sell them.

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

#320

Post by sokoloff »

vonmoltke wrote: post #241
sokoloff wrote: post #191

Earlier quoted context omitted.

Any forgiveness is likely to be executed by the forgiving entity paying off the loans. The federal government is not going to use a pen to steal trillions of dollars from lenders holding contracts for repayment. That’s a banana republic action.

The federal government is the one holding all that debt, so that is exactly what is going to happen.

There is a high 8/low 9 digit inventory of private student loans, not held federally.
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