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More Than 40% of Student Borrowers Aren’t Making Payments

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Re: More Than 40% of Student Borrowers Aren’t Making Payments

#321

Post by transfire »

FYI Student loans are federally guaranteed. The original lender does not loose money. If default occurs, the tax-payer pays them off. The debt is then sold by the government to credit collectors at a discount, who can seek the entire principle, plus interest, plus steep fees. So the typical defaulted student loan, if ever paid back, procures two to three times the original cost of school. Consequently, the student has no credit, so it is basically impossible for them to fully function in our highly debt-oriented society. This includes not being able to go back to school to finish their education if it not yet complete.

Meanwhile $200 billion is the cost of two-months in Iraq.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#322

Post by hibikir »

The student loan system lies in the special place that brings in the worst of private and government sectors.

General loans work pretty well out there: Loan costs are aligned with loan risks, because nobody wants to loan money to those that can't pay. But student loans are guaranteed by the government, so for all intents and purposes, anyone can get a loan, whether they'll be able to pay it or not. At the same time, it never goes away, and it's given to people who probably still live with their parent. They bear a bigger risk than I do with my mortgage, but they might get tens of thousands of dollars in debt without deciding on a major first!

What really makes this pernicious is that, since everyone gets access to the loans, in practice, this means college can be far more expensive than it'd be otherwise: Without all the loans, most colleges would have to be cheaper. Same thing if colleges also bear the risk of non-payment. And it's not as if this money is being spent enriching teachers: It's mostly administration and facilities.

So now we have a system where everything is very expensive, and most students get huge loans that they can't afford, and where ultimately, the taxpayer will end up having to foot the bill: The only winners here are the universities themselves.

Just think of what this is doing to medical schools and law schools: They know that even the poorest student will be able to max out on their loans! So dropouts, and in the case of law school, graduates that went to the wrong school end up in a worse situation than they would have been 30 years ago.

The country must choose: Either stop giving money to private colleges, and just focus on good, cheap, no loans, public universities, or let people pay for their own college with no guaranteed loans: Less people will even go to college, but those that do will afford it, because colleges would have to adapt to lower budgets.

Guaranteed loans to pay for expensive, private universities? This just makes sure that millennials will end up worse off than their parents for the first time since the industrial revolution.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#323

Post by michaelbuddy »

ethanbond wrote: post #299
pmiller2 wrote: post #78

Earlier quoted context omitted.

> A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. > I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school…

When people make this kind of assessment they seem to be implying that because a college education is less surefire than it used to be, that it's useless. This is demonstrably false, and a college education is still the best bet a person can make on his or her future. In the same breath people say "all our manufacturing jobs went to China" and "why not go to a vocational school and pick up welding?"

not so much useless, but really just a negative in so many respects. A massive debt right at the time before you've really even had any personal freedom at all. It's terrible.

Though i went to college, I'd recommend people who don't have a wild passion towards a specific subject (if the outlook is cloudy I mean) earn, save and buy a house in cash.

And in regards to passion, I don't mean necessary a love for something, I mean a drive to REALLY get good. If you don't have that for school, then work, earn and make yourself a good situation so you can get education with disposable income when the passion comes.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#324

Post by michaelbuddy »

industriousthou wrote: post #261
pmiller2 wrote: post #78

Earlier quoted context omitted.

> A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. > I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school…

Non-college grad here (well, AA from a community college, but that doesn't really count). I get the impression that that some kids did really challenging programs or went to prestigious schools and that paid off really well, but a lot of kids bought into the "college = success" mantra. Every authority figure they knew was telling them that this was the only way to be successful and the schools were jacking up tuition…

an associates degree does count. it shows initiative. it's something completed. don't just toss it out, it's not trivial to employers. And you can learn a ton in community college. I know people who enjoyed it a lot more than 4 year universities and had more available to them. depends on the school and the person of course, always.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#326

Post by pcote »

twinkletwinkle wrote: post #70
guelo wrote: post #21

There's a simple solution, the Feds should cutoff loans for schools that don't get their students jobs. The government are the only ones that are able to accurately calculate which schools are completely worthless. In fact they should take it one step further and advertise to the whole world what percentage of students get jobs in their studied field and the average starting salary. That would finally put some market…

Must the value of an education be purely the salary you can get afterwards? The true roots of liberal arts (which used to include everything from astronomy to mathematics to botany) lie in creating a well-rounded, educated, sophisticated person. We can't all study STEM, and we as a society shouldn't demand that.

>> The true roots of liberal arts (which used to include everything from astronomy to mathematics to botany) lie in creating a well-rounded, educated, sophisticated person.

That's fine so long as you actually want to become the person that liberal arts education strives to create. That archetype is a lovely justification for four years and the student loan equivalent of a 2016 Porsche 911.

The instance or the archetype, on the other hand, is not so nice. If somebody ever called me "sophisticated", I would assume that they were being sarcastic or condescending. If I called someone else "unsophisticated", that would make me look like an elitist jerk.

As for being "well-rounded", liberal arts college education is both redundant and contradictory. It's redundant because we already have K-12 education to "broaden horizons beyond one's comfort zone". It's contradictory because the whole idea of college majors pushes students to be LESS well-rounded in favor of a specialization.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#327

Post by rlucas »

praxulus wrote: post #263
alanh wrote: post #176

Earlier quoted context omitted.

> splitting hairs No we’re not! The framing of higher education as a career enabler with positive ROI is the #1 bit of propaganda that has justified and reframed how tuition is evaluated and is directly responsible for the steady and insane yearly tuition hike since the 1980s. Fighting for the essence and purpose of higher education is therefore not trivial but in fact paramount. The fact that we are having this conv…

How is that propaganda? People with degrees make more money. The fact that universities had other goals doesn't mean their effects on graduates' earnings are any less real. Are you saying we should lie to high school students about what does and does not lead to a high-paying job?

No, GP is saying that the value (societal or individual) of higher education may be orthogonal to the change in job pay of the person educated. The framing of the conversation as being around job pay rates has consequences.

There are real economic effects that happen when new frames of reference / paradigms / conventional wisdom take hold. Think about the ridiculous 2003-2008 house price run-up and how it was concomitant with a mass change from seeing housing as a cost to seeing it as "investment". Positive feedback loop, that. Maybe the same idea here with higher ed.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#328

Post by addled »

maaku wrote: post #142
addled wrote: post #64

Earlier quoted context omitted.

Some of these income based payment plans have a forgiveness clause after 20-25 years, so it may still make sense.

Subject to many stipulations. One of them being that you are making regular payments...

But what if the minimum payment is 0, and you pay it regularly?

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#329

Post by tomc1985 »

speeder wrote: post #204
AJ007 wrote: post #42

Earlier quoted context omitted.

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

I am from Brazil, and was victim of the same thing. Worse, I could if I had spent a year studying or so, join a free university, but even that was unnaceptable, the "right thing" to do was take a loan and dive in a expensive course. I finished college in 2009, I still don't got my first legal job, and I still have debts, I am struggling to buy medicine I need. Meanwhile everyone I know that ignored the "adults" and d…

No seal?

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#330

Post by xenadu02 »

alanh wrote: post #163
vonmoltke wrote: post #157

Earlier quoted context omitted.

I personally never got that message. I got the "you will go to college" message, but it came bundled with a "don't borrow $40,000 for college" message. In fact, I turned down my first choice school (Rose-Hulman) because I would have accrued $50,000 on loans over four years. That seems to be unfortunately typical now.

I really wanted to go to MIT, but I couldn’t believe my eyes when they were bragging that average student debt after graduation was “only” the price of a brand-new minivan or sports coupe.

I guess I passed the first few screening stages at MIT. They wanted to setup an interview and all that. My father had just gotten a programming job so suddenly, on paper, we were far too high income to qualify for any aid. I never bothered to schedule the interview.

I don't know if it worked out for the best or not but it seems insane that university is so money driven here in the US.

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