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US Household Debt Surpasses 2008 High

nytimes.com

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Re: US Household Debt Surpasses 2008 High

#41

Post by fwefwwfe »

dragonsky67 wrote: post #32
ericd wrote: post #22

Earlier quoted context omitted.

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

bariereefwozere's point still stands. A small group of people could get as good, if not better education by privately employing the lecturers. I'd say the lecturers would get a better deal as well. The only thing you would miss out on is the piece of paper from the hallowed institution. I suppose in the end that is the point. It's the piece of paper that has the value/door opening ability, not the actual knowledge im…

That doesn't seem true in a lot of programming jobs, and from what I heard also not in other engineering jobs.

Re: US Household Debt Surpasses 2008 High

#42

Post by ericd »

dragonsky67 wrote: post #32
ericd wrote: post #22

Earlier quoted context omitted.

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

bariereefwozere's point still stands. A small group of people could get as good, if not better education by privately employing the lecturers. I'd say the lecturers would get a better deal as well. The only thing you would miss out on is the piece of paper from the hallowed institution. I suppose in the end that is the point. It's the piece of paper that has the value/door opening ability, not the actual knowledge im…

Yeah, I agree with him that there is probably a better alternative, starting a new school could be the way.

Part of the problem with that route is that a big part of university education is the signaling and brand value, and that's hard to replace via tutoring. Maybe that won't always be such a big factor, though.

Re: US Household Debt Surpasses 2008 High

#45

Post by ryandamm »

spenczar5 wrote: post #37
ryandamm wrote: post #20

An alternative view, and one I happen to subscribe to: a balance sheet analysis shows that US debt must go up over time to support exogenous capital flows. Whether US debt grows in the housing sector, student loans, revolving debt, etc is a function of internal, domestic dynamics (including laws, local economic structure, etc). But the total capital flow into the US exceeds the outflow; that money ends up on a balanc…

Help me understand: what does 'exogenous capital flows' mean? What does 'capital flow into the US' mean? Investment in stuff physically in the borders of the US, where the money comes from outside the US?

At its most basic, it means money being put into US dollars from foreign entities. It could be a country's central bank buying US Treasury notes, or purchases of US companies by foreign entities, or even just investment in the public stock market by individuals.

Anything where someone is investing money in the US from outside is a capital flow. They all have the same macro effect. The reason so much capital gets parked in the US is a combination of desirability (stability, etc) and the open capital markets. It's sometimes called 'exorbitant privilege,' and it's not actually good for the US (or at least, US workers). It does make capital cheaper here, though.

Re: US Household Debt Surpasses 2008 High

#46

Post by chii »

mljoe wrote: post #39
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

didn't many try with MOOCs? The problem is two fold - university has an acreditation/reputation aspect and a learning aspect. MOOCs and other online resources "fix" the learning aspect, but does nothing for the acreditation/reputation. Unfortunately, most employers are actually using the acreditation aspect rather than the learning aspect as the filter (given that so many people are still so incompetent in high positions).

Re: US Household Debt Surpasses 2008 High

#47

Post by fwefwwfe »

subterfudge4 wrote: post #35
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

This is one thing about USA I do not understand. Why pay $200K for a degree that can not pay that money off in couple of years ? Just why ?

Because the initial increase in pay and lifetime increase in earnings is well worth it. Why do so many people get car and house loans they take more than 2 years to pay off?

Re: US Household Debt Surpasses 2008 High

#48

Post by ericd »

nnfy wrote: post #36
ericd wrote: post #22

Earlier quoted context omitted.

iirc US and state government funding for public universities has decreased severely, which has caused tuition to spike up. That's probably at least one major factor in the hikes - what taxes used to pay for, now individuals pay for directly. Except that the top marginal tax rates also used to be much, much higher, so it was subsidized by the rich. But then, there are also many more people going to college now, and th…

The prices have spiked because loans are guaranteed by the government and unforgivable, which creates a situation where loans are given to more individuals, which leads to a greater demand for college, and a resulting price increase. This is a problem caused by government, not a lack of funding.

It's complicated, there are a lot of factors. I agree that the government loan programs haven't helped - they've decreased students' price sensitivity.

But the decreased funding for research on the backend, and decreased direct funding for public schools, have made it so that schools need to seek out funding in other ways.

For example, they actively recruit full-fare foreign students now for the tuition. It has also caused tuition to rise, relegating the ability for students to pay their own way via a part time job or two to the past.

EDIT: And yeah, the increased demand for a fixed supply increasing the price is what I meant by "they're not minting new Ivys". I wouldn't agree that it's a bad thing that we're educating more people to a high level, though.

Re: US Household Debt Surpasses 2008 High

#49

Post by backpropaganda »

libria wrote: post #19
mdorazio wrote: post #3

For those who just read the title, the cause of this new high is ballooning student debt, not mortgages. Housing debt is still mostly declining.

Why is student loan debt not dischargable in bankruptcy? If it were, banks would be far less likely to issue them, students would find cheaper education alternatives, and universities would be forced to provide greater assistance.

I'm not an American, but isn't it likely that a student who owns nothing, just out of college, can easily declare bankruptcy, get out of his student loans and lose nothing, and then start a life?

Re: US Household Debt Surpasses 2008 High

#50

Post by secabeen »

mljoe wrote: post #39
manacit wrote: post #10

I don't know if it's a "bubble" (I am not qualified to say that), but I can't imagine that the current trend with student loans will continue. Looking at the numbers for someone entering college in 2017, it feels nearly predatory what a good portion of private and out of state colleges are charging. Even with financial aid, $30-40k a year for 4-5 years is insane. I was fortunate enough to have parents who made saving…

University is ripe for disruption. Not only has the prices spiraled out of control, no time in history has good quality information has been more available on the Internet. When I was in school, when YouTube was new, I would watch well crafted lectures from top tier professors for free. This allowed me to get a better handle on my brick and mortar class. The problem is the career value of a degree has not diminished,…

Yes and no. The lecture part can certainly be disrupted, but the most successful learning experiences I had in university were during face-to-face problem solving sessions with other classmates, small group discussion, and participating in a community of learners of a shared subject. There's also the challenges of learning that occurs through labs and other manipulation of the physical world that is hard to replicate online. I think you could see significant disruption in the lower-division, large-lecture classes, but upper-division classes, hands-on labs and small-group discussions and seminars will continue to benefit from physical proximity.
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