Student Loan Debt Is Now as Big as the U.S. Junk Bond Market • Hacker News Board

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#401

Post by WWLink » Wed, Dec 06, 2017, 4:42 AM UTC

ConceptJunkie wrote: post #155

jackweirdy wrote: post #68

Earlier quoted context omitted.

> Another solution is to let you go to school for free and then pay a percent of all your future earnings back to your college, or at least into a pool that pays for the next generation's college. We could call it income tax :)

The problem with subsidizing college in any way, including the current student loan system is that it encourages people to go to college whether it makes sense or not, and as several people have mentioned in this discussion, in a lot of cases, it doesn't make sense. Anyone who is properly motivated should be able to go to college, but when I hear cries for a free college education, I can imagine that that would stimu…

You make it sound as if dedicating 4 years to studying say, latin art history, is a waste to society.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#402

Post by etskinner » Wed, Dec 06, 2017, 4:49 AM UTC

Celarnor wrote: post #255

jedberg wrote: post #22

There is definitely an education bubble. It's way too easy to get money for college. You hear a lot of stories about the increasing costs of college and crushing debt on graduation, but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. We need a fundamental shift in the way college is paid for. Some…

> ... but you don't hear a lot of stories of "I wanted to go to college but couldn't get a loan". Almost everyone gets approved, regardless of their future ability to pay it back. This is absolutely not the case. Student loans have caps and they're incredibly easy to hit, especially if you go to a 5-year school where you're expected to pay tuition while doing 6-month internship blocks. Lots of people I knew in colleg…

I think the point of the parent comment was to say that people never get denied because of credit history, choice of major, etc. in the way that they might be denied for a credit card.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#403

Post by lordCarbonFiber » Wed, Dec 06, 2017, 4:57 AM UTC

specialist wrote: post #353

sli wrote: post #303

Earlier quoted context omitted.

Perhaps we could make only the first time through college free. If you fail or drop out, the next time through, the student covers tuition themselves. I have no real opinion on that idea, or any idea how effective it would be, so I'll say nothing more.

I reimburse my child per a formula: A = 100%, B = 80%, C = 60%, etc. 4.0 GPA = 120% (hasn't happened). I will happily pay for everything, a full ride, as a parent or a taxpayer, if the student does the work.

Optimize for least amount of challenging classes, impose huge monetary penalty for risk taking. Sounds like you're doing a stand up job in parenting.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#404

Post by speby » Wed, Dec 06, 2017, 4:59 AM UTC

JonFish85 wrote: post #79

To me, this is another implementation of the housing bubble: - People see college graduates making a lot of money - Politicians make it a priority to make it easier for people to get loans to go to college - More people take out loans to go to college - Colleges realize there is no downward pressure on price and raise tuition. - Politicians continue to make it easy for people to go to college - People take bigger loa…

> Politically it's a difficult problem, because the old solution of making more money available is getting out of hand, but what politician wants to stand up and tell people they can't go to the college of their dreams just because they can't afford it?

Presumably the same politicians that were around when foreclosure mania (a la 2008) occurred and ultimately were forced to change regulations that now make it much more difficult to get away with issuing subprime loans. Or in your line quoted above, substitute "college of their dreams" with "home of their dreams." The net effect, of course, is that those politicians are now telling people they can't get the home of their dreams because, gasp, they can't afford it.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#405

Post by ultraluminous » Wed, Dec 06, 2017, 5:02 AM UTC

vkou wrote: post #372

ultraluminous wrote: post #327

Earlier quoted context omitted.

I coasted through five years of college ... Compared to a 9-5 job, yeah, college was a five year vacation. If you went to college voluntarily and did not care about neither the monetary constraints nor the opportunity costs, then sure that's a vacation. I suspect pretty much anything can be framed as such under those circumstances. For most people, this is not actually a realistic option.

No monetary constraints, because I borrowed from the bank of middle-class parents. No opportunity costs because my earning potential after college was much higher then before. Not everyone can become a college dropout who founds a unicorn. My situation is not unusual.

"the bank of middle-class parents" is not a real bank. It's your parents. You can pay them whenever (and you most likely never fully/really will, and that's ok). Your opportunity cost might be true and might be "I can't help support my family on a part time job".

Your situation might not be extremely rarefied, but I don't think you grasp the immensely insurmountable advantage you have in this scenario.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#406

Post by RcouF1uZ4gsC » Wed, Dec 06, 2017, 5:02 AM UTC

czep wrote: post #245

ardit33 wrote: post #87

Earlier quoted context omitted.

Say what? I'd say a "propper scientist" will know about the "scientific process" pretty well. Sure, there are plenty of pseudo scientists out there that promote their political or economic agendas, but you can't discredit all science because of that. Right now "hard" science is the best way to explain things around us and the universe. Sure, often it is wrong as new science gets discovered, but that's how human knowl…

> They are more prone to trends, fads and more personal biases This is not necessarily true, and I would urge caution when making such generalizations. There is junk social science and there is also plenty of junk "hard" science. Examples of fake data, political and personal biases interfering with the scientific method, occur in all fields. Some "fads" eventually become accepted fact. It took 100 years before plate…

When you have prominent social scientists arguing that pointing out statistical errors in papers is "Methodological Terrorism" (http://andrewgelman.com/2016/09/21/what-has-happened-down-he...), I call that junk science.

And if social scientists want to "help legitimize science as a process, critial thinking, and to debunk illogical arguments.", they should start with fixing their own reproducibility crisis and p-hacking crisis before instructing other people on science as a process.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#407

Post by WWLink » Wed, Dec 06, 2017, 5:09 AM UTC

throwawayjava wrote: post #141

bluGill wrote: post #83

Earlier quoted context omitted.

There is the problem. I have full respect for "useless" degrees. If people want one then they should get one. However since it is "useless" you should not be mortgaging your future to get it. Get a "real job" first and pay for the degree out of your pocket, perhaps taking night classes. As a member of society I need you to take care of yourself. You are a burden on society if you don't have a productive job paying yo…

These discussions often become "either/or", ignoring the possibility of studying STEM and other pre-professional fields while also receiving a thorough introduction to the humanities. You can study Computer Science while also learning a bit of art history, or architecture, or psychology, or the sciences, or business, or... And doing so might even make you more valuable to your employer, to yourself/your family, and t…

Having a computer science degree does not guarantee gainful employment.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#408

Post by stephen_g » Wed, Dec 06, 2017, 5:21 AM UTC

was_boring wrote: post #203

Veratyr wrote: post #177

Earlier quoted context omitted.

> Another solution is to let you go to school for free and then pay a percent of all your future earnings In Australia we have a system somewhere between this and a loan. You go to (heavily subsidized) university, tuition is paid for by the government with an automatic interest free loan. Once you earn above a particular (somewhat generous) threshold, your employer automatically starts taking a percentage of your inc…

question: why would you pay it off early? money (generally) gets cheaper over time and if interest is lower then inflation there is no reason to pay it off early as the debt becomes cheaper every year.

Most people don't - they just pay the minimum required out of their pay every year once they've reached the threshold.

But getting rid of it does make it easier to borrow more money for a house, etc.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#409

Post by trophycase » Wed, Dec 06, 2017, 5:45 AM UTC

ktta wrote: post #147

jartelt wrote: post #43

Earlier quoted context omitted.

The article does compare them (albeit without much detail). “Delinquency rates on student loans are much higher than those on auto loans or mortgages, due to loose student loan underwriting standards, the unsecured nature of student debt, and the inability to charge off non-performing student loans in bankruptcy,” Goldman Sachs Group Inc. analysts Marty Young and Lotfi Karoui wrote in a note Tuesday. “The substantial…

If the default risk is borne by the US Treasury, then what risk do we have in general?

Classic case of moral hazard.

Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market

#410

Post by jmalicki » Wed, Dec 06, 2017, 5:46 AM UTC

JBlue42 wrote: post #318

WkndTriathlete wrote: post #110

Earlier quoted context omitted.

Strangely enough that proposal was floated around in earlier versions of the currently proposed tax bill: the 401(k) yearly contribution cap was going to drop from $18,000/year to $2,400/year. That would have driven savings into Roth 401(k)s/Roth IRAs so that the tax income would be realized sooner rather than later. I currently save at a 50/50 mix of 401(k)/Roth 401(k) just in case the scenario you described comes t…

I was a bit miffed to learn that the max contribution for an IRA and Roth IRA combined is only $5,500. I did some reading and understand the point of it but I would much prefer to be in control of my own money and where it is invested than some of the limited options given through an employer's 401k.

When you change jobs, you can rollover your 401(k) into an IRA, so if you're in an industry where change jobs every 3-5 years, the extra savings makes the difference pretty small (you can always put your money into a low-fee index fund in the 401(k) and then manage it more when you rollover).

Further, a lot of 401(k)s at larger companies that use Fidelity (at least, possibly others) have a feature where you can allocate money into a general brokerage sub-account, where you can invest in anything you could if you opened an IRA at Fidelity.