Easy solution. LET the students default. Seriously, if students could default like they can buying a used car there would be lower tuition and better attention to whom you give a loan to.
Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
61–70 of 447 posts
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#62Earlier quoted context omitted.
Default rates in good times can be very misleading (as the subprime crisis showed).
Can't you extrapolate default rates to when we don't have good times.
That's what banks do to manage their credit risk, they look at defaults rates "through the cycle", i.e. including the last downturn. But for new asset classes, like subprime in their time and like student loans now (if you look at chart in the article in term of growth), people have to make their own assumptions in term of how it will behave in a downturn. And that's where the credit markets can be really dangerous. These assumptions are what banks and rating agencies got wrong last time. And I think it is fair to assume that people under financial hardship will probably default on their student loan before they default on their mortgage (roof over their head) or their car.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#63There 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…
> for a useless degree they'll never use I went to school for such a degree. While I don't use it in my day to day now, I still consider it priceless. There's some inherent value added to a person who pursues to study a bit of humanities, history, philosophy and art in college apart from their major. Scholarly work really helps shape the way you look at life for the better. Part of this is that you really understand…
> We have too many people thinking it's okay to discredit scientists and scholars because they don't understand how research works.
And a similar number of people who elevate science to the level of religion, marching in its name and developing a brand of hero worship for scientists when they too know nothing at all about the scientific process. Both are forms of anti-intellectualism that are growing in our polarized political environment.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#64Easy solution. LET the students default. Seriously, if students could default like they can buying a used car there would be lower tuition and better attention to whom you give a loan to.
No offense, but that's ridiculous. There's money owed here. The schools already got it, the banks are owed it. Someone needs to make that right, you can't just "forgive" debt without some party taking a huge hit. Which one?
I'm guessing the developed version of your proposal would be for the government to step in and make the payments to the banks. But.. that's ridiculous. If you want to throw around government money to reduce education burden, what you do is pay the schools directly by offering grants. You don't prop up the imbalanced loan system by making loan payments with tax dollars.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#65There 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…
The problem I really see is that we've dug ourselves a big hole. The safety net created for the banks were done to ensure that everyone could get a loan. Banks were "worried" that people would default on their student loans and run away with the money, even though this hasn't happened or is really rare. There was an unfortunate side effect that this incentivized banks to give out riskier loans. Couple that with telling everyone to go to college, kids that don't know what they want to do, and schools that are also seeking a profit, and you get a pretty messed up system.
The unfortunate part about this, is that I believe that if you remove the protections on the loans, many students now WILL default, because they have too much debt and are incentivized to do so, if they are one of the larger loan carriers. I'd say "bite the bullet, and that's what banks get for giving out risky loans" but we know that's not going to play out that way, especially since the gov owns a fair portion.
Making tuition free is nice, but the generation that took out loans isn't helped AND this does not reduce the college price problem. The price was inflated and there is no reason for them to decrease it. Kind of a parallel to health care here. That's the cost. I like this idea, even if I have to pay back my large loans, but I think the fundamental price issue also needs to be solved.
Giving a portion of your earnings is a decent method, but you already bring up the problem with that. And this also doesn't solve the price problem, in fact it encourages the price to keep going up. (We can even tangent into how schools are over charging gov for research, but I'll leave that for another comment)
Whatever we do, somebody is going to lose. And that's the problem with bubbles. We need to, as a society and government, decide who is going to lose. Problem is I think the majority of people think the banks [gov] should lose, for giving out such risky loans. But I don't think many politicians would agree. I wonder what the economists say.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#66Earlier quoted context omitted.
> you'd probably see a lot more STEM degrees and a lot fewer of everything else I honestly think art schools are going to start running into problems convincing people it's a good idea to pay 60k a year for minimal ROI. My cousin wants to go into stage drama, and I don't want to tell her to not pursue her dream, but I think it's a lot to ask her to put herself in debt for years for a piece of paper that says she can…
> People who came from my alma mater who majored in drama can't say the same. Don't worry, your salary gives them a way out too. And I'm not just saying that to be snarky, I think it's very likely what will end up happening: you'll end up paying for their poor choices one way or another. If it's not directly via taxes to pay off their student loans, it'll fund their retirement.
> Don't worry, your salary gives them a way out too. And I'm not just saying that to be snarky, I think it's very likely what will end up happening: you'll end up paying for their poor choices one way or another. If it's not directly via taxes to pay off their student loans, it'll fund their retirement.
Social Security benefits, without any other retirement savings, puts you right around poverty level. I would not consider that "retirement".
Being a software engineer, who makes more than many other professions, doesn't automatically make you better for doing so. It just means you've optimized for a specific system. Congrats! The world still needs plenty of professions where the pay sucks and college is required (teachers, civil engineers, LPNs), that are arguably far more useful/noble/whatever you want to call real value. Consider that when you're sending your kid(s) off to school, crossing a bridge on your way to work, or are in the hospital being cared for.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#67I wonder how educators are handling this. When I was set to graduate high school a decade ago we spent a portion of our home room hour planning our collegiate futures. I think I may have been the exception -- where my advisor stressed that we had to do something. Too often I hear that, "college is the only option." I personally never experienced that, but I wonder if educators are stressing that 4 year universities a…
My son just started Mountain View High School here in Silicon Valley, not too far away from the Googleplex.
I'll simply say that in all of the relevant words I've read from that school, nowhere was there any allowance for NOT going for some kind of college. It was kind of spooky.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#68There 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…
> 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 :)
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#69There 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…
> for a useless degree they'll never use I went to school for such a degree. While I don't use it in my day to day now, I still consider it priceless. There's some inherent value added to a person who pursues to study a bit of humanities, history, philosophy and art in college apart from their major. Scholarly work really helps shape the way you look at life for the better. Part of this is that you really understand…
Can't tell if you're enlightened or institutionalized.
> Scholarly work really helps shape the way you look at life for the better.
Like what? What scenario did you encounter and how did your studies help you? Otherwise it sounds like a vague claim that every religious institution would make.
Re: Student Loan Debt Is Now as Big as the U.S. Junk Bond Market
#70One statistic that's commonly left out of these discussions & articles is how late parents save for college. According to Sallie Mae ( http://news.salliemae.com/publication/how-america-saves-coll... ), most families don't start saving before their oldest child reaches 7 years old. This effectively robs 1/3 of the investment period's growth potential. Another one (as perhaps a consequence of the previous fact) is that…
You sound like a cigarette executive. "The real problem is we don't start em smoking before they leave the hospital. We could increase our profits 33% if every baby was exposed to nicotine before they leave the hospital." Maybe not all people in society should be socially required to purchase an expensive good, thus causing demand to be infinite, meaning price can only skyrocket. Given the number of Masters degrees w…
Those are two separate issues and it is only prudent that parents relive their children of crushing debt. Would you rather parents piss away their wealth on frivolities?
Passing on wealth is the hallmark of a wealthy society and it's rocket fuel that elevates us beyond destitution. Whether it is debt relief, real estate property, or arcane financial instruments -- passing on wealth to their children is the right of every parent.
The efficacy of master's degrees is unrelated to the social responsibility of post-secondary education funding. You might as well argue we all starve ourselves to pressure the government to do something about it.
The real issue behind student debt growth is payment, and with the US Government as a guarantor then growth potential is effectively infinite. Colleges will continue to feast unabated.