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The Great College Loan Swindle

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Re: The Great College Loan Swindle

#71

Post by wolfgke »

b4lancesh33t wrote: post #60
wolfgke wrote: post #46

Earlier quoted context omitted.

This is also the kind of environment that I am used to. Even though university education is mostly free in Germany, there are still costs of living etc. Thus there exist quite some children whose parents are quite hesitant to pay for the education of them if they don't agree with the degree course that the child chooses - even though by law they are typically required to pay.

Parents are required to support their children into their adulthood in Germany? That doesn't sound likely, but then, I'm not German. Edit: found a reference that says parents must support children until they are 21 or have a profession to support themselves (presumably whichever is sooner -- I hope!).

> Parents are required to support their children into their adulthood in Germany? That doesn't sound likely, but then, I'm not German.

> Edit: found a reference that says parents must support children until they are 21 or have a profession to support themselves (presumably whichever is sooner -- I hope!).

According to

> https://www.merkur.de/leben/geld/erwachsen-kind-finanzieren-...

if the child studies at a university, the parents have to pay for them until it gets its master's degree (which is typically much longer than up to the 21 years of age). There are exceptions, such as if the parents can prove that the child does not concentrate on his studies or if it changes the degree course "too often" etc. But assume that the normal case is that the parents have to support the child up to master's degree.

Re: The Great College Loan Swindle

#73

Post by cryoshon »

Maarten88 wrote: post #58

I am always amazed at the level of acceptance for these types of injustice there is in the US. Even here, most discussion is about the economics of college degrees, and how to deal with it on an individual level. While the problem, it seems to me, is entirely one of political choice and justice, and the current situation seems very unfair. Young people from poorer backgrounds seem to be destined for slavery for a lar…

the silence you hear is rage, not acceptance

Re: The Great College Loan Swindle

#74

Post by Pete_D »

KGIII wrote: post #38
readams wrote: post #34

Because of government loan guarantees, the cost of tuition will eventually rise to match the entire net present value of the expected lifetime earnings premium. This could easily be in the millions. Also, we can expect income-based repayment to become the norm, since most will not be able to afford the payments

I'm kind of fond of the idea of people paying a percentage of their income after they get their degree and for X number of years. I think that's a fantastic idea. For needed professions, it could be X - Y number of years. Inexpensive and attainable education would be a good thing, I should imagine.

This is sort of how it works in the UK. You pay 9% of what you earn over £X for 25 years (with X and other details like interest depending on when you started borrowing).

In theory, this stops when you pay off your loan, but the most recent estimate I know of[0] predicts that 60% of graduates under the current system will never get there, so while it's technically a loan, it feels more like a graduate tax.

[0] http://www.telegraph.co.uk/education/educationnews/10747315/... (2014)

Re: The Great College Loan Swindle

#75

Post by pandaman »

wskinner wrote: post #69
imsofuture wrote: post #45

Earlier quoted context omitted.

This is really the only path forward: make student debt dischargable. Yes, it will make less people go to college, but too many people going to college is clearly one of the root causes of cyclical skyrocketing costs and increased borrowing.

How would reducing the costs of going to college drive down the number of people going to college? To clarify what I mean: If student loan debt is dischargeable, that means that taking out a loan for college is actually less risky. We should expect more people to do it, not fewer.

It makes loan itself more risky and thus more expensive. Fewer people will take loans at, say, 22% APR (a good rate for unsecured loan) than at the current rate (3-7%?).

Re: The Great College Loan Swindle

#76

Post by ejnulls »

Maarten88 wrote: post #58

I am always amazed at the level of acceptance for these types of injustice there is in the US. Even here, most discussion is about the economics of college degrees, and how to deal with it on an individual level. While the problem, it seems to me, is entirely one of political choice and justice, and the current situation seems very unfair. Young people from poorer backgrounds seem to be destined for slavery for a lar…

No, no one in the US is protecting people like them.

Even in this site, most likely will not have much empathy for the people mentioned in the article.

Welcome to America, worship those above you and look down on those below. Then tell yourself you're a good person and go contribute to a company with shaky ethics (at best). Eat, sleep, repeat.

Re: The Great College Loan Swindle

#77

Post by scryder »

wskinner wrote: post #69
imsofuture wrote: post #45

Earlier quoted context omitted.

This is really the only path forward: make student debt dischargable. Yes, it will make less people go to college, but too many people going to college is clearly one of the root causes of cyclical skyrocketing costs and increased borrowing.

How would reducing the costs of going to college drive down the number of people going to college? To clarify what I mean: If student loan debt is dischargeable, that means that taking out a loan for college is actually less risky. We should expect more people to do it, not fewer.

Companies comfortable offering loans to risky candidates will feel far less comfortable doing so.

There is because there is some point where the ratio between amount of money requested, and expected postgraduate earnings for the chosen degree, would make for a bad deal due to the likelihood of default.

It’s less risky for students, but loan providers won’t want to overextend themselves to accomodate institutions who promise students the moon and demand sums they won’t be able to repay to “give” it to them.

Re: The Great College Loan Swindle

#79

Post by aylmao »

Overtonwindow wrote: post #15

Most scorn of universities and loan programs never seem to address a serious problem: Students taking on debt to fund degrees with little market value, or few job prospects. Racking up $100k to get an interdisciplinary degree in women and gender studies might sound awesome, but not at the cost of a school like NYU.[0] I think schools should be required to press upon students prior to taking out these loans honest and…

I agree, but I would say that's not the real problem here. Take the story in the article for example. My guess is that guy majored in English, and he did it because he understands it and likes it.

That should be fine and enough because there is value in English; he's a teacher, he's definitely gonna produce a TON of value over his lifetime for society (and, discussion over fair wages for teachers aside, enough money). More than the $35k debt he graduated with.

Or take the lady who has payed $63k towards her $8k original debt.

The problem here is that the student loan debt market is structured such that this value won't actually pay the debt. If they tie you in with perpetual debt, they can essentially "tax" you for the rest of your life, and because student debt is some sort of exception, there's nothing you can do to default out of it. What corporation wouldn't take the incentive for this essentially free, steady monthly income?

Re: The Great College Loan Swindle

#80

Post by wskinner »

scryder wrote: post #77
wskinner wrote: post #69

Earlier quoted context omitted.

How would reducing the costs of going to college drive down the number of people going to college? To clarify what I mean: If student loan debt is dischargeable, that means that taking out a loan for college is actually less risky. We should expect more people to do it, not fewer.

Companies comfortable offering loans to risky candidates will feel far less comfortable doing so. There is because there is some point where the ratio between amount of money requested, and expected postgraduate earnings for the chosen degree, would make for a bad deal due to the likelihood of default. It’s less risky for students, but loan providers won’t want to overextend themselves to accomodate institutions who…

Most student loans come from the federal government, and the rates are fixed regardless of risk. So what you and parent are really suggesting is increasing interest rates on student loans, which I totally support. Getting the government out of the student loan business so that the rates can be determined by markets would seem a good first step.
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