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

#91

Post by lazypenguin » Tue, Dec 05, 2017, 5:21 PM UTC

monkseal wrote: post #71

What feels so deceptive about the panic around student debt is the devil is the details. I think if you drill in median student loan debt for an UNDERGRADUATE is like $12k. That's less than a car loan and we don't have a panic about that. Most of the debt is for graduate, PHDs, law and MDs or undergrads who attend expensive private universities. These people should make more money from that investment. My point is ov…

It's also deceptive to downplay the situation by only looking at the debt in students' names. Many parents take out loans on behalf of their children. E.g. Parent Plus Loans: https://en.wikipedia.org/wiki/PLUS_Loan

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

#92

Post by mdorazio » Tue, Dec 05, 2017, 5:22 PM UTC

ajross wrote: post #64

ransom1538 wrote: post #61

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.

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…

I think you misunderstood. He/she said "default", not "forgive". As in, the people with the loans walk away from them and take the massive credit hit that comes with that, likely by filing for bankruptcy. The issue is that student loans are uniquely sticky, so a person with student loans today basically can't get out of them.

If it were possible, many people would choose to file for bankruptcy to release the loans, take the temporary hit, and start again. This would burn the treasury and banks who hold the loans, just like they get burned when they loan mortgage money to people who can't afford one and later default on it.

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

#93

Post by bluGill » Tue, Dec 05, 2017, 5:22 PM UTC

godelski wrote: post #65

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…

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 telli…

I'm working with an idea that you can go bankrupt on student loans, but in doing so you lose the degree - including all rights to a job that might use the degree.

There are a ton of things I haven't figure out (follow my post history for more detail on what I have)

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

#94

Post by peterwwillis » Tue, Dec 05, 2017, 5:24 PM UTC

smokeyj wrote: post #69

umbrellathorn wrote: post #51

Earlier quoted context omitted.

> 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.

If I can steal your question for the parent comment and get more specific:

> the way you look at life for the better

Do you feel your outlook has improved, or are your life outcomes measurably better, and how?

Additional question: was it worth the $37,000 in debt, and do you think that perhaps we could achieve the same better-ness with less debt?

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

#95

Post by gedy » Tue, Dec 05, 2017, 5:25 PM UTC

ProAm wrote: post #76

murph-almighty wrote: post #38

Earlier 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…

Education doesn't always need to have an ROI, sometimes it's just worth what you spend on it.

For sure, but the issue is whether you should borrow so much that it becomes a public policy issue.

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

#96

Post by toomuchtodo » Tue, Dec 05, 2017, 5:25 PM UTC

JonFish85 wrote: post #86

toomuchtodo wrote: post #66

Earlier quoted context omitted.

> 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 co…

I'm not thinking just SS. Imagine in 30-40 years when SW engineers are retiring with their $5m 401k, but their neighbor is still barely making rent at their service-level job. I imagine there are many more people who have foregone retirement savings to pay off their massive college loans. Politically, the story would be something like this: why should you, a multi-millionaire SW engineer who hasn't paid taxes on your…

Taxes are at historically low rates, and current governments have continually borrowed from the future to fund wars and tax cuts (outstanding US government obligations are in the trillions of dollars [1]).

Of course taxes are going to go up. Plan accordingly. If you've put millions of dollars in a pre-tax retirement account, you're a fool if you think it's coming out at anything near current tax rates. You're banking on a political climate that cannot exist existing. That's your fault.

And before blaming your average citizen, look how little anyone cares about what citizens want regarding net neutrality, a tax bill that is going to gut entitlements to support tax cuts for the top 1%, and so on.

[1] https://treasurydirect.gov/NP/debt/current (~20 trillion dollars in US gov outstanding debt obligations)

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

#97

Post by mattmanser » Tue, Dec 05, 2017, 5:26 PM 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…

The thing I don't understand is, how does it unravel?

It feels like politically acceptable short-termism of shunting education costs onto future generations. No-one's going to 'lose' money over it. Who will suffer? It doesn't look like it will be corporations that will suffer, save some institutions will close when the endless supply of money suddenly dries up. It looks to me like it will be governments, a political ticking time-bomb much worse than the growth of numbers of pensioners vs number of workers. Is it a potential social disaster where a lot of people will end up sent to a new version of debtors prison for a bit? Or will it massively impact future GDP of developed countries, as people won't be able to spend, they'll be paying back this onerous loans. Having the exact opposite effect that it's supposed to, instead of growing GDP by growing skills, it'll be killing it by curtailing worker spending potential. Tax revenues might fall due to higher education instead of grow.

Governments seems to be making these student loans rock-solid backed by government assurances to the detriment of future generations.

I haven't looked into it enough to know and am lucky enough to have paid all mine off as it was much smaller than today's crazy amounts.

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

#98

Post by stevenwoo » Tue, Dec 05, 2017, 5:26 PM UTC

rhino369 wrote: post #73

stevenwoo wrote: post #41

Earlier quoted context omitted.

This non-dischargeability of the student loan changes made by Congress baffles me and strikes me as terribly unfair, and I'll never be using a student loan. I guess we should follow the money and ask whom does the bankruptcy non-dischargeability benefit?

It benefits people who can pay back students loans and people who need students loans to make extra money. Before loans were non-dischargeable, you'd have students run up their debts and declare bankruptcy. This sort of fraudulent activity had no consequences since student loans are unsecured. The result was that the private student loan market was small. Nobody was going to loan money they'd never get paid back.

Doesn't it also benefit universities who can then keep upping costs because the loans will rise to match the costs no matter what?

Prior to the change was there a shortage of student loans (with a lot less people choosing university) or did we just shift the loan balance from the government to private industry?

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

#99

Post by etr-strike » Tue, Dec 05, 2017, 5:26 PM UTC

When the next recession strikes, interest rates have no place to go but into negative territory. The rates will be either explicitly negative, or effectively negative (inflation higher than interest rates).

When that happens, bitcoin will be the only safe haven in the world to protect your wealth. The bubble people will be changing their tune very quick.

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

#100

Post by chriskanan » Tue, Dec 05, 2017, 5:26 PM UTC

umbrellathorn wrote: post #51

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…

> 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…

While I agree that one can gain a great deal of enrichment from studying non-lucrative majors, I think people should highly consider double majoring in this case. I majored in computer science AND philosophy as an undergraduate. Doing both took under 5 years.

I think a lot of people don't realize how little they will earn with their degrees compared to how high their debt load will be. That's not including people who fail to even finish their degrees.