Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

npr.org

Post reply on HN
Print view View original

91–100 of 372 posts

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#91

Post by the6threplicant »

rumanator wrote: post #86
magnusss wrote: post #83

It seems like the majority of the commenters here are missing the point. The increasing rate of student loan default is not a result of kids who go to a four year college, graduate with an unmarketable degree in philosophy, fall on hard times and then can’t pay their bills. It's kids who go to barber or cosmetology school, take on $30k of debt, then realize they don't make enough money cutting hair to support themsel…

At which point do US student loans start to resemble indentured servitude?

10 years ago?

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#92

Post by plorkyeran »

azhenley wrote: post #64
rhino369 wrote: post #47

Earlier quoted context omitted.

>Why was it necessary to change student loans to being non-dischargeable in bankruptcy? To keep interest rates on student loans low and to make sure the loans are available to 18 year olds with no credit history. There was a real problem with medical students racking up huge sums, declaring bankruptcy when they were making low money during residency, but then making 6 figure salaries a few years later. >It seems like…

But federal student loan interest rates aren't low. Undergrads' loan options are determined by their parents' income, regardless of whether their parents are providing financial assistance. Graduate students can't take out subsidized loans at all anymore, even if they are on food stamps. My loan rates are 6.55%. After 10 years of continuous school, that really, really adds up. I even had scholarships but they wouldn'…

6.55% is low for an unsecured loan to someone without assets. Unsecured loans to people with good credit that can be discharged in bankruptcy have rates that are 3x that.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#93

Post by beamatronic »

planetzero wrote: post #15

We need to get rid of student loans. The problem is that Universities don't ever need to worry about a student defaulting and can keep increasing the prices of tuition with impunity. If they default, they don't care, because the money is already in the bank. If universities had to worry about students defaulting, they would get rid of bullshit degrees that don't result in an actual job and the prices would come done…

I keep thinking about the circa 1991 recession. Everything was cheap. Everyone was poor. Everyone was happy living a basic life. Cause there was no other choice.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#94

Post by ponsin »

rumanator wrote: post #87
ponsin wrote: post #63

Earlier quoted context omitted.

Why? If I take out a loan in order to go on a cruise, the cruise company is not responsible if I default. In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. If responsibility fell on the university, then they could just refuse to accept people who take out loans. The result being that only rich people could go to colleg…

> Why? Because education is not a luxury service that can be postponed or outright skipped, like lifestyle-tailored tourism, and education costs in the US have become a major societal and economical problem. > In fact, with almost every purchase that involves a loan, the company offering the loan is different than the company offering the product / service. That's a tautology, and entirely misses the point. The point…

"Education" is necessary up to a certain point. In America, up to highschool education is free and for the most part required. Why draw the line at a bachelors degree? Should Masters and PhDs be free and partially required? Based on how I framed the question I assume that you can tell that I draw the line at highschool education. I can however see the argument for raising it to bachelor's. However I would expect the government to do much more than just give free money. Rather they would regulate it like they do to highschool. For example, required courses in English literature, American history, PE, and science. Mandatory attendance. Nationwide standardized tests. And others ... I personally am glad that I finish all of that in highschool and I now have the freedom to choose what and how I study.

But to respond to your point directly, degrees such as gender studies, art history, and English literature are certainly a luxury service that can be postponed or outright skipped.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#95

Post by treden »

sykick wrote: post #72
Mirioron wrote: post #57

Earlier quoted context omitted.

Why would transportation costs be higher in the US? Gasoline is two times cheaper in the US than in Sweden. Food is roughly the same price, depending of what you eat.

Public transportation is very bad in the U.S. Even in major cities. For the vast majority of people a car is a necessity in the U.S. Most Americans end up in debt to buy a car. Then there is insurance and the opportunity cost of the government having to spend a great deal of money on road maintenance that could otherwise be spent on things like education.

European cities have much higher population density, and the lower personal income (often via higher taxes and, ironically, worker protection laws) changes the tradeoff between driving and taking pub trans, so more people take the bus. The tradeoff is that a lot of people live in small boxes.

And european governments have plenty of bs job creation engines like roadwork, too.

Would be nice to have some data. One related observation, that seems less surprising the longer I live here, is that europe has no spacex, google, tesla, nasa, coherent mars rovers, the list goes on... if you give people stuff, they're mostly just afraid someone's going to take it away. But yeah, to echo someone else's comment, I'd rather be poor, or even average, in Europe. I guess being super wealthy here wouldn't be that bad either, since nobody's nipping at your heels.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#97

Post by listenallyall »

swagasaurus-rex wrote: post #62
gwright wrote: post #54

Earlier quoted context omitted.

Because it is an unsecured loan. It would be too easy for a newly minted graduate to declare bankruptcy, discharge the loan, and move on with their life. The only entity stupid enough to loan money to students in that world would be the government.

The missing wisdom here is that maybe the government should take on a high-risk, societally high-reward investment like education.

It does, to an extent. Stafford and Perkins loans are direct from the government.

This article says 90% of student loans are from the gov't, so it appears it currently does exactly what you're suggesting. https://www.nationalreview.com/2017/02/student-loans-governm...

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#98

Post by listenallyall »

plorkyeran wrote: post #92
azhenley wrote: post #64

Earlier quoted context omitted.

But federal student loan interest rates aren't low. Undergrads' loan options are determined by their parents' income, regardless of whether their parents are providing financial assistance. Graduate students can't take out subsidized loans at all anymore, even if they are on food stamps. My loan rates are 6.55%. After 10 years of continuous school, that really, really adds up. I even had scholarships but they wouldn'…

6.55% is low for an unsecured loan to someone without assets. Unsecured loans to people with good credit that can be discharged in bankruptcy have rates that are 3x that.

>> without assets

and without an income

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#99

Post by pgcj_poster »

golergka wrote: post #96

As a non-american, what makes me curious is why do black students borrow twice as much money as other groups. Do they choose more expensive degrees?

Black Americans are poorer than most other groups, and I suspect that they're less likely to get parental support paying for college.

Re: Student Loans a Lot Like the Subprime Mortgage Debacle, Watchdog Says

#100

Post by listenallyall »

swagasaurus-rex wrote: post #61
diogenescynic wrote: post #38

Earlier quoted context omitted.

Why was it necessary to change student loans to being non-dischargeable in bankruptcy? That is a recent change and it shifts the burden from banks having to evaluate the loans they are making which would likely mean fewer loans and thus less money earned from interest. It seems like student loans should be treated like any other unsecured loan. And really student loans shouldn’t even be necessary for public universit…

Nobody else is saying it so I will: Non-dischargeable loans have resulted in spiraling student loan debt. Lenders have no reason not to give out these loans as they will be repaid even if it is sub-prime. Schools have no reason not to jack up rates because students are given largely unlimited access to loans. Both parties have been repeating this and raising their incomes for decades ever since student loans have bec…

>> Nobody else is saying it

People have been saying this for many, many years! And using as an example of the Law of Unintended Consequences.

Post reply on HN