NPR story on student loans

[Celery Man 20979]

1 hour ago, Parliament said:

Attitudes like this are exactly how you drive normal people to vote for President Trump.  Plenty of folks out there, young and old, who are happy to pay their own bills.  Many of them vote for Donald Trump and the like.  Mr. Smith lives in a bubble.

 

Do you disagree with his assertion that college/non-college is the main divide, and that non-college folks see the lack of student debt as a giant plus in their column?

You are in a bubble too fwiw.

[Nice Guy Eddie 13515]

I find the cost of college today to be obscene and practically criminal.

however it’s a horrible idea to just write off or forgive debt. One, it rewards people that spent college loan money foolishly.  Two, it encourages colleges to raise costs that much more as the next generation of borrowers  will expect a loan write off on in 10 years or so.

the only way I could get behind a college loan forgiveness program is if the US govt simultaneously got out of the loan guarantee business. Ask banks to take on the risk based on the individual, degree program etc.  or ask schools to take on the risk. Or even have the govt increase tuition assistance, but no more loan guarantees by the taxpayer.  These programs were abused by the schools to raise students costs.

[Eastwood 4394]

3 hours ago, wildcat09 said:

Did you bitch when Trump gave enormous subsidies to giant agribusinesses? Did you bitch when the GOP slashed taxes on the wealthiest Americans (pick which time) and exploded the deficit? Did you bitch when the government gave about $2.3 trillion to businesses when covid hit without any condition that they spend that money on keeping people employed?

No? Then fuck off.

This is the big one, here. As someone who had delayed assistance from the PPP only to learn that publicly traded companies with market caps of 9 figures or more from loans from the Small Business Administration got their loans first. Where was the outrage? I explained this to Trump voting family members and got just a bunch of "huh" and shoulder shrugging.

College really has become a huge money-making scam. A lot of us growing up in the 90s and early 00s had it hammered in our head over and over that "if you want to get anywhere, you need a college degree." If you ask them what kind, the response was "doesn't matter, just having the degree will get your foot in the door." Ok, sure, let's go do it. Then you start undergrad and then a lot of these programs, whether they be BBA, BA, or BS, start telling you "well, sure you might get a job when you get out, but if you really want to be competitive, you need a masters." Then these same people graduate in 08 through 11 and guess how that went. Then they have to deal with older generations who enjoyed affordable college and being able to provide for a family with just a high school diploma if they didn't go to college chirp non-stop about how "nobody forced those people to take loans they couldn't pay back." They took the loans because they were convinced by the older generations and the system itself that college was necessary and the loans were the only way they could afford it.

The advising system in college is completely broken. Departments depend on students enrolling in them for survival. My wife, who started having second thoughts about her degree, did a little research about job opportunities after graduation and learned that to get the most out of it, she needed an expensive and lengthy internship program after. She didn't like the sound of it, had an opportunity to switch to a related major with possibly better job prospects, but outside of the department of the original major. She goes to the department, voices her concerns, and they tell her with the utmost confidence that she should stay in her current degree and that she didn't need the internship to get a good job. She stays in and finds out after she graduates two things: 1. there is a ceiling without that internship and it is insanely low, as in "shouldn't have even gone to college" low. 2. The department was on its last leg and needed to keep as many students as possible to avoid being eliminated by the school. I am convinced they straight up lied to her to save their own ass.

Now she has a useless degree, but thankfully no student loan debt because her parents paid for it. Very fortunate. Now what happens to her classmates that weren't as fortunate? They are stuck in student loan hell for 20, 30 years? A lot of us from that generation did what was expected of us and were left holding the bag. It makes sense that as more of that generation comes into power that they want to fix those situations for others.

Edited November 17, 2020 by Eastwood
Got pulled away mid sentence, didn't finish sentence

[DonkeyCigars 143]

This is why I don't make the big bucks as a management consultant, but the answer has to include a win for all parties, and I'm not completely sure how one would do that.

I come to this problem from the angle that we can forgive loans but we need to be able to pay the folks responsible who paid their loans. Who made the sacrifices and budgeted and did without in order to service their debt as an obligation; maybe a moral one, definitely a legal one, and maybe both. 

The optics behind it otherwise are damning and dare I say a moral hazard; it appears as if being responsible and prudent is being punished while there is no punishment for being foolish. 

That said, I think a practical and easy fix for this is to just let Student Loans be included in Bankruptcy.  

[wildcat09 29357]

10 minutes ago, Nice Guy Eddie said:

I find the cost of college today to be obscene and practically criminal.

however it’s a horrible idea to just write off or forgive debt. One, it rewards people that spent college loan money foolishly.  Two, it encourages colleges to raise costs that much more as the next generation of borrowers  will expect a loan write off on in 10 years or so.

the only way I could get behind a college loan forgiveness program is if the US govt simultaneously got out of the loan guarantee business. Ask banks to take on the risk based on the individual, degree program etc.  or ask schools to take on the risk. Or even have the govt increase tuition assistance, but no more loan guarantees by the taxpayer.  These programs were abused by the schools to raise students costs.

On the list of foolish things official government policy encourages, this is so far down the list that it doesn't even register. 

 

[DonkeyCigars 143]

5 minutes ago, DonkeyCigars said:

This is why I don't make the big bucks as a management consultant, but the answer has to include a win for all parties, and I'm not completely sure how one would do that.

I come to this problem from the angle that we can forgive loans but we need to be able to pay the folks responsible who paid their loans. Who made the sacrifices and budgeted and did without in order to service their debt as an obligation; maybe a moral one, definitely a legal one, and maybe both. 

The optics behind it otherwise are damning and dare I say a moral hazard; it appears as if being responsible and prudent is being punished while there is no punishment for being foolish. 

That said, I think a practical and easy fix for this is to just let Student Loans be included in Bankruptcy.  

Also I meant to add:

It's not an apples to apples or effective comparison to say "But, what about the companies that the government bails out!" because that, theoretically, affects all citizens who pay taxes. This is discriminatory by definition in that it helps only the most debt-ridden, whether that debt was not taken and is not being serviced responsibly through unfortunate and legitimate circumstances or through ignorance and foolishness.

[wildcat09 29357]

3 minutes ago, DonkeyCigars said:

Also I meant to add:

It's not an apples to apples or effective comparison to say "But, what about the companies that the government bails out!" because that, theoretically, affects all citizens who pay taxes. This is discriminatory by definition in that it helps only the most debt-ridden, whether that debt was not taken and is not being serviced responsibly through unfortunate and legitimate circumstances or through ignorance and foolishness.

Well, Biden's plan only forgives outstanding debt for people who work in government or nonprofit positions and have been paying off their loans for at least 20 years. It's a woefully inadequate plan, but it certainly doesn't have the "problems" you ascribe to it.

[DonkeyCigars 143]

1 minute ago, wildcat09 said:

Well, Biden's plan only forgives outstanding debt for people who work in government or nonprofit positions and have been paying off their loans for at least 20 years. It's a woefully inadequate plan, but it certainly doesn't have the "problems" you ascribe to it.

Yea, I feel like those are really strong verifiers and a great start.

Would you have a problem in making Loan Forgiveness be a "quick win" by just removing the restriction from allowing student loans to being discharged in bankruptcy? It gives people a way out, but there is sufficient punitive sting, to restart and learn from mistakes potentially.

[softlynow 1816]

The political moment we'll be in come January will weigh heavily in favor of, at the very least, some targeted loan forgiveness. The Republican controlled Senate will be in full obstruction mode again/still, and no doubt McConnell will either say it aloud, like he did at the beginning of Obama's first term, or he'll operate that way quietly. Their goal will be a one-term Biden. Combine that with an economy in need of economic stimulus, and tools entirely under executive control will be vital. This is one, and he simply must use it. Do it right, and money the fisc would be gobbling up gets redirected to economic channels that should help our recovery.

Pubs can whinge and whimper about moral hazard all they want. Besides the fact that they've lost the standing to complain about all forms of morality, the game the next few years will be about actually helping people, not corporations, economically. Do that, and Biden will have sturdy coattails in the midterms and a strong case for a second term. Fail to do it, and be prepared for Dem carnage.

[DonkeyCigars 143]

8 minutes ago, softlynow said:

Pubs can whinge and whimper about moral hazard all they want. Besides the fact that they've lost the standing to complain about all forms of morality, the game the next few years will be about actually helping people, not corporations, economically. Do that, and Biden will have sturdy coattails in the midterms and a strong case for a second term. Fail to do it, and be prepared for Dem carnage.

Are you essentially saying that doing nothing for those who sacrificed, did without, and responsibly met their financial obligations on one hand and on the other offering blanket loan forgiveness for people loaded up to the gils with bad debt from expensive and/or for-profit schools, not finishing their programs despite taking loans, or irresponsibly borrowing for low-value career paths is punishment for the Pubs? 

The above sounds very much like "let the Pubs complain we are doing this anyways and they deserve to eat the poop on this one!"

That said, I like Biden's loan plan a lot as a start and would also like to see some reform in allowing student loans be discharged through bankruptcy. We can make sensible reform without being ridiculous. 

Edited November 17, 2020 by DonkeyCigars

[wildcat09 29357]

1 minute ago, DonkeyCigars said:

Yea, I feel like those are really strong verifiers and a great start.

Would you have a problem in making Loan Forgiveness be a "quick win" by just removing the restriction from allowing student loans to being discharged in bankruptcy? It gives people a way out, but there is sufficient punitive sting, to restart and learn from mistakes potentially.

No. That should be done anyway and on its own merits.

Fuck the "personal responsibility" concern trolling. We've got numerous posts in this thread eloquently stating why that's bullshit and selectively applied to those who don't already have money and power. The overwhelming majority of people with student loan debt, I'm talking like 95% or more, took out that debt because they had no other option and were told they needed a college degree to be able to make it in America. We were exploited and lied to and abused by a system so that a select few worthless shitstain irresponsible pricks could "earn" ungodly sums of money that was wholly incommensurate with the value they added to society.

We've just spent four years with Donald Trump as president, watching his demon spawn use the United States federal government simultaneously as their own piggy bank and as muscle to extort money from everyone else they could think of. We've spent decades now watching the GOP give trillions of dollars to people who absolutely did nothing to deserve it but already be rich and bribe Republican politicians. We've seen them further rig the system to exploit the powerless at every goddamn turn to give more and more money to the worst people in America, to the point that they've spent months letting a pandemic ravage America so that their donors can snatch up smaller businesses and assets on the cheap. Your party's officials have completely abandoned their most basic duty to protect American lives because their donors realized that even a pandemic could be good for their pockets.

And suddenly Republicans are concerned about the moral hazard of student loan debt forgiveness? If this was a just country, you and your friends would be terrified about guillotines right now.

[wildcat09 29357]

11 minutes ago, DonkeyCigars said:

Are you essentially saying that doing nothing for those who sacrificed, did without, and responsibly met their financial obligations on one hand and on the other offering blanket loan forgiveness for people loaded up to the gils with bad debt from expensive and/or for-profit schools, not finishing their programs despite taking loans, or irresponsibly borrowing for low-value career paths is punishment for the Pubs? 

The above sounds very much like "let the Pubs complain we are doing this anyways and they deserve to eat the poop on this one!"

That said, I like Biden's loan plan a lot as a start and would also like to see some reform in allowing student loans be discharged through bankruptcy. We can make sensible reform without being ridiculous. 

This describes me. Biden's plan won't forgive any of my loans. I don't meet the qualifications and have privately refinanced my student loan debt so the only way that's getting forgiven is if legislation is passed that buys out all outstanding private student loan debt. I would love for that to happen, but the GOP Senate will never let it. Given that, I have absolutely no problem with a Biden administration forgiving debt for those it has the power to forgive, and I'll place the blame for them not doing something for me where it belongs, at the feet of the scum that are the GOP Senate caucus.

Edited November 17, 2020 by wildcat09

[Asithappens 974]

39 minutes ago, Nice Guy Eddie said:

I find the cost of college today to be obscene and practically criminal.

however it’s a horrible idea to just write off or forgive debt. One, it rewards people that spent college loan money foolishly.  Two, it encourages colleges to raise costs that much more as the next generation of borrowers  will expect a loan write off on in 10 years or so.

the only way I could get behind a college loan forgiveness program is if the US govt simultaneously got out of the loan guarantee business. Ask banks to take on the risk based on the individual, degree program etc.  or ask schools to take on the risk. Or even have the govt increase tuition assistance, but no more loan guarantees by the taxpayer.  These programs were abused by the schools to raise students costs.

The cost of college is way too high, however, the notion that it's "horrible" to forgive debt is, well, asinine imo. 

 

[DonkeyCigars 143]

1 minute ago, wildcat09 said:

No. That should be done anyway and on its own merits.

Fuck the "personal responsibility" concern trolling. We've got numerous posts in this thread eloquently stating why that's bullshit and selectively applied to those who don't already have money and power. The overwhelming majority of people with student loan debt, I'm talking like 95% or more, took out that debt because they had no other option and were told they needed a college degree to be able to make it in America. We were exploited and lied to and abused by a system so that a select few worthless shitstain irresponsible pricks could "earn" ungodly sums of money that was wholly incommensurate with the value they added to society.

We've just spent four years with Donald Trump as president, watching his demon spawn use the United States federal government simultaneously as their own piggy bank and as muscle to extort money from everyone else they could think of. We've spent decades now watching the GOP give trillions of dollars to people who absolutely did nothing to deserve it but already be rich and bribe Republican politicians. We've seen them further rig the system to exploit the powerless at every goddamn turn to give more and more money to the worst people in America, to the point that they've spent months letting a pandemic ravage America so that their donors can snatch up smaller businesses and assets on the cheap. Your party's officials have completely abandoned their most basic duty to protect American lives because their donors realized that even a pandemic could be good for their pockets.

And suddenly Republicans are concerned about the moral hazard of student loan debt forgiveness? If this was a just country, you and your friends would be terrified about guillotines right now.

Based off this really weird reaction, I feel like having a reasonable discourse around this is not possible so I'll respectfully bow out now. Good luck out there, friend.

[Guest Lobo]

Our national bank is partnering with a lending company to do something interesting in this space.  Starting with graduate degrees (dentists, pet vets, and lawyers to start), but I suspect it'll be down in the undergraduate loan ecosystem by the end of the decade.  Not my idea, so don't shoot the messenger.  

When you underwrite a student loan, of course you look at the student's (and often their parents) credit score, timeline, size of the loan, etc.  All the basics.  Nothing new there.  But all other underwriting is so much more in depth and forward looking.  Why have there not been equally rigorous metrics applied to student loans?  A $100k loan to study Art History at Vassar College is just not the same as a $100k loan to study business or engineering or law at the University of Texas.  We need to quit underwriting them that way.  "Student Loan Forgiveness" is just another bullshit political label slapped onto shit like "Pro-Life" (who the fuck is against "Life"?).  It's not, it's "Loan Default Reprieve."  I want more well-rounded humanities-read people in the workforce.  I hold three degrees, two of which are Liberal Arts degrees.  But we have to quit acting like all student loans are the same.  We learned the fucking hard way that not all primary resident mortgages were the same.  We know all auto loans aren't the same.  We know all commercial loans aren't the same.  Centuries have taught us this.  But we pretend as a society that all undergraduate degrees are the same.  They are not.  They are all worthy and needed in a well-rounded society.  But I don't want to have a national conversation about pouring hundreds of billions into the "Student Loan Default Reprieve" market unless we are going to at least recognize that certain "assets" (in this case not homes or cars, but brains) have better repayment odds than others.  That's all underwriting/de-risking is, it's the basis of all lending.  You are encouraged to pursue liberal arts or education or similar degrees with a more robust federal grant program.  But as for forgiving all these past trillions, we gotta look at it from who can repay and why not?  

If you support FHA/VA, Freddie/Fannie, SBA, USDA, and any of a dozen other GSE backed loans...then you know how those loans are underwritten and what has to happen for forgiveness/forbearance.  I don't understand why student loans would be completely separate from those multi-trillion, multi-century platforms that are the hallmarks of Progressive Politics in this nation.  They've already tested the waters with students/young professionals in teaching...why not extend that logic outward even more?  It would also have some potential tacit societal good in that it could help us solve the massive shortages we are already seeing in nursing, teaching, analysts, programmers, social workers, et. al.  

Every week we make economic decisions based on the future cost of it, why should our educational choices be any different?  Particularly since it's taxpayer money.  I am happy to help a teacher retire her loan.  She wants to live near my kids' school and that's expensive and eliminating that part of her budget helps us all make her a part of our kids' community.  I want artists, musicians, philosophers, and historians in my neighborhood as well.  And would be willing to subsidize it if everybody involved was just a little more fucking proactive about it up front.  

Edited November 17, 2020 by Lobo

[wildcat09 29357]

4 minutes ago, DonkeyCigars said:

Based off this really weird reaction, I feel like having a reasonable discourse around this is not possible so I'll respectfully bow out now. Good luck out there, friend.

Based on this reaction, it's clear you have no idea how incredibly outrageous your conduct and that of your party (and if you're a boomer, your generation) has been. White, conservative boomers were given a fucking paradise that their parents and grandparents fought and bled and died to build (if that sounds crazy to you then do some reading on the labor movement). They were given affordable college, affordable housing, the best infrastructure, all without needing to incur substantial personal debt, but that wasn't enough for them so they dismantled it and sold it for scrap for a little more, and now their children and grandchildren have to fight and bleed and die to rebuild it.

And after breaking that nice publicly-funded education system they were given, they told us to take out loans if we wanted to go to school and now want to turn around and lecture us for having been dumb enough to listen to them. It's literally absurd.

[DonkeyCigars 143]

1 minute ago, wildcat09 said:

Based on this reaction, it's clear you have no idea how incredibly outrageous your conduct and that of your party (and if you're a boomer, your generation) has been. White, conservative boomers were given a fucking paradise that their parents and grandparents fought and bled and died to build (if that sounds crazy to you then do some reading on the labor movement). They were given affordable college, affordable housing, the best infrastructure, all without needing to incur substantial personal debt, but that wasn't enough for them so they dismantled it and sold it for scrap for a little more, and now their children and grandchildren have to fight and bleed and die to rebuild it.

And after breaking that nice publicly-funded education system they were given, they told us to take out loans if we wanted to go to school and now want to turn around and lecture us for having been dumb enough to listen to them. It's literally absurd.

We aren't going to agree here, but I do like your opinions in other threads and conversations. Have a great day wildcat my friend! 

['stache 21825]

Tuition and the student loans needed to cover them are absurdly high. I guess the world needs ditch diggers too.

[Dahobbs 17626]

15 minutes ago, DonkeyCigars said:

We aren't going to agree here, but I do like your opinions in other threads and conversations. Have a great day wildcat my friend! 

Weak and cowardly response. 

[Enchubben 5510]

33 minutes ago, DonkeyCigars said:

Based off this really weird reaction, I feel like having a reasonable discourse around this is not possible so I'll respectfully bow out now. Good luck out there, friend.

welcome to the cloak room!

[David Dennison 18938]

At the very least, student loans should be subject to the same bankruptcy laws as all other consumer debt.

[Enchubben 5510]

Just now, David Dennison said:

At the very least, student loans should be subject to the same bankruptcy laws as all other consumer debt.

This is the reasonable response which is exactly why it won't happen. Give them bankruptcy protection and figure out a way to stop the bleeding of rising education costs.

Instead we will do nothing, or make it worse by throwing a shit ton of money at people to keep throwing it away. 

[gmr548 16588]

We aren't going to agree here, but I do like your opinions in other threads and conversations. Have a great day wildcat my friend! 

TTLP

[Huckleberry 33038]

1 hour ago, DonkeyCigars said:

We aren't going to agree here, but I do like your opinions in other threads and conversations. Have a great day wildcat my friend! 

What in his post do you disagree with? 

[softlynow 1816]

1 hour ago, DonkeyCigars said:

Are you essentially saying that doing nothing for those who sacrificed, did without, and responsibly met their financial obligations on one hand and on the other offering blanket loan forgiveness for people loaded up to the gils with bad debt from expensive and/or for-profit schools, not finishing their programs despite taking loans, or irresponsibly borrowing for low-value career paths is punishment for the Pubs? 

No.

Quote

The above sounds very much like "let the Pubs complain we are doing this anyways and they deserve to eat the poop on this one!"

Yes, this move would be politically advantageous for Dems, and can be done unilaterally. And we can type "shit" here.

Quote

That said, I like Biden's loan plan a lot as a start and would also like to see some reform in allowing student loans be discharged through bankruptcy. We can make sensible reform without being ridiculous.

Reform requires control of both houses and the presidency or cooperation from Pubs. We will not likely see the latter except on reform that enriches the already rich, and the former is at least one election cycle away.

['stache 21825]

1 hour ago, David Dennison said:

At the very least, student loans should be subject to the same bankruptcy laws as all other consumer debt.

And all interest should be deductible, not limited by amount, and not phased out with income (or raise the phase out to like $750,000 to $1,000,000 salaries).

[NWBuck 8573]

1 hour ago, softlynow said:

And we can type "shit" here.

[DonkeyCigars 143]

Haha, oop.

[High Plains Drifter 11050]

 

This donkey idiot is going on the ignore list. I'd appreciate it if you assholes would not quote him, if at all possible. Thanks.

 

 

[elfenix 34330]

10 hours ago, Parliament said:

Attitudes like this are exactly how you drive normal people to vote for President Trump.  Plenty of folks out there, young and old, who are happy to pay their own bills.  Many of them vote for Donald Trump and the like.  Mr. Smith lives in a bubble.

 

people for whom the government paid for college telling people paying the government for college that they need to take personal responsibility is such fantastic bullshit.

Edited November 18, 2020 by elfenix

[Hank Scorpio 17729]

[TexasEd 8067]

 

9 hours ago, wildcat09 said:

Well, Biden's plan only forgives outstanding debt for people who work in government or nonprofit positions and have been paying off their loans for at least 20 years. It's a woefully inadequate plan, but it certainly doesn't have the "problems" you ascribe to it.

Just started reading this topic, but this is where I am.  Take a govt job, join the armed forces, take a teaching job, or work in whatever the current job corps is called.

The taxpayers need a return on the money they are investing in your education.  There are options.

 

[Huckleberry 33038]

1 hour ago, TexasEd said:

 

Just started reading this topic, but this is where I am.  Take a govt job, join the armed forces, take a teaching job, or work in whatever the current job corps is called.

The taxpayers need a return on the money they are investing in your education.  There are options.

 

The return is their future productivity, just like it was for the generations who went to college cheap because it was subsidized. 

[pacman 7362]

Further, folks who are in college debt tend to be in the economic class that puts any extra funds right back into the economy.

On the surface, the government may pay back a 30k loan for an individual. But, if that individual turns around and puts $300 extra dollars a month into the economy for ten years, then you have likely created economic activity well above 30k.

[elfenix 34330]

36 minutes ago, Huckleberry said:

The return is their future productivity, just like it was for the generations who went to college cheap because it was subsidized. 

bUt WhAt AbOuT tHe FiVe AfRiCaN sTuDieS mAjOrS?!?!?!

[StassneyHorn 6622]

*Thinking out loud*Goddamn I should’ve joined the Air Force after college. Officer pay and housing/food allowance plus living in your own place. Could’ve had them teach me to fly without this big ass loan I got instead.

[safe sex 11738]

Yes but you have to wear silly hats.

[DonkeyCigars 143]

5 hours ago, trauma babe said:

Yes but you have to wear silly hats.

I’m doubly doing it wrong, as I wear silly hats for free. Smh 

[wildcat09 29357]

15 hours ago, elfenix said:

people for whom the government paid for college telling people paying the government for college that they need to take personal responsibility is such fantastic bullshit.

This. We're the first generation that is actively taxed for trying to get an education. Nothing brings out my desire for guillotines more than this shit. Education is such a foundational necessity for any developed country and the GOP is stuck in the 18th century, thinking it should be a privilege only the wealthy (and those who might be immediately useful to them) get to enjoy. 

[bernorange 8362]

On 11/17/2020 at 9:28 AM, Nice Guy Eddie said:

...

the only way I could get behind a college loan forgiveness program is if the US govt simultaneously got out of the loan guarantee business. ...  These programs were abused by the schools to raise students costs.

The road to hell is paved with good intentions.  Affordable college.  Affordable housing.  Once government gets involved, markets get distorted.  And it's not a problem until it is and then it's really a problem.

[wildcat09 29357]

2 minutes ago, bernorange said:

The road to hell is paved with good intentions.  Affordable college.  Affordable housing.  Once government gets involved, markets get distorted.  And it's not a problem until it is and then it's really a problem.

This is the worst post you've ever made.

[elfenix 34330]

The road to hell is paved with good intentions.  Affordable college.  Affordable housing.  Once government gets involved, markets get distorted.  And it's not a problem until it is and then it's really a problem.

Markets distort themselves through the concentration and coordination of supply and wealth.

[wildcat09 29357]

There's also that whole thing where a "free" market has no incentive to provide education to those who can't afford to pay.

[bernorange 8362]

Quote

...
A paper recently published by the Philadelphia Federal Reserve claims that education loan defaults are largely due to the federal government relaxing accountability measures for higher ed institutions.

“Newly sanctioned institutions rapidly contract and exit, sending defaults falling; when constraints are lifted, affected institutions expand rapidly, and defaults surge,” Adam Looney and Constantine Yannelis, the report’s authors, wrote. “Today’s crisis largely stems from repeal or reduction in accountability measures between 1998 and 2006, and expansions in federal aid and loan limits in the mid-2000s.”
...

https://elective.collegeboard.org/student-loan-crisis-more-complicated-number

Quote

We demonstrate that expansions and contractions in federal student loan credit to institutions with high default rates explain most of the time series variation in student loan defaults between 1980 and 2010. Expansions in loan eligibility between 1976 and 1988 led to the entry of new, high-risk institutions, and default rates exceeding 30 percent in the late 1980s. Credit access was subsequently tightened through strict institutional and student accountability measures. This contracted credit availability at the highest default rate institutions, which in turn caused an exodus of institutions with high default rates, resulting in lower default rates on student loans. After 1992, the cycle was repeated, with credit access gradually loosened by unwinding many of the pre-1992 reforms. We confirm this time series narrative by examining discrete policy changes governing access to credit to show that tightening credit supply led to the closure of high-default schools and the relaxation of accountability rules resulted in their expansion. Our estimates imply that 85 percent of the increase in default between 1980 and 1990, and 95 percent of the decrease in default between 1990 and 2000 is driven by schools entering and exiting loan programs. One-third of the recent increase in default is associated with the entry of online programs following the relaxation of rules for lending to online schools, and another third is associated with the abolition of rules limiting the share of revenue coming from federal programs.

https://www.philadelphiafed.org/consumer-finance/education-finance/the-consequences-of-student-loan-credit-expansions-evidence-from-three-decades-of-default-cycles

[wildcat09 29357]

Congratulations on linking a study that provides evidence that deregulation is bad.

[Nice Guy Eddie 13515]

A few of you are pointing fingers at the wrong direction - govt. Why are the borrowers not looking for a refund from the universities.

If I buy something I'm dissatisfied with, I don't complain to Chase Bank to give me my money bank, I ask the store for a refund. I'm sure the school will laugh at the suggestion but the problem is with them not with the banks/guarantors that gave you money that you said you would pay back.

[TwiceHorn 31511]

 

1 hour ago, elfenix said:

1 hour ago, bernorange said:

The road to hell is paved with good intentions.  Affordable college.  Affordable housing.  Once government gets involved, markets get distorted.  And it's not a problem until it is and then it's really a problem.

Markets distort themselves through the concentration and coordination of supply and wealth.

 

1 hour ago, wildcat09 said:

There's also that whole thing where a "free" market has no incentive to provide education to those who can't afford to pay.

You're all pretty much right.

Wildcat is absolutely correct that a free market provides no incentive to educate the masses, or at least no short-term perspective does.

But bolstering the availability of student loans through loan guarantees and whatever other incentives there are had some dire unintended consequences:  liberating state governments to cut support, creating an artificial demand and price elasticity, raising tuition, and all of this conspired to saddle students with unconscionable debt.

I don't know the history of student loans, but I do know that loans as a form of financial aid didn't really exist until the 60s or later.  Might have been based on the success of the GI BIll, I'm not sure.  But this is a prime example of what seems to be a well-intentioned, but expensive, government program that has gone way off the rails.

I'm as guilty as anyone of blaming the student for picking an unrealistic major and incurring $100k in debt to obtain the degree.  My ire is really directed at the parents, many of whom should know better (and should have done a better job preparing for the costs of education and the student herself), and the universities and lending institutions.  

Edited November 18, 2020 by TwiceHorn

[Nice Guy Eddie 13515]

The govt should only guarantee a certain amount of debt and i don't think that amount should be overly high. If a student wants more loans, then find it on the open market. Otherwise find a cheaper alternative for education. Everyone wants their perfect school and degree but that student needs a Rolling Stones lesson in that you can't always get what you want.

The schools should also be held accountable in that if their drop out rate is too high, then their students should get less (fewer?) loan guarantees. That might sound like it punishes those students but those students should move on and let the school fail.  (I realize this is impossible due to the tight relationship between govt and universities.)

Our higher education basically works as a capitalistic system with a govt safety net. That will never work well. 

[UrbanAchiever 278]

3 hours ago, bernorange said:

The road to hell is paved with good intentions.  Affordable college.  Affordable housing.  Once government gets involved, markets get distorted.  And it's not a problem until it is and then it's really a problem.

The vast majority of affordable housing is delivered via the market either as naturally occurring affordable housing or private equity in the form of tax credits.

[Guest Lobo]

After a two year study by CommonBond...#1 indicator that you are likely to default on your student loan?  Not major, not school, not current job, not income level, not where you live, and not credit score.  

It's whether or not you completed your bachelor's degree/graduated.  There's a reason places list, "Some College" under "Highest Educational Level"  

Not saying it's good, bad, or indifferent.  But the data is in, and it's not even close.