Just how bad are these students loans?

[Vdubchaos]

For federal Student loans my personal opinion is that they shouldn't be charging much in interest.

Also i see no reason kids shouldn't be able to refinance the loans.

Though also i think kids should get counseling on them. Why are kids getting 100k in student loans for some of the idiotic degrees?

Because if they can find people stupid enough to pay for worthless degree, they will do so.

 

[Train]

ROFL - do you *really* think the government is going to write off principal balance nearly 2.5x what the *entire* TARP program had in loans outstanding?

We are are talking about over $1TR.

Good fucking luck.

They'd do it for votes in a heartbeat.

Either party would.

 

[Aharami]

I was at a credit card lender and had that exact discussion in 2006.

Me: "So, what happens when the chargeoff rate increases and excess spread (profit) is pressured in the credit card master trust?"

Him: "Why, we increase interest rates more, generating more spread, bolstering the trust, and driving profit for the company"

Me: "Yeah, but then that increases the minimum payment for the borrowers, they'll default more"

Him: "Sure, then we'll just increase the rates again"

He didn't get the problem.

this sounds VERY similar to something a friend posted on fb once. He's a finance guy and went in for an interview for a position at what he called a "pretty reputable university". During discussions, the CIO apparently mentioned that if they have bad performance for endowment , they just raise the tuition. That they dont have to worry about outflows like in a mutual fund company.

Tuition is definitely the problem.

edit: old article, but worth a read
http://online.wsj.com/news/articles...979629178.html?mod=WSJ_Opinion_LEFTTopOpinion

 

[Aharami]

I have a hard time blaming the universities for the increasing tuitions. They're just charging what the market will allow. Students often shop higher education by how fancy the amenities are, so why shouldn't the schools increase tuition to pay for the fancy amenities? They want to stay competitive. If consumers want tuition to go down then they need to put their money where their mouth is, and start enrolling at schools that have more reasonable tuition costs. I did.

no, the market is being propped up. Take away student loans, or make the loans much harder to get and merit based, with contingencies on maintaining a certain GPA level. Then we'll get the true picture of what the market will bear

 

[Phoenix86]

MD doctors are not as rich as everybody tends to think!!! This is why I asked the question about the guy who responded in this tread with 350K in student loans. I never received an answer back from him in regards to his "return"....

Unless you are a specialist of some sort, physicians have a high salary, but also have some of the highest overhead regarding their profession! My kids last Pediatrician admitted to me his take home is around 80K when everything is said and done. He was an old guy as well 40s or so. If you have more than 100K of student loans what's the point....

Ever met a poor doctor? Me either. Their bottom end is most people's high end, 80K is about double the median houshold income.

At that age he's not working like he used to, he was likely earning much more in his prime.

 

[manly]

They'd do it for votes in a heartbeat.

Either party would.

baloney, the GOP wouldn't do anything so drastic for the (lower) middle class and the Dems can't get the votes in the House (and could possibly lose the Senate in November).

 

[Train]

baloney, the GOP wouldn't do anything so drastic for the (lower) middle class and the Dems can't get the votes in the House (and could possibly lose the Senate in November).

I bet if you guaranteed the dems Texas for the next 3 presidential elections, they would do it.
Ditto for the GOP if it was California or maybe even NY.

 

[manly]

I bet if you guaranteed the dems Texas for the next 3 presidential elections, they would do it.
Ditto for the GOP if it was California or maybe even NY.

I didn't say the Dems wouldn't do it, but that they can't round up the votes.

The current GOP just wouldn't do it (they'd rather starve the federal government than increase the debt, or fix the structural budget deficit), aside from any fictional scenarios where they'd win California in a national or even state-wide election.

I don't remember the precise vote count, but the irony of TARP is that Dems voted for it while many Republican congressmen didn't believe the Treasury/Bush administration that it was absolutely necessary to save the economy. And to this day, they largely still don't believe it was necessary.

 

[Train]

I didn't say the Dems wouldn't do it, but that they can't round up the votes.

The current GOP just wouldn't do it (they'd rather starve the federal government than increase the debt, or fix the structural budget deficit), aside from any fictional scenarios where they'd win California in a national or even state-wide election.

I don't remember the precise vote count, but the irony of TARP is that Dems voted for it while many Republican congressmen didn't believe the Treasury/Bush administration that it was absolutely necessary to save the economy. And to this day, they largely still don't believe it was necessary.

I don't think we're on the same page at all. I think you are way overthinking and/or ignoring my main point.

 

[manly]

I don't think we're on the same page at all. I think you are way overthinking and/or ignoring my main point.

your point is like saying if I could sleep with supermodels for the rest of my life, I'd murder somebody for you.

Yeah, that might be true but it's so totally fictional that I don't have to seriously consider what my moral/ethical limits are.

That's LegendKiller's point, forgiving $2T of loans or whatever it is is so astronomical that it's not happening. No matter how many elections you think you can promise to the GOP (because that's the party you'd have to convince).

Although hypothetically, I agree the GOP would "commit all kinds of murders" to keep another Clinton out of the White House. I don't even mean figuratively.

 

[Train]

your point is like saying if I could sleep with supermodels for the rest of my life, I'd murder somebody for you.

Yeah, that might be true but it's so totally fictional that I don't have to seriously consider what my moral/ethical limits are.

That's LegendKiller's point, forgiving $2T of loans or whatever it is is so astronomical that it's not happening. No matter how many elections you think you can promise to the GOP (because that's the party you'd have to convince).

Although hypothetically, I agree the GOP would "commit all kinds of murders" to keep another Clinton out of the White House. I don't even mean figuratively.

If you were already a murderer for hire, it would be a tiny step for you.

If you are already a politician passing laws for self serving interests, it would be a tiny step for you. The core of every politicians actions are to get and STAY in office. RE: the votes.

 

[LegendKiller]

They'd do it for votes in a heartbeat.

Either party would.

You aren't even in the same ballpark. No matter how many students there are, there are far more non-students.

 

[LegendKiller]

In most cases those on the 20 or 25 year plans(the majority of people) will have massive tax bills. So while they have a reduced payment for 20-25 years they will have a substantial tax bill due upon forgiveness. The govt at this point is using paye and ibr to stop the future hemorrhaging so they will atleast recover the bulk of the principle from most borrowers whereas they would likely get substantially less otherwise. That's not how ibr was originally intended to be used but that is the reality of the current situation.

The govt could do a lot on correcting the student loan problem going forward by simply not allowing student loans to be used at for profit schools. The bulk of the current problem is from students at worthless for profit institutions. While people point out people who get say liberal arts degrees as the problem, it's for profits and the overall college graduation rates that have made student loans a $1trillion problem. The majority of borrowers never complete a degree and for profit degrees are worthless and many times more expensive. Correcting what's already happened just isn't likely to happen without the taxpayers eating a lot of money. We need to pay to fix the current problem and address the issues that caused them so they don't happen again. Instead we are just throwing more fuel to the fire.

For profit borrowers are a small component of the SL population, at least from what I see on the FFELP side (and esp. the private loan side).

There are millions of borrowers on IBR/PAYE. The terms for IBR are worse but the President's plan will probably result in consolidation into FDL and application/approval into PAYE. This is the agreement among most sell side analysts and my own opinion also.

As far as the tax issue, the difference between the tax bill in the future and paying off the amount over the next 20 years anyway is huge. If you make $45k for the entire 20 year period (hopefully not), then that means your non-AGI gross income minus federal poverty rate is ~28k, so you pay $2.8k/yr, or ~233. Even if you account for inflation making wages go up, so will the poverty level amount.

Anybody above the average loan amount (~30k) will benefit form the PAYE. Naturally that benefit goes down with the taxable forgiveness, but the more people that join up, the more that will lobby for tax forgiveness.

The government can do a lot more by mandating what tuition amount they will pay for. Or mandating risk-sharing with the loans, or simply underwriting to degree.

The problem with IBR is that it's effectively an option-arm on a house. You get to borrow far more than you can actually afford to pay back in the hopes you get it forgiven, or you eventually make enough to pay it off. This is why I feel the idea is so repulsive. You aren't fixing the problem.

These fuckwits in Congress thing the problem is loans expense. The problem is principal balance. Principal balance is caused by tuition expense, not by interest expense. Under their utopia everybody could afford a $1mm house as long as the payment was "affordable", even if that $1mm house was in Compton because their own ineptitude and thoughtless Taxpayer bounty causes what should be a $100k house to cost $1mm.

 

[Train]

You aren't even in the same ballpark. No matter how many students there are, there are far more non-students.

I wasn't implying that only students would be the votes won.

When I said "the votes" I meant enough to make them do it.

Like saying "anyone would do it for the money" With the actual amount of "the money" obviously being enough to make them do it.

 

[LegendKiller]

I wasn't implying that only students would be the votes won.

When I said "the votes" I meant enough to make them do it.

Like saying "anyone would do it for the money" With the actual amount of "the money" obviously being enough to make them do it.

There aren't enough votes to make it happen, nor were there ever be.

There are plenty of "debt forgiveness" posts on facebook, I look at each one and the comments on them. Universally if you aren't looking for it to be forgiven all of the posts are "pay your money back".

One reason I won't ever vote for it is because it won't teach anybody a lesson.

 

[Hugo Drax]

What? That's what happened before. Not every doctor and lawyer were doing it but enough did so the laws were changed and college loans are now excluded for the most part from bankruptcy. So we can blame the asshole doctors and lawyers for not being able to discharge student loans from bankruptcy.

It was actually a small percentage. What happened is Fatcat bankers wanted a way to get risk free profits so they got the government to enact a lemon socialist policy so they can get rich at the expense of young Americans.

Fuck them, it has to be treated like any other unsecured credit. Let the free markets price risk and college prices accordingly.

What you have now is infinite risk free money(for the bankers) entering the college market artificially distorting pricing.

Capitalism only works if it is a true free market, not some perverted system where you socialize the losses and privatize the gains.

 

[Tweak155]

MD doctors are not as rich as everybody tends to think!!! This is why I asked the question about the guy who responded in this tread with 350K in student loans. I never received an answer back from him in regards to his "return"....

Unless you are a specialist of some sort, physicians have a high salary, but also have some of the highest overhead regarding their profession! My kids last Pediatrician admitted to me his take home is around 80K when everything is said and done. He was an old guy as well 40s or so. If you have more than 100K of student loans what's the point....

Lol, 40's is old?

 

[slugg]

I came from poverty. My parents couldn't help me at all. I had some scholarships for being poor, but that's it as I was a terrible student before college. I worked my entire way through college, doing what I needed to do. I played drums, fixed computers, wrote software, whatever. Eventually, the school picked me up as a researcher and they were paying me to get a masters. I became extremely unhappy with school, as I felt like a slave to the system, so I quit. I literally walked out and never looked back. I never took out a loan. The only debt I have is my mortgage. Oh and I don't flip burgers; I do some pretty cool stuff for a big, evil, multinational corporation.

Moral of the story? Education nowadays is a business. It's designed to lure you in and take your money. For rest of your life, if possible.

Let me propose this. If you were to tell a bank "hey, I want $100k for this shithole of a house," they would say "hell no." But if you were to tell a bank "hey, I want $100k for an art degree," they'd happily enslave you.

Fuck college. And fuck student loans.

 

[PhoKingGuy]

Because if they can find people stupid enough to pay for worthless degree, they will do so.

This is pretty much the answer to this question. You don't really see people with Engineering, science, math, finance or business degrees complaining if they took their education seriously.

BUTTTTTTTTT MOOOOOOMMM AND DADDDDDDD I NEEED TO GO TO NYU FOR FILM STUDIES

 

[Mai72]

Lol, 40's is old?

40 is the new 20!

Seriously, it depends on the age of the person you ask. A 20 year old is going to think 40 is ancient. A 70 year old is going to think a 40 year old is young.

 

[OverVolt]

Ever met a poor doctor? Me either. Their bottom end is most people's high end, 80K is about double the median houshold income.

At that age he's not working like he used to, he was likely earning much more in his prime.

No only old ones.

 

[OverVolt]

Personally I think the "tuition crisis" is another example of poor planning by lots of people. Schools generally will offer classes for anyone who wants to pay for them. If you want to spend 100k getting a BS and MS in underwater basket weaving, the schools will let you.

College degrees should be limited to fields where you need actual education to perform. (for loans / 100k+ programs etc)

My personal experience as a fledgling IT guy was to get a degree in management with a telecom minor. My masters is purely in business operations. These degrees I believe have helped me significantly. I also did the CC route and cut out a lot of the fluff classes for $100 a credit hour rather than $1275 a credit hour. IE English 101, English 102, Any math etc.

Sure I have student loans but at this point the interest rate is so tiny (sub 2% on about 26k) I let them sit and use my money else where. Also, My parents never spend a dime on this either.

People that spend 100k on any program that basically gives you nothing over a 17 year old in HS is just being stupid.

Yea I'm sure it has noting to do with tuition rising above inflation for decades and all that hodgepodge.

 

[Naeeldar]

This is pretty much the answer to this question. You don't really see people with Engineering, science, math, finance or business degrees complaining if they took their education seriously.

BUTTTTTTTTT MOOOOOOMMM AND DADDDDDDD I NEEED TO GO TO NYU FOR FILM STUDIES

Even that's not true anymore. Engineering, Science, MAth and Finance aren't hurting as much as some but they are definitely feeling pain for recent graduates over the last 6 years. Overall people seem to fail to realize how much more expensive college is now in 2014 than it was in 2005 as an example. Rates have been going up 10% roughly every year for years on end.

Also business degrees - many of them our hurting coming out of school.

Realistically the education bubble is really going to end up causing major issues with our economy. You have the loans themselves which is a lot of risk but even if people dont' default - it now means students who can't buy houses for some years, consume heavily in our economy etc..

It's also destroying entry level jobs market. There is no reason to require a Bachelors degree for an entry level office job. You learn on the job, not from your degree, so now instead we have raised the cost of living for all of these entry level jobs. It's a viscous cycle that is only going to get worse as students continue to go back to school for a masters because now everyone has a bachelors. This cycle is very very bad for us.

Anyway I'm sure glad to not have to deal with these issues personally as many students and future kids will have too. Until the education bubble pops we are going to have a lot of issues with jobs, loans piling up, and a young new workforce that cannot afford to purchase consumer goods in a consumer driven economy.

 

[CountZero]

So many people harp on about people with massive debts and liberal arts degrees. The news loves these stories because it plays into our inherent idea that the world is fair and these people got what they deserve. Those people are a drop in the bucket though, examples of an extreme.

The reality is that across the board the student loan debt, both those paying and those in default, has a drag on the economy. At the rate tuition is going up that drag is going to become more pronounced and dire year after year.

Returning to the liberal arts degrees. There is certainly truth to the idea that you should consider CC before University, you should look at cheaper schools before private but I take issue with the idea they should've picked a better degree. People, especially on a tech board such as this, love to say things like "I picked a degree that makes money". Yeah you did but it is highly unlikely you picked a degree in something you were terrible in and had zero interest in. For me it was a decision between astronomy/physics and EE. I went EE because it seemed more likely to lead to a job but it wasn't as if I was uninterested in it or didn't already have an aptitude for math and science. People don't finish engineering degrees or science degrees without some interest a some aptitude. To flip it imagine your least favorite college course, now take 3.5 years of those courses but with increasingly high time demands surrounded by people that just 'get it' while you struggle and after that journey you get to apply for jobs doing it for the foreseeable future. It's awesome to 1) have ideas of what you'd like to do for a living 2) those things you like actually pay decent/have good job prospects 3) have an aptitude in the basis of that thing and 4) have schools that will teach you that thing in a way that is practically designed as job training. Outside of STEM its a crap shoot, I honestly have no idea what people that don't have interests in STEM do but I imagine it frequently involves getting a degree that will hopefully get your foot in the door somewhere.

 

[jpiniero]

So many people harp on about people with massive debts and liberal arts degrees. The news loves these stories because it plays into our inherent idea that the world is fair and these people got what they deserve. Those people are a drop in the bucket though, examples of an extreme.

I looked at Penn State's 2013 degrees list and based upon that I'd put the average school at about 10% useless and another 20% or so who would have a tough time for sure. BTW, Penn State charges 28k/year for out of staters.