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This is a horrible message to kids currently thinking about borrowing because it will make them more likely to borrow which will make tuition skyrocket above it

This is a horrible message to kids currently thinking about borrowing because it will make them more likely to borrow which will make tuition skyrocket above its already criminal level.

VLM 10y ago
Its a necessary part of the bubble cycle. Once you're on it, you can't just wish away the bubble and say "now we're gonna run this economic sector on financial fundamentals" or whatever. There doesn't seem much political will to de-bubble economic sectors, real estate certainly hasn't been fixed and thats a larger problem, ditto medical-industrial complex.
- arenaninja 10y ago
  Could it be that real estate and medical haven't been fixed, just as student loans won't be fixed, because this kicks the can further down the road instead of addressing the problem?
- dexterdog 10y ago
  And that's what we do - band aid at the cost of everybody so that the industry can keep its racket going and ultimately cost even more in the future.
- hood_syntax 10y ago
  Housing is screwing the country (rent in particular) and it will create serious problems for the future if nothing is done about it. It's killing the opportunities for young people to save for retirement and reducing their purchasing power.
Broken_Hippo 10y ago
You say this like borrowing for college is a reasonable choice for most people, or a choice at all. For many, going to college means borrowing money because there isn't another way. The average cost for tuition and fees in Indiana is nearly 8,000 per year. This does not include books and supplies (at around $1200) nor what they view as living expenses ($11,500). This is an average yearly cost of $20,700: $9,000 of this will be needed in a lump sum payment to the school when going. And I'm guessing the yearly living expenses aren't exactly all-inclusive. Minimum wage is only $7.25. If you work 38 hours a week for a year you only earn a bit over $14,000 before tax. You might not get tax breaks because you are still a dependent on your parent's taxes. Heck, you can't even afford to pay your living expenses if you are working part-time. As a young high school graduate, most jobs that are willing to work around your college schedule pay this rate. I'm not saying it is impossible, but highly improbable that you can go to college without financial aid. Tuition skyrocketing - yet again - will make little to no difference.
- Trundle 10y ago
  At no point in his comment did he say kids should go to college.
  - Broken_Hippo 10y ago
    That is true, and I'm likely to agree. Some folks don't even consider further education: This obviously wouldn't apply to them. Proper college isn't really a good solution for some folks - I'm a supporter of trade schools - which also charge tuition in many cases, and there are a few jobs that post-high-school education isn't required and you can make a decent enough income. But realistically these aren't the norm, and this still puts folks victim to the borrow-or-don't go situation. For those that college makes sense for, however, this is a pretty common scenario.
ianai 10y ago
Not quite. Think of that 108 billion as an economic stimulus dolled out on an 'as needed' basis. Does that equate to increased demand for higher education down the road? Maybe, maybe not. But: a.) The demand was there before the stimulus package. b.) The individuals benefitting from the stimulus do not have a pure strategy of attaining the bail out. i.e. Just because the government forgave student loans in the past does not mean a later "generation's" loans will be forgiven. c.) The people benefitting from the stimulus spent that money in the past. The stimulus actually affects them as an income factor effectively raising their monthly income while holding their actual wage/salary constant. For the vast majority of the "forgiven" borrowers, this will increase their demand for goods and services. That's the exact sort of multiplier effect government's want with a stimulus. You can even guestimate the effect this would have on GDP. If the government was going to see payments of $1 billion (just a number) per quarter on the principle of those loans then at least an additional $1 billion of goods/services will be demanded by the borrowers. The additional goods/services demanded will be spread out across consumption by the nature of the borrowers. (i.e. If you qualified to have your student loans forgiven then the student loans were having a negative effect on your consumption.) So for every $100 billion in student loans forgiven the economy would grow by some fraction (could be 1 billion, 2 billion, etc) of that amount per month, in perpetuity.

This is a horrible message to kids currently thinking about borrowing because it will make them more likely to borrow which will make tuition skyrocket above its already criminal level.

VLM 10y ago

Its a necessary part of the bubble cycle. Once you're on it, you can't just wish away the bubble and say "now we're gonna run this economic sector on financial fundamentals" or whatever. There doesn't seem much political will to de-bubble economic sectors, real estate certainly hasn't been fixed and thats a larger problem, ditto medical-industrial complex.

arenaninja 10y ago
Could it be that real estate and medical haven't been fixed, just as student loans won't be fixed, because this kicks the can further down the road instead of addressing the problem?
dexterdog 10y ago
And that's what we do - band aid at the cost of everybody so that the industry can keep its racket going and ultimately cost even more in the future.
hood_syntax 10y ago
Housing is screwing the country (rent in particular) and it will create serious problems for the future if nothing is done about it. It's killing the opportunities for young people to save for retirement and reducing their purchasing power.

Broken_Hippo 10y ago

You say this like borrowing for college is a reasonable choice for most people, or a choice at all. For many, going to college means borrowing money because there isn't another way. The average cost for tuition and fees in Indiana is nearly 8,000 per year. This does not include books and supplies (at around $1200) nor what they view as living expenses ($11,500). This is an average yearly cost of $20,700: $9,000 of this will be needed in a lump sum payment to the school when going. And I'm guessing the yearly living expenses aren't exactly all-inclusive. Minimum wage is only $7.25. If you work 38 hours a week for a year you only earn a bit over $14,000 before tax. You might not get tax breaks because you are still a dependent on your parent's taxes. Heck, you can't even afford to pay your living expenses if you are working part-time. As a young high school graduate, most jobs that are willing to work around your college schedule pay this rate. I'm not saying it is impossible, but highly improbable that you can go to college without financial aid. Tuition skyrocketing - yet again - will make little to no difference.

Trundle 10y ago
At no point in his comment did he say kids should go to college.
- Broken_Hippo 10y ago
  That is true, and I'm likely to agree. Some folks don't even consider further education: This obviously wouldn't apply to them. Proper college isn't really a good solution for some folks - I'm a supporter of trade schools - which also charge tuition in many cases, and there are a few jobs that post-high-school education isn't required and you can make a decent enough income. But realistically these aren't the norm, and this still puts folks victim to the borrow-or-don't go situation. For those that college makes sense for, however, this is a pretty common scenario.

ianai 10y ago

Not quite. Think of that 108 billion as an economic stimulus dolled out on an 'as needed' basis. Does that equate to increased demand for higher education down the road? Maybe, maybe not. But: a.) The demand was there before the stimulus package. b.) The individuals benefitting from the stimulus do not have a pure strategy of attaining the bail out. i.e. Just because the government forgave student loans in the past does not mean a later "generation's" loans will be forgiven. c.) The people benefitting from the stimulus spent that money in the past. The stimulus actually affects them as an income factor effectively raising their monthly income while holding their actual wage/salary constant. For the vast majority of the "forgiven" borrowers, this will increase their demand for goods and services. That's the exact sort of multiplier effect government's want with a stimulus. You can even guestimate the effect this would have on GDP. If the government was going to see payments of $1 billion (just a number) per quarter on the principle of those loans then at least an additional $1 billion of goods/services will be demanded by the borrowers. The additional goods/services demanded will be spread out across consumption by the nature of the borrowers. (i.e. If you qualified to have your student loans forgiven then the student loans were having a negative effect on your consumption.) So for every $100 billion in student loans forgiven the economy would grow by some fraction (could be 1 billion, 2 billion, etc) of that amount per month, in perpetuity.