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The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed t

by patio11 10y ago

The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. I think this might be a matter of framing -- "failed to pay down at least $1 on their debt" might include students with a deferment who are planning on having the debt forgiven. That is, for better or worse, public policy of the United States; it seems weird to conflate that with default. For example, if you have a Perkins Loan, you can defer during a period of service at any employer where 10+ years would get you loan forgiveness. That list is... rather expansive? https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell... Would I expect people graduating from e.g. a teaching college to largely make principle-decreasing loan payments given that this is our policy? No, I would not; it would require that they receive terrible financial advice.

rosser 10y ago
> That is, for better or worse, public policy of the United States; it seems weird to conflate that with default. Unless the conflation is deliberate, intended to suggest that the folks pursuing those deferments and forgivenesses are as parasitic as the deadbeats.
wtvanhest 10y ago
In order to qualify for those deferals you still need to pay 10% of your income. This means factually that all of those people cannot cover their interest with 10% of their income. In my opinion, that should be considered a loan in default. They can get out from under the loan in 10 years, we still have to pay for it. It is failed policy to allow college to get to expensive due to inflation of prices through loose lending. IMO, that is the real bubble.
- projektfu 10y ago
  It's 10% of discretionary income, which is the amount that excess 150% of the federal poverty level. Nonetheless, the law also allows for hardship forbearances that allow people to stop paying without defaulting. Personally, I think the law is a backdoor subsidy done in the worst way. It increases stress on families who can't afford the tuition for 20 years to give a subsidy to the university. It incentivizes high tuition and keeping students on the treadmill, with no concern for quality. I don't particularly mind if tax money helps pay for an esoteric major, but I expect it to produce a capable scholar in that field.

by patio11 10y ago

rosser 10y ago

> That is, for better or worse, public policy of the United States; it seems weird to conflate that with default. Unless the conflation is deliberate, intended to suggest that the folks pursuing those deferments and forgivenesses are as parasitic as the deadbeats.

wtvanhest 10y ago

In order to qualify for those deferals you still need to pay 10% of your income. This means factually that all of those people cannot cover their interest with 10% of their income. In my opinion, that should be considered a loan in default. They can get out from under the loan in 10 years, we still have to pay for it. It is failed policy to allow college to get to expensive due to inflation of prices through loose lending. IMO, that is the real bubble.

projektfu 10y ago
It's 10% of discretionary income, which is the amount that excess 150% of the federal poverty level. Nonetheless, the law also allows for hardship forbearances that allow people to stop paying without defaulting. Personally, I think the law is a backdoor subsidy done in the worst way. It increases stress on families who can't afford the tuition for 20 years to give a subsidy to the university. It incentivizes high tuition and keeping students on the treadmill, with no concern for quality. I don't particularly mind if tax money helps pay for an esoteric major, but I expect it to produce a capable scholar in that field.