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> the biggest travesty is the non-dischargeability of educational debt There's no doubt that non-dischargeable student can be really rough for a lot of people.

> the biggest travesty is the non-dischargeability of educational debt There's no doubt that non-dischargeable student can be really rough for a lot of people. I'm not in insurance or anything, but it seems like if we just implemented the simplest fix, i.e. let people declare bankrupcy to forgive student loans, the math might just not pencil out to make it feasible to grant any student loans. For instance I couldn't take out an $80k loan to start a business with instead of getting a student loan, no bank would give it to me. So there's definitely something special about student loans and the way in which they're so easy to get without needing good credit or any collateral behind them. And if they could be forgiven by declaring bankruptcy, what would stop lots of people from doing that right after they graduate? For a lot of young people (including myself at that age), your total cumulative assets are worth approximately nothing when you graduate. And it's not like you're gonna be able to buy a house within 7 years of graduating anyway so the hit to your credit score of a bankruptcy might not be that bad. It really doesn't seem like there's a silver bullet solution to help people finance the massive cost of college easily. What's the best solution here? Is it possible to reduce the underlying cost structure of higher education enough to make a big enough difference?

JumpCrisscross 8y ago
> What's the best solution here? Let lenders vary interest rates by institution and major. Also, give lenders a choice: (a) loans dischargeable in court like any debt or (b) non-dischargeable loans where total payments in a calendar year are capped as a fraction of AGI. This combination incentivises lenders to communicate employment and wage information from the labor market to students deciding where to go for school and what to study.
- derekp7 8y ago
  And it will at the same time vary the price of education based on financial post-graduation prospects. Have a shortage of teachers or social workers due to low salary? Well, the relevant degrees would only cost 10% of a STEM degree. I see this as a major win.
- dcosson 8y ago
  Pretty sure b. already exists, there are consolidation programs where you can get your monthly payment capped at a percentage of your salary. The downside is just like with paying the minimum due on a credit card, the interest can really screw you. In some cases the amount you can afford to pay may even be less than the interest.
astura 8y ago
Why do you say you won't be buying a house within seven years of graduating? I bought a house a little less than seven years after graduation. The guy next door bought his house like 2 years after graduation, since it was a bit of a fixer-upper he paid about 65% of what I paid for my house. The median price of houses sold in the US is around $200,000. If you have a good job you can afford a house in 99% of America. And, indeed, there are more homeowners than renters.
- dcosson 8y ago
  Surely you're trolling? Good for you that you live somewhere affordable. Lots of people (much more than 1% of the population) don't, or can't find these "good jobs" you speak of right out of college.
  - astura 8y ago
    No, absolutely not. 99% of Americans live somewhere where buying a house is affordable for most people. That's cold hard facts backed up by the average house price and ownership statistics. Most Americans don't live in New York City or San Francisco. More people own (~65% IIRC) than rent and mortgages are stupid easy to get as long as you're employed; you don't even need a sizable down payment OR a good credit score. The requirements for a FHA loan is 3.5% down and 580 credit score - that's it! There's also plenty of other government subsidized programs for buying a house, my State has one that's available to almost everyone - the income limits are stupid high, more than six figures IIRC. I know people who are in a financial mess and have no business owning a house but they do own because it's so easy to get a mortgage. My friend makes only $30,000/year working for the government and owns a house because she qualified for a mortgage. If it was so impossible to buy a house then it wouldn't be possible for 67% of the population to own a house. Good jobs doesn't need scare quotes. And I don't live in the Midwest either - I live on the east coast. I have friends all over the east coast and don't live in the city where I grew up, so it's not like my experience is hyper localized.
mhneu 8y ago
Thoughtful replies here, thanks. Perhaps letting rates vary across institutions might be the simplest improvement. That would help Stanford students and make it hard to attend lower tier colleges. So we’d also need a way to advantage community colleges with a service mission. The big losers would be lower-tier, high-cost private schools and for-profits. But that’s a good thing- those are the schools that are breaking the American educational system and loading up students with low-value degrees and high debt.

JumpCrisscross 8y ago

> What's the best solution here? Let lenders vary interest rates by institution and major. Also, give lenders a choice: (a) loans dischargeable in court like any debt or (b) non-dischargeable loans where total payments in a calendar year are capped as a fraction of AGI. This combination incentivises lenders to communicate employment and wage information from the labor market to students deciding where to go for school and what to study.

derekp7 8y ago
And it will at the same time vary the price of education based on financial post-graduation prospects. Have a shortage of teachers or social workers due to low salary? Well, the relevant degrees would only cost 10% of a STEM degree. I see this as a major win.
dcosson 8y ago
Pretty sure b. already exists, there are consolidation programs where you can get your monthly payment capped at a percentage of your salary. The downside is just like with paying the minimum due on a credit card, the interest can really screw you. In some cases the amount you can afford to pay may even be less than the interest.

astura 8y ago

Why do you say you won't be buying a house within seven years of graduating? I bought a house a little less than seven years after graduation. The guy next door bought his house like 2 years after graduation, since it was a bit of a fixer-upper he paid about 65% of what I paid for my house. The median price of houses sold in the US is around $200,000. If you have a good job you can afford a house in 99% of America. And, indeed, there are more homeowners than renters.

dcosson 8y ago
Surely you're trolling? Good for you that you live somewhere affordable. Lots of people (much more than 1% of the population) don't, or can't find these "good jobs" you speak of right out of college.
- astura 8y ago
  No, absolutely not. 99% of Americans live somewhere where buying a house is affordable for most people. That's cold hard facts backed up by the average house price and ownership statistics. Most Americans don't live in New York City or San Francisco. More people own (~65% IIRC) than rent and mortgages are stupid easy to get as long as you're employed; you don't even need a sizable down payment OR a good credit score. The requirements for a FHA loan is 3.5% down and 580 credit score - that's it! There's also plenty of other government subsidized programs for buying a house, my State has one that's available to almost everyone - the income limits are stupid high, more than six figures IIRC. I know people who are in a financial mess and have no business owning a house but they do own because it's so easy to get a mortgage. My friend makes only $30,000/year working for the government and owns a house because she qualified for a mortgage. If it was so impossible to buy a house then it wouldn't be possible for 67% of the population to own a house. Good jobs doesn't need scare quotes. And I don't live in the Midwest either - I live on the east coast. I have friends all over the east coast and don't live in the city where I grew up, so it's not like my experience is hyper localized.

mhneu 8y ago

Thoughtful replies here, thanks. Perhaps letting rates vary across institutions might be the simplest improvement. That would help Stanford students and make it hard to attend lower tier colleges. So we’d also need a way to advantage community colleges with a service mission. The big losers would be lower-tier, high-cost private schools and for-profits. But that’s a good thing- those are the schools that are breaking the American educational system and loading up students with low-value degrees and high debt.