12 ms·

U.S. Student Debt in ‘Serious Delinquency’ Tops $166B

169 points by spking 8y ago

brightball 8y ago
Stuff like this is one of the reasons I like the idea of a basic income...because you could easily just divert the BI to pay for long term services in a situation like this. Can’t pay student loans, your BI gets automatically directed to paying it off with no interest until the balance is clear. Need to pay for school in the first place? Direct the monthly BI to the university to cover tuition/housing/meal plan (or a significant portion of it). Commit a violent crime that will put you in jail, let your BI go to the prison to cover your stay. Have a baby? The baby gets a basic income that can pay for daycare, baby supplies.
- preommr 8y ago
  This makes 0 sense because that's not how UBI works. You can't just give free money to everyone and expect things to magically fix themselves. Where are you even getting all this money under modern constraints to just give to every single person? But that's beside the point because even with UBI, you'd still have to sacrifice QoL to pay back the loans for your education because of the inefficiencies that exist in our current system. The end result would you be slaving away at work with high taxes that go off to pay off your loans and whatever percentage goes to UBI.
  - brightball 8y ago
    The core idea is that every citizen is getting a monthly stipend of some basic amount. If that were to happen, it stands to reason that policy oriented side effects would kick in over time to work alongside such a stipend. First among those, actually securing student loans against the BI. I’ve never seen BI as being anything that would be desirable to live on though. Closer to survival level income in the area of $700 / month. You’d partially pay for it by reducing all other types of government service payouts (welfare, social security, disability, unemployment) by that amount. You’d likely see homeless shelters, rehab clinics, etc open that were designed to operate on a per person budget equaling the BI. At the same time, you can potentially eliminate minimum wage discussions since it would immediately supplement those workers. I think it’s doable at a low level as long as you partially address the costs with dents in the budgets of many of the other existing services.
- DSingularity 8y ago
  Thanks for pointing this all out. I think it’s also worth noting that such a direct will facilitate discussion of just what kind of society we want to be with regards to the means of the common man.
exabrial 8y ago
No creditor would give a loan to someone who doesn't have a chance of paying it back. There are kids going to school for music therapy that are taking $100K in debt. It's time to end government subsidized loans, at least in the current form. The private market does a great job of evaluating risk, the only thing that needs to be done is ensure there is ample competition so it self-regulates.
- maxkwallace 8y ago
  In principle I agree, but in practice, it seems like private lenders are empirically doing a bad job evaluating risk. Rates for private loans are so high they can only be explained by a high default rate, even among "low-risk" demographics. These rates are very high even for students that we'd view as a low credit risk (e.g. studying CS and not music therapy). I think this shows the private market is doing a poor job evaluating risk. That said, it's probably still a good thing long-term to end government subsidized loans. But that doesn't mean the private market is healthy. I'm not an expert on this area, and I don't know why there aren't "smart" lenders that do a better job arbitraging this. It could be possible that it's inherently difficult to predict whether someone will default or not. As other people have pointed out, the real problem is the incentive structure for colleges and the increase in administrative staff (and thus tuition) who are enriching themselves at the expense of everyone else.
  - nroets 8y ago
    It's called adverse selection: A lot talented students happen to have one or more wealthy family member (s) who will either lend or donate the money to them. So commercial lenders receive a disproportionate number of applications from students who will have a difficult time finding a well paid job.
  - dorchadas 8y ago
    > In principle I agree, but in practice, it seems like private lenders are empirically doing a bad job evaluating risk. Rates for private loans are so high they can only be explained by a high default rate, even among "low-risk" demographics. These rates are very high even for students that we'd view as a low credit risk (e.g. studying CS and not music therapy). I think this shows the private market is doing a poor job evaluating risk. Or that they know the risk, but also know people have to borrow so see a chance to profit more from it.
alkibiades 8y ago
i predict we’re going to have to bail these people out. once a critical mass of americans do something idiotic, it becomes politically expedient to bail them out and blame the companies for greed. this is a direct response of the government providing unlimited loans to anyone
- lazulicurio 8y ago
  Not to be too cynical, but I seriously doubt that the individual borrowers will be bailed out. The government will instead provide liquidity to the servicing companies so they can repackage and resell the loans. Nobody really cares about the borrowers; it's all about keeping the companies in business.
- toomuchtodo 8y ago
  We will bail them out when enough voters vote for candidates who support zeroing out this debt, and write it off as a policy mistake. We’ve wasted trillions on unproductive military initiatives in the Middle East, this would be relatively minor in comparison. The economic productivity realized by these debtors able to be full economic participants instead of having student loan drag for a lifetime outweighs the moral hazard.
  - goodells 8y ago
    I can see two distinct groups of people who would take issue with this, not that they'll necessarily have their way: - people who were realistic about their finances and did not take on debt to "drag for a lifetime" in the first place. Why should the "rich" and/or reckless kids who lived in overpriced dorms with unnecessary amenities get bailed out when "I was smart and didn't screw myself from the start"? - people who were able to afford a university education out the gate and were not burdened by any or much debt in the first place (and their parents!). Why should the "poor" and/or reckless kids who reached for something they couldn't & shouldn't have been able to afford get bailed out when "I worked hard to provide for myself / my family from the start"?
    - rosterface 8y ago
wtvanhest 8y ago
If you add up the total cost of all education institutions in the US, multiply by 4 years, then build a payment structure based on that number, there is simply not enough income left over in the corhort of new grads (first 10 years out of school) to pay the debt service. The problem has nothing to do with liberal art majors, or irresponsible borrowing. The problem is entirely driven by an excessive cost structure of both public and private institutions. People like the founder of Lambda School understand the problem and will be the solution.
- temp1928384 8y ago
  Lambda School isn't exactly cheap. 17% of 2 years salary (edit) is capped at $30k. I paid less than that in tuition for 4 years of in-state tuition at a top 10 public school.
  - tfolbrecht 8y ago
    Read there ISA, there is a cap, it's at 30k. You only pay if you make a salary greater than 50k a year. It's also six months full time, intensive, and targeted. They feel it's their duty to help you find a job, and have found a job (>50k) for 100% of their first cohort. Find me a college with similar numbers. [ISA FAQ](https://lambdaschool.com/faq/ https://lambdaschool.com/faq/)
    - temp1928384 8y ago
      I believe Lambda School is effective, though something about being alone at home in front of my computer for 12-15 hours/day for 6 months straight, even with remote office hours and chatting with other students, makes me think I'd feel extremely lonely.
      - tfolbrecht 8y ago
        It's an 8 hour day with a lunch break. 11am-8pm ET, If you want people, you can always go to the local coffeeshop, library etc. I agree colleges killer feature for a young person is networking, friendship, and dating. You just have to find alternative places to get it.
reader5000 8y ago
But I thought the more a degree costs the more it magically increases lifetime earnings?
- Consultant32452 8y ago
  And the corollary: we destroyed the value of a high school diploma by lowering the standards and just shoving everyone through, so you need that magic degree more than ever now.
- deleted 8y ago
  [deleted]
- deleted 8y ago
  [deleted]
- deleted 8y ago
  [deleted]
- deleted 8y ago
  [deleted]
- deleted 8y ago
  [deleted]
- hskaw 8y ago
  It does: if degrees cost more, fewer people can access them, so the market has fewer people with that expertise, so they can make more money.
  - i_cant_speel 8y ago
    Unless there are other schools that provide the same degree for a lower cost.
  - jackpirate 8y ago
    You missed the key step that the people who access these programs are already wealthy, and wealth breads wealth like rabbits.
Mountain_Skies 8y ago
Education is important. Access to education is important. But our current system of giving out student loans with no regard to if the student will ever have a realistic ability to repay borders on predatory. If we can't do anything to solve that portion of the problem, we should at least restrict the mandatory fees that are tacked on for non instructional purposes. No student should have to pay for decades to prop up with school's sports ambitions. For every Alabama that makes a profit off of sports, there are dozens of Georgia States that impose ridiculous mandatory fees on students to balance the budget of the athletics department. Athletics are easy to pick on because they're the most visible but most schools have a whole list of these non instructional fees that students must pay, in most cases, go into debt to pay or be denied access to education. After removing the mandatory fees, also limit how much of the tuition can be used for non instructional purposes. Every institution has overhead that must exist to keep things operational but there must be a limit to how much or we're once again either denying access to education or condemning students to an overwhelming debt burden. Instruction of course isn't the only mission of most universities. Research is important. Extension is important. There are many worthwhile activities universities engage in that should continue but not at the expense of access to instruction. edit: spacing
- Shivetya 8y ago
  People have been fine with Medicade/Medicare spelling out costs for services and such they should be willing to accept the same in higher education to obtain a Federally backed loan. Schools will trip over themselves to offer degree programs to meet Federal Assistance requirements. Each degree, each course credit leading to that degree, should all be subject to review on a periodic basis to insure that the needs of the country as a whole are being supported. Colleges which fall outside the loan guarantees will obviously find methods to insure students can attend, by steering endowment funds and sponsorships.
  - iguy 8y ago
    > each course credit ... should all be subject to review on a periodic basis ... needs of the country This sounds horrifying. You want every change of a course to go via some central bureaucracy for approval? This bureaucracy will be staffed by ideologically neutral disinterested angels, regardless of which party is in power? I think there's a much more free-market solution here. Cap student loan payments at 15% of taxable income, written off after 20 years. Then they can never be a crushing burden, and lenders will become very picky about who (and for what course, and where) they make loans to. And 17-year-olds will be presented with highly relevant individualised information about the likely outcomes of different options. And it'll also create some jobs for the coming glut of machine-learning people, to make these predictions...
anilshanbhag 8y ago
There is so much waste in universities: bloated admin/it staff , libraries filled with journals/magazines that no one reads, tenure system that doesn't allow you to downsize departments that have no students. Tuition can be reduced, however there is no incentive to do it since students can easily get loans.
- erentz 8y ago
  Right. It’s become a government backed bubble. Somehow we need to pop it softly. I’m sympathetic to all the current student debt holders and providing relief to them but if we do that without putting and end to these guaranteed loans we’re just perpetuating (and making worse) the problem. Doing something like making community college and trade school level degrees free and leaving everything else to private loans sorta makes sense. (Arguably 80% of university graduates really didn’t need their degree for their job.)
  - chrisseaton 8y ago
    Why do you think community college and trade school level degrees should be free? It sounds like you think they're less wasteful somehow?
    - maxkwallace 8y ago
      On average, they must be less wasteful simply because their tuition is so much lower. There's lower margins so less room for waste. They are also not a luxury good (college is) so they are more subject to market pressures.
    - skh 8y ago
      Community colleges have lower wages for their permanent faculty compared to universities and 4 year colleges. Community colleges usually have very little in terms of athletics. Athletics at most universities are a huge sink in terms of expenses. Very few universities generate enough money to pay for their athletic departments and none of them as far as I know generate enough money to pay for the buildings and stadiums they use. Community colleges mostly focus on teaching classes and lack the accoutrements that universities generally have.
curtis 8y ago
I wonder if the increase in serious delinquency is being disproportionately driven by loans to for-profit institutions. This article addresses the issue directly: "Student debt a harsh math lesson for US graduates as wages lag" - https://www.nola.com/education/index.ssf/2018/03/student_debt_a_harsh_math_less.html https://www.nola.com/education/index.ssf/2018/03/student_deb... For instance: > Compared to their peers at other colleges, students attending for-profit institutions -- mostly those classified as inclusive, part-time or two-year -- are falling behind in their debt repayments. Twenty-two percent at for-profit schools were behind on their academic loan payments compared with six percent of students at public institutions, according to a survey by the Federal Reserve.
kevmo 8y ago
This is the real national emergency.
DeonPenny 8y ago
If we run this number up hopefully they bail everyone out.
- intopieces 8y ago
  As someone who just paid his student loans off after 7 years out of college, I hope this turns out to be the case. I am fortunate. A confluence of factors outside the control of many borrowers keeps them saddled with debt for the foreseeable future. They deserve relief.
ourmandave 8y ago
This is why keep pushing my daughter towards a trade school. (Once you become immune to eye-rolling life gets easier.) There's a lot of companies with unfilled skilled blue collar jobs. And despite self-driving trucks, semi drivers can make some serious money. And HVAC projected job growth is 14% over the next 10 years. Thank you Global Warming!
- deleted 8y ago
  [deleted]
- bad_good_guy 8y ago
  Should you really be actively pushing your child in any direction? Would the best course of action not just be to make sure that trade schools are a completely viable choice, should she not be interested in an academic subject?
  - CogitoCogito 8y ago
    Basically everybody actively pushes their child in some direction. Assuming you have some wisdom to offer, that's basically what parenting is about. If the OP truly believes trade schools are a better choice, then I don't see why he shouldn't push them. Besides in the circles I grew in this attitude would have brought some balance to things considering I was surrounded by people pushing deeply academic subjects beyond all else.
  - danaur 8y ago
    Parents should guide their children, you can argue about the level of guidance but the meme that you should give your child full control over what they choose to do isn't sensible
  - greedo 8y ago
    Expecting a 17 year old to make life long decisions is nuts, knowing what we do about brain development in young adults. If my daughter wants to study dolphin therapy, you bet I'm going to push her in a direction...
- Casseres 8y ago
briandear 8y ago
This will be highly unpopular but it seems to me like a solution is to start doing some amount of payroll withholding for those with student loan debt similar to the way social security/Medicare is handled. It doesn’t have to be a huge amount, but enough to ensure repayment. Government forces us to “save for retirement” via social security, yet being debt-free is a far greater advantage in retirement than the retirement income supplement of social security. If people had no debt, they’d be better positioned to cover their own retirement. Paying off $100k student loan debt “now” is far more valuable to a person than social security later. Essentially what I would propose is this: your social security withholdings go towards student loans while you have student loans, once the loans are repaid, social security contributions resume. But, it’s a house of cards because those with excessive unpaid student loans are most likely the ones financially irresponsible enough to require social security for their retirement. There is also the other issue that your social security payments you make today are paying current benefits rather than your own benefits later. Social Security is a Ponzi scheme, so in practice my idea wouldn’t work as it might collapse the social security scheme; but adding federal student loan payments to payroll withholdings would potentially solve the problem. Also stricter caps on student loans sounds like good policy. There is no good reason anyone should have $100k+ in undergraduate student loans. Taking out loans to get an expensive degree from a school like NYU ought to not be allowed. Loans should be a means to assist someone in getting education — not as a means for someone to get the most expensive education possible. Practically bottomless student loans has absolutely contributed to the extraordinary inflation in higher education: college costs have risen faster than even healthcare costs, no small part of which can be blamed upon the availability of loans.
- BallinBige 8y ago
  I think an income garnishment does this?
- jogjayr 8y ago
  I rather like the idea of making student debt dischargeable in bankruptcy (not retroactively obviously). Why should borrowers alone face the consequences of their bad decisions? Aren't lenders equally complicit? I understand that educational loans are essentially unsecured loans. So fine, let them be treated like personal loans and let lenders evaluate their risk accordingly. It'll quickly put an end to letting an 18-year old go into $100k in debt for a liberal arts degree.
iamgopal 8y ago
Law regarding repayment and non payment of student loan should be seriously relaxed. Increase risk factor will reduce the amount of float in the market, and supply and demand ultimately force institution to better manage and reduce the cost and price.
ww520 8y ago
The system lacks check and balance to rein in the runaway college cost. Graduated students with crushing debt should start suing the schools to get back some of the money. The schools clearly jack up the overall tuition to push up the debt.
fgkkghhj 8y ago
Free higher education, free universal healthcare - I guess I am really lucky.
dqpb 8y ago
Loans should be based on the earning potential of the degree.
kaycebasques 8y ago
Auto loans are looking interesting, too. * $1.27T of outstanding debt. * Subprime share of that fell to 22% but because so many loans are being created, total number of subprime borrowers (SBPs) is now at all-time highs. * 8% of SBPs are seriously delinquent. Cycle low was 6% in 2012. Peaked at 10% in 2010. * Increasing share of prime loans is offsetting the deteriorating SBP picture. * “Although rising overall delinquency rates remain below 2010 peak levels, there were over 7 million Americans with auto loans that were 90 or more days delinquent at the end of 2018. That is more than a million more troubled borrowers than there had been at the end of 2010 when the overall delinquency rates were at their worst since auto loans are now more prevalent. The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market and warrants continued monitoring and analysis of this sector.” https://libertystreeteconomics.newyorkfed.org/2019/02/just-released-auto-loans-in-high-gear.html https://libertystreeteconomics.newyorkfed.org/2019/02/just-r...
brohoolio 8y ago
There's going to be a bunch of comments about waste in universities, how people are irresponsible, trade schools, government alone guarantees that make it a crisis, no ability to discharge debt, etc. The two big things that typically don't get brought up in these discussions is that government funding for college is way down and medical costs. All these state schools, which are pretty much the backbone of higher education in america are chronically underfunded. The last 40 years in america we have been borrowing against our future and higher education funding is just one aspect. The second aspect is that higher education is fairly labor intensive, a large part of the labor cost is health care. When a pharmaceutical company acquires the rights to a rare drug and jacks up the cost 1000% that cost ultimately is passed on to students.
reasonablemann 8y ago
No coincidence that industries with misaligned incentives create massive debt bubbles. Education, health care, real estate.
xwvvvvwx 8y ago
Just fucking cancel all the debt already :)
keeptrying 8y ago
What are the ways this can cause a recession?
openloop 8y ago
This is fine.
lukeschlather 8y ago
The graph of percentage of people in serious delinquency over the past 20 years doesn't seem to support the doom and gloom throughout the article. In fact it looks like there might even be a bit of a percentage-wise decline, even though the absolute total is increasing linearly.
alexnewman 8y ago
Only things in our economy with no skin in the game get more expensive medical and student loans cannot be bankrupted houses are mostly gov't supported and when they crash the gov't bails them out. If you don't want high prices, tell the gov't to stop inflating the prices.
randomacct3847 8y ago
I don’t regret going to a public college at all. College is more than just a job factory. You make some of your strongest friendships, connections, potentially future partner in school. You learn a lot about yourself. Private edu costs are out of control, but if we can figure out how to cut costs then I don’t think the institution of college/higher ed should go away. You have the rest of your life to work...as a working adult I don’t particularly wish I had skipped college and taken a 6-month online class instead so I could start working earlier.
- malvosenior 8y ago
  I think this is the strongest argument against student debt relief. I would certainly not pay for someone else to do this: "You make some of your strongest friendships, connections, potentially future partner in school. You learn a lot about yourself."
  - randomacct3847 8y ago
    I agree that taking out $200k+ for an undergrad degree is crazy. But what I paid at a public edu was completely reasonable and worth it in my opinion.
    - greedo 8y ago
      My daughter will be going to a small private school in a year; the total cost of tuition is around $7K. She'll be living at home since the school is within driving distance, and working summers to help pay for tuition and expenses. $30K for a BA is fine. Paying outrageous amounts to party on a student loan is what's nuts.
RGamma 8y ago
From a European perspective I can only shake my head at this. It doesn't seem like a good idea at all to indebt a significant part of the young population (which I presume creates a lot of avoidable stress) while the rich gain in wealth and power year after year. But I guess longer-term thinking has been thrown overboard in economic decision/policy making anyway, because that would make the numbers not grow fast enough. Recently I'm under the impression that American society has been tearing itself apart more than is healthy, damaging social cohesion to a great deal. Good luck building an advanced society on distrust and inequality though...
- bitdeveloper 8y ago
  Yep, we are pretty hosed.
- monting 8y ago
  Don’t mean to sound defensive (I’m not American), and I mostly agree with you. But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.
  - fwsgonzo 8y ago
    I don't see how that relates. Maybe you see something I don't?
  - avip 8y ago
    Most Europeans do not associate themselves with the EU but rather with their nation state. Also - not all Europeans are in the EU to start with.
  - why-el 8y ago
    This is a conversation about education. The EU, with all its faults, is leaps and bounds ahead of the US in the democratization of education, even though the US was the nation that pioneered the field in the first place. Goes to show how extreme the whole political spectrum of the US has gotten.
i_am_proteus 8y ago
The entire credit system for education ends up combining government spending and market forces in the worst ways possible. The Federal Reserve Bank of NY drew some conclusions a few years ago to this extent.[0] The Federal government provides an enormous amount of free/"free" credit, the schools get cash and the students take on the risk. Coupled with the role of academic institutions as gatekeepers of a shot at a better future, and we get the system we have. Hyperbolically, t only outcomes schools are incentivized to care about are applications (lower acceptance rates raise prestige) and attendance (money is transferred to the school only while the student is attending). [0] https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf https://www.newyorkfed.org/medialibrary/media/research/staff...
deleted 8y ago
[deleted]
rubyn00bie 8y ago
Let it burn down. No one should pay back their student loan debt. Seriously, just stop. This is a scheme in which they've fucked over a large portion of the population with the skyrocketing prices of education. Further, this education is the regularly accepted means of increasing your production. Society says you have to do this, and then continuously increases the price, without reason. The gist of this is; some shithead, many years ago decided to increase his bottom lines by fucking with future generations and our ability to output... when they started this whole fucking problem, and you know what? Let it burn to the ground. You know who's not gonna lose a bunch of money? The people in student debt, we already fucking have.
- grawprog 8y ago
  Yeah...honestly student loans make the future feel bleak and pointless anyway. The amount of interest that gets put on every month makes paying it back fucking pointless as it is. Unless I like starving and not paying rent so I can do more than just stop the loan from getting bigger while paying it. Meh...I figure maybe society will just collapse at some point and it won't matter anyway. Either that or a bunch of people are going to start going crazy because of this and things will get interesting.
  - indentured 8y ago
    You’re being downvoted for some reason, but you’re saying what I and other Millennials are feeling. Don’t feel bad. I too have an insane amount of debt. I can’t buy a house until my late 30s, if ever (why would I want another money sink, though?) We were just doing what everyone told us to do to be successful, and we got fucked. At least we’ll all go down together.
- pxeboot 8y ago
  This would be beautiful to see. Considering the scope of the population affected, there would be little to no recourse if everybody collectively decided to stop paying at the same time. If you trash every millennials credit score, the scores would become worthless.
wpdev_63 8y ago
The problem is that for _many_ of jobs that 'require' a degree is they're not necessary at ALL! A good high school education is good enough for the vast majority of the jobs outside of STEM. Now we have diploma inflation because it makes them 'more productive'. In an ideal world you world put them in a short boot camp to make sure they up to snuff for the job but atlas you have the gatekeeping going on with universities. I personally can't wait for the education bubble to pop.
orzig 8y ago
Honest question: what are the best two or three studies showing where all the extra money has gone over the last few decades? If millions of people are losing, some set of people must be winning (by an amount roughly inversely proportional to their size). I understand economics is complex, feedback loops, etc., but with so much money flowing it must accumulate somewhere. And I’m sure people have studied it on a deeper than anecdotal level
- Mountain_Skies 8y ago
  There are many winners, probably some we'll never know. Real estate developers near universities are big winners. The living standard of the average student are much higher than they were in the days of shared bedrooms and a single large shared bathroom per floor. Apartments marketed to students are pretty upscale these days. For some students, their college years will be the peak as far as living standards go. There is a whole economic ecosystem that thrives off of student dollars that were nowhere as plentiful before easy federal student loans expanded. The financial markets no doubt have some pretty big winners though the way all of that works is a bit convoluted and difficult to pin down individual winners. If there is no tsunami of default, the government itself (and hopefully taxpayers by extension) likely will come out a winner. The money flowing through campuses flow out in many ways beyond student spending. New construction, salaries for professors and administrators, textbook companies, journal middlemen, and many others are all thriving off of the diversion of so much money into these institutions. In general it's good for the economy around the schools but a million little drags on the economy wherever the students live after graduation as their potential spending dollars are diverted to loan payments instead of the local economy.
chiefalchemist 8y ago
And earlier this week there was a report - from the NY Fed? - that the number of 90+ day delinquent car loans is also up.
arminiusreturns 8y ago
So, one of my side hobbies is saving the world, and my conclusion is that any fiat frb system requires regular debt jubilees (Hammurabi did it first), and part of why our system is so fucked is because people ignore this fact. Any conversation about usurious debt without talking about jubilees is missing the bigger picture.
craftinator 8y ago
I would be interested to see this data scaled with the average price of attending college. That cost has 'surged' in recent years as well, most because colleges are so much better at teaching now!
sys_64738 8y ago
Student debt is unsecured debt hedging against future earnings of the debtor. If you look at it through purely financial return then the degree earnings potential absolutely has to be means tested to reduce risk of default. The only way to make this happen is to have the federal government get out of the student loan business.
smallgovt 8y ago
As someone who graduated from a top tier school, I'm constantly befuddled by society's expectation/belief that college degrees are useful. I learned absolutely nothing during my 4 years of undergrad that is practically useful to my current vocation, and I can say the same is true for 90% of my peers. For some areas of study, college IS worth the cost. For example, hard sciences. But, for the vast majority, it's not (think: business and administration, art, history, economics, etc.) I would guess that in 90% of cases, graduates would be more valuable to companies and potential employers if they spend those 4 years and $300K (tuition + lost wages) learning/practicing their specific trade/industry. So, when are we as a society going to realize that 90% of us are wasting 20% of our most productive years on useless learning? This really seems like a travesty to me.
- bootlooped 8y ago
  From my CS Bachelor's degree I think 15% or less of classes made me a better programmer, 15% or less made me a more well rounded individual, and the remainder were a total waste of time. I did it because I felt like I had to play the game to succeed in the way I wanted to, and I think playing along makes me a small part of the problem.
- cortesoft 8y ago
  I think the disconnect is that a university degree is NOT vocational training, and it never has been. What happened is that for a long time, only a certain class of people got to go to a university, and that class of people were the same ones that got the best jobs. In fact, many companies used a university degree as a filtering mechanism to select that class of person. Other classes saw this, and assumed that if they also got this degree, it would open up that other class. It worked for a bit, but soon there were simply too many people getting the degrees for it to work anymore as a way to select a limited group. It is no longer the gateway into a higher class lifestyle. At the same time, though, I think it is a bit dismissive to call the education useless. I learned a ton studying philosophy at a university, even if it doesn't directly apply that often to my work. It helped me understand the world, its history, and how we think. I am very glad I did it. However, it was not training me for a job. Not everything we do is for job training.
8bitsrule 8y ago
College students in the previous century had a remedy. It was removed in 2005. Forbes: "In 2005, Congress passed, and President George W. Bush signed, the Bankruptcy Abuse Prevention and Consumer Protection Act, which exempted federal and private students loans from discharge." https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an... IIRC correctly, the number and size of student loans grew greatly after this Act. College students who received advice which encouraged them to take on huge debt loads - on speculation - were essentially thrown into the water to see if they could learn to swim.
skookumchuck 8y ago
The solution is straightforward. End the government sponsored loan program. This will cause tuitions to drop down to what the market can justify.
NoblePublius 8y ago
No student loan should be issued without the university being equally liable to pay it back.
juliebooth 8y ago
I live in USA Florida and i am a happy woman today? I told my self that any Loan lender that could change my Life and that of my family, i will refer any person that is looking for loan to Them. If you are in need of loan and you are 100% sure to pay back the loan please contact them and please tell them that Mrs Sharon Coolidge referred you to them. barrymoreloans12@gmail.com
kevindong 8y ago
The trend in American high schools is to push everyone to go to a college; regardless of what each student's interests are, how useful a college education would be in attaining the jobs that the major is applicable towards, the student's academic aptitude, etc. My high school was thankfully somewhat resistant to this trend in that there was a very large vocational program that was somewhat popular amongst my graduating class. I don't mean to offend people when I say this, but there are certain majors that very, VERY few people (if any) should actually pick as a matter of practicality (likelihood of getting a livable-wage job related to the major vs. getting saddled with debt for a degree that you won't use during your lifetime).

169 points by spking 8y ago

Stuff like this is one of the reasons I like the idea of a basic income...because you could easily just divert the BI to pay for long term services in a situation like this. Can’t pay student loans, your BI gets automatically directed to paying it off with no interest until the balance is clear. Need to pay for school in the first place? Direct the monthly BI to the university to cover tuition/housing/meal plan (or a significant portion of it). Commit a violent crime that will put you in jail, let your BI go to the prison to cover your stay. Have a baby? The baby gets a basic income that can pay for daycare, baby supplies.

preommr 8y ago
This makes 0 sense because that's not how UBI works. You can't just give free money to everyone and expect things to magically fix themselves. Where are you even getting all this money under modern constraints to just give to every single person? But that's beside the point because even with UBI, you'd still have to sacrifice QoL to pay back the loans for your education because of the inefficiencies that exist in our current system. The end result would you be slaving away at work with high taxes that go off to pay off your loans and whatever percentage goes to UBI.
- brightball 8y ago
  The core idea is that every citizen is getting a monthly stipend of some basic amount. If that were to happen, it stands to reason that policy oriented side effects would kick in over time to work alongside such a stipend. First among those, actually securing student loans against the BI. I’ve never seen BI as being anything that would be desirable to live on though. Closer to survival level income in the area of $700 / month. You’d partially pay for it by reducing all other types of government service payouts (welfare, social security, disability, unemployment) by that amount. You’d likely see homeless shelters, rehab clinics, etc open that were designed to operate on a per person budget equaling the BI. At the same time, you can potentially eliminate minimum wage discussions since it would immediately supplement those workers. I think it’s doable at a low level as long as you partially address the costs with dents in the budgets of many of the other existing services.
DSingularity 8y ago
Thanks for pointing this all out. I think it’s also worth noting that such a direct will facilitate discussion of just what kind of society we want to be with regards to the means of the common man.

exabrial 8y ago

No creditor would give a loan to someone who doesn't have a chance of paying it back. There are kids going to school for music therapy that are taking $100K in debt. It's time to end government subsidized loans, at least in the current form. The private market does a great job of evaluating risk, the only thing that needs to be done is ensure there is ample competition so it self-regulates.

maxkwallace 8y ago
In principle I agree, but in practice, it seems like private lenders are empirically doing a bad job evaluating risk. Rates for private loans are so high they can only be explained by a high default rate, even among "low-risk" demographics. These rates are very high even for students that we'd view as a low credit risk (e.g. studying CS and not music therapy). I think this shows the private market is doing a poor job evaluating risk. That said, it's probably still a good thing long-term to end government subsidized loans. But that doesn't mean the private market is healthy. I'm not an expert on this area, and I don't know why there aren't "smart" lenders that do a better job arbitraging this. It could be possible that it's inherently difficult to predict whether someone will default or not. As other people have pointed out, the real problem is the incentive structure for colleges and the increase in administrative staff (and thus tuition) who are enriching themselves at the expense of everyone else.
- nroets 8y ago
  It's called adverse selection: A lot talented students happen to have one or more wealthy family member (s) who will either lend or donate the money to them. So commercial lenders receive a disproportionate number of applications from students who will have a difficult time finding a well paid job.
- dorchadas 8y ago
  > In principle I agree, but in practice, it seems like private lenders are empirically doing a bad job evaluating risk. Rates for private loans are so high they can only be explained by a high default rate, even among "low-risk" demographics. These rates are very high even for students that we'd view as a low credit risk (e.g. studying CS and not music therapy). I think this shows the private market is doing a poor job evaluating risk. Or that they know the risk, but also know people have to borrow so see a chance to profit more from it.

alkibiades 8y ago

i predict we’re going to have to bail these people out. once a critical mass of americans do something idiotic, it becomes politically expedient to bail them out and blame the companies for greed. this is a direct response of the government providing unlimited loans to anyone

lazulicurio 8y ago
Not to be too cynical, but I seriously doubt that the individual borrowers will be bailed out. The government will instead provide liquidity to the servicing companies so they can repackage and resell the loans. Nobody really cares about the borrowers; it's all about keeping the companies in business.
toomuchtodo 8y ago
We will bail them out when enough voters vote for candidates who support zeroing out this debt, and write it off as a policy mistake. We’ve wasted trillions on unproductive military initiatives in the Middle East, this would be relatively minor in comparison. The economic productivity realized by these debtors able to be full economic participants instead of having student loan drag for a lifetime outweighs the moral hazard.
- goodells 8y ago
  I can see two distinct groups of people who would take issue with this, not that they'll necessarily have their way: - people who were realistic about their finances and did not take on debt to "drag for a lifetime" in the first place. Why should the "rich" and/or reckless kids who lived in overpriced dorms with unnecessary amenities get bailed out when "I was smart and didn't screw myself from the start"? - people who were able to afford a university education out the gate and were not burdened by any or much debt in the first place (and their parents!). Why should the "poor" and/or reckless kids who reached for something they couldn't & shouldn't have been able to afford get bailed out when "I worked hard to provide for myself / my family from the start"?
  - rosterface 8y ago

wtvanhest 8y ago

If you add up the total cost of all education institutions in the US, multiply by 4 years, then build a payment structure based on that number, there is simply not enough income left over in the corhort of new grads (first 10 years out of school) to pay the debt service. The problem has nothing to do with liberal art majors, or irresponsible borrowing. The problem is entirely driven by an excessive cost structure of both public and private institutions. People like the founder of Lambda School understand the problem and will be the solution.

temp1928384 8y ago
Lambda School isn't exactly cheap. 17% of 2 years salary (edit) is capped at $30k. I paid less than that in tuition for 4 years of in-state tuition at a top 10 public school.
- tfolbrecht 8y ago
  Read there ISA, there is a cap, it's at 30k. You only pay if you make a salary greater than 50k a year. It's also six months full time, intensive, and targeted. They feel it's their duty to help you find a job, and have found a job (>50k) for 100% of their first cohort. Find me a college with similar numbers. [ISA FAQ](https://lambdaschool.com/faq/ https://lambdaschool.com/faq/)
  - temp1928384 8y ago
    I believe Lambda School is effective, though something about being alone at home in front of my computer for 12-15 hours/day for 6 months straight, even with remote office hours and chatting with other students, makes me think I'd feel extremely lonely.
    - tfolbrecht 8y ago
      It's an 8 hour day with a lunch break. 11am-8pm ET, If you want people, you can always go to the local coffeeshop, library etc. I agree colleges killer feature for a young person is networking, friendship, and dating. You just have to find alternative places to get it.

reader5000 8y ago

But I thought the more a degree costs the more it magically increases lifetime earnings?

Consultant32452 8y ago
And the corollary: we destroyed the value of a high school diploma by lowering the standards and just shoving everyone through, so you need that magic degree more than ever now.
deleted 8y ago
[deleted]
deleted 8y ago
[deleted]
deleted 8y ago
[deleted]
deleted 8y ago
[deleted]
deleted 8y ago
[deleted]
hskaw 8y ago
It does: if degrees cost more, fewer people can access them, so the market has fewer people with that expertise, so they can make more money.
- i_cant_speel 8y ago
  Unless there are other schools that provide the same degree for a lower cost.
- jackpirate 8y ago
  You missed the key step that the people who access these programs are already wealthy, and wealth breads wealth like rabbits.

Mountain_Skies 8y ago

Education is important. Access to education is important. But our current system of giving out student loans with no regard to if the student will ever have a realistic ability to repay borders on predatory. If we can't do anything to solve that portion of the problem, we should at least restrict the mandatory fees that are tacked on for non instructional purposes. No student should have to pay for decades to prop up with school's sports ambitions. For every Alabama that makes a profit off of sports, there are dozens of Georgia States that impose ridiculous mandatory fees on students to balance the budget of the athletics department. Athletics are easy to pick on because they're the most visible but most schools have a whole list of these non instructional fees that students must pay, in most cases, go into debt to pay or be denied access to education. After removing the mandatory fees, also limit how much of the tuition can be used for non instructional purposes. Every institution has overhead that must exist to keep things operational but there must be a limit to how much or we're once again either denying access to education or condemning students to an overwhelming debt burden. Instruction of course isn't the only mission of most universities. Research is important. Extension is important. There are many worthwhile activities universities engage in that should continue but not at the expense of access to instruction. edit: spacing

Shivetya 8y ago
People have been fine with Medicade/Medicare spelling out costs for services and such they should be willing to accept the same in higher education to obtain a Federally backed loan. Schools will trip over themselves to offer degree programs to meet Federal Assistance requirements. Each degree, each course credit leading to that degree, should all be subject to review on a periodic basis to insure that the needs of the country as a whole are being supported. Colleges which fall outside the loan guarantees will obviously find methods to insure students can attend, by steering endowment funds and sponsorships.
- iguy 8y ago
  > each course credit ... should all be subject to review on a periodic basis ... needs of the country This sounds horrifying. You want every change of a course to go via some central bureaucracy for approval? This bureaucracy will be staffed by ideologically neutral disinterested angels, regardless of which party is in power? I think there's a much more free-market solution here. Cap student loan payments at 15% of taxable income, written off after 20 years. Then they can never be a crushing burden, and lenders will become very picky about who (and for what course, and where) they make loans to. And 17-year-olds will be presented with highly relevant individualised information about the likely outcomes of different options. And it'll also create some jobs for the coming glut of machine-learning people, to make these predictions...

anilshanbhag 8y ago

There is so much waste in universities: bloated admin/it staff , libraries filled with journals/magazines that no one reads, tenure system that doesn't allow you to downsize departments that have no students. Tuition can be reduced, however there is no incentive to do it since students can easily get loans.

erentz 8y ago
Right. It’s become a government backed bubble. Somehow we need to pop it softly. I’m sympathetic to all the current student debt holders and providing relief to them but if we do that without putting and end to these guaranteed loans we’re just perpetuating (and making worse) the problem. Doing something like making community college and trade school level degrees free and leaving everything else to private loans sorta makes sense. (Arguably 80% of university graduates really didn’t need their degree for their job.)
- chrisseaton 8y ago
  Why do you think community college and trade school level degrees should be free? It sounds like you think they're less wasteful somehow?
  - maxkwallace 8y ago
    On average, they must be less wasteful simply because their tuition is so much lower. There's lower margins so less room for waste. They are also not a luxury good (college is) so they are more subject to market pressures.
  - skh 8y ago
    Community colleges have lower wages for their permanent faculty compared to universities and 4 year colleges. Community colleges usually have very little in terms of athletics. Athletics at most universities are a huge sink in terms of expenses. Very few universities generate enough money to pay for their athletic departments and none of them as far as I know generate enough money to pay for the buildings and stadiums they use. Community colleges mostly focus on teaching classes and lack the accoutrements that universities generally have.

curtis 8y ago

I wonder if the increase in serious delinquency is being disproportionately driven by loans to for-profit institutions. This article addresses the issue directly: "Student debt a harsh math lesson for US graduates as wages lag" - https://www.nola.com/education/index.ssf/2018/03/student_debt_a_harsh_math_less.html https://www.nola.com/education/index.ssf/2018/03/student_deb... For instance: > Compared to their peers at other colleges, students attending for-profit institutions -- mostly those classified as inclusive, part-time or two-year -- are falling behind in their debt repayments. Twenty-two percent at for-profit schools were behind on their academic loan payments compared with six percent of students at public institutions, according to a survey by the Federal Reserve.

kevmo 8y ago

This is the real national emergency.

DeonPenny 8y ago

If we run this number up hopefully they bail everyone out.

intopieces 8y ago
As someone who just paid his student loans off after 7 years out of college, I hope this turns out to be the case. I am fortunate. A confluence of factors outside the control of many borrowers keeps them saddled with debt for the foreseeable future. They deserve relief.

ourmandave 8y ago

This is why keep pushing my daughter towards a trade school. (Once you become immune to eye-rolling life gets easier.) There's a lot of companies with unfilled skilled blue collar jobs. And despite self-driving trucks, semi drivers can make some serious money. And HVAC projected job growth is 14% over the next 10 years. Thank you Global Warming!

deleted 8y ago
[deleted]
bad_good_guy 8y ago
Should you really be actively pushing your child in any direction? Would the best course of action not just be to make sure that trade schools are a completely viable choice, should she not be interested in an academic subject?
- CogitoCogito 8y ago
  Basically everybody actively pushes their child in some direction. Assuming you have some wisdom to offer, that's basically what parenting is about. If the OP truly believes trade schools are a better choice, then I don't see why he shouldn't push them. Besides in the circles I grew in this attitude would have brought some balance to things considering I was surrounded by people pushing deeply academic subjects beyond all else.
- danaur 8y ago
  Parents should guide their children, you can argue about the level of guidance but the meme that you should give your child full control over what they choose to do isn't sensible
- greedo 8y ago
  Expecting a 17 year old to make life long decisions is nuts, knowing what we do about brain development in young adults. If my daughter wants to study dolphin therapy, you bet I'm going to push her in a direction...
Casseres 8y ago

briandear 8y ago

This will be highly unpopular but it seems to me like a solution is to start doing some amount of payroll withholding for those with student loan debt similar to the way social security/Medicare is handled. It doesn’t have to be a huge amount, but enough to ensure repayment. Government forces us to “save for retirement” via social security, yet being debt-free is a far greater advantage in retirement than the retirement income supplement of social security. If people had no debt, they’d be better positioned to cover their own retirement. Paying off $100k student loan debt “now” is far more valuable to a person than social security later. Essentially what I would propose is this: your social security withholdings go towards student loans while you have student loans, once the loans are repaid, social security contributions resume. But, it’s a house of cards because those with excessive unpaid student loans are most likely the ones financially irresponsible enough to require social security for their retirement. There is also the other issue that your social security payments you make today are paying current benefits rather than your own benefits later. Social Security is a Ponzi scheme, so in practice my idea wouldn’t work as it might collapse the social security scheme; but adding federal student loan payments to payroll withholdings would potentially solve the problem. Also stricter caps on student loans sounds like good policy. There is no good reason anyone should have $100k+ in undergraduate student loans. Taking out loans to get an expensive degree from a school like NYU ought to not be allowed. Loans should be a means to assist someone in getting education — not as a means for someone to get the most expensive education possible. Practically bottomless student loans has absolutely contributed to the extraordinary inflation in higher education: college costs have risen faster than even healthcare costs, no small part of which can be blamed upon the availability of loans.

BallinBige 8y ago
I think an income garnishment does this?
jogjayr 8y ago
I rather like the idea of making student debt dischargeable in bankruptcy (not retroactively obviously). Why should borrowers alone face the consequences of their bad decisions? Aren't lenders equally complicit? I understand that educational loans are essentially unsecured loans. So fine, let them be treated like personal loans and let lenders evaluate their risk accordingly. It'll quickly put an end to letting an 18-year old go into $100k in debt for a liberal arts degree.

iamgopal 8y ago

Law regarding repayment and non payment of student loan should be seriously relaxed. Increase risk factor will reduce the amount of float in the market, and supply and demand ultimately force institution to better manage and reduce the cost and price.

ww520 8y ago

The system lacks check and balance to rein in the runaway college cost. Graduated students with crushing debt should start suing the schools to get back some of the money. The schools clearly jack up the overall tuition to push up the debt.

fgkkghhj 8y ago

Free higher education, free universal healthcare - I guess I am really lucky.

dqpb 8y ago

Loans should be based on the earning potential of the degree.

kaycebasques 8y ago

Auto loans are looking interesting, too. * $1.27T of outstanding debt. * Subprime share of that fell to 22% but because so many loans are being created, total number of subprime borrowers (SBPs) is now at all-time highs. * 8% of SBPs are seriously delinquent. Cycle low was 6% in 2012. Peaked at 10% in 2010. * Increasing share of prime loans is offsetting the deteriorating SBP picture. * “Although rising overall delinquency rates remain below 2010 peak levels, there were over 7 million Americans with auto loans that were 90 or more days delinquent at the end of 2018. That is more than a million more troubled borrowers than there had been at the end of 2010 when the overall delinquency rates were at their worst since auto loans are now more prevalent. The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market and warrants continued monitoring and analysis of this sector.” https://libertystreeteconomics.newyorkfed.org/2019/02/just-released-auto-loans-in-high-gear.html https://libertystreeteconomics.newyorkfed.org/2019/02/just-r...

brohoolio 8y ago

There's going to be a bunch of comments about waste in universities, how people are irresponsible, trade schools, government alone guarantees that make it a crisis, no ability to discharge debt, etc. The two big things that typically don't get brought up in these discussions is that government funding for college is way down and medical costs. All these state schools, which are pretty much the backbone of higher education in america are chronically underfunded. The last 40 years in america we have been borrowing against our future and higher education funding is just one aspect. The second aspect is that higher education is fairly labor intensive, a large part of the labor cost is health care. When a pharmaceutical company acquires the rights to a rare drug and jacks up the cost 1000% that cost ultimately is passed on to students.

reasonablemann 8y ago

No coincidence that industries with misaligned incentives create massive debt bubbles. Education, health care, real estate.

xwvvvvwx 8y ago

Just fucking cancel all the debt already :)

keeptrying 8y ago

What are the ways this can cause a recession?

openloop 8y ago

This is fine.

lukeschlather 8y ago

The graph of percentage of people in serious delinquency over the past 20 years doesn't seem to support the doom and gloom throughout the article. In fact it looks like there might even be a bit of a percentage-wise decline, even though the absolute total is increasing linearly.

alexnewman 8y ago

Only things in our economy with no skin in the game get more expensive medical and student loans cannot be bankrupted houses are mostly gov't supported and when they crash the gov't bails them out. If you don't want high prices, tell the gov't to stop inflating the prices.

randomacct3847 8y ago

I don’t regret going to a public college at all. College is more than just a job factory. You make some of your strongest friendships, connections, potentially future partner in school. You learn a lot about yourself. Private edu costs are out of control, but if we can figure out how to cut costs then I don’t think the institution of college/higher ed should go away. You have the rest of your life to work...as a working adult I don’t particularly wish I had skipped college and taken a 6-month online class instead so I could start working earlier.

malvosenior 8y ago
I think this is the strongest argument against student debt relief. I would certainly not pay for someone else to do this: "You make some of your strongest friendships, connections, potentially future partner in school. You learn a lot about yourself."
- randomacct3847 8y ago
  I agree that taking out $200k+ for an undergrad degree is crazy. But what I paid at a public edu was completely reasonable and worth it in my opinion.
  - greedo 8y ago
    My daughter will be going to a small private school in a year; the total cost of tuition is around $7K. She'll be living at home since the school is within driving distance, and working summers to help pay for tuition and expenses. $30K for a BA is fine. Paying outrageous amounts to party on a student loan is what's nuts.

RGamma 8y ago

From a European perspective I can only shake my head at this. It doesn't seem like a good idea at all to indebt a significant part of the young population (which I presume creates a lot of avoidable stress) while the rich gain in wealth and power year after year. But I guess longer-term thinking has been thrown overboard in economic decision/policy making anyway, because that would make the numbers not grow fast enough. Recently I'm under the impression that American society has been tearing itself apart more than is healthy, damaging social cohesion to a great deal. Good luck building an advanced society on distrust and inequality though...

bitdeveloper 8y ago
Yep, we are pretty hosed.
monting 8y ago
Don’t mean to sound defensive (I’m not American), and I mostly agree with you. But, from a non-European perspective, Europe doesn’t seem to be doing well? It seems the EU is slowly disintegrating, and the monetary union isn’t working. Also the political landscape seems to be in turmoil as well.
- fwsgonzo 8y ago
  I don't see how that relates. Maybe you see something I don't?
- avip 8y ago
  Most Europeans do not associate themselves with the EU but rather with their nation state. Also - not all Europeans are in the EU to start with.
- why-el 8y ago
  This is a conversation about education. The EU, with all its faults, is leaps and bounds ahead of the US in the democratization of education, even though the US was the nation that pioneered the field in the first place. Goes to show how extreme the whole political spectrum of the US has gotten.

i_am_proteus 8y ago

The entire credit system for education ends up combining government spending and market forces in the worst ways possible. The Federal Reserve Bank of NY drew some conclusions a few years ago to this extent.[0] The Federal government provides an enormous amount of free/"free" credit, the schools get cash and the students take on the risk. Coupled with the role of academic institutions as gatekeepers of a shot at a better future, and we get the system we have. Hyperbolically, t only outcomes schools are incentivized to care about are applications (lower acceptance rates raise prestige) and attendance (money is transferred to the school only while the student is attending). [0] https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf https://www.newyorkfed.org/medialibrary/media/research/staff...

deleted 8y ago

[deleted]

rubyn00bie 8y ago

Let it burn down. No one should pay back their student loan debt. Seriously, just stop. This is a scheme in which they've fucked over a large portion of the population with the skyrocketing prices of education. Further, this education is the regularly accepted means of increasing your production. Society says you have to do this, and then continuously increases the price, without reason. The gist of this is; some shithead, many years ago decided to increase his bottom lines by fucking with future generations and our ability to output... when they started this whole fucking problem, and you know what? Let it burn to the ground. You know who's not gonna lose a bunch of money? The people in student debt, we already fucking have.

grawprog 8y ago
Yeah...honestly student loans make the future feel bleak and pointless anyway. The amount of interest that gets put on every month makes paying it back fucking pointless as it is. Unless I like starving and not paying rent so I can do more than just stop the loan from getting bigger while paying it. Meh...I figure maybe society will just collapse at some point and it won't matter anyway. Either that or a bunch of people are going to start going crazy because of this and things will get interesting.
- indentured 8y ago
  You’re being downvoted for some reason, but you’re saying what I and other Millennials are feeling. Don’t feel bad. I too have an insane amount of debt. I can’t buy a house until my late 30s, if ever (why would I want another money sink, though?) We were just doing what everyone told us to do to be successful, and we got fucked. At least we’ll all go down together.
pxeboot 8y ago
This would be beautiful to see. Considering the scope of the population affected, there would be little to no recourse if everybody collectively decided to stop paying at the same time. If you trash every millennials credit score, the scores would become worthless.

wpdev_63 8y ago

The problem is that for _many_ of jobs that 'require' a degree is they're not necessary at ALL! A good high school education is good enough for the vast majority of the jobs outside of STEM. Now we have diploma inflation because it makes them 'more productive'. In an ideal world you world put them in a short boot camp to make sure they up to snuff for the job but atlas you have the gatekeeping going on with universities. I personally can't wait for the education bubble to pop.

orzig 8y ago

Honest question: what are the best two or three studies showing where all the extra money has gone over the last few decades? If millions of people are losing, some set of people must be winning (by an amount roughly inversely proportional to their size). I understand economics is complex, feedback loops, etc., but with so much money flowing it must accumulate somewhere. And I’m sure people have studied it on a deeper than anecdotal level

Mountain_Skies 8y ago
There are many winners, probably some we'll never know. Real estate developers near universities are big winners. The living standard of the average student are much higher than they were in the days of shared bedrooms and a single large shared bathroom per floor. Apartments marketed to students are pretty upscale these days. For some students, their college years will be the peak as far as living standards go. There is a whole economic ecosystem that thrives off of student dollars that were nowhere as plentiful before easy federal student loans expanded. The financial markets no doubt have some pretty big winners though the way all of that works is a bit convoluted and difficult to pin down individual winners. If there is no tsunami of default, the government itself (and hopefully taxpayers by extension) likely will come out a winner. The money flowing through campuses flow out in many ways beyond student spending. New construction, salaries for professors and administrators, textbook companies, journal middlemen, and many others are all thriving off of the diversion of so much money into these institutions. In general it's good for the economy around the schools but a million little drags on the economy wherever the students live after graduation as their potential spending dollars are diverted to loan payments instead of the local economy.

chiefalchemist 8y ago

And earlier this week there was a report - from the NY Fed? - that the number of 90+ day delinquent car loans is also up.

arminiusreturns 8y ago

So, one of my side hobbies is saving the world, and my conclusion is that any fiat frb system requires regular debt jubilees (Hammurabi did it first), and part of why our system is so fucked is because people ignore this fact. Any conversation about usurious debt without talking about jubilees is missing the bigger picture.

craftinator 8y ago

I would be interested to see this data scaled with the average price of attending college. That cost has 'surged' in recent years as well, most because colleges are so much better at teaching now!

sys_64738 8y ago

Student debt is unsecured debt hedging against future earnings of the debtor. If you look at it through purely financial return then the degree earnings potential absolutely has to be means tested to reduce risk of default. The only way to make this happen is to have the federal government get out of the student loan business.

smallgovt 8y ago

As someone who graduated from a top tier school, I'm constantly befuddled by society's expectation/belief that college degrees are useful. I learned absolutely nothing during my 4 years of undergrad that is practically useful to my current vocation, and I can say the same is true for 90% of my peers. For some areas of study, college IS worth the cost. For example, hard sciences. But, for the vast majority, it's not (think: business and administration, art, history, economics, etc.) I would guess that in 90% of cases, graduates would be more valuable to companies and potential employers if they spend those 4 years and $300K (tuition + lost wages) learning/practicing their specific trade/industry. So, when are we as a society going to realize that 90% of us are wasting 20% of our most productive years on useless learning? This really seems like a travesty to me.

bootlooped 8y ago
From my CS Bachelor's degree I think 15% or less of classes made me a better programmer, 15% or less made me a more well rounded individual, and the remainder were a total waste of time. I did it because I felt like I had to play the game to succeed in the way I wanted to, and I think playing along makes me a small part of the problem.
cortesoft 8y ago
I think the disconnect is that a university degree is NOT vocational training, and it never has been. What happened is that for a long time, only a certain class of people got to go to a university, and that class of people were the same ones that got the best jobs. In fact, many companies used a university degree as a filtering mechanism to select that class of person. Other classes saw this, and assumed that if they also got this degree, it would open up that other class. It worked for a bit, but soon there were simply too many people getting the degrees for it to work anymore as a way to select a limited group. It is no longer the gateway into a higher class lifestyle. At the same time, though, I think it is a bit dismissive to call the education useless. I learned a ton studying philosophy at a university, even if it doesn't directly apply that often to my work. It helped me understand the world, its history, and how we think. I am very glad I did it. However, it was not training me for a job. Not everything we do is for job training.

8bitsrule 8y ago

College students in the previous century had a remedy. It was removed in 2005. Forbes: "In 2005, Congress passed, and President George W. Bush signed, the Bankruptcy Abuse Prevention and Consumer Protection Act, which exempted federal and private students loans from discharge." https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an... IIRC correctly, the number and size of student loans grew greatly after this Act. College students who received advice which encouraged them to take on huge debt loads - on speculation - were essentially thrown into the water to see if they could learn to swim.

skookumchuck 8y ago

The solution is straightforward. End the government sponsored loan program. This will cause tuitions to drop down to what the market can justify.

NoblePublius 8y ago

No student loan should be issued without the university being equally liable to pay it back.

juliebooth 8y ago

I live in USA Florida and i am a happy woman today? I told my self that any Loan lender that could change my Life and that of my family, i will refer any person that is looking for loan to Them. If you are in need of loan and you are 100% sure to pay back the loan please contact them and please tell them that Mrs Sharon Coolidge referred you to them. barrymoreloans12@gmail.com

kevindong 8y ago

The trend in American high schools is to push everyone to go to a college; regardless of what each student's interests are, how useful a college education would be in attaining the jobs that the major is applicable towards, the student's academic aptitude, etc. My high school was thankfully somewhat resistant to this trend in that there was a very large vocational program that was somewhat popular amongst my graduating class. I don't mean to offend people when I say this, but there are certain majors that very, VERY few people (if any) should actually pick as a matter of practicality (likelihood of getting a livable-wage job related to the major vs. getting saddled with debt for a degree that you won't use during your lifetime).