7 ms·

Imagine taking out 200k in loans for an uncertain future income. Imagine that previous generations paid less for the same hiring opportunities.

dantheman 7y ago
These crazy loan amounts are not taken by most students. There are many ways that most people choose to keep their costs low - living not as nice housing, not going to your top school, working while in college. Here's some stats: https://www.pewresearch.org/fact-tank/2019/08/13/facts-about-student-loans/ https://www.pewresearch.org/fact-tank/2019/08/13/facts-about... Median bachelors degree debt: $25,000 Most of these people with huge debts are getting graduate degrees and they significantly skew the results when looking at the average, the median is far more insightful.
- ericd 7y ago
  Thanks for the reality check.
- mattwest 7y ago
  An appropriate correction, but I don't think it changes the inevitable feeling of doom that many college students and recent graduates face. $25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment. When you borrow for a house or car, there is an immediate, tangible benefit. With college, it's not so simple. It would be great if you didn't need to go to college, but let's face it. You simply make more money with a degree, and many employers require them. There is an undeniable problem with tuition rates over time and its affect on the mental health of many American students.
  - learc83 7y ago
    >$25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment. If that $25k is public loans, which it should be since that's well under the limit, the uncertainty should be mitigated by income based repayment plans. You'll never have to pay more than 10% of your disposable income (income over 1.5x the federal poverty level). If anything I think the feeling of doom is caused by people constantly telling kids how bad student debt is without realizing that $25k in public loans and $200k in private loans are vastly different situations. Most younger people I know feel guilty about taking out $25k in loans to make hundreds of thousands more over their life time.
    - throwawayjava 7y ago
      > ...$25k in loans to make hundreds of thousands more over their life time. 1. Future reward should be discounted, usually by a fairly large constant, because of interest and risk. Also, in many fields, most of those extra hundreds will come toward the end of a career. So, highly discounted. 2. I wonder if it's really a good idea to set up a society where banks that provide educational loans are able to capture huge percentages of future productivity. Seems like this would have all sorts of really negative outcomes. Some of those negative outcomes are already happening -- e.g., we effectively import 90+% of our scientific human capital because US students aren't willing to do phds. We realize that allowing financiers to capture a big chunk of the rewards for K-12 ed is a bad idea. Why don't we realize that the same is true for college?
      - learc83 7y ago
        1. Enough of the extra income is weighted towards the beginning that for most people it's worth $25k particularly since repayment us based on income. 2. Public loans are over 90% of disbursements, and if you're only borrowing $25k you're definitely getting public loans. Public loans are made directly from the treasury. No banks involved. Also most stem phds work as researchers and teachers--they generally aren't paying tuition.
        throwawayjava 7y ago
        > Enough of the extra income is weighted towards the beginning... No banks involved.... Whether it's banks or other taxpayers or recipients of other entitlement programs is, I guess, a bit of a red herring wrt the point I was trying to make. The question is about the knock-on effects of squeezing an entire generation for some chunk of what they're worth before they even enter the job market. Again, I think the K-12 analogy is the best way of communicating the point I'm trying to make. Why don't we also charge high school students $10K @ 4% instead of paying for high school through taxes? Well, because that would be a huge net negative for society. > Also most stem phds work as researchers and teachers--they generally aren't paying tuition. I have a stem phd :). I was referring to the huge opportunity cost re: delayed earnings. US students opting out of phds because they have huge student debt to service is a real thing. This is true even when the phd would undoubtedly increase lifetime earnings (e.g., students from no-name schools turning down CMU/MIT/Berkeley/Standford phd acceptance letters for mid five figure salaries).
  - twblalock 7y ago
    $25k is actually less than the average price of a new car sold in the US. It's not an enormous amount of debt. It's manageable. Would it be better if students didn't owe money after college? Yes. Is the student loan debt equivalent of a new midrange Toyota Camry a life-crushing burden? No, not really.
    - TheOtherHobbes 7y ago
      Student debt is running at around 8% of US GDP. It might or might not be a life-crushing burden for individuals. But it's still an incredibly risky burden for a fragile economy. And personally I don't find "And don't even think about a graduate degree unless you want to end up with >$40k" all that reassuring for those with postgrad talent and ambitions.
      - twblalock 7y ago
        I don't know who says "And don't even think about a graduate degree unless you want to end up with >$40k". When I went to grad school the standard advice was that you shouldn't go anywhere without a free ride in the form of tuition waivers and/or a stipend or TA job. Professional schools (law, medicine, MBA, etc.) are different, but they also cost way more than $40k.
    - simple_phrases 7y ago
      I don't know many people who get saddled with $25k of brand new car debt when they turn 18. Typically, you buy a brand new car if you can afford one, and that precludes most teens. We're telling every kid in high school not born into means that they'll be destitute if they don't go to college. The two are not comparable.
      - CapricornNoble 7y ago
        "I don't know many people who get saddled with $25k of brand new car debt when they turn 18." Spend some time near a military base. Brand new Mustangs galore. And when you ask the kids who bought them for some details you find out these Lance Corporals are paying like 19% interest. -_- A side-effect of schools not having classes like Home Economics anymore.
- chillwaves 7y ago
  That ignores the fact that out of state schools cost on average of double and not every state either has the programs folks are looking for or the schools to go to, so some resort to out of state and pay $20k per year and will walk out with more than twice that in debt. Also the cost of living around good schools is mostly increasing, at least if they are in an urban environment.
  - dantheman 7y ago
    Completely agree schools cost too much and ideally everyone would have lots of options -- talking about loans isn't they way to get there, the problem is the cost of schools and housing skyrocketing.
  - ericd 7y ago
    So, do a cost benefit analysis of whether it’s worth it to go out of state and pay twice as much to study that esoteric subject? You seem to be implying that students in those situations have no choice but to take on more debt, which seems to be a recurring theme in a lot of these threads, but they do. Or, they can live at home and go to a local community college for the first two years to take the general reqs, and finish up at that expensive 4 year school. A few of my friends did that and saved quite a lot.
    - chillwaves 7y ago
      > study that esoteric subject Where does this come from? The major one had was game design, another was for IT. I'm not implying anything. I know people from states who don't have great schools (or programs) available to them and choose to go out of state. The whole instate/out of state system needs an overhaul as well. Some students want to resettle out of their state and intend to stay after getting their education. That's a net plus for the state, why make it so difficult for them to get an education here if they are academically qualified?
      - ericd 7y ago
        Those are slightly more esoteric/unusual programs. More common would be Computer Science. Yep, the public university program could definitely use work, no argument there. But I’m under the impression that most states have at least one serviceable university.
chrisco255 7y ago
Imagine skipping college altogether and getting a blue collar job like plumbing or working your way up to retail management. Imagine that colleges take advantage of egregious, lax loan policies and inflate the price of education to exorbitant amounts. Reminder to periodically get away from technology and into nature. Take up a hobby like fishing, kayaking or whatever floats your boat. Too much outrage in the world today.
- knolax 7y ago
  Imagine breaking your body doing blue-collar work only to be deprecated once what you do is inevitably automated, leaving you with no transferrable skills or employment prospects in middle age.
  - chokolad 7y ago
    > Imagine breaking your body doing blue-collar work only to be deprecated once what you do is inevitably automated, leaving you with no transferrable skills or employment prospects in middle age. Man, I wish plumbing was automated. It's not going to happen any time soon though and plumbers will quote exorbitant prices for their work for quite some time.
    - DanBC 7y ago
      Do it yourself if it's so easy.
      - AlexTWithBeard 7y ago
        I do it myself: neither plumbing nor home electricity is a rocket science. My town though thinks only a person who has completed a three years apprenticeship is allowed to install a new electric outlet.
      - chokolad 7y ago
        > Do it yourself if it's so easy. That's what I ended up doing after having a few unfortunate interactions with local handymen of various specializations. After going through the motions I understood how badly I was ripped off previously
brighton36 7y ago
I don't know why people pay for degrees. I never bought one, and I never had a problem with opportunity in my life as a consequence. Imo, the bottom needs to drop out of this market.
- mattwest 7y ago
  "I don't know why people pay for degrees" Because some pursuits in life require them. What about someone who wants to pursue genetics or molecular biology? Those are essential fields that provide things like healthcare and food security.
  - brighton36 7y ago
    Yeah, I get that. Those people seem like a minority of the degrees. But even there, I suspect there's probably creative paths through the bureaucracies that don't involve degrees, or push the degree costs onto employers.
- mLuby 7y ago
  The "bottom dropping out" means at minimum a great depression, quite possibly wide-scale violence. Economists almost always hand-wave away the financial (let alone human) cost of forcing people can switch jobs or careers, then complain people are "irrational actors." I assume they do this because economists are actually bad at economics and so should find jobs more suited to their aptitudes.
  - brighton36 7y ago
    Sure. The fat has to get trimmed. Short these loans I suppose, if you want to make money during the depression.
    - ben_w 7y ago
      What is your advice for the people who are defaulting on the loans because they don’t have enough money to pay them never mind short them? Remember that previous examples of people rioting over poverty has included literally beheading the rich, en-masse, in a fundamental change of the nature of national governance.
rayiner 7y ago
The average student loan debt for the class of 2017 was about as much as the average new car loan. And repayment is limited to 10% of disposable income with forgiveness after 20 years. The whole “crisis” is the projected anxiety of the the relatively small handful of upper middle class people who are actually looking at taking $200k in loans.
- quaquaqua1 7y ago
  I paid 30k and my parents paid 70k for me to get my degree. They don't shut up about it. I don't use my degree 7 years later.
- Spooky23 7y ago
  Average is misleading. 70% of students borrow, and the average debt is suspiciously similar to the federally backed loan caps. People incur debts in all sorts of ways for school besides a formal student loan as well. Private loans are expensive and often avoided. Home equity loans are common, as are credit cards for both students and parents.
jedimastert 7y ago
Edit: You know, I started this comment just wanting to point out the interesting economic relationship of "hours worked to total cost", but apparently got much more rant-y. I'll leave this here as an example of the anxiety I still feel about college, even after 3 years out of it. The important part of the comment is the three of so paragraphs. ===== Not even less in terms of money. Not even less money adjusted for inflation. Less in terms of time. This website[0] lets you look at how much time of minimum wage work it would have taken to pay for a college degree in 1987 vs now, Because of vastly inflating tuition prices and relatively stagnant minimum wage, there's a very significant difference. For the college that I went to, working part time at a minimum wage job not only would have paid for the entirety of tuition, it would have paid 156% of tuition. What I would have had left over would have been more than what my parents paid for the down payment of the house my family of 5 grew up in. (warning: projection time) Now I could barely pay half on a part time job, so I either start my adult life with absolutely crushing debt, hope that my parents set aside what would have been way more that the original tuition to cover what would have been left, kill myself trying to work full time and be a student full time, or stunt my career by a few years doing school part time and coming into the workforce years behind in a fairly ageist sector. And all this for a piece of paper that was pounded into our head that we needed in order to have any kind of hope of getting into even a reasonably basic field. If you can't tell, I can empathize with why college might give someone depression and anxiety. That's not to mention the general artificial competitiveness of getting into a "good" school, internships, and everything else to make sure that your resume is good enough to even find a job after college, lest you spend a year or two floating and having to explain an every growing gap in your resume. There was also the special bureaucratic that I ended up falling into (though those were just unfortunate circumstances). I ended up getting the amazing job I have right now by almost pure luck. I know a lot of my classmates that aren't so lucky and have simply very little extra value (other than the worthy pursuit of knowledge and life experience) for the incredibly expensive piece of paper gathering dust in their closet. [0]: https://www.marketwatch.com/graphics/college-debt-now-and-then/ https://www.marketwatch.com/graphics/college-debt-now-and-th...
paulpauper 7y ago
It's more like $20k-40k Given all the generous payment, deferral, and forbearance plans, student loan debt is a better deal than other types of debt, and unlike consumer debt ,a college degree gains value in term of higher inflation adjusted wages.
masonic 7y ago
Imagine that previous generations paid less for the same hiring opportunities. Acknowledge that many minimized (or avoided) debt by working their way through school, often doing jobs the current generation considers "beneath" them.

dantheman 7y ago

These crazy loan amounts are not taken by most students. There are many ways that most people choose to keep their costs low - living not as nice housing, not going to your top school, working while in college. Here's some stats: https://www.pewresearch.org/fact-tank/2019/08/13/facts-about-student-loans/ https://www.pewresearch.org/fact-tank/2019/08/13/facts-about... Median bachelors degree debt: $25,000 Most of these people with huge debts are getting graduate degrees and they significantly skew the results when looking at the average, the median is far more insightful.

ericd 7y ago
Thanks for the reality check.
mattwest 7y ago
An appropriate correction, but I don't think it changes the inevitable feeling of doom that many college students and recent graduates face. $25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment. When you borrow for a house or car, there is an immediate, tangible benefit. With college, it's not so simple. It would be great if you didn't need to go to college, but let's face it. You simply make more money with a degree, and many employers require them. There is an undeniable problem with tuition rates over time and its affect on the mental health of many American students.
- learc83 7y ago
  >$25,000 is an enormous amount of debt, especially when there is a multitude of uncertainties with the investment. If that $25k is public loans, which it should be since that's well under the limit, the uncertainty should be mitigated by income based repayment plans. You'll never have to pay more than 10% of your disposable income (income over 1.5x the federal poverty level). If anything I think the feeling of doom is caused by people constantly telling kids how bad student debt is without realizing that $25k in public loans and $200k in private loans are vastly different situations. Most younger people I know feel guilty about taking out $25k in loans to make hundreds of thousands more over their life time.
  - throwawayjava 7y ago
    > ...$25k in loans to make hundreds of thousands more over their life time. 1. Future reward should be discounted, usually by a fairly large constant, because of interest and risk. Also, in many fields, most of those extra hundreds will come toward the end of a career. So, highly discounted. 2. I wonder if it's really a good idea to set up a society where banks that provide educational loans are able to capture huge percentages of future productivity. Seems like this would have all sorts of really negative outcomes. Some of those negative outcomes are already happening -- e.g., we effectively import 90+% of our scientific human capital because US students aren't willing to do phds. We realize that allowing financiers to capture a big chunk of the rewards for K-12 ed is a bad idea. Why don't we realize that the same is true for college?
    - learc83 7y ago
      1. Enough of the extra income is weighted towards the beginning that for most people it's worth $25k particularly since repayment us based on income. 2. Public loans are over 90% of disbursements, and if you're only borrowing $25k you're definitely getting public loans. Public loans are made directly from the treasury. No banks involved. Also most stem phds work as researchers and teachers--they generally aren't paying tuition.
      - throwawayjava 7y ago
        > Enough of the extra income is weighted towards the beginning... No banks involved.... Whether it's banks or other taxpayers or recipients of other entitlement programs is, I guess, a bit of a red herring wrt the point I was trying to make. The question is about the knock-on effects of squeezing an entire generation for some chunk of what they're worth before they even enter the job market. Again, I think the K-12 analogy is the best way of communicating the point I'm trying to make. Why don't we also charge high school students $10K @ 4% instead of paying for high school through taxes? Well, because that would be a huge net negative for society. > Also most stem phds work as researchers and teachers--they generally aren't paying tuition. I have a stem phd :). I was referring to the huge opportunity cost re: delayed earnings. US students opting out of phds because they have huge student debt to service is a real thing. This is true even when the phd would undoubtedly increase lifetime earnings (e.g., students from no-name schools turning down CMU/MIT/Berkeley/Standford phd acceptance letters for mid five figure salaries).
- twblalock 7y ago
  $25k is actually less than the average price of a new car sold in the US. It's not an enormous amount of debt. It's manageable. Would it be better if students didn't owe money after college? Yes. Is the student loan debt equivalent of a new midrange Toyota Camry a life-crushing burden? No, not really.
  - TheOtherHobbes 7y ago
    Student debt is running at around 8% of US GDP. It might or might not be a life-crushing burden for individuals. But it's still an incredibly risky burden for a fragile economy. And personally I don't find "And don't even think about a graduate degree unless you want to end up with >$40k" all that reassuring for those with postgrad talent and ambitions.
    - twblalock 7y ago
      I don't know who says "And don't even think about a graduate degree unless you want to end up with >$40k". When I went to grad school the standard advice was that you shouldn't go anywhere without a free ride in the form of tuition waivers and/or a stipend or TA job. Professional schools (law, medicine, MBA, etc.) are different, but they also cost way more than $40k.
  - simple_phrases 7y ago
    I don't know many people who get saddled with $25k of brand new car debt when they turn 18. Typically, you buy a brand new car if you can afford one, and that precludes most teens. We're telling every kid in high school not born into means that they'll be destitute if they don't go to college. The two are not comparable.
    - CapricornNoble 7y ago
      "I don't know many people who get saddled with $25k of brand new car debt when they turn 18." Spend some time near a military base. Brand new Mustangs galore. And when you ask the kids who bought them for some details you find out these Lance Corporals are paying like 19% interest. -_- A side-effect of schools not having classes like Home Economics anymore.
chillwaves 7y ago
That ignores the fact that out of state schools cost on average of double and not every state either has the programs folks are looking for or the schools to go to, so some resort to out of state and pay $20k per year and will walk out with more than twice that in debt. Also the cost of living around good schools is mostly increasing, at least if they are in an urban environment.
- dantheman 7y ago
  Completely agree schools cost too much and ideally everyone would have lots of options -- talking about loans isn't they way to get there, the problem is the cost of schools and housing skyrocketing.
- ericd 7y ago
  So, do a cost benefit analysis of whether it’s worth it to go out of state and pay twice as much to study that esoteric subject? You seem to be implying that students in those situations have no choice but to take on more debt, which seems to be a recurring theme in a lot of these threads, but they do. Or, they can live at home and go to a local community college for the first two years to take the general reqs, and finish up at that expensive 4 year school. A few of my friends did that and saved quite a lot.
  - chillwaves 7y ago
    > study that esoteric subject Where does this come from? The major one had was game design, another was for IT. I'm not implying anything. I know people from states who don't have great schools (or programs) available to them and choose to go out of state. The whole instate/out of state system needs an overhaul as well. Some students want to resettle out of their state and intend to stay after getting their education. That's a net plus for the state, why make it so difficult for them to get an education here if they are academically qualified?
    - ericd 7y ago
      Those are slightly more esoteric/unusual programs. More common would be Computer Science. Yep, the public university program could definitely use work, no argument there. But I’m under the impression that most states have at least one serviceable university.

chrisco255 7y ago

Imagine skipping college altogether and getting a blue collar job like plumbing or working your way up to retail management. Imagine that colleges take advantage of egregious, lax loan policies and inflate the price of education to exorbitant amounts. Reminder to periodically get away from technology and into nature. Take up a hobby like fishing, kayaking or whatever floats your boat. Too much outrage in the world today.

knolax 7y ago
Imagine breaking your body doing blue-collar work only to be deprecated once what you do is inevitably automated, leaving you with no transferrable skills or employment prospects in middle age.
- chokolad 7y ago
  > Imagine breaking your body doing blue-collar work only to be deprecated once what you do is inevitably automated, leaving you with no transferrable skills or employment prospects in middle age. Man, I wish plumbing was automated. It's not going to happen any time soon though and plumbers will quote exorbitant prices for their work for quite some time.
  - DanBC 7y ago
    Do it yourself if it's so easy.
    - AlexTWithBeard 7y ago
      I do it myself: neither plumbing nor home electricity is a rocket science. My town though thinks only a person who has completed a three years apprenticeship is allowed to install a new electric outlet.
    - chokolad 7y ago
      > Do it yourself if it's so easy. That's what I ended up doing after having a few unfortunate interactions with local handymen of various specializations. After going through the motions I understood how badly I was ripped off previously

brighton36 7y ago

I don't know why people pay for degrees. I never bought one, and I never had a problem with opportunity in my life as a consequence. Imo, the bottom needs to drop out of this market.

mattwest 7y ago
"I don't know why people pay for degrees" Because some pursuits in life require them. What about someone who wants to pursue genetics or molecular biology? Those are essential fields that provide things like healthcare and food security.
- brighton36 7y ago
  Yeah, I get that. Those people seem like a minority of the degrees. But even there, I suspect there's probably creative paths through the bureaucracies that don't involve degrees, or push the degree costs onto employers.
mLuby 7y ago
The "bottom dropping out" means at minimum a great depression, quite possibly wide-scale violence. Economists almost always hand-wave away the financial (let alone human) cost of forcing people can switch jobs or careers, then complain people are "irrational actors." I assume they do this because economists are actually bad at economics and so should find jobs more suited to their aptitudes.
- brighton36 7y ago
  Sure. The fat has to get trimmed. Short these loans I suppose, if you want to make money during the depression.
  - ben_w 7y ago
    What is your advice for the people who are defaulting on the loans because they don’t have enough money to pay them never mind short them? Remember that previous examples of people rioting over poverty has included literally beheading the rich, en-masse, in a fundamental change of the nature of national governance.

rayiner 7y ago

The average student loan debt for the class of 2017 was about as much as the average new car loan. And repayment is limited to 10% of disposable income with forgiveness after 20 years. The whole “crisis” is the projected anxiety of the the relatively small handful of upper middle class people who are actually looking at taking $200k in loans.

quaquaqua1 7y ago
I paid 30k and my parents paid 70k for me to get my degree. They don't shut up about it. I don't use my degree 7 years later.
Spooky23 7y ago
Average is misleading. 70% of students borrow, and the average debt is suspiciously similar to the federally backed loan caps. People incur debts in all sorts of ways for school besides a formal student loan as well. Private loans are expensive and often avoided. Home equity loans are common, as are credit cards for both students and parents.

jedimastert 7y ago

Edit: You know, I started this comment just wanting to point out the interesting economic relationship of "hours worked to total cost", but apparently got much more rant-y. I'll leave this here as an example of the anxiety I still feel about college, even after 3 years out of it. The important part of the comment is the three of so paragraphs. ===== Not even less in terms of money. Not even less money adjusted for inflation. Less in terms of time. This website[0] lets you look at how much time of minimum wage work it would have taken to pay for a college degree in 1987 vs now, Because of vastly inflating tuition prices and relatively stagnant minimum wage, there's a very significant difference. For the college that I went to, working part time at a minimum wage job not only would have paid for the entirety of tuition, it would have paid 156% of tuition. What I would have had left over would have been more than what my parents paid for the down payment of the house my family of 5 grew up in. (warning: projection time) Now I could barely pay half on a part time job, so I either start my adult life with absolutely crushing debt, hope that my parents set aside what would have been way more that the original tuition to cover what would have been left, kill myself trying to work full time and be a student full time, or stunt my career by a few years doing school part time and coming into the workforce years behind in a fairly ageist sector. And all this for a piece of paper that was pounded into our head that we needed in order to have any kind of hope of getting into even a reasonably basic field. If you can't tell, I can empathize with why college might give someone depression and anxiety. That's not to mention the general artificial competitiveness of getting into a "good" school, internships, and everything else to make sure that your resume is good enough to even find a job after college, lest you spend a year or two floating and having to explain an every growing gap in your resume. There was also the special bureaucratic that I ended up falling into (though those were just unfortunate circumstances). I ended up getting the amazing job I have right now by almost pure luck. I know a lot of my classmates that aren't so lucky and have simply very little extra value (other than the worthy pursuit of knowledge and life experience) for the incredibly expensive piece of paper gathering dust in their closet. [0]: https://www.marketwatch.com/graphics/college-debt-now-and-then/ https://www.marketwatch.com/graphics/college-debt-now-and-th...

paulpauper 7y ago

It's more like $20k-40k Given all the generous payment, deferral, and forbearance plans, student loan debt is a better deal than other types of debt, and unlike consumer debt ,a college degree gains value in term of higher inflation adjusted wages.

masonic 7y ago

Imagine that previous generations paid less for the same hiring opportunities. Acknowledge that many minimized (or avoided) debt by working their way through school, often doing jobs the current generation considers "beneath" them.