5 ms·

The problem with "good prospects of replaying" / full-knowledge lending (and what the system was originally intended to prevent) is that the best lendees are we

by ethbro 7y ago

The problem with "good prospects of replaying" / full-knowledge lending (and what the system was originally intended to prevent) is that the best lendees are wealthy students from socioeconomic groups with good employment prospects. I'm not one to toot on the SJW train, but it's likely inefficient (and certainly unjust) if we encode existing economic biases into our primary method of access to educational capital.

yzmtf2008 7y ago
I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Instead of being in a socioeconomic disadvantage, they now also have a loan that they can never payback. It honestly feels predatory and sounds like payday lending or one of those "more credit = more cash in your wallet" ads. I'm really sad that in this view, access to credit is equated to access to education. Sure, in a first degree thinking the goal is achieved, but at the end of the day education is a means to an end rather than an end in itself. Lending people money to attend unaffordable institutions can't be the best way to fix the problem.
- bsanr2 7y ago
  >I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Not if loan terms aren't designed to court default, which they often seem to be. Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates?
  - yzmtf2008 7y ago
    > Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates? I mean, yes. But on the other hand if the ability to payback the loan (risk of default) isn't taken into account these loans might not exist at all (not necessarily a bad thing). Eventually the risk-adjusted rate hits usury limits and loans start disappearing. (Of course we still get things like payday loans, credit cards, student loans, etc., but these are legal loopholes that should be closed.)
Merrill 7y ago
Poor, but capable and deserving, students should be given scholarships, not saddled with debt.
LanceH 7y ago
The flip side of dischargeable loans going largely to the currently entrenched is that those most victim of non-dischargeable loans are the ones most in need of protection.
BubRoss 7y ago
School in the US is already funded by the people in the immediate area, meaning that poor families have worse schools. Also wealthy families wouldn't need student loans anyway.
toasterlovin 7y ago
University degrees are not actually that expensive to obtain. You go in-state, live cheap, and, if you’re poor, apply for scholarships. Loans are really only necessary if you’re obtaining a graduate degree or if you’re going to an elite school. I think loans would be available to most people in either circumstance.
- chairmankaga 7y ago
  I went to school 2008-2012. Went in state, lived at home (commuted 2-2.5~ hours twice a day) lived cheap (no real spending outside of school bills) Had scholarships which knocked off 50% of the sticker price. After all that, and the high interest rates at the time on my initial loans it was north of 200k. My parents helped with food and rent (living at home) but everything else I took a loan off. I considered my loans heavily predatory and wish I could have done things differently.
  - cpitman 7y ago
    That's nuts. What state? Comparing that to my alma mater (Johns Hopkins), a private university, your loans work out to more than my total cost for tuition for four years (2004-2008). Even looking up their current rates, the average four year tuition after student aid is ~130k. Without any student aid, it hits ~$200k.
    - Godel_unicode 7y ago
      Compare that to UMBC right up the road. Full-time tuition for a year is under $12k, plus a few thousand in books and fees leaves you at less than half of your private schools number less financial aid. And everyone gets aid if you're instate in MD. Go to public schools, live at home, get out with little debt. It's really not a difficult choice, and it gets even easier if you know about the existence of community colleges. Stop anchoring impressionable kids to ridiculous tuition numbers. Edit: the highest average in-state tuition is Vermont with just over $17k. If you're willing to go to a state school, you can do it for under $80k for 4 years. https://research.collegeboard.org/trends/college-pricing/figures-tables/published-state-tuition-and-fees-public-four-year-institutions-state https://research.collegeboard.org/trends/college-pricing/fig...

by ethbro 7y ago

yzmtf2008 7y ago

I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Instead of being in a socioeconomic disadvantage, they now also have a loan that they can never payback. It honestly feels predatory and sounds like payday lending or one of those "more credit = more cash in your wallet" ads. I'm really sad that in this view, access to credit is equated to access to education. Sure, in a first degree thinking the goal is achieved, but at the end of the day education is a means to an end rather than an end in itself. Lending people money to attend unaffordable institutions can't be the best way to fix the problem.

bsanr2 7y ago
>I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Not if loan terms aren't designed to court default, which they often seem to be. Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates?
- yzmtf2008 7y ago
  > Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates? I mean, yes. But on the other hand if the ability to payback the loan (risk of default) isn't taken into account these loans might not exist at all (not necessarily a bad thing). Eventually the risk-adjusted rate hits usury limits and loans start disappearing. (Of course we still get things like payday loans, credit cards, student loans, etc., but these are legal loopholes that should be closed.)

Merrill 7y ago

Poor, but capable and deserving, students should be given scholarships, not saddled with debt.

LanceH 7y ago

The flip side of dischargeable loans going largely to the currently entrenched is that those most victim of non-dischargeable loans are the ones most in need of protection.

BubRoss 7y ago

School in the US is already funded by the people in the immediate area, meaning that poor families have worse schools. Also wealthy families wouldn't need student loans anyway.

toasterlovin 7y ago

University degrees are not actually that expensive to obtain. You go in-state, live cheap, and, if you’re poor, apply for scholarships. Loans are really only necessary if you’re obtaining a graduate degree or if you’re going to an elite school. I think loans would be available to most people in either circumstance.

chairmankaga 7y ago
I went to school 2008-2012. Went in state, lived at home (commuted 2-2.5~ hours twice a day) lived cheap (no real spending outside of school bills) Had scholarships which knocked off 50% of the sticker price. After all that, and the high interest rates at the time on my initial loans it was north of 200k. My parents helped with food and rent (living at home) but everything else I took a loan off. I considered my loans heavily predatory and wish I could have done things differently.
- cpitman 7y ago
  That's nuts. What state? Comparing that to my alma mater (Johns Hopkins), a private university, your loans work out to more than my total cost for tuition for four years (2004-2008). Even looking up their current rates, the average four year tuition after student aid is ~130k. Without any student aid, it hits ~$200k.
  - Godel_unicode 7y ago
    Compare that to UMBC right up the road. Full-time tuition for a year is under $12k, plus a few thousand in books and fees leaves you at less than half of your private schools number less financial aid. And everyone gets aid if you're instate in MD. Go to public schools, live at home, get out with little debt. It's really not a difficult choice, and it gets even easier if you know about the existence of community colleges. Stop anchoring impressionable kids to ridiculous tuition numbers. Edit: the highest average in-state tuition is Vermont with just over $17k. If you're willing to go to a state school, you can do it for under $80k for 4 years. https://research.collegeboard.org/trends/college-pricing/figures-tables/published-state-tuition-and-fees-public-four-year-institutions-state https://research.collegeboard.org/trends/college-pricing/fig...