9 ms·

It is free money for lenders because backed by the Govt AND protected against bankruptcy. It is Free money for colleges because they know they will get paid reg

• ourmandave 3y ago
  If you don't repay your student loan, it dies with you. They won't go after your estate for the balance.
  • swagasaurus-rex 3y ago
    At great sacrifice to your credit score
    • kayodelycaon 3y ago
      Death makes your credit score somewhat irrelevant.
    • cannonpalms 3y ago
      Dead people don't have or need credit scores
      • huehehue 3y ago
        Speak for yourself, in my town you can't get a decent plot without at least a 760 FICO
  • solarmist 3y ago
    Sure, but the bulk of those consequences are decades away so effectively they don’t exist (or are at least invisible). So schools and lenders are acting as if it’s true.
  • yardie 3y ago
    Hospice and long-term care would have already picked through those bones. Unless you're rich there isn't much of an estate to go after.
  • codegeek 3y ago
    Sure but then it depends on *when* you die. Let's say you graduate at 22/23 and live till 70. For almost 50 years, you will be chased for that debt. Is that a good way to live ?
    • tekknik 3y ago
      I mean after a while debt collector calls become easy to avoid and block.
• Workaccount2 3y ago
  This isn't going to happen because the whole point of the current government back student loan program is to give kids from not-ideal backgrounds access to credit, and hence access to the full range of schools available.
  • rhplus 3y ago
    Crazy idea, but how about the gov just gives kids from not-ideal backgrounds access to grants and scholarships, rather than credit.
    • Workaccount2 3y ago
      There already is tons of that. The issue is the "full range of schools" part. You can be from a family with a 400 credit score and combined income of $45k, and get loans to go to a $50k/yr university. If the government is going to step in and provide direct funding, it will almost certainly only apply towards community colleges followed by local state schools.
    • itake 3y ago
      How is that different from the current system? People from low or mid-income families have access to scholarships and funding. Kids from ideal backgrounds don’t take out loans. If you’re saying schools get a blank check via grants and scholarships, then I’m not seeing how that fixes the issue. This problem feels super similar to the Us health care system. Those with blank checks for pre-negotiated prices (have health insurance), pay low healthcare costs, and those without pay insane prices. Overall everyone is paying insane prices. Can you explain your reasoning more?
      • skrtskrt 3y ago
        > People from low or mid-income families have access to scholarships and funding It might be relatively common for low income to get full rides or near full rides, but anyone in mid-income is getting saddled with tons of debt. I applied to college in 2011 with a household income of like 95k, with an older sibling already in college, and most "financial aid" packages from state universities added up to between $60k-$160k total debt for four years. Going out of state to places like Ohio State, Maryland, etc. was already $50k/year back then. This was inclusive of significant amounts of merit-based scholarships. Most (all?) schools do not allow you to stack merit scholarships with need-based grants. If you earn a merit-based scholarship, they reduce your need-based aid by that exact amount.
• aidenn0 3y ago
  > Hint: It's tough to get your 1st credit card if you have no credit history in the US and most lenders will not even entertain that idea. Some will do if you put in a collateral like $500 of actual cash deposit to guard against the default risk. Is that true these days? At my university 20 years ago, the credit card companies would bribe 18-year-old freshmen to sign up for their cards.
  • jackson1442 3y ago
    I was able to get a credit card with a relatively low limit ($1200) as my first one, partly because I had a higher than average income during school as a private tutor. Many people do get secured cards if they are on a low income though. That was a “student card,” so optimized for people who don’t have a credit history. After having that for a while I was able to leverage it into standard rewards cards.
  • yardie 3y ago
    I had an unsecured student credit card, 20 years now. Its limit was $800, no deposit required; just enough to pay for books, lab supplies, and a few meals. I know because I kept it as my last resort emergency card all these years later. Or use it on sketchy kiosk/online shopping sites. Every few years BoA asks me to increase the limit, which I decline to do. I'm still FB friends with the girl that gave me a free t-shirt for signing up. LOL.
    • rahimnathwani 3y ago
      Off topic: 20 years ago, FB didn't exist.
      • yardie 3y ago
        All my FB friends are friends I've made through physical contact. Most of us have been separated through location, time and obligations. Even though we haven't seen each other in over a decade we're still FB friends.
  • function_seven 3y ago
• carabiner 3y ago
  Yeah but I'm not so comfortable with a technocracy where universities become advanced trade schools, purely to increase your chances of getting a job. As the late Kaczynski said, students are grudgingly pursuing these subjects because it's the only way to survive in a country without real social services. There needs to be some formal patronage of the arts, but I have no idea how to pursue that.
• Levitz 3y ago
  >Remove this "free money guarantee" and watch how market corrects itself. While I agree, I can't imagine what it would be like for the first generation of students under such change. The reason they are government backed is to make college a possibility to begin with. First ones in line would probably get massively screwed, no?
  • throw_m239339 3y ago
    > First ones in line would probably get massively screwed, no? No, College education will become cheaper, mechanically. Right now, it's the government that is highly distorting the education market with that loan system under pretense of allowing everybody to get an education.
• nightski 3y ago
  I'm pretty sure the government is the lender in the case of federal student loans. There aren't any banks getting "free money".
• robomartin 3y ago
  > When students can file for bankruptcy Agree with everything you say, except for this. Allowing student loans to be discharged in bankruptcy will result in millions of students pulling that lever as soon as they graduate. They, of course, get to keep their degrees and use them to make money their entire lives. If you file for bankruptcy and, for example, want to keep your car (which has a loan), you have to reaffirm that debt and continue paying. Same with your home, etc. Student loans provide you with a valuable life-long asset. Allowing discharge simply isn't right and is economically destructive. How about I BK, discharge my mortgage and keep my house forever? Same thing. I agree 100%, government has to get the hell out of the student loan business. Universities and students need to be forced into a situation where risk is assessed and loans are issued --or not-- accordingly. The university has to have risk. And students have to be held to their commitments. The other problem the current system causes is what I call "course padding". Most degrees in the US have a year (or slightly more) of coursework unrelated to the field of study. In the case of STEM degrees, students spend a year or more on non-STEM courses. This is detrimental on many fronts. First, the time to graduation rate for undergrad is 33% longer than it would be without this irrelevant coursework. No employer cares about this stuff for STEM degrees. Some might differ wit this. OK. Let the free market decide then. If Google wants engineers who have taken three semesters of Underwater Basket Weaving History, the free market will drive students to take those courses as enhancements to the required curriculum. They should NOT be conditions for graduation at all. This would reduce a typical engineering degree from four years to three. Second, these non-major courses add 33% to the cost of a typical STEM degree. Whatever a year costs at a school (including housing, etc.), that's what they add to the student loan. That could mean $30K to $70K. This is horrific, unnecessary and counterproductive. If the student wants to take these courses because they add value and become additive to their career, they can make that decision --not be forced by government into it. If government wasn't in this business, bullshit degrees and bullshit unnecessary courses would cost a ton less and some would completely evaporate from our universities. A few weeks ago I was watching a show where this guy helps people deal with debt. This poor fellow had over $250K in student debt for a degree that might not even make him $50K a year. The only way that happens is in a distorted market, one that is distorted by government in favor of what usually ends-up being political agendas disguised as good intentions. The other element of this equation is our failures in K-12 education. Again, government (and union) meddling has caused much of this. Our 18 year old's graduate high school devoid of marketable skills. They are useless to most businesses without training and, generalizing, are ignorant about most things that matter as they transition into adulthood. For example, they have no understanding of money and finances and no skills to help them make sound decisions. So, someone throws a $200K loan at them for a degree on Basket Weaving and they take the ride, not understanding they are going to make just above minimum wage and have signed-on to financial hell for the rest of their lives. That is a failure in pre-college education. And a serious one at that. Not everyone has to go to college. Our K-12 path fails that population as well. The average US high school graduate requires training to stack boxes on shelves and make coffee. That sure sounds like a formula for societal success, doesn't it? At the end of the day, the problem might very well be that education, in the US, has become a political punching bag. One could come-up with dozens of scenarios to understand why we seem to insist on destroying our nation by not doing a good job educating our kids. All of them would seem insane to even suggest. And yet, here we are, it's 2023 and our kids rank below third-world-nation levels almost across the board. This is insane. What are we doing?
• gowld 3y ago
  I can vividly recall having this exact conversation in my grandmother's apartment, in 1995.