6 ms·

US Will Have to Write Off Billions in Student Debt Due to Deaths

26 points by LopRabbit 3y ago

LopRabbit 3y ago
https://archive.ph/AUEWS https://archive.ph/AUEWS
throwuwu 3y ago
There are 9.2 million people 50 years old or older still paying off student debt.
- panzagl 3y ago
  Their own or their kids?
- agentdrek 3y ago
  that's crazy
- meragrin_ 3y ago
  That could be a good thing. Age of person and age of debt are two separate things. There could be millions of 50+ years old people who accrued that debt in the past 10 years. My parents didn't get degrees until their 40s.
  - yellow_lead 3y ago
    Still can't see it as a good thing.
  - cced 3y ago
    Going along with what you said, it’s a good thing that 40yr/o need to go into debt in order to get an education? Surely if someone in their 40s who was at least a little lucky may be in a better socioeconomic strata than those just starting out in their 20s. What kind of debt burden do we want our kids carrying? Rentier economics throughout the economy are crippling the working class and feeding the rentiers. People finance their cars, their education, their music, healthcare, phones, laptops, just about any major appliance. You can even finance your food! What exactly are you getting for your tax dollars?
    - mschuster91 3y ago
      > People finance their cars, their education, their music, healthcare, phones, laptops, just about any major appliance. You can even finance your food! It used to be the case that you could realistically save up money to buy a car or whatever. These days, so many people are living paycheck to paycheck that they can't afford assets at all, and forget about home ownership or other kinds of equity. Some may be lucky enough to have a 401k with an employer match, but without the latter I see why many people prioritize immediate survival over long-term financial planning.
      - cced 3y ago
        I’m not sure how I managed to forget housing, but I agree. We are no longer living fulfilling lives but going about lining the pockets of landlords and rent-seekers.
    - AlchemistCamp 3y ago
      Nobody needs to go into debt to get an education. All they need is an internet connection, time and effort. In a pinch, a library card and $10 of notebooks and pencils is enough to get far. The problem is people going into debt for credential-granting schools that are becoming more expensive while simultaneously becoming less correlated with education.
- KerrAvon 3y ago
  How did they manage that? GenX wasn't generally subject to the onerous student debt mess. For everyone over 50, college was much cheaper and easier to get into. If nothing else, the population was smaller!
  - lapcat 3y ago
    Graduate school. Half of all student loan debt is held by graduate students. https://www.cnbc.com/2021/07/16/graduate-students-owe-around-50percent-of-all-student-debt.html https://www.cnbc.com/2021/07/16/graduate-students-owe-around... It's also the case that back in the 80s, the elite ultra-expensive schools did not offer generous financial aid like they do now, so middle class kids had to pay themselves.
  - starttoaster 3y ago
    Many people go to college later on in their lives too. I've mostly seen them in community colleges because they're easier to adapt into your adult lifestyle than a university, but I've also seen older people seeking education at university. Not saying that's the majority of the 9 million, but it could make up a fair chunk.
  - dv_dt 3y ago
    The front end of GenX were not, but by the tail end of GenX many more were.
  - ourmandave 3y ago
    I've got Parental Plus loans paying for my daughter's college. I was aggressively paying them off before COVID.
  - brewdad 3y ago
    As one around 50 years old who needed loans to get through school, I graduated with about $20k in loans. My first year was paid for with scholarships and savings from working in high school but the scholarships were mostly one-time deals, so I had to borrow for the rest. My first job out of school paid me $32k a year and I was NOT underpaid for the time. I was able to pay my loans off in about 7 years but mainly because I lived with my girlfriend (now wife) and we shared expenses. Point is, yes the balances are higher now but so are the salaries. The average student with my degree from my school makes about $80k to start now, so if they have $60k in loans, we are in similar situations.
- retrac 3y ago
  Is there no forgiveness on US student loans? Government student loans in Canada that aren't paid off after 15 years are forgiven, though they won't give another loan after that.
  - whatshisface 3y ago
    As far as I am aware there is no possibility for forgiveness or bankruptcy.
    - frumper 3y ago
      Various government student loans can be forgiven through a few different programs. The IDR, IBR, PAYEE, REPAYE, and now SAVE all have forgiveness dates after X years. The newest program, SAVE, forgives after 20 years of payments. These are separate from more niche forgiveness ones for teachers, or government workers. There could be more, not sure.
      - zer8k 3y ago
        How many of those require service to the government? How many require you to work in a position where living wage is a dirty word? So many backflips through flaming hoops when allowing bankruptcy to discharge loans would solve it all in one fell swoop. Universities donating millions and millions to political candidates would never want this golden goose to be culled though. Creating debt slaves is good for business. All business. Good for the military too, in fact, and good for calling citizens lazy and entitled to justify bringing in more and more H1Bs working for less than their position is worth. The more you dig the more it feels like a giant conspiracy. I am not pro "forgiveness" in the mainstream sense of the term. I am absolutely for no-fault, no question bankruptcy that eliminates the debt entirely. This would punish the lenders, punish the schools, and punish the government for their absolutely moronic decisions.
        frumper 3y ago
        None of the general forgiveness ones require any type of employment. Anyone can join the latest program SAVE. There is no income limit and your payment can be $0 and considered in good standing. It's all based off of your income. I think a family of 4 can make into the mid 60's before they have to pay. It also doesn't compound interest beyond your normal payment anymore, so no more start out with 60k in loans and 5 years later you have an 80k balance.
bombcar 3y ago
An error in their methodology - the average amount owed may not reflect the average amount owed by borrowers who died who are likely to be older, and therefore further along in payments.
- mlyle 3y ago
  And with lesser initial borrowing, as college costs have ballooned.
- wizzwizz4 3y ago
  However, they have also accrued more interest over time: how many of the borrowers weren't able to pay it off?
  - paulddraper 3y ago
    Interest rates for student loans are relatively low; I would be surprised if payments didn't almost always exceed interest.
    - bombcar 3y ago
      The only way to pay less than the interest I know of is to be on a graduated repayment plan, some of which cancel the debt after X years.
      - paulddraper 3y ago
        > The only way to pay less than the interest Well...there is another way.....
- anovikov 3y ago
  Plus they studied a lot earlier because they are older, and back then the amount of loans was lower because tuitions were way lower.
  - lapcat 3y ago
kneebonian 3y ago
> Bloomberg asked economists to estimate how many borrowers died > That number was then multiplied by average amount of debt owed Doesn't seem like the most accurate way to do that. > The US government will have to write off billions of dollars of student loans from borrowers who died during the pandemic, adding another complication to a system ill-equipped to handle the resumption of payments this fall. Wait so we're just talking about borrows who died during the pandemic. I get that a lot of people died during the pandemic bust most of them fell into the category of people who were substantially older, and as consequence are least likely to be paying back on student loans, as those usually are paid off earlier in life. Especially since most of these people would've had much smaller loans. > The calculation to arrive at the lost revenues is twofold. First, Bloomberg asked economists and demographers to estimate how many borrowers died during the forbearance period. Loan holders skew older now than before the pause and thus have a higher probability of dying. Again I'm going to guess many of those paying student loans skew younger (<40) and thus 2 years probably doesn't change their mortality rate all that much. Seems to me like the whole article was designed more for clickbait than any rigorous analysis.
renewiltord 3y ago
The university racket is pretty good, but you do have to put in work at the beginning to get accredited. Then you fill the moat and bleed the government. 1. (hard part) Establish a new university 2. Charge high prices for worthless degrees 3. Government provides the loans 4. People die in debt or just keep paying (they're out of your hands at this point so you don't care that much) Net result is that you can get a taxpayer subsidy which you can roll into a non-profit. An interesting side effect is that because you're teaching junk like Divinity at Columbia and stuff, the people don't really learn any reasoning skills and so they'll go out there and say that the government should forgive student debt and pay for college for people. I don't think that part was planned. That was just accidental and beneficial. Honestly, that step 1 is really hard, and I think there's some trouble with step 2 as well, but you can get there. I think, if things don't change in the next 10 years, I'll try a startup that does this. I think there's a way to organize the spending such that you benefit a VC's portfolio through the non-profit university's spending thereby making it a strong investment even if it won't actually get you an exit. Essentially you just tax arbitrage government dollars into hiring your for-profit companies as vendors.
- devwastaken 3y ago
  The only work you need for accredditing classes is to be an established name. There are no checks or enforced requirements afterwards. There's no punishments for not following the rules. This is being abused all the time and people sit by and let it happen because they don't want to risk their own political position within the org.
  - renewiltord 3y ago
    Interesting. Thanks for that.
isykt 3y ago
The US always has always had to do this because people die for all kinds of reasons, so this fact alone isn’t very interesting. This would be an interesting article if the headline included an actual dollar amount that pointed out the excess write off due to deaths. This would be trivial for any actuary to calculate.
ldehaan 3y ago
[dead]
dnissley 3y ago
This seems like a non-story. There are some 1.8 trillion dollars in student loan debt: https://fred.stlouisfed.org/series/SLOAS https://fred.stlouisfed.org/series/SLOAS
- pirate787 3y ago
  Agreed. Additionally the US will net gain from not having to pay Social Security and Medicare for these passed borrowers.
  - deleted 3y ago
    [deleted]
RobinL 3y ago
In the UK,the value of student debt is explicitly estimated to take account of this and other factors, and has been for years: > The Government expects that around 27% of full-time undergraduates starting in 2022/23 will repay them in full https://commonslibrary.parliament.uk/research-briefings/sn01079/#:~:text=Currently%20%C2%A320%20billion%20a,)%20by%20the%20mid%2D2040s https://commonslibrary.parliament.uk/research-briefings/sn01....

26 points by LopRabbit 3y ago

LopRabbit 3y ago

https://archive.ph/AUEWS https://archive.ph/AUEWS

throwuwu 3y ago

There are 9.2 million people 50 years old or older still paying off student debt.

panzagl 3y ago
Their own or their kids?
agentdrek 3y ago
that's crazy
meragrin_ 3y ago
That could be a good thing. Age of person and age of debt are two separate things. There could be millions of 50+ years old people who accrued that debt in the past 10 years. My parents didn't get degrees until their 40s.
- yellow_lead 3y ago
  Still can't see it as a good thing.
- cced 3y ago
  Going along with what you said, it’s a good thing that 40yr/o need to go into debt in order to get an education? Surely if someone in their 40s who was at least a little lucky may be in a better socioeconomic strata than those just starting out in their 20s. What kind of debt burden do we want our kids carrying? Rentier economics throughout the economy are crippling the working class and feeding the rentiers. People finance their cars, their education, their music, healthcare, phones, laptops, just about any major appliance. You can even finance your food! What exactly are you getting for your tax dollars?
  - mschuster91 3y ago
    > People finance their cars, their education, their music, healthcare, phones, laptops, just about any major appliance. You can even finance your food! It used to be the case that you could realistically save up money to buy a car or whatever. These days, so many people are living paycheck to paycheck that they can't afford assets at all, and forget about home ownership or other kinds of equity. Some may be lucky enough to have a 401k with an employer match, but without the latter I see why many people prioritize immediate survival over long-term financial planning.
    - cced 3y ago
      I’m not sure how I managed to forget housing, but I agree. We are no longer living fulfilling lives but going about lining the pockets of landlords and rent-seekers.
  - AlchemistCamp 3y ago
    Nobody needs to go into debt to get an education. All they need is an internet connection, time and effort. In a pinch, a library card and $10 of notebooks and pencils is enough to get far. The problem is people going into debt for credential-granting schools that are becoming more expensive while simultaneously becoming less correlated with education.
KerrAvon 3y ago
How did they manage that? GenX wasn't generally subject to the onerous student debt mess. For everyone over 50, college was much cheaper and easier to get into. If nothing else, the population was smaller!
- lapcat 3y ago
  Graduate school. Half of all student loan debt is held by graduate students. https://www.cnbc.com/2021/07/16/graduate-students-owe-around-50percent-of-all-student-debt.html https://www.cnbc.com/2021/07/16/graduate-students-owe-around... It's also the case that back in the 80s, the elite ultra-expensive schools did not offer generous financial aid like they do now, so middle class kids had to pay themselves.
- starttoaster 3y ago
  Many people go to college later on in their lives too. I've mostly seen them in community colleges because they're easier to adapt into your adult lifestyle than a university, but I've also seen older people seeking education at university. Not saying that's the majority of the 9 million, but it could make up a fair chunk.
- dv_dt 3y ago
  The front end of GenX were not, but by the tail end of GenX many more were.
- ourmandave 3y ago
  I've got Parental Plus loans paying for my daughter's college. I was aggressively paying them off before COVID.
- brewdad 3y ago
  As one around 50 years old who needed loans to get through school, I graduated with about $20k in loans. My first year was paid for with scholarships and savings from working in high school but the scholarships were mostly one-time deals, so I had to borrow for the rest. My first job out of school paid me $32k a year and I was NOT underpaid for the time. I was able to pay my loans off in about 7 years but mainly because I lived with my girlfriend (now wife) and we shared expenses. Point is, yes the balances are higher now but so are the salaries. The average student with my degree from my school makes about $80k to start now, so if they have $60k in loans, we are in similar situations.
retrac 3y ago
Is there no forgiveness on US student loans? Government student loans in Canada that aren't paid off after 15 years are forgiven, though they won't give another loan after that.
- whatshisface 3y ago
  As far as I am aware there is no possibility for forgiveness or bankruptcy.
  - frumper 3y ago
    Various government student loans can be forgiven through a few different programs. The IDR, IBR, PAYEE, REPAYE, and now SAVE all have forgiveness dates after X years. The newest program, SAVE, forgives after 20 years of payments. These are separate from more niche forgiveness ones for teachers, or government workers. There could be more, not sure.
    - zer8k 3y ago
      How many of those require service to the government? How many require you to work in a position where living wage is a dirty word? So many backflips through flaming hoops when allowing bankruptcy to discharge loans would solve it all in one fell swoop. Universities donating millions and millions to political candidates would never want this golden goose to be culled though. Creating debt slaves is good for business. All business. Good for the military too, in fact, and good for calling citizens lazy and entitled to justify bringing in more and more H1Bs working for less than their position is worth. The more you dig the more it feels like a giant conspiracy. I am not pro "forgiveness" in the mainstream sense of the term. I am absolutely for no-fault, no question bankruptcy that eliminates the debt entirely. This would punish the lenders, punish the schools, and punish the government for their absolutely moronic decisions.
      - frumper 3y ago
        None of the general forgiveness ones require any type of employment. Anyone can join the latest program SAVE. There is no income limit and your payment can be $0 and considered in good standing. It's all based off of your income. I think a family of 4 can make into the mid 60's before they have to pay. It also doesn't compound interest beyond your normal payment anymore, so no more start out with 60k in loans and 5 years later you have an 80k balance.

bombcar 3y ago

An error in their methodology - the average amount owed may not reflect the average amount owed by borrowers who died who are likely to be older, and therefore further along in payments.

mlyle 3y ago
And with lesser initial borrowing, as college costs have ballooned.
wizzwizz4 3y ago
However, they have also accrued more interest over time: how many of the borrowers weren't able to pay it off?
- paulddraper 3y ago
  Interest rates for student loans are relatively low; I would be surprised if payments didn't almost always exceed interest.
  - bombcar 3y ago
    The only way to pay less than the interest I know of is to be on a graduated repayment plan, some of which cancel the debt after X years.
    - paulddraper 3y ago
      > The only way to pay less than the interest Well...there is another way.....
anovikov 3y ago
Plus they studied a lot earlier because they are older, and back then the amount of loans was lower because tuitions were way lower.
- lapcat 3y ago

kneebonian 3y ago

> Bloomberg asked economists to estimate how many borrowers died > That number was then multiplied by average amount of debt owed Doesn't seem like the most accurate way to do that. > The US government will have to write off billions of dollars of student loans from borrowers who died during the pandemic, adding another complication to a system ill-equipped to handle the resumption of payments this fall. Wait so we're just talking about borrows who died during the pandemic. I get that a lot of people died during the pandemic bust most of them fell into the category of people who were substantially older, and as consequence are least likely to be paying back on student loans, as those usually are paid off earlier in life. Especially since most of these people would've had much smaller loans. > The calculation to arrive at the lost revenues is twofold. First, Bloomberg asked economists and demographers to estimate how many borrowers died during the forbearance period. Loan holders skew older now than before the pause and thus have a higher probability of dying. Again I'm going to guess many of those paying student loans skew younger (<40) and thus 2 years probably doesn't change their mortality rate all that much. Seems to me like the whole article was designed more for clickbait than any rigorous analysis.

renewiltord 3y ago

The university racket is pretty good, but you do have to put in work at the beginning to get accredited. Then you fill the moat and bleed the government. 1. (hard part) Establish a new university 2. Charge high prices for worthless degrees 3. Government provides the loans 4. People die in debt or just keep paying (they're out of your hands at this point so you don't care that much) Net result is that you can get a taxpayer subsidy which you can roll into a non-profit. An interesting side effect is that because you're teaching junk like Divinity at Columbia and stuff, the people don't really learn any reasoning skills and so they'll go out there and say that the government should forgive student debt and pay for college for people. I don't think that part was planned. That was just accidental and beneficial. Honestly, that step 1 is really hard, and I think there's some trouble with step 2 as well, but you can get there. I think, if things don't change in the next 10 years, I'll try a startup that does this. I think there's a way to organize the spending such that you benefit a VC's portfolio through the non-profit university's spending thereby making it a strong investment even if it won't actually get you an exit. Essentially you just tax arbitrage government dollars into hiring your for-profit companies as vendors.

devwastaken 3y ago
The only work you need for accredditing classes is to be an established name. There are no checks or enforced requirements afterwards. There's no punishments for not following the rules. This is being abused all the time and people sit by and let it happen because they don't want to risk their own political position within the org.
- renewiltord 3y ago
  Interesting. Thanks for that.

isykt 3y ago

The US always has always had to do this because people die for all kinds of reasons, so this fact alone isn’t very interesting. This would be an interesting article if the headline included an actual dollar amount that pointed out the excess write off due to deaths. This would be trivial for any actuary to calculate.

ldehaan 3y ago

[dead]

dnissley 3y ago

This seems like a non-story. There are some 1.8 trillion dollars in student loan debt: https://fred.stlouisfed.org/series/SLOAS https://fred.stlouisfed.org/series/SLOAS

pirate787 3y ago
Agreed. Additionally the US will net gain from not having to pay Social Security and Medicare for these passed borrowers.
- deleted 3y ago
  [deleted]

RobinL 3y ago

In the UK,the value of student debt is explicitly estimated to take account of this and other factors, and has been for years: > The Government expects that around 27% of full-time undergraduates starting in 2022/23 will repay them in full https://commonslibrary.parliament.uk/research-briefings/sn01079/#:~:text=Currently%20%C2%A320%20billion%20a,)%20by%20the%20mid%2D2040s https://commonslibrary.parliament.uk/research-briefings/sn01....