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I'm 32, and while I was fortunate enough to not have any debt of my own, I think that the economic and demographic consequences of loading up a generation with

I'm 32, and while I was fortunate enough to not have any debt of my own, I think that the economic and demographic consequences of loading up a generation with this much debt this early have already taken hold. There is a sizable plurality of Millennials who just see themselves as financially screwed. Kids? Nah. House? Possibly attainable before 2022, but not anymore. Retirement? Get real. Economies need workers and un-concentrated capital to grow. We're not making enough babies, and we're sending more of the capital up the ladder to people who already have it and just don't want to spend it. We're transferring value from the future to pay for the costs of now, because the people of wealth (who are almost always older) now don't want to pay for it.

alistairSH 3y ago
I'm GenX and the beginnings of the loan crisis was definitely getting started in the 90s and 00s, as the tail end of X moved into the workforce. I had friends who definitely forwent consumption of things like vacations, newer cars, etc due to loan obligations. And it was the same pattern we see now - largely liberal arts graduates from expensive private schools or out-of-state schools.
- lenerdenator 3y ago
  This isn't vacations and newer cars, though. This is having kids or equity in a property that one lives in. And it's not just the underwater basket weavers.
  - alistairSH 3y ago
    No question, just pointing out this trend was observable ~30 years ago. It's not a new problem, just getting progressively worse.
  - koolba 3y ago
    > This isn't vacations and newer cars, though. They did take a vacation though, for about four years. Sometimes more. Divide that out by the next fifty years of life and you get 4 x 250 / 50 = 20 vacation days per year. Plus, based on the time value of money, those "taken in advance" vacation days are arguably worth more than the ones years from now. I'll be honest. I have no sympathy for liberal arts majors that are saddled with debt and cannot find meaningful work that leverages their education.
    - alistairSH 3y ago
      Except we also have liberal arts majors who DID FIND meaningful work and still struggle. Teachers and others in education come to mind.
      - koolba 3y ago
        I meant financially meaningful. If they can’t pay their loans, then by definition it’s not financially meaningful. They made a bad bet and they’re going to pay the price for it. Being deceived on the expected outcome doesn’t automatically allow passing the financial responsibility to tax payers. If there’s actual fraud, let them sue the institutions. Maybe they can find a new generation of liberal arts majors and continue the Ponzi scheme.
        alistairSH 3y ago
        From a purely policy stand-point, the question we should be asking is "does forgiving some subset of loans result in a net-positive for society?" If the answer is "Yes" then we should be forgiving that subset of loans. For example, we have the PSLF for borrowers who work in service careers. Maybe we don't need blanket loan forgives, but should simplify and beef-up PSLF. And in parallel, we should be reforming the funding system for college so we don't have to keep addressing this problem.
        randomdata 3y ago
        If we are to forgive some amount of debt, wouldn't housing mortgage forgiveness be more beneficial? It is not a good situation either, but I think we at least agree that we want people to continue to have homes. We do not want people to continue wasting their time in college. That itself is a huge drag on society. There needs to be some kind of 'punishment' to scare off future would-be students. "Oh, go on have your fun in your youth and we will all help you pay for it later" doesn't exactly send the right message. PSLF isn't really loan forgiveness in the traditional sense. It is an employer providing compensation to workers for a quality that is deemed beneficial to the work being done. All employers are free to do this, and do so where such a benefit is recognized.
- analognoise 3y ago
  It's amazing that we denigrate the foundations of a classical education for fellow members of the working class, and rather than blame the politicians (and the body politic, of course...) for failing to shape the market for our fellow citizens to thrive (including taxing billionaires, controlling immigration, etc) we simply blame the working class for choosing the wrong subject at the ripe age of 18 and doom them to a family-less, apartment-dwelling class forever, as though they should have had the foresight to "compete on their merits" in the same system that cut taxes for the billionaires after "forgiving" their COVID loans. "Meritocracy" was always a dystopian fiction, but the disconnect between even "good worker" and "stable, good income" is so severed that we watch as thousands of our tech compatriots are laid off after record profits, and I have to wonder how deep the cuts have to come before we the slightest inkling of class consciousness takes root.
randomdata 3y ago
> because the people of wealth (who are almost always older) now don't want to pay for it. Well, no, of course not. Us older people with wealth have strongly advocated for decades that they not take on the debt. Of those who thought they knew better, why would we want to pay for their stupidity? But if we agree that we should pay for stupidity because that's the nice thing to do, why stop at college? What about the dumb kid who bought a Ferrari he can't afford? Are we going to pay for that too? Logically we should. There is no difference. ~60% of the population (in the USA) have not attended college. Why not let them reap the rewards of their choices?
- AnimalMuppet 3y ago
  There is some difference. Education (in a worthwhile degree) is an asset that should pay a return. A Ferrari isn't. An education in a worthless degree is more like the Ferrari - except you can at least drive the Ferrari.
  - randomdata 3y ago
    > Education (in a worthwhile degree) is an asset that should pay a return. Where is the return coming from? There was once a theory that labour income with a degree attached would rise, but that didn't happen. Incomes have held quite stagnant. We've known that for many decades by now. Why do you think we've been dissuading people for the last many decades to not take on the debt? Because there is no return! In fact, the best way to estimate the return on an investment is to look at the asset sale price as buyers will pay some multiple of the yearly return. How much do you think you can sell a degree for on the used market? I'm guessing no more than nothing. Quite possibly you'd have to pay the buyer to take it off your hands. Clearly there is no retained investable value there. Which should be really troubling when you take on debt for it. If you can't resell the asset to get you out of debt, that's a scary proposition. At least the used Ferrari is still probably worth approximately what you paid for it, allowing you to get out if need be. > A Ferrari isn't. If you have a Ferrari you can almost certainly start making money with a YouTube channel. People eat that kind of thing up. If that's not your cup of tea, you can rent it out. People will pay a healthy premium to be able to rent a unique car like that. There are all kinds of ways to make money with a Ferrari. There is real, tangible value there. As such, Ferraris carry a decent resale value.

alistairSH 3y ago

I'm GenX and the beginnings of the loan crisis was definitely getting started in the 90s and 00s, as the tail end of X moved into the workforce. I had friends who definitely forwent consumption of things like vacations, newer cars, etc due to loan obligations. And it was the same pattern we see now - largely liberal arts graduates from expensive private schools or out-of-state schools.

lenerdenator 3y ago
This isn't vacations and newer cars, though. This is having kids or equity in a property that one lives in. And it's not just the underwater basket weavers.
- alistairSH 3y ago
  No question, just pointing out this trend was observable ~30 years ago. It's not a new problem, just getting progressively worse.
- koolba 3y ago
  > This isn't vacations and newer cars, though. They did take a vacation though, for about four years. Sometimes more. Divide that out by the next fifty years of life and you get 4 x 250 / 50 = 20 vacation days per year. Plus, based on the time value of money, those "taken in advance" vacation days are arguably worth more than the ones years from now. I'll be honest. I have no sympathy for liberal arts majors that are saddled with debt and cannot find meaningful work that leverages their education.
  - alistairSH 3y ago
    Except we also have liberal arts majors who DID FIND meaningful work and still struggle. Teachers and others in education come to mind.
    - koolba 3y ago
      I meant financially meaningful. If they can’t pay their loans, then by definition it’s not financially meaningful. They made a bad bet and they’re going to pay the price for it. Being deceived on the expected outcome doesn’t automatically allow passing the financial responsibility to tax payers. If there’s actual fraud, let them sue the institutions. Maybe they can find a new generation of liberal arts majors and continue the Ponzi scheme.
      - alistairSH 3y ago
        From a purely policy stand-point, the question we should be asking is "does forgiving some subset of loans result in a net-positive for society?" If the answer is "Yes" then we should be forgiving that subset of loans. For example, we have the PSLF for borrowers who work in service careers. Maybe we don't need blanket loan forgives, but should simplify and beef-up PSLF. And in parallel, we should be reforming the funding system for college so we don't have to keep addressing this problem.
        randomdata 3y ago
        If we are to forgive some amount of debt, wouldn't housing mortgage forgiveness be more beneficial? It is not a good situation either, but I think we at least agree that we want people to continue to have homes. We do not want people to continue wasting their time in college. That itself is a huge drag on society. There needs to be some kind of 'punishment' to scare off future would-be students. "Oh, go on have your fun in your youth and we will all help you pay for it later" doesn't exactly send the right message. PSLF isn't really loan forgiveness in the traditional sense. It is an employer providing compensation to workers for a quality that is deemed beneficial to the work being done. All employers are free to do this, and do so where such a benefit is recognized.
analognoise 3y ago
It's amazing that we denigrate the foundations of a classical education for fellow members of the working class, and rather than blame the politicians (and the body politic, of course...) for failing to shape the market for our fellow citizens to thrive (including taxing billionaires, controlling immigration, etc) we simply blame the working class for choosing the wrong subject at the ripe age of 18 and doom them to a family-less, apartment-dwelling class forever, as though they should have had the foresight to "compete on their merits" in the same system that cut taxes for the billionaires after "forgiving" their COVID loans. "Meritocracy" was always a dystopian fiction, but the disconnect between even "good worker" and "stable, good income" is so severed that we watch as thousands of our tech compatriots are laid off after record profits, and I have to wonder how deep the cuts have to come before we the slightest inkling of class consciousness takes root.

randomdata 3y ago

> because the people of wealth (who are almost always older) now don't want to pay for it. Well, no, of course not. Us older people with wealth have strongly advocated for decades that they not take on the debt. Of those who thought they knew better, why would we want to pay for their stupidity? But if we agree that we should pay for stupidity because that's the nice thing to do, why stop at college? What about the dumb kid who bought a Ferrari he can't afford? Are we going to pay for that too? Logically we should. There is no difference. ~60% of the population (in the USA) have not attended college. Why not let them reap the rewards of their choices?

AnimalMuppet 3y ago
There is some difference. Education (in a worthwhile degree) is an asset that should pay a return. A Ferrari isn't. An education in a worthless degree is more like the Ferrari - except you can at least drive the Ferrari.
- randomdata 3y ago
  > Education (in a worthwhile degree) is an asset that should pay a return. Where is the return coming from? There was once a theory that labour income with a degree attached would rise, but that didn't happen. Incomes have held quite stagnant. We've known that for many decades by now. Why do you think we've been dissuading people for the last many decades to not take on the debt? Because there is no return! In fact, the best way to estimate the return on an investment is to look at the asset sale price as buyers will pay some multiple of the yearly return. How much do you think you can sell a degree for on the used market? I'm guessing no more than nothing. Quite possibly you'd have to pay the buyer to take it off your hands. Clearly there is no retained investable value there. Which should be really troubling when you take on debt for it. If you can't resell the asset to get you out of debt, that's a scary proposition. At least the used Ferrari is still probably worth approximately what you paid for it, allowing you to get out if need be. > A Ferrari isn't. If you have a Ferrari you can almost certainly start making money with a YouTube channel. People eat that kind of thing up. If that's not your cup of tea, you can rent it out. People will pay a healthy premium to be able to rent a unique car like that. There are all kinds of ways to make money with a Ferrari. There is real, tangible value there. As such, Ferraris carry a decent resale value.