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Loaning 18 year olds vast sums of money to invest is a bad idea? Who would have guessed. Seriously though, the young borrowers aren't price sensitive so the c
by pstrateman 2y ago
Loaning 18 year olds vast sums of money to invest is a bad idea?
Who would have guessed.
Seriously though, the young borrowers aren't price sensitive so the cost of the things they're buying spikes.
The dynamic here is quite simple and obvious (though maybe only in hindsight).
- Loughla 2y agoIt's not that younger borrowers aren't price sensitive at all. Cost tends to be the first deciding factor, unless the particular student is considering prestige of institution. This is why fewer students are attending small, private, expensive colleges. The dynamic is not that simple. There are a multitude of reasons behind the increase in the cost of postsecondary education. Waving it away as young people just being young people is sort of silly.
- whimsicalism 2y agobut why aren’t their parents price sensitive
- pstrateman 2y agoTheir parents aren't making the decision. They can borrow the money all by themselves.
- whimsicalism 2y agoi am curious how much borrowing against parents wishes actually occurs
- ourmandave 2y agoUndergraduate dependents of parents can only borrow $31,000 across their entire tenure. First year cap is $5,500. Independent student loan limit is $57,500 total. First year cap $9,500. https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized https://studentaid.gov/understand-aid/types/loans/subsidized...
- pstrateman 2y agoThat's only loans directly from the feds. Most people borrow money from private lenders as well.
- bee_rider 2y agoThey are a little price sensitive but probably not fully rational, everybody has rose-tinted glasses about their kids’ potential, right?
- joe_the_user 2y agoI don't think it's hindsight where the problems could be seen. It's econ 101 that markets can produce rational allocation of resources but only if they are involve people with the information and time to determine the outcome and those people are working with their own money. A system where the state "gives"/"loans" your customers money and then forces them to spend that money on you produces a industry that has neither the discipline of skin-in-the-game markets nor the discipline of state regulation.