7 ms·

That's why we have bankruptcy laws. Yes - bankruptcy laws that were passed in 2005 which made it significantly harder to get debt forgiven in bankruptcy, and a

by sc68cal 14y ago

That's why we have bankruptcy laws. Yes - bankruptcy laws that were passed in 2005 which made it significantly harder to get debt forgiven in bankruptcy, and also removed some forms of debt from being able to be discharged in bankruptcy: https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an... It was widely claimed by advocates of BAPCPA that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. These claims turned out to be false. After BAPCPA passed, although credit card company losses decreased, prices charged to customers increased, and credit card company profits soared. http://ssrn.com/abstract=1157158 http://ssrn.com/abstract=1157158 And that kind of debt is entirely optional. Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree.

tsotha 14y ago
>Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree. That's a self-refuting argument. If your degree was really the ticket to a "vibrant middle class" job you'd be able to pay off your student debt. The reality is not all degrees are created equal, and people should think a little bit before they go $200k into debt for a degree that's going lead to a $40k job. Granted, 18 year olds aren't very good at this kind of reasoning, but that's what parents are for. On top of that, for a lot of fields a degree from a public university is just as good as one from an Ivy. Nobody is entitled to a pricy private college education. Either you go on family money or you think very carefully about how those loans are going to get repaid.
- sc68cal 14y ago
  I believe that the vast majority of student debt is not people going to an Ivy institution. The major concentration of serious debt issues has been in the private-education-as-big-business sector from companies like University of Phoneix and DeVry, whose business models depend on government backed student loans, or loans from private companies that are subsidized/guaranteed by the government (before President Obama signed a law that allowed the government to manage student loans without requiring a private company to act as an intermediary). http://www.motherjones.com/politics/2011/09/gi-bill-for-profit-colleges http://www.motherjones.com/politics/2011/09/gi-bill-for-prof... "Last winter, the Department of Veterans Affairs tasked its newly hired blogger, a cantankerous Iraq vet named Alex Horton, with investigating the website GIBill.com, one of many official-looking links that come up when you Google terms like "GI Bill schools." With names like ArmedForcesEDU.com and UseYourGIBill.us, these sites purport to inform military veterans how to best use their education benefits. In reality, Horton found, they're run by marketing firms hired by for-profit colleges to extol the virtues of high-priced online or evening courses. He concluded that GIBill.com "serves little purpose other than to funnel student veterans and convince them their options for education are limited to their advertisers." http://www.motherjones.com/media/2012/08/explosive-growth-profit-higher-education-numbers http://www.motherjones.com/media/2012/08/explosive-growth-pr... "The for-profit higher education industry was the target of a bruising report issued last week. Based on a two-year effort, the report detailed high rates of loan default, aggressive recruiting, higher than average tuition, low retention rates, and little job placement assistance. It was spearheaded by Sen. Tom Harkin, D-Iowa, a longtime critic of the industry. (ProPublica has written a number of pieces looking more closely at the explosive growth sector, including questionable recruiting and marketing.)" And finally - http://www.motherjones.com/politics/2009/11/university-phoenix-allegations-enrollment-abuses-persist http://www.motherjones.com/politics/2009/11/university-phoen... "After federal regulators accused the University of Phoenix of systematic enrollment abuses in 2004, the school's parent company paid out nearly $10 million to resolve the allegations. Phoenix allegedly had broken the law by tying recruiters' pay to enrollment numbers, U.S. Department of Education investigators found, creating pressure to sign up unqualified students. In the years since, Phoenix cemented its stature as the nation's largest for-profit school and the single biggest recipient of federal student aid. But some of the school's recruiters have continued to use high-pressure, deceptive tactics, according to a dozen current and former students and two former recruiters who spoke to ProPublica and Marketplace as part of a joint investigation."
  - tsotha 14y ago
    >I believe that the vast majority of student debt is not people going to an Ivy institution. The difference is nobody goes into $200k debt studying at the University of Phoenix, whereas people who go to lower tier Ivies on student loans and get less marketable degrees have literally sold themselves into debt slavery.
    - tilgovi 14y ago
      Except you're the one who brought up $200k as a number to begin with. And those people who sold themselves into debt slavery, by going to an extremely good school, may actually still hold jobs that will allow them to repay their loans eventually. Ignoring your arbitrary choice of debt number, we're looking at many people in debt and many of them without any college degree whatsoever. And talking about parents isn't helpful. Parents are the ones watching the State of the Union address where the President talks about higher education and competing with China and then go out in the town and talk to the other parents about where their children are going to college and what their children are doing with their degrees. Thinking that only 18-year-olds can be fooled into saddling themselves with excessive debt is nonsense.
      - tsotha 14y ago
        >Except you're the one who brought up $200k as a number to begin with. Yes. >And those people who sold themselves into debt slavery, by going to an extremely good school, may actually still hold jobs that will allow them to repay their loans eventually. Well then, there's no problem, is there? >Thinking that only 18-year-olds can be fooled into saddling themselves with excessive debt is nonsense. At some point people have to think for themselves.
- btilly 14y ago
  >Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree. That's a self-refuting argument. If your degree was really the ticket to a "vibrant middle class" job you'd be able to pay off your student debt. You just failed at basic logic. Saying that jobs of type X require a degree IS NOT saying that getting a degree guarantees that you will get a job of type X. As an example, a law degree is required to become a lawyer. But only something like 70% of people graduating with law degrees will pass the bar, and be put on a track to a job where they can reasonably expect to pay back their debts. I also see that you are happy to blame the victim. Yet many victims are not to blame. Let me take a real example, my wife. She got an MD. She went into residency. She got injured, had to take time off then leave residency. She is in another residency now. She still does not make enough to contribute towards her debts, I've been doing it instead. She did nothing wrong. Yes, the degree was expensive, but an MD is generally a worthwhile investment. Yes, she got injured. But that was not her fault. There are no guarantees in life. Bad luck will happen to a certain fraction of people. It happened to her. Now you have a lot to say about planning. Well back when she took on that debt, bankruptcy could discharge it. It was not until after she had the MD that the rules changed on her. Thanks to me, she's not in trouble. But when she took on the debt, the bank agreed to one set of risks, and then Congress changed the terms of the contract out from under her later. In what world is it fair that you sign one thing, and then because the right politicians got bribed, you're bound to a different thing?
  - tsotha 14y ago
    >Saying that jobs of type X require a degree IS NOT saying that getting a degree guarantees that you will get a job of type X. No, but he was talking about the majority of jobs. I understand people get unlucky. That's life. But there's a huge disconnect between what the population of college students is paying for degrees and what the job market is paying for labor. This isn't a question of some small percentage of people getting unlucky. It's a fundamental overestimation of the value of what they're buying. >I also see that you are happy to blame the victim. People who make dumb decisions are not victims. Like I said, not everyone is in that position because they made a dumb decision. But most of them are.
- zanny 14y ago
  > 18 year olds aren't very good at this kind of reasoning, but that's what parents are for. It is a dangerous assumption to think it is the place for a parent to judge if their children should incur the equivalent of half a decades debt when they themselves may have no comprehension of the value of a degree their kid is thinking of.
  - tsotha 14y ago
    I'm not sure what you mean by "half a decades debt". At some point people have to be treated as adults. If your parents aren't up to advising you on financial matters you have to get outside help. Or you figure it out yourself. I refuse to accept the notion we should alter agreements freely entered into by adults in an effort to protect them from themselves.
    - zanny 14y ago
      I don't think so either, I just don't think its an excuse to say colleges and universities (especially since they are all federally funded) can practice extremely predatory financing expecting a kids parents to know better for them. I agree you should not alter open agreements, but those agreements are already biased by federal dollars in the form of guaranteed stafford loans. We need to get rid of federal loan and grant guarantees that are not merit based limited funding that happens after acceptance (so that schools can't focus target anyone getting a federal scholarship).
      - tsotha 14y ago
        I would get rid of GSLs. I would go further, too, and make the current financing process illegal. Imagine if you went to the local car dealer and he told you "Every car on the lot is $200k. But give me a detailed listing of your assets and income and I'll adjust the price such that you can barely afford to buy one if you take out as much financing as possible." That kind of price discrimination is illegal for your local car dealer, but it's exactly what happens when your kid goes off to college. Not only that, colleges collude so that you can't play one college off against another. Of course what they say is they're just making sure they have a "diverse" student body by cutting the less well off students a deal. But the net effect is the college takes in the maximum amount of money in tuition. It's the biggest driver of ever-rising tuition, and were I in Congress I'd go on the freakin' warpath against this industry.
smsm42 14y ago
Many jobs require a degree, but not every degree leads to a job. Unfortunately, easy access to huge loans and widespread confusion about the relationship between the degree and the paying jobs has lead to ever increasing number of people in huge debts with no way to repay it ever. It reminds me some recent history when people got into huge debt in order to get something that is sure to provide them huge value and make them rich - and then it turned out not to be so. We're heading into it again, full steam.
- eli_gottlieb 14y ago
  The problem is that not getting a university degree still makes you far more likely to end up poor. So people are still making the "rational" investment, which is to take a 40% chance of a good job over a 10% chance (numbers pulled from my ass, but you get the point).
  - smsm42 14y ago
    Correlation != casuation. Degree in feminist basket weaving is not going to make you rich (unless you land a sinecure job in some Diversity Office, but these are severely limited in number) or even richer. It is almost guaranteed to make you significantly poorer unless you get some deal to get it for free. That's the part of the confusion - the fact that average college graduate now in his 40ies makes more than average non-graduate in his 40ies, does not mean getting into 100K debt would actually work out for you as a current college student. It's like saying "stock market returns 8% annually long term, so I'll put all my life saving into Shady Gadgets Inc. that was touted to me by some guy I don't know on the phone". That's not how rational investment is made.
    - tsotha 14y ago
      >Correlation != casuation. This. It's not at all clear people make more money as a result of college or if people who are generally more likely to make more money are also more likely to go to college. There are certainly some very famously high earning college dropouts.

by sc68cal 14y ago

tsotha 14y ago

>Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree. That's a self-refuting argument. If your degree was really the ticket to a "vibrant middle class" job you'd be able to pay off your student debt. The reality is not all degrees are created equal, and people should think a little bit before they go $200k into debt for a degree that's going lead to a $40k job. Granted, 18 year olds aren't very good at this kind of reasoning, but that's what parents are for. On top of that, for a lot of fields a degree from a public university is just as good as one from an Ivy. Nobody is entitled to a pricy private college education. Either you go on family money or you think very carefully about how those loans are going to get repaid.

sc68cal 14y ago
I believe that the vast majority of student debt is not people going to an Ivy institution. The major concentration of serious debt issues has been in the private-education-as-big-business sector from companies like University of Phoneix and DeVry, whose business models depend on government backed student loans, or loans from private companies that are subsidized/guaranteed by the government (before President Obama signed a law that allowed the government to manage student loans without requiring a private company to act as an intermediary). http://www.motherjones.com/politics/2011/09/gi-bill-for-profit-colleges http://www.motherjones.com/politics/2011/09/gi-bill-for-prof... "Last winter, the Department of Veterans Affairs tasked its newly hired blogger, a cantankerous Iraq vet named Alex Horton, with investigating the website GIBill.com, one of many official-looking links that come up when you Google terms like "GI Bill schools." With names like ArmedForcesEDU.com and UseYourGIBill.us, these sites purport to inform military veterans how to best use their education benefits. In reality, Horton found, they're run by marketing firms hired by for-profit colleges to extol the virtues of high-priced online or evening courses. He concluded that GIBill.com "serves little purpose other than to funnel student veterans and convince them their options for education are limited to their advertisers." http://www.motherjones.com/media/2012/08/explosive-growth-profit-higher-education-numbers http://www.motherjones.com/media/2012/08/explosive-growth-pr... "The for-profit higher education industry was the target of a bruising report issued last week. Based on a two-year effort, the report detailed high rates of loan default, aggressive recruiting, higher than average tuition, low retention rates, and little job placement assistance. It was spearheaded by Sen. Tom Harkin, D-Iowa, a longtime critic of the industry. (ProPublica has written a number of pieces looking more closely at the explosive growth sector, including questionable recruiting and marketing.)" And finally - http://www.motherjones.com/politics/2009/11/university-phoenix-allegations-enrollment-abuses-persist http://www.motherjones.com/politics/2009/11/university-phoen... "After federal regulators accused the University of Phoenix of systematic enrollment abuses in 2004, the school's parent company paid out nearly $10 million to resolve the allegations. Phoenix allegedly had broken the law by tying recruiters' pay to enrollment numbers, U.S. Department of Education investigators found, creating pressure to sign up unqualified students. In the years since, Phoenix cemented its stature as the nation's largest for-profit school and the single biggest recipient of federal student aid. But some of the school's recruiters have continued to use high-pressure, deceptive tactics, according to a dozen current and former students and two former recruiters who spoke to ProPublica and Marketplace as part of a joint investigation."
- tsotha 14y ago
  >I believe that the vast majority of student debt is not people going to an Ivy institution. The difference is nobody goes into $200k debt studying at the University of Phoenix, whereas people who go to lower tier Ivies on student loans and get less marketable degrees have literally sold themselves into debt slavery.
  - tilgovi 14y ago
    Except you're the one who brought up $200k as a number to begin with. And those people who sold themselves into debt slavery, by going to an extremely good school, may actually still hold jobs that will allow them to repay their loans eventually. Ignoring your arbitrary choice of debt number, we're looking at many people in debt and many of them without any college degree whatsoever. And talking about parents isn't helpful. Parents are the ones watching the State of the Union address where the President talks about higher education and competing with China and then go out in the town and talk to the other parents about where their children are going to college and what their children are doing with their degrees. Thinking that only 18-year-olds can be fooled into saddling themselves with excessive debt is nonsense.
    - tsotha 14y ago
      >Except you're the one who brought up $200k as a number to begin with. Yes. >And those people who sold themselves into debt slavery, by going to an extremely good school, may actually still hold jobs that will allow them to repay their loans eventually. Well then, there's no problem, is there? >Thinking that only 18-year-olds can be fooled into saddling themselves with excessive debt is nonsense. At some point people have to think for themselves.
btilly 14y ago
>Not when the majority of jobs that create a vibrant middle class in the post-industrial United States require at least a college degree. That's a self-refuting argument. If your degree was really the ticket to a "vibrant middle class" job you'd be able to pay off your student debt. You just failed at basic logic. Saying that jobs of type X require a degree IS NOT saying that getting a degree guarantees that you will get a job of type X. As an example, a law degree is required to become a lawyer. But only something like 70% of people graduating with law degrees will pass the bar, and be put on a track to a job where they can reasonably expect to pay back their debts. I also see that you are happy to blame the victim. Yet many victims are not to blame. Let me take a real example, my wife. She got an MD. She went into residency. She got injured, had to take time off then leave residency. She is in another residency now. She still does not make enough to contribute towards her debts, I've been doing it instead. She did nothing wrong. Yes, the degree was expensive, but an MD is generally a worthwhile investment. Yes, she got injured. But that was not her fault. There are no guarantees in life. Bad luck will happen to a certain fraction of people. It happened to her. Now you have a lot to say about planning. Well back when she took on that debt, bankruptcy could discharge it. It was not until after she had the MD that the rules changed on her. Thanks to me, she's not in trouble. But when she took on the debt, the bank agreed to one set of risks, and then Congress changed the terms of the contract out from under her later. In what world is it fair that you sign one thing, and then because the right politicians got bribed, you're bound to a different thing?
- tsotha 14y ago
  >Saying that jobs of type X require a degree IS NOT saying that getting a degree guarantees that you will get a job of type X. No, but he was talking about the majority of jobs. I understand people get unlucky. That's life. But there's a huge disconnect between what the population of college students is paying for degrees and what the job market is paying for labor. This isn't a question of some small percentage of people getting unlucky. It's a fundamental overestimation of the value of what they're buying. >I also see that you are happy to blame the victim. People who make dumb decisions are not victims. Like I said, not everyone is in that position because they made a dumb decision. But most of them are.
zanny 14y ago
> 18 year olds aren't very good at this kind of reasoning, but that's what parents are for. It is a dangerous assumption to think it is the place for a parent to judge if their children should incur the equivalent of half a decades debt when they themselves may have no comprehension of the value of a degree their kid is thinking of.
- tsotha 14y ago
  I'm not sure what you mean by "half a decades debt". At some point people have to be treated as adults. If your parents aren't up to advising you on financial matters you have to get outside help. Or you figure it out yourself. I refuse to accept the notion we should alter agreements freely entered into by adults in an effort to protect them from themselves.
  - zanny 14y ago
    I don't think so either, I just don't think its an excuse to say colleges and universities (especially since they are all federally funded) can practice extremely predatory financing expecting a kids parents to know better for them. I agree you should not alter open agreements, but those agreements are already biased by federal dollars in the form of guaranteed stafford loans. We need to get rid of federal loan and grant guarantees that are not merit based limited funding that happens after acceptance (so that schools can't focus target anyone getting a federal scholarship).
    - tsotha 14y ago
      I would get rid of GSLs. I would go further, too, and make the current financing process illegal. Imagine if you went to the local car dealer and he told you "Every car on the lot is $200k. But give me a detailed listing of your assets and income and I'll adjust the price such that you can barely afford to buy one if you take out as much financing as possible." That kind of price discrimination is illegal for your local car dealer, but it's exactly what happens when your kid goes off to college. Not only that, colleges collude so that you can't play one college off against another. Of course what they say is they're just making sure they have a "diverse" student body by cutting the less well off students a deal. But the net effect is the college takes in the maximum amount of money in tuition. It's the biggest driver of ever-rising tuition, and were I in Congress I'd go on the freakin' warpath against this industry.

smsm42 14y ago

Many jobs require a degree, but not every degree leads to a job. Unfortunately, easy access to huge loans and widespread confusion about the relationship between the degree and the paying jobs has lead to ever increasing number of people in huge debts with no way to repay it ever. It reminds me some recent history when people got into huge debt in order to get something that is sure to provide them huge value and make them rich - and then it turned out not to be so. We're heading into it again, full steam.

eli_gottlieb 14y ago
The problem is that not getting a university degree still makes you far more likely to end up poor. So people are still making the "rational" investment, which is to take a 40% chance of a good job over a 10% chance (numbers pulled from my ass, but you get the point).
- smsm42 14y ago
  Correlation != casuation. Degree in feminist basket weaving is not going to make you rich (unless you land a sinecure job in some Diversity Office, but these are severely limited in number) or even richer. It is almost guaranteed to make you significantly poorer unless you get some deal to get it for free. That's the part of the confusion - the fact that average college graduate now in his 40ies makes more than average non-graduate in his 40ies, does not mean getting into 100K debt would actually work out for you as a current college student. It's like saying "stock market returns 8% annually long term, so I'll put all my life saving into Shady Gadgets Inc. that was touted to me by some guy I don't know on the phone". That's not how rational investment is made.
  - tsotha 14y ago
    >Correlation != casuation. This. It's not at all clear people make more money as a result of college or if people who are generally more likely to make more money are also more likely to go to college. There are certainly some very famously high earning college dropouts.