Student Loan Debt

[Texsox]

It seems like I can remember almost everyone here at college at some point. 

[Soxbadger]

I think this issue could really cause some problems for a variety of reasons. My proposal that I think would be palatable to most people is: 1) student loans can be discharged in bankruptcy and 2) college education expenses deduction is increased to 50,000 per year and it retroactively can be used by any living person for the next 10 years. Therefore if you paid off your student loans last year, you can still get full deductibility up to an amount of 500,000.

 

[Soxnfins]

Paid off mine this past year, actually paid off my car and then traded it in for a lesser vehicle and used the proceeds to have a paid off vehicle and no student loans.  Just a mortgage here.

[Chisoxfn]

9 minutes ago, Soxbadger said:

I think this issue could really cause some problems for a variety of reasons. My proposal that I think would be palatable to most people is: 1) student loans can be discharged in bankruptcy and 2) college education expenses deduction is increased to 50,000 per year and it retroactively can be used by any living person for the next 10 years. Therefore if you paid off your student loans last year, you can still get full deductibility up to an amount of 500,000.

 

I haven't seen this type of a proposal - but directionally I like it.  When you say deductability - are you saying like a tax-write off for you college expenses?  

[Soxbadger]

1 minute ago, Chisoxfn said:

I haven't seen this type of a proposal - but directionally I like it.  When you say deductability - are you saying like a tax-write off for you college expenses?  

Yes, right now certain taxpayers can only deduct $4,000 for college expenses (some cannot take any deduction). This would increase it to 50,000 per year for the next 10 years and it would remove any income limitation. It would also allow someone like Soxnfins to deduct his expenses over the next 10 years. That way people who paid off their college get the exact same benefit as other people who have yet to pay it off. 

And its something I thought up myself over the last year haha. I just was trying to figure out a way to make it fair for both the person who paid off their loans and for the person who has not. 

The other concern I have about paying off loans is that there will be a lot of people who feel it is unfair because they didnt go to college (or went to a cheaper college) because they didnt want to take the economic risk. If they knew all of their loans would have been forgiven maybe they would have gone to college because their would have been no risk. 

[mqr]

I would do vile, vile things for ten grand off my student loans. 

[Chisoxfn]

10 minutes ago, Soxbadger said:

Yes, right now certain taxpayers can only deduct $4,000 for college expenses (some cannot take any deduction). This would increase it to 50,000 per year for the next 10 years and it would remove any income limitation. It would also allow someone like Soxnfins to deduct his expenses over the next 10 years. That way people who paid off their college get the exact same benefit as other people who have yet to pay it off. 

And its something I thought up myself over the last year haha. I just was trying to figure out a way to make it fair for both the person who paid off their loans and for the person who has not. 

The other concern I have about paying off loans is that there will be a lot of people who feel it is unfair because they didnt go to college (or went to a cheaper college) because they didnt want to take the economic risk. If they knew all of their loans would have been forgiven maybe they would have gone to college because their would have been no risk. 

Gotcha - confirms I was thinking of it your way. I here you on the last part. I specifically chose the school I did with finances in mind and it allowed me to graduate debt free (helps that I lived at home too). If I could have gotten a bunch of debt written off, maybe I would have opted for that out of state school and borrowed some living expenses, etc. 

I think I prefer easing some of the bankruptcy guidelines and just focusing on the current facts at hands. If we are going to get rid of debt - it doesn't have to be for all - but make sure we are getting the right economic stimulus out of it and not just raising debt for sake of raising debt. I don't know answer - but it would be a costly use of resources. 

But I think your concept is probably one of the best approaches I've seen.  

[Bob Sacamano]

18 minutes ago, Soxbadger said:

Yes, right now certain taxpayers can only deduct $4,000 for college expenses (some cannot take any deduction). This would increase it to 50,000 per year for the next 10 years and it would remove any income limitation. It would also allow someone like Soxnfins to deduct his expenses over the next 10 years. That way people who paid off their college get the exact same benefit as other people who have yet to pay it off. 

And its something I thought up myself over the last year haha. I just was trying to figure out a way to make it fair for both the person who paid off their loans and for the person who has not. 

The other concern I have about paying off loans is that there will be a lot of people who feel it is unfair because they didnt go to college (or went to a cheaper college) because they didnt want to take the economic risk. If they knew all of their loans would have been forgiven maybe they would have gone to college because their would have been no risk. 

That last paragraph really hits home for me.

[Texsox]

I keep thinking of a hierarchy of fairness that starts with a BA from a state school near your home and ends with a PhD from a private school. 

I still have some,  it's the last of any debt I have. If they forgave $10,000 I would probably buy a new vehicle sooner rather than later. I've been hanging onto some cash waiting to see what happens. 

[Texsox]

5 minutes ago, manbearpuig said:

That last paragraph really hits home for me.

I think it does for a lot of people.  But tell me this,  using the $10,000 number,  what changes would you have made?  $1,250 per semester  doesn't really change schools too much. 

[illinilaw08]

I'm just waiting for interest rates to be re-instated to pay of the last of my loans (and also to see if Biden does some sort of forgiveness by executive order).

With that being said, I'm a bankruptcy lawyer, and IMO, the fix on student loans in bankruptcy is to make them dischargeable over time.  Most people who do well with their degrees are able to accumulate assets over their first several years after graduation while also paying down their debt.  Those people - depending on the state they live in - will find bankruptcy to be a not particularly viable option - not without giving up assets.  Those are the people who don't really need a discharge of student loan debts, and it prevents the issue of people graduating and immediately filing which would completely screw up the lending market.  If you make them dischargeable over time, people who didn't get the benefit of their degree have an opportunity to get out of debt that they can never get on top of (note, if we were to make public education free in college, I'd be less concerned about "over time" on dischargeability of existing student loan debt).

That's the fix - in my opinion - on loans in existence now.  Regardless of the fact that I have paid off the vast majority of my existing loans, and that I have no kids and never plan to do so, I'm all for free public education in college - even if it means a greater tax burden on myself.  The fact that I dealt with the yoke of student loan debt for a decade makes me want younger people to avoid going through what I've gone through, rather than making me mad that younger people will get a benefit which I did not receive.

[southsider2k5]

I think the biggest problem here is that generations of people who didn't need college to succeed, and even so could have affording to do college with a part time job when they would have been in school, are now controlling legislation and not understanding that a college degree is now a minimum in most decent paying jobs, and that the cost of it is now WAY more than what they remember.  The results are already hitting the economy, and this is why you see that the younger generations aren't buying houses (they can't afford them with their debt loads) and aren't consuming like previous generations did.  This problem is only getting worse.  We need to reimagine the entire higher education system from the ground up to come up with something that works for people long term, and not just piecemeal attacks on symptoms.

[Jack Parkman]

On 1/15/2021 at 10:18 AM, southsider2k5 said:

I think the biggest problem here is that generations of people who didn't need college to succeed, and even so could have affording to do college with a part time job when they would have been in school, are now controlling legislation and not understanding that a college degree is now a minimum in most decent paying jobs, and that the cost of it is now WAY more than what they remember.  The results are already hitting the economy, and this is why you see that the younger generations aren't buying houses (they can't afford them with their debt loads) and aren't consuming like previous generations did.  This problem is only getting worse.  We need to reimagine the entire higher education system from the ground up to come up with something that works for people long term, and not just piecemeal attacks on symptoms.

Nice post. This is the truth. 

Also, you have someone like me who is autistic and thought he was going into an autistic-friendly field only to find out that you need strong interpersonal skills for the job AFTER graduation. I went into Engineering where a better field for me would have been computer science, IT or something like that. 

Because of all of the nightmares I've heard about how student loan debt accumulates during deferrals, I've been on SSI and worked part time since a year after I graduated, was never able to break into my chosen field AND have been using the majority of my income from part time work to make my regular payments. My folks helped me out as much as they could, and I also had an academic scholarship that covered 50% of my tuition. 

I never thought this was ever a going to be a problem because engineers in my field were THE HIGHEST paid post-bachelors entry level positions out of ANY degree on average. 

Had I been able to get and keep a job in my chosen field, I'd have been able to to make the payments easily. 

I've given up on that field and am now doing taking classes to get COMP TIA certs because I really enjoy helping people and troubleshooting computers and networks. It's something  I could have done with just an associates degree and zero debt, which sucks in retrospect. 

Edited January 18, 2021 by Jack Parkman

[he gone.]

This along with topics like minimum wage are such simple yet complex topics. There's no real right answer or wrong answer and regardless some are going to be left upset about the choice and outcome. 

We can start with the general: A) College costs too much. Way back in the day there was a value proposition, but now it has become over the top. This started with the BK ruling. Once colleges & lenders knew their money was good to go - they just increased and increased. zero risk to them. became an arms race to build newer and nicer buildings. I mean, go to a campus and check out how nice they are -- for about 20 years everything was freshened up. Once one college did, the next did, etc. etc. 

So that's the root issue. Any forgiveness means nothing if we don't fix the root issue which is to say we need to revamp and fix the college system. These institutions, especially the large ones are just corporations. their endowments have so much capital they're putting to work its ridiculous. 

In regards to the forgiveness of student loans I will say I am biased because I am in the middle of it. I married into student loans. My wife is from Detroit - grew up on 12 mile, so not too far from 8 mile. as you can imagine her parents didnt have the means to pay for any of her college. She went to a state school - worked jobs the whole way through ... but between room and board and school you're at about $20-25k a year for in state. so you're talking 80-100k minus some nominal waitressing wages over the years that are all but wiped away by interest plus some. she then went on to law school... after a year+ I think it was pretty obvious she didn't want to do that for life, but she also felt trapped - already had thrown $50k at it so she finished out.. add on $100-150k,  add on room and board to that too. Now add interest... again she worked the whole way through all of it and put as much as she could at it. (just for that whole crowd saying you can work your way through college and pay it off). Now she didn't end up utilizing her law degree for law, she took a normal job. And you say ... well that's her fault. But she was 21, a criminal justice major, really liked the idea of law. Still loves law, but doesn't want to practice, and got a normal job. Allowing 18 and 20 and 22 year old kids make decisions that literally will change the course of their life for the next 30 years is bat shit. 

Now here are real things I had to consider as a human being:

How many kids are we going to have? Not how many do we want - but how many can we reasonably have?

What size house are we going to/did we buy?

Should I marry her? Finances are the number one driver to ending of marriage. 

The end of the day -- we're having at least 1 less kid. Maybe two less. Our student loans are on par with the house, like literally. My payment towards students loans monthly is bigger than my mortgage (not counting taxes). We actively discussed not getting married and just living together for student loan forgiveness possibilities which will now not happen. 

Those are really fucking terrible decisions to make and discuss because she wanted to be further educated and contribute to society. And that's my issue. Life is about kids, it's about marriage ... its about raising the next generation that can contribute. About donating your time and money to help others. 

So call me a socialist of whatever - but with the trillions being thrown around? Scrap it all. Dont just forgive 10k, or 50k or for certain classes of people. Forgive it from community college to doctors. I don't care if you're making $30k or $500k a year, everybody gets wiped clean. We shouldn't punish our country for wanting to be more educated, cultured, and wanting to contribute more to society. I don't care that the doctor is making bank -- he donated his time for a decade to learn ... don't punish him for that. I have a buddy who is a surgeon ... people dont feel bad for him. They'll say hes rich he can pay it off. Sure. He can. However, he literally just took his first job this year at age 34. For 10 years he dedicated his life to becoming a doctor. He put off family, marriage, etc. There's enough cost in doing that. So i dont care if he's making $500k now - I'd forgive his loans too. There is no doubt that if loans were wiped that millennials would pour more into the economy. 

But dont just wipe debt.... fix the root issue, because otherwise its pointless.

 

[Two-Gun Pete]

On 1/15/2021 at 10:02 AM, illinilaw08 said:

I'm just waiting for interest rates to be re-instated to pay of the last of my loans (and also to see if Biden does some sort of forgiveness by executive order).

With that being said, I'm a bankruptcy lawyer, and IMO, the fix on student loans in bankruptcy is to make them dischargeable over time.  Most people who do well with their degrees are able to accumulate assets over their first several years after graduation while also paying down their debt.  Those people - depending on the state they live in - will find bankruptcy to be a not particularly viable option - not without giving up assets.  Those are the people who don't really need a discharge of student loan debts, and it prevents the issue of people graduating and immediately filing which would completely screw up the lending market.  If you make them dischargeable over time, people who didn't get the benefit of their degree have an opportunity to get out of debt that they can never get on top of (note, if we were to make public education free in college, I'd be less concerned about "over time" on dischargeability of existing student loan debt).

I do like the dischargability over time idea.

However, I also believe that schools and lenders also have to change their behaviors as well. Colleges and universities have had  virtually unlimited access to virtually unlimited funding by means of federally-backed loans that are not tied to the value of the degree, and not underwritten by the student's likelihood of future repayment.

Just by putting THE THREAT of bankruptcy to discharge student loans will force schools to re-think charging a sociology student the same as a nursing student, or else those loans may not perform. Then, tie a school's future ability to receive loans to their student loans performances over time. What this can do is to weed out the schools that prey on the young and the otherwise naive, by threatening their future viability, if their alumni can't pay their loans.

 

At the same time, the threat of bankruptcy to discharge student loans would force lenders to have some measure of underwriting standards before they pass out the cash. Otherwise, lenders could be saddled with piles of useless loans that will never be repaid.

 

The mere threat of getting fooked out of repayment of loans via BK would bend the cost curve downward, IMO. It is for this reason that I think it is essential to make student loans dischargeable via BK. (Edit) And, I think that having loans dischargeable, either all at once, or over time can help modify future behaviors of lenders and the schools alike.

Edited January 18, 2021 by Two-Gun Pete

[he gone.]

Also to add to that.. let's just use $250k as a round number for this situation ... you can stop me at any time and see if there's a root issue. 

$60k salary

$14k taxes

$12k housing (either rent or mortgage - if mortgage don't forget taxes of about $6000 more. This is assuming about a $300k house, or $1k rent.

$5k food for year ($100 a week - probably heavy - but let's say a few times eating out once and a while)

$4500 car payments (just using avg. car payments via quick internet searches)

$1-2.5k? insurance and such (total round guessing)

$4k Metra tickets to get to work ($13/day + $3 parking -- $16 a day * 5 = 80 = 320 per month * 12 = roughly 4k

So all in to have a roof, food, insurance, a car, and to get to work ... no extras, no crazy trips, no clothing, no kids, no anything and an okay starting salary you net at end of year $8-10k

Throw the rest of that at student loans of $1k per month? You know have negative balance, no savings at all. $12k per year, maybe you get some nice raises and new jobs and you make $100k and throw $2k a month at it .... Under this plan let's say $12k for 5 years ($60k), $18k for 10 years ... $180k ...  

Now $250k accruing interest for 20 years until "forgiveness" = $350-400,000. 

Rough math 15 years from now, you have no savings, you're 40 years old, you've paid $240k in student loans, have $100k left. Have two kids ... which you have to pay for those somehow out of the balance above...pay it off for 5 more years and fully paid off!!!

By 45 you can start saving money... just in time for your 2 kids college funds.... which has now inflated to $50k a year by 2040. Better start it all over again!!!!

 

The AMERICAN DREAM!

 

[The Beast]

1 hour ago, BrianAnderson said:

This along with topics like minimum wage are such simple yet complex topics. There's no real right answer or wrong answer and regardless some are going to be left upset about the choice and outcome. 

We can start with the general: A) College costs too much. Way back in the day there was a value proposition, but now it has become over the top. This started with the BK ruling. Once colleges & lenders knew their money was good to go - they just increased and increased. zero risk to them. became an arms race to build newer and nicer buildings. I mean, go to a campus and check out how nice they are -- for about 20 years everything was freshened up. Once one college did, the next did, etc. etc. 

So that's the root issue. Any forgiveness means nothing if we don't fix the root issue which is to say we need to revamp and fix the college system. These institutions, especially the large ones are just corporations. their endowments have so much capital they're putting to work its ridiculous. 

In regards to the forgiveness of student loans I will say I am biased because I am in the middle of it. I married into student loans. My wife is from Detroit - grew up on 12 mile, so not too far from 8 mile. as you can imagine her parents didnt have the means to pay for any of her college. She went to a state school - worked jobs the whole way through ... but between room and board and school you're at about $20-25k a year for in state. so you're talking 80-100k minus some nominal waitressing wages over the years that are all but wiped away by interest plus some. she then went on to law school... after a year+ I think it was pretty obvious she didn't want to do that for life, but she also felt trapped - already had thrown $50k at it so she finished out.. add on $100-150k,  add on room and board to that too. Now add interest... again she worked the whole way through all of it and put as much as she could at it. (just for that whole crowd saying you can work your way through college and pay it off). Now she didn't end up utilizing her law degree for law, she took a normal job. And you say ... well that's her fault. But she was 21, a criminal justice major, really liked the idea of law. Still loves law, but doesn't want to practice, and got a normal job. Allowing 18 and 20 and 22 year old kids make decisions that literally will change the course of their life for the next 30 years is bat shit. 

Now here are real things I had to consider as a human being:

How many kids are we going to have? Not how many do we want - but how many can we reasonably have?

What size house are we going to/did we buy?

Should I marry her? Finances are the number one driver to ending of marriage. 

The end of the day -- we're having at least 1 less kid. Maybe two less. Our student loans are on par with the house, like literally. My payment towards students loans monthly is bigger than my mortgage (not counting taxes). We actively discussed not getting married and just living together for student loan forgiveness possibilities which will now not happen. 

Those are really fucking terrible decisions to make and discuss because she wanted to be further educated and contribute to society. And that's my issue. Life is about kids, it's about marriage ... its about raising the next generation that can contribute. About donating your time and money to help others. 

So call me a socialist of whatever - but with the trillions being thrown around? Scrap it all. Dont just forgive 10k, or 50k or for certain classes of people. Forgive it from community college to doctors. I don't care if you're making $30k or $500k a year, everybody gets wiped clean. We shouldn't punish our country for wanting to be more educated, cultured, and wanting to contribute more to society. I don't care that the doctor is making bank -- he donated his time for a decade to learn ... don't punish him for that. I have a buddy who is a surgeon ... people dont feel bad for him. They'll say hes rich he can pay it off. Sure. He can. However, he literally just took his first job this year at age 34. For 10 years he dedicated his life to becoming a doctor. He put off family, marriage, etc. There's enough cost in doing that. So i dont care if he's making $500k now - I'd forgive his loans too. There is no doubt that if loans were wiped that millennials would pour more into the economy. 

But dont just wipe debt.... fix the root issue, because otherwise its pointless.

 

 

55 minutes ago, Two-Gun Pete said:

I do like the dischargability over time idea.

However, I also believe that schools and lenders also have to change their behaviors as well. Colleges and universities have had  virtually unlimited access to virtually unlimited funding by means of federally-backed loans that are not tied to the value of the degree, and not underwritten by the student's likelihood of future repayment.

Just by putting THE THREAT of bankruptcy to discharge student loans will force schools to re-think charging a sociology student the same as a nursing student, or else those loans may not perform. Then, tie a school's future ability to receive loans to their student loans performances over time. What this can do is to weed out the schools that prey on the young and the otherwise naive, by threatening their future viability, if their alumni can't pay their loans.

 

At the same time, the threat of bankruptcy to discharge student loans would force lenders to have some measure of underwriting standards before they pass out the cash. Otherwise, lenders could be saddled with piles of useless loans that will never be repaid.

 

The mere threat of getting fooked out of repayment of loans via BK would bend the cost curve downward, IMO. It is for this reason that I think it is essential to make student loans dischargeable via BK. (Edit) And, I think that having loans dischargeable, either all at once, or over time can help modify future behaviors of lenders and the schools alike.

Here’s another problem. What do you do with young adults who don’t know what to do and just pick something, only to find out later they want to do something else or they hate or are indifferent the work they are in? What do we do as a society to stop people from majoring in a subject, like sociology and instead help guide them to major in a position?

And...if it is too crazy for someone to decide what they should do for the next 30 years, do we have them major in something of interest but have them take classes in something that involves prerequisites for a job?
 

I know this has been discussed before but there are too many real life situations where people chose the wrong field, didn’t think and just chose a major or thought they had passion and didn’t like the job. That’s a problem.

[he gone.]

10 minutes ago, The Beast said:

 

Here’s another problem. What do you do with young adults who don’t know what to do and just pick something, only to find out later they want to do something else or they hate or are indifferent the work they are in? What do we do as a society to stop people from majoring in a subject, like sociology and instead help guide them to major in a position?

And...if it is too crazy for someone to decide what they should do for the next 30 years, do we have them major in something of interest but have them take classes in something that involves prerequisites for a job?
 

I know this has been discussed before but there are too many real life situations where people chose the wrong field, didn’t think and just chose a major or thought they had passion and didn’t like the job. That’s a problem.

It's a tough question. Because who are we to say you shouldn't do something. I personally think we should be integrating more real world applications into curriculums in high school rather than "teaching to a test" to be able to master an SAT or ACT score which were metrics that were made up at WW2 I believe? Right? Weren't those tests created to take to determine who was "smart" enough not to go to war/get drafted and instead go to college? I may have made that up, but I thought that was teh start of it. Then of course everything morphed from there and now we teach these subjects that have very little application to real life. 

How much more would kids like math if you taught it alongside wood shop? Or math alongside programming or math along side finance/banking? Teach math that shows how to balance a budget - how to calculate college cost alongside mathematical statistics of earnings of different fields. You're average payback, salary, etc. 

Same with english/reading - teach that alongside law. You find connections and teach those connections. 

Science alongside baking, cooking, etc. Teach them what is happening in the chemistry of these foods and how the changing of the cells create bread. Science connected to health - how are bodies work, how eating right and science are interconnected. 

Psychology taught with real world examples of how certain things change effect people and how that can be related to their own lives. Theoretical thinking. Entrepreneurship classes.. trade classes ..

 

Kids are kids. Think about how many times everybody changes their major. I started accounting, then finance, then ended up in an insurance/finance roll. But we need to start giving kids more tools at an earlier age in high school and challenge them in different ways rather than just having them memorize shit. The more you do that the more you equip them to make better decisions. 

 

It's probably giving too much credit to impressionable kids at age 16 or 18 or 20 because im pretty sure i was only concerned with getting laid and drunk until like 25 to actually but critical thinking thoughts into this, but these decisions to change your life for the rest so i think we have to focus on making sure those decisions are better influenced by our education system. 

[The Beast]

1 hour ago, BrianAnderson said:

It's a tough question. Because who are we to say you shouldn't do something. I personally think we should be integrating more real world applications into curriculums in high school rather than "teaching to a test" to be able to master an SAT or ACT score which were metrics that were made up at WW2 I believe? Right? Weren't those tests created to take to determine who was "smart" enough not to go to war/get drafted and instead go to college? I may have made that up, but I thought that was teh start of it. Then of course everything morphed from there and now we teach these subjects that have very little application to real life. 

How much more would kids like math if you taught it alongside wood shop? Or math alongside programming or math along side finance/banking? Teach math that shows how to balance a budget - how to calculate college cost alongside mathematical statistics of earnings of different fields. You're average payback, salary, etc. 

Same with english/reading - teach that alongside law. You find connections and teach those connections. 

Science alongside baking, cooking, etc. Teach them what is happening in the chemistry of these foods and how the changing of the cells create bread. Science connected to health - how are bodies work, how eating right and science are interconnected. 

Psychology taught with real world examples of how certain things change effect people and how that can be related to their own lives. Theoretical thinking. Entrepreneurship classes.. trade classes ..

 

Kids are kids. Think about how many times everybody changes their major. I started accounting, then finance, then ended up in an insurance/finance roll. But we need to start giving kids more tools at an earlier age in high school and challenge them in different ways rather than just having them memorize shit. The more you do that the more you equip them to make better decisions. 

 

It's probably giving too much credit to impressionable kids at age 16 or 18 or 20 because im pretty sure i was only concerned with getting laid and drunk until like 25 to actually but critical thinking thoughts into this, but these decisions to change your life for the rest so i think we have to focus on making sure those decisions are better influenced by our education system. 

Schools definitely should put less weight on standardized tests and put more weight on real life skills. One thing I would propose is giving kids an option to do a BA or BS track in high school, where they could choose to take foreign language if they are on the BA track or an additional math and science course if they are on the BS track. Make the courses they take applicable to real life scenarios in fields like you describe or help kids with deficiencies who want to get better at subjects get more experience in subjects.

There is no question that in high school and college I was more concerned about my next meal or getting laid than courses. But it was naive of me to think that because I am decent at writing that I should focus mostly on writing and journalism courses since I will probably end up in media. Fast forward to today and I have a business degree and a data science degree (thanks for the grad degree Mr Employer), but now I see that I would much rather work in health care in some capacity. I would think that taking some sort of unrelated pre-reqs to go along with the degree I got would have helped a decent amount, especially if I wanted to go into nursing or PT, which I still could do if being a data analyst doesn’t work out on the health care or insurance side of things, it’s just more tough when you’re in your 30s with the same questions you posed in your earlier post.

Challenging kids and young adults in different ways would be beneficial to help them for the decisions they face in the future and the ways you describe would be helpful for students to better see the application.

[Texsox]

Where else could an 18 year old kid get a $100,000 loan at single digit interest? That's kind of the balance,  make the loans riskier for lenders and the people who do pay will be punished with higher overall interest rates. 

If there was an easy fix,  we'd have done it. 

I believe there first,  tiny step,  is offering 15 years of education instead of the current 13. Free associate's degree at community colleges or approved trade/ apprentice/ certificate programs. Each person after graduating from high school receives a $5,000 per year credit to use for job training or college. Use it or lose it might be easier to pass or better is offer a lifetime $10,000 stipend. That way if someone doesn't use it but shifts mid career,  it's still there. 

I'm still not certain about allowing the $5,000 to be applied to a private or elite public university. I'd liked to see them have to accept the $5,000 as full tuition for anyone with less than 60 credit hours. 

[Two-Gun Pete]

On 1/18/2021 at 3:04 PM, The Beast said:

Here’s another problem. What do you do with young adults who don’t know what to do and just pick something, only to find out later they want to do something else or they hate or are indifferent the work they are in? What do we do as a society to stop people from majoring in a subject, like sociology and instead help guide them to major in a position?

True that our education system has failed in this regard. That said, I don't know that we "have to" force people to take majors that will lead to a job. I also recognize that the humanities, the liberal arts, etc... can be crucial to rounding out an education.

 

What is problematic, and creates a moral hazard is when a student chooses some stoopid major that has no prayer of providing the student with a livable wage, then the schools charge them the same as a REAL major. OR, when the lenders allow an oboe major to borrow the same as a finance major.

The cost to a student should be tied to the value of the degree. The ability to borrow should be tied to the ability to repay. Set as a percentage of likely earnings, the amount a student can borrow should be set in such a way that we aren't creating piles of perma-poor Americans.

Edited January 19, 2021 by Two-Gun Pete

[southsider2k5]

The idea that we are trusting 17-18 year old kids to be able to see the future and project which jobs and careers will be around in 10/20/30 years to a degree of certainty that many are going to carry six figures (or more) of debt in making that bet is absurd.   These are the same kids we don't trust to drink or drive a rental car, but are fully putting a hundred thousand dollars worth of debt and their careers in the same hands.

The best economists out there struggled to see the changes in the world during my lifetime.  The fact that we are having kids bet their careers and financial futures on it is laughable.  

There has to be a better way to do this.

[Two-Gun Pete]

21 hours ago, Texsox said:

Where else could an 18 year old kid get a $100,000 loan at single digit interest? That's kind of the balance,  make the loans riskier for lenders and the people who do pay will be punished with higher overall interest rates. 

If there was an easy fix,  we'd have done it. 

I believe there first,  tiny step,  is offering 15 years of education instead of the current 13. Free associate's degree at community colleges or approved trade/ apprentice/ certificate programs. Each person after graduating from high school receives a $5,000 per year credit to use for job training or college. Use it or lose it might be easier to pass or better is offer a lifetime $10,000 stipend. That way if someone doesn't use it but shifts mid career,  it's still there. 

I'm still not certain about allowing the $5,000 to be applied to a private or elite public university. I'd liked to see them have to accept the $5,000 as full tuition for anyone with less than 60 credit hours. 

Agreed about the non-bolded part. About the bolded, however:

1. The schools charge whatever they want, because the loans are not underwritten, not tied to the value of the degree, and not limited by the student's future ability to pay.

2. Young and naive borrowers then borrow whatever the fook they want, even if they will have no prayer of making the payments.

 

In other words, let's say Tex gets a degree in Mechanical Engineering, while Pete stoopidly gets a degree in poetry. These two students' abilities to borrow are set by how much our parents make, NOT based on the fact that Tex will make Six Figures, while Pete will be serving coffee at Starbucks. 

 

So, the moral hazard exists where the lender does NOT have to consider that Pete will never ever be able to make the payments. If the lenders were forced to make a risk analysis on these two borrowers, the interest rates would NOT increase. What would happen is that Pete wouldn't be able to borrow as much as Tex.

IOW, consider if both Tex and Pete had 800 credit, but Tex is an engineer, while Pete worked at Walmart, and both were shopping for houses. Tex could buy in Arlington Heights, while Pete might have to look in Maywood. If student lenders had to consider the same risks as mortgage lenders did, rates would not be affected. 

Rather, the lender might cap the amount borrowed, depending on future earnings of the student. Over time, schools would then have to alter their pricing behavior, or risk losing students and revenues. Or maybe consider cutting non-performing parts of a school, such as athletics programs that suck.

Edited January 19, 2021 by Two-Gun Pete

[Texsox]

Actually,  the first set of student loans are not tied to the parent's income. They are on the students,  which is why the kids have the debt, not the parents. Parents may also take out private loans and those are based on income. 

But you're correct, college should be about making yourself more valuable for an employer. Develop some skills that others can use to make themselves more money. Our society just can't support arts and humanities anymore. You don't need a college degree to get a million views. 

[Two-Gun Pete]

4 minutes ago, Texsox said:

Actually,  the first set of student loans are not tied to the parent's income. They are on the students,  which is why the kids have the debt, not the parents. Parents may also take out private loans and those are based on income. 

Disagreed.

 

If a student is a dependent, it is the parent's income that appears on the FAFSA form.

Info about FAFSA

Edited January 19, 2021 by Two-Gun Pete