Education bubble?

[The Gooch]

And who is the most likely to default on their loans? (Its a guess, but I bet it is right) Even though it makes sense, I bet the program gets labeled racist in the next 10 years when it starts disproportionally affecting minorities.

 

I don't see how this would be identified as racist? They aren't going after those defaulting on loans, they are going after school that are being irresponsible with their program and admissions. The results should be less defaulting on loans by minorities.

 

It is actually pretty upsetting that taxpayer money is used for loans given to students that some recruiter at University of Phoenix manipulated into paying $15,000 for an associates degree.

Edited April 28, 2011 by The Gooch

[StrangeSox]

You need to scale that $15,000 up a bit.

 

The DoE rule doesn't restrict giving loans to minorities or those at risk of default. It targets schools who churn out loads of useless degrees that graduates have no chance of paying back because the programs themselves are garbage. If they're offering quality programs that actually lead to employment, there won't be a problem. If they offer crap programs with little or no practical field experience (nursing) or are just very expensive and unlikely to get a job, they'll be cut off from guaranteed federal dollars.

 

BTW this is also why for-profit voucher schools are a terrible idea.

[Balta1701]

And who is the most likely to default on their loans? (Its a guess, but I bet it is right) Even though it makes sense, I bet the program gets labeled racist in the next 10 years when it starts disproportionally affecting minorities.

You don't default on student loans.

 

You might try. You're not going to succeed.

[southsider2k5]

You need to scale that $15,000 up a bit.

 

The DoE rule doesn't restrict giving loans to minorities or those at risk of default. It targets schools who churn out loads of useless degrees that graduates have no chance of paying back because the programs themselves are garbage. If they're offering quality programs that actually lead to employment, there won't be a problem. If they offer crap programs with little or no practical field experience (nursing) or are just very expensive and unlikely to get a job, they'll be cut off from guaranteed federal dollars.

 

BTW this is also why for-profit voucher schools are a terrible idea.

 

And which schools do you think will disproportionally accept disadvantaged minority students? Its not on the basis of race for sure, but you can bet your ass it will be turned into a because of race argument down the road.

[NorthSideSox72]

You don't default on student loans.

 

You might try. You're not going to succeed.

You do if you declare bankruptcy.

 

[StrangeSox]

And which schools do you think will disproportionally accept disadvantaged minority students? Its not on the basis of race for sure, but you can bet your ass it will be turned into a because of race argument down the road.

 

I really, really doubt that people* are going to complain about colleges that prey on the disadvantaged and leave them with tens of thousands of dollars of debt being shut down.

 

*except pro-business, f***-everyone-else people (USCoC) and the colleges themselves, of course

 

Anyway I'm sure at the top of the list of schools that accept disadvantaged minority students are community colleges, and no one is clamoring for them to be shut out of student aid for predatory practices. Probably because they don't make millions/billions off of them and leave them with huge debt loads while providing a worthless degree.

[The Gooch]

And which schools do you think will disproportionally accept disadvantaged minority students? Its not on the basis of race for sure, but you can bet your ass it will be turned into a because of race argument down the road.

 

Sure it will. I would also bet that the government could generate some statistics (default rates, employment of graduates, salary, etc) from minorities of the schools that become ineligible for aid and make it a short argument. I'm telling you, some of the students that go to these schools are at about a 2nd grading reading level. The online schools are a joke.

[StrangeSox]

Sure it will. I would also bet that the government could generate some statistics (default rates, employment of graduates, salary, etc) from minorities of the schools that become ineligible for aid and make it a short argument. I'm telling you, some of the students that go to these schools are at about a 2nd grading reading level. The online schools are a joke.

 

This is an issue at CC's as well since they must accept everyone, but they're charging a fraction of what these online universities do and they're not pressuring people into it, either.

[The Gooch]

This is an issue at CC's as well since they must accept everyone, but they're charging a fraction of what these online universities do and they're not pressuring people into it, either.

 

Also the online universities accept these people into bachelor degree programs, whereas community colleges only do associates degrees as far as I know.

[southsider2k5]

You do if you declare bankruptcy.

Maybe from a technical standpoint, but you are still responsible for paying them.

[southsider2k5]

Sure it will. I would also bet that the government could generate some statistics (default rates, employment of graduates, salary, etc) from minorities of the schools that become ineligible for aid and make it a short argument. I'm telling you, some of the students that go to these schools are at about a 2nd grading reading level. The online schools are a joke.

 

The problem is that we have gotten to the point in this country where if something affects a group in a disproportionate ratio, then it gets blamed on an -ism.

[StrangeSox]

The problem is that we have gotten to the point in this country where if something affects a group in a disproportionate ratio, then it gets blamed on an -ism.

 

(in this case, it's predatory capital-ism!)

 

Anyway, I really don't see how this would happen, because the people most likely to fight for minority causes are the same people fighting against these schools. Why would they suddenly switch and want to bring these schools that benefited only their shareholders back?

[The Gooch]

(in this case, it's predatory capital-ism!)

 

Anyway, I really don't see how this would happen, because the people most likely to fight for minority causes are the same people fighting against these schools. Why would they suddenly switch and want to bring these schools that benefited only their shareholders back?

 

I agree here. The ism words have done a lot to slow progress in a lot of things, but I don't think this will be one of them.

[Chisoxfn]

You do if you declare bankruptcy.

Thats actually not true. Its nearly impossible to get away from student loan debt and filing bankruptcy, with a very very rare exception (

 

[NorthSideSox72]

Thats actually not true. Its nearly impossible to get away from student loan debt and filing bankruptcy, with a very very rare exception (

I can't speak to percentages, but I know of at least one person who did exactly this. Chapter 7, walked away from everything, student loans (which were carried by a bank), were charged off. Of course his credit is absolute garbage now, but, it definitely can be done.

 

[Chisoxfn]

I can't speak to percentages, but I know of at least one person who did exactly this. Chapter 7, walked away from everything, student loans (which were carried by a bank), were charged off. Of course his credit is absolute garbage now, but, it definitely can be done.

That might have been pre 1998 and pre early 2000's. Two major bankruptcy reforms during that point in time have made it nearly impossible to walk away from student loan debt (Federally funded student loan debt). If you had private student loans, than that is a whole nother story. But if it was a loan from the government, it is impossible to get away from (excluding if you had a severe hardship due to a sever disability).

 

Getting away from federally sponsored student loans might be one of the toughest things to ever get out from you.

[NorthSideSox72]

That might have been pre 1998 and pre early 2000's. Two major bankruptcy reforms during that point in time have made it nearly impossible to walk away from student loan debt (Federally funded student loan debt). If you had private student loans, than that is a whole nother story. But if it was a loan from the government, it is impossible to get away from (excluding if you had a severe hardship due to a sever disability).

 

Getting away from federally sponsored student loans might be one of the toughest things to ever get out from you.

This was private at the time of default, but I am not sure if it started as government debt. And it was a few years ago, maybe early 2000's or so.

 

[Chisoxfn]

I can't speak to percentages, but I know of at least one person who did exactly this. Chapter 7, walked away from everything, student loans (which were carried by a bank), were charged off. Of course his credit is absolute garbage now, but, it definitely can be done.

On 2nd thought, you said, student loans carried by a bank. Those are similar to personal loans and a Chapter 7 would wipe them away. In fact, if any student was taking on a ton of debt, I could see significant reasons for why I wouldn't take a ton of government debt. God forbit you end up 200K in debt and its owed to Uncle Sam...you'll never get away from it (unless you land a big time gig).

 

Bankruptcy is probably something more people should do now a days. Especially if they are severely under-water. They wouldn't waste money paying stuff that theyll eventually lose or won't recover for a period of 7 years, where as the bankruptcy would free them from most things (the exception to this would be if you had a lot of cash or savings/liquid assets; your 401k I believe is protected in a bankruptcy). And your credit would eventually recover (something like 7 years later, but it would recover).

[Chisoxfn]

And the above is the random crap a CPA needs to know to be licensed, LOL.

[bmags]

couldn't that be a pretty strategic default if you went to an expensive private school for a theatre major or religious studies degree?

[Chisoxfn]

couldn't that be a pretty strategic default if you went to an expensive private school for a theatre major or religious studies degree?

Yep. That is why they made things the way they are. At 24 you probably have no assets so there is no harm in defaulting and losing everything (Bankruptcy protects something like 25 to 30K in assets, plus I think you can homestead up to like 250K in equity in a residence) really isn't much of a risk. So you could take 150K in debt to go to a big fancy school, get whatever degree, and than immediately declare bankruptcy.

 

However, now, the only way you could do that, is if you got a s***ton of privately backed student loans (and I'm not sure how hard it is to get those).

 

The other negative though to a bankruptcy is that it can have a negative impact when you look for jobs since it will show up on your background check and is something, depending on your position and background, that people could consider a red flag or make you unhireable.

[Jenksismyhero]

On 2nd thought, you said, student loans carried by a bank. Those are similar to personal loans and a Chapter 7 would wipe them away. In fact, if any student was taking on a ton of debt, I could see significant reasons for why I wouldn't take a ton of government debt. God forbit you end up 200K in debt and its owed to Uncle Sam...you'll never get away from it (unless you land a big time gig).

 

Bankruptcy is probably something more people should do now a days. Especially if they are severely under-water. They wouldn't waste money paying stuff that theyll eventually lose or won't recover for a period of 7 years, where as the bankruptcy would free them from most things (the exception to this would be if you had a lot of cash or savings/liquid assets; your 401k I believe is protected in a bankruptcy). And your credit would eventually recover (something like 7 years later, but it would recover).

 

I don't even think it's that long really. You basically have to have no assets though for this plan to work though. If you're out of school with no house, car, job, etc, maybe it's worth the risk of getting that terrible credit. But they'll take everything else in your bankruptcy. And really government debt is about the most friendly in terms of paying it back. They charge you the interest, but they don't charge you a crazy amount of fees, they'll never garnish your wages, and so long as you pay SOMETHING to them they're more than happy to alter your re-payment plan.

Edited April 28, 2011 by Jenksismybitch

[Chisoxfn]

I don't even think it's that long really. You basically have to have no assets though for this plan to work though. If you're out of school with no house, car, job, etc, maybe it's worth the risk of getting that terrible credit. But they'll take everything else in your bankruptcy. And really government debt is about the most friendly in terms of paying it back. They charge you the interest, but they don't charge you a crazy amount of fees, they'll never garnish your wages, and so long as you pay SOMETHING to them they're more than happy to alter your re-payment plan.

That was the one thing I know nothing about. Basically, what does the gov do if you just never send them a check? I assume it would only have a negative impact on there credit, especially if they are unable to garnish wages or touch your social security payout, etc.

 

You can actually have assets for a Bk though (limit is like 30K plus 250K in equity in your home). So technically someone with 20,000 in the bank and a couple year old car would be ok.

 

And you are right, after a couple years your credit starts to bounce back but I think after 7 years it is complete off your record. Or something like that.

[NorthSideSox72]

couldn't that be a pretty strategic default if you went to an expensive private school for a theatre major or religious studies degree?

Heh, funny you say that. This person I know about... graduated from law school with a lot of debt, and declared bankruptcy within 6 months of getting out of school. That's one way to pay for law school.

 

Amazingly, he has a job (a few years later) as a corporate counsel with a software firm. I have to say, I'd be highly leery of hiring someone to that sensitive a position who went through a bankruptcy that recently. So that's one of many potential negative impacts - it may make it hard to get a job in certain sectors. Another example... the reason I know all this is, this person sent me an application to rent an apartment from me. Credit check revealed the bankruptcy, and some googling gave me the rest of the picture. I elected not to have him as a renter, because to me, this guy looks like someone who may choose to scheme his way out of something instead of paying, and I didn't trust him to rent from me.

 

I will of course not mention any of this person's identifying information, but I will say that its amazing what you can dig up on the interwebs.

 

[southsider2k5]

That might have been pre 1998 and pre early 2000's. Two major bankruptcy reforms during that point in time have made it nearly impossible to walk away from student loan debt (Federally funded student loan debt). If you had private student loans, than that is a whole nother story. But if it was a loan from the government, it is impossible to get away from (excluding if you had a severe hardship due to a sever disability).

 

Getting away from federally sponsored student loans might be one of the toughest things to ever get out from you.

 

It is literally easier to get ouf of debt to the IRS than it is a student loan.