The Delinquent Borrowers Leading a Student Loans Revolt
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Here's the list of issues (signup/login related) that I'm working on now: https://github.com/debtcollective/debtcollective-web/issues/...
Here's a taste of the future: "Harnessing user data (and combining it with data gathered automatically from creditor websites and public data sets)" - https://www.newschallenge.org/challenge/data/entries/debt-co...
I sympathize with these folks who have gotten themselves into this situation, but they did make the choice of their own free will. If they didn't do a proper analysis ahead of time, it doesn't seem fair to shift the cost of their decision onto others who did, or who are responsibly shouldering the burden that they took on.
There is a definite moral hazard in the current system (it encourages indebtedness and inflates the cost of education), but that doesn't make it right to create another moral hazard in trying to correct it.
The American system is really really screwed up if you are trying to escape poverty.
So free eduction may play a role in producing positive results for the whole society. Also maybe the poets are more important to this than a person from a country where no free education is available can understand.
Please also read about https://en.wikipedia.org/wiki/Stockholm_syndrome
In a certain sense you already are, by indirectly bearing the costs of widespread loan defaults. At least the government is in a position to effectively address the overabundance of worthless degrees being issued.
I do. Society needs poets.
You call it a moral hazard to forgive the debt, but the students who took the loans are the least-bad actors in this scenario.
What on earth makes you think the choice was not coerced? A student before the age of 18 is presented with an option. Here's one path - be in massive debt. Here's the other path - your hopes and dreams are shit. That's freedom? Hardly.
It's funny how all the moral hazard trolls come out of the woodwork as soon as something benefits poor people. Bank bailouts? No hazard. Corporate tax cuts? No hazard. Corporate subsidy? No hazard. Private prisons? No hazard. Help indentured slaves? HAZARD!
And what do we end up with when these 18 year olds become 23 year olds with a load of debt and still no basic idea of economics or understanding what it means to go into debt? We end end up with an even bigger problem.
Also, government is not society.
There might however be a lot more traction on one of the paths as compared to the other.
You're presenting this proposition as that the only way someone can make it, is by pursuing a higher education (with severe debt). I, again respectfully disagree. It is not that binary.
First of all, the path of not going into higher education is not as ridiculous as you make it sound.
Secondly, there are many variations of how to finance your higher education. You do not have to take out a loan. Especially not for the full duration of your studies.
What I mean is this: a lender who cannot choose who to lend to wisely will be pushed out of a free market. If the people they are lending to cannot pay them back in large numbers, they have no one to blame but themselves.
But that empathy is short lived. We all have a free will. All these students could do the math prior to the commitment (I did!) and see the mountain of debt they'd be in. To say that it was someone else's fault is just yet another cop-out of a generation where it is socially acceptable to walk away from commitments and refuse to accept responsibility.
Here is a data point for my local State University. I happen to work there, so I can verify that these numbers are pretty much correct. You can pay cheaper rent, but you'll pay back the difference in car mileage and/or roommate drama.
Tuition is (roughly) 40 percent of the cost. What really drives up the student debt is the cost of living. If we really wanted to do something about student loan debt, I think we'd do better to apply the same political pressure to the cost of living as we do to the rate of tuition.
Indiana University [1] Tuition: $10,388 Room and board: $9,794 Books and supplies: $1,230 Transportation: $1,030 Personal Expenses: $2,096
[1] http://admissions.indiana.edu/cost-financial-aid/tuition-fee...
It's a pittance of the total, but that $1,200 (x4) could still add up to a lot with interest.
The statement: The proportion of costs I outlined, from my point of view, have always been true. I finished my first degree in 1997.
The anecdote: All the professors in my computer science program (I'm not going to name-drop, but I had some great teachers that insisted that I learn scheme, then Java, then C, then assembly) either had no required text or gave syllabi that referenced several versions of their listed texts. The context was that we were free to get the best deal possible on the texts.
And there is all the more incentive when the instructor requires a book he has written himself.
1. Poor and too often manipulated information about a school's job placements.
2. Students are short sighted about debts and schools don't care because the money is government guaranteed.
Solvable problems! Have an independent party collect and report on job placement. Then tie a school's loan eligibility more closely to the ability of recent graduates to pay.
For my degree it should be a net profit for me. For less well paid occupations one is insulated against low wages. I am happy that I contribute to the advancements in non vocational learning.
My fellow students and I are said to contribute $40m pa to the local economy which is much needed in this deindustrialised part of the country - all accommodation is provided by third parties.
But $45k per year is an outrage. It surely can't be based upon the cost of provision.
A group of teachers using cheap space and online communications to provide lectures/support/assessment with students then taking exams accredited by another institution? Possibly with sponsorship/organisational support from a voluntary sector organisation?
That is basically how most Universities outside Oxford/Cambridge/Edinburgh/Aberdeen started in UK in the Victorian period. The University of London was set up to validate degrees provided by various constituent colleges in the regions. There was a strong non-conformist (Baptist/Methodist) input on the funding and organisational side.
The Student Loan Company in the UK has to borrow money at commercial interest rates in the financial markets. The difference in costs between the interest rates paid by the company and the interest paid back by the students will be met by the government. It isn't clear to me if there will actually be any net saving to the taxpayer at all - I recollect seeing (but can't find a reference at present) an analysis that suggested that the policy will actually cost more money compared with the previous direct grant system for the next 20 years or so. I suspect the payback period will depend on the number of graduates who get stuck in low paying jobs.
I would love to see any more recent analysis.
Back on topic: good luck to these people!
This sounds strange. How does that work?
1) You will save some money to pay for school. 2) Because you are a bit older a new world of grants are available to you since you are returning to education. 3) Because your income will probably be fairly low you will qualify for more grants due to this fact. 4) Gives you time to figure out what you want to go to school for and possibly make you take it more seriously when you start.
Another option is to join the military and qualify for a lot of additional grants that way. 4 years of service opens a lot of doors. There are many non-combat roles available.
There are many ways for the poor to advance themselves and not cripple themselves financially for the next 40 years.
https://nces.ed.gov/fastfacts/display.asp?id=76
http://www.usnews.com/news/articles/2013/10/23/charts-just-h...
Refinancing will be a transfer of wealth from the rich to the poor. Good for the economy, shores up consumption, and all that. Has the added side-benefit of freeing indentured slaves.
[1] https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...
(The tuition is free for higher education in Sweden, but you can choose to take out a loan for your living expenses during your study period).
The learning and lending institutions clearly fucked up big-time in their forecasting, along with everyone else who was irrationally exuberant in their optimism about the future economy.
Now they are stuck between students on one hand (who have been sold a bill of goods and are seriously pissed about the pittance left over after their loan payments, if they're able to pay back at all), and the investors on the other hand (which includes not only evil bankers' money but also people who have been sacrificing in good faith for decades to contribute to their retirement accounts).
So the stage is set for a nice messy society-destroying generational war that should distract everyone from the forecasting mistakes.
Many underdeveloped societies and failed states can be identified by looking at the education situation. In the worst cases education is held hostage by a leading group of brutal oligarchs that are raping education into a "business-model" - these societies will need a lot of help from other nations to overcome the dark neandertaler age they are stuck in and it is important to teach them about the basic abilities of Homo Sapiens Sapiens - solidarity, compassion and love.
Good Luck!
In cases where basically everyone needs the education to succeed in society and the positive externalities are large (e.g., teaching young children to read), I think that the case for "everyone else" paying is pretty strong. In cases where the education is mostly consumption (i.e., the benefits all go to the student), the case for subsidizing is weak (e.g., a trust-fund kid getting multiple PhDs in impractical fields to have something to do).
So the main issue becomes: where does a Bachelor's degree lie on this spectrum?
1. Fields of study are very heterogeneous. Some majors have a much larger return on investment than others, so subsidizing all "higher education" equally probably doesn't make sense.
2. Even in Western Europe, college attendance rates are only around 1/3. Is it right to have that 1/3 subsidized by the 2/3 who don't go to college, and who on average have lower income?
3. (More speculative) To some extent, the payoff to a college education is not because of what you learn, but in signaling that you're a smart, conscientious, perseverant person. In that case, a degree becomes less valuable the more people that have them, and the case for subsidizing what has become an arms race becomes a lot weaker.
4. If we spend a lot of money and effort propping up the current, very expensive, forms of higher education, we might discourage better ways of educating from emerging. One example is something like Coursera, where the marginal cost of adding one more student is basically zero, and everyone can learn from the very best educators in the field. Another would be separate institutions for education and for testing / accreditation. This would help with grade inflation, bring back the focus in the educational institutions to teaching rather than credentialing, and provide more accountability (% of graduates passing a common exam is a lot easier to compare than future income of graduates, and is less confounded by things like socio-economic status of students).
You'll only have to pay the income tax on the defaulted loan.
It's not like you need credit anyways since almost no one in this generation is going to be able to afford a house down payment.
Also, you pay income tax on forgiven loans, not defaulted ones.
[1] https://studentaid.ed.gov/sa/repay-loans/default#consequence...
[2] http://money.cnn.com/2014/08/24/news/economy/social-security...