Student Debt Dodgers: Americans Who Moved to Europe
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Anyway, all the english majors and political science majors etc struggled to find jobs, but they found shitty jobs nonetheless. They chipped away at their loans, changed it to lower payments, or just paid interest for a while. Where are they now 5 years later? Their loans are mostly paid off and they're in better jobs.
My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work. The stories where their parents have to deal with phone calls are especially bad.
The ol' puritanical work ethic. No, you need to make the best business choice. If a corporation defaults, no one cares. But your degree is worthless or provides you no benefit? You never get away from it.
When you can walk away, walk away. Its okay for the Fed to QE till the cows come home to prop up asset bubbles, but not okay for the US DOE to forgive loans on educations that have little value? Please.
I guess it just comes down to the type of slavery you want for the next generation. At least you have the option of not buying a home or equities in inflated markets, but garnishing your wages or your tax returns forever? We should be shocked about those who don't emigrate to countries that treat them better. I'm very surprised first world countries with declining populations haven't made an active advertising/outreach effort to appeal to young US graduates with large amounts of debt.
Right now, we have this joke where schools can raise rates as much as they want, because you must have a degree to be competitive (inelastic demand). Combined with cheap, government-backed lending, its a disaster. Its a long-term payday loan, no more, no less.
At least when the money flowed without discretion for housing, you could walk away from your house.
With housing it is secured against the value of the house but with education there is nothing.
No different then single payer healthcare.
Also, credit card and personal loan debt is unsecured; we don't prohibit that from being discharged in bankruptcy. Student loan debt is the only debt that can't be discharged.
The problem isn't the debt type. The problem is the government needs to use its regulatory authority to enable cost controls on education.
Why? Why would education be no different than any other sunk cost, like a military or transportation infrastructure?
"Bootstraps"
I think the president has it almost right. Deny student loans to worthless colleges. The degree is a byproduct since it is the coursework that counts.
Deny student loans to all for-profit colleges. They only exist to suck up GI bill money anyway.
Mandate a gap year between high school and college: minimum age for attendance ought to be 19, barring a few exceptions. Many of my friends have gone on to be perfectly successful, but only after deciding after the first year that college is not for them. Too late; they already had loans. Had we all taken a year to truly ruminate on what we want to do, we'd all ended up a lot better.
The average cost of a 4-year undergraduate degree in the United States, including room and board, is around $76k. A lender might agree to pay this in exchange for 20% of wages for 10 years after graduation. The median income for fully-employed people with undergraduate degrees in the United States is $56k per year, so assuming the student earns that the lender gets a total return of $112k, or 47% ROI, over ten years.
That's roughly the same as debt with an interest rate of 4.7% percent, which is similar to what lenders are charging these days. The difference is that this scheme shifts the risk to the lender, where it should be: banks are experts of credit risk assessment.
Since lenders only get paid when the student does, their interests are better aligned. If you graduate and end up making a very high salary, they get a lot of money (and so do you of course); if you can only get minimum wage jobs, the lender doesn't make a profit. So they actually has an incentive to ensure the students earn more money after graduation to maximize their own return. Lenders would probably start competing with each other on job placement programs and whatnot.
It also puts the burden of the cost of education on the lenders, not the students. Lenders here have more bargaining power with schools, so they'd be better able to apply downward pressure on tuition fees.
No. You don't have the option to not take on student debt unless a) employers stop requiring it for an entry level job or b) the US government sees enough social progress to remove the need to take out loans for education.
http://www.bls.gov/opub/ted/2015/unemployment-rates-by-educa...
Employment situation directly leads to living situations. Unemployed? You're going to be in poverty or homeless.
Its hard enough to get a job today with a bachelors degree. Without one? Much harder, if at all.
Getting a degree is truly a life or death situation. With proper social safety nets, single payer healthcare, and so forth, it would not be. But the way things are today, it is.
But totally unrepresentative, the plural of anecdote, et cetera, of course. I must simply be one of the privileged 95%.
I have a Bachelors Degree. Didn't ace it, but did pretty well. But it's been completely useless for my work & employers didn't care about it - they're more interested in what you can do than in the random letter soup after your name. I've seen 4-year graduates who literally didn't know what an array was.
(The one place where I have found a degree to be useful is in moving overseas, where visa programs prioritize someone with a Bachelors Degree.)
I can't think of any other loan that is this generous with its terms.
To be fair the US Congress didn't think this through either since most programs to improve access appear to be loan-based.
I'm not sure what bubble you're living in, but some of my tech colleagues (making six figures) have enough student debt that they'll be paying it back for the rest of their working lives.
For less well-off people, a single misstep (or illness) can throw them into insolvency. This is an insane price for individuals to shoulder just to get on a level playing field (aka getting an education).
Say you take home 6K/mo after taxes and 401K contributions. This is reasonable for a dev making 100-150K. 2K to rent. 1K to bills, groceries. 1K to entertainment. You can now contribute 2K/mo to your loans. Even with a massive loan of 200K you could pay it off in 10 years.
If you were to move to my country, Uruguay, and pay for rent, normal expenses and private education for 7 years (Comp. Sci. being 4-5yrs) you still would barely be above half that amount of money.
Why do you guys pay that much for a degree? Just haven't considered moving (and I don't mean here, I'm pretty sure there are many other countries in a similar or better situation) or is it something else?
It's when you get to private universities that you see 200K+ degrees.
I think a more reasonable budget is $25k/year on the low end: tuition, books (often $500-$1k/semester in engineering or similar programs), food, rent, etc. In CA if you live close to a community college, you can do the first two years for much less money and live at home, but we have perpetual budget crises so you will probably have to waste an extra year because you'll have a hard time getting into classes.
That said, my undergrad in Arkansas was probably only 15K/year with cost of living included. I had friends who paid < $200/mo for rent. Location, location, location.
Even U Arkansas tuition/fees are $8.5k/year.
Two more thoughts:
1 - whether you have access to inexpensive public education also wildly varies depending on where your parents live;
2 - Universities w/ better rep makes it far easier to get those first 1-2 jobs. After that it matters much less, but a great univ will open doors for the rest of your career.
Do you have a source for this? Considering I've been looking at in-state MN costs for a couple years now, that's absurdly low.
Current costs for in-state attendance including everything reasonable you would expect (aka fees) is more along the lines of $25k/yr then of course add in your daily living expenses on top of it.
This of course assumes you will be living on-campus. Even if you assume free rent and free food, you are talking $15k/yr for tuition and books alone.
https://www.google.com/search?q=minnesota+tuition&oq=minneso...
also, I read the 3rd row instead of the second; 3rd (room and board) says $10k, 2nd row says $14k in-state tuition. Sorry to get your hopes up =P
Worst, people spin morality plays out of it, without ever doing the math or looking at systemic flows and going... 'hmmm maybe all this talk about personal responsibility and fortitude is completely irrelevant in the face of systemic unsustainability'
Suppose they took about 7 years to get both BS and MS degrees. (the PhD is normally "free") This would amount to about $300,000 per year. That is overpaying for school by a factor of 6 to 100, depending on the school.
Now subtract rent, which in most tech hubs is at least $1500 / month. Now you're left with ~$47k. After the cost of food, transport, and a little travel let's say you still have ~$35k. So each year of working pays for one semester of NYU. Not "the rest of their working lives" but even a generous salary takes a while to chip away at the loans students are currently taking out.
No, I don't mean Austin. I mean real Texas. Actually, it seems the better deal is Florida. (for example, Palm Bay is an easy commute to companies like Harris) You can eat non-organic food, including beans and rice. Do not travel. Carpool with your spouse. Do not buy furniture.
Consider the tax advantage of buying a home and having kids. Your taxes plunge. You can end up paying nothing, even with a 6-figure salary. Kids and houses are way more affordable than you might think.
Also, your calculations ignored interest. Even 5-8% interest on private student loans adds up in a hurry.
So, a person making $100k/yr that can't manage to pay for their college education either spends too far too much of their income, or horribly overpaid for school.
"I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back. Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference."
Emphasis added.
I am sympathetic however - people under 35 were sold a bill of goods - we were told "go to college, get a degree, and they will be a good job waiting for you" which turned out to be a load of malarkey - the problem isn't that you need to take loans out, its that student loans are not dischargeable - if normal lending standard applied, you'd see a whole lot less student debt, and the cost of education would likely drop precipitously.
But most of these examples in this piece have small amount of debt, something along the size of a car loan, with generous and long repayment terms - its much harder for me to accept someone crying hardship when they owe less than 40k. Even if the amounts were larger, once you take on the debt, it's yours, you own it, no matter if you want to pay it back or not.
But yes, bankruptcy should absolutely apply to student loan debt if the individual can't pay.
Without this, banks might require very good credit to give out loans (hard for young students to acquire).
The reason bankruptcy doesn't apply to student loans anymore is because a bunch of a-holes in the 70s started getting massive loans for their graduate degrees and immediately declaring bankruptcy after graduation (but before getting a job).
So what are the conditions in which the guarantor will be required to take ownership of the loan? Death? Anything else?
> I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back.
No shit
> Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference.
He didn't have to; it was a choice.
Let's change the system of higher education, but lets also get some better standard-bearers.
Partly I think this might be just my bias, inasmuch as I opted against taking on a six-figure debt load as my first adult act, and have discovered that not going to college is hardly the kiss of career death it's made out to be.
But I really don't think you have to be me to find someone who got his parents to co-sign that six-figure debt load, then skipped the country and left them holding the bag, almost beneath contempt.
Did I miss out on some fabulous career path because I chose my state school over Drexel, Urbana, etc.? That's not entirely fair comparison for every student because Virginia Tech is a phenomenal engineering school. The point still stands though, are there any states in the USA that don't have a high quality state school?
This is missing the magical step 2 just before "Profit!". How did your "English major" friends manage to pay off their their student loans from shitty jobs in 5 years? Even state school tuitions are now starting to reach several tens of thousands of dollars per year. For private universities, the annual tuition is often significantly higher than the median annual salary of their graduates.
There is no reason to praise hardship. Saying that they shouldn't inflict extra hardship on others (their parents) is fine, but the ridiculousness of the situation is not something we should pride ourselves on getting through.
No one's parents worked hard so their kids would have as hard of a life. It's so they have an easier one, and that's something we should aspire to.
Since I mostly f'd off in HS, I had few scholarship options (and the state lottery had not come into effect yet), so I went to a decent nearby college and lived at home while working 20ish hours/week. Even then, some of my peers who went away to big schools with big price tags were saying I was missing the 'real' college experience because I had a job and lived at home. To me the real experience was not worth that kind of money.
Also, having his parents co-sign and then bolt is just a selfish jerk thing to do. My parents had to cosign for the initial loan I received, but from there on I either paid or took loans out on my own. Given how little money my parents already had, seeing them willing and excited to co-sign made me sad. My parents only had 3 years of college between them, but they taught me a lot of life lessons that formal education seems to miss.
not so sure about all of that
Institutions that feel comfortable doing this are profiting from factories of debt-peonage. This includes both for-profit and non-profit institutions. They must be stopped.
Educational institutions are ostensibly founded on the magnanimous goal of educating people. If they must lend to be sustainable they should do so without charging interest.
And student loans should be disclosable in bankruptcy. If you're bankrupt, you're bankrupt!
Baby boomers get to lose hundreds of thousands of dollars on their homes and walk away scott-free, but heaven forbid we forgive 40K in student debt for someone making 13$/hour.
We love to express the sentiment that business owners do not owe the working class anything. And that's true. But somehow we gloss over the fact that the working class does not owe their masters anything either. Owners are not entitled to cheap wages. We're all in this together...and if not, then many people say 'fuck it I'm doing what's best for me!'
Expecting people to act in the best interests of society is a wholly stupid notion. If you want people to do what's best for their neighbors, then you must make it semi-convenient to do so.
Hmm, I wonder if we can come up with similarly nasty and unhelpful instructions for other generations, based on stereotypes and anecdotes.
E.g.: baby boomers with failing health should just accept that they're going to die, and stop overburdening Medicare with expensive treatments that only give a few more years of life.
Also at the time, we knew we were going to need to be sponsored by companies if we wanted to stay in the US so we both chose practical degrees which would most likely lead to sponsorships for our H1B visas (ie engineering degrees).
I don't understand these people who willingly choose to go to EXPENSIVE private schools they COULD NOT afford, take HUGE loans they COULD NOT HOPE to repay on degrees that will barely pay for those loans. Then they have the audacity to feel entitled NOT to pay back those loans.
"the name Sallie Mae sounds so friendly; she's just your cute aunt making soup" - seriously?
Dont you need an extended work visa in order to work for that long?
Just like the US, most of Europe does not want new immigrants to be a drain on their social services. If you can find a job before you apply or have a very large bank account it's almost a give they'll give you a visa. A popular option is to get your TOEFL certificate and become an english teacher. Others are get a student visa or marry a EU citizen.
Its going to put downward pressure in the price of education. We really need an international market for education.
I see it across the board with my nephew, his friends and the young people I talk to everyday. At first I really felt like I was just being the "old guy" and thought my parents probably said the same thing about me. Now, I just accept this as the new normal for this generation.
To me, it's sad when you see kids with no sense of responsibility and have no drive to earn anything in their life.
EDIT: Yes, I know most generations usually give off an air of irresponsibility (baby boomers, hippies, Gen X, Gen Y) but this generation is so inwardly focused and lacks any kind of responsibility, it's borderline alarming.
And in response to your other reply noting this is a "cultural (American)" thing: well yes, because American student debt is not common in other countries. I'd argue it's likely more national than cultural, as it's driven by external context.
That's my two-cents, and they come from someone who naysays most of the non-evidenced-based comments spouted about Millenials.
For now...The US government successfully pressured foreign governments into adopting banking reforms that make it a significant burden for an American to control a foreign bank account. So, it's safe to assume that the USG is capable of compelling foreign banks to hand over the assets of persons in default of their DoE loans.
Private loans are another matter, but I wouldn't be surprised if private lenders find a way around this. International banks have deep pockets and can probably buy up the debt of these fleers for pennies on the dollar.
Perhaps this individual was pressured heavily at 17 and 18 (by parents, guidance counselors or whomever else was in a position of authority over them as a young adult) to jump on the bandwagon and before they were old enough to assess the value of the education being provided for themselves, it was too late.
Why on earth anyone would think an 18 year old is mature enough to sign away six digits worth of debt but not drink a beer is just boggling to me.
Another point to consider is that many young people believe their parents (and their parents generation as a whole) signed up to pay these costs: both when they chose to become parents and when they collectively chose to slash public funding to universities.
Your parents have no obligation to pay for you through college. Nice parents do so. But there's certainly no "obligation".
And if your parents cosign a loan for you, I would hope that you would at least have the personal honor to help your parents with the financial issue, rather than run away to Germany.
Or at very least, run away WITH your parents, together. The fact that he's separated from his parents speaks volumes about the situation. His relationship with his family has been likely stressed due to this debt issue.
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I think I'm mostly on the side of the students throughout the article. But in this particular case, the person's behavior is so egregious I felt like it needed to be pointed out.
In the article it hints at $30K a year. That sounds like a LOT of money, and then five years of education give you the $160K.
I can kind of understand medical school costing that kind of figure, but I cannot see how an undergrad degree could cost that.
Mine was approx $8K/year or $24K over three years. Still a LOT of money, but compared to his $30K/year, $160K total it is chump change.
Even better, it's up 20% from when I graduated, just a few years ago... Gotta pay those six-figure salaries for assistant deans of XYZ, $25/hr cafeteria workers and security forces to make sure adult students aren't drinking hard alcohol somehow.
I laugh and hang up the phone when they call up and dun me for alumni donations.
I was poor enough that the financial aid made it a better decision - something like 3-5k more per year than going to my state university, which doesn't look anywhere near as good on a resume.
Even with in-state, I still paid around 13K/year. The deal I struck with my parents was they pay for two years, I pay for the rest. They figured if I flunked out, it would happen within two years. If I wanted to get my degree, I'd work hard and earn it mostly on my own, which I did.
(Not that I'm pro student debt: I live in a country with free higher education, and I don't think it's healthy to have to start your life with massive amounts of debt. )
Usually this is done by taking your tax refund to pay off tax debts you may have. They can also garnish your wages to pay the debt off. There are also professional boards that can/will revoke your professional license if necessary.
This is a type of loan that can't be discharged through bankruptcy either. Best plan is to contact the Dept. of Education and set up a payment plan. Even if you're paying $20/month it will keep you off the radar of the government looking to collect on your student loans
Disclaimer: Helped a friend negotiate ~$100K in defaulted student loans down to ~$10K while he was out of the country.
You approach it as such: "I have X for you now (with X being about 1/10 of the total obligation). You either take that, or you get nothing."
To be able to do this, you must have X, and you must be able to negotiate from a position of power (it has to be very difficult for them to collect).
[1] https://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices...
I've had success negotiating certain matters with the tax authority in a similar way, when dealing with unclear laws.
It's a giant pain in the ass, from lenders who have no way of taking payment from anything but a US bank account, lenders who's systems can't handle a foreign address, and lenders who you can only pay via PayPal.
I think my favourite was the lender who told me to wire the money to a friend in the US and then they could pay my loan for me...
It gets especially fun geopolitically. You can force countries to take out new loans to repay older ones, even when they cannot meet their interest payments, paint them in the media as lazy, ignorant and irresponsible. Why invade a country when you have the IMF?
Student loans in "Europe" are treated like any other line of credit. You walk into a bank and ask for one. If it doesn't work out you can discharge it through bankruptcy like any other loan.