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Comment by dublinben | Hacker News Reader

Regardless of how much debt there is, this isn't a bubble. These loans are nearly impossible to discharge. Recent graduates will be on the hook for this debt whether they want to be or not.

The largest negative effect of all this debt will be the drag it puts on consumption. Young people are already delaying major purchases like cars and houses due to all their student debt.

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They're extremely difficult to get discharged currently. That's purely a legislative protection. One that can be legislated away at any point if the political climate demands it.

Keep in mind major purchases such as cars and houses support the local economy and taxes. Student loan repayment doesn't. Once a large enough percentage of consumers are deferring those purchases that it starts to be felt locally, it becomes a lot more palatable to remove that safety net on student loans. Especially since the federal govt holds most of those loans, so fewer lobbyist dollars at work to protect it. And representatives will pretty consistently choose to screw over the federal budget before they'll take a hit locally. Especially as more and more representatives become personally affected by the issue and sympathetic to it.

All those Boomers expecting to offload their family house on someone to unlock their retirement equity when they downsize to head into retirement are screwed. Turnabout is fair play I suppose.

With automation how are they expected to even service that debt, much less pay it off? If you can't pay minimum interest on the debt and it keeps growing. What then? Will you have to service the debt out of your guaranteed income?

By automation you mean in many, many years, right?

Automation will start causing job loss by the millions in 5 years. So no I mean it's a problem creeping up very quickly. Initially it will be less qualified workers, but the fact is that many university grads, say art majors, end up in less qualified jobs (if they exist).

I agree with you except I am not sure about two conspiring forces at work here: Technology eating into professional jobs like xray techs, lawyers, etc., and colleges giving the degree in name only (nominally) were graduates more and more are not sufficiently trained and educated despite the degree. This makes for a spectacular bubble when the defaults and nonpayments reach critical mass.

Edit: P.S. this is just my guess and any data on this would be interesting.

People can often just leave the country. US law makes it hard to discharge, non US law is another story.

Wouldn't one have to abandon US citizenship? From what I understand, that's a very long uphill struggle, and likely impossible if you have significant debt.

In theory it's an obstacle in practice if you have no significant assets it's easy. Remember all those undocumented immigrants into the US other countries have the same thing.

Now, sure you can't come back to the US without problems. But, plenty of countries are happy to take young well educated workers looking to start over.

>the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.

https://travel.state.gov/content/travel/en/legal-considerati...

I guess if you successfully renounced you could just try to avoid having any contact with the US ever again...

You can't be arrested for not paying debts. You could probably still visit the US as long as you didn't intend to work there.

In principle. In practice, renouncing US citizenship is the sort of thing that gets you put on a "make their life hell if they want to come here" list.

Why would you need to renounce citizenship?

Interesting idea. But that seems pretty tough unless the new grad has a much sought after skill and speaks the language in the destination country.

It's pretty easy for someone with an American university degree to get jobs in other countries -- the easiest is probably teaching English in Asia. It won't make you rich but it definitely pays enough to survive at what people in those countries would consider a decent middle-class standard.

> Regardless of how much debt there is, this isn't a bubble.

Unless people start to die before paying off their loans.

Ah, but what about in 20-25 years when all of those who couldn't pay off the debt will suddenly have all of it "forgiven", and suddenly find themselves with a huge tax bill seeing that forgiven balance as income?

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