The Number of Older Student Loan Borrowers Is Rising

This system, in a way, exists in the UK. We have a single (govt sponsored) source of student loans and repayment is taken out of paychecks automatically. In the pre-2012 scheme it's 9% of everything over £20k (roughly), where the median salary outside of London is ~£25k.

For me, my student loans were about £20k overall (including living costs) and I'm paying back about £2.5k/year from it. Most of my friends are never going to pay it back.

However, it's not really put much burden on universities as they get the money immediately and then the losses from non-repayment are absorbed by the government.

IBR already exists in the US in the sense that your payments can be capped at a percentage of your income.

Unfortunately interest keeps doing its thing so many people will see their loan amounts increase once on IBR.

This leaves their only likely out as forgiveness by making 120 payments and working for a gov/education institution for 10 years.

My school, Purdue University, has been making a big push towards IBR. The biggest issue with it I can see, is that, as far as I can tell, there's no cap on the money collected. That is to say, if they take 15% of your income, and you end up making lots of money, they will continue collecting their share past the actual cost of college. It honestly makes me feel like they see me as an indentured servant, not a student.

Currently, I use part of my student loan payments to shield against higher taxes. AKA I can write off the interest payments on my tax return. I can then use the money I write off to invest in the stock market, buy groceries, etc. This is better for the economy long term, but also for myself. That's why there have been discussions around the topic, but not much action in the U.S.

Here are some issues it would have caused:

(a) Reduced my chances of getting an education at a top rate university (because I would be considered "at risk" for not succeeding, at least on paper). So I would have ended up at a less prestigious school, made less money, etc.

(b) If I had say 10% of my income siphoned off to a private company (which is a scary thought), I wouldn't have the opportunity to choose how to spend my money. For example, I have chosen to skip paying a loan payment to pay rent. I called and asked if this was alright, they told me it was fine. It kept me from being homeless for a month while I handled a cashflow issue.

(c) Because of the tax benefits, I have zero incentive to pay off my loan quicker. If 10% of my income went to some loan agency I'd pay it off quicker than I am now, and thus have less interest to write off. Further, I make money quicker than I lose it due to loan interest on the stock market, so I can actually pay back my loan faster by investing, then paying down the loan. This also helps spur the economy along, and at scale this is a massive reason it's not in anyone's best interest to implement a plan like this.

> Has there been any attempt to orchestrate an income based repayment program?

This wouldnt prevent students from going after useless degrees like they do today.

> 2. The burden of "payment" is shifted from the student to the school, as the school now must make sure their students are capable of getting good jobs if they want to be paid themselves.

It's usually not the schools loaning the money, they don't care what you do as long as you pay tuition, its banks and the federal government that loan the money, and they don't care because interest keeps accruing on your loan and you cant get rid of it.

> Has there been any attempt to orchestrate an income based repayment program?

Such an option has been available for many years, though the main loan servicer has been accused of directing people into temporary deferments instead.

http://www.huffingtonpost.com/entry/state-prosecutors-navien...

At one level all loans are "income based repayment programs" as they depend on income of the recipient to repay. But I don't think it is the "program" that is the problem.

If you step back and take in the wider view, you can see there is a business model for enslaving people without enough money. It works like this, you offer to give them money for something they want, even though they can't really afford it, and then you can add penalties and interest to garnish their future income until they die.

This is the business model of payday loans, you offer a loan until pay day, but they never have enough money so you "roll over" the loan and you're always owed interest. You create a situation where not only will the person never be able to pay you back you can milk them for anywhere from 5 - 50% of any money they manage to acquire. You have effectively enslaved them.

That was the same model used in the sub-prime mortgage crisis except there are two problems with sub-prime mortgages, one was they are usually no-recourse so you can just hand over the keys to the house and "pay them off" and they are dischargable in bankruptcy while the primary residence is protected.

So these leeches have turned to student "loans." Not dischargable in bankruptcy, you pay until you die. Check. At risk population that feels they have to have a college degree? Check. A set of 'for profit' schools willing to set aside any sort of moral principle so that they can transfer money to themselves? Check.

The predatory lenders stepped right into that ideal environment and have been convincing people left and right that things will be so much better and all they need is "education" and its easily within reach because they can "finance it."

Yes. Australia has had this for a long time. The rates last FY were:

  Below $54,126 	Nil
  $54,126–$60,292 	4%
  $60,293–$66,456 	4.5%
  $66,457–$69,949 	5%
  $69,950–$75,190 	5.5%
  $75,191–$81,432 	6%
  $81,433 - $85,718 	6.5%
  $85,719–$94,331 	7%
  $94,332–$100,519 	7.5%
  $100,520 and above 	8%
  

The progressive structure helps address the disadvantages, I think. Also debt has no interest, but it's indexed to CPI.

> Has there been any attempt to orchestrate an income based repayment program?

Yes, it's called filing bankruptcy, and they removed the ability for people to do that for student loans.

Both Bush and Obama offered income capped programs. Obama revision was more generous. I live they only apply to government loans, not private.

> Has there been any attempt to orchestrate an income based repayment program?

Yes, this is available for most federal student loan programs today.

[0] https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

> Has there been any attempt to orchestrate an income based repayment program? This could be implemented in a variety of ways, the most popular of which is taking a percentage of your income after graduating.

Yes. In the US, this was reasonably common before student loans.

So you would lower tax intake by millions of dollars. Where do you propose to cut to pay for it?

Wouldn't making the interest tax deductible increase the price? I've read that economists argue that housing prices would be lower if we removed the interest deduction.

Basically, markets adapt to the cheaper money.

Then, as someone who is a renter and does not have student loans, I would miss out on two tax breaks. I think a more elegant solution is to get rid of interest deductions for home owners. When you take out a loan, I think you should pay the real price for that loan.

> The idea that necessary education is 12 years goes back a century

So previously it was 6 years, and you want to make it 16?

IMO, the opposite should happen. Germany got this pretty right. https://upload.wikimedia.org/wikipedia/commons/thumb/0/0e/Ge...

There are far more varied education routes, it means not everyone takes $100ks of loans when they really just need a couple years of trade school.

If I recall correctly, this was how universal secondary education came about (at least in Australia). Initially secondary education was available only through private schools (including religious). As demand for skilled workers rose, free public education was extended from primary to secondary education to meet the demand from employers.

The same justification could easily be applied today with regard to tertiary education. Maybe this could be implemented by giving all people a three year 'credit' for tertiary education that can be used as and when they please.

Note that I am not suggesting that tertiary education should be compulsory.

People at 12 years education today are less capable than people at 12 years a few decades ago. Long-time university lecturers dismay at having to teach first-years in basic skills they used to arrive with.

I can't find it now (at work), but on youtube Brady Haran interviews some lecturers on this topic - one pulls out an A-levels engineering exam from the early 80s, and the questions are dense paragraphs expecting you to apply learned knowledge. Then he pulls out the A-level paper for that year (2013, I think) and the first question is "pick the correct picture that is hydropower", with four pictures of different power generation mechanisms. Easily answerable by anyone who didn't do the course. "The questions get harder, though?" > "Yes, but not substantially".

> I wonder if people beyond their 20's are going back to college in hopes of meeting a mate?

If you read the linked article, it's about taking on debt for kids/grandkids or repaying debt incurred when they were young. There's nothing in there about a change in the trend of older people going back to school.

I've always taken "fastest-growing" to mean a small group that's turning into a bigger group. Like, I don't think people would expect China to have the "fastest-growing" population in the world, but American Samoa could.

Learning new skills by doing exactly this sounds like a good idea in order to increase their ability to pay.

Immoral by what measure?

I think putting universities on the hook for defaulted student loans would probably help. They'll start steering people out of $50k english degrees and into degrees that they might have some hope of paying off. Or will figure out a way to make english degrees less expensive.

I sympathize with and agree with a lot of the points you're making, but think they apply in an environment that doesn't really apply anymore. Our society as a whole is trending toward a situation where I think other factors are at play too.

I have never had student loan debt, so I'm not trying to defend any decisions I made.

However, part of why I was able to do that was because college was actually affordable at the time I went. Not easy to afford, but not something that would break the bank either. If tuition were at those levels now, we wouldn't be having this discussion.

Another fundamental problem is the increasing "credentialization" of labor supply in the US. What I mean by this is that employers, broadly speaking, do not approach employees as investments, but rather as objects. So a potential employee is not seen as someone who could be trained or learn, but as someone who performs a given task. The way they do this, moreover, is to rely on a credential that documents their ability to perform a specific task.

I don't think people always go into, say, English, because they think there's lucrative business opportunities or because they are incompetent. I think they go into it because they reasonably see themselves as having a diverse set of skills, and as being capable of doing more than what their degree focused on. This is the philosophy of a liberal arts degree, after all. They major in English because they think "I like English, and I'm going to hone my communication skills, and can always get work in something else or go to graduate school because I'm competent enough, and my degree will document my ability to function in a broad set of tasks. But when they are done, rather than seeing this, "oh this person is capable of understanding and completing a broad range of things, because they have a liberal arts degree," employers approach them as if their degree is a mark of identity: "oh, you do literature."

There are many exceptions of course, and I'm not saying that advanced skillsets aren't often necessary. But as a society, we tend to have a very narrow-minded idea of a person. If you do math, you can't write; if you do english, you can't do math, etc. And there's always graduate school. I don't mean that as a joke, I mean that if you see yourself as pursuing more advanced skills in some area anyway, why should it matter what your undergraduate degree is?

These calls for more "usable" degrees, and blaming individuals for seeking expensive college education always seem disingenuous to me, because it's often the businesses demanding the degrees in the first place, one way or another. And what does everyone think would happen if there were suddenly a flood of STEM graduates?

This also has all sorts of other manifestations too. E.g., the only way you can learn to do procedure X (not only do, but learn to do) is if you are a nurse, PA, or physician. Or the only way you can manage is if you have an MBA or masters of management or something like that.

Anyway, to me the root problem is businesses not seeing individuals as investments, but as widgets. They're trying to offload costs as much as possible. If you can't provide me with X now, you're not worth it. It's part of a broader trend, in not investing in R&D, etc. and so forth. I think even engineer types run into this with job ads that have ridiculously specific requirements. Do those really make sense to anyone in the field? If I completed a BS in comp sci from a decent university with decent grades, do you have any doubt that I could manage MS SQL Server?

> I have never heard of anyone being turned down for a job because of their undergrad being from a no-name college.

Have you really never come across this? My anecdota are the exact opposite. In every hiring process that I've been familiar with (granted, that's only like...3), you'd have a non-trivial advantage at getting your foot in the door if you have a good name on your resume. By the time you get to interviews, nobody really cares, but the recruiters in pretty much every organization I've been exposed to use extremely blunt filters like that.

> r better yet, take half the classes, live at home, create a budget, and pay for your school (or at least books) as you go. I have never heard of anyone being turned down for a job because of their undergrad being from a no-name college.

This was possible in 2004, but it hasn't been possible since ~2014. Back in 2004, community colleges were like ~$100/wk (~$1500/semester) in tuition, which is somewhat affordable out of pocket by a working student living at home. Those costs have gone up to like $250/wk ($3750 semester) which is a lot more than I suspect most part time jobs would pay.

But the underlying message is apt. This is probably your best college strategy if you didn't end up with some sort of scholarship to another school (and come from a stable home).

Why are you placing all the moral blame on the heads of borrowers, and not lenders? The simple fact of the aging baby-boomer generation demands national and generational scale saving. The only way saving works on that scale is by making promises to provide something of real value later - infrastructure breaks down, capital becomes obsolete, consumer goods get consumed, but debt will remain. The end result of people getting better at saving for college is that there's more pressure to make riskier loans in other sectors of the economy. Advertising budgets for 0 down 0% interest auto loans go up. Banks are more willing to loan out money for remodeling your house. Credit cards get issued for greater limits and to more people.

At a macro level, the existence of pension funds and retirement savings means that as a whole, we are going to exchange current goods and services in exchange for promising to take care of the elderly in the future. If we tighten our belts, all it means is that interest rates go down until it balances out again. The only question is what sort of things we get today, and at what terms. Is a higher education experience the best thing to mortgage our society's future for? Cars? Houses? Health care? Ipads, televisions, and expensive lunches?

tl;dr - savings and debt are counter-parties to each other. If we want to have retirees live comfortably by drawing down their savings, we necessarily have to have current workers paying off their debts. If current workers as a whole set their lives up to shovel less money into student loan debt, it'd kick off systematic processes that increase how much of their other debt they end up paying off.

This is even worse than traditional student loans, because it parents feel like crap for not "helping" their children. When in reality, the fact that a student needs a PLUS loan should be an indicator that their chosen college is too expensive.

Eliminate Parent Plus loans. Then require colleges to guarantee to a student, before they start, that they can graduate from the program on time for the maximum amount of student loans they will be granted. This prevents students from going to an expensive university and ending up in a financial bind two years in.

From the article:

  most have education debt taken out on behalf of their children or grandchildren

I see your point. But it is like if you say that if someone is shot while buying healthy food is good in a way, because he was shopping healthy food. Not false, but worth a deeper discussion. ;)

I do not think you read the article. The article is specifically cites two reasons for debt woes: older people becoming co-signers of their kids' or grandkids' loans, and being unable to pay off student debt that they themselves took out decades ago.

It says nothing about training, or older people gaining new skills and taking on new debt for themselves.