Comment by lb1lf | Hacker News Reader

Comment by lb1lf | Hacker News Reader

This is -ahem- exotic, seen from Scandinavia.

In Norway, student loans are granted by the state; roughly speaking, the terms are as follows -

-They're personal; noone acts as collateral. Neither do you need to provide any - however, if you default, they _may_ go for your assets, within reason.

-No interest while you're under education (within reason; if you're delayed significantly, interest may start to accrue.)

-You get approx. $14,000/year, intended to cover living expenses, study materials, beer &c.

-Once you graduate, interest starts to accrue (at the time being: 2.08% per annum; after a few months, you have to make monthly payments.

-If you're unemployed, you can apply for postponement of payments; interest keeps running.

-If you're ill for any significant duration of time, you can apply to have interest stopped, as well.

-If you default on your loan, the lender may go after assets - bank accounts, vehicles, homes &c - but only after a long and involved due process, and they need to try to work with you to find a solution which isn't as drastic..

Edit: Also, the terms, including the caveat that interest rates may rise &c are being spelled out - more or less literally, they go through great pains to ensure you know what you're getting yourself into - and you get an estimate based on the expected length of your studies as to how much your monthly payment will be+when you will have repaid the loan in full.

Germany goes even further. They also waive part of the loan if you graduate within the regular number of semesters, with a high enough grade or if you repay early. Additionally it is interest-free unless you're late with payments.

Oops - forgot about that part. We do that as well - I believe up to 40% is waived (on a per-term basis) if you pass all your finals that term.

Interesting, that's something I didn't know. Wouldn't have helped or motivated me to do this even if it had been possible :P

But I'm not sure which student loans you're talking about, but back when I was studying BAföG was a different beast. You usually don't get much and it all depends on your parents' income and in general I found the bureaucracy very... annoying, because my case worker was extremely incompetent, had to hand in stuff twice all the time, had to point out errors in all the calculations and every time I was there I only heard complaints how my case was so complicated..

That said, it's a good thing and if you find any decent job you shouldn't have too many problems paying it off very soon without a lot of interest payments. (But I also had to pay fees for a few semesters back then, I think they're mostly gone again now...)

Estonia goes even further than that. University is free as long as you don't fall behind (too much) in the curriculum.

University is mostly free in germany too (there's an administrative fee of ~200€ per semester). Those loans are just to cover living expenses so that everyone has a chance to study even when parents can't provide support.

US federally subsidized loans don't accrue interest while you're in college either. And the interest rates are fixed at around 3 to 4%. So I think the US should strive to move more student loans in this direction. It's pretty obvious that you're probably going to get screwed by any private loan (Sallie Mae).

Why don't more people take state subsidized loans then? Seems like a nobrainer.

There's a borrowing limit. Something like $7k a year. So if you wanted more people to take these loans the first thing to do would be to raise the limit.

Moreover, students are required to demonstrate financial need (in consideration of their family's assets) in order to qualify for subsidized loans.

Sounds very similar to Sweden apart from the fact that interest accumulates during your studies here. Still with the low interest rates of the last 10 or so years they've been in the <1% range for a long time now. And since calculations are based on the average interest rate of new government bonds over the last 3 years it's likely to stay low for a while.

The interest rates in the Swedish student loan system are extremely low even within the context of Sweden's low interest rates - I'm paying back my student loan as slowly as possible since the interest on my savings account is actually higher than the interest on the loan!

I fear things like this would never work in the US because at this point $14k/yr is nowhere near enough to cover the insane rate at which university prices are rising.

Ignoring all the reasons why the rates are going up, the simple truth is that many degrees are not worth their increased cost (in terms of ability to repay the loan with a career derived from said degree) and as a result the program wouldn't work for every major which could lead to the exact situation we are in - private parties offering crazy loans for majors that are deemed not cost effective by others.

We almost have this now in some ways. I've heard of hospitals paying for people to get nursing degrees if they work at said hospital for N years after graduating, so that apparently is a major where it is cost effective. I suspect you could also come up with something comparable for other majors that have a relatively high salary and high job prospects, but it would be much harder for fields where getting a job paying more than $15/hr after college is hard and often requires a PHD.

Pretty much all [0] of that applies to the US as well. The issue is that the author maxed out her government-backed student loans (which are capped at $20.5k/year at the moment, would have been less when she was in school), and took out private loans on top of that.

In most regards, private student loans are student loans in name only, they are much closer to general personal loans in most aspects.

[0] Notable differences are that only $8.5k year are "subsidized" (they dont accrue interest while in school), and the current interest rate is 4.45%.

You pay about 500-1000 EUR for a public college in Belgium and you can even apply for a scholarship which will pay it all for you. But once you run out of credits (every student starts with credits and has to spend them to get new classes and will receive them back once they graduate the same year in that class, fail the class and you have to do it again and lose the credits iirc.)

I don't know a single person in Belgium that has student debts.

-The Norwegian system is similar, in that tuition itself is free; however, being as sparsely populated as we are, most students have to leave home in order to obtain higher education - and a significant part of those living close enough to a site of higher learning move out from their parents anyway - it is kind of, sort of expected that you'll try to live on your own once you graduate from our high school equivalent (at age 19)

So - most of your student loan is used to cover a roof over your head and food in your belly. (Oh, and beer.)

Pretty similar to Quebec, Canada. Lenders are typical banks, but the state pay interest while you are still in school and a bit after for you to get set. No need for collateral, but you can't get rid of it with bankruptcy. Interest is low.

This US education system, just like healthcare, is something I just can't wrap my head around..

Why do they cover beer? Seems like alcohol companies did some work under the table...

How do you expect people to study without beer?

It’s a human right in Scandinavia.

They dont explicitly cover beer. Each student gets an allowance to spend as they please.

Right, op made it sound like they are. It is good that spending is not restricted though, as otherwise it would create all sort of unpleasant effects.

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