The Student Debt Problem Is Worse Than We Imagined

Term limits don’t work.

Having a max age limit make more sense or remove the seniority rules used to appoint key committee chairs.

They key thing would be strict maximum $ limits for elections and give candidates free time on the tv networks.

In setting a fixed term limit, we would risk weakening the check that the legislative represents against the executive.

But these are just both band aids on America's problems. We are infested with a religion that denies science and education, and we have a political party controlled by 3 families that feel entitled to as much as they can have at the expense of the entire nation. We would need to limit the power of money in politics and reform public education to raise a generation that can see the right for what it is.

I realize, that at least in some analysis, this did not happen in Michigan. (just reduction of lobbyist spending was 13%, but politicians with less experience consulted with them more -- See page 19 of [1] ).

However, I think the number of years in service, plus preliminary background requirements for staff members, plus other adjustments, still need to be made for a proper term-limit system.

Fundamentally, I believe, there are no small (defined as less than 1000), humans that should be permanently place in the position of distributing tax dollars, or military control.

These two things will produce corruption no matter how 'intellectually clean' a person is, entering the position.

US, UK and other countries claiming to be the 'moral compasses' for the world to follow, need to figure out how to switch from the class of politicians to the 'statesman' .

Whereas, I see a politician as somebody who makes is their job/career, vs statesman -- who view their work as a poorly (or insignificantly) compensated service for 8-12 years.

[1] http://www.msae.org/Portals/0/PDF/Term%20Limits%20White%20Pa...

Term limits do exist and are called elections. Every single election is a chance to vote someone out of office who hasn't done a good job. The thing that has essentially broken elections as term limits is partisan gerrymandering.

Term limits is the last of your problems

The only “problem” solved would be that of occasionally having people that are even nominally accountable to the electorate who have the experience and skills in the system and the personal powerbase to standup to the permanent class of lobbyists and other unaccountable, interested experts.

If you kneecap politicians, which are somewhat more accountable to us voters, you empower administrators and lobbyists.

If you want more accountability, empower politicians, so they aren't so beholden to monied interests. Public financing of campaigns, for starters. Increase their staffing, so they can manage the work load. Etc.

If we set 2 term limits, it would just mean that the corporate elite would just buy a new politician every 2 terms rather than buying a politician for 6 or more terms.

If you wanted to run for a political office. You'd need money. So who has money? And now you are beholden to the wealthy.

It's amazing when you think about it. We can no longer ever have a populist or independent president or congressman really. Because of the money needed to run for office.

You'll find that in most peace deals, bad people get excused of crimes, but it's necessary for the greater good.

There's certainly a moral hazard, but that's part of the deal - if we do things right, the bad situation won't be repeated.

Your opinion and his are, to me, examples of one of the worst forms of greed: greed with a reasonable excuse. It is rational and I cannot really fault you for feeling that way, but this form of greed makes fixing the problem much harder to solve.

Should we blame those that fall prey to predatory loan practices? Especially at 18, most are not fully equipped to evaluate the debt they are signing up for and its implications.

It seems a better approach would be to look at the root of the problem, which is that easy credit for education has incentivized bad apples to exploit vulnerable people. Just because you were smart enough to not be exploited does not mean others should suffer.

By all means argue for a solution that also helps people who made sacrifice in the past, but people who didn't or couldn't being left to suffer is not a solution.

To be clear - I get you are not saying you don't want to solve this because of that, but unfortunately that sentiment often results in policy actually being set like that.

We should always be asking 'how can we pull everyone up' not 'are they going through what I did'. Even if it ends up not benefiting you directly, we all benefit from a better society.

If we could get past the initial point and start implementing stuff like that, it'd give people more faith that it doesn't just invalidate their effort.

Is college only for job training, or is it for something a little different?

I’m not criticizing your viewpoint; as another commenter said, I understand some of the reasons you may hold this view. However, I do not feel that people who majored in, say, English - against their own likely knowledge that it would be difficult to find a job applying the skills they learned directly in search of a job - should suffer because of the debt they incurred. But I also think they should continue to get training in an area that is needed, or work at something for which they are already qualified.

Granted, the government has tightened the rules around private student loans and encouraged students to pursue federal-only loans (which offer a ton of benefits compared to private loans), but if you look at the loan practices in 2000-2008, private lenders were effectively fly-by-night and doing everything they could (including questionable advertising) to encourage students to apply for private loans.

Despite getting accepted to many top-tier universities (Berkeley, Yale, Rice), I chose to go to an in-state school with a generous scholarship so I could come out of school with very little loans. I sacrificed going to a really great school like Berkeley (and living in California!) so I would save money and not end up in so much debt.

While I fully think that debt is a nondesirable thing to have, and that we do not educate people about debt enough, I don't know if loan forgiveness is the answer. I have personally paid off a close friend's student loans and old medical bills, and guess what? Even after all that she was just as financially irresponsible as before.

As a related situation, I know a few people who come to me asking me for help with rent or medical bills. When I ask them, why don't you have any money, they say it's because their hours were cut, or something else. But when I step back and look at the whole picture, I realize that because they went on an expensive vacation, and went to the bars every other night, and spent lots of money on clothes, that's the real reason they didn't have money. So when they asked me to help pay their rent, they were really asking me to help finance their vacation.

In a similar way, if we (collectively, the taxpayers) pay for the students who can't afford the student loans, we're actually subsidizing whatever the people DID spend their money on, or their choice to go to more expensive schools when less expensive schools are available, perhaps at the cost of those who, like me, chose to save money by going to less expensive schools.

I would be OK with slashing interest rates. A loan which has such special status that it can’t even be cleared through bankruptcy should have a remarkably low interest rate.

Something like, every month you make your payment the interest is credited back to the principal. Or perhaps require 6 months of consecutive on-time payments after which interest goes to zero or 1% as long as you keep making regular payments.

Imagine if someone could've paid his loans, but was irresponsible and just risked /lost it all in stocks. Not only can he file a capital loss in his tax form to pay less taxes like Trump has done, and now he gets his loans and debt cleared (also like Trump has done).

If the system aids people like that, why should there be anyone who responsibly avoids debt?

Thousands of people are filing for bankruptcy every day which – by implication – are getting a break on loans that you would otherwise pay.

The issue is where debtors, who cannot presumably discharge their defaulted student loans in bankruptcy, begin to lose their savings, investments, and ability to stave off financial dependency on the government and become financially dependent on government programs now and into their retirement.

By saying that since you were able to pay your loans in 2018 and therefore most other people should be able to pay is like looking at any bad investment. If you allow people to remain indentured and fall into perpetual dependency on government programs (welfare, SNAP, Medicaid) due to their default or judgment-debtor status, the overall cost of that is projected to be much higher than if they could have been eligible for a partial or full discharge of the debt in 2018.

A bankruptcy prevents a bank from collecting interest. A judgment-debtor on financial assistance from the government is taking far more tax dollars from you than the bank is getting from the tax write-off on the charged-off debt.

Obviously, banks want their money, so they lobby for bankruptcy provisions to keep people indebted. They don't particularly care if the side-effect is the government demanding higher taxes from you to pay for government welfare programs.

Anyone else seeing a trend here?

If you ask people what’s most important for them, health ranks very high, often is #1. So, once you’re rich enough to pay for food, clothing, and living, almost all extra money should go to health, rather than, say, dining at three star restaurants, wearing tailor-made clothing, or four day working weeks.

Also, automation makes things that can be automated cheaper, and, hence, things that can’t (or aren’t yet) relatively more expensive. Education, day care centers and healthcare fall in the latter category.

Providers charge whatever they want, because they know you really don't have a choice and that insurance is picking up the bill, and if insurance won't pay you can go after the patient. Patients don't have any way to price shop (it's usually impossible to know the cost of a procedure or service before you get it, nor what will really be covered by insurance) and are insulated from most of the costs by their insurance.

In education, a huge chunk of the tab is covered by loans, which makes students price-insensitive, and the institution has no real incentive to hold costs down, in fact they actually use the fancy rec center and stadium to attract students. They can also run up the gen-ed courseload to artificially increase the amount of time it takes to graduate. Students have no real flexibility here either, because it's not like you can take a class at another university because it's too much, or choose to pass on a gen-ed.

The sad truth about healthcare is there's just too many middlemen all taking their cut and it all adds up. Hospitals, drug companies, insurance companies, doctors all need to make their cut, and by the time the service is delivered it's extremely expensive. Most other countries impose a lot more price controls, reduce the number of middlemen, and provide doctors with free education to increase the supply and remove the need to repay their own steep student loans (iirc you are looking at about $400k these days). Fixing the problem involves taking on a number of very powerful lobbying groups at the same time and is going to piss off a lot of people whose gravy-train would come to an end.

In schools, the problem largely comes down to reducing the amount of administrators and reducing the spend on non-essential facilities (rec center, stadium, etc). The actual teachers themselves are usually overworked and underpaid, the money is disappearing at an institution/administration level.

Student loan forgiveness is a solution that only helps a narrow slice of those affected by the student loan problem. It's not something that just affects those making payments, it affects literally everyone who ever had a loan.

Jubilees are only going to decrease repayment rates (why would I pay if it's going to be forgiven next year) and drive up costs further (the government is paying, so why not renovate the athletic center?).

The first step needs to be getting college costs under control, I'm not sure there needs to be another step. If you took out $100k in loans to pursue a degree in the arts, well, that's your problem.

At a system level, we need to consider people’s demonstrated behavior and look at the practical outcomes of various policy interventions, not decide policy based on moral judgments about whether people deserve their misery.

People are strongly pressured into taking these loans, told that they face much worse life prospects without the education than without the debt, and many of them do not have a full understanding of the risks and opportunities involved. Under the circumstances, many are going to take the loans, whether or not they hear your warning.

When they subsequently can’t pay the debt back, it doesn’t really matter for society whether they are “whining” or not. What matters is that the debts hang around their necks like anchors, preventing them from getting on with their lives, depressing their lifetime earnings, keeping them from buying houses or starting families or taking higher paying jobs, etc., and ultimately making them less capable of paying their own medical bills, supporting their own retirements, and so on.

These are large systemic problems which need to be addressed by large systemic changes, not by punishing people for supposed moral failings by forcing them into poverty.

It's not that easy. What's to stop everyone from defaulting?

Solved in what way though? The end solution state might be one where loans are less available, further entrenching generational income inequality.

My big beef is that Bush 2 and Congressional Republicans saw this coming, and in 2005 changed bankruptcy law severely curtailing, specifically students, from declaring bankruptcy.

"2005 bankruptcy reform bill making private student loans nondischargeable"

"Many debtors will have to work out repayment plans instead of having their obligations erased in bankruptcy court under the law"

It's a much higher bar for a student to successfully claim hardship than other debtors as a result.

http://www.nbcnews.com/id/7575010/ns/business-personal_finan...

http://www.slate.com/blogs/moneybox/2015/04/16/student_loans...

Local parents can influence grades, but they can’t get past standardized testing (which is why colleges use SAT/ACT/AP grades to filter rather than GPA).

Perhaps funding as a result of standardized testing is a problem and distracts from teaching. But the actual problem is children who grow up in unsupportive environments with lack of parental guidance. That socioeconomic class divide exposed by standardized testing isn’t going to be fixed by getting rid of standardized testing.

For my particular high school, the class was called Avid (https://www.avid.org). It's a college-preparatory class you may take all four years, with junior year being the year the class focuses on, amongst other things, studying for the SAT/ACT, applying to colleges, etc. My high school's Avid program mostly consisted of low-income, first-generation Hispanic students.

Going on a tangent, it's interesting to think about. Today, I came across an old friend from the same high school, same graduation, and from that same program working at Target full-time. He's Hispanic, low-income, and first-generation. He mentioned school ended not working out for him. I have another old but closer friend from the same high school and same graduation year but not from that program - he's American, middle-class, and not a first-generation student. He graduated from UC Berkeley last December and just started working at a finance company in San Francisco making roughly 85k/year. It's interesting in a way where I'm thinking about what heavily affected their lives to lead to both their different outcomes and the possible ways there are to bridge that gap, at least from the perspective of the old friend working at Target.

The program's site states the success rate of the program itself is high but from mere observation of old friends from that program, I unfortunately don't think that's the case. But above all, it reminds of this note written by and from Jordan Peterson's new book where he talks about lobsters in the first chapter: "to those who have everything more will be given; from those who have nothing, everything will be taken away." It seems to me then that if one wants to get out of, say of a generational low-income family, that person must be do something drastic: deliberate practice, a shift in perspective, etc. But first, they must be aware of this and that's the tough part, I think.

Only the megarich can afford to spend hundreds of thousands of dollars (representing decades in median salary) and four years to do these things before they've even worked out how they can support themselves. If you want that experience for your children, you first need to work out how to be megarich by the time they reach 18.

As an aside, the push is so strong I ended up leaving high school (after 10th grade) to attend college early at one of our early-entrance-to-college programs that effectively is a building full of high schoolers going to college (and, e.g. being locked in the building at 8pm each night, not being allowed to have a car, etc) and getting backfilled highschool credit for classes also -- you get your high school diploma alongside an associates degree.

It's a massive push, and the assumption is generally a mix of "everyone needs to go to college or you won't find a job" and "you can get a job without college but all those jobs suck and you'll wish you went to college but by then it will be too late". After years of having it hammered into you, kids finally listen. That, and mandatory college applications being part of your class grades (sometimes as early as 8th/9th grade depending on your classes), as well as the school requiring you to send your ACT scores to colleges.

Edit: this was around 10 years ago for me -- my highschool graduation date was 2010 (even though I had been in college for 2 years by then).

And the military is a no-go. We already use it as a welfare gate for poor Americans, creating a society where the poor have to serve in the military to survive while the rich skip out. This is a dystopian ideal to me.

Sweden has that system. Can't say it is that terrible.

Trying to hide or subsidize the price only prevents people from acting on that fact. (and thereby acquiring that value in a more efficient manner, etc.)

It's like adding back pressure or load shedding to a distributed system. It is better to drop or delay requests than let the entire system collapse under it's own weight.

The law can chain you up, or the East India Company can chain you up, and it doesn't make much of a difference.

Free markets are kept free by intelligent and benevolent legal force.

That doesn't work longterm.

https://ec.europa.eu/eurostat/statistics-explained/images/2/...

https://nces.ed.gov/fastfacts/display.asp?id=37

Your assertion that society will lose if gender studies majors for instance decrease in output is debatable. In fact, a decent argument can be made that certain majors have a role in indoctrination that make society worse off because of increased fractionation, division, and tribalism.

1) So most people doing accounting, economics, history, design, law, journalism, marketing, philosophy etc dont get jobs?

2) This is assuming universities will specialise to the most profitable vs being self funded.

3) This assumes that universities wont value lower returning education disciplines enough to cross subsidise areas they feel are important vs 'most profitable'

.... so I dont doubt there would be issues in this funding model but cant see too much STEM focus being one of them.

It was a 2.5% loan that balloons up to 6% loan after two missed payments, but that's not the confusing part.

Interesting loophole, when he was sent back to Mexico - his payment lapsed for 6 months before I was made aware that payments were being missed. They claim they are not allowed to disclose when payments are missed (but I'm allowed to be held responsible as the co-signer of course).

Student loan laws have a maximum amount of interest that can be charged and are not allowed to change the payment. They are allowed to redirect all payments to interest until all penalties are paid.

Long story short - 12 & $130 = $1560 in payments made little to no difference...$70 to be exact. Even more annoying, all of the payments post showing principal being paid (and then it's "retracted" to pay for interest the following month). Each month it would show the principal being repaid at $33 and then the following month would be the same exact balance as the month before.

I had to call the help line to figure out why $33 principal reduction never lead to a lower balance....and that's with me paying attention to the details.

I paid it off for my friend and wish nothing but the best for him, but no one should have to deal with the joke of an industry like Student loans.

https://www.irs.gov/newsroom/what-if-i-am-insolvent

Colleges are not victims of some Godlike invisible economic hand; they set their prices as they wish, and before this dogmatic obsession with the market, they set the prices to education as many people as they could - that was their mission, not money. Instead, they are acting as market participants selling a service for which there is inelastic demand - their customers almost can't say no; education is almost invaluable. Therefore they can raise their prices indefinitely - similar to health care.

The problem is not that we are funding students. The problem is market pricing for education.

EDIT: other options include working at startups/smaller companies, contributing to open source to get social validation of your abilities, learning some skills through coursera/online courses, ...

Ah ok, so the default referred to in the article is "default" as a status designation and not defaulted in the sense that the lender is taking a loss. I think this is what I wasn't understanding. Thanks.