Many Americans Feel Cheated by Their Student Loans
buzzfeednews.com
buzzfeednews.com
'“I think there’s this assumption that millennials are spoiled, naive, and entitled,” Jen said.'
That's because they often are. Jen racked up $50K of students loans in one year at an Ivy League school. My daughter is finishing up her first year of grad school at a state university, debt free. She works multiple jobs while going to school. It's hard. Sometimes it's really hard. And when she's done she won't have a diploma from an Ivy League school. But she won't have any debt, either.
Jen's case is intentionally special because she had a stroke in the middle of all this. So we can't criticize Jen. We have to sympathize with her. By extension, we are supposed to sympathize with everyone who has racked up student debt.
The cost of a college education is crazy. I agree with that. But the onus for student debt should fall on the debtor. Just like the onus for a car loan so that somebody can drive to work. Or the onus for a mortgage, or credit card debt. You can't repossess an education. When a student defaults, that knowledge and experience can't just be transferred back to the bank. So it is fair that such loans are secured differently than debt on hard assets.
If you don't currently have a cash flow that would allow you to make a $2000/month mortgage payment, don't take out that mortgage. If you don't currently have a cash flow that would allow you to make a $500/month student loan payment, don't take out that loan. If you could afford a $200 monthly payment, find a degree that fits your budget. Try a $3000/semester school instead of a $25000/semester school.
Don't rack up $50K/year and then pretend that you're not entitled.
I challenge you to find a $3000/semester grad school. UC Berkeley is $9000 a semester, and that's in-state.
Aside from this, I think you've identified that student loans work differently than regular ones; hence, the usual rule of "don't take a loan you aren't able to pay off right now" doesn't apply. A college student making minimum wages is unlikely to be able to pay off their tuition, but they may have a good chance of being able to do so in the future. That's how the entire industry is structured, and whether that's a good thing or not is up for debate but that is the current situation.
Because you need to in order to be a doctor / psychologist / counselor / MBA.
One of my kids newly minted 7th grade English teachers was salty because before going into teaching she had just earned her PhD in a social science and had significant student loan debt. ($200K+ I can't remember how much exactly but it was breathtaking). She made a poor choice. Her colleague, a math teacher, went to college at the US Military Academy and served time in the Army before following her dream of teaching. She made a better choice.
edit: typos
I'd argue that we need psychologists, counselors, and MBA's. If everyone was as painfully pragmatic as a lot of these comments suggest there'd be no art in this world, no one taking care of our sick or our poor, and no one remembering our past.
My child worked part time for a couple of years in high school. My child worked hard to get good grades. My child worked hard to get accepted into the program, while holding down a part-time job. My child is pretty pragmatic. Being free of debt will allow them to be a poor starving artist.
You can be pragmatic, debt-averse, and an artist, historian, counselor, or anything else.
edit: Ok. I fed, clothed, transported, and housed them through the end of high school.
On campus housing + tuition = ~$10000/year
$12000/$8/hr = 1500 hours = 30 hours/week for 50 weeks
That's frugal, but I wouldn't say incredibly frugal. It's very doable. If the alternative is to live it up and rack $10K debt each year, then complain because you have to pay it back and they won't let you bankruptcy out of it...
Maybe you can talk your boss into a $1000 scholarship. Maybe you get some help from Rotary Club. Maybe you can pick up $500 from you department to help pay for textbooks. Every little bit helps. But even without the help, you can pay for college as you go.
Or you can sink $50K+/year at an ivy league and think the world owes you when you're done.
30 hours is a lot. Yes. And...?
Do you want a great college education? Without debt? Without work? Without sacrifice? I can't help you. But if you are willing to work, and sacrifice a little, I can help you.
Many prefer to rack up huge debt, then complain about it.
Cascadia College ~$4300/year tuition. Connecticut State Colleges and Universities ~$4300/year tuition. Northern Oklahoma College $4000~5000/year tuition. University of South Florida ~$6400/year tuition. Utah State University Eastern < $4000/year tuition.
This is not a list of the cheapest colleges. It is a random selection based on geography.
$5000 at $8/hour = 625 hours = 12.5 hours/week for 50 weeks.
I took a look at the Conneticut State Colleges and Universities Residents requirements and they say "On campus room and board is provided by the school at a cost of $11,816 per academic year." That's huge.
In fact, the amount they estimate(1) it'll cost is $25,152 - at $8/hr that's 3144 hours, or 251 weeks at 12.5 hours/week. That's 5 years of saving for one year.
If you live off campus at a cheap place ($600/month - I couldn't find a place that cheap, but I assumed that it must exist), that's $7,200 for the year for housing, which ends up being 4 years of work at part time.
Paying for university is actually the cheap part of living there.
1) http://www.collegecalc.org/colleges/connecticut/central-conn...
If you want a college education, they can be had in quality for under $15,000/year total. Tuition, fees, books, rent, food, laundry, everything. No car, used laptop, state school. If there isn't one across the street from you, look around. My kids are spread across the country. So far, they all have degrees they can be proud of.
University of Nebraska has campus housing as low as $4000/year. Tuition and fees ~$9000/year. Boise State has 3 bedroom apartments for $825/month. Tuition and fees ~$8000/year. $2000 scholarship to residents with 3.3+ GPA. Arizona State has apartments for ~$5000/year. Tuition and fees ~$11000/year. Georgia Tech has apartments for ~$6400/year. Tuition and fees ~$12500/year
If you don't have the money, don't expect MIT. But you can get a decent--sometimes best-in-class--STEM degree from state colleges. Go in with five roomates on rent. Cook planned meals. Give up your smart phone and its $60/month plan. Pretend like you're really poor. Live like you're really, really poor. For four years.
Then when you're done, lose out on real big job offers to MIT grads and settle for something under 6 figures (read 7 figures in Silicon Valley).
Society doesn’t have that luxury. If student debt cripples 50 people, we could collectively decide to ignore them. If 50 million people are crippled then there’s probably a legitimate systemic issue somewhere. Blame doesn’t change the fact that those people exist, are economically crippled and our society can’t just wish them away. I’d also argue that if enough people do something then just telling them they’re bad is useless. I’d put it in the same category as abstinence education to prevent teen pregnancy - sure maybe it makes you feel good but it’s utterly useless for actually preventing teen pregnancy.
I’d support blame if there was any evidence it changes behavior. In this case there isn’t. We as a society want an outcome where most college students aren’t crippled in debt so it’ll have to be something else.
Also this covers up the fact that there are probably real policy failures that drive up the cost of education for everyone. Retribution conveniently lets politicians ignore the fact that college could be way cheaper. What schools are you referring to that cost only $3000 per semester? That kind of dates your info...
I also know lots of folks who went all over the country from my high school - a significant number of them will end up in high paying jobs and/or have decently large scholarships so perhaps that's worthwhile for them. I also know of a decent number of them who are going to fairly expensive places (especially with private schools) without scholarships and who aren't targeting fields with a low E(x) in terms of pay. I do wonder how they will fare in the coming years.
I told my kids that I would help pay their college costs if they went after a STEM degree at a local school.
Daughter No. 1 didn't want STEM so she went to a service academy where she majored in social sciences.
Daughter No. 2 is getting a CS degree at a local state school. I am paying for it but she will pay me back.
It's not that hard. We all want things that we can't afford. Some people find alternatives or do without. Others just YOLO.
The bad actors here are the colleges that sell $50K vanity degrees to people that cannot nor will ever be able pay for them.
I paid for my college via the USAF. I'm helping my kids with similar deals that you describe.
With hard work, part-time jobs, good ACT preparation and well-chosen schools, college is definitely in reach.
I believe that children learn from observing their parents. It sounds like you are off to a great start.
If any of your kids are close to fitting the cadet/midshipman profile, make sure to encourage them to consider service academies. They are not impossible to get into.
I think all of the academies have week long summer experience programs for HS Juniors. My daughter went to two of them and confirmed that it was a good fit for her.
My oldest graduates and commissions this Spring and has had a wonderful experience, including spending a semester studying abroad, a couple of shorter overseas trips, internships in DC, and so on.
But that describes the majority of students who take out loans to go to school full time. The entire point of the arrangement is that the thing you are taking out a loan for should improve your ability to actually pay off the loan. Our society and culture has encouraged students to go into debt with the promise that it will improve their future. But that is not panning out for many people. When so many people have the same kind of problem, we need to look at systemic causes.
It's pretty convenient for the creditor that we do not teach finance in American high school. It's pretty convenient for the creditor that student loans are unique in that you CANNOT default on them. It's pretty convenient to the creditor that these loans are being offered to children, optimistic at the whole life they have ahead of them, eager to sign whatever terms to make their dreams a reality. It's pretty convenient to the creditor that although he has ZERO risk of the debtor defaulting, we don't enforce any regulation on the amount of money that can be loaned out for certain fields of study or to certain schools (for-profit private colleges).
But, sure, blame it on the stupid millennials, 'cause they dreamed of being a success and listened to what society told them to do and went to college. Don't blame it on the debtor for lending money to people that shouldn't have ever been loaned money.
If only they didn't go to that Art school and eat avocado toast for breakfast...
Look: if a bank gave me a loan to build a six-thousand foot marble statue of my asshole, and I defaulted and couldn't pay it back, pretty sure no one would feel sorry for the bank. They'd say, what a dumb fucking bank!
But oh how the tables turn when it comes to millenials. Give them some money for school, even when we know it's a bad investment, and we blame it on the kid for taking it!
Next up, we'll be giving loans to drug addicts and blame them for spending the money on drugs...
I am pretty sure where the blame should go.
edit: why is this comment down voted? Every time I took an aid package I has a meeting with a financial aid officer. Surely, their role and responsibility should be more than just pointing out where the student should sign on the promissory note for multi-thousand dollar loans.
If a four year degree will cost $50K, and you agree to pay that back at 5% over 20 years, you need to be able to afford a $350/month payment. It can't depend on whether you win the lottery or whether you get a better job. It needs to depend on your current history, just like any other loan. If you can't afford to make a $350/month payment, you can't afford a $50K degree. It's that simple.
Ohio State undergrad tuition is < $11000/year. You could replay that at 5% in 10 years for ~$120/month. Working 20 hours/week for $8/hour should cover net around $120/week. That leaves you ~$360/month to pay for food/rent/laundry/bus/whatever. If you can't afford this, you can't afford it. You are not entitled to this. It is not a basic human right. If you can't find an apartment near enough to campus within this price range, this won't work. Don't take out the loan. No matter how much you want the product.
For your second year, if you can't make $240/month payments, don't take out another $11000 loan. Or negotiate a 20 year term for $75/month if you can afford last year's $120/month obligation plus this year's $75/month commitment. If you're still working 20 hours/week at $8/hour, maybe you can't afford a second year.
I know it stinks, but if you can't afford to pay for college, you can't afford college. That's crummy. That's lousy. That's a lot of things. But it is also reality.
Ignoring reality is a big systemic cause.
Are we as humans so empatheticly deficient that we cannot say “I don’t really want to give up this money which will be spent on another person’s well being, but I’m not going to fight it”? I pay a lot of money in taxes that I’d prefer to spend on rent or food or healthcare or my family but ultimately I’m satisfied that at least some of it will go to making someone whose life is not very good just a bit better.
University of New Mexico costs ~$7400/year in tuition, $22000/year with room/board/books. A high school student working 10 hours/week at $8/hour can earn $2400 in one school year and another $4800 in a summer. Working for two years in high school, plus one summer, then working through their freshman year, they can earn $21600 before they start their sophomore year. If they step it up and work 20 hours/week as a college freshman, they can add another $2400. After taxes, they will come up only slightly short of the mark. That's depressing.
But if they write a brief summary of what they did to earn money, how much they need, and how short they are, they will know that they only need $1000 loan or scholarship. There are very few bosses that won't recognize that effort and spring for a $1000 scholarship. Or maybe a parent can help with $500. Or maybe the college will help. Or maybe they can work one more part-time job one summer.
The jobs might be menial. You might scrub toilets or bag groceries or scrape old paint off pipes or write html.
It's depressing. It's a lot of work.
It's doable.
Student loans are all about future earnings potential, right? This argument seems to fall apart when you realize you aren't shopping for a mortgage or car that you can _currently_ pay for.
Right now, we have the worst of both worlds. The requirement that you must go to college to acquire "job skills," and the insane cost of an "enlightened education." The reality is that we get neither.
The two desperately need to be pried apart.
My wife and I are complete opposites. I went to state school, commuted from home, studied engineering, did well enough, got my M.S. paid for by the school (which is fairly easy to do if you are open to schools), now making 300k
My wife went to a private college (40k per year), lived on campus, went into sciences, went to a private M.S. program (40k per year yet again) with no funding, now making 75k
Our timelines are staggered by a few years (she worked before going for her master's) and she works for a non-profit while I work in tech, but I still think it's a worthwhile comparison as we've both arguably "put in" the same amount of time
It's no wonder to me why people feel entrenched by student debt. Granted, my wife has super close college friends which I don't have. I'm not sure I'd trade for that though. Going to state school and keeping costs low in college was the best decision I ever made
I used to feel the same way, and it's easy to vilify students who get to experience a more expensive education and place the onus on these students to pay back the debts. However, I realized that there's much more to this. Students typically apply for such loans while they are still in high school, in October of the year prior to starting college. It's uncommon for students to have the financial foundation needed to understand the significance of taking out such huge loans. I mean how could they possibly know what they'll "cash flow" four years when they graduate (or if they even do graduate)? In contrast, an adult who takes out a mortgage for a home after earning steady income has his/her assets, liabilities, and income meticulously scrutinized by the loan officer of some major bank. The adult is much more equipped with the information and experience to understand the commitment of this debt, and it's reasonable to place blame the adult if he is unable to make his mortgage payments.
Things get tricky when determining if a teenager is qualified to make a decision about taking out a student loan. We have regulation in place to disallow teenagers from smoking, gambling, and drinking, and yet a teenager can sign off on decades of indebtedness and financial insecurity without the proper regulation or warning labels. The phenomenon of teenage students misinformed-ly taking out loans is almost identical to how banks had issued subprime mortgage debt to debtors during the 2008 financial crisis by speculating and overestimating to these debtors their ability to pay back these loans.
So under the premise that students are not fully qualified to make such financial decisions and entitlement aside, solving this problem of insurmountable student debt across the country starts with better financial education for young kids and stricter regulation on banks for issuing unreasonable student loan debt. This is necessary because a bank cannot "repossess" an education, yet there is no recourse for students who are faced with snowballing debt.
I don't suggest that the student take out a loan based on future earnings. I agree that this is difficult to impossible to predict.
I suggest that the student doesn't take out a loan at all, or if they do, base it on CURRENT earnings. That is, if they can currently afford $100/month, only take out a $100/month loan at most. That could be a $15000 loan at 5% for 20 years. Or a $5000 loan at 5% for 5 years. If you cannot pay for school with this loan, don't take out the loan.
It's not a crime to work for a year and save up before going to college. But you have to save--not buy a car or a house or a party every weekend. 2000 hours * $8/hour = $12000 after taxes. If you're supporting yourself, you can't save for college and you could never repay a student loan. Go find a $10/hour job and save $4000 in a year. Then you can pay your way through school.
Then, if you're lucky you can pull in 6 figures 5 years out of high school. If you're not lucky, you can double your income. If you're unlucky, you got a college education debt free.
That took three paragraphs to explain. I don't think it is beyond the grasp of a high school senior. If it is beyond their grasp they should definitely not take out any loan whatsoever.
Perhaps this should be a story problem on every single SAT or ACT test. Getting it wrong should divide your score in half.
(1) There are low-income, middle-income, and upper-income individuals with student loan debt so large it will never be paid back. I know at least two people in each income bracket. The ones from the upper-income bracket come from families that are well-off, but not so well-off that they are willing to throw away a quarter of their life-savings to payback their child's student loan debt.
(2) I know people with $200K+ in student loan debt, but who pursued degrees which have career trajectories not aligned to paying off such debt.
(3) Even at elite institutions, and even within different acclaimed grad programs, the 'country club' experience of American undergrad education is creeping in. That is, even at elite grad programs, students are beginning to treat education as secondary and socializing, partying, etc. as primary. Grade inflation, among other signs of systemic institutional rot, is rampant.
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Having graduated and joined the professional class, as well as being connected to various professional social circles spanning different industries, I can also attest (anecdotally) to witnessing only ~20% of the people I know spending the vast majority of time at their job doing work rather than playing around. To those with limited data on what actually takes place at the mid and senior levels of management in large corporations and firms, I can tell you many stories of people making ~$130-$200K/yr while spending a non-trivial amount of work time shopping on-line, scrolling social media feeds, etc.
Take that FWIW.
I just remember hearing that individual amassed about a quarter of a million of US $ in debt. And he will be paying about $2000 - $3000 a month to repay the debt, till he reaches 40ish, provided there is no hiccup in employment. That's enough for mortgage for a really good house in most parts of US.
Was it worth it? I think not personally. Not with that kind of loan.
And yes, people in mid/senior management spend non trivial time doing non-work related activities on computers behind closed doors of the private offices. I've seen it as a help desk guy.
To add on to your point about people playing around behind closed doors: something I've found quite surprising is the remarkable skill and effort that is involved in playing around. I know people who are extraordinarily talented at making themselves look busy and/or productive, but in reality are merely a drag on their company and the wider economy.
In one sense, this is a type of fraud the market is supposed to self-correct (i.e. identify and remove). This fraud seems to be increasing.
I'm often reminded of certain types of deceit which increased in the Great Depression. It was not uncommon for a husband, say, to dress up and go off to work in the morning, and return home as if he had had a normal day on the 'job'. In reality, he was unemployed, and either looking for work or wasting his time doing something else. This would go on for 1-3 years as the family savings was gradually depleted to nothing, while neighbors and family members thought everything was fine. Then, when the deceit couldn't be sustained, the husband tried operating a mini-golf business (doomed from the start) out of the front yard.
(I went to school at night/part-time so I could keep my tech salary rolling in to pay for it.)
I can't imagine what her final total was -- I was offered over $80K in loans each year even though I had a $100K+ tech salary included in my "financial contribution" in the financial aid formula. I accepted about 10% of the offered loans.
The "a member of my family once said I deserved student loan debt because I chose the unrealistic field of history" comment reminds me of friends. They're smart. But they came from families that didn't teach ROI. (Their high schools didn't offer , they pursued majors that they found interesting. Nobody offer economics in a remotely-useful form, either.) Nobody told them to consider job-placement frequencies and mean exit salaries. (Let alone where to find these data.) So they didn't.
It's difficult to fault them. Their adolescent brains were given insufficient information (or, in some cases wrong information) for a series of huge decisions. They are now left with the consequences of those decisions for life.
The only way to fix this is to let loans be wiped out in bankruptcy (i.e. give lenders skin in the game). We probably also need to let lenders vary interest rates by institution and major. (The latter to give borrowers an early price signal around their choices.)
However, I disagree that we should let lenders vary interest rates by institution and major. Our premise was that these students didn't understand the full picture of what they were getting into. I'm not sure complicating that picture by varying interest rates is going to make the situation better overall.
As the article illustrates, complexity isn't the core problem. College applications, student aid and education loans are already complicated.
The problem is critical information is not being presented to students at the right time. One way to solve this would be mandatory disclosures when (a) schools or lenders send out any marketing materials, (b) admissions or loan applications are received, and (c) school or loan acceptance letters are sent out. (I think this should happen.)
Unfortunately, simple disclosure is only a first step. Incorporating the disclosed information into pricing ensures it's received.
Also, if we're going to force lenders to bear the risk of default, we should give them a way to manage it. Forcing a single market rate subsidies students pursuing uneconomic majors at the expense of those pursuing economic ones.
Going to college is a financial investment, so I see the logic in this: just make it a flat "fee" and let the student decide what to study to make it worth it. I'm not sure what the ramifications of this might be, though. I can imagine there might be some unintended consequences.
Someone turning 18...
- can join the military
- enter contracts
- get a credit card or loan
- decide not to go to college
Make non-dischargeable student loans only repayable at all when your taxable income is above $50k (or some number keyed to official stats), capped at 15% of income, and written off after 20 years. And let the interest rate, and amount offered, vary with major, school, SAT score, everything.
This will provided a vivid picture to 17-year olds of what their choices mean. Taking a 4-year all-inclusive resort holiday should be expensive, maybe it's a nice gift to buy your kids, but nobody should stumble into it thinking they are getting job training. (But the same major at a more selective school may actually have great outcomes -- it doesn't have to be direct job training.) And this way there's no need for a committee to identify which programs do or don't fall into this category, the bankers are free to gamble as they wish.
I like your idea. I'd edit $50k to some fraction of the median wage (or multiple of the poverty line) and revise 15% of income to a higher fraction of after-tax income after housing, food, childcare, healthcare and other essential costs. (We already have fraction of discretionary income based repayment programs. Shouldn't be hard to borrow that definition.)
I've seen arguments that the government not allowing these debts to be discharged through bankruptcy was a major cause of the problem. Do we want more market manipulation, or should we start teaching students that because the government has allowed for a trap even bankruptcy cannot escape, you need to learn how to avoid it?
- "Schools should be required to teach $R, and not graduate a student that hasn't learned it!"
- "The evil school wouldn't graduate my snowflake merely because s/he couldn't pass the standardized test for $R!"
Hence there is a tension between "graduation rates" and "adding more things-schools-have-to-teach", and yes, probably a lot of people who don't see the contradiction (between hate for standardized tests and demands that schools teach $R) as clearly as I've laid it out here.
Obviously, I don't share that belief....
In Germany, the mentality is different: school is for becoming well-rounded (that is why one has to attend many obligatory subjects from different areas) and university is for specializing into some area in which you will probably work for the rest of your life.
People are always going to think that they're going to be the one to break through--to rise above the mean ROI. That's why you get so many people trying to become actors or musicians or athletes or even startup founders. The high-end returns are so distracting that people forget about the mean ROI.
I have no problem paying taxes toward humanity or other "useless" degrees if the person is truly profoundly talented. Student loans provide all of the wrong incentives.
https://www.smithsonianmag.com/science-nature/impulsive-teen...
People make bad decisions at every age. The way to fix this problem is to make colleges suffer penalties for loan defaults. Then maybe they would think twice about selling onw year vanity grad degrees for $50K to people who can't afford it.
"[]Kathryn, a 35-year-old with $118,000 in debt from a degree in museum studies[]."
A 1-year masters degree in public policy from an Ivy is a vanity degree. (as indicated by Jen's current situation)
>Jen enrolled in a one-year master’s program in public policy at an Ivy League university, where, despite having small scholarships and participating in work-study programs, she accumulated an additional $50,000 in federal loans. But by the time she graduated, the economy still hadn’t recovered, and she struggled to find work. She deferred her loans (meaning she did not have to make payments, and no interest accrued) and when the deferment period ran out, she put them in forbearance (during which payments are suspended, but interest does accrue). In 2010, she found a job — only to be laid off, again, two years later. She managed to find a contract gig that put her to work three days a week, and consolidated her loans into a single loan that would be easier to manage.
I don't know how not being able to find a job in 2008 and then finding a job but being laid off and then having a stroke qualifies as her earning a vanity degree.
If the crisis is so dire, why do articles like this highlight victims that few will sympathize with. Maybe the author doesn't know any normal people.
Maybe they should highlight people like my daughter who intentionally chose a local state school rather than an expensive out-of-state or private school and selected a pragmatic STEM degree.
Did your daughter pay for her schooling all by herself? And which letter in the acronym? I'd argue that the S and M might not be guaranteed to get you a job either. It's really just "TE" jobs at best.
I think with room and board it is costing us around $22K per year.
- University is basically free but does not include room and board
- First year of university is essentially open to anyone
- To get to the 2nd year, you must pass difficult exams with a very low pass rate
That means that the number of people with "some college" is very high but the number of people with a degree is much, much lower. This way they get to say "college is free for everyone" while also getting to limit who "everyone" is.
I would disagree that this system is extraordinarily competitive. I'd agree that it sorts too early and sometimes misjudges due to that. But overall, getting the "Abitur", which is the degree necessary to go to university did seem quite a bit easier than university itself.
It used to be two years of service, now it's one. Russian army is not a nice place to be, to put it mildly.
It may not work for more diverse countries, such as US.
Then indeed expensive useless degrees will (like a gap-year in first-class hotels) be available only to the rich. But useful job training will not be.
I think nepotism is less bad than slavery. I had debt with no degree, nothing to show for it. I had to work and not get to keep the money. I felt like a slave. I don't want other people to be in debt slavery.
Nepotism only would affect me via envy. Debt affected me daily, mentally, harshly. There were days when I could think of nothing else, miserable at my situation. Nepotism is nothing compared to being in debt slavery. Who cares what other people are doing. Am I free?
Nepotism is a step backwards from this goal. It is only a solution to a symptom of the current means, without achieving the same ends.
The unlimited student loan situation has directly caused the bloat of university administration, salaries, and spending. It doesn't cost $40,000 a year to educate someone.
Student loans are a funny kind of loan. They're unsecured debt given to students with--on average--no assets or income.
We certainly went extreme with the "no discharge under any circumstances" threshold. There is no reason to over-correct to the other extreme of "everything is dischargeable at any time." A new chapter of bankruptcy would probably be needed to effectively deal with student debt defaults.
Bankruptcy is a court-mediated process.
> Have a X number of year waiting period?
This would be a necessary first piece. One needs a few years of income data to establish how much someone can pay. After that, I'd argue for % of discretionary income payments (up to a dollar cap) for N years, after which the unpaid balance (both principal and interest) are written off.
I have now spent the last 10 years studying all kinds of things that I'm interested in, such as philosophy and physics, history, theology (both from a position of belief and disbelief as I've transitioned), and many more. I am now utterly convinced that if our goal is "that this populace still becomes educated" the correct answer is to make information more accessible, lower cost, and more entertaining. I still think there's a place for a traditional college degree, but that place is generally not as training for a career IMHO.
I’m really glad that a lot of movies and literature doesnt dumb down a lot of the science tropes as much as it used to.
You don't need a college degree for most jobs really. You can learn almost anything on the job. And as someone also with two bachelors pursuing a PhD I agree that most people are not that educated.
In my opinion more focus should be put on early childhood education and public school. I felt like I learned nothing in hs, and now feel I could easily have gotten a whole undergrad during that time, had I known better how to teach myself
If someone believes that such a person will get a decent salary after graduating, they should put their money where their mouth is.
They were set up for failure in many ways. The loan assumed they'd have a job. The school assumed they needed a leg up, and would adapt to the work load.
Is this oppression? Or is this death by assistance? Hansel and Gretel were fattened up before they were eaten, as well. Is this toxic assistance, where people drown in the programs meant for their benefit?
I stretched out the repayment to 25 years and it's on autopay. The monthly payment is around $150/month. Also, interest is tax deductible if you make less than $85k.
I barely think about this loan at all except for filing taxes. Of course everyone's situation is different, but even ~$40k in debt for one of the most forgiving loans you can take out (both in terms of the fixed rate, the amount of time you can stretch out, and the tax deductibility of the interest) is not worth the stress.
What we actually need is a long term solution to middle class destruction. Everyone/everything is sucking them dry. It’s too bad though once they’re empty the whole system is dead.
Obviously allowing student loans to be discharged through a normal bankruptcy isn't feasible, because students leave college basically bankrupt. There needs to be a sensible mechanism to default on student loans, and probably a matching hard political conversation about what education is actually worth.
Consider how politicized this would become. Also consider that demand for a major is a lagging indicator.
You literally read books, one of the oldest technologies and write papers getting on. You have professors, but your tuition isn't really going to your professors. As a philosophy major I spent most of my time in buildings a hundred years old (had no projectors or computers) reading texts that were free from the library. I would have preferred that my tuition just paid for that building and my professors instead of the armies of administrative assistants and provosts.
There probably should be higher requirements. At my undergraduate the business degree was hard to get into. The english or philosophy degree just required you to tell someone.
I think knowledge for the sake of knowledge is a good on its own, but when you're paying that much, and everyone is all vying for limited academic positions, it doesn't make sense.
It just wouldn't be an issue if tuition for majors was actually closer to the cost of actually being taught.
Trades, IT jobs and the inability to bankruptcy out of bad decisions... paired with colleges that are more focused on head count than quality...
And the plumber has a trade degree and 6 figures in the bank.
I'm okay not having a 4 year degree (I have a 2 year degree and a 6 figure job) and I'm okay letting others know that "current wisdom" isn't right.
* Public service loan forgiveness
* Inability to get out of loans through bankruptcy
* "College, college, college" mantra where college is specifically defined as a big expensive place you go
* Kids' first "grown up" financial decision is a big one
* Majors that don't have a track record of paying off with no real counseling or information to encourage more realistic choices
* Kids taking easy or "cool" majors without thinking very hard about the financial trade offs
* Going back to (expensive) school as a way to hide from debt payments
* Many colleges more like joining a social club than an educational institution. The first two years at university are very expensive but no better at educating than a community college.
We know these are all problems, we just have no will to fix them. Politicians are looking for a political money-shuffling solution after the damage is already done, not looking for policies that will prevent the harm.
There is really no reason college has to be as expensive as it is. It isn't like college professors pay went up as tuition did or anything, or as if students got their own microscope or something to make up for the cost.
It just went to staff, and buildings.
It isn't, or shouldn't be about prestige or income.
Many people seem to have this massive chip on their shoulder, "these fing kids just thinking they're so much smarter than me but they're just hipsters getting useless degrees."
God forbid anyone should pursue knowledge for knowledge's sake.
You want to work in the private sector and make a killing? Good for you here's a pat on the back.
You might not realise this, because you're close minded, but fundamental research happens to pay terribly, requires long hours, is super stressful, but is good for everyone.
Pharmaceuticals, for example, almost always rely on fundamental biological discoveries made by academic science. You need to sort of understand a disease a bit, before you find a drug to cure it, and guess who is figuring that stuff out? It's the grad student over there who went to lab on christmas, because that's when the mice were born.
Let nerds spend 60+ hours a week in the lab or library doing what they love, and let's make sure they can eat and survive, so we can all reap the benefit. These people will literally go to work all day including weekends for fun. What motivates these people is discovery of new information, and having the respect of their peers. They aren't motivated by money, but they need enough to be mentally and physically healthy.
Have the kind of rationality that sees what a terrific resource that is. You can pay them less than half of any worker in private industry and they will work twice as much.
Just the sheer ignorance, hautiness, and closed mindedness of some of these comments. Chill, university isn't really supposed to be there for that annoying kid you all think of when you think of college loans. There are literally people trying to give us their lives as long as we allow them to do research. And y'all are ruining it.
A generation of people being systematically lured into making unwise financial decisions is a racket.
How do people rationalize putting young people into debt slavery instead of having them spend their earnings in the free market, stimulating the economy?
Because they (the people rationalizing) didn't realize the game has changed since they left college (or their lack of access to college)
This is why schools should bear more of the risk. They are ones that are recommending that the kids takes the loans and help them select majors.
I couldn't believe how much financial aid (all loans) I was offered for law school. (I took about 10% of what was offered.)
I don't think we've actually run out that string however; you have to go a long, long way before academe recognizes the futility of throwing more 'guidance' at the problem.
Law school tuition is insane, I can only imagine if you paid for your room and board and tuition with loans and that was only 10% of the aid offered you must have been offered like 500k.
At the very least, this would shift the burden of determining which degrees are "worth it" from high-school-aged kids and their families to large lending institutions that are much better equipped to analyze risk.
The end career was an important part of the decision making process when I started college, harped on by parents, advisers, processors, etc, - but maybe things changed over time.
The entirety of the pro-education message I received all through my youth and schooling was, "get a degree, it doesn't matter what in, and you'll get a white-collar office job."
That's it.
My parents weren't of the socio-economic class to give me any more detailed information, either. They didn't know better, no one else said better, and I know my experience is common among my peers.
No thought given to the fact that a large fraction of people aren't really capable of intellectually challenging tasks and professional class behavior, and I mean from the womb.
Just 'Education! Education!'
I don't think 98% of people are doing it wrong
However, I'd like to propose that there's alternative value to education beyond short-term individual capital gains.
First off, having a degree teaches you more than the hard skills promoted by the individual degree program, it opens up new pathways to learning that you can use to later-on learn new skills [2] This is increasingly important as the pace of technology changes, and skillsets will need to be adjusted multiple times in one lifetime.
Also, the overall prosperity of the economy, as well as other indicators such as happiness, is tied to the number of college graduates in a particular society. [3] [4] To me it makes sense to invest in education as a whole, instead of targeting one specific area, or pitting individuals against each other to compete over education resources.
I'm surprised by the number of well-educated people on this site who don't see the value of any degrees that aren't directly related to current economic trends, and who don't see the value of expanding access to education through society as a whole. To me, it seems like a case where having been given a certain set of privileges it's easy to dismiss other situations as being a result of poor decisions or poor societal structure. I just hope that people reading my comment will take a moment to step back and recognize that there may be much longer-term humanitarian reasons to support education as a whole, even if that means supporting degrees in 'underwater basket weaving'
[1] https://news.ycombinator.com/item?id=19138961
[2] https://eric.ed.gov/?id=ED465040
[3] https://www.universitiesuk.ac.uk/news/Pages/Nation%27s-prosp...
[4] https://journals.sagepub.com/doi/abs/10.1177/147490411877081...
Apparently criticizing poor decision making is a bad thing and so here we're provided a convenient pejorative with which to dismiss it.
Recently we've seen many notables dismiss uneducated white Trump supporters as poor decision makers; their outcomes being entirely their own fault and so we need consider their views no further. I wonder if they'll be permitted to demean such behavior as “retributive.”
I don't actually wonder that. The answer is as certain as a physical law.
These kids were sold a bill of goods. One might hope they've learned that good paying jobs will not magically appear simply by chanting 'Education!' We can't actually evacuate most of our industrial base to Asia and force the remaining employers into ever greater oligopolies through regulatory pressure and still have a middle class.
But I think that's a false hope. Instead they'll do precisely as they've been trained and vote for the promises of the political class; the very people that taught them to mindlessly chant 'Education!' in the first place.
Yet 15 minutes ago I got a call from “Robbie”, clearly a domestic call as he had 100% American accent, to talk about restructuring my federal student loans.
Why is our country so incredibly deceptive and scammy? We’ll never have European-style socialism here and that’s somewhat liveable / something I’ve come to accept, but why must we be cheated at every turn and in every interaction? This is not capitalism as much as it is a predatorial monetary jungle. Reminds me of the quote: “behind every fortune, a crime”.
As a tax payer, I do not want to subsidize people's poor educational decision making. If you get a STEM degree, you can get a job. This article describes what's long been referred to as:
https://en.wikipedia.org/wiki/Underwater_basket_weaving
Look at what fields are in demand and get an appropriate degree. Someone's failure to do that should not fall on the tax payers shoulders anymore than it already does.
You’re saying that children basically barely out of high school need to make decisions that are very high cost and impact the rest of their lives, then held accountable for them when they make a mistake.
This is on top of the fact that in all likelihood both society and their parents and teachers pushed them hard that the only way to succeed in life is to max out on education.
Blaming kids for choosing the wrong college is just a symptom of a broken system. How messed up is it that almost the very first decision a person has to make when reaching the age of majority is whether to take on tens of thousands in debt or more?
Bravo.
You can’t default from educational loans, but if you could then you’d be right.
Yes, I'm absolutely 100% saying this. We need to bring back the concept of personal responsibility. 18 year olds can go fight in wars, vote and drive. They are fully capable of making informed financial decisions. Basic algebra should be sufficient to see the math isn't going to work in your favor.
It's possible it's a generational thing. Boomers burned draft cards, bras, dropped out and most definitely were not listening to their parents at 18.
Gen X (my generation) was so disillusioned with the boomers that we ignored literally everything they told us. It's extremely foreign to me to hear the argument: "But our parents told us to go to expensive universities!" The generations prior to this would take that as an anti-command and done the opposite.
When you're an adult (which you are at 18) you must take responsibility for yourself.
imo, we should probably raise the legal age of adulthood.
> They are fully capable of making informed financial decisions.
Yet so many of them obviously are not able.
Imo, consider the opposite, 2 years being an adult in the military or apprenticing at a job before college could provide the experience that sheltered children need.
Just my personal opinion, but 20 year olds aren't really adults either.
I think we need another legal category that is more than a minor but less than an adult to cover ages approximately 18-24.
These so-called professionals might do their job better if the school was penalized for defaults.
Perhaps I am too German to understand this problem, since in Germany, nearly every child is taught by their parents that you should only go into debt if you have really, really good reasons (i.e. almost never, except perhaps for buying a house/flat; and in this case it is a mortgage and not a credit).
I believe this is really sound financial advice.
> Blaming kids for choosing the wrong college is just a symptom of a broken system. Blame just doesn’t work.
I think it is right to blame children for ignoring the IMHO sound financial advice (almost) never to take any credit.
In Germany you typically don't have to pay tens of thousands of dollars for your education like in the US. If you don't have well-off parents you pretty much have to go into debt.
Indeed there exist good public universities in Germany that are rather cheap and most students attend them. But there also exist private universities. At these, usually there is choice: you can either pay your student fees regularly or if you can't or don't want to, there is also the offer that you study "for free" and after you graduate, you pay some agreed percentage of your (future) salary for, say, 10 years after graduating.
I personally believe that markets are rather efficient. So to every prospective student, it should be a strong warning sign when a (private) university does not offer that you study "for free" and can pay off your "virtual tuition" by some share of your future salary for the next 10-15 years after gradutating, since this shows that the university does not believe that it offers a course of studies that will (in average) give a decent salary to its graduates (otherwise, it would make (financial) sense for the university to make such an offer).
> https://de.wikipedia.org/w/index.php?title=Liste_privater_Ho...
You are probably mostly interested in the private institutions of higher education with a right to award doctorates:
> https://de.wikipedia.org/w/index.php?title=Liste_privater_Ho...
For example for Bucerius Law School, you can find:
> https://de.wikipedia.org/w/index.php?title=Bucerius_Law_Scho...
"Die Hochschule bietet einen umgekehrten Generationenvertrag (UGV) an, der es Studierenden ermöglicht, zunächst ohne Gebühren zu studieren, wenn sie sich verpflichten, nach dem Eintritt in das Berufsleben 10 Jahre lang jährlich 9 % des Einkommens an die Hochschule zu zahlen, maximal das Doppelte der regulären Studiengebühren plus Basiszinssatz."
"The institution of higher education offers an reverse inter-generational contract which enables students initially to study without tuition fees if they pledge themselves after entering the workforce for 10 years yearly 9% of their income [the clause order in German is much more free than in English; if I translated it into proper English, it would be incomprehensible] to the institution of higher education; at a maximum double the regular tuition fees plus basic rate of interest".
German Wikipedia page for "Umgekehrter Generationenvertrag (UGV)" (reverse inter-generational contract):
> https://de.wikipedia.org/w/index.php?title=Umgekehrter_Gener...
Also Universität Witten/Herdecke offers a reverse inter-generational contract:
> https://de.wikipedia.org/w/index.php?title=Universit%C3%A4t_...
"Als private Universität finanziert sich die Hochschule aus Studienbeiträgen, Spenden und Fördermitteln.[31] Die StudierendenGesellschaft Witten/Herdecke, ein von Studierenden geführter, gemeinnütziger Verein, organisiert seit 1995 die elternunabhängige und sozialverträgliche Finanzierung des Studiums anhand des Umgekehrten Generationenvertrags." (I will not translate this, since it is just the relevant quote for what I wrote in English).
Also WHU – Otto Beisheim School of Management makes such an offer:
> https://de.wikipedia.org/w/index.php?title=WHU_%E2%80%93_Ott...
> https://www.whu.edu/de/programme/bachelor-programm/gebuehren...
Most universities in Germany are public and thus quite cheap. But note that while they are quite good in terms of quality of education, there is hardly any handholding offered. Many Germans say that this is two birds with one stone:
1. Mostly free tertiary education
2. Students learn a lot of self-responsibility
So it is a very different system from the one in the US.
So it makes much more sense to compare US universities with the few private universities in Germany. Under https://news.ycombinator.com/item?id=19139246 I wrote something about that topic. TLDR: If a university does not make an offer that you can pay off your "tuition" by a fixed amount of the salary that you earn in the next 10-15 years after graduating, you should be wary, since this shows that the university does not believe that its respective course of studies will (in average) give a decent salary to its graduates.
I don't know of a single US university that offers this guarantee...
Yes, 18 year olds (adults) need to be able to make decisions. If they decide not to go to college, they also need to be able to work.
And to clarify, some "kids" emancipate at 16.
If they make enough money, they can also start an IRA early.
I think that colleges shouldn't admit you unless you have at least a year or two of with experience. This way people would actually know why they are going to college rather than just treading a familiar path.
The cost of 10-50k/year for tuition and an opportunity cost (in terms of not getting a full time job and working your way up) of another 50k+/year. Is that a fair price for a degree that won't get you a better job?
She got a degree in public policy, which I assume is government work. Also, I find the "If you get a STEM degree, you can get a job." claim to be disingenuous. Are the job markets actually overflowing for every letter in that acronym? Can someone who specialized in frog reproduction or proof theory be guaranteed a job?
I suspect the market has over-valued the outputs of computer science, and while that remains true, then software companies have as much as duty as, say, oil companies or banks to "give back to the community" to offset the negative externalities of their work.
Put another way: If we find a way to run a fully-automatic people-less farm, that doesn't mean that farmers deserve to become destitute. In my opinion, we should be compensating farmers for their service up until now (maybe, like a pension) and then giving them the freedom to reallocate their time to the benefit of society as they see fit (which might mean taking vacations or it might mean starting a startup).
DO WORRY about the loan amount. There ARE cheaper college options. It doesn't matter how much money you'll make "someday", your future self would much rather have $10K in debt than $100K. Here I am, a 17-year-old kid who doesn't know any better being sold on an expensive private college. There are so many things I would do differently if I could.
No, only if you get a computer science, computer engineering, or electrical engineering degree. Job prospects for most other parts of STEM, especially anything having to so with real science, are significantly poorer. (Your choices are poverty and playing the academia lottery, or throwing away 99% of your hard-earned specialty skills and pivoting on the remaining 1% into coding or finance.)
We need people working on subjects that aren't directly profitable, including but not limited to the public-service category mentioned in the article.
The higher-ed industrial complex is generating a lot of waste/surplus w/o bearing any of the cost.
I mean, I love engineers to be in charge of tech companies, but that doesn't mean I want EVEYRONE to go to college just for STEM.
Also, I actually know a guy who graduated from a top public university IN USA as a mechanical engineer, and could not get a job as an actual engineer for almost 15 years. He did not do bad, but he didn't go all out to be top of the class either.
He did have odd jobs, but not as a mechanical engineer. He finally got a job as an actual mechanical engineer, after 15 years, including a stint in the US armed forces, which he did all because he didn't know what else to do.
If you don’t want to subsidize poor educational decisions, that seems fine, but the way to achieve that is to stop giving out loans to people who won’t be able to repay them, not to criticize people for choosing the wrong major.
Focusing on the individual is useful because they're the ones making the decision to take the loan, thus are in a position to do something about it. No one is forced to take out a loan and the individual is the one who will pay for a poor decision.
> not to criticize people for choosing the wrong major.
It's not about criticizing, it's about people taking responsibility for their actions and making good decisions. It's just not a good idea to get 50k-100k in debt for a degree that doesn't have market value. It's really not that hard to see it either.
When people talk about personal responsibility they always talk about it all as if debt was only problem. It is not. The other problem is what happens when you dont have degree. We read and shate articles about plight of college educated, because they are our group.
Personal responsibility is malleable argument. No matter what they do, it was their lack of personal responsibility. Struggle unemployed without degree? Should have go to school. Struggle with debt? Should not go to school.
Somehow not false information (especially in case of private schools whose students are in worat shape and who literally lied to them). Somehow not a fault of system where expensive school makes or break possibilities for ambitious people. Somehow it is not economy, not school.system where professions like doctors study way more years then would be necessary.
And people who do worst are the ones who did not finished college but started.
As one of those people I could not disagree more strongly with your entire statement. Not only do I make a very good living without a degree but I've hired many others without degrees as well. If you can code, you can get a job.