Americans who fled the country to escape their student debt | Hacker News Reader

Americans who fled the country to escape their student debt

cnbc.com

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So the article mentions the average college graduate has $30,000 in debt, which doesn't actually seem that bad. That's the average price of a new car in the U.S. (And, until recently, the average American bought a new car every ~4 years.) The usual rule is that student debt shouldn't exceed your expected first year income, and the median starting salary for a college graduate is considerably over $30,000. So the debt load seems quite in line with recommendations.

The article is also missing key bits of information. For example, Chad graduated in 2011, and started in 2007. So he should be eligible for federal income-based repayment, which should key his student loans to his income level. That's a really important fact. 92% of all student loan debt is currently owed to the federal government. Although there have been various programs over the years, those loans have had some sort of income-based repayment plan since 1994: http://www.ibrinfo.org/existingidr.vp.html. Currently, your payments are 10% of your income above 150% of the federal poverty level. So if Chad is making about $25,000 per year (corresponding to about $1,700 per month take home), his payments would be just $640 per year, or $50 per month under the current PAY-E scheme.

I find it curious that articles on the student debt crisis never mention that information. I feel like these articles always pick out exceptional cases (recent graduates who have private loans, for example, even though almost all new student loans are federal). Then they try to link it to the overall $1.6 trillion student debt issue, failing to mention that almost all of that debt is subject to the federal government's income-sensitive repayment options.

>the average college graduate has $30,000 in debt, which doesn't actually seem that bad.

Until you come to find out one of the college grads couldn’t get any employment and the one that did (with $100,000k+ in loans) got 3 part time jobs including Starbucks barista and mail delivery. That’s the reality for millions of America grads, not 6 figure SV jobs with stock options and health insurance.

The numbers and realities are devistating, 1 million grads are defaulting on their loans every year.

And your take on the income based repayment programs sounds like marketing and PR. These income based programs have been in play for over 10 years so the first groups of students (in government/non profit work) were in theory eligible to discharge their loans, yet something like 90% of the first batch were denied the discharge because the banks played games along the way (put students into deferment for a month while the banks reviewed student financials on annual renewals breaking the consecutive payment rule and restarting their 10 year clock every time). For the rest of the loan holders (the first batch who isn’t eligible for discharge until after 25 years) will be in a similar boat/rude awakening when their time comes - of the programs aren’t gutted first which has basically been threatened since the program began. Sure these programs exist but so does discharge of student loans in bankruptcy (but there is a reason why almost everyone thinks student loans aren’t dischargable in bankruptcy).

> Until you come to find out one of the college grads couldn’t get any employment and the one that did (with $100,000k+ in loans)

So they should get their college loans paid off by taxpayers that had nothing to do with their really really bad decision?

Well if you are going to frame it as taxpayers paying off the loans (I don’t necessarily agree with you framing it that way), then the taxpayers are also the ones that extended these guaranteed loans in the first place.

So by your logic, yes taxpayers are responsible to the extent they are guaranteeing loans in the first place which is what allows the schools to charge artificial prices which the data shows can’t be repaid in millions of cases because the jobs and wages aren’t there. The article maybe just a few anecdotes but when the data amounts to 1M defaults a year, at what point are you going to stop complaing about the taxpayers having to make up for the bad decisions of 18 year old kids trying to better their future and question taxpayer funded loans allowing the runaway school costs in the first place?

> taxpayers are responsible

Taxpayers have no choice: pay taxes or face fines / jail.

Arguably taxpayers also get to choose who they vote for. You can argue about the effectiveness of the democratic process in the US but it feels a tad disingenuous to suggest we have no responsibilities in this system we are all apart of.

A political ballot doesn't carry enough bits of information for you to express how you would like to see student loans administered, and every other thing you'd like to influence.

In the first place, a government like that of the US is a massive bureaucracy, only a tiny fraction of which is actually elected. No matter who is elected, pretty much the same people will be administering student loans.

Of all tax units filing income taxes, 76.4 million tax units pay no federal income taxes. That's 44.4% of all tax units.

That's approximately 44.4% of potential votes by people who likely choose politicians that are spending the money of those who do pay taxes. And of those that pay income taxes, a few pay the disproportionate share of those taxes.

So basically, many people who are tax filers but not tax payers are getting to choose who they vote for, but others are left shouldering all the tax responsibility for the bad policies of those politicians. These tax filers might be paying other taxes like state and local sales tax, but those taxes are pretty much all state and local and irrelevant when we are talking about federal loan programs.

https://www.taxpolicycenter.org/model-estimates/tax-units-ze...

* "A tax unit is an individual, or a married couple, that files a tax return or would file a tax return if their income were high enough, along with all dependents of that individual or married couple."

If the taxpayers actually cared about 1M defaulted student loans a year they could elect leaders who will take action.

Maybe you vote for a politician who will terminate federally guaranteed student loans. Maybe support one that will provide UBI, which will be adjusted based on student loan obligations. Maybe elect one that will reform the existing IBR/repayment options so 1M students are going into default every year.

But as we all know what your saying is a strawman when you have people like warran buffet paying less in taxes than his secretary. Obviously that’s not by accident and rich taxpayers have successfully organized/lobbied/passed multiple laws over the last 40 years providing tax breaks for the themselves and corporations.

> Maybe you vote for a politician who will terminate federally guaranteed student loans.

Problem is, that joker wants to criminalize abortion and lock up anyone who smells of weed. Now what do I do?

Make the schools pay for it.

I'd just like to point out that when I was a student the university upgraded from a cafeteria to a foodhall (rated one of the best in the country), tore down old student dorms and replaced them with suites. And went into massive debt to pay for new buildings and renovate old ones. The students had no say in the matter and I'm sure if given the option would have preferred the old, paid for buildings.

This was a state school of 30,000. The school and the state decided what tuition was going to be, not the students.

My college did the same. Tore down the old library and built a new one that put all the books behind robo shelves. Built a new gym, several new dorms, a "student center", basically anything other than contributions to education. It's like they had a surplus of cash and had to find a way to spend it.

They have to spend a certain % of endowment funds every year (4% maybe) in order to maintain tax-free status.

Uh, why not simply give it to the students?

If the decision was based on government-backed advice like schools teaching "Everyone should have a degree!", and the government subsidising cheap loans for all then yes, obviously. It's a problem taxpayers created so it's a problem taxpayers should fix.

It's still a really really bad decision to go to a $100,000 school over a $20,000 school

It's a really bad decision to lend a kid $30k+ to obtain skills no one wants to pay for.

No, the person was lent $30k for the OPPORTUNITY to study anything they wanted, to become anything they wanted. The person CHOSE to obtain skills no one wants to pay for.

This is not a matter of people getting the wrong skills, or being bad at those skills, or anything to do with choices. If 200,000 kids go to university to get a particular degree and 4 years later enter a market recruiting 180,000 graduates with that degree then there's a problem, yet no individual made the wrong decision. The problem is about predicting the future job market, attrition rates at universities, and the over-supply of graduates as a whole. It's not simply people doing the wrong degrees.

Putting all the blame on individuals for making bad choices shows a distinct problem of your understanding of the issue.

My point is that the lender also made a bad decision.

What lenders require you to list the classes you plan to take?

I didn’t claim any lender did, just that it’s a bad idea to lend tens and hundreds of thousands of dollars to young people with no collateral and only a loose requirement to use it on “education”.

No lender is actually stupid enough to do this, other than the US taxpayer.

The reason these loans can be made without collateral for the rates they are is the loans are not discharged easily. They’re still a benefit to both parties, because both gain from them on average.

No one is stupid here. Stupidity would imply a net loss on one or both sides, which simply isn’t true.

Many US taxpayers aren't this stupid. The problem is that they need to contend with the votes of people who may or may not file taxes but still vote.

I would gladly pay an 80k premium to go to a more prestigious school if I had to choose. I'd bet that the increased lifetime earnings due to a better resume and better education would easily surpass 80k.

Yes, because letting them funnel their debt-servicing money back into useful parts of the economy (houses, cars, businesses, whatever!) would be a much better thing for the country as a whole than what they're doing now.

This debt is a huge bottleneck on the economy; it's slowing things up for a huge part of the population, and for what? We're not better off as a people. We're not building a better country or future this way.

The arguments I've seen in favor are all "they made a bad decision, they should live with it" or "I paid mine off, why should they get a free ride" or any number of variations on that sort of thing. I haven't seen a single argument that the student debt status quo is good or healthy for the country, or is getting us where we want to be as a people.

Personally, I don't give a shit what stupid degree people got or how much student debt there or how hurt those who paid theirs off will feel; hurt feelings or resentment are no good basis for policy. This is a bad scene for the country and forgiving the student debt would improve things in so, so, so many ways; the trade-offs are absolutely 100% worth it.

> improve things

Improve things for whom? Who is going to shoulder the disproportionate burden of forgiving all those loans?

Uncle Sam.

Uncle Sam is the US taxpayer, or more precisely, the minority of Americans paying most of the taxes.

Using your argument, why not pay off everyone’s car notes too?

Yes.

> 1 million grads are defaulting on their loans every year

Source?

That is astonishing!

About 20 million people are expected to attend a college this fall [0]. With the expected graduation time of six years for undergrad [1], that means that each year's 'class' is only 3.33 million people. So, that means that about 1/3 people with an undergrad degree will default on their loans (yes, fast and dirty stats here). Couple that with the fact that only about 70% of people take out loans [2], and you have a default rate per class of ~43%.

Yeah, ~2/5ths of people that take out loans will default on them?! Is that anywhere near the defualt rates of other types of loans (auto, home, etc)? This seems crazy.

[0] https://nces.ed.gov/fastfacts/display.asp?id=372

[1] https://nces.ed.gov/fastfacts/display.asp?id=569 (this is pretty complex data, well worth the dive)

[2] https://www.cnbc.com/2018/02/15/heres-how-much-the-average-s...

EDIT: Yep, it seems to be true [3]. Home and auto loans are a bit harder to google, but they seem to be at about 4% and 6% respectively. Honestly, the default rates on student loans are really high compared to other loans of a similar timeline and monetary value.

[3] https://www.cnbc.com/2018/08/13/twenty-two-percent-of-studen...

Typically a debtor is going pay their home/car loans first (that’s not a huge surprise).

I agree it’s an astonishing number, and once you begin looking past the data and at the individual stories/anecdotes it’s heartbreaking. After all look at this article people are literally leaving the country.

I have 4 brothers all of us have a bachelors and advanced degree (1 MD, 2JDs and 2 Masters). I had a brother move to Korea to teach English, because he couldnt get a job. He had an undergraduate degree in information science and an MBA, graduated in 08’. People in this thread want to blame student choices and say it’s an issue of majors/skills...that’s not the problem.

Problems with the college system aside, why get an MBA without any work experience? Every successful MBA I know became a domain expert before pursuing theirs.

There is no reason anyone should ever default on an IBR loan. That’s the whole point of the income-based repayment. The reason people still do it is because they don’t follow the proper procedures for requesting IBR or requesting forbearance. That’s a damning indictment of our educational system, that a million students a year who have at least been accepted into college can’t figure out a simple administrative procedure. But it’s not the fault of the program itself, nor does it call for radical change.

Likewise, almost everyone who got rejected for the IBR forgiveness did so because they screwed up the administrative procedure: https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-b.... 73% didn’t meet the program requirements, and another 25% screwed up the application, not providing sufficient information. That’s not a sign of anything wrong with the program, it’s a sign of the total failure of our educational system.

I’m quite put out that these issues are being used to justify tuition-free college. In my view, the existing system is actually pretty good. If your college education ends up in you earning a lot, you pay back more to the federal government. If it doesn’t, then the federal government takes a hair cut on your loans. The people who earn more subsidize those who earn less. The total cost to the government ends up being pretty low (IBR will cost the government about $18 billion per year over the next decade, a tiny fraction of the cost free college would cost.) If what’s preventing that system from working well is that people attending college can’t figure out the administrative requirements, then I’m sorry I don’t think that’s an acceptable excuse.

>There is no reason anyone should ever default on an IBR loan. That’s the whole point of the income-based repayment.

Again that’s right in theory and what the banks report, however, individual law suits uncovered intentional efforts by the banks internally to force deferments and resetting the clock on IBR loan payers. Literally bank communications turned over in discovery on a number of lawsuits show instruction not to process annual financials, place the students in forebearance for a month, then process the documents so the clock reset.

Case in point the banks at no point inform loan holders when the IBR discharge clocks reset (sure student knew they were in forbearance for a month every year, but in these cases the students timely submitted the documents and students have no control over the bank processing times), it’s only when the students went for the discharge and were the students informed there clocks reset annually. Further bank communications showed this was also intentionally done so over the years the banks counted on the student losing their records and proof they timely submitted their annual financials.

And I’d argue that 98% (it’s actually 99.5%) of loan holders being denied discharge in IBR programs is proof the program is broken, but again the individual lawsuits against the banks/loan services broke this wide open. Then again we don’t need to look at the individual lawsuits either multiple state attorney generals have brought charges against the largest loan servicer for these acts and worse (continuing to collect on loans that were actually discharged), still it doesn’t seem that will help these students (like billion dollar fines against the banks didn’t help homeowners post 2008).

> Again that’s right in theory and what the banks report, however, individual law suits uncovered intentional efforts by the banks internally to force deferments and resetting the clock on IBR loan payers. Literally bank communication turned over in discovery on a number of lawsuits show instruction not to process annual reporting requirements, place the students in forebearance for a month, then process the documents.

There are no "banks" here. These are loan servicers acting at the federal government's direction.

If there is a problem with the loan servicers, then the federal government should retain different ones. That has nothing to do with whether the program works or should be different. (And if the federal government has failed to properly supervise the companies it hires to service its loans, why is the solution even more federal involvement?)

Here is a decent write about about 4 such student lawsuits...funny you mention the federal government, because as you will see in this article the Dept. Of Ed. Was involved in these efforts to reset the discharge clocks, because the program was going to cost them more than expected. Specifically right before the first batch of discharged loans the Dept of Ed changed their rules on the fly (in violation of the Act) to make students ineligible for discharge.

https://www.studentloanplanner.com/pslf-lawsuit/

Edit: I think In all 4 of these cases the Dept. Of Ed. Already approved these discharges, sent approval letters, then changed their rules and revoked the discharges. Again the rule changes were in violation of law and done because the costs of the program were so large.

If the government is can't be trusted to manage this I don't see how it can be argued that we need more government intervention to resolve the problem.

I don’t think I argued that government intervention was needed to resolve the problem.

However, going back to 7th grade civics our government is split into 3 branches to distribute power and provide checks and balances. In this very instance the judicial system (government) is the forum where these facts and bad acts of the government were uncovered and a judge (government employee) reinstated the discharge in 3 of the 4 cases cited.

> Judge Timothy J Kelly of the DC Circuit Court found that the original determination letters had language in them that seemed final, in contrast to the Department of Ed’s claim that it was provisional.

> $30,000 in debt, which doesn't actually seem that bad

I think over time what seems reasonable has been stretched. Given that you don't have any collateral with this debt, $30k seems extremely deep under water to me, coming from a generation where I was able to pay off all my student debt with a relatively low-paying job within a couple of years.

> The usual rule is that student debt shouldn't exceed your expected first year income

Was this rule made by the same people who made the rule about how much to spend on an engagement ring?

If you go to Stanford and then get a job at Google where your signing bonus is $30k cash after tax, then yeah maybe it all adds up.

> Given that you don't have any collateral with this debt

You may not have collateral, but you technically should have an asset, which in this case would be an education and degree in hand. What matters is if your education and degree were in a subject that has market value.

$30k for a computer science, engineering, law, finance or medical degree wouldn't really be underwater, because you have a degree with market value.

Seriously. I graduated a top Canadian engineering school about ten years ago, and I think my debt at graduation was around $10k, and that was with per-term tuition that was around $6k, I think, so most of that debt was from the final year— prior to that I'd been covered by a mix of money earned on internships and a family RESP.

I also remember the "rule" that a house should cost 2 years salary. And when I graduated college in the early 80s, starting salaries were $25-$30K, and you could get a house for $60K on Long Island.

IIRC, the "rule" was 4 years. And that's about what homes in the USA cost today (median home cost is apx 4.5x median household income).

It's been growing over time. It was 2x, then 4x, now 4.5x. This is an increasing problem.

It's been between 3.5x to 4.5x pretty much the entire history such data has been tracked in the USA, a bit over 100 years now.

> average college graduate has $30,000 in debt,

The average listed in the article is a mean, but then you compare it to a median starting salary.

If an appreciable fraction of college graduates have 0 debt, it could imply that students that do have debt have a higher debt that $30,000. Of course, this distribution could have lots of different shapes, so there's no conclusive statement I could make here, but it seems quite dangerous to compare the mean of one thing to the median of another and then say that there's no issue.

I'm also not disputing your other points. I'd definitely be interested in finding our more information about why the article elided those repayments (or if they haven't been happening for some other reason).

I find it curious that articles on the student debt crisis never mention that information.

Be honest! You know exactly why they didn't mention these things.

News today seems to be: 1) figure out what you want your article to be about and make sure it's an attention grabbing headline, preferably outlining a negative situation, 2) do research on the issue, 3) filter out any information that runs counter to your headline, 4) write article with the remaining information even if it's not an accurate representation.

There are journalists/publications that just stop at 1) I think. Doing any kind of research is rarely on the table, and that's very apparent when you confront these people directly. They don't even know their subject.

Is the average American buying a new car or new to them car every 4 years? Last I checked, new car loan terms are 3-5 years.

I got rid of my first post college car 2 years ago. I had that car 15 years, so I definitely beat the odds. I've never understood the desire for a car to be more than a source of transportation. Some people seem insistent on extending their sexuality with a car. Others feel that having a different cars makes them a better person, but these are just externalities. I feel like the bigger reason students leave the US and shirk responsibility is because they can.

They took a degree that doesn't pay as much as they'd expect, or maybe they are just poor planners that don't care about the future. These are exactly the types that you would expect to take on high risk behaviors for smaller rewards. There's nothing wrong with that, except for claiming that it was the only option they had. Certainly they (and many others) have plenty of options. Some have the habit of making poor decisions until they paint themselves into a corner.

they have 6 or 7 years now

average is 65 months for new cars

https://www.autotrader.com/car-shopping/buying-a-car-what-te...

Doesn't look like that includes leases

No way is it possibly a new car every four years. There are over 200 million licensed drivers in the US and less than 20 million new cars sold per year.

Car loans are stretched to the 84 month and 96 months now (and they'll helpfully roll your last car loan into it too)

I know this info - but just reading it makes me wonder why people go along with the scam.

I get it - I once had a car loan too; it wasn't even a new car (but I bought it from an actual dealer, so it wasn't some weird sketchy loan). Paid it off, had the car for a while, then it died and I moved on. That was the last car I financed, too.

Since then, my wife and I only pay cash for used cars, and spend the extra money normally used for payments, for maintenance and upgrades on the vehicles (upgrades are on my side, mostly - I own a Jeep Wrangler - don't own one unless you like to throw money into a hole - but it's more fun than a boat, so there's that).

We own our cars for as many years as we can, until it becomes more expensive to repair than to buy something else. But, there again, I think my wife will keep hers for as long as parts can be found for it (2013 Outback - solid vehicle), and I'll keep my Jeep until I can no longer get into it from age (then I'll probably just delete the lift and put regular tires on it).

My VehiCROSS on the other hand...I'll cry the day I sell it, unless it's at a car show auction should it ever become a collectible. Heck - I'll still cry - I love that truck.

There are 300million adults buying 17million cars per year. That's an average of 17 years per car, not 4.

Rules of thumb don't tend to work well at the extremes, since discretionary income matters more than total income, as far as debt is concerned.

> Currently, your payments are 10% of your income above 150% of the federal poverty level. So if Chad is making about $25,000 per year (corresponding to about $1,700 per month take home), his payments would be just $640 per year, or $50 per month under the current PAY-E scheme.

A $30,000 loan at 5.05% APR with $50/month payments will take infinite years to pay back. Need to be paying $127 a month to keep up with the interest, otherwise you are getting deeper and deeper in debt.

The debt, including accrued interest, is forgiven after 25 years.

It might be. If the program still exists, and you didn't do any paperwork wrong in 25 years. And then you might owe taxes on the forgiven portion.

The government could get rid of IBR, but it would be very difficult to do so retroactively. At that point, ordinary contract law principles come into play. The government’s freedom to end federal programs doesn’t free it from having to meet pre-existing contractual requirements. Even Trump’s plan and the new GOP bill only gets rid of loan forgiveness for new loans, and only 10-year public interest forgiveness program, not the 25-year forgiveness for everyone else.

The federal government also promised college students in 2007 that student loans would be forgiven after 10 years of work in public service professions.

Of the first 29,000 applications filed with the Department of Education to take advantage of this promise, 96 were approved. That's an approval rate of 0.33 percent.

Relevant quote that applies to most of the stories in this article: "but, he said, his difficultly finding a college-level job in the U.S. has made that debt oppressive nonetheless." The problem isn't just that students are graduating with debt, it's that they are graduating with debt and degrees that don't translate into actual good job prospects anymore.

I think it's also worth mentioning that the "leave the US for a cheaper/easier lifestyle elsewhere" choice isn't new. I met dozens of expats when I lived in China 15 years ago who were there because they could make ends meet and still have fun doing little more than teaching English. The only difference now is that if you ever come back to the US you're pretty much screwed.

Absolutely agree. We as a society have put so much emphasis on earning a college degree that people are attaining worthless ones at too high of a rate and finding themselves buried in debt with no way to pay it off.

It doesn't help that basic financial literacy isn't taught in grade school anymore, either. Too many times, a graduate's first lesson in managing finances and debt comes in the form of a default notice from a lender.

The other problem I see here is that the whole mentality of being able to run away from your problems is, well, problematic. These things will only get worse if you don't address them. What they don't apparently realize is, one day, they're going to want to come back to the U.S. for one reason or another just to find out that their mound of student debt has grown into a mountain of defaults which prevents them from even holding certain jobs, getting credit, finding housing, and basically functioning comfortably in society.

I do think you should be able to declare bankruptcy on worthless degrees. Banks (note that I have a problem with government loan subsidies) should face the risk and not loan to a student getting a worthless degree.

What I can't figure out is how to stop someone who gets a useful degree from declaring bankruptcy right after graduating and then getting a job using that degree. This is fraud.

In this way college loans are unsecured debt, like credit cards, and should be priced accordingly.

You never really know when the market would be saturated with degree x since it takes 4 years to earn. On the other end banks may decline a degree that if taken now will start to be high demand when the candidate graduates.

If you have a electrical engineering degree in generators right before someone discovers a cheap over unity solar panel (coming up with a way to violate the laws of physics is left as an exercise to the reader) thus making all generator specialists valueless - most of your EE course work still applies so you just need pivot a little. Maybe you need an additional year of school to get in demand skills, but the odds that you can't find something that it is a low risk to get you into is low.

If you have a degree in music - we already know that field is saturated. If you studied only music you have a few years left to get a course of study that is useful.

Is the value of some college degree really the problem or does our system and culture just do a horrible job of matching candidates with open positions?

The fun part about expat life is that the Foreign Earned Income Exclusion often puts your adjusted gross income at below zero, which means income based repayment plans have a zero payment while your income is that “low.”

I worked summers during college to help pay the cost. One of those jobs led to a full time job at a commercial bank after I graduated.

This is a totally valid move in my opinion, as well as just circumventing the trainwreck of a healthcare system to seek treatment overseas.

If congress continues to be negligent in its duties then this is really the only viable path forward for many people. If a large enough percentage of people bail on their student loans/medical debt then eventually dozens of predatory banks and "medical billing" companies will go out of business and then we can actually start to change things.

By "dozens of predatory banks" and "medical billing companies" you mean "the federal government" (who is owed 92% of student loan debt) and "hospitals and doctors offices" right?

Absolutely. I am excited by the prospect of hospitals shutting down and doctors being unable to find a job, it's long overdue for them to finally come back down to earth. I can't imagine a quicker way to reform healthcare than that. It's probably our best case scenario right now with a non-functional government.

Student loans are a bit more complicated, but yes absolutely I expect to see massive defaults hurting the federal balance sheet and for schools who failed their students to start shutting down. This isn't a bad thing, it's healthy.

How would students defaulting on their debt cause the schools to shut down? They get the tuition up front.

Student loans would presumably not be given if the degree program isn't able to get you a "good" job after finishing it.

Nothing wrong with getting a worthless degree: if you are into art you should get an art degree. However you should first get a good job that pays your bills and pay for that degree from your own fun money. As a society I help with your basic education because the value of everybody knowing how to read and do math makes it worth it.

>Student loans would presumably not be given if the degree program isn't able to get you a "good" job after finishing it.

Er, that's pretty much how we got here, they have been and are being given. Government-backed student loans have no requirement that they be spent on degrees that are lucrative.

That can change.

The implication that government is choosing which degrees are worthwhile is scary...

>If a large enough percentage of people bail on their student loans/medical debt then eventually dozens of predatory banks and "medical billing" companies will go out of business and then we can actually start to change things.

Pretty naive view of the way things work. The more likely outcome is that those in need will be denied service in the future, either medical or financial. Or do you think we should force employees and medical staff to service people who will not pay for said service? How will that work?

I realize the entire situation is a mess, but simply bailing on your obligations to "teach these people a lesson" will backfire. Case in point: you think the bank is hurt by your defaulting your $50,000 in obligations? They have a lien on your personal assets, and the number is insignificant to the size of their balance sheet.

How is this a valid move. You bought a service and failed to pay for it. How is this different from predatory payday loans. Sure it is on a larger scale, but do you agree that if you get a payday loan you can leave the country and not pay for it.

K-12 education is a right in the US, you get to go to school for free. College is, for better or worse, a paid for service. You chose to go and you signed the paperwork.

Medical is a bit different, you certainly didn't ask to have medical conditions (most of the time). So I can't bundle the healthcare system with the Educational systems when it comes to paying back debt.

Lenders should be pricing in the risk of not being paid back, aka figuring out the interest rate, which is their job.

> eventually dozens of predatory banks

The government completely took over student loans in 2010.

No they didn't. Source: took out a student loan last year.

Yes they did.

Student Loan Overhaul Approved by Congress - https://www.nytimes.com/2010/03/26/us/politics/26loans.html

Ending one of the fiercest lobbying fights in Washington, Congress voted Thursday to force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.

The revamping of student-loan programs was included in — if overshadowed by — the final health care package. The vote was 56 to 43 in the Senate and 220 to 207 in the House, with Republicans unanimously opposed in both chambers.

Although private banks will no longer be allowed to make student loans with federal money, many will continue to earn income by servicing those loans.

The Congressional Budget Office said the direct-lending approach would save taxpayers about $61 billion over 10 years. Roughly $40 billion of the savings will be redirected to higher education. Education programs will get an additional $10 billion from the health care package.

But who pays? The fools who bought the loans, or the public who mostly paid theirs (if they ever took any to begin with)? I suspect that everyone will pay, despite a minority of people benefiting, that hardly seems just.

I don't think it's predatory, I think the lendee is a fool being led by the blind; but does that make it right for it to suddenly be everyone else's burden?

People make dumb decisions that affect only them all the time; when is it suddenly my business to subsidize people's personal mistakes? Are they even mistakes at all, if the debt is forgiven without prejudice? I don't want to live in a world where taking a loan you have no intention of paying is not a mistake.

Also, AFAIK a huge majority of student loans are held directly by the Federal government (which is the other reason I fear "forgiveness" is on the horizon); assuming you don't mean to call the Federal government a "predatory bank".

> taking a loan you have no intention of paying

I'm not sure what sort of people you've run into, but I've never met a single person who ever took any loan out with no intention of paying on it.

The problem is "intention" and "ability" aren't inextricably linked. My brother has defaulted on his loan; he agonizes over it every single day. He has every intention of paying, but he's left with 32$ a month after rent, the cheapest, most basic of utilities, rice, beans, and the occasional leafy green, and health insurance. His apartment was 43 degrees during the winter because he couldn't afford to heat it.

32$ isn't going to pay down his debt, and there's nothing he can currently do to change that. I'm certain he'd LOVE to. There's nothing he wants more than to keep his current standard of living, but make enough money to pay his debt off (edit: and do note that his current standard of living _sucks_).

I find it a bit disconcerting that your mind immediately goes toward intention and doesn't even seem to consider ability. I'm certain there are those who take out loans with no intention to pay on them, but much like the welfare queen propaganda of the 90's, it seems like that specific problem is blown entirely out of proportion of the reality.

You're making a counterpoint to something I did not say.

I'm saying that taking the loan is no longer ever a mistake, because you can expect that you will never need to pay, if you wait long enough: hence "where taking a loan you have no intention of paying is not a mistake".

> the cheapest, most basic of utilities, rice, beans, and the occasional leafy green, and health insurance

I'm sorry to hear that, I suspect that I'll need to be housing my brothers some time in the next decade too, so I can feel that. Is there some problem with SNAP and Medicaid that's preventing him from taking them? Is housing just so costly where he lives that he's insolvent despite not being below the "poverty plus" lines for those programs?

Correct me if I'm wrong - I think I now see the disconnect we (or better put, I) had and I'm sorry I didn't see it before.

If there's no financial or legal penalties for discharging the loan debt due to bankruptcy, people may be more apt to go that route, disrupting the entire lending system.

If that's right, and I read the rest of your comment in that context, you're basically lamenting the fact that there's no outrageous material downsides for people being taken by duplicitous lenders and education institutions. And if that's also what you meant, then I agree; that's certainly a problem that would need to be solved as well if blanket debt forgiveness were to occur. That seems to be just as untenable a situation as the one we have now - and by my view, the situation we have now is wildly untenable and is going to hobble our entire country and economy for decades to come if we don't change _something_.

I'm going to stop riffing on "and if"s, though - that's just doubling down on the same mistake I made earlier. My apologies!

Yeah, sorry for not making it clearer at the outset. I'm coming from the perspective of somebody who is building a product to (among other things) help people prevent household debt from ruining their lives (starting here in Canada); and I've given out a lot of loans in the family to prevent debt spirals, so I definitely feel for people in this position.

At the same time, my personal experience is completely different. I was difficult in primary school, probably because of family issues. I dropped out effectively before high school, and started doing contract work (and eventually full time work at 17) on software. I got my start based on little more than natural confidence and many hours of reading Wikipedia and StackOverflow from about age 8, eventually on my first personal computer, which I bought at 14 with about 95% of the money (I always begged for cash instead of toys and hometown giftshop trinkets) I'd received in my life. After biking about two hours a day just for work (rain or shine, usually rain it seemed), I decided to leave home to be closer to work and farther from my mother, and I was lucky enough to have a friend who would let me crash on his couch for a few months.

Even with the rather extreme subsidies here in Ontario, I couldn't really afford to take time to go to school; I could now, but I probably don't need to. That's basically why I feel that it would be unjust if I moved to the U.S. (I'm a citizen) and that started immediately with paying off other people's loans that the federal government gave out like candy, for something I couldn't even afford to buy if it were free.

Side note: I was given my first student loan when I was 17. I was the only signatory.

I'm still not sure how that was allowed; at least it's an amusing anecdote, though.

> I'm sorry to hear that, is there some problem with SNAP and Medicaid that's preventing him from taking them? Is housing just so costly where he lives that he's insolvent despite not being below the "poverty plus" lines for those programs?

Nailed it! Seattle is not an inexpensive city. Before expenses he's actually doing quite well for himself, in theory - especially compared to federal poverty guidelines - for a college drop-out. But those guidelines that are probably pretty feasible in West Virginia or Kansas are so far beyond useless to someone in a larger metro, it's kind of insane.

So no dice on SNAP or expanded Medicaid (Apple Health, in WA). It's a shame because without the insurance premiums, he'd actually be able to make all of his loan payments, even without extending them or doing an IBR type thing.

I know it's probably not the first time you've heard this, but moving just slightly out of Seattle (I'm assuming the family ties are pretty damn important, I know it's a huge part of why I'm still in Ontario, so no big moves) could have a huge impact. I recently moved in to my mother's house because I don't want to live the ramen life again while working at a startup. She was, in turn, able to afford this place because it's in Hamilton, ON and not Toronto.

To my eyes, it seems that high-minded zoning and planning (especially insidious nonsense like minimum house sizes, lawn setbacks for bungalows that would be enough for a five-storey building), and the mindset comes with, have made and kept housing extremely expensive in major cities in the U.S. and Canada. I think you can do a lot better outside of Seattle, with the main bottleneck being transport time (and possibly not being able to stay with the same company).

I know it's a cliché, but I think a lot of people will find that they like the slightly-less-exciting life in a second-tier city once they're there; I know I prefer being in Hamilton to being in Toronto in many ways. On the flip side, I know somebody who seems to really prefer living in Seattle despite working in Redmond. These are, of course, the more privileged thoughts that you can have about where you live.

P.S. if you reply and don't see anything pop up; I'm probably not just ignoring you. Hacker News has this health-promoting but annoying feature of rate limiting submissions for a given user. When I hit my limit (which is often), it often takes about four hours (or possibly more, dunno) to clear.

Oh, I feel the move; we're actually from rural Appalachia. He came to Seattle because I'm here and I supported him financially for close to a year until he finally got his feet even remotely under himself. The wilds of Western PA are a rough place to get a start for anyone, and not having a college degree makes it even worse. He spent 4 years trying to find a job other than being a cook at a crusty hole-in-the-wall dive bar with no luck. I convinced him the opportunity was at least better out here, and he made the leap. His wage went up 230% from before and he's closer to 30 hours than the 18 he got previously, so it's far more lucrative, but the COL is also at least 400% more (you can rent an apartment where he lived prior for about 350-450$ a month). Without public transportation of any sort, though, you also need a car, insurance, gas, blah blah blah - and the ~550$ he made a month gross just wasn't going to cut it.

He really is better off here, but he'd REALLY be better off in a second tier city - exactly like you said. That's hard to pull off when you don't have a couch to crash on for a while while you get started, though. At this point he's tried literally every option besides hitch hiking and being homeless, and he isn't too keen to try that; at least now he has a roof and rice and beans, you know?

We could slice 10% (maybe less) off the military budget and pay for college for everyone, forever. This "who pays" nonsense is just that: nonsense.

I'm sure the Navy would find a way to make do with a mere nine aircraft carriers.

If you're worried about freeloaders getting welfare they don't deserve then slashing the insanely corrupt grifting that goes on every day in DHS/Defense should be your top priority.

> We could slice 10% (maybe less) off the military budget and pay for college for everyone, forever.

According to Wikipedia, 'the approved 2019 Department of Defense budget is $686.1 billion.' In the 2015–2016 academic year, colleges and universities spent $559 billion (https://nces.ed.gov/fastfacts/display.asp?id=75). So 10% of the military budget would pay for a little over 12% of collegiate spending.

That $559 billion is including all the money the government (states, mostly?) already gives to schools that they then spend. GP was talking about (I assume) covering tuition, which is estimated between $50 billion and $75 billion from the articles [0] I can find. That lines up with ~10% of the military budget.

[0] one example: https://www.npr.org/sections/ed/2016/07/28/487794394/hillary...

> In the 2015–2016 academic year, colleges and universities spent $559 billion

Talking out my nether regions here - but is that broken out in any way?

Basically - I'm wondering how much of that spending is on actual academics vs non-academic activities?

Perhaps we could cut back on entitlements , too. That would bring bigger savings and help with the governmental fiscal responsibility thing. Lower debt would let people keep more of their money to spend on making their lives better.

Entitlements are exactly that. You, the taxpayer, paid for them, you are entitled to use them. How about we cut the things we pay for but aren't entitled to use, like the military.

Fun thing about "personal fiscal responsibility" is that almost everyone preaching about it when talking about entitlements have either never been poor in their lives or are grifters looking for acceptance from those who have never been poor in their lives.

The point is to make life easier for people, not harder.

I was very careful not to take on student debt. I personally chose a low-cost college and took as many first and second year required courses at a community college. I would be very angry if I had to bail out people who lived on The Farm, or in an Animal House frathouse for 6 years.

This seems like one of those articles where they cite a handful of cases and then draw a big trend line from it. The article says no one tracks this which means it could easily be only a dozen or two people a year at most.

Interesting idea though.

> "He then went back to school to pursue a master’s degree in comparative literature at the University of Colorado Boulder."

So:

* Get degree

* Struggle to find steady/career employment in a job market still rippling from a massive recession

* Decide the best ROI is to go back to school for a Master's in Comparative Literature

While I'm totally cognizant of the systematic and pervasive failures of the modern college lending system... I don't think the system is totally to blame for this one.

Four years of college AND working experience and you still can't make a basic CBA for how you spend your time?

I believe in personal responsibility as much as the next guy, but my generation (i'm about 29) was heavily taught two things by our parents 1)Having a degree is better than not having a degree and 2) You should pursue your interests and passions above all. I am thankful that i became interested in computers at a young age and make a decent living but that guy could have totally been me if i had been interested in something unemployable. Mental models that we are taught about the world growing up have a huge influence on our behaviors as we venture out into the real world. This guy might have doubled down on his "follow your passions" by getting a unemployable masters degree.

Frankly, his moving to India is a net gain for the US.

As a software developer, my income has quadrupled since graduating with $25k in student loans from a state college. It was totally worth it for me.

However, everyone should do the research to understand their career outlook before going to college. If a profession had low wages, low growth, and/or low demand, I’d be very wary of taking out any student loans to qualify.

People should also research what type of college they will need to graduate from in order to achieve their most likely career outcomes. Paying significantly more for private or out-of-state tuition probably won’t be worth it, unless you know for a fact that it will be.

Finally, prospective students should critically evaluate their own ability to achieve the grades necessary to graduate. My own degree required nothing more than a C average, which I knew I could achieve.

There's strong demand for software engineers now. We can enjoy it while it lasts. But, if you look at some of the latest dev surveys, you'll see there's a ton of fresh talent entering the work force and it's only a matter of time before they become mid-level and senior (5-10 years). At that point, the supply of engineers will far exceed the demand and the same thing will happen to engineers as any other white collar profession.

> But, if you look at some of the latest dev surveys, you'll see there's a ton of fresh talent entering the work force and it's only a matter of time before they become mid-level and senior (5-10 years). At that point, the supply of engineers will far exceed the demand and the same thing will happen to engineers as any other white collar profession.

While I don't disagree we could see a demand contraction, I think your assertion is based on a tenuous premise at best: tenure == competency.

I've had the misfortune of working with many "senior" engineers who struggled with basic technical concepts and even more basic reading comprehension.

The demand for great engineers will always be there. What the market will be flooded with is mediocre ones who have improved nothing but their title in the 5-10 years of their career

working in the bay area i've never met any software enginer like that, senior or otherwise.

What cities/type of companies to you find "senior" engineers who struggle with basic technical concepts?

The high-achieving SF market may be more likely to select against it.

IME it's much more common in 3rd-tier/mid-market tech companies, or even higher-profile companies where tech isn't the primary operating vertical, and locale != Bay Area.

Companies that can't compete on engineering culture or compensation are naturally going to attract less talented engineers, and there will be a wider variance of skill across the engineering org as a whole.

He struggled to come up with the $300 a month he owed upon graduation... He then went back to school to pursue a master’s degree in comparative literature. He brought home $1700 per month and lived with his mother but still couldn't afford to pay off 20k.

He couldn't afford to live in the (expensive) city of Denver so he moved into a concrete house in a jungle in India where some toilets are holes in the ground you squat over and restaurants serve spoiled goat meat. He considers his standard of living higher in India.

The above is 90% copy/pasted from the article, just shortened and summarized.

Maybe this sounds harsh but I don't think he will be missed. Writing off 20k seems like a deal for the US, enjoy him India!

The thing is, there's plenty of blue collar waitress/waiter/cook style jobs. Here in the bay area almost every cafe and restaurant has a now hiring sign. But, white collar jobs that require degrees are exceedingly rare. amongst my MBA friends (producers, managers, analysts, etc), their facing an unemployment rate of over 30%!

What this indicates is a vast oversupply of workers with degrees. We've just got too many people running around with degrees and not enough blue collar workers.

“Here in the Bay Area”

Sweetheart, your area has its own special problems.

You might want to sit down with PadMapper or some other rental site and see what’s available in the Bay Area for a price someone getting paid $11/h (California’s minimum wage) can afford. Especially when you consider there’s a general trend towards never giving anyone enough hours to qualify as full-time.

Believe me I know. They'll never be able to fill those 11$/hour roles without paying more. That's why local inflation is so high. Anything service related becomes increasingly expensive (child care, plumbing, etc). Child care costs 1800$/mo around here vs 600$/mo in other big cities more affordable. the cost of housing raises the eventual total COL

Ask someone in the trades what they think of their kids going into the trades. Everyone in those jobs are busting their ass so their kids don't have to take a job like that. Those jobs never pay enough and never pay enough compared to the amount of work involved.

Most jobs want cheap, reliable, and productive labor. And you can only get 2 of those. An employee that can hit all 3 is not sticking around if they can get paid better elsewhere. And that is why you see those unfulfilled help wanted signs.

Those signs exist because they can't find workers because said workers can't afford to live there!

Interesting article, yet not a single mention of what area of study and degree each of those 3 examples received? That is a key piece of information, I wonder why it was left out.

A previous version of the same story says:

- one in philosophy

- one in communications and history

https://www.cnbc.com/2018/10/26/he-moved-to-a-jungle-in-indi...

all of a sudden I am not as surprised

I recently toured a state university with my son. The rec center had a lazy river, hot tubs, weight room, climbing wall, etc. It was all very new, and looked very expensive.

If you have high student loan payments and low income, income-based repayment is essential.

However, companies systematically (and probably illegally) direct borrowers toward expensive deferment and capitalized interest rather than income-based repayment.

Moreover, while traditional payment terms might offer a 30 to 90 day grace period, student loan companies routinely declare a borrower "delinquent" for being one day late, triggering aggressive collections actions as well as credit damage, and or course vectoring borrowers into the aforementioned deferment/capitalized interest.

And of course with income-based repayment you may very well be making student loan payments for the rest of your life.

Though checking a student loan web site recently it did say that you may be eligible for loan relief if you have recently "become deceased."

Good to know.

Not everyone needs to go to college and a student thinking about enrolling really should look at the likelihood of being able to get a job that pays well enough to pay off the student loan.

I know so many history, art, English, and various other liberal arts majors that have $50k+ in debt and are still scraping by. They can't find a job, can't pay off their debt, and are barely surviving.

College is an investment in your education. I don't think this is taught enough in school.

The Federal loan system is also the problem. Universities get their money up-front and don't care if the student can pay it back. They can continue to increase 'administrative' costs and the students get stuck with the bills and have virtually no risk.

The risk needs to be shifted to the University. Shitty, useless, majors would be gone pretty quickly.

> He struggled to come up with the $300 a month he owed upon graduation

Don't most loan providers have income based repayment plans? You can just tell them "I can't afford this" and provide pay stubs. I think 15% of take home is standard.

The government, which owns 92% of outstanding student loan debt, has income-based repayment. It's 10% of your income after subtracting 150% of the federal poverty level.

“Any rational person who learns that people are fleeing the country as a result of their student loan debt will conclude that something has gone horribly awry with this lending system,”

I agree. The current system is built to shovel money into ever-growing college bureaucracies. Kids are being given loans without a fair chance to repay and are being encouraged to live lives they can't sustain.

The whole thing needs a good reset. MOOCs might help.

One thing I strongly oppose: foisting the payoff onto the entire population (taxpayers). That makes non-college people (who make very little) foot the bill for this boondoggle.

Where's globalization when you really need it?

What if these US students could have earned an equally useful degree for one quarter as much money by attending an accredited college in China, India, Ukraine, Mexico, Russia, Ecuador, Thailand or some other nation where all the costs are lower?

They could have earned an equally useful degree for less than a quarter of the price in some European country like Germany or Finland where university is really cheap even for non-citizens.

I've seen several stories about this, and people usually become teachers in other countries. I think many of them picked their degrees with an intention of becoming a professor, only to find that job unobtainable.

So why are they unwilling to enter the US education system, which has been suffering from a shortage of teachers for years. Are teachers in these other countries better paid? Is the certification in the US that much harder? Or is our public education system so shitty that virtually no one is willing to return after high school?

> Are teachers in these other countries better paid?

From having some family that were and are teachers here in the states, seems like the answer is: yes.

There's also the general lack of respect that American society gives teachers.

When I was fresh out of college (about 6 months), I interviewed for a teacher's assistant in the computer lab. The job only paid $12,500 a year. The school was in a low income area and had a high rate of student on student altercations (they never told me about any student on teacher altercations). I really wanted the job (this was 2007 btw) but didn't get it. I don't know who could stand to work for that little unless they were really loved teaching children or needed money.

check out this high school district - finally a superintendent paving the way for students not to fall into the college student loan fiasco: https://abc7chicago.com/education/high-school-program-helps-...

Don’t know why we get excited about subsidizing the poor choices of the 40th percentile income earner instead of the 5th percentile earner.

Really, good for them. They recognized the problem in front of them and did something to fix it.

The Bush administration that pushed making student loan debt not dischargeable in bankruptcy has been absolutely ruinous.

I have a higher standard of living in a Third World country than I would in America, because of my student loans.

In a way, that's really sad, that we can't do better here.

I think most people do, do better. 3 cases of people getting very questionable degrees and then running on their loan obligations does not make a trend.

here's a great example of a school district doing something to help kids not get into debt: https://abc7chicago.com/education/high-school-program-helps-...

what do you guys think?

How long until people with student loan debt are denied passports

Probably they are working on this already.

400 dollars as a student repayment of the loan seems small, especially for a single person with no family. There are people working delivery jobs and even off books making way more than that money and yet, going to school in the evening and buying cars and taking loans when necessary. I can tell from these stories that these people hate the struggle, and although college graduates, they never passed the school of hard knocks, as they gave up too easy on America because they couldn't find a job in their city or field, but why not move to another city or expand horizons? I understand if the loan was a colossal 100k, but 30k is quite acceptable. Also some students go study in China to avoid paying for college, so how come the thought never crossed their mind, and working as an expat is a choice, not a last resort.

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