Comment by wonder_er | Hacker News Reader

Comment by wonder_er | Hacker News Reader

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> Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection

Millenial here. 100% agreed with this. Feels like a big blind spot in the boomer crowd. They don't seem to see the seething, roiling, overpowering resentment their entire generation is receiving from many, many people that currently don't have much power in society.

A politician wants to win office, and lower the probability of a civil war.

Recognizing politicians historic-low approval ratings, a politician would propose something radical:

1. Make student loan debt equal under the law to any other form of debt

2. Implement a national zoning system similar to Japan's zoning[0], eliminating the housing crisis, rolling back a century of racist and exclusionary laws that ruin lives and act as an enormous drag on everyone in the country. Hundreds of millions of Americans are now richer and much more at peace with each other.

Said politician would instantly win the popular vote. Unfortunately, these policy positions are at odds with power brokers in the USA, so no politician will ever seriously propose these policies, or they'll get to office, and be informed that these policies are no longer going to appear in their speeches.

[0]: https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...

If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change.

From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future income and no underlying assets that the bank can put a lien against in case of default. The problem is not the loans, it’s the whole higher education system that needs a total overhaul including the utility and price of higher education. The current system is based on the idea that many people’s parents encountered where a good summer job and maybe a bit of savings was more than enough to pay for a decent college degree!

Student loan treatment only changed in the mid-noughties (under GW Bush), how do you account for the existence of student loans before that?

exactly, he's assuming everyone will declare bankruptcy if they can, which is untrue. Most people declare bankruptcy way later then they should have and suffer accordingly. People don't want to walk away from debt, they just don't have the money.

Student loans are stupid anyway. Why build this system that is basically a shadow tax. We should be able to figure out a way to pay for this and collect the funds with regular taxes.

There were fewer loans, by $ amount - https://research.collegeboard.org/trends/student-aid/figures...

Exactly. I started college in 2001 and while more pricey than it had been, I was able to secure loans at like 0% during school and then like 4% after. I’m not aware of the numbers for other years, but this seemed fair.

Then the loans were sold and came out at like 16%. This was painful. Not sure how that happened.

> If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change.

Right, and an investment in the public school systems and community colleges would make them more affordable. If what the government wants is more lower income families in higher education there are many ways to achieve it. The current system encourages the astronomical increase in inflation adjusted cost of education.

> From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future income and no underlying assets that the bank can put a lien against in case of default. The problem is not the loans, it’s the whole higher education system that needs a total overhaul including the utility and price of higher education. The current system is based on the idea that many people’s parents encountered where a good summer job and maybe a bit of savings was more than enough to pay for a decent college degree!

This is literally what governments and regulation are for -- do things that are not profitable in the short term (ex. inventing GPS, the internet, etc) for strategic advantage.

In 10/20/30 years, the countries that do the best will be the ones with more intelligent/flexible lower and middle classes -- we can already see rapid cannibalization of industries happening on a large scale.

What would the effects of changing the student loan system be? I assume you mean to increase the creditor's risk to levels comparable to other types of debt. Personally, I'd expect that to result in higher interest rates for student debt, and more stringent eligibility requirements. IOW, a higher barrier to entry to education.

Maybe that would be good, it depends on how the price of education would react, and in whether a high level of education is seen as a positive or not.

If you want to make student loans more accessible, the trick is not to stimulate student loans be legalizing the loan-sharking of students. This way you are just encouraging students to take a bad deal. You are making the system more accessible by offering really bad options.

If the reasoning is "It is a good idea to have high education", then stimulate that directly. At the very least, have government-backed or government-supplied loans. And ensure those loans have reasonable terms.

I know australia has an interesting system.

In my country (the Netherlands), student loans are given by the government. They are hard to get rid of, _but_ the repayment terms are very very lenient. Very low interest rates (either 0% or the current 10 year government bond rate); a maximum monthly payment of 30% of what you make above minimum income; debt forgiveness after 30 years; the ability to pause repayment for 2 years in total.

I am not a big fan of this system (I still think it is too burdensome on students) but it sure seems a lot more reasonable than the US system. Even though this is also a form of debt that cannot be cleared by bankruptcy, the generous repayment terms really help. The trick here is that the government is willing to take a slight loss (through the 30 year debt-forgiveness) on repayments. Though that the moment, since our 10 year bonds have negative interest, the student loans might be making a profit for our government. Still I am not going to complain about a loan with 0% interest.

> In my country (the Netherlands), student loans are given by the government.

Over 90% of American student loans are also issued by the federal government.

My daughter got a scholarship that covers her tuition 100%, so she only needed loans to cover room and board. Federal oans were still not enough to cover this, in one of the least expensive state schools. My credit sucks and we didn't qualify for a cosigned loan to cover the extra. Luckily the school offers a reasonable payment plan and I'm taking advantage of that.

She is just living in a dorm with a standard meal plan. Between this extra out of pocket cost and the books, I can't see how a lower income family could afford college.

> My credit sucks and we didn't qualify for a cosigned loan to cover the extra.

I assume by that you mean the parent PLUS loan? Yeah, the federal loan limits outside the PLUS program are pretty low, especially for underclassmen. I don't have any statistics, but I suspect most of the Department of Education's newly-issued debt (by dollar amount) is in PLUS loans since those cover the full cost of attendance.

hmmm, I did not know this. What are the terms offered?

Do you even know anything about what you’re talking about?

A lot of student loans in the US are also backed by the government. So obviously this isn’t the solution.

Making money easier to get simply increases the “supply” (or rather, increases the buying power of the students) which basically allows colleges to keep increasing their prices with no increase in quality. If instead loans were given by private creditors, believe me, the quality (in terms of job prospects and earning potential) of the specific college and specific course that a student will study would quickly become very important. No more “social media marketing” or “feminist history” courses costing 50k per year.

What are you implying with "these policy positions are at odds with power brokers in the USA"? The politician you describe would most likely not win the popular vote because the most important voting base for most politicians is the 50+ crowd (in the US and most other Western countries) and this demographic wouldn't care too much about these issues. It's really a generational conflict.

I'm surprised #1 isn't proposed more. It's not really even that radical when you consider that the Overton window now includes completely eliminating student debt.

Source for claim?

This claim?

> the Overton window now includes completely eliminating student debt.

I'm referring to the fact that Bernie Sanders, who came close to being a major party candidate, ran on canceling student debt.

Wikipedia says "According to Overton, the window frames the range of policies that a politician can recommend without appearing too extreme to gain or keep public office given the climate of public opinion at that time."

Bernie certainly did not gain new public office in 2020. I therefore think Bernie's primary run does not demonstrate the window's shift on canceling student debt across America. Sure, he came closer in 2020 but no cigar.

So long as Bernie keeps his Senate seat, I agree that the Overton window in Vermont now includes cancelling student debt. We won't know for certain unless he is reelected there.

If you want to offer student loans to people with low incomes (as almost all students are and many of their families also are), you’re not going to be able to offer loans with traditional finance-based underwriting standards. If someone can only qualify for a pre-paid credit card or payday loan, is a lender going to step up and offer $100K+ in education loans?

I don’t want higher education open primarily to the already-wealthy. I don’t want to deny loans to students whose family will not co-sign loans for them, etc.

See my post above, that's already the case. I was able to setup a payment plan for the last part of my daughters tuition, about $100 /month. She had a scholarship for 100% of tuition and still couldn't get enough federal loans to cover room and board for the year at Purdue.

Luckily she also had some money saved for books, but there are plenty of families that couldn't afford this.

There are alternative, cheaper, forms of education. There's nothing wrong with somebody having to pay more for a better quality product or service. Using government to game the system just makes things worse for everyone (government debt, inflated prices, worthless degrees and indenture servants).

> I don’t want higher education open primarily to the already-wealthy.

I fully agree. I just think that providing cheaper capital to students (which is in effect what this enables) only has the effect of transferring more wealth from (the eventual earnings of) economically disadvantaged students, not less.

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