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Comment by twblalock | Hacker News Reader

> But that whole "I'll get a loan to get a degree" is a tool for servitude. US really needs to get out of that.

You might be surprised to learn that the average student loan balance on graduation in the US is about $30k. That is actually a bit less than the average price of a new car sold last year, which is about $37k.

That is not a life-crushing amount of debt. It represents 4 years of college education for the price of a Toyota Camry. Why is it that we think that it's OK to spend that much money on a car, but unconscionable to pay that much for four years of college? Keep in mind that unlike car loans, college loans have public service loan forgiveness, can be postponed when one is unemployed, and have income-based repayment programs. If you don't pay for the Camry it's gonna get towed.

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You have argued that the average student loan debt is not “life crushing”. This is a bit absurd. No one would argue that buying a brand new car for $30k fresh out of school is wise financially for the typical college graduate. Whether it crushes your life or not, it is very ill advised.

You have also not addressed the half of debtors who owe more than the average. If the average is so high just think of the figures in the most indebted quarter which is necessarily one million persons per year approximately in the U.S.

There is a reason student debt cannot be discharged through normal bankruptcy. It is for many a horrific and crushing burden.

You can declare bankruptcy on the car loan. You can't on the student loan. Because of this, before you take out a car loan, the bank actually checks on how likely you are to pay it back. They don't loan you a $30k to buy a new Camry if you're 17 years old making minimum wage. They will happily loan you that much and more to go college even if you are, because they know you'll just be in debt forever no matter what.

We could fix the college loan problem practically overnight by making the loans dischargeable in bankruptcy. Lenders would be on the hook for the risk they're assuming, as they should be. Universities would have to lower tuition because there wouldn't be an endless firehouse of money pointed at them to pay whatever they want. It would fix a lot.

> They will happily loan you that much and more to go college even if you are, because they know you'll just be in debt forever no matter what.

They also give you income-based repayment programs and forbearance if you lose your job. I have never seen similar programs for car loans, or credit cards, or rent, or mortgages.

Of course they do, they want you to keep racking up fees and interest so you end up paying even more. You'll pay until you're dead.

They don't have programs like this for other loans because they don't need them. If they look at your finances when you apply for a mortgage and think you'll need an income-based program, they don't loan you the money.

If something happens and you can't pay, they can repossess your car or foreclose on your house to get some of their money back that way. For unsecured debt, even if they don't have special programs, you can usually negotiate a settlement if you can't pay the whole thing. They'd rather get something than nothing. And again, you can discharge it in bankruptcy, so that gives them some incentive to work with you. For rent, there are income-based rent assistance programs in every city I'm familiar with, not sure how it is where you are.

We wouldn't need these programs for student debt if you could declare bankruptcy and have the loan discharged that way. It wouldn't be something you would do lightly, but the threat of the possibility would incentivize the banks to make sure that paying the loan is less of a burden than declaring bankruptcy.

> We wouldn't need these programs for student debt if you could declare bankruptcy and have the loan discharged that way.

Ok, then only rich people get to go to college.

Student loans cannot be discharged because they are not risk based. If they were risk-based, the only people who could qualify for them wouldn't need them anyway. 18-year-olds don't have credit history, and most of them don't have income either.

You seem pretty hurt about voluntary loans that have really, really good repayment programs -- better than any other kinds of loans that exist. Why shouldn't people be able to borrow to go to college under those terms? Keep in in mind that they have no other options, and they cannot escape into an ideal world where college is free, and they cannot legally force their parents to give them money. For a lot of people, this is a fantastic deal and it's the only way they will ever go to college.

Of course they're risk based. It's just that all the risk is borne by the borrower, not the lender. Take out a bunch of loans and can't get a job? Too bad! You still have to pay your loans anyway. Your risk didn't work out.

> 18-year-olds don't have credit history, and most of them don't have income either.

Yes, this is exactly why in every other normal circumstance, lending them money is a bad idea.

College used to be something where you could reasonably pay tuition with a decent summer job. If there is not an infinite supply of money to pay tuition, tuition will have to be lower. This will make it more accessible, not less.

> College used to be something where you could reasonably pay tuition with a decent summer job.

That was only true for a few decades in the late 20th century, due to massive state subsidies covered by taxpayers, many of whom did not get to go to college themselves.

I guarantee you that college will not get cheaper if the student loan money dries up. The only thing that will change, is that only rich kids will get to go to college.

Even public schools are building luxury student housing on campus. They aren't going to cut back, because they will always have enough rich kids and foreign students to cover the cost of running the place. In-state students are not who pay the bills.

We don't live in a socialist country. If we hope for a utopia we will only lock non-rich kids out of college. If you want normal people to be able to afford college, they need access to loans, which fortunately have flexible terms and, again, amount to about the cost of a new car. It's hardly a dystopia. It's a realistic accomodation to a capitalist society, and a college loan is one of the least burdensome loans those students will undertake in their lives.

And taking on massive student loan debt (also government subsidized) that you spend the majority of your adult lifetime paying off is only true for a few decades at the end of the 20th and beginning of the 21st century. I don't know why you're married to this concept as the end-all, be-all only option for education financing, especially when there is an endless flood of people saying how it personally harmed them.

There are absolutely not enough foreign students to keep shoring up US universities. Many mid and lower tier schools are already experiencing cash flow problems. Many should and probably will close.

There's no law of nature that demands you have to spend $40k a year to have someone tell you what Hamlet is about just so you can be qualified to come up with a new marketing campaign for a soft drink or whatever you end up doing. Most jobs don't require anything you learn in college, so why are we forcing kids into a lifetime of indentured servitude just so they can get a degree?

> And taking on massive student loan debt (also government subsidized) that you spend the majority of your adult lifetime paying off is only true for a few decades at the end of the 20th and beginning of the 21st century.

How much do you honestly think the average student takes on? What about the median?

You mentioned $40k/yr to learn Hamlet. The figures I am looking up show less than $30k total over 4 years of education. It is pretty hard to believe that can be a lifelong debt or result in "indentured servitude", as you put it.

I don't get how you consider $30k "not a big deal". That's just the average, many people owe a lot more than that.

The median entry level salary is $41k. That means the average student is coming out of college owing 75% of their income. That is ridiculous.

According to this [1] the average payment is $393. If you're making $41k, that's $3416 per month gross, maybe $2300 after taxes and 401k contributions. Good luck finding an apartment in a city with any jobs for less than $1k per month. That leaves you $1300, with a $393 monthly payment you're spending about 30% of your monthly disposable income just to service debt. That leaves $800 for food, utilities, transportation, saving, going out with friends and having some semblance of a social life, dating.

It's not impossible, but don't pretend a nearly $400/month payment is not huge burden for someone in that situation. If they're smart and careful, yeah, they can manage it, but if not, or if they have some bad luck, get sick, any sort of financial trouble and they're suddenly in a huge hole, with no savings and an inescapable debt. The forbearance programs are a joke. Fees and interest continue to accrue and people come out of them owing double what they did when they went in.

You can't say "Oh it's just a Camry!" no sane person would recommend that anyone take out a car loan for 75% of their annual income.

And that's assuming they even finish school and get a median level job. It's the median, so 50% of people are earning less and are even worse off.

There are knock-on effects to the rest of the economy. People are delaying buying houses (if they can ever afford to), having kids. They can't afford to move or take risks, start businesses. What is it going to look like in 20 or 30 years when an entire generation has grown up stunted by this burden?

[1] https://www.forbes.com/sites/zackfriedman/2020/02/03/student...

You are taking a loan assuming:

- You will graduate - Your diploma will get you a high paying job

If either of these assumptions fail, you are back to square one, poorer than someone who own nothing.

Then graduate, and major in something that will help you get a job.

I needed loans, and I made good decisions with my education, and I graduated -- should that opportunity have been taken away from me because other people did not handle it well?

Didn’t the OP do those things and still end up homeless?

So? Should the millions of students who rely on loans have their opportunity for an education taken away because of that?

You seem to be assuming that student loans are the only way to pay for that. In the past most of the money was given as grants rather than loans.

No, I’m saying there’s no single way to 100% prevent homelessness

People are not average. How big is the spread?

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