Student (College) Loans

[iacas]

Colleges have very little incentive to compete on price. College tuition and general costs way outpace inflation.

[StuM]

10 minutes ago, iacas said:

Except… that there doesn't, because student loans are one of the few types of loans that don't go away in bankruptcy. So banks LOVE to give them out, love to buy them from others, etc. And who takes them? 18-year-old optimistic college kids who don't understand what having to make a $1500/month payment or even a $500/month payment can mean when you're 22 and just out of school with a really lame degree and poor prospects.

Part of the solution could be to make student loans dischargeable or modifiable through bankruptcy.  Maybe Then the lenders would look for a reasonable expectation of repayment.  IMO knowingly lending more than can be expected to be repaid is predatory.

i agree young adults are often not equipped with the knowledge or experience to make some of these decision and that is where lending criteria should protect them, just like a mortgage lender evaluates ability to pay and collateral and setting criteria for student loans should help.  The trick is predicting future earnings potential of a degree.  I would not leave that to the colleges or lenders as they have conflicts, maybe the Federal Reserve could since they have a lot of information that may apply.

I understand lobby efforts, etc, are issues and I know that “Stuart’s Utopia” and “Reality” seldom exist in the same universe but I feel we can, and should, do better.  

[saevel25]

Pending the loan, the government is already covering some of the cost. Is this student loan forgiveness for private loans or just the federal student loans?

yea, I think the entire system needs to be reworked.
 

[StuM]

5 minutes ago, saevel25 said:

Pending the loan, the government is already covering some of the cost. Is this student loan forgiveness for private loans or just the federal student loans?

yea, I think the entire system needs to be reworked.
 

My understanding is the "Forgiveness" is for federally insured loans only.  This issue really needs to be addressed from 2 angles.

1) Find solution for current borrowers.

2) Fix system so future student loan borrowers are not in the same position.  My comments on lending based on expected earnings would address this, not the current borrowers.

[jshots]

4 minutes ago, StuM said:

My understanding is the "Forgiveness" is for federally insured loans only.  This issue really needs to be addressed from 2 angles.

1) Find solution for current borrowers.

2) Fix system so future student loan borrowers are not in the same position.  My comments on lending based on expected earnings would address this, not the current borrowers.

The solution for future borrowers is that school needs to be cheaper. The only way I see that happening is if people stop going and find other ways to be successful.

[StuM]

4 minutes ago, jshots said:

The solution for future borrowers is that school needs to be cheaper. The only way I see that happening is if people stop going and find other ways to be successful.

My suggestion to limit amount of loans based on the earning potential of a degree may force lowering some costs.  If a student can only get $20,000 in loans the schools will not be able to charge $100,000 unless the student can come up with the difference.

I agree that not all need to attend college.  My next door neighbor's son was not good in school but after H.S. got an apprenticeship and now he is a CNC Machine Operator earning good money.  Apprenticeships and Skilled Trades should be given as much consideration as college in deciding a person's future.

[iacas]

1 minute ago, StuM said:

My suggestion to limit amount of loans based on the earning potential of a degree

People change majors all the time.

[StuM]

Just now, iacas said:

People change majors all the time.

Ture, but easily addressed.  Change to a "Higher Earning" Degree you may get additional loans, change to a "Lower Earning" degree, you are on your own and still owe what was borrowed. 

[iacas]

8 minutes ago, StuM said:

Ture, but easily addressed.  Change to a "Higher Earning" Degree you may get additional loans, change to a "Lower Earning" degree, you are on your own and still owe what was borrowed. 

So college students would just declare that they’re in one major and then graduate with a different degree.

Plus, the same degree from different schools can yield different incomes. Even the same degree from the same school can yield different incomes.

I have a friend who went to Yale Law who basically does pro bono work and earns piddly each year.

This would require so much overhead and oversight and would have so many edge cases it’s not remotely possible IMO.

[jshots]

21 minutes ago, StuM said:

Ture, but easily addressed.  Change to a "Higher Earning" Degree you may get additional loans, change to a "Lower Earning" degree, you are on your own and still owe what was borrowed. 

Its in a sense its like you need a "credit" score but for your future self. I think that would be really hard to implement, but if you leave it up to the free market rather than the government stepping in it might work out but it would look very different. I imagine it would really end up with a bunch of different college paths disappearing. 

As a software engineer, I've see a huge shift, there are way more people coming into the field and still making very good money with no college education. I think a future with a significant number of options for career paths without going to college is knocking on the door right now. College Educated != Educated.

If the Biden admin really wanted to make a difference, they would pay people and companies to take on internships and apprenticeships.

Edited August 30, 2022 by jshots

[StuM]

15 minutes ago, iacas said:

So college students would just declare that they’re in one major and then graduate with a different degree.

Plus, the same degree from different schools can yield different incomes. Even the same degree from the same school can yield different incomes.

I have a friend who went to Yale Law who basically does pro bono work and earns piddly each year.

This would require so much overhead and oversight and would have so many edge cases it’s not remotely possible IMO.

All valid points.  I did say that my Utopia and Reality are not always in the same universe but still want to see something other than taxpayer bailouts.

[Darkfrog]

Not sure where my thoughts fit into this discussion.

I'm completely fine with all student loans being forgiven. Especially considering how student loan providers operate, and the age/maturity of the borrowers. Personally I think all education, including college, should be free, and students should not need to take on debt to educate and empower themselves.

I don't believe that attending college is only about education for the purpose of entering the work force and earning a lot of money. Learning for the sake of learning is really important, even if the subjects being learned are not linked to lucrative jobs after graduation. When I went to college, I wasn't thinking about how much money I might make when I graduated. I studied subjects that were interesting to me, and took on a major aligned with these interests.

Also humanity needs people to study language, arts, writing, history, culture, politics, literature, etc. (ideally without taking on debt). Maybe degrees and advanced degrees in these subjects don't lead to high paying jobs, but that doesn't mean studying these subjects is not valuable to society in many other ways.

[GolfLug]

1 hour ago, iacas said:

Colleges have very little incentive to compete on price. College tuition and general costs way outpace inflation.

I am ok with the forgiveness although have bit of a heartburn for not receiving my piece of the pie since I don't have any outstanding loans. But really the cost of college has continued to rise and there seems to be nothing in place to combat this.

 

1 minute ago, StuM said:

All valid points.  I did say that my Utopia and Reality are not always in the same universe but still want to see something other than taxpayer bailouts.

Exactly. Root cause not being addressed and the cycle will remain perpetual 

[Bucki1968]

I do know one thing, there are a large group of kids leaving high school who are not going to succeed at college. They are making through high school because of the COVID pandemic making their grades for two years mean nothing.  They are not only going to come out in major debt, they are not equipped to be successful.

[Double Mocha Man]

1 hour ago, Darkfrog said:

Learning for the sake of learning is really important, even if the subjects being learned are not linked to lucrative jobs after graduation. When I went to college, I wasn't thinking about how much money I might make when I graduated. I studied subjects that were interesting to me, and took on a major aligned with these interests.

Good points.  I've always held that college helps you to see the world scale "bigger picture".  It gives you an uncanny degree of resourcefulness.  And you gain an appreciation for things you might never have experienced otherwise.

[StuM]

7 hours ago, Darkfrog said:

I don't believe that attending college is only about education for the purpose of entering the work force and earning a lot of money. Learning for the sake of learning is really important, even if the subjects being learned are not linked to lucrative jobs after graduation. When I went to college, I wasn't thinking about how much money I might make when I graduated. I studied subjects that were interesting to me, and took on a major aligned with these interests

I am not against learning, but if taking a loan you need to be able to repay thus linked to income is necessary for me.  If you want enlightenment it needs to be out of your pocket, not mine.

[boogielicious]

18 hours ago, jshots said:

Generations raised to think 4 years of education after high school is the only way to be successful, encouraged to take that route regardless of cost. Compound that with a lack of financial literacy +

Government guarantees students will get loans

=

Schools jack up prices and make a killing

 

The government caused this stupid thing and schools and loan companies took advantage. They should pay for it, but we know that is never gonna happen. Wiping debt is a bad solution, but that US government is really good at bad solutions.

I think the long term solution  -  society needs to quit putting school on a pedestal. Education is absolutely important, but we don't need these schools to provide it. There are so many ways to get educated, and hopefully people and companies start embracing those. I see it shifting a lot as a software engineer, and I think other fields can do the same thing. 

Research how the GI Bill after WWII contributed to this. It lowered tuition for a significant number of years. When that dried up, costs then outpaced inflation.

I have a BS and MS in Chemical Engineering. My MS was paid for by my company otherwise I would not have done it. 

My son started college in business but did not like it and dropped after a year and a half. He’s doing well now and debt free. We didn’t like the choice at the time, but now we’re proud of his making a decision early. He still has an account to use if he decides to do continuing education.

[Bob M]

At my alma mater, Boston College, tuition, room and board was about $4,800 for my freshman year of 1974-1975. During the summer of 1974 I earned about $1,200 working for the County mosquito control driving a pickup truck. Let that sink in for a minute...I earned 25% of my tuition, room and board during the summer prior to my freshman year. Freshman entering BC in the next few days will be paying approximately $80,300 for the same thing. I highly doubt that any of them earned $20,000 during this summer!