Student loans used to be dismissible through bankruptcy. Problem is people would jack up their debt, claim bankruptcy at 22 and be clean and good before 30. This had negative effects on lending (the kids have no income, no collateral and are so young that bankruptcy really can't hurt them). So it was made that student loans could not be discharged.

Now people are complaining.

I would allow more flexibility in the bankruptcy law for students. With that said, I would couple this with a cap and reduction in the maximum amount of student loans you can take. For an undergraduate degree I would limit federal loans to the cost of 4 years of tuition at a state university.

The government also offers programs where you do something that benefits society and after 7 years your loans are forgiven. A great way to get experience, give back and get rid of your loans. Might not be ideal, but it is a good option if you got a degree in something that is not in demand.

Midas,

Simply put yes. We are watching a slow motion train wreck in progress. When you create an entire class of people who are subservient to the government,such that private companies profit off of the spread (because these loans are guaranteed by the government) and this debt cannot be discharged under bankruptcy, there is a huge problem. There will be hell to pay, as default will rise (and so too will the servitude of man), such that a crisis will be inevitable. The rising costs of secondary education go unchecked (Thanks Uncle Sam, for backstopping the debt with a federal guarantee so no one bothers realizing that the costs of education need to be realistic - and yes, even those Ivy League educations are extremely overpriced. there I said it!), which contributes to the rising necessity of student loans for those that can't afford to pay for school. It's not just about college from a cost point.

When you need a college degree to gain entry into an entry level job, you force people to go if they want any real career progression in a white collar world or they go the route of the manual labor. And even then, you need to get a college degree before you can even look at going to Law School and Medical School if you want to work in those fields. While I can't speak for medicine, in order to pass the Bar (the licensing exam for lawyers), it is essentially required for you to have attended a law school that is accredited by the ABA. There are a few states that allow non-ABA accredited students to take the bar. HOWEVER, only California, Virginia, Washington State and Vermont allow for people to sit for their respective Bar exams without having a formal legal education. What does it say when now everyone is required to spend 100K+, and continually rising, for three years of education to become a lawyer when what you learn in class has little to say about how practice actually is. So when you have 4 years of undergraduate loans and then another few years of post-graduate loans, it creates a system of indentured servitude you can't get out of.

When you add in the fact that we are in the midst of a recession, for which jobs for new graduates are not as readily available as they used to be, you create a very large group of people who owe money and can't pay it off without having a way out.

So, how do we get out of this? You allow the debt to be discharged via bankruptcy after 5 years from which payments start. You tie federal research funding grants for every school that wants them to the requirement for active means of the reducing costs of education. You abolish unpaid internships in order to stop the promotion of free labor and pay students for their time (in order to help reduce the cost of education or pay for living expenses, etc.). I'm sure there are other things we can do, but I'm blanking on them right now. Either way, the SS Titanic is here and on a collision course with an iceberg. It's not going to be pretty when the two collide.

Ant, the road to hell is paid out with good intentions man...

The firms that require an UG degree from a top university usually pay enough to justify $150K. Someone looking to teach 3rd grade in suburbia probably doesn't need to drop 40K in tuition a year for a private school.

And I believe you can do the first 2 levels of the CFA before graduating.

Ahhh, thanks for the clarity.

Incorrect only the first level can be taken

Much cheaper ways to blow money for 4 years if all those people ever do is get crunk.

High schools need to drill into college-bound students' minds that they need to get internships to get a job, not just a degree.

The CFA also requires four years of relevant work experience upon completion of the level 3 exam.

Not to mention, the total cost for the entry fees and three tests is ~$4,000.00

Is this a serious question? No one can profit from that which means it will never be an option.

I didn't relate the true trades to duff's question. I was thinking: what is stopping someone from studying something like finance on their own and fully mastering it to the point they don't need a degree or prior real world experience to land a job?

If, for example, that becomes an option in our society, does finance transition to a trade?

I think we have to keep this conversation in terms of the present and future. If we start going back into the past it will get really hazy as college degrees weren't, essentially, a requirement.

I think Anthony is fairly pro Laissez-faire

I disagree, going to a ivy league and majoring in arts, history, you can get a job in finance like many do. My cousins girl majored in art history went to a target and has nice paying job on W.S. While me being a finance major going to a non-target I've only seen two banks recruit both for B.O and one for HR. There needs to be a change in way recruitment works. If majoring in finance at a non-target can't get you a job. I say recruitment needs to change.

It's probably simpler than all this: the next generation of students need degrees that prepare them for the workforce. The contradiction is that while we have this huge education bubble, there's a severe shortage of engineers, programmers, accountants, doctors, and other professionals. Read about 18th Century Frenc Lit or MARX on your own time or do a double major, but get something that opens up actual employment....unless you come from money, and then do whatever the hell you want.

I got a psych degree and while I DO have a few tricks up my sleeve from studying the mind, I'll be focusing on a straight laced business / finance degree for grad school. I can read up on ancient religions and politics on my own time.

Requiring a degree for employment is not going to go away. It's far too late to wind back the clock on that one. With 10+% unemployment out there, why would you hire someone without a degree when you can get someone with a degree and likely internship experience gained while going to school? Even if something like the CFA or CPA exams could be taken without a degree, there is no fucking way you would get a job versus someone with a degree.

I am currently an a senior undergraduate at an overpriced institution (Pace University), although I am a transfer student and am only in my 3rd semester here, I will still graduate with about a 50K loan. Personally, I think academic institutions do not serve much benefit. I am paying an inflated tuition for all theoretical knowledge, nothing with much practical use. The sad part is that a degree is required to get your foot in the door, so students like me are forced to incur the debt if we desire a respectable profession. Now I wouldn't mind paying the tuition if I felt like I was getting what I was paying for. Take Pace University for example, we are located minutes away from the Federal Reserve Bank of NY and Wall Street. If the university organized tours of the Fed and used the tuition money to get the students involved in a practical manner, the money would be worth it and we won't just be paying for a piece of paper. I feel like academic institutions have really dropped their standards and the college classroom does not feel much different than a high school classroom yet it is necessary for us to attend (and pay). Just my 2 cents...

You are just adding in other non relevant factors. What if internships were available to Lvl 1 and Lvl2 candidates, for instance? My whole point is that self study is probably more effective than university education, and infinitely cheaper. We aren't talking about practicality...

I learned infinitely more about finance studying the first two levels of the CFA than I did while in undergrad.

The real question is, how can WE make $$$ of it o_0

+1

I'd like to think that employers will inevitably eventually realize how useless these degrees really are and hence relevant experience would trump that additional masters degree for non-technical jobs.

The problem is that we really do not need a huge workforce and that's part of the reason that barriers are set up around jobs (degrees, exams, etc. e.g. I'm preparing for the actuarial exam but WTF does it really help cone my skills if I have taken the courses? I doubt). Also, apprenticeship may now be as good as it sounds, considering we actually always have apprenticeship on every job nowadays (but we add more barriers so that not many people can use that apprenticeship).

This is a highly automated world (not automated enough if we consider the jobs that actually can be done by robots), and less and less people are able to find a job. That's why we have computer games, TV shows, etc. to keep them at bay.

The current cap on federal stafford loans for dependant students is as follows:

-$5,500 (for the 2010-11 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans.
-$6,500 (for the 2010-11 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.
-$7,500 if you've completed at least two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

The current cap on federal stafford loans for independant students is as follows:

-$9,500 (for the 2010-11 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans.
-$10,500 (for the 2010-11 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans.
-$12,500 (for the 2010-11 academic year) if you've completed two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans.

While cost of attendance at UTexas, a relatively cheap state university, is $24,000-25,000/Yr. So you are saying we should increase the cap on how much the federal government lends?

Private sector lenders, not the federal government, make up the lion's share of outstanding student loan debt, especially for private schools.

Consider the following:

USC has ~30,000 students total
NYU, the largest private shcool in the US, has ~50,000 students total
Harvard has ~20,000 students total
At an estimated cost of attendance of $50,000 total, that translates into $5B/Yr. You could generously assume that about 1/2 of that is funded w/o borrowing, yet the numbers are still astonishingly high for just 3 private universities. I think there are about +300 public and private colleges/universities in the US.

Regulators dont seem to be on top of this. This is subprime 2.0, without doubt. I am really sad to see this is actually happening post 2008. Really sad.

I will graduate with a history/econ major from a state non-target and have around 25k-27k in total debt. I really am getting freaked out on how I will pay it back, especially without an internship yet. I guess that's why my grad school plans will be something more practical like an accounting masters.

Still, with grad school added in, I would have around 80k in total debt (depending on what school, I want UT-Austin for Houston energy/oil/gas markets). IDK how comfortable I'd be paying that back on a Big 4 salary, though.

Za, you're looking at it from a skewed, incorrect perspective. Mortgage debt can be discharged. Mortgage debt that led to the subprime crisis was given to people who could not afford them, such skewing the numbers to the point where, partially, you have a base that couldn't afford it given household debt (ie what is a person making 40K a year doing with a 200K 3-1 Option ARM mortgage). Mortgage debt is still a resolvable situation.

With student debt, you have a non-dischargable loan and a decreasing job market. If you can't pay off your loan and you can't get it discharged in bankruptcy, you have a problem. You create a class of slaves that will be in servitude for a very long time. When you take decrease the number of jobs available to new grads and post-grads, you increase their chances to default on their debt essentially forcing servitude on them. Consider that...

As to the muni debt, oh that's always a question of who will do what and how bad it happens.