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having had to pay them off with the equivalent of a $34k/yr starting salary (in 2022 dollars), I have absolutely zero sympathy for people who want loan forgiveness. if predatory lending practices were done, that's fucked up, but I feel very strongly about 2 things
I 100% feel the education financing system is fucked and it needs structural change. simultaneously I don't feel it's the job of govt to bail people out just because they didn't budget appropriately.
Some might even argue that gov't invovlement is what created this mess in the first place by guaranteeing all those loans and then changing the law to disallow discharge through bk like other debts (a big portion of that fault lays with the lawyers and doctors for abusing the system too). It's a deep topic and there's plenty of other threads on here going through it if you want to keep digging into it.
Good points.
As an advisor at a bank (which I presume is incentivized to push lending products) why would you pay off your loans assuming you understand the benefits of leverage? I just refinanced by student loans for another 20 years at a 3.75% fixed interest rate and laughed my ass to the bank while doing it, allowing me to throw more money into QQQ.
Not at a regular bank at a BB and we don't do student loans
credit wasn't great at the time so refi wasn't an option
refinancing stuff like that is just kicking the can down the road, you can make an argument about leverage helping CAGR but I'm more conservative than that
much more psychological benefit to paying off debt when you came from where I did
different strokes, I just abhor leverage so I think about these things differently, I don't care about CAGR maximization just what I need to meet my personal goals, I care about survival and minimal debt
Forgiveness is happening. As such, I am making minimal efforts to pay down my debt. Sorry brofessor.
I disagree with Number 1. I think they should be dischargeable after a certain amount of time / proof of trying to work out a solution to pay, but I think if you dangled the option for many to remove one or two years worth of gross earning from a 21 yrs liabilities. I think to many would take that.
Agreed- it should not be possible to get approved to borrow $60k/yr for fine arts degrees from private schools. Two people from my high school graduating actually did this, both dropped out and now are aggressive SJWs per their instagram pages.
My university wasn't prestigious enough warrant a student loan.
What do you do now?
finance, brah
Had a bunch of merit-based scholarships, chose my school based on the best financial aid package, and still took out some loans which I worked jobs through college to pay down to a negligible amount before I'd even graduated. It's not rocket science.
Stupid people take out massive loans and don't bother to do the math and compare with their career options. Fuck em. Part of being an adult is being responsible for financial decisions and the information is all just a web search away.
Exactly. Did the same thing and it’s just so much less stress now that I’m about to graduate.
My student loans were over 3.5k/month. This was due to a family friend in the bank assuring me and my parents that this was the best option and the most responsible option. My credit was shot needless to say when I had to drop out of college midway through to take care of my parent who suffered a permanent severely disabling injury that was crippling to my parents financial situation. That year out of school (before later returning) caused payments to become due, it was more than I made in a month. In addition to that the loans 7.5%+ interest rate (ridiculous) continued to accrue until I was able to refinance them into a more reasonable loan term.
Government shouldn't guarantee these loans and it's apart of the problem.
Schools shouldn't have been made to artificially raise prices like they did/do.
Loans shouldn't be structured like they are and should be more flexible, take into account more factors like degrees being earned, and have certain forgiveness options built in if the government is backing them.
There is something fundamentally wrong with being able offer loans to 18yr olds (cosigner or not) that has the potential to never be reasonably paid off given their expected salary and the loan terms. It is debt slavery and predatory when many of these kids will be first time college grads and haven't a clue what they really want to do.
I get it too, I'm in finance, people should make responsible decisions and have to live with those decisions. But at the end of the day college should also not be reserved for those who come from financially privileged backgrounds. You financial situation should not dictate whether you get a degree. It's not good for a society nor is it good to the individual.
And yes I did get scholarships and significant ones, but scholarships should not be an excuse for a poor system. Even with these scholarships my loans still came to 3.5k+/month, yes.
Stossel has a great short video documentary talking about colleges and loans. Highly recommend.
Responsibility? D level athletic Colleges should not build hundred million dollar athletic centers with tax incentives and then hike tuition costs. Or charge above market rates for mandatory dorms with special tenancy laws that benefit the college and gives them special rights. List goes on people.
Spot on. The ridiculous price of schools today is due to handing out six figure loans to anyone. These schools can then increase tuition as much as they want. Yale now has more administrators than teachers. It's beyond ridiculous. A lot of schools are now hedge funds with an ancillary business of teaching.
I am all about personal responsibility and accountability, but 18-22 year olds who have never budgeted or paid for anything themselves have no idea how expensive life actually is. I would support forgiveness after a long period (say 20 years). Many of those with government loans have this option, although then the forgiven amount is taxable. I guess at that point if they truly can't pay that amount they can try to go through bankruptcy.
The government needs to get out of the student loan business completely. If they didn’t make it so easy to access loans, schools wouldn’t have been able to increase tuition at such a ridiculous rate.
I am very against canceling student loans because it wouldnt fix the underlying problem, which is the cost of tuition. I am also a firm believer that not everyone should go to college. We shouldn’t be pushing people to go if it doesn’t fit their goals. If anything we should be pushing more people to trade schools than university.
quoted and bolded for emphasis. like giving a diabetes patient insulin instead of telling them to stop drinking soda, exercise, and lose a fuckton of weight, it doesn't fix the root cause
-
Loans 100% enabled me to go to business school, which redirected my career and significantly increased my earnings (both presently and future potential). I make significantly more today, after debt service, than I did pre-business school, am in an industry I actually like, and have significantly boosted my career and earnings potential. I knew what I was getting myself into, I knew what taking out $200k meant, and I made a calculated decision to go forward.
It worked out in the end, but Covid nearly fucked me, I have sympathy for people who get locked into something and extraordinary circumstances ends up holding them back. I agree with thebrofessor that loans should be dischargeable for the penalty of having to declare bankruptcy. Plus the gov't should really be getting out of the loan business to begin with, so much price inflation for schools is because there are so many federal dollars floating around with zero responsibility of the school to actually provide anything of value, all the risk is on the students who are taking the loans out and the taxpayers who are funding it, the school holds no risk whatsoever.
quoted for emphasis lest I sound heartless. my issue is exactly what you point out here - moral hazard. part of the reason the housing bubble crashed was people going beyond their means yes, but it was also because underwriters were not forced to bear the risk of the loans they were underwriting, just selling them off to institutional investors whose clients/LPs were clamoring for yield. if schools had to own the risk of their loans, they'd exercise a lot more scrutiny in how they were doled out, and I'd also argue it'd be more difficult to raise tuition
how old r u and how much do you make?
Late 20s, $175k all in. I topped out at $71k in construction before school.
did you finance all of b school with loans? I opened a 529 account for myself and am saving a bit that way, not planning to finance the whole thing that way but I did want to give myself some flexibility
Yeah, I was barely able to save before B school, and what little I did I either put into retirement accounts or spent it on a two week trip through Europe and a two week cross-country road trip before I started school. I was also super aggressive about school, had I waited another two years I would have fit the profile better (instead of being one of the youngest people in the class) and probably would have gotten some sort of scholarship.
The price of education is ridiculous. Anything above 10k/ur or even 5k quite frankly is ridiculous. Equally, in the U.K. I got maybe 30k in debt for my master’s year, over 7 years, I don’t really see the difference on my account tbh.
My favorite part is when the calls start going out literally two weeks after graduation trying to get you to donate. People can do whatever they want with their money but for those of you that actually donate seriously wtf are you getting out of it? I’d argue you’re making the problem worse not better by incentivizing schools to raise their prices even more.
I'm ok with what the Biden administration has been doing with "forgiving" student debt from some of these abusive for-profit institutions. It hurts that debt forgiveness is just a transfer of costs onto the general public, but in these narrow instances where some of these for-profit schools straight-up lied about their job placement and issued a worthless degree, I suppose this is the best remedy. What I deplore is seeing proposals from the Biden administration proposing huge increases in student loan programs, which is giving coke to the addict. The issue--as others have already said--is the supply of money with respect to tuition is too great, which is incenting these universities to raise prices endlessly. We're in an ugly feedback loop--universities raise prices so gov't responds by increasing student loan access, which incents universities to raise prices and causes gov't to respond with expanding student debt. Ostensibly the smartest people in America--and inarguably the best credentialed--for reasons unknown can't see this obvious feedback loop. I don't know if they are genuinely this clueless or if they have bad intentions. It's hard to tell when you're dealing with such incompetent policymakers.
But why must the public pay and not the for-profit institutions who committed the scam?
Because most are going bankrupt. They don't hold the debt. The public does.
i’m not american so the concept of debt is kind of new and bizarre to me (especially when people live with CC debt). i understand that it’s sometimes smarter to take on debt, including student loans but unless there’s an extreme need and justification for that, i’d stay away from them. i was lucky to have ~100% of my ivy league tuition to be paid by a scholarship and worked part time to sustain myself and i still ended up with ~$16k in debt which bothered me and i would be annoyed to be held hostage by the lender so i paid them off the second i got my bonus. this makes me wary of going to the business school and taking on crazy amounts of debt. but as i said if there’s a good justification and you’re mentally OK with having a liability on you at all times - consider them
Went to a state school on scholarship despite grades, test scores, involvement, etc. that would have gotten me into a top tier school. The decision was very clear to me, and I’m happy I made it knowing what I did then, although at this point I could have paid them off many times over.
I feel for people who are drowning in debt, and I do think there should be an avenue to restructure or discharge - both because I feel empathy and because pragmatically I think it will be good for the economy for people to be able to move on from their debts. Even so, outright forgiveness feels like a handout to people who chose a more expensive option, and it does nothing to help the generation starting school one year later (in fact, arguably incentivizes more debt with the prospect of forgiveness).
Provide more government funding for education (because I do believe in the benefits of a well-educated population), but allow borrowers to discharge in bankruptcy. Lenders will need to be more judicious, and demand for high priced schools will fall (except those that merit the cost). Ideally tied to smaller administrations at schools with public funding. If you want to go to an expensive school, great, but find a way to pay for it. If you can’t find someone willing to finance it, then go somewhere cheaper or spend $1.50 in late fees at the public library
I agree with you wholeheartedly. I have a further question, completely spitballing here and willing for someone to point out I'm wrong/shut me down with evidence: we generally say that the US no longer places as much focus on vocational training (although of course those opportunities are there, but maybe not as much as in the mid-20th century), so I'm wondering if we were to invest more money in that (and also show that people can have very strong and secure incomes without a college education, increase US production of goods [RIP inflation though]), would people not enrolling as much in college then push them to cut their expenses and lower tuition to become more compelling to attract students?
Good question! One, Mike Rowe's Dirty Jobs Foundation is spearheading publicity and scholarships for trade schools to get more people aware of, and potentially going down, that route of skilled trades. I pray it goes well, because while some of us are grateful we grew up doing carpentry, mechanics, plumbing etc summer jobs so we can do some ourselves, we have a generation of people walking around thinking that you just get food from the grocery store so why are farmers complaining about rising input costs or drought conditions?
Two, my thought would be that at first those institutions would keep the tuition high and try and circle around with "exclusivity" as why it's worth it (actual outcomes be damned!). After that starts to fall short, I can see some in-house type financing options come up in order to spur enrollment and keep the money coming in. After that, I think your idea of things having to come down to reach a new balance is appropriate. In the mean time, we should see a lot of these more local "community colleges" (that are fully accredited institutions, some with four year degrees now!) on the rise and I think that's a good thing. Maybe see local schools preparing people with a more appropriate regular bachelors level education and then the other bigger schools can step in and offer something that's between a BSc and MS in a specific field of study?
Join us won't you, on this week's Friday Morning Mental Masturbation(tm)...
I’m generally supportive of encouraging people to pursue trades, and we have a woeful shortage of skilled labor in the US. It’s tough though; I respect the hell out of people who do those jobs because I never could, but there’s no getting around the fact that they can be pretty shitty careers - earnings ramp nicely but can plateau fast, you’re often married to shitty hours and worse customers, and you can destroy your body by 50. Maybe tech-driven productivity improvements could help there
extra 2-3 years of work with no play
The student loan freeze was basically free money for anyone like myself who was previously paying a few hundred in interest every month. Double down on payments.
A potential future solution is to force universities to adopt financial responsibility for the loans of students who do default or declare bankruptcy. In many cases, they participated in and encouraged a system of 18 year olds accepting obscene debt to study non-sense, and this would make them more selective with degrees and students.
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