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How do you think the student debt saga will end?

Looking at how outrageous the entire system has become and wondering how you guys think this will turn into. Any takers?

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Comments (276)

Feb 23, 2018

Students will be allowed to discharge debt, thereby robbing taxpayers and continuing to fuel increases college costs and the subsidizing of uneconomical degrees.

We should stop providing college loans. Colleges are by and large a cesspool of Marxist ideology and the rising costs are directly related to unrestrained lending.

Feb 23, 2018
TNA:

Students will be allowed to discharge debt, thereby robbing taxpayers and continuing to fuel increases college costs and the subsidizing of uneconomical degrees.

We should stop providing college loans. Colleges are by and large a cesspool of Marxist ideology and the rising costs are directly related to unrestrained lending.

Agree that ultimately the government is going to have to step in and forgive their debt, courtesy of my 51% bonus tax.

As for the second point, what about a program where the government will ONLY give loans to students who are choosing the least costly college trajectory, ie, two years of community college and then two years in-state.

A lot of my cousins live in New England and they all took out outlandish sized college loans to go to private schools in other states and major in Public Policy or Communications. Then they have the nerve to complain about their loans as though they didn't willingly sign up to borrow money. I don't get wtf they think is supposed to happen after they borrow ~100K.

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Best Response
Feb 23, 2018

I agree, but anything the govt does will be criticized.

Student loans came about as people cried that college was only for the rich. So the govt helps. Now people complain about why did the govt let them do this.

Just walk away. Allow private lenders to lend, allow people to claim bankruptcy, and eventually the market will create loans to certain degrees and require certain grades.

Let's be real. College is a drunken orgy nowadays. Every study shows how a degree can be had cheaper, hope large portions of loans are used for travel and other bullshit. Just walk away. Colleges will fire unprofitable professors, tuition will go down, etc.

And is college actually educating people? Colleges are limiting free speech, indoctrinating kids to leftist ideology, providing degrees with zero economic benefit and pissing away money on things not core to education.

Gut the monster.

Feb 23, 2018
TNA:

Just walk away. Allow private lenders to lend, allow people to claim bankruptcy, and eventually the market will create loans to certain degrees and require certain grades

This is also a good idea. If the private market is allowed to lend once again and debt can be discharged in bankruptcy then lenders will provide credit but will only do so for legitimate degree programs at legitimate schools. Market takes care of itself.

Feb 25, 2018

I'm gone for a while come back to basically a copy paste of a post you've made years ago. Some things never change. With that said I'm coming to see you in Philly and I'll bring STW with me.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

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Apr 4, 2018

Would you hire someone without a college degree? I know the partner's of my firm sure as hell would not.

Apr 5, 2018
TheWildMan:

Would you hire someone without a college degree? I know the partner's of my firm sure as hell would not.

Sure I would. Depends on the job and the quality of candidate. There are few jobs in which a 21st-century American college degree provides actual job-applicable skills. With that said, requiring a college degree is a convenient way of culling (or preventing altogether) excess applications, so I would still use it as a general requirement for hiring.

Apr 5, 2018

I'm confused. In your first sentence you say you would hire someone without a college degree. But in your last sentence you saif you would require a college degree.

Would you hire someone without a college degree?

If not, regardless of how valuable the skills/education of a college dregree really is, the sad truth is that it is required for many jobs.

Apr 5, 2018
TheWildMan:

I'm confused. In your first sentence you say you would hire someone without a college degree. But in your last sentence you saif you would require a college degree.

Would you hire someone without a college degree?

If not, regardless of how valuable the skills/education of a college dregree really is, the sad truth is that it is required for many jobs.

I don't understand what's confusing about saying that I would hire someone without a college degree "depending upon the job and quality of candidate" but saying that, regardless, I would still generally require a college degree simply to reduce the number of candidates I have to sift through. That's not that complicated of a position.

Apr 5, 2018
Troll - Aged 18 Years:

regardless, I would still generally require a college degree simply to reduce the number of candidates I have to sift through. That's not that complicated of a position.

Sounds like if someone wanted to work for you, they would have to have a college degree. Otherwise their application would not even make it to your desk.

I realize now that my original question was not directed at you, but at TNA who is asserting that college is not "actually educating people".

My point is: whether college is "actually education people" or not, it's a moot point. Because for many desireable jobs, you NEED a college degree. Your comment proves that.

Apr 5, 2018
TheWildMan:
Troll - Aged 18 Years:

regardless, I would still generally require a college degree simply to reduce the number of candidates I have to sift through. That's not that complicated of a position.

Sounds like if someone wanted to work for you, they would have to have a college degree. Otherwise their application would not even make it to your desk.

I realize now that my original question was not directed at you, but at TNA who is asserting that college is not "actually educating people".

My point is: whether college is "actually education people" or not, it's a moot point. Because for many desireable jobs, you NEED a college degree. Your comment proves that.

Well, yeah, that's the topic of this thread...We--myself included--require college degrees because they are the new high school diploma when, in reality, college is largely worthless in terms of producing students with skills. WE--society--are why many "need" a college degree, not the job itself. In other words, to tackle the student debt crisis, society needs to produce alternatives, and I do see that slowly evolving (e.g. Purdue buying Kaplan; non-profit public universities starting to offer 2-year computer programming degrees).

Apr 5, 2018
TNA:

I agree, but anything the govt does will be criticized.

Student loans came about as people cried that college was only for the rich. So the govt helps. Now people complain about why did the govt let them do this.

Just walk away. Allow private lenders to lend, allow people to claim bankruptcy, and eventually the market will create loans to certain degrees and require certain grades.

Let's be real. College is a drunken orgy nowadays. Every study shows how a degree can be had cheaper, hope large portions of loans are used for travel and other bullshit. Just walk away. Colleges will fire unprofitable professors, tuition will go down, etc.

And is college actually educating people? Colleges are limiting free speech, indoctrinating kids to leftist ideology, providing degrees with zero economic benefit and pissing away money on things not core to education.

Gut the monster.

What America needs is a some European style sensibility in Higher Ed,

1.) Bachelor's degree should be 3 years. No BS core classes. Just focus on your major. If you want to learn about Art History and Philosophy, do it in your own time. If the rest of the world can finish college in 3 years, we can do it here too.

2.) There should be public colleges where poor kids can do and get a great education for a very lost cost. But there should be a HIGH barrier to entry for higher ed. Sorry, if you are't capable of going to college, you should not - go to a 2 year plumbing/electrician/mfg school. That's the problem with US colleges - there are too many kids who don't belong there.

These public colleges should be heavily subsidized by State/Fed govts - but they should have no excesses, i.e. no sports teams, residential dorms etc. Sort of like a CUNY.

3.) Similarly, there should be 2 year vocational colleges for kids who can't make it to higher ed to train them for these "new collar" jobs. These should be very cheap to attend.

4.) MBA should be 1 year. JD should be 2 years.

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Feb 23, 2018
LReed:

As for the second point, what about a program where the government will ONLY give loans to students who are choosing the least costly college trajectory, ie, two years of community college and then two years in-state.

I've never heard of this idea, but it's one of the better ideas I've ever heard. That makes a lot of sense.

Feb 27, 2018
TNA:

Colleges are by and large a cesspool of Marxist ideology and the rising costs are directly related to unrestrained lending.

You hit the nail on the head. American taxpayers are subsidizing increasingly radicalized Neo-Marxism where free speech and debate are not only discouraged, but often prohibited. "Microaggression", "hate speech", and "white privilege" are cast upon anyone who dares question Frankfurt School principles. Administrative salaries are out of control while tuition/textbook costs have inflated more than any other consumer cost over the past 10 years. White men and Asians are openly discriminated against in the admissions process, which is far removed from an objective meritocracy. Stoicism, masculinity, Austrian Economics, and the Socratic method have disappeared.

https://www.aei.org/wp-content/uploads/2018/02/CPIChart2018.png

Feb 23, 2018

I think there should be a mandatory 2 year work period for high school graduates, before they are allowed to enter college. I worked for a handful of years and knew the hard value of a dollar earned, so I was scared shitless when taking out my student loans and I knew that I couldn't study some bullshit non STEM subject.

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Feb 23, 2018

States offer plenty of scholarships. Working some $7.25 job 40 hours a week to pay for college is counter-intuitive and that money is fractional relative to college tuition. Putting all that time into getting a great SAT, high GPA, and AP courses will pay for most schools (assuming in-state resident).

Feb 23, 2018

Not if you go to community college and transfer or take an extra year or take more classes per semester.

Plenty of ways to not have crippling debt. Sadly people are morons. So the government needs to remove the ability.

No where in the Constitution does it say student loans are a right. Kids will figure it out.

Feb 23, 2018

In an insanely competitive country that's getting harder, and harder to get into certain fields, going to a community-college seems like a nice way to put yourself behind. Especially for the careers highly sought after on this forum. That "moron" who leveraged all those loans, and broke into high-finance through a top institution that costs a lot is certainly going to do better than a 2 year CC to state school student. Sad reality

That's all I have to say about your first point, not really feeling like arguing the rest.

Also, I don't like older people robbing my social security tax on each of my paychecks. Hopefully we can get rid of that as well.

Feb 23, 2018
Pump And Dump:

In an insanely competitive country that's getting harder, and harder to get into certain fields, going to a community-college seems like a nice way to put yourself behind.

I can't speak to any state but Virginia, but here in Virginia we have an incredible system for those willing to do their research. Automatic admission to 4-year state universities (such as UVa, William & Mary, JMU, and Virginia Tech) with a certain GPA achieved over 60 credit hours. The community colleges are multiple times less expensive and you ultimately graduate from your 4-year institution. No one knows where you spent your first 2 years.

It's actually a brilliant system that cuts costs markedly (assuming you live at home for first 2 years). Two full years of college for $11,000. That's a $33,000 savings over going to, say, VT full-time on-campus for 2 years.

Feb 23, 2018

VCCS is pretty sweet, but relative to what this forums is pretty much all about, you can't expect to do 2 years at a community college, transfer, and muscle into the most competitive industry. Just won't happen. You will have no GPA, no network, and everyone who took a little more weight on their back in terms of loans from Freshmen year will have an easier time getting what they want. These days, just about everyone's at a 4 yr undergrad. This is coming from a CC student, possibly the worst decision I've ever made. Busting your ass at a real college is better than trying save fractional money while working a low-wage job on top of studying. Just my viewpoint, going to leave it from here. Trying to save nickel, and dimes sways you from looking down the line which matters most in my honest opinion.

Feb 23, 2018
Pump And Dump:

VCCS is pretty sweet, but relative to what this forums is pretty much all about, you can't expect to do 2 years at a community college, transfer, and muscle into the most competitive industry. Just won't happen. You will have no GPA, no network, and everyone who took a little more weight on their back in terms of loans from Freshmen year will have an easier time getting what they want. These days, just about everyone's at a 4 yr undergrad. This is coming from a CC student, possibly the worst decision I've ever made. Busting your ass at a real college is better than trying save fractional money while working a low-wage job on top of studying. Just my viewpoint, going to leave it from here. Trying to save nickel, and dimes sways you from looking down the line which matters most in my honest opinion.

I hear you, and I agree with you for those of us who were/are looking to break into banking. So no objections. I think we're talking about "the people" in general though--the lower-middle class kid looking for a degree in engineering, or trying to go pre-med and become a doctor. In those instances, it's a great way to go. But yeah, not if you want to be a Wall Street guy.

Feb 23, 2018
Pump And Dump:

you can't expect to do 2 years at a community college, transfer, and muscle into the most competitive industry. Just won't happen.

I did two years at an SEC school that was probably shittier than NoVA Community College and then transferred to UVA and it worked out just fine for me. Plus I got laid at least twice a month for the first two years of college. Shit was cash. Highly recommend the transfer maneuver.

Feb 23, 2018
LReed:

transferred to UVA

Hey, don't beat yourself up, my friend. Nobody's perfect. :)

Hokies!

Feb 23, 2018

Ha, I've spent plenty of Fall days outside of the Center Street apartments or at the White House with a cold beer in hand, cheering on the Hokies. Think we can both mutually celebrate not being JMU.

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Apr 2, 2018

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Feb 24, 2018
RocketToTheMoon:

As someone from Virginia, this is terrible advice. You will literally have no GPA to recruit with...no reason to not just attend the 4yr if you are already in-state for tuition.

This is the dumbest comment so far in 2018 on WSO. For one, we aren't talking about prospective investment bankers. We are talking about your common person who wants to become an engineer or teacher or doctor. You don't need 3 summers of finance internships. Two, what you're saying is demonstrably false--you will have a GPA. In fact, for automatic admission you will have to achieve a 3.0-3.5 GPA to gain admission. Then, you'll have your junior year to create an on-campus GPA for senior year recruiting. Finally, you're talking about a difference of $33,000 in savings over 2 years over in-state tuition. For the average American that doesn't have $1,000 in savings, $33,000 in savings is a small fortune.

Apr 2, 2018

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Feb 24, 2018
RocketToTheMoon:

As someone from Virginia, this is terrible advice. You will literally have no GPA to recruit with...no reason to not just attend the 4yr if you are already in-state for tuition.

One of my roommates in grad school was a 3rd year transfer at McIntire and had multiple summer offers to choose from. In fact transferring 3rd year objectively leads to better outcomes than the grad program.

Feb 24, 2018

Third year transfer to mcintire is a COMPLETELY different story. We are talking about the VCCS program. Acceptance to mcintire externally is very difficult ~10% acceptance rate and your friend definitely earned his spot for recruitment.

Feb 25, 2018
RocketToTheMoon:

Third year transfer to mcintire is a COMPLETELY different story. We are talking about the VCCS program. Acceptance to mcintire externally is very difficult ~10% acceptance rate and your friend definitely earned his spot for recruitment.

Your counterargument to me is that my roommate earned it...yeah that's true? I'm just trying to defend Virginia's system that gives people the opportunity (but no guarantee) to succeed in their goals if they choose to work their asses off. Nobody is saying it's easy.

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Feb 24, 2018
thurnis haley:
RocketToTheMoon:

As someone from Virginia, this is terrible advice. You will literally have no GPA to recruit with...no reason to not just attend the 4yr if you are already in-state for tuition.

One of my roommates in grad school was a 3rd year transfer at McIntire and had multiple summer offers to choose from. In fact transferring 3rd year objectively leads to better outcomes than the grad program.

I was a 3rd year transfer to the College of Arts & Sciences and had multiple SA offers as a Statistics major. You will have a GPA, it will just be your cumulative college GPA. Yeah you're at a slight disadvantage for BB IBD recruiting, but go to some of the hundreds of networking events and find someone that thinks your story is impressive (everyone I talked to was really impressed by the transfer route, contrary to popular belief) and fwd him your resume to push during the OGI application period and you'll be golden. It's not fuckin rocket science kids, you don't have to follow the Private High School -> HPY -> Sophomore PWM -> BB IBD SA -> FT BB IBD trajectory to a tee as long as you can hustle, use your head and you're not socially retarded.

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Feb 25, 2018

It'd be interesting to post what year he transferred since the recruiting timeline has sig decreased the likelihood of being able to transfer 3rd year and then doing IB SA. This yea fe:info sessions are in the spring semester for 2nd years and applications open up towards the beg of summer

Feb 23, 2018

The vast majority of people have no interest in being an investment banker. No one is talking about this job.

I'm moving on.

Feb 27, 2018

The whole "student debt" argument doesn't really count for the "type of people on this forum". I'm basically in the "failure" boat for this website and still coming out FT making 70k+bonus from a non IB / consulting finance route.

Honestly like someone said above just privatize the fuck out of lending. The problem are the fucking communications majors coming out with 200k in loans and complaining about their debt working a 40k / year job.

Sadly the problem is that with no financial literacy education from a young age that most incoming college freshmen / HS seniors have little to no value / appreciation for money / debt.

Apr 5, 2018

As someone who looks at student loan assets, the govt getting involved by handing out free loans to ANYONE for ANY degree is the problem.

A smart govt would only provide loans for value-add degrees (engineering, computer science, urban planning, variety of vocational degrees, NOT business, liberal arts), but in America we call that "social engineering" although in other places it would just be called government, but wtv. So that is not an option

The alternative is a private market - yes SOME good people (admittedly lower income) are likely to be disproportionately impacted - that lends purely based on merit. Honestly, I support limited wage garnishment to pay off private student loans

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Feb 27, 2018
Pump And Dump:

In an insanely competitive country that's getting harder, and harder to get into certain fields, going to a community-college seems like a nice way to put yourself behind. Especially for the careers highly sought after on this forum. That "moron" who leveraged all those loans, and broke into high-finance through a top institution that costs a lot is certainly going to do better than a 2 year CC to state school student. Sad reality

That's all I have to say about your first point, not really feeling like arguing the rest.

Also, I don't like older people robbing my social security tax on each of my paychecks. Hopefully we can get rid of that as well.

Agreed. In many cases, community college is literally not an option because of how crazy competitive "good jobs" are becoming. Speaking for myself, I went the "best value" route (LSU for petroleum engineering, where they gave me almost a full ride on academics) and it has already been an uphill battle from recruiting being worse than the higher ranked universities. I had a 3.6 GPA, finance minor, research experience, solid work experience, was active on a design team, and two of the oil majors wouldn't even interview me for a sophomore internship (and those are practically required for my major if you want to get a "good job"). While I did end up with an offer, I was busting my butt from day 1 at a state flagship. And some jobs/industries/grad schools are more competitive than that.

Going to CC first is good for some people, but ultimately a losing strategy for others. If we start trying to require that, this debate is going to go full circle back to "rich people have a massive advantage that poor people can't hope to match"

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Feb 23, 2018

I go to my state school and this isn't true at all. There is literally no merit-aid given only need based.

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Feb 24, 2018
RocketToTheMoon:

I go to my state school and this isn't true at all. There is literally no merit-aid given only need based.

What the absolute fuck are you talking about? I went to Virginia Tech on a merit-based accounting scholarship. You're a complete retard. Why are you commenting on stuff you clearly know nothing about?

Apr 2, 2018

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Feb 24, 2018
RocketToTheMoon:

Oh my gosh you are actually a moron wtf no wonder you go to tech. Re-read what I wrote slowly this time and think WHILE you read to comprehend. UVA has NO merit-aid besides the jefferson scholarship it is all need-based. Unlike tech, they don' need to attract top talent with money like you cow fuckers do.

You sound like you missed your opportunity to transfer to UVA/Tech and are trying to rationalize it. Fact of the matter is, I know plenty of other transfers to UVA in the CAS who are starting out in high places now. If you did Community College for two years then transferred to UVA there would be no need to take out more than 50K tops in loans, even if you're footing the entire bill with debt.

Feb 24, 2018
RocketToTheMoon:

Oh my gosh you are actually a moron wtf no wonder you go to tech. Re-read what I wrote slowly this time and think WHILE you read to comprehend. UVA has NO merit-aid besides the jefferson scholarship it is all need-based. Unlike tech, they don' need to attract top talent with money like you cow fuckers do.

You do realize that there are 15 4-year state universities in Virginia, right? For one, you didn't even say that you went to UVa. Is that just, ya know, implied or something? Two, there are all kinds of merit-based scholarships for anybody that don't come directly from the school. They're all over. There are literally published books on these scholarship opportunities.

Feb 23, 2018

My engineering-focused undergrad school had a lot of people doing co-op 5-year programs. It had a lot of benefits including students making money, having more time to study, learning practical things on their job in between study semesters, and graduating with a job offer and real-world experience.

Would be great if this caught on across all majors and schools. Students and companies need to come closer together, earlier, in order to serve both of their needs.

Feb 23, 2018

Like nearly every gov. venture (except the Louisiana purchase): a losing one.

Feb 23, 2018

This is the stuff that should happen, but likely won't because it makes too much sense:

1)

Should not require a college degree to sit for these exams:

  • CPA and related accounting exams
  • Bar exam
  • Actuarial services and related exams
  • Any securities licensing

In other words, no professional license not dealing with physical structures (such as engineering and architecture) or human health (such as doctor or nurse) should require a college degree to sit for the certification exams. If you can pass the exams then you have the requisite knowledge.

2)

A non-profit organization should create a general business certification exam that covers the basics of accounting, finance, mathematics, and English writing proficiency--the basic business skills that white-collar employers will want in their paper-pushing employees. Then this non-profit should get major corporations to agree to accept certification in lieu of college degrees (for most of their jobs). This would require a significant cultural shift, but it's possible.

Should accept the above comprehensive business competency certification test in lieu of a college degree (for most administrative jobs):

  • Federal employment
  • State employment

3)

In order to receive federal student loans, you must complete 2 years at a community college and transfer to a 4-year in-state program. In other words, for taxpayers to assist you in financing your education, you should take the most economically efficient path.

4)

Re-allow private lending for student loans, specifically allowing for students to discharge private loans in bankruptcy. This will create a business opportunity for lenders, but will narrow lending to legitimate programs and career paths due to the risk of bankruptcy.

5)

Universities should start offering highly targeted 2-year programs for in-demand skills, such as computer programming. Private, for-profit organizations have been trying to do this, but they don't have legitimacy with employers. I believe I saw UNC-Asheville (?) is now offering a similar program, which is great. Having a non-profit university certification adds credibility.

Feb 23, 2018

Agree, they should also have to price degrees by the average yearly salary of someone in that field. This would ensure private and public sector working together and normalize the supply of needed skillsets and prevent a surplus of gender studies degrees.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, your total tuition for 4yrs is $55k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, your total tuition for 4yrs is $40k

Feb 24, 2018

This is stupid. You're basically asking non-retards to subsidize the retarded women's studies and art history majors. It's not the like students who lack foresight don't have access to nearly all of the fixed costs associated with a university (counselors, sports, libraries, advisors, career fairs, most classes, etc.).

Your incentive scheme is backwards as well. Schools should charge MORE for an art history degree if you were gonna do this, as this would ensure fewer students graduating in this field, and the ones who do graduate likely have better external supports anyways due to the ability to bear the higher cost.

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Feb 24, 2018

No it's not. It's like buying anything in life. If you want something useful and valuable it's gonna cost you and the government is gonna get a piece back in taxes.

Take things like' an expensive car, a nice place, or you make a lot of money. All of those things are already subsidizing the lesser of each of those...

Feb 24, 2018

Still wrong, if your idea was actually implemented then smart people would eventually figure a way around this by setting up their own engineering, finance, and hard sciences colleges (think caltech, rose hullman, mit, etc. on a much more widespread scale). Universities would then end up feeling this hit in terms of enrollment and tuition dollars, as well as the loss of research grants and undergrad research grunts, and their prices would start to lower. You'd also be pushing the marginal student TOWARDS an art history degree due to the cheaper price, and hence this would only exacerbate the earnings gap down the road (and in turn cause the university major cost gap to increase in a vicious cycle).

Obv this wouldn't happen overnight, but the market would sort itself out. Smart people don't let themselves get suckered for long, hence why they are smart.

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Feb 25, 2018

So you're saying everyone should earn the same and pay the same for college to prevent an earnings gap?

Apr 6, 2018

Pmc2ghy is on point.

TippyTop11 - extravagant things like Art degrees should cost more. They should not be subsidized at all. Here is an updated version of your comment.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, total cost to teach is $150k (let's say), subsidy/loan = $50k, cost to you = $100k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, total cost to teach is $150k (let's say), subsidy/loan = -$20k, cost to you = $170k

And if after all this people keep studying art, then we jack their prices even further, until they cover the costs of the people studying REAL things

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Feb 27, 2018
TippyTop11:

Agree, they should also have to price degrees by the average yearly salary of someone in that field. This would ensure private and public sector working together and normalize the supply of needed skillsets and prevent a surplus of gender studies degrees.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, your total tuition for 4yrs is $55k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, your total tuition for 4yrs is $40k

I would say that I like where you're going with the pricing model, but I would flip it around.

If you're doing a, say, political science major, you're charged $60,000 and if you're doing an engineering major you're charged $35,000. This would really force students to decide if the degree is worth it at all. Unfortunately, this means the liberal arts would be reserved for the wealthy, but as I've pointed out in other threads, the liberal arts are easily accessible in libraries, on the Kindle, on YouTube, etc. Anyone of any age can study in the liberal arts.

Feb 27, 2018
Troll - Aged 18 Years:
TippyTop11:

Agree, they should also have to price degrees by the average yearly salary of someone in that field. This would ensure private and public sector working together and normalize the supply of needed skillsets and prevent a surplus of gender studies degrees.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, your total tuition for 4yrs is $55k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, your total tuition for 4yrs is $40k

I would say that I like where you're going with the pricing model, but I would flip it around.

If you're doing a, say, political science major, you're charged $60,000 and if you're doing an engineering major you're charged $35,000. This would really force students to decide if the degree is worth it at all. Unfortunately, this means the liberal arts would be reserved for the wealthy, but as I've pointed out in other threads, the liberal arts are easily accessible in libraries, on the Kindle, on YouTube, etc. Anyone of any age can study in the liberal arts.

Idk why you keep saying this. You can say the same about any major. I'd argue studying engineering/cs/accounting/finance is easier on your own compared to the insight you gain listening and being able to ask questions to some great professors lecturing liberal arts. I was a math major and it was very beneficial getting to see the thought process of some of my professors who've produced world class research. Am I going to benefit the same having a great mind teaching me what a credit/debit is or how to do a Dcf? Even higher finance stuff like black scholes is relatively easy to learn on your own

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Feb 27, 2018
slippy777:
Troll - Aged 18 Years:
TippyTop11:

Agree, they should also have to price degrees by the average yearly salary of someone in that field. This would ensure private and public sector working together and normalize the supply of needed skillsets and prevent a surplus of gender studies degrees.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, your total tuition for 4yrs is $55k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, your total tuition for 4yrs is $40k

I would say that I like where you're going with the pricing model, but I would flip it around.

If you're doing a, say, political science major, you're charged $60,000 and if you're doing an engineering major you're charged $35,000. This would really force students to decide if the degree is worth it at all. Unfortunately, this means the liberal arts would be reserved for the wealthy, but as I've pointed out in other threads, the liberal arts are easily accessible in libraries, on the Kindle, on YouTube, etc. Anyone of any age can study in the liberal arts.

Idk why you keep saying this. You can say the same about any major. I'd argue studying engineering/cs/accounting/finance is easier on your own compared to the insight you gain listening and being able to ask questions to some great professors lecturing liberal arts. I was a math major and it was very beneficial getting to see the thought process of some of my professors who've produced world class research. Am I going to benefit the same having a great mind teaching me what a credit/debit is or how to do a Dcf? Even higher finance stuff like black scholes is relatively easy to learn on your own

"Great" liberal arts professors? Ha. Ok. Maybe at Harvard or Oxford? Most of them I wouldn't put into the category of "great." As a general rule, great people don't teach undegrad students, or they teach after a successful career or in parallel to a successful career. But setting that aside...

As I've argued in this very thread--multiple times--I think college is "over prescribed" for all people. College is over prescribed even for accountants, engineers, lawyers, etc. But if you're going to make a pure economic argument, we should be discouraging young people from loading themselves up with debt to obtain a liberal arts degree at any school that's not in the top 2% of the nation. We should encourage them to seek alternative means of education rather than obtaining a poli sci degree from Penn State.

Feb 27, 2018
Troll - Aged 18 Years:
slippy777:
Troll - Aged 18 Years:
TippyTop11:

Agree, they should also have to price degrees by the average yearly salary of someone in that field. This would ensure private and public sector working together and normalize the supply of needed skillsets and prevent a surplus of gender studies degrees.

Studying Finance? Last year's average salary for a finance grad (2-5yrs out of school) $55k, your total tuition for 4yrs is $55k

Studying Art? Last year's average salary (2-5yrs out of school) $40k, your total tuition for 4yrs is $40k

I would say that I like where you're going with the pricing model, but I would flip it around.

If you're doing a, say, political science major, you're charged $60,000 and if you're doing an engineering major you're charged $35,000. This would really force students to decide if the degree is worth it at all. Unfortunately, this means the liberal arts would be reserved for the wealthy, but as I've pointed out in other threads, the liberal arts are easily accessible in libraries, on the Kindle, on YouTube, etc. Anyone of any age can study in the liberal arts.

Idk why you keep saying this. You can say the same about any major. I'd argue studying engineering/cs/accounting/finance is easier on your own compared to the insight you gain listening and being able to ask questions to some great professors lecturing liberal arts. I was a math major and it was very beneficial getting to see the thought process of some of my professors who've produced world class research. Am I going to benefit the same having a great mind teaching me what a credit/debit is or how to do a Dcf? Even higher finance stuff like black scholes is relatively easy to learn on your own

"Great" liberal arts professors? Ha. Ok. Maybe at Harvard or Oxford? Most of them I wouldn't put into the category of "great." As a general rule, great people don't teach undegrad students, or they teach after a successful career or in parallel to a successful career. But setting that aside...

As I've argued in this very thread--multiple times--I think college is "over prescribed" for all people. College is over prescribed even for accountants, engineers, lawyers, etc. But if you're going to make a pure economic argument, we should be discouraging young people from loading themselves up with debt to obtain a liberal arts degree at any school that's not in the top 2% of the nation. We should encourage them to seek alternative means of education rather than obtaining a poli sci degree from Penn State.

I think the more important part to consider is the students plan/goals post degree. I have 3 friends who obtained the exact degree you mentioned from the exact school with the plan of getting a 4.0 and going to law school. One is at Chicago, Michigan, and BU. So I'd argue the BS was a pretty good investment as it helped them get into top law schools by 1. Being easy AF and 2. Drastically improving their writing skills. Any time I had a big paper they were able to help me out a lot from their exp in their BS major. But to the kid majoring in women's studies with no plan in mind? Yeah I agree we need to do something about that

Apr 2, 2018

+1 to each of your comments, well said

Apr 6, 2018

Hey good post. Didn't realized you had posted and I basically said the same thing again

Feb 24, 2018

this is a great post, +1

Feb 24, 2018

badly.

it's the only form of debt where the underwriter has absolutely no regard for the borrower's ability to pay back the loan.

imagine if I walked into my Mercedes dealer and said "hey guys, I'm enrolled in a performance driving course. give me a financing deal on that new AMG GT S cabriolet. oh, and don't look at my finances. just trust that I'll get enough sponsorships afterwards to repay the loan."

unsustainable. extremely myopic. borderline enslaving.

if you can't afford tuition, you shouldn't go to college. (unless it's a highly techincal degree)

    • 1
Feb 24, 2018
MonacoMonkey:

badly.

it's the only form of debt where the underwriter has absolutely no regard for the borrower's ability to pay back the loan.

imagine if I walked into my Mercedes dealer and said "hey guys, I'm enrolled in a performance driving course. give me a financing deal on that new AMG GT S cabriolet. oh, and don't look at my finances. just trust that I'll get enough sponsorships afterwards to repay the loan."

unsustainable. extremely myopic. borderline enslaving.

if you can't afford tuition, you shouldn't go to college. (unless it's a highly techincal degree)

I disagree with your last line. Loans would be fine if the government and certain private undergrad lenders were able to discriminate based on a wholistic set of criteria (hs GPA/SAT, undergrad selectivity, major, undergrad GPA, internships, current credit history, etc.). The issue is that this could never happen in today's politically and racially charged environment, as such a program would be declared racist and discriminatory due to a disproportionate number of minorities (excluding asians obv) and women being unable to get loans.

    • 4
Feb 28, 2018

I agree with you on changing the rates and also that it wouldn't go over well politically. Too bad people don't have common sense anymore.

That said, I think a fix is changing student loan rates- you have a debt with minimal risk but still priced at 4-7%? Seems high, I think they should reduce student loans to the Feds fund rate. This would be more appropriate for the risk level and would help reduce the burden on those who made stupid decision.

Don't get me wrong, if you decide to take out $100k to go party for 4 years then you should have to pay it all back but I think punishing them with an interest rate that I can get on a personal loan is a bit much.

Apr 4, 2018

this isn't a disagreement. it's following up on my thoughts.

"it would be find if the govn't could discriminate". BUT THEY CANNOT.
and therein lies the monstrosity of a problem. I completely agree with your hypothesis.

Apr 5, 2018

If they privatized student loans then they are able to.

No pain no game.

Feb 28, 2018

Too true, unfortunately.

Don't even get me started on costly crap private schools... I understand it MIGHT be worthwhile taking out a 100K+ loan to go to an Ivy, but not for a school like Baylor, USC, etc. Just go to a decent public school and call it a day, pay in-state tuition. Don't complain about your enslavement to debt owed to a subpar school to me.

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Apr 2, 2018

All the liberal arts majors will be publicly burned at the stake in front of the masses. They will pay with the only thing they have left after such subpar decision making; their lives. Their assets (if they have any aside from immaterial items like paint brushes and ripped hoodies) will be auctioned off like that of an incarcerated dope dealer and sold for pennies on the dollar. Millions will die, yes, but the US will recover, and never again will so many mindless lemmings overextend their leverage (only financial institutions should be allowed to do so). The reduction in population will allow the US to prosper while the rest of the world suffers from overcrowding-related repercussions. Trump will stay on for another 2-6 terms, gracefully defending our borders while Melinda moves in with Tom Cruise. You heard it here first

    • 2
Apr 4, 2018

It'll end in tears, then suicides, riots in the streets, calls to put bankers into gulags.

1) Interest rates are rising, which will make debt for many unsustainable.
2) There's evidence that many haven't finished paying (nor are anywhere close) their debt by 35, a decade after finishing university.
3) Low interest rates have destoyed savings. If you dare, go look how many Americans have no savings whatsoever, and how many millennials haven't saved anything yet.
4) If I recall correctly, there are actually subprime student loans securities out there. You know how it goes.
5) Humanities faculties have been utterly destroyed. The only good thing that will come out of this catastrophe will be de fact that humanities will have to be de-funded so that the SJW cancer is eradicated. Curricula in education, gender studies, ethnic studies, human resources will have to be purged in their entirety. If this doesn't happen soon enough, even STEM will be contaminated. (I legit dated briefly a chick studying biology at UCLA, she was forced to take African studies and write an essay on Black Lives Matters)
6) The corporate world, which ironically is the one pushing the most for the point 5, isn't enough to collect the crap it produces and pay for it. Starbucks will push for diversity and then still pay you a minimum salary for bartending with your phd in social justice.
7) Half of millennials now believe socialism is a fairer system, so when the happening happens, run before comrade genderfluid knocks at your door. Liberal media will fully endorse this until their doors are finally knocked as well. If you are white, male and heterosexual, get out of the country as soon as the bubble bursts and move to the Visegrad bloc.

    • 1
Apr 4, 2018

The Student Security Act is a phenomenal idea that unfortunately doesn't seem to be getting any traction. It wouldn't solve the problem entirely, but it would take a huge bite out of it while also taking a big step towards keeping Social Security solvent.

Basically, it would give borrowers of federal loans the option to defer collecting Social Security by up to 73 months beyond their current date of eligibility. In exchange for each month you defer, you would get a $550 credit off of your student loan balance ($40,150 total if you take the full credit). It would be strictly voluntarily, and you could defer for less than 73 months (in 1-month increments) if you don't want or need the entire amount of the credit.

There's literally no common sense reason for anyone to oppose this, but it does not seem to be going anywhere.

Apr 5, 2018

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Apr 5, 2018
Troll - Aged 18 Years:

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Valid points, however I'd say that:

a) It's true that this could end up being a bad deal for the taxpayer....but even in the worst case scenario it's better than simply forgiving most or all of the debt next time the Democrats control the government, which they're likely to try but are less likely to get away with if the Student Security Act or something similar is in place

b) We're talking about grown adults (20s/30s) and pushing back SS eligibility at most to age 73. If they take the money they would have used to pay off student loans and either invest it or use it to pay off credit card debt it's a slam-dunk good financial decision. If they blow it (and many would), then maybe not...but it's still their decision to make.

Apr 5, 2018
Mantis Toboggan MD:
Troll - Aged 18 Years:

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Valid points, however I'd say that:

a) It's true that this could end up being a bad deal for the taxpayer....but even in the worst case scenario it's better than simply forgiving most or all of the debt next time the Democrats control the government, which they're likely to try but are less likely to get away with if the Student Security Act or something similar is in place

b) We're talking about grown adults (20s/30s) and pushing back SS eligibility at most to age 73. If they take the money they would have used to pay off student loans and either invest it or use it to pay off credit card debt it's a slam-dunk good financial decision. If they blow it (and many would), then maybe not...but it's still their decision to make.

People born today in the U.S. are expected to have a life expectancy of 90. So I wouldn't be so quick to assume any retirement age "at most." What could end up happening is that they get their debt forgiven, get their retirement age pushed back and then so does everyone else to match them. I totally reject the idea of the taxpayer exchanging money today for essentially nothing. It's a terrible deal for the taxpayer. 50 years ago was 1968--how much has changed since then? How on Earth could we expect the taxpayers to exchange debt forgiveness today for some nebulous future deduction of a benefit in 2068? Makes no sense.

Apr 5, 2018
Troll - Aged 18 Years:
Mantis Toboggan MD:
Troll - Aged 18 Years:

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Valid points, however I'd say that:

a) It's true that this could end up being a bad deal for the taxpayer....but even in the worst case scenario it's better than simply forgiving most or all of the debt next time the Democrats control the government, which they're likely to try but are less likely to get away with if the Student Security Act or something similar is in place

b) We're talking about grown adults (20s/30s) and pushing back SS eligibility at most to age 73. If they take the money they would have used to pay off student loans and either invest it or use it to pay off credit card debt it's a slam-dunk good financial decision. If they blow it (and many would), then maybe not...but it's still their decision to make.

People born today in the U.S. are expected to have a life expectancy of 90. So I wouldn't be so quick to assume any retirement age "at most." What could end up happening is that they get their debt forgiven, get their retirement age pushed back and then so does everyone else to match them. I totally reject the idea of the taxpayer exchanging money today for essentially nothing. It's a terrible deal for the taxpayer. 50 years ago was 1968--how much has changed since then? How on Earth could we expect the taxpayers to exchange debt forgiveness today for some nebulous future deduction of a benefit in 2068? Makes no sense.

By "at most" I meant that 73 is the maximum age they can defer benefits to. The bill would have allowed borrowers to defer a maximum of 6 years and 1 month of benefits.

Yes, it's a bad deal for the taxpayer...IF you assume that a) there won't be some sort of mass student debt amnesty in the next decade or so anyway (think President Fauxchohontas or Kamala Harris) and b) Social Security will still be solvent and paying out in ~40-50 years. If one or both of those turns out not to be the case then it's a good deal for the taxpayer, and if it helps prevent A from happening at all then it's a fantastic deal.

Apr 5, 2018
Mantis Toboggan MD:
Troll - Aged 18 Years:
Mantis Toboggan MD:
Troll - Aged 18 Years:

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Valid points, however I'd say that:

a) It's true that this could end up being a bad deal for the taxpayer....but even in the worst case scenario it's better than simply forgiving most or all of the debt next time the Democrats control the government, which they're likely to try but are less likely to get away with if the Student Security Act or something similar is in place

b) We're talking about grown adults (20s/30s) and pushing back SS eligibility at most to age 73. If they take the money they would have used to pay off student loans and either invest it or use it to pay off credit card debt it's a slam-dunk good financial decision. If they blow it (and many would), then maybe not...but it's still their decision to make.

People born today in the U.S. are expected to have a life expectancy of 90. So I wouldn't be so quick to assume any retirement age "at most." What could end up happening is that they get their debt forgiven, get their retirement age pushed back and then so does everyone else to match them. I totally reject the idea of the taxpayer exchanging money today for essentially nothing. It's a terrible deal for the taxpayer. 50 years ago was 1968--how much has changed since then? How on Earth could we expect the taxpayers to exchange debt forgiveness today for some nebulous future deduction of a benefit in 2068? Makes no sense.

By "at most" I meant that 73 is the maximum age they can defer benefits to. The bill would have allowed borrowers to defer a maximum of 6 years and 1 month of benefits.

Yes, it's a bad deal for the taxpayer...IF you assume that a) there won't be some sort of mass student debt amnesty in the next decade or so anyway (think President Fauxchohontas or Kamala Harris) and b) Social Security will still be solvent and paying out in ~40-50 years. If one or both of those turns out not to be the case then it's a good deal for the taxpayer, and if it helps prevent A from happening at all then it's a fantastic deal.

There's not going to be a mass debt amnesty. You'll never get that through 2 houses of Congress and a presidential signature. There is zero public appetite for that.

Apr 6, 2018

Debt Amnesty = AIG + Bank Bailouts
--if corporates can get it, why not individuals?

Not saying it will happen - just trying to keep it in context

    • 1
Apr 6, 2018
Troll - Aged 18 Years:
Mantis Toboggan MD:
Troll - Aged 18 Years:
Mantis Toboggan MD:
Troll - Aged 18 Years:

It's an interesting idea, but I can think of a number of objections. For example, you're costing the taxpayer a known quantity in the short-run in exchange for saving the taxpayer an unknown quantity--on paper--50 years from now on a program that may or may not exist in a half century. Another objection is that you're asking a 20-something to make a retirement decision 50 years in advance. As much as I've bashed young people lately, I do think it's an unfair burden to place on someone to make such a decision 5 decades in advance. 95% of people will exchange money today for the potential of money 50 years from now.

Valid points, however I'd say that:

a) It's true that this could end up being a bad deal for the taxpayer....but even in the worst case scenario it's better than simply forgiving most or all of the debt next time the Democrats control the government, which they're likely to try but are less likely to get away with if the Student Security Act or something similar is in place

b) We're talking about grown adults (20s/30s) and pushing back SS eligibility at most to age 73. If they take the money they would have used to pay off student loans and either invest it or use it to pay off credit card debt it's a slam-dunk good financial decision. If they blow it (and many would), then maybe not...but it's still their decision to make.

People born today in the U.S. are expected to have a life expectancy of 90. So I wouldn't be so quick to assume any retirement age "at most." What could end up happening is that they get their debt forgiven, get their retirement age pushed back and then so does everyone else to match them. I totally reject the idea of the taxpayer exchanging money today for essentially nothing. It's a terrible deal for the taxpayer. 50 years ago was 1968--how much has changed since then? How on Earth could we expect the taxpayers to exchange debt forgiveness today for some nebulous future deduction of a benefit in 2068? Makes no sense.

By "at most" I meant that 73 is the maximum age they can defer benefits to. The bill would have allowed borrowers to defer a maximum of 6 years and 1 month of benefits.

Yes, it's a bad deal for the taxpayer...IF you assume that a) there won't be some sort of mass student debt amnesty in the next decade or so anyway (think President Fauxchohontas or Kamala Harris) and b) Social Security will still be solvent and paying out in ~40-50 years. If one or both of those turns out not to be the case then it's a good deal for the taxpayer, and if it helps prevent A from happening at all then it's a fantastic deal.

There's not going to be a mass debt amnesty. You'll never get that through 2 houses of Congress and a presidential signature. There is zero public appetite for that.

If the Democrats get control of both houses of Congress plus the WH in the near future, it's more likely to happen than not IMO. Media will crank up the outrage machine and help them push it through. By no means 100% sure to happen but north of 50% (again, if Dems get full control of government in the next 5-10 years or so).

Apr 6, 2018

Wow this is actually a really interesting idea. Surprised I haven't heard of it before nice

Apr 6, 2018

Wait... so they get money accelerated? Paid for by my 40%+ tax rate... good to know
So that this idiot can mill around for a couple years and then decide they need a masters in BS too???

Why don't we don't enabling the poor decision makers?

Apr 5, 2018

It utterly pisses me off when the institution approves the Grants/Loans to the kids wearing the latest style clothing, new iPhones, driving BMW's/Benz/Audi's. Yes, these are the liberal arts students ranting on FB how the world is unfair or constantly spamming photos/updates about their lives.

SDSU, if you look at their Transfer Admission Guaranteed programs, and yes, UCSD is included, has majority STEM majors that they allow these transfers in. They're trying to cut down on the students transferring into an 'arts' program.

@neink Yes, STEM is facing the dilemma as well. I know the faculty heads at both institutions in engineering. Many of the students coming in lack strong mathematical skills to the point the institutions tried to implement a remedial/refresher mathematics class as a requirement prior to continuing the upper division coursework. This failed. The only option they have now is to dumb down the coursework.

@neink I agree with #6. Recruiting/Headhunting/Temp Agencies are being flooded with resumes/CV's of people with BA/MA degrees for data entry/office assistant type role. Most of these jobs are easily trained at a Community College that offers a program for one semester and you get direct placement with local businesses/corporations. Sad, ain't it?

No pain no game.

Apr 5, 2018

The dumbing down is real. I have a friend who studied maths (Bsc) in Italy, went on to take a Master in the same discipline at Oxford and told me the entire program didn't teach him anything he didn't already know.

He still appreciated having a significantly broader network of people, but he effectively paid for that, not for the education.

Apr 6, 2018

Simple -- if the economy was half-ass competent at creating good-paying jobs it wouldn't be an issue whatsoever. Instead we have totally incompetent leaders and policymakers stuffing a shitload of pathetic regulations and shitty policies (e.g., ACA) down the economy's throat, which is screwing businesses and workers up the ass.

    • 2
    • 2
Apr 6, 2018
SF_G:

Simple -- if the economy was half-ass competent at creating good-paying jobs it wouldn't be an issue whatsoever. Instead we have totally incompetent leaders and policymakers stuffing a shitload of pathetic regulations and shitty policies (e.g., ACA) down the economy's throat, which is screwing businesses and workers up the ass.

wrong again hippie. if the government didn't force feed easy cash there wouldn't be a bubble, just like the housing market.

If the glove don't fit, you must acquit!

    • 4
    • 1
Apr 6, 2018

No idea what your first sentence means. The reality is college tuition keeps going up because the market demand allows it to. Yet when the kids get out, they can't get good-paying jobs. Many stay unemployed, go part-time, and stay underemployed for long periods of time. There's too much regulation, too much federal spending, and too many taxes and shitty laws that are sucking the wind out of the economy. Outside the NYC/SF bubble things are not so pretty in this country. If you sawed both off and sent them off to sea this country would be in a recession.

    • 1
Apr 6, 2018
SF_G:

No idea what your first sentence means. The reality is college tuition keeps going up because the market demand allows it to. Yet when the kids get out, they can't get good-paying jobs. Many stay unemployed, go part-time, and stay underemployed for long periods of time. There's too much regulation, too much federal spending, and too many taxes and shitty laws that are sucking the wind out of the economy. Outside the NYC/SF bubble things are not so pretty in this country. If you sawed both off and sent them off to sea this country would be in a recession.

i disagree with your 2nd sentence. it has nothing to do with demand, and all to do with money supply/financing..it's artificial inflation. financing of worthless assets, ie useless degrees from shitty schools and allowing anyone with a pulse to qualify for 30k/yr in loans is why the bubble is what it is. its not demand driven, its easy money driven like the housing market. that's why a bubble pops, not BC demand magically disappears, wtf are they teaching kids these days?

this everyone has a right to a degree is the dumb shit churning and burning these mba baristas. that's why acceptance rates need to selective, a degree in history from a community college should not get the same loan capacity as a kid studying engineering at MIT, but in the fedloan's eyes they are, and the system is designed to fuck em over just like selling houses to sub prime with robo doc signing. it's so damn obvious.

your 3rd sentence proves this, if someone gets a degree, and can't get a job, how does demand keep going up? now they let these over levered kids make a deal to only pay 10% of income under diff payment plans, with loan forgiveness at the end...you can go get a med degree, rack up 300k in debt, go be a teacher for 40k and pay 400/yr for ten years, and owe absolutely nothing, not even tax on forgiveness (if in public sector, private is 15yrs with income tax levied on forgiveness amount).

who do you think foots the bill? the same person who footed the bank bailout, that somehow shored up bank balance sheets while the avg american became homeless.

If the glove don't fit, you must acquit!

    • 2
Apr 6, 2018

The numbers still indicate that college graduates do much, much better economically than non-college graduates. Plus the labor force is becoming increasingly biased toward those with a degree. The natural decision for most students these days, in light of this fact, is to go to college, even if tuition was hiked 3.5% over last year.

People go to college and further their education to make themselves more employable. It's in nobody's plan that they get a degree and four years later they can't find a job because of a soft market. Nobody going to college today thinks, "I'm not going to bother going to college b/c the job market will suck in the summer of 2020 and I'll become unemployed/underemployed and all my time/money/hard work will have been a waste so I'll just go pull weeds or clean windows for a living."

The expectation is that a degree will pay off many years down the line, and it does for the vast majority of individuals by increasing their lifetime earnings by $1mm+. It still makes sense to go to college, given we're still above the breakeven point. Until that reality changes, we're still going to see massive demand to attend college. In today's society, it's a fairly inelastic good.

Regarding history at so-and-so community college vs. MIT engineering, if we assume no non-loan financial aid, the discrepancy in tuition over four years is still $200K+. Harvard, MIT, Wharton, etc. could uniformly hike their tuition 10% for next year and it still wouldn't make a shit. The demand to attend these institutions is still going to be through the roof.

Btw, many people go halfway through college before declaring a major. If people know they're going to be discriminated against because they want to study medieval literature, they'll simply lie about what they want to study and won't declare until the end of sophomore year if that becomes a criteria.

If you want to talk about potentially ass backward policies, consider Clinton's totally fucked up, nonsensical, economically stupid plan to make college "free." Don't have time to explain but this article is spot on: http://seekingalpha.com/article/3998717-free-colle...
Explains the massive amount of human capital misallocation we'd get by making college "free" by getting rid of a part of the supply/demand market.

Apr 6, 2018

The best fix would be for the federal government to cut its losses get out of the student loan business.

Apr 6, 2018

Have to stop federally guaranteeing loans. Knowing people can get approved for cost of attendance regardless of future plans, knowledge, or intentions has resulted in tuition skyrocketing.

    • 2
Apr 6, 2018

Obviously fixing past made loans is out of the question other than writing it off. To fix the future you're more in need of an education reform. There shouldn't be loans being made to people who are obtaining an education with no job prospectus.

It'd be interesting to see information on the majors/schools of people who's loans have defaulted or are in distress. Maybe then you could place pressure on schools to encourage worthwhile majors/cut irrelevant ones or block funding to their students.

Apr 6, 2018

Not that I necessarily disagree with you and the others above regarding loans to people w/o job prospectus... but what do you do then?

"Kid: Hey, I need a loan to go to school to become an investment banker"
"Bank: Ok, cool can you prove that you have a chance?"
"Kid: No, but I really want to learn about murders and executions, and will network a lot to get into them"
"Bank: Sorry, we don't know if you can get the job, so no loan for you.".

See where this is going?

...

Apr 6, 2018

I see what you mean and of course it isn't a flawless system. In my opinion though if a student is interested in IB he's majoring in finance most of the time. That in general has a lot better job prospectus than art history, gender studies, evolution of cats, etc.

If schools were more focused on providing the best resources available to core programs they offered (Business, STEM, etc.) those classes would be even more relevant to their careers and could be structured to be more applicable for when they enter the work force.

While diversity is important to keep us from being excel robots, I believe the education system would benefit if it correlated it's focus with which majors had the greatest job prospectus and eliminate the others entirely. We're in the age of the internet of endless knowledge. If you want to learn about art history you don't need a 15 year old textbook and class 3 times a week. That's something you can do in your spare time any night of the week.

    • 1
Apr 6, 2018

If you never fund student loans for people who want to study art history, english literature etc., then the amount people who choose these majors would drop significantly, which ultimately filters up to the top end of academia, i.e. professors, academics who could actually make groundbreaking contributions in these fields. Without these breakthroughs the fields themselves would become stagnant, and there will be no new books to be read in these fields. You can hardly become an authority in these fields just by spending some spare time on it during some nights of the week.

I don't think it's as simple as saying nobody who wants to learn about art history needs to study it at a college.

Apr 6, 2018

what do you think gpa and test scores are? they are basically a credit rating along with the ranking of the school and classification of the degree.

BreakingRich:

Not that I necessarily disagree with you and the others above regarding loans to people w/o job prospectus... but what do you do then?

"Kid: Hey, I need a loan to go to school to become an investment banker""Bank: Ok, cool can you prove that you have a chance?""Kid: No, but I really want to learn about murders and executions, and will network a lot to get into them""Bank: Sorry, we don't know if you can get the job, so no loan for you.".

See where this is going?

If the glove don't fit, you must acquit!

    • 1
Apr 6, 2018

Test scores are becoming somewhat irrelevant as studies are showing that students from wealthier families tend to have higher scores. Using SAT / ACT scores would cause some sort of problem. And GPA is not a fair measure, because every school grades differently with some being more lenient and others much harsher. (Didn't box your math answer? Well you dropped from an A to B)

Ranking of the school is also subjective. For example, I went to a large state school, non-target. That being said, we have some of the top programs in certain fields as deemed by US News and others. What system would you use to separate an English major's prospects at NYU versus a Finance major at NYU? No easy way to go about this one in my eyes.

...

    • 1
Apr 6, 2018

there are exceptions to any rule, but you certainly don't run an institution based on them. you can win the lottery also, but i doubt you will spend all your money on the chance. likewise all risk/insurance/finance evaluation uses metrics, student loans need to also-is the point. everything you mentioned is already common knowledge, schools that have a concentration in an area are respected in those areas. gpa isn't 100% accurate, but these weightings and metrics change all the time, just like credit scoring methodologies. you don't throw the baby out with the bathwater because a non-target became ceo of an investment bank, now everyone will suddenly transfer to non-targets.

If the glove don't fit, you must acquit!

Apr 6, 2018

For banks start pooling and MBS loaning based on degree type and where the degree is from.

Why should a bank charge the same interest rate on a $50,000 student loan for a kid who is getting a bachelors degree in literature from Idaho State University compared to a $50,000 student loan for a kid who is getting a bachelors in mechanical engineering from MIT.

It sounds awful but banks profile loans based on credit score. Why not have a degree score ranking?

In fact, the banks tailored by government incentive can actually incentivize students towards a career path. Charge a 2% interest rate for in demand STEM degrees and charge a 5% interest rate for under water basket weaving.

Apr 6, 2018

Private lenders are already doing that and if you attend a good program, you can get much a better rate than the 6% offered on federal loans (I've been paying ~3% on my MBA loan). SoFi was essentially founded to target this opportunity.

I don't think the government playing winners and losers is a good idea and anyway, it would never be politically palatable, especially with the democrats in charge. That's why the government should get out of the student loan space and let free markets function as they should.

Apr 6, 2018

Was unaware of this, links to any relatively short articles I can read?

...

Apr 6, 2018

This Bloomberg article is a very good overview
http://www.bloomberg.com/news/articles/2015-06-10/...

Apr 6, 2018

Good read, thanks!!

...

Apr 6, 2018

Wanted to mention this. You're seeing these online/marketplace lenders (SoFi, Earnest) cherrypick the government by offering to refinance successful graduates at a lower rate. In addition to the traditional credit underwriting (FICO, income), these guys also ask where you went to school, who your employer - which makes sense to me.

The bigger concern is that the government is holding onto shittier loans made to Joe Schmoe who took out $60k to go to a Corinthian for-profit college. Someone will have to pay for those charge-offs...

On the other hand, SoFi to date has issued 10 of these private label SLABS (student loan ABS) that essentially have clean collateral pools because of this arb. This is definitely SoFi's (and other marketplace lenders) largest profit machine.

(btw: I'm short SoFi because I think the arb will erode over time, due to other market entrants and/or gov't leaving the student lending business)

Apr 6, 2018
REPE8:

For banks start pooling and MBS loaning based on degree type and where the degree is from.

Why should a bank charge the same interest rate on a $50,000 student loan for a kid who is getting a bachelors degree in literature from Idaho State University compared to a $50,000 student loan for a kid who is getting a bachelors in mechanical engineering from MIT.

It sounds awful but banks profile loans based on credit score. Why not have a degree score ranking?

In fact, the banks tailored by government incentive can actually incentivize students towards a career path. Charge a 2% interest rate for in demand STEM degrees and charge a 5% interest rate for under water basket weaving.

How about the Feds only offer financing on the first $100K of debt-- enough to cover in-state tuition? That way nobody can get into too much trouble with student debt. The problem isn't the kid studying literature at Idaho State who needs $50K or the kid at MIT studying engineering who needs $50K. It's the bozo studying Art History at Princeton who needs $250K.

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Apr 6, 2018

Here in Canada the government subsidizes roughly half of the cost, and the universities make up the difference with internationals. It's a little brute force, but it settles the debt. Would never fly in the US though.

Apr 6, 2018

Thank god. America was founded on individualism which is one reason why obamacare has gotten so much shit. Our Protestant founders believed in you eat what you kill. Individualism is one reason why America was a great nation. If you choose not to go to college you should not have to subsidize someone who does. that person can pay their own way.

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Apr 6, 2018

That "individualism" has doubled the price of the average bachelors degree even if we don't include government subsidies. Not to mention the GoC offers incentives for certain professions including the trades, so everyone has subsidized education. As well, the individualism of the founding father only had to do with the Federal level as opposed to the country as a whole. Given how much smaller Canada is we run our government a lot more like a State in the American context. Our system would be impossible to replicate efficiently on a Federal basis for 300+ million people.

P.S. if this "eat what you kill" shit was actually true like most cons think why have a property tax?

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Apr 6, 2018

Wrong, government encouraging students to attend college(when they shouldn't) and subsidizing student loans is what has caused college costs to go up. P.S. when I say "Thank god" I was not referring to thank god Canada subsidizes college but that the US does not.

Property tax in America is mainly (~60-70%) allocated towards schools. The rest goes to county and local governments mainly. Property tax is a big issue in America and most people want it lowered. Great way to do that is by running schools more efficiently and cost effectively.

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Apr 6, 2018

so on point it's honestly disheartening. that's why our public schooling has turned to shit and private schooling is top notch, govt steps in, makes promises to the lowest common denominator, and then when the situation gets worse, blames those who succeed.

Build the Wall:

Wrong, government encouraging students to attend college(when they shouldn't) and subsidizing student loans is what has caused college costs to go up. P.S. when I say "Thank god" I was not referring to thank god Canada subsidizes college but that the US does not.

Property tax in America is mainly (~60-70%) allocated towards schools. The rest goes to county and local governments mainly. Property tax is a big issue in America and most people want it lowered. Great way to do that is by running schools more efficiently and cost effectively.

If the glove don't fit, you must acquit!

Apr 6, 2018
Build the Wall:

<

p>government encouraging students to attend college(when they shouldn't) and subsidizing student loans is what has caused college costs to go up.

Agreed. +1

Apr 6, 2018

Get the fed out of the business. Leave whoever gives the loans to take the risk of repayment.

Make it possible to default on them at the cost of XX% of your wages garnished for XX years or until repayment. This keeps people from defaulting for no reason, but ensures any crushing burden can be mitigated while you still feel the pain of your bad decisions.

Apr 6, 2018

Whenever I hear "default" and "student loans" in the same sentence I get nervous. A lot of kids will try to find a way to default if given the opportunity. Obviously someone is going to have to pay for it. Doubtful the college will so it will most likely be the taxpayer(me and you). I do not want to have to pay for someones defaulted student loan

Apr 6, 2018
Build the Wall:

Whenever I hear "default" and "student loans" in the same sentence I get nervous. A lot of kids will try to find a way to default if given the opportunity. Obviously someone is going to have to pay for it. Doubtful the college will so it will most likely be the taxpayer(me and you). I do not want to have to pay for someones defaulted student loan

If the gov't doesn't back student loans cost of attendance will drop.

Apr 6, 2018
SECfinance:

<

blockquote class="If the gov't doesn't back student loans cost of attendance will drop.

But is this a bad thing?

Also, in response or anticipated response to lack of financing, wouldn't colleges have to lower tuition and cut costs?

    • 1
Apr 6, 2018
Steve83:

SECfinance:

But is this a bad thing?

Also, in response or anticipated response to lack of financing, wouldn't colleges have to lower tuition and cut costs?

It's not a bad thing, I was saying it was a good thing.

Apr 6, 2018

Gotcha.

For some reason, I read it as "attendance" and not "costs of attendance".

Apr 6, 2018

Federal government shouldn't be involved. If banks don't see a profit in a loan without a federal guarantee, that's a pretty good sign the loan is probably going to sink.

Apr 6, 2018

The loans aren't the issue. The issue is the spiraling costs that come with guaranteed money, that and how university pricing models are set up. When you have codified mandates that place a floor on pricing as a fixed percentage of available student aid then when you increase the aid available you force prices up. The idiotic thing is that politicians love this shit because they think they can trap people into voting dependencies. They couldn't give a fuck about any of these retards.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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Apr 6, 2018
heister:

The loans aren't the issue. The issue is the spiraling costs that come with guaranteed money, that and how university pricing models are set up.

I'd argue that the loans are also an issue, but I completely agree that college spending is completely out of control, meanwhile most schools complain that they don't get enough funding. Both the administration and the professor unions have no control over themselves.

Apr 6, 2018

I am not saying loans aren't an issue for those who have them. What I am saying is that in general the loans in theory aren't a problem, the problem is how the tuition is set. When you tie tuition prices to a fixed percentage of available aid then you set in motion the exact situation we have now.

Also we don't really have a problem with expenditures on professors. That number hasn't changed adjusted for inflation much in twenty years. What has changed is spending on administration. This number now is a multiple of spending on actual professors.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Apr 6, 2018

Course of study based lending is the key, with checkpoints along the way (ie: can't get a loan for the next year if you don't maintain a X.XX GPA). This limits the downside lenders face since they can taper off loan amounts as the likelihood of a borrower becoming a barista grows.

The problem is that people will have to learn how to deal with being told "no, we can't give you money because what you plan to do with it is dumb".

Apr 6, 2018

the issue i see with that is let say someone misses the GPA cut off by 0.XX. They can't get a loan for next year and they do not have the means to pay out of pocket so what do they do? Quit school to work a menial job? They still have X years of student loan debt but without a degree to show for it. I'd imagine even a humanities major with a bachelors degree has a higher earning potential than someone with XX credits in humanities ie: no degree.

Apr 6, 2018

Good point, I should have clarified or added additional detail.

I'm not recommending a hard cutoff of a given GPA, but that GPA is one of the metrics considered. Say you miss the cutoff by 0.1. If you missed it because you took a few extra classes or harder classes, or even because you were more involved on campus (or other extracurriculars), you would of course get some wiggle room.

Additionally, if your GPA falls, you may just face a higher interest rate versus a strict inability to get a loan.

Apr 6, 2018

Underwrite the risk accordingly. I wouldn't lend money to asocial Suzy who wants to major in English and barely got into that state school.

Apr 6, 2018

How do 1.1 billion borrowers default when we only have about 300 million people in this country?

Apr 6, 2018

I'm really hoping it's a typo and he means million.

alternatively, it could mean individual loans. for example, I got 1 new loan per semester, so technically, I had 8 student loans at graduation, even though I'm just one borrower. not sure if it works the same at other schools, just a thought

Apr 6, 2018

I think this thread proves the student loan market is broken if for no other reason than at least 4 people have confused the meanings of 'prospects' and 'prospectus'.

The two words mean VERY different things. Your job 'prospects' after college depend on the quality of school you attend, your GPA, your connections, your interpersonal skills, etc. A 'prospectus'is a document describing something. For instance, if you had attended a decent college, they might have sent you and your parents a 'prospectus' describing the institution and its offerings before you enrolled. To that point, English majors may be more valuable than some of you seem to think.

Back to the question at hand, there are few clear options for the government at the moment as it concerns the student loan market. Allowing people to take income-based repayment plans, and then write off the remainder of the loans after 10-15 years depending on the type of post-college employment they pursued makes sense. Other countries have similar policies, and I think that's sensible given the fact that you cannot default on student loan debt even in bankruptcy.

Beyond that, the government should provide incentives for students to study particular subjects. I hear constantly that we don't produce enough STEM graduates. Since the US immigration system doesn't allow for enough H1B workers to fill the perceived gap in STEM majors, why don't we incentivize more Americans to focus on those majors? We could provide more grant money up front so those students don't have to take out such large loans, but that doesn't really solve the problem.

If the problem is that we produce too few engineers, then you want to provide incentives for engineers, not just engineering students. You could get an engineering degree and then become an investment banker. It should not be cheaper for you to do so than for, say, a finance major. If you actually work as an engineer in some way (even financial engineering), then perhaps you could get a certain portion of your loan retired every year you remain in a related profession.

That said, I'm not sure what you do for the 20% of the market that is already in distress. If you already took a loan to attend a shitty school to study some irrelevant topic, I think the income-based repayment option is your best bet. The problem comes when someone becomes long-term unemployed. If you miss your payments, I think you get disqualified from the scheme. That means the people with the least ability to pay are trapped in a system where they have few job prospects, little income, and terrible credit (which further hurts their job prospects). If I were one of those people, I'd think I'd simply leave the country and walk away from the loans. If the alternative is simply living a life of poverty that they cannot escape (because they can't even default on the loans), I think I'd just leave.

Obviously, the government doesn't want people leaving en masse due to student debt issues, so perhaps it could either retire debts after a certain period, or provide a jobs program that simultaneously employs people while retiring some of their debt each year (though, that sounds something like indentured servitude).

The government can't start letting people default on their debts because you'd see far too many strategic defaults. That said, there has to be a better mechanism for repaying student loans. Perhaps you could repay loans with pre-tax earnings up to a certain point. That way, the government can still charge an interest rate so student loans aren't such a massive burden to taxpayers (which in itself is a bit ridiculous, as it's effectively a transfer payment from indebted, impoverished 20-somethings to their parents and grandparents). You're allowed to do so with pension contributions, so why not with student loans? Nothing hurts you more in retirement than not saving anything for, say, a decade or more as you repay your loans.

Or perhaps the government could allow people below a certain income to make payments directly against the principal. I'm not sure why we don't already do this. The government charges such high rates of interest because taxpayers don't want to pay for college educations, and those interest rates are needed to prevent the program from collapsing (because the stronger credits in the pool have to absorb the bad decisions of the weaker credits). I think this is wrong.

Education is the silver bullet that improves basically all aspects of the economy. We guarantee a free education through high school to everyone because a high school degree used to mean something. You used to be able to get a decent job with a high school diploma. That's not true any longer. The calculus on attending college isn't the same for our generation as it was for our parents and grandparents. We have to go to college to get decent jobs. And until society sees college education as a right of its citizenry, the ridiculous student loan market is going to continue in some absurd way.

Apr 6, 2018

Hey if you want more people in STEM occupations how about we ELIMINATE H1B visas. Why? Because H1B Visa holders will work at a below market wage just to get into the country. H1B Visa holders DEPRESS the price of wages in the STEM fields. The free market solution is to eliminate H1B and allow STEM wages to rise to market so we can naturally attract more interest in those fields.

Apr 6, 2018

So you are saying that no foreigners should be allowed to work in these fields?

Apr 6, 2018

Yes, we need to drastically cut down on the number of foreign workers in general but especially in the STEM fields. The reasons are numerous, both economically and culturally.

Apr 6, 2018

The government isn't going to get out of the student loan business and in a way, it's in their best interest not to get out. With that being said as the fact we're working with, I'd say the following: either set a tuition maximum for schools receiving public funds and/or schools receiving payment from students with government guaranteed loans. Also limit the amount a student can't discharge in bankruptcy. You want to lend an 18yr old 260k? Fine, but they can discharge 200k of that in bankruptcy. You want to take on students with loans they can't discharge and lots of of debt? Fine, but you can only charge X amount. Let the marketplace create a viable solution given those two policies.

Apr 6, 2018

I would note only that it is misleading to say that fewer borrowers have dropped behind or become delinquent. This reflects a recent expansion of income-based repayment schemes which rehabilitate debt that borrowers may have stopped paying on. It doesn't mean they are on track to actually pay it off in full within the borrowing period.

Use more debt than your competition or get out of the business. Any other policy is either self-limiting, no-win, or a bet that the competition will go bankrupt before they displace you. - Bruce Henderson

Apr 6, 2018

0

Apr 6, 2018

I think we can not depend only on government to get jobs.

Apr 5, 2018

I agree wholeheartedly that college is not for a lot of people. I might be one of them. The struggles I am facing starting undergraduate with a negative debt and trying to save up so I don't require a loan might be all for nothing. I still want that toilet paper on my wall.

College is expensive, time consuming, and not a sure guarantee something will produce after the years of effort. Many professions that require a certification, training, or trade skill are in dire need of more people to enroll in. They're told by society that these jobs are "beneath" them, and a college degree is the only means for a better quality of life.

No pain no game.

Apr 6, 2018

Saw this last night. Liliana Rodriguez-Marshall shouldn't have been allowed to go to a shitty law school to begin with.

Apr 6, 2018
abacab:

Saw this last night. Liliana Rodriguez-Marshall shouldn't have been allowed to go to a shitty law school to begin with.

This, for the love of god

Apr 6, 2018

OP, I'm very, very torn on the issue.

On one hand, student loan debt is out of control. People our age can't even think about buying new cars or houses or generally helping the economy because they can barely pay off their debt. I pay $600 a month in student loans and did not go to a name brand university or anything. It's ridiculous and I'm getting raped on the interest rates.

On the other hand, knowing that they won't have to pay the debt anyhow only lets more students get their MA in women's studies, lets colleges continue to skyrocket tuition, and places the bill for both of those activities in the lap of people, like myself and others on this site, who actually make money.

I really have no idea how to fix the problem

Apr 6, 2018

Instead of forgiving student loans the government should stop guaranteeing them to any one who wants to go to college. Student loans should be given based on one's academic qualifications and the value of the education they are trying to receive. Easy credit for student loans has a lot to do with the increase in the price of college. If students can finance the experience no matter what it costs, why would the universities try to keep tuition down? Instead they just spend more money on things like resort-style pools and beefing up cultural studies departments. The reality is that some students aren't fit for college and would be much better off learning technical skills that can lead to a decent-paying living rather than getting a useless, expensive degree in a field like communications that they will struggle to pay off. If the government stopped subsidizing university education, the universities would have no choice but to lower tuition, in theory at least. At this point most schools are such gluttonous, bureaucratic messes that it may be near impossible to unwind them.

    • 1
Apr 6, 2018
thealphamale:

Instead of forgiving student loans the government should stop guaranteeing them to any one who wants to go to college. Student loans should be given based on one's academic qualifications and the value of the education they are trying to receive. Easy credit for student loans has a lot to do with the increase in the price of college. If students can finance the experience no matter what it costs, why would the universities try to keep tuition down? Instead they just spend more money on things like resort-style pools and beefing up cultural studies departments. The reality is that some students aren't fit for college and would be much better off learning technical skills that can lead to a decent-paying living rather than getting a useless, expensive degree in a field like communications that they will struggle to pay off. If the government stopped subsidizing university education, the universities would have no choice but to lower tuition, in theory at least. At this point most schools are such gluttonous, bureaucratic messes that it may be near impossible to unwind them.

This. My thoughts exactly.

Apr 6, 2018

Just like housing...there is NO RIGHT TO OWN A HOUSE....similarly there is no right to higher education........If one really wants it, move out to North Dakota, make 17/hr working at wal mart or 20's working to support oil fields, or 50-100/hr welding (real wages, know someone there, speak to every-other day)......its a misnomer, you need to earn college. Not get a handout to go....and I know this forum is all about Ivy, but you can go to a state school get a good education, meet people alumns etc.
Forgiving loans is just another road down to an overbearing govt.

This has been said before, but please, this is the definition of insanity.

O and by the way, back in the day (hope someone hear can attest to that) a bunch of traders in the pits didn't have college degrees...some were delivery men....so find the next big thing, and don't say you need a degree....go out and find it....as for me...i'm looking........,

Apr 5, 2018

What America needs is a some European style sensibility in Higher Ed,

1.) Bachelor's degree should be 3 years. No BS core classes. Just focus on your major. If you want to learn about Art History and Philosophy, do it in your own time. If the rest of the world can finish college in 3 years, we can do it here too.

2.) There should be public colleges where poor kids can do and get a great education for a very lost cost. But there should be a HIGH barrier to entry for higher ed. Sorry, if you are't capable of going to college, you should not - go to a 2 year plumbing/electrician/mfg school. That's the problem with US colleges - there are too many kids who don't belong there.

These public colleges should be heavily subsidized by State/Fed govts - but they should have no excesses, i.e. no sports teams, residential dorms etc. Sort of like a CUNY.

3.) Similarly, there should be 2 year vocational colleges for kids who can't make it to higher ed to train them for these "new collar" jobs. These should be very cheap to attend.

4.) MBA should be 1 year. JD should be 2 years.

    • 2
Apr 5, 2018

Agreed, decrease the duration and increase the intensity. This would actually level the playing field between rich and poor students to some extent because people are more likely to get derailed by peripheral issues than lack of academic ability. Cutting program length decreases the likelihood of life getting in the way.

Apr 6, 2018

why not short for profit education....some of them are public company's...take a look at devry...fallen a nice amount since mid 2011

Apr 6, 2018

student loans are evil.

Apr 6, 2018

Invent a derivative collateralized by prepaid tuition vouchers (perhaps purchased through 529 savings accounts) and go short. If the US university system begins to fall apart and tuition falls because students can no longer cover the high costs, you're golden.

Apr 6, 2018

Student loan pools have made up a part of the ABS universe for years. You can aso find municipal revenue bonds that have claims to student loans issued by certain agencies.

Transaction costs would be high to short either of them

Apr 6, 2018

DDIC did a piece on this recently. Planned on shorting University GO bonds or using a structured product to bet against the default of those issues. I'd post it but itd get removed

Apr 6, 2018
blackthorne:

DDIC did a piece on this recently. Planned on shorting University GO bonds or using a structured product to bet against the default of those issues. I'd post it but itd get removed

planned? why didnt you go through with it

also, since student loans can't be discharged in bankruptcy, how do you think it will affect this bubble? I'm sure it wont pop the same way housing did

Apr 6, 2018

Step 1: Read Big Short
Step 2: Do the same thing except with student loans

"The way to make money is to buy when blood is running in the streets."

-John D. Rockefeller

Apr 5, 2018

Total side note: I initially read your user name as "tona porn otto nap," which made no sense, and it took me a minute to re-read as "to nap or not to nap."

Good to know my mind is still solidly in the gutter.

Apr 6, 2018

The thing to understand is the govt sets the direction then backs off and let the professionals go about business ideally however in this case the govt set the direction(everyone go to college, easy to obtain loans) however now the govt is not allowing industry to go about business and is interjecting more politics to navigate the direction even further what is ideal. (recent example Christie in NJ loan forgiveness). It will be a shit show and much harder to identify and hedge risks. So now it's a game of political observation. It is a little easier to estimate what will happen now since house, senate and executive are all majority holders of one party. I might be missing the mark.

Love your neighbor as yourself. The enemy is rarely the men in opposing uniforms.

    • 1
Apr 6, 2018

No, because the government is going to bail them out before they have a chance to fail.

Although if you are scared of the effects of expanded credit, look closely at the sub-prime auto industry.

Apr 6, 2018

No. A significant amount of the rising defaults come from government guaranteed loans and the default rate of private loans is still reasonable (sub 3%) due to stronger underwriting and greater safety nets (guarantors, cosigns etc...). The only issue is that student loans (for some ridiculous reason) are not discharged in bankruptcy which may screw a lot of people over, and affect a large number of people's spending habits. Also, considering the government is considering forgiving 100bn+ of student loans, I think that scenario would be very unlikely.

Apr 6, 2018

Majority of student loan debt is well below $50K. This "issue" is from a minority of people who took out excessive debt for non-marketable degrees.

http://www.finaid.org/educators/20100929debtdistri...
Reality is there are and have been a number of ways to help students. Payment adjustments, deferrals, public service, military service, certain in demand fields (nursing). Students could also choose cheaper schools, take 5 years vs 4, work part time, etc. All of these options require hard work and sacrifice, two things people do not want to do.

So they go to expensive schools, don't work, travel, buy the big TV, study careers with chance of making real money and then cry poverty when they can't get the baller one bedroom in NYC while making $45k a year.

US Govt should set loan caps. No more than $25 or $50K, depending on major or something similar. This will limit debt and force students to make tough choices. This will take the wind out of useless majors and cause schools to ratchet back their tuition.

None of this will happen though.

Apr 6, 2018

No the issue is fucking Bill Clinton ran around in the 1990's say college for everyone & no one especially a politician can say no thats a bad idea lets not make college affordable for every fucking loser there is in the country. As a result idiots make idiotic choices. Get to the root of the problem, you sound like MSNBC.

Love your neighbor as yourself. The enemy is rarely the men in opposing uniforms.

    • 2
Apr 6, 2018

Thought about this a few years ago when, admittedly, I wanted to bet against my peers. It's come into light more recently when the public got an animated glimpse into the housing crisis by way of The Big Short. Student loans and mortgages are similar, but there is one main distinction - collateral. Mortgages are backed by an underlying asset, which in itself fluctuates in price. If you are unable to meet your debt obligations, the house in owned by the bank - a very straightforward penalty.

The lenders typicall assume most of the risk on student loans. Sure the borrower will need to pay additional fees, lose their credit, and maybe see a lawsuit, but the collateral is very different. Also, you'd be surprised how many student loans are already in default. I think the issue with credit may pose long term threats to generations but don't foresee anything like an immediate crash.

http://www.wsj.com/articles/more-than-40-of-studen...
Check out the auto industry.

Apr 6, 2018

Has the student loan market been as over-securitised as the MBS/CDO market was? I've looked at a number of deals where my shop has bought books of student loans, but nothing more fancy than that.

Part of the MBS/CDO problem was that you had a large number of bets being placed on the same books of mortgages eg you could have billions of dollars of bets based on one pool of a few hundred million of mortgages. So, when one pool goes rotten, the impact is very much magnified beyond the immediate mortgage loan exposure. I don't think you have the same thing running with student debts.

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Apr 6, 2018

@SSits took some of the words right out of my mouth. The housing collapse took many other parts of the global economy down with it because real estate loans had been morphed into all sorts of financial instruments and sold on an astronomical scale. I do not believe that is the case with student loans. However, if student loans were to be packaged and sold on a massive scale, then talk about a potential bubble would probably be appropriate.

Side bar: While student loan debt may not be a bubble in the traditional sense of causing a huge collapse in markets around the world, it may, down the road, be an issue for young people crippled by student debt and a fledgling economy. A "bubble" of young people in a poor financial situation. I'm not saying some of them don't deserve it (taking excessive debt for a degree with little earning potential), but many were just kids when they made the decision.

Apr 6, 2018

I don't understand how the Income Share Agreement would be effective in practice. Would a liberal arts major who goes to work in finance be charged the same % income as the one that teaches middle school? And what's to stop an entrepreneur from awarding themselves $0 salary during the contract period?

It's very interesting when he compares it to equity though. I feel like he is only thinking of this as "equity" in the sense that it would make it easier for students to get out of their obligations. What he fails to mention is the dystopian outcome where the investor can appoint some form of oversight committee to their investment (the student) and can pay themselves dividends out of the student's disposable income. Maybe I've been watching too much Black Mirror lol.

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Apr 6, 2018

% of future income college financing already exists

Apr 6, 2018

There are already start ups that do this, see: http://myalfie.com. Talked extensively about this with a guy who was pursuing this at MIT Sloan (MBA) and the consensus was that, at least for MBA students, it is generally considerably more costly over the long run if you take one of the more lucrative careers (so finance, consulting) and you are definitely basically betting on lack of upside, which seems odd to me. Personally, I'd have to be extremely risk averse and not confident in my abilities to do this.

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Apr 6, 2018

there is an alternative to student debt: having rich parents, being a stripper or drug dealer, or going into the military.

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Apr 6, 2018

Don't forget seekingarrangements!

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Apr 6, 2018

Get citizenship in a country which has "Free Education" then head to the US to work for the extra pay. Win-Win.

Apr 6, 2018

I was educated in the US and worked abroad because I made more money abroad. It's a fallacy that you make more in the US - maybe on average. You were better off in London in banking before 2008 for example. Taxes in Dubai are 0% and the pay is higher or equal to the US. Moscow used to love bankers and would pay them silly packages.
What I am saying is you can just GTF out of the US and live a good life. I had an opportunity to work in the US just a few months ago - they offered 14 days of holidays, I told them fuck no, I'll keep my 31 days.
Then there is the unaccountable, free health care or social services in a lot of county that you pay via taxes. If you have a someone low paying job you get a lot back from the community and the taxes others contribute.

It's not just black and white, but add some spanking and some gag balls and you get 50 shades of gray when it comes to employment. The only thing that is sure is that US education is more expensive than anywhere on earth and that's here to stay.

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Apr 6, 2018

Fair point, I was more narrowly looking at the consulting Industry from a UG level. Your points make sense though as perhaps do why alot of Expats come to the US for a few years then return home to cash in the paycheck with the experience you get there at the more senior levels.

Solid points on the intangibles such as Healthcare, and various other social services as-well which should be taken into consideration.

Edit: But I think most expats would move to the US for Money & exp, vs "Good Life". At least from compatriot western neighbours preferably looking at the ex-colonies. At least that was my decision when I made it.

Apr 6, 2018