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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
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.

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Apr 10, 2019

Government causes the problem, and then proceeds to offer a solution to buy votes. This shit is as old as the hills boys.

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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

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 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 23, 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 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)

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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.

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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.

Feb 24, 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.

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

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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.

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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.

Feb 23, 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 4, 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.

Feb 23, 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 4, 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.

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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!

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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.

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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

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
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

.

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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

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

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

.

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

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Apr 6, 2018

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

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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.

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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.

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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.

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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.

Feb 23, 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.

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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

Saint Venus Theater, NYC. Heard it's da shizz. Expect pay of 85k p.a. if you're a dancer.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."

Apr 6, 2018

As a member of #4 I supported #2. I did my part

Apr 6, 2018

Get a scholarship either athletically or academically. Not that hard.

Just about anyone can get educated for free under an athletic scholarship if they are willing to go to the right school.

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Apr 6, 2018

Peer-to-peer lending is best viewed as a supplement federal aid. Federal loans are cheaper, easier to get and have better repayment options than other types of student loans.

Apr 6, 2018

I know of two ways:
1. Join the military and fight for it
2. Work and pay for your degree

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Apr 6, 2018

Agreed.

The reason universities charge the tuition they do is because there is steady demand and, with the government providing loans to students schools know that the demand for higher education will never decrease or cease to exist (in short, steady stream of customers who pay whatever you charge them).

The problem we have is that we have too many people going to college and many for the wrong reasons. In addition its great we have lots of choices in terms of schools but why does a kid go to Elizabethtown College instead of an established state school or a top tier school?

Add to this you have people majoring in music, Slavic languages, etc. which are important but provide very little in terms of employment opportunities (correct me if I'm wrong). If our hypothetical student does graduate what are his/her chances of graduating and being able to pay back the debt they've now accrued?

Lastly colleges of today are more like resorts with bloated athletic programs. There is very little teaching being done and studies have repeatedly shown that most students go in either regressing or graduate with very little improvement in core skills.

Point of all of this is we are sending too many customers to school who have no business being there AND colleges are no longer about teaching and the shift has been to serve the customer with a lazy river, huge stadium for a team that probably goes 6-6, etc.

These were some of the points made in Ivory Tower.

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Apr 6, 2018

I'm a proponent of working while in school. I think people who don't get a flawed idea of why they're in college and what the alternative is.

Even if you're only making $100/week, that's $20k over a college career and will make a ton of difference especially if going to a state school.

Apr 6, 2018

Honestly?

Biggest way to do that is probably military service. From what I've heard it can benefit you significantly if you're willing to wait an extra 3 years to work as an analyst. The reason for this is that most military candidates are trying to come in at the MBA level, while analyst veteran candidates are something of a unicorn and won't have much competition for that diversity category.(Source: a vet who works at an EB and entered as an analyst).

Apr 6, 2018

For MBA, some companies will pay for it on the condition you come back afterwards for a set period of time (usually 2 years).

Two points to note: it's usually tuition only (no living expenses) and from what I heard it's taxable (i.e. the company reimburses you and that amount is taxed).

Apr 6, 2018

Easiest way. Make the students able to default on loans and not be obligated to pay them back during a bankruptcy.

Apr 6, 2018

@C.R.E. Shervin ok and then what? Someone has to pay, someone loses in that situation

Apr 6, 2018

It's simple economics: If the government stopped offering loans, many people would no longer be able to afford college. Colleges would go out of business, OR they would have to start to cut costs. Price gets driven down, and college again becomes a worth-while investment for people going into fields that are hiring. Degrees will become more scarce, and companies will again start to accept people who don't have one.
If you get rid of these loans that aren't based on ability to repay, colleges are faced with the decision to either close their doors or lower their price. Supply and demand.
We can all agree there are plenty of ways colleges can cut costs. I've visited some tiny, obscure colleges and seen the grand new buildings they all have. Higher education is an extremely profitable business. If you stop giving it food, it will learn how to hunt.

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Apr 6, 2018

@dan_yo23 this is exactly what I was trying to say but I just ended up rambling. Also @GridironCEO you're right. If you want to major in Nursing or be a teacher there is no need for you to go to a school like Vandy. Your local college in the city or a major state school (i.e. UT Austin, Texas A&M, UH for Texas) would be more than enough and allow you to pay off your loans.

Apr 6, 2018

Got to a shit cheap school if you want to study something that isn't old ways elitist. Why does a teacher have to go to school at Boston College, or Columbia or Vanderbilt? Go to an expensive school if you go into finance. Allow the Government to give loans to high paying fields and deny them for bullshit ones.

So you're telling me you're a poor white family, and you daughter wants to take out a loan to study music at Berkely in Boston? Fuck outta here.

Lower class and taking out debt for NYU Stern, sure we'll give you an interest free loan.

Also we did a case study on for profit schools and ultimately we should have more of these. You pay $20-40k or so for a shit degree from a for profit school. Sure the Dukes and Whartons of the world won't be scared but all the fucking terrible private schools that we've never heard of... Grand Canyon University??? Sewanee, The University of the South??

Apr 6, 2018

In Order of Ascending Beta:
1. Sugar baby
2. High-class Escort
3. Market Maker (E.g. as a bookie)
4. Card player
5. Drug Merchant

Apr 6, 2018

Friend of mine paid for school playing online poker semi-professionally

Apr 6, 2018

Interesting debate. I had no idea what I wanted to do when I was a senior in high school. I therefore had little clue what my earning potential would be, especially in the short term. Regardless, my parents and I had to take massive loans to finance my education. I think % income financing makes a lot of sense if you don't know what you are going to do with your life. You take on far less risk if you choose % income finance but you lose if you end up making a lot of money. But if you're making a lot of money, it's not that big of a deal. The more I think about it, I think this makes a lot of sense. It might not seem "fair" if you end up making a lot of money but I think that's just immature. We need investment bankers just as much as we need middle school teachers. Given how terrible my middle school teachers were, we probably need them more so.

Feb 23, 2018

Yea, (clears throat) Bernie f'n Sanders! Jk

Apr 6, 2018

I hear the Mexican cartel pays assassins well.

Apr 6, 2018

Who much?
Now I know why you have less than $10k in student loans.

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Apr 6, 2018

Bump

Better pay down student loans as quickly as possible or invest along the way as well?

Apr 6, 2018

the correct answer is live enough below your means so you can do both

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Apr 6, 2018
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WSO's COO (Chief Operating Orangutan) | My Linkedin

Apr 6, 2018
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