Student Loan Debt Crisis Is Bankrupting Millennials(medium.com)
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Student Loan Debt Crisis Is Bankrupting Millennials
https://medium.com/utopiapress/student-loan-debt-crisis-is-bankrupting-millennials-6d753c86305b
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Made my last student loan payment at 40 as well. Got my computer engineering degree in 99 from UIUC and since my parents paid a substantial portion of my costs, I "only" had about $25,000 in student loans (equivalent to about $50,000 in today's dollars) with about $350/mo payment ($700/mo today).
Starting salary for an engineer was $60k, so there have been effectively no raises for the middle class for my generation or younger. Which means whoever reads this is going to be paying 2-4 times as much as I was, even with a degree from an affordable state school like I went to.
I also dorked around a lot and basically wasted my 20s on trying to win the internet lottery.
All that said, I strongly disagree with most assessments of why college is so expensive. I feel that the real reason is that it coincides with the decline of the US middle class, starting around 1980 and Reaganomics.
We don't make anything useful anymore. We don't automate the real burdens in people's lives, things like necessity or health. We just chase get rich schemes to do as little work as possible. So the rest of the world is eating our lunch now.
You want to fix the cost of college? Go back to pre-1980. Make it government funded, build more darn campuses so everyone can go (or at the very least get trained in a trade), and do a jubilee on all student loan debt effective immediately. It's how they do it on Star Trek. That's the future. Anything short of that is a bunch of unamerican hogwash to privatize everything we used to hold dear and make someone rich on your backs.
Disclaimer: this is one humble opinion from someone who paid his dues and is sick of the I've got mine mentality pushing the US to the brink of corporate fascism. I don't want anyone else to squander their potential making rent like I did.
Starting salary for an engineer was $60k, so there have been effectively no raises for the middle class for my generation or younger. Which means whoever reads this is going to be paying 2-4 times as much as I was, even with a degree from an affordable state school like I went to.
I also dorked around a lot and basically wasted my 20s on trying to win the internet lottery.
All that said, I strongly disagree with most assessments of why college is so expensive. I feel that the real reason is that it coincides with the decline of the US middle class, starting around 1980 and Reaganomics.
We don't make anything useful anymore. We don't automate the real burdens in people's lives, things like necessity or health. We just chase get rich schemes to do as little work as possible. So the rest of the world is eating our lunch now.
You want to fix the cost of college? Go back to pre-1980. Make it government funded, build more darn campuses so everyone can go (or at the very least get trained in a trade), and do a jubilee on all student loan debt effective immediately. It's how they do it on Star Trek. That's the future. Anything short of that is a bunch of unamerican hogwash to privatize everything we used to hold dear and make someone rich on your backs.
Disclaimer: this is one humble opinion from someone who paid his dues and is sick of the I've got mine mentality pushing the US to the brink of corporate fascism. I don't want anyone else to squander their potential making rent like I did.
> ... from someone who paid his dues and is sick of the I've got mine mentality pushing the US to the brink...
I'm in agreement. My family, via a lot of hard work and sacrifice, was able to pay for college for my sibling's and myself. We all had no debt upon graduation. It was hard, but we managed to do it despite a lot of set-backs.
Though that sacrifice would be 'useless' with a jubilee on loans, I'm all for it. I've seen too many of my friends suffer under $800/mo debt loads for 12 years now. I'd much rather drink a beer with them on weekends than have them work their second jobs and drink a beer by myself.
I'm in agreement. My family, via a lot of hard work and sacrifice, was able to pay for college for my sibling's and myself. We all had no debt upon graduation. It was hard, but we managed to do it despite a lot of set-backs.
Though that sacrifice would be 'useless' with a jubilee on loans, I'm all for it. I've seen too many of my friends suffer under $800/mo debt loads for 12 years now. I'd much rather drink a beer with them on weekends than have them work their second jobs and drink a beer by myself.
Kinda the same story for me, right down to the debt level. I only credit myself for taking what was offered even when my advisor told me I should hold out for a better job more in line with my CS degree.
I took a guaranteed job that started one week after graduation over starting out higher up on pay scale and with relevant work experience.
Had my job search the following year not gone well, I could very well be trapped in underpaid, overworked sysadmin hell. :-/
I took a guaranteed job that started one week after graduation over starting out higher up on pay scale and with relevant work experience.
Had my job search the following year not gone well, I could very well be trapped in underpaid, overworked sysadmin hell. :-/
It boggles my mind that a rich and highly civilized country as the USA does not have free education and healthcare. I'm sure it's a great country but come on, you guys are really nuts sometimes.
It maybe rich but I am having a lot of doubts about how civilized this country is in 2019.
Education is free. Credentials are not. We could spend the next two decades providing everyone with free credentials just in time to realize that the economy has moved on and they don’t matter any more. This is a more complex problem than policy makers realize as it’s connected deeply into the employment market.
> Education is free. Credentials are not.
So, the least expensive part of the process is the only one that you have to pay an exorbitantly ridiculous amount. I stand by my calling you nuts.
So, the least expensive part of the process is the only one that you have to pay an exorbitantly ridiculous amount. I stand by my calling you nuts.
K-12 is the least expensive part? I'm willing to be convinced but I don't buy that. If you look at a State School tuition would have to be 3x more than what K-12 would cost for parents. I say state school because I feel that's the best comparison to HS on what it would cost, but again I might be wrong. I just haven't read anything saying that college is the most $$ part compared to K-12 before.
The "least expensive part" he was referring to is, I believe, the piece of paper.
You can get vast amounts of education for free nowadays, but if you didn't do it through the approved structure and pay the right people for it, to many people (particularly those hiring), you don't count as knowing any of it. You need the piece of paper, even though it's the actual education that costs so much to create.
You can get vast amounts of education for free nowadays, but if you didn't do it through the approved structure and pay the right people for it, to many people (particularly those hiring), you don't count as knowing any of it. You need the piece of paper, even though it's the actual education that costs so much to create.
That would completely change my answer. Thank you for that perspective.
A lot of the disconnect here comes from the signalling aspect of getting a degree. It's not just that you're educated - otherwise companies would have more skills-based hiring - it's that you've proven willing to work through a dysfunctional system to get a fundamentally worthless piece of paper.
People willing to work through systems of that sort make for less disruptive employees.
People willing to work through systems of that sort make for less disruptive employees.
Andrew Yang had a great reason for NOT signing the progressive pledge and why he didn't support free college for everyone.
His reasoning was 2 fold.
1) His UBI would help college students drastically and be a stimulus for college age kids.
2) His words, "Only 33% of people go to college" IIRC he also stated that this would only help 1/3 the population and that we need to promote alternatives to college instead.
I think there are two more issues with college. Some jobs require college degrees but really shouldn't (some not all). Some degrees offer little to no economic benefit to the student but are sold to the student at a premium.
There are some really great reasons why we need to resolve current student debt, but I think we need to overhaul how we view high school / college for everyone rather than for 1/3 of the population.
His reasoning was 2 fold.
1) His UBI would help college students drastically and be a stimulus for college age kids.
2) His words, "Only 33% of people go to college" IIRC he also stated that this would only help 1/3 the population and that we need to promote alternatives to college instead.
I think there are two more issues with college. Some jobs require college degrees but really shouldn't (some not all). Some degrees offer little to no economic benefit to the student but are sold to the student at a premium.
There are some really great reasons why we need to resolve current student debt, but I think we need to overhaul how we view high school / college for everyone rather than for 1/3 of the population.
No jobs should require college. They should require skills. College is just an easy substitute for the recruitment process. (Unless the job requires an official training certificate that is)
For fields like tech, college/university might not be necessary but for anything in advanced research or medical fields, you absolutely need to go in uni and higher studies and be certified. Even in tech, you may not need a degree but still need to be certified for the field you are in (ccna, ccnp etc for network admin jobs for example).
You really don't need the network certificates for work. They're just a common retirement.
I've long encouraged my friends to go to trade schools instead.
> Student loan debt is generally non-dischargeable in bankruptcy
This is the cause of the absurdly high prices for education. Lenders see a non-dischargeable loan as zero risk. Their debts will be paid no matter the circumstances, even when other debts are wiped out in bankruptcy, student loans will still be paid, or garnished from wages.
Lenders have no reason not to give out as many of these zero risk loans to as many unqualified and barely educated 18 year olds.
Educational institutions, seeing a surge of both demand and loaned money, raise their rates.
This process happens year after year, and the demand for colleges is only increasing, especially with a wealthy foreign population keen on sending their kids to prestigious American universities.
This is the cause of the absurdly high prices for education. Lenders see a non-dischargeable loan as zero risk. Their debts will be paid no matter the circumstances, even when other debts are wiped out in bankruptcy, student loans will still be paid, or garnished from wages.
Lenders have no reason not to give out as many of these zero risk loans to as many unqualified and barely educated 18 year olds.
Educational institutions, seeing a surge of both demand and loaned money, raise their rates.
This process happens year after year, and the demand for colleges is only increasing, especially with a wealthy foreign population keen on sending their kids to prestigious American universities.
"Student Loan Debt Crisis is Bankrupting Millenials"
Technically incorrect, since we legally can't file for bankruptcy on this debt except under very particular circumstances.
Technically incorrect, since we legally can't file for bankruptcy on this debt except under very particular circumstances.
I feel this is one of the biggest obstacles to the free college idea floating around.
While I hear some millennials say it's a good idea (and maybe it is in the grand scheme of things, it doesn't really matter for this point) I don't see how it would be in their best interest unless there was some very serious benefits/perks to millennials that are already in debt or those that spent the past 10+ years paying it off. They're so far behind now that many put off starting a family, buying a home, saving for retirement, and all the other things they should have been doing in their post college years. Now the'll need to face the next generation workforce of college educated debt free competition. I mean I absolutely hate to admit this but it's true, I'm going to be pretty sour if I can finally land a decent job and my soul goal is to save something up for retirement and everyone else doesn't have that huge debt monkey on their back to guide their decisions.
While I hear some millennials say it's a good idea (and maybe it is in the grand scheme of things, it doesn't really matter for this point) I don't see how it would be in their best interest unless there was some very serious benefits/perks to millennials that are already in debt or those that spent the past 10+ years paying it off. They're so far behind now that many put off starting a family, buying a home, saving for retirement, and all the other things they should have been doing in their post college years. Now the'll need to face the next generation workforce of college educated debt free competition. I mean I absolutely hate to admit this but it's true, I'm going to be pretty sour if I can finally land a decent job and my soul goal is to save something up for retirement and everyone else doesn't have that huge debt monkey on their back to guide their decisions.
Disclaimer: I'm personally in the extremely lucky early cohort of millennials who got a decent job before everything went to shit.
Not a single one of the less lucky millennials I know, either online or in real life, has given the slightest inkling that they would rather see the people who come after them suffer as they have suffered, perpetuating the terrible system, just to make it that tiny bit easier for them to compete. They'd rather have the rest of their own debt forgiven and just start from there.
Obviously I can't speak for every debt-ridden millennial out there, but the overwhelming sentiment I encounter from them when this potential issue comes up is "Just do it. Make it right."
Not a single one of the less lucky millennials I know, either online or in real life, has given the slightest inkling that they would rather see the people who come after them suffer as they have suffered, perpetuating the terrible system, just to make it that tiny bit easier for them to compete. They'd rather have the rest of their own debt forgiven and just start from there.
Obviously I can't speak for every debt-ridden millennial out there, but the overwhelming sentiment I encounter from them when this potential issue comes up is "Just do it. Make it right."
I'm an earlier millennial and while I'm doing alright personally, I think for those of us who graduated into the financial crisis, we were essentially sold a false bill of goods with college. We were promised stable professional jobs with which we could pay our debts.
I think the financial sector owes my cohort, especially the worst affected of us, some sort of reparations.
I think the financial sector owes my cohort, especially the worst affected of us, some sort of reparations.
I read some histories that just sound like someone that financed a big and very specific type of boat, that they couldn't afford to begin with, while living in a landlocked nation with no lakes and a few small rivers. But it is not entirely their fault, a lot of people cheered their young naive ass on to step in that trap.
The silver lining is that they might serve as a good cautionary tale for others.
The silver lining is that they might serve as a good cautionary tale for others.
In a complex and intermixed system, things won't be limited to just bankrupting millenials. Are those loans being traded as securities or something like that? What about families, communities, job conditions and even laws? It will change society, and probably for the worse.
It will be a piece of a far bigger problem that will affect most of the system.
It will be a piece of a far bigger problem that will affect most of the system.
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So many people saying they have degrees and cannot pay the debt used to acquire it.
Making degrees cheaper to get will not be the answer. That'll just lead to even more degree holders looking for the elusive job.
Perhaps paying skilled labor / trades better is the right direction.
Making degrees cheaper to get will not be the answer. That'll just lead to even more degree holders looking for the elusive job.
Perhaps paying skilled labor / trades better is the right direction.
Skilled labor and the trades are paid very, very well. I could probably make more money busting ass as a plumber or electrician than I do slinging code.
You do have to actually work though if you want to make money in trades, and sweat and get dirty. Most college-educated people are alergic to working that hard, and are looking for white-collar BS jobs that they can push paper around, go to meetings, feel good about themselves, and never actually do anything.
You do have to actually work though if you want to make money in trades, and sweat and get dirty. Most college-educated people are alergic to working that hard, and are looking for white-collar BS jobs that they can push paper around, go to meetings, feel good about themselves, and never actually do anything.
The author of this article, Michael K. Spencer, is a prolific writer on Medium. Unfortunately I tend to dislike most of his articles, as they usually contain a lot of mistakes (technical or otherwise). It's a pity, because otherwise he would be a terrific author.
I wish there were an option on Medium to dislike or downvote an article or an author. I would certainly do that with him.
I wish there were an option on Medium to dislike or downvote an article or an author. I would certainly do that with him.
Nobody was forced into taking a large loan to get a worthless degree that is useless in the job market. Be glad for these people, may their mistakes and poor judgement serve as an example so that others and their kids do not make the same ill-informed decisions.
When I was 15/16 years old I was promised by adults I trusted (teachers, principal, parents, family members, speakers at my school) that if I got a college degree I would be guaranteed a good paying job when I got done. At 15/16/17 years old, you are a child and you follow the advice and leadership of adults. In my senior year of high school, my parents started taking out loans in my name (called a Parent Plus loan) to pay for my college. Could I have refused? Yes, but remember I had been promised by every adult that I needed this to get a job. "A bachelor's degree is the new high school diploma" I remember being told over and over [1] [2]. If you don't want to work at McDonalds, you have to get a degree.
So yeah, no one put a gun to my head and forced me to take on student loan debt. Instead they put poverty to my head and threatened that I would sleep in my car and work for minimum wage if I didn't.
When you are a child and the adults tell you this is what you need to do for your future, you listen. What you're doing is blaming children for the bad advice their parents and mentors gave them.
[1] https://www.washingtonpost.com/opinions/catherine-rampell-th...
[2] http://www.msnbc.com/jansing-co/college-degrees-are-becoming...
So yeah, no one put a gun to my head and forced me to take on student loan debt. Instead they put poverty to my head and threatened that I would sleep in my car and work for minimum wage if I didn't.
When you are a child and the adults tell you this is what you need to do for your future, you listen. What you're doing is blaming children for the bad advice their parents and mentors gave them.
[1] https://www.washingtonpost.com/opinions/catherine-rampell-th...
[2] http://www.msnbc.com/jansing-co/college-degrees-are-becoming...
On top of society strongly directing people to university, we also intentionally mislead people about their future potential. 'You can do whatever you put your mind to.' Ostensibly it's good for young people to believe this, but it is of course not true. Loan companies are able to exploit this false belief for the sake of profit. 47% of people age 18-29 think it is very/somewhat likely that they will become "rich." [1] If you restrict that just to those that attend university, the number is probably even higher. So what does going 6 figures in debt matter if you'll be a millionaire a decade after college?
https://news.gallup.com/poll/154619/Americans-Having-Rich-Cl...
https://news.gallup.com/poll/154619/Americans-Having-Rich-Cl...
Your parents didn't give you bad advice at the time (that is without the hindsight of current knowledge). At that time it was GREAT advice. The problem with advice is it only works in hindsight.
I'd suggest anyone going into college right now get a CS degree, but in 20 years that may be automated away.
Who knows. People gave you advice in good faith, they weren't trying to steer you wrong. It's what they were told was the best thing for their kids. Blaming parents or kids or even mentors is the wrong thing. It's how everything entwined that created the situation. No one tried to create it and society couldn't see it coming.
I'd suggest anyone going into college right now get a CS degree, but in 20 years that may be automated away.
Who knows. People gave you advice in good faith, they weren't trying to steer you wrong. It's what they were told was the best thing for their kids. Blaming parents or kids or even mentors is the wrong thing. It's how everything entwined that created the situation. No one tried to create it and society couldn't see it coming.
I'd like to agree with you, but how could "society" not see what would happen if you increase the percent of college graduates from e.g. 5% to 35% in a matter of just several decades? And this started to happened about the same time that we nearly doubled the labor force by first "allowing" and gradually starting to effectively require that women also work.
Skills are valued for their rarity. Get rid of the rarity, get rid of the skill's value. The most realistic concern for the value of a CS degree is not automation, it's other humans. Add far more people pursuing CS degrees, without a proportional growth in the job market, and you'd see wages and demand for it plummet.
And there also factors like China in the future. Outsourcing only really stuttered because the quality of the outsourced products was consistently poor. But there's no inherent reason this must always be the case. If China can start being a source that companies can turn to for high quality software solutions at a low cost, run of the mill software development could go the way of industrial manufacturing.
Skills are valued for their rarity. Get rid of the rarity, get rid of the skill's value. The most realistic concern for the value of a CS degree is not automation, it's other humans. Add far more people pursuing CS degrees, without a proportional growth in the job market, and you'd see wages and demand for it plummet.
And there also factors like China in the future. Outsourcing only really stuttered because the quality of the outsourced products was consistently poor. But there's no inherent reason this must always be the case. If China can start being a source that companies can turn to for high quality software solutions at a low cost, run of the mill software development could go the way of industrial manufacturing.
I think the best way to see how society could not see what would happen is to watch any TV show that has ever tried to predict the future ever.
Smartphone? Rarely seen but critical to our society.
Twitter? Ha.
Facebook? People actually spoke to one another.
Global warming? Didn't see that coming...
Flying cars? Nope not yet.
Pervasive Nuclear? Nope not that either.
Humans suck at predicting the future. We're so terrible at it. Market crashes, war, etc. We just have no idea. While what you're saying make sense to an economist, that's not how society works. The best ideas don't always win out the most popular ones do. People WANTED their kids to be better off, so they sent them to success factories that told the parents they'd be better off because in the past people were better off.
Until they weren't.
EDIT: I'm not saying no one saw this coming. I'm just saying a most people (society) didn't.
Smartphone? Rarely seen but critical to our society.
Twitter? Ha.
Facebook? People actually spoke to one another.
Global warming? Didn't see that coming...
Flying cars? Nope not yet.
Pervasive Nuclear? Nope not that either.
Humans suck at predicting the future. We're so terrible at it. Market crashes, war, etc. We just have no idea. While what you're saying make sense to an economist, that's not how society works. The best ideas don't always win out the most popular ones do. People WANTED their kids to be better off, so they sent them to success factories that told the parents they'd be better off because in the past people were better off.
Until they weren't.
EDIT: I'm not saying no one saw this coming. I'm just saying a most people (society) didn't.
I don't really think any of those were comparable. The situation with the devaluing of an education is an extremely simple case of supply + demand. When usable skills are rare, they have a high value - when they're not, they don't. Again the same thing that makes it easy to predict what the longterm outcome of 'get [everybody] in computer science' will be. It'd devalue the skill to the point that it'd be worthless, much the same way that when you 'get [everybody] a college degree' those degrees, in and of themselves, become worthless.
Put another way, I can't imagine how anybody could predict anything else besides exactly what has happened.
Put another way, I can't imagine how anybody could predict anything else besides exactly what has happened.
What college did you go to? Public or private? In state or out? Community or state? What was your major field of study in college?
Why would you be homeless if your parents have a home with a room for you?
How old are you? The student debt crisis is 20 years old already.
If it's your parents' fault, take their money to pay back the loan. What's your parents' excuse for taking out large bad loans?
Why would you be homeless if your parents have a home with a room for you?
How old are you? The student debt crisis is 20 years old already.
If it's your parents' fault, take their money to pay back the loan. What's your parents' excuse for taking out large bad loans?
Again with blaming children for the bad advice and mentoring that their parents gave them. Absolutely none of those questions mean anything if you're a 15 year old and your parents say "time to start looking for colleges!"
We know now, as adults, looking back and seeing that it was a bad idea. But 10-15-20 years ago when your parents told you it was time to go to college and you'd be homeless without a degree, you, as a child, listen to them.
We know now, as adults, looking back and seeing that it was a bad idea. But 10-15-20 years ago when your parents told you it was time to go to college and you'd be homeless without a degree, you, as a child, listen to them.
Who to blame then? Your parents and other adult advisers? Your college? The government?
I do agree that parents/teachers/principals etc bear some responsibility, but surely so too does the individual student, no?
I do agree that parents/teachers/principals etc bear some responsibility, but surely so too does the individual student, no?
>so too does the individual student, no?
You mean the child? Following the advice of their parents and mentors?
You mean the child? Following the advice of their parents and mentors?
Yes, the 18-22 year old "child". Otherwise known as an adult.
People are usually 15/16/17 when they start applying to universities and applying for loans. You know, children.
Applying for college, yes. Applying for loans at 15? No. In the U.S., loans are generally applied for on an annual basis and disbursed on a semester basis. So once again, we return to these people being 18-22 (adults).
My actual point was that yes, parents/teachers/principals/other adult advisers do bear some responsibility, but let's also not pretend the actual students are unable to reason about future income and debt.
My actual point was that yes, parents/teachers/principals/other adult advisers do bear some responsibility, but let's also not pretend the actual students are unable to reason about future income and debt.
While I agree with some of this, few of these people are fully responsible for their situation. Anyone born after the year 1980 or so has been force-fed the "go to college" meme so much that it's difficult to imagine any alternative. Ask millions of not-yet-fully-developed brains to choose between "go to a college, make new friends, get away from mom and dad" and "start working a minimum wage job and get your own cheap place" and you will likely have few takers of the minimum wage option.
The real problem here is that the colleges responsible for high tuitions (thus high debt for graduates) and useless degrees are not held responsible for the outcomes of the educations they confer. Because the government guarantees many of these loans for students, we're effectively handing out money to anybody who asks for it -- at the expense of a potential entire life spent in debt if you choose poorly or even sub-optimally.
It's hard to be glad that these people are suffering under high debt loads when you realize that we will all be affected. When they retire with no savings and pull money from the system funded by taxes on your income and investments, you will likely not be happy. No man is an island and all of us are affected by macro-trends like this.
The real problem here is that the colleges responsible for high tuitions (thus high debt for graduates) and useless degrees are not held responsible for the outcomes of the educations they confer. Because the government guarantees many of these loans for students, we're effectively handing out money to anybody who asks for it -- at the expense of a potential entire life spent in debt if you choose poorly or even sub-optimally.
It's hard to be glad that these people are suffering under high debt loads when you realize that we will all be affected. When they retire with no savings and pull money from the system funded by taxes on your income and investments, you will likely not be happy. No man is an island and all of us are affected by macro-trends like this.
I remember high school in the 90s. Basically if you had 2 braincells to rub together you were dissuaded from even considering the military and even trade related classes. I didn't even know apprenticeships were even a thing in the US until well into my 20s because nobody ever told you about it unless you had family that was a tradesman.
The really sad thing was that there was a lot of push for lower class kids to go to college which means taking out loans. I was a part of a program for first generation college bound kids (basically lower class) and they spent some time helping us apply for scholarships and grants but everyone knew it was pretty much not a sure thing and that we'll all most likely resort to loans.
Also I feel the explosion in for-profit colleges in the 2000's were largely due to the easy access to loan money. I had it bad but these kids that fell for the for-profits had it worse.
The really sad thing was that there was a lot of push for lower class kids to go to college which means taking out loans. I was a part of a program for first generation college bound kids (basically lower class) and they spent some time helping us apply for scholarships and grants but everyone knew it was pretty much not a sure thing and that we'll all most likely resort to loans.
Also I feel the explosion in for-profit colleges in the 2000's were largely due to the easy access to loan money. I had it bad but these kids that fell for the for-profits had it worse.
Colleges need to have some skin in the game. Lenders should require that colleges pay out at least a small percentage of the loss when borrowers default.
And instead of a single flat interest rate for all student borrowers, actuaries should set interest rates based on the school and major. So students entering programs that produce a lot of defaulters would pay higher rates. That would provide a clear market signal indicating we have a surplus of people with that education, and encourage students to look at other options.
And instead of a single flat interest rate for all student borrowers, actuaries should set interest rates based on the school and major. So students entering programs that produce a lot of defaulters would pay higher rates. That would provide a clear market signal indicating we have a surplus of people with that education, and encourage students to look at other options.
Why is it better for taxpayers to pay off their loans now instead of waiting to see if they retire penniless?
The loans are foisted on people who aren't even trusted with the decision of whether or not to drink alcohol. It's predatory, and at the same time the cost of education has absolutely skyrocketed. Baby boomers could emerge debt free from college with a minimum wage job. If they ended up with loans they couldn't afford, they could declare bankruptcy.
The baby boom generation pulled up the ladder behind them, and is now pouring boiling oil down on the generation trying to catch up.
The baby boom generation pulled up the ladder behind them, and is now pouring boiling oil down on the generation trying to catch up.
Baby boomers didn't cut school funding. Gen X did.
It's easy to say that but kids (yes, kids) that are age 17 aren't really the best equipped to make great life altering decisions in the first place. People fuck up all the time and our response as a society shouldn't be "well, too bad" because 1) that's a terrible way to treat other people 2) if a ton of people are bankrupt due to student loan payments it WILL affect you indirectly, and potentially your own children/family members/friends
I'm not sure of a great solution and it's way outside my knowledge/expertise but ignoring the issue and basically just saying "should have got a STEM degree idiot" isn't good for society
I'm not sure of a great solution and it's way outside my knowledge/expertise but ignoring the issue and basically just saying "should have got a STEM degree idiot" isn't good for society
> but kids (yes, kids) that are age 17
"Kids" have been making this decision for decades. Kids also chose to serve in each of the World Wars at younger ages. Kids at a younger age can also get married in most states.
45-55% of the (albeit distant by social class) peers of college freshman are NOT going to college, but working jobs that don't require degrees. Not going to higher ed is as much of an adult decision as taking a loan.
"Kids" have been making this decision for decades. Kids also chose to serve in each of the World Wars at younger ages. Kids at a younger age can also get married in most states.
45-55% of the (albeit distant by social class) peers of college freshman are NOT going to college, but working jobs that don't require degrees. Not going to higher ed is as much of an adult decision as taking a loan.
And the 17 year-olds are in an adversarial environment.
I've known very smart people who, as late teens, were told all sorts of lies by colleges, about employability in the fields in which they ultimately got degrees.
It could've been wishful thinking on the part of the department (e.g., "Every industry needs Philosophy majors!"), and it could've been professors out of touch (e.g., "Hey, I got degrees in literature, and I got a professorship, coincidentally at the same university where my mom was head of a department, so anyone can do it! And my friends who didn't get professorships all got jobs at the hedge funds run by friends of their dads!").
And everyone was telling these teens that they need a degree, and everyone they knew was doing it.
I've known very smart people who, as late teens, were told all sorts of lies by colleges, about employability in the fields in which they ultimately got degrees.
It could've been wishful thinking on the part of the department (e.g., "Every industry needs Philosophy majors!"), and it could've been professors out of touch (e.g., "Hey, I got degrees in literature, and I got a professorship, coincidentally at the same university where my mom was head of a department, so anyone can do it! And my friends who didn't get professorships all got jobs at the hedge funds run by friends of their dads!").
And everyone was telling these teens that they need a degree, and everyone they knew was doing it.
So if you're not ready to take on responsibility of a large loan, maybe don't take one out, wait a few years, research the market, maybe work some jobs that don't require a college degree.
And seriously, figuring out which degrees pay takes literally one google search. A 17-year-old can easily do that.
And seriously, figuring out which degrees pay takes literally one google search. A 17-year-old can easily do that.
This is a catch-22 though, if you are ignorant enough to not realize it is irresponsible, you are not the person who is going to be waiting a few years to research the market and make an informed decision. The people whose job it is to stop semi-ignorant people from making a poor uninformed decisions, are the same loan officers rubber stamping loans.
Not everyone can magically be smart enough to truly understand what they are getting into, and what ramifications it will have on their later economic life. What is your advice for the people who aren't doing more research ahead of time? "just get smarter dummy" ?
Not everyone can magically be smart enough to truly understand what they are getting into, and what ramifications it will have on their later economic life. What is your advice for the people who aren't doing more research ahead of time? "just get smarter dummy" ?
I remember being told that you were wasting your life if you didn't start college immediately after graduating from high school, and employers would look down on your resume as some sort of failure.
You're talking to the wrong people. A child looks to the advice of their parents, and if their parents say go to university, that's what happens.
Maybe go to community college for a bit as an alternative and figure out if it's right for you before taking out a large loan.
Most middle class kids coming out of school see college as an extension of the education required to compete in the market - they're also told that trade schools are a rip off and community college is for underachievers, so they end up diving into university before giving that option any real critical examination.
I imagine upper class kids just get their education bank-rolled by their parents so who cares. And I didn't live the life of a lower class kid (my family was middle or lower middle) so I can't speak to their experience - but that middle class suburbanite definitely isn't going to get a check from their parents to cover their full schooling.
I imagine upper class kids just get their education bank-rolled by their parents so who cares. And I didn't live the life of a lower class kid (my family was middle or lower middle) so I can't speak to their experience - but that middle class suburbanite definitely isn't going to get a check from their parents to cover their full schooling.
Where I lived as a middle class teenager at least - a generic suburb in SoCal - I, and every other student, was told the community college we had has an excellent program to transfer students into a 4 year college with minimal debt. It definitely takes effort as a community to ensure graduating high school students understand their options in full.
I find that the community college grada are better professionals than the kids who jumped into uni because they didn't know anything and grasped at straws. It's an expensive but revealing mistake that shows which young adults have good judgement and self awareness.
Great, if people were that smart we wouldn't have had the 2008 housing crash. You have to make these structures idiot safe or the idiots destroy the economy.
It is easy to take potshots at people who got Art degrees, but what people never want to engage with is those who didn't do that. Investing 50-100k in a software degree may provide job-market-value and the ability to pay back the loan, but a huge loan is still a drain. A huge loan that was taken out to pursue a very economically viable career path still delays basic things like owning a home, marriage, children. The effect is more extreme on certain degrees than others, but that 60k still causes harm to the economy regardless.
But that $60k has to come from somewhere, right? So what we're really talking about is where to shift that burden. Who pays?
And regardless of who is paying, society just doesn't value liberal arts degrees.
And regardless of who is paying, society just doesn't value liberal arts degrees.
Who benefits most from having an educated workforce and a rich market? Company owners, aka rich people. It makes sense to me that taxes on the rich should pay for most of it.
The 60k comes from the loan officers, who work for institutions that are regulated by the U.S. Department of Education. And after you have graduated, your loan servicer is assigned to you by the the DoE, you don't get to pick that either.
So the burden to pay is on the voters who voted to put this system in place, and those who continue to keep it in place by not voting for politicians that provide alternatives.
So the burden to pay is on the voters who voted to put this system in place, and those who continue to keep it in place by not voting for politicians that provide alternatives.
I'll take the troll bait.
Ok, sure, but why did the loan officer approve it? Because student loans can't be shed off in bankruptcy, so it's guaranteed. What loan officer wouldn't approve such a loan?
If we're going to blame the victim, let's also look at the market structures that allow it to happen in the first place. If the lender took on some of the risk instead of passing the buck to our modern-day debtor's prison, then these degrees wouldn't be fundable if they are as worthless as you suggest.
Ok, sure, but why did the loan officer approve it? Because student loans can't be shed off in bankruptcy, so it's guaranteed. What loan officer wouldn't approve such a loan?
If we're going to blame the victim, let's also look at the market structures that allow it to happen in the first place. If the lender took on some of the risk instead of passing the buck to our modern-day debtor's prison, then these degrees wouldn't be fundable if they are as worthless as you suggest.
I was 17 when I chose my undergrad. I got a degree in a field I didn't care about for the sole purpose of being employable. Then the 2008 recession wiped out entry-level mining and then oil sector jobs (my field). I jumped into software development, which I've been doing since. I don't have a degree in it but I make a good living.
If your argument about a generation-wide problem involves blaming individuals, instead of looking at the wider factors that caused this outcome to be predictable, you're missing an opportunity to improve matters.
If your argument about a generation-wide problem involves blaming individuals, instead of looking at the wider factors that caused this outcome to be predictable, you're missing an opportunity to improve matters.
Even people with "nonworthless" degrees that get hired have a hard time paying off their debt. I was lucky enough to get out of college without debt and into my engineering job.
The way we educate children in school is predatory when it comes to college and loans. We tell them to follow their dreams and that they must go to college. Of course you're going to have 18 year olds (who we know aren't fully developed until 25, who've been conditioned through schooling / society, etc.) make choices that turn out to be wrong in the long run.
For some reason, the older generations of our country (along with many others I would say) have decided they would rather eat their young.
None of this is an accident. It's to fund someone's luxurious lifestyle or retirement.
Why build housing when we can force the next generations to rent from us until they die?
Why have healthcare when we can use that to drain the accounts of any cancer stricken family who might have some actual savings built up? (healthcare related bankruptcies are staggeringly high in the USA)
All these things make someone richer. And if it's not you, you should probably be questioning why our country is making these decisions. They aren't the only decision we can make, other countries have proven that.
Empathy is hard. Sometimes people can't imagine the viewpoints on these things until someone in their family experiences it (gets cancer, loses their job, etc.).
I guess I would say, realize that no one is trying to get into these bad situations where they can't pay off their loans. They didn't wake up at 18 years old and say: "By golly, I sure would like to be hating my life in 10 years." They had hopes, they had aspirations, they had extenuating circumstances and a childhood that was different from our own.
The point is, almost no one sets out to make their life awful. Life happens.
The way we educate children in school is predatory when it comes to college and loans. We tell them to follow their dreams and that they must go to college. Of course you're going to have 18 year olds (who we know aren't fully developed until 25, who've been conditioned through schooling / society, etc.) make choices that turn out to be wrong in the long run.
For some reason, the older generations of our country (along with many others I would say) have decided they would rather eat their young.
None of this is an accident. It's to fund someone's luxurious lifestyle or retirement.
Why build housing when we can force the next generations to rent from us until they die?
Why have healthcare when we can use that to drain the accounts of any cancer stricken family who might have some actual savings built up? (healthcare related bankruptcies are staggeringly high in the USA)
All these things make someone richer. And if it's not you, you should probably be questioning why our country is making these decisions. They aren't the only decision we can make, other countries have proven that.
Empathy is hard. Sometimes people can't imagine the viewpoints on these things until someone in their family experiences it (gets cancer, loses their job, etc.).
I guess I would say, realize that no one is trying to get into these bad situations where they can't pay off their loans. They didn't wake up at 18 years old and say: "By golly, I sure would like to be hating my life in 10 years." They had hopes, they had aspirations, they had extenuating circumstances and a childhood that was different from our own.
The point is, almost no one sets out to make their life awful. Life happens.
I actually believe that society today has enough wealth that we can allow people to pursue both their vocation and their interests - I don't think people need to go to college to learn their trade (out of a few specific fields). Instead they benefit from that learning by living a more fulfilling life - and, sneakily, they also end up developing their soft skills quite a bit and soft skill proficiency is classically what has allowed American labour to retain it's value.
Sure. Just as long as you agree that the loans should be dischargable in bankruptcy. The lenders here should also bear the consequences of making a poorly thought out contract.
Why do you people always assume that the degree we chose to pursue was useless? I chose to pursue Applied Mathematics and Computer Science. I had to leave school prior to completion due to financial circumstances beyond my control at that time and have been unable to get my foot in the door without a degree since then.
If only backrupsy would releave these people but somehow the whole chapter 11 thing has turned into some sick modern dept jail.
Soon your dept will be forced to your descendants.
Soon your dept will be forced to your descendants.
Nobody is going to jail over student debt, that's some nutty hyperbole.
If you could get out of student loans by simply declaring bankruptcy, no sane institution would give out student loans. A young graduate has little to lose by declaring bankruptcy.
What we really need to do is teach young people not to waste $100K+ on some ridiculous degree that will not get them hired.
If you could get out of student loans by simply declaring bankruptcy, no sane institution would give out student loans. A young graduate has little to lose by declaring bankruptcy.
What we really need to do is teach young people not to waste $100K+ on some ridiculous degree that will not get them hired.
>no sane institution would give out student loans
Then maybe the whole concept of student loans is ridiculous to begin with.
Then maybe the whole concept of student loans is ridiculous to begin with.
Nobody is forcing you to take a loan out. I studied and worked at the same time. Paid for my 4-year NJ college with cash.
The average cost of college for a four year, in-state public state university is ~$25,000 per year [1]. I'm happy that you either came from a rich family or went to college before the student debt crisis started, but not everyone has $100,000 in cash under their couch cushions.
[1] https://www.valuepenguin.com/student-loans/average-cost-of-c...
[1] https://www.valuepenguin.com/student-loans/average-cost-of-c...
Was my comment not clear? I worked and studied at the same time.
I came from a very poor family, and my parents paid zero for my education. I paid around $12K/semester, depending on the number of credits, so around $24K/year.
I came from a very poor family, and my parents paid zero for my education. I paid around $12K/semester, depending on the number of credits, so around $24K/year.
I'll bet $5 he went to state school which are often heavily subsidized.
> If you could get out of student loans by simply declaring bankruptcy, no sane institution would give out student loans.
And yet, credit cards (unsecured lines of credit with no recourse in bankruptcy) are issued continuously to this cohort.
And yet, credit cards (unsecured lines of credit with no recourse in bankruptcy) are issued continuously to this cohort.
Credit cards are issued at 10%-30% interest rates. This is the norm for unsecured debt; to get a decent rate a debt must usually be backed by something. Mortgages have the lowest rates seen with consumer debt because even in foreclosure, the house can (in normal economic conditions) be sold to repay the debt in full.
Student loans can't be made at reasonable interest rates without either a strong guarantee of repayment or a taxpayer subsidy for the risk. The current system has a bit of both.
Student loans can't be made at reasonable interest rates without either a strong guarantee of repayment or a taxpayer subsidy for the risk. The current system has a bit of both.
Yes, but at the credit level of a student getting $50,000 in loans, a credit card company would give a $1,000 limited cards
If you don't give students tens of thousands of dollars in credit, schools can't charge tens of thousands of dollars per year. Prices rise to capture available revenue.
At what APR though? 30-40% for someone with no credit history? And how much? Maybe $1K on a prepaid card at first.
They hedge the risk by charging a lot more. Do you want student loans at 30-40% APR?
They hedge the risk by charging a lot more. Do you want student loans at 30-40% APR?
Between 15-28%, although legislation is currently being sponsored to cap credit card interest rates at 15%.
I want student loans eliminated and universities to be government funded through taxpayer dollars, as was the case previously with public universities. Public university tuition has gone up because government funding for them have gone down. As usual, stealing from the future.
EDIT: I'm okay with raising taxes to pay for education instead of the broken student loan system, forcing universities to limit what they charge, and democratic socialism as a whole. Societal utilities (healthcare, education) are not a free market. Never have been, never will be.
I want student loans eliminated and universities to be government funded through taxpayer dollars, as was the case previously with public universities. Public university tuition has gone up because government funding for them have gone down. As usual, stealing from the future.
EDIT: I'm okay with raising taxes to pay for education instead of the broken student loan system, forcing universities to limit what they charge, and democratic socialism as a whole. Societal utilities (healthcare, education) are not a free market. Never have been, never will be.
Sure, but then it means you have to forcefully decide how much universities can charge for their services. And you will have to raise taxes to fund free education.
I'm not a fan of socialism. I think people and organizations should be free to decide how much their services cost.
And btw, that 15% cap will result in one thing: poor people not being able to get credit.
I'm not a fan of socialism. I think people and organizations should be free to decide how much their services cost.
And btw, that 15% cap will result in one thing: poor people not being able to get credit.
It's almost impossible https://www.google.com/amp/s/www.creditkarma.com/advice/i/st...
You could teach old people to stop trying to charge 100K for some ridiculous degree as a prerequisite to enter certain job markets, but they already seem aware of the problems they're causing.
You cant teach anyone to make less profit.
I suppose they don't believe in their own ability to educate students enough to generate ideas that pay for themselves via research grants; otherwise it would be more profitable to charge less.
I'm pounding the strongly disagree button.
Do you eat your fill before you serve your children dinner?
Do you eat your fill before your guests get a share?
If you had money to blow, do you buy every single house in a locality just to keep them empty?
Do you charge your neighbors $150 an hour for technical support they need, and implement payment plans they can barely get out from under to make it happen?
No, you don't. Because at some level you have two neurons to rub together that say "I don't need this, it isn't terribly polite, and even if I did, I wouldn't be the best equipped to manage actually keeping things running smoothly."
Making "less profit" is a subset of the same group of life lessons as those I posted above.
Except now, we have an entire strata of people who forsake the basics of human coexistence called "capitalists", who seek to leverage every opportunity to build rent-seeking empires at the expense of everyone else because... Why? Because if they don't somebody else will?
You are a citizen of the world first, and the economy second. If there is something that needs to get done, work at figuring out how to get it done with what you've got, and no one will begrudge you making a bit extra off it if it makes their lives easier.
Reasonable profit is a given; predatory profit generating practices, however, are not, and should never be acceptable.
Reasonable profit making is absolutely learn/teachable. You just have to have a modicum of humanity left to be willing to recognize and honor it.
Do you eat your fill before you serve your children dinner?
Do you eat your fill before your guests get a share?
If you had money to blow, do you buy every single house in a locality just to keep them empty?
Do you charge your neighbors $150 an hour for technical support they need, and implement payment plans they can barely get out from under to make it happen?
No, you don't. Because at some level you have two neurons to rub together that say "I don't need this, it isn't terribly polite, and even if I did, I wouldn't be the best equipped to manage actually keeping things running smoothly."
Making "less profit" is a subset of the same group of life lessons as those I posted above.
Except now, we have an entire strata of people who forsake the basics of human coexistence called "capitalists", who seek to leverage every opportunity to build rent-seeking empires at the expense of everyone else because... Why? Because if they don't somebody else will?
You are a citizen of the world first, and the economy second. If there is something that needs to get done, work at figuring out how to get it done with what you've got, and no one will begrudge you making a bit extra off it if it makes their lives easier.
Reasonable profit is a given; predatory profit generating practices, however, are not, and should never be acceptable.
Reasonable profit making is absolutely learn/teachable. You just have to have a modicum of humanity left to be willing to recognize and honor it.
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Play dirty right back at them.
If you get a job at Corporation-X your wages can be garnished for failure to pay a debt. If you own your own business and a your corporation is employed by Corporation-X your business can't have it's income interfered with.
How you get paid by your corporation is not fit for discussion on this forum.
Note: This applies to Canadian tax/debt law. I don't know how well it works elsewhere.
If you know a doctor who owns their own practice ask them 'how they do it'.
If you get a job at Corporation-X your wages can be garnished for failure to pay a debt. If you own your own business and a your corporation is employed by Corporation-X your business can't have it's income interfered with.
How you get paid by your corporation is not fit for discussion on this forum.
Note: This applies to Canadian tax/debt law. I don't know how well it works elsewhere.
If you know a doctor who owns their own practice ask them 'how they do it'.
In the US, I'm pretty sure you couldn't get away with this. Business expenses are held against income to determine how much tax you pay. There are strict guidelines on what counts as a business expense versus a personal expense. I suspect spending a ton on groceries and rent/mortgage for a residential address would raise some flags and get you audited.
There is always the classic income tax dodge.
Incorporate, then hire your wife, mistress, children, and random family members.
Incorporate, then hire your wife, mistress, children, and random family members.
If you're employing people in lower tax brackets that might save a little bit of money if they funnel it back to you. But I don't generally hear about that tactic. It would be more relevant if you were wanting to bleed a not for profit entity where there are legal caps on the types of income executives can make.
The classic tax dodge is the $1 salary and getting taxed at capital gains rates instead
The classic tax dodge is the $1 salary and getting taxed at capital gains rates instead
Back when top marginal rates were 70% And corporate/capital gains taxes were also high. It was a classic thing.
Limited liablity only works one way: individual cannot be personally liable for the debt of the corporation. But if you, the owner, are in debt then there's a simple solution for your creditor: seize your shares in said corporation (and after gaining control over corporation, just take money from its bank account).
Usually, the people owed the debt is not the people who the loan was spent on. You aren't playing dirty back at them, you are just making someone else the victim of the monetary loss.
No, I reject this. The loan system in the US (at least) is dirty through and through, and anyone who ends up buying debt off of a major corporation is especially sleazy. And heck, if the banks get in trouble through irresponsible lending it'll be fine for them - their loss will end up coming out of all of our pockets.
I say all this to make the point that, even as someone who is a poster child for "college-enabled upward mobility", the article's dread warnings still ring true to me. I don't feel like I am any smarter or harder working than my classmates, I just got very, very lucky. I know far too many physics majors working in retail, many of whom consistently outscored me on tests, to believe I've somehow "earned" more than they had. The system right now is far too random, far too viscous. Kids need to understand that "I have a degree" is not a guarantee of employment, it just increases their chances by X%. It's still entirely possible they spend their life making <50k a year just by having bad luck.
This is all made worse by the student loan albatross around their necks, not only can they not find jobs that pay a comfortable wage - they're getting hundreds of dollars taken off every paycheck to pay off debt. This line from the author:
>I just turned 40, and I finally just paid my last student loan payment.
Ouch. I'm sorry. I'm just really sorry.