Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Then do it! You're using an arbitrary means to do so. Also, credit card users aren't being bailed out. The damn middle-aged boomers who took out HELOCs and second mortgages for renovations are the ones being bailed out. Go after THOSE folks, then talk to me.
The lenders should decide whether they want to verify income for adults or not. Ultimately I think they would change the way they handle college students regardless of the law.
Anyhow, the problem with the under 21 crowd is that they are usually not responsible and the statistics show this. The law is largely targeting college students without income, not the working adult that is under 21. For similar reasons we don't let people under 21 drink alcohol.
Limiting students ability to obtain debt I think is an important way to control college costs.
Don't get me started with the drinking laws.... those were made by a bunch of bitchy mothers on the rag who wanted to bring back prohibition. If you ask me, drinking age should come first, THEN driving age. Anyone over 21 knows that when you can drink legally, it loses any bad-assness it may have had. Go to Europe and see: they don't have binging like we have here nor do they have as many drunk drivers because driving is taken seriously as an adult responsibility.
Anyway, if the lenders want to change their standards, wonderful. The government has no business in doing so especially using age discrimination. That's for the actuaries to figure out. IMHO, if we're going to have income requirements for 18-20 year olds, we should require them for EVERYONE. I mean, who's going to do more damage: a fresh adult with a $600 limit (standard for a beginner card) with a $500/month job, or an adult who's had credit a while, $40,000/year salary, and is able to qualify for an AmEx platinum with no spending limit (it's happened before) because they didn't have to prove income? I'm just saying... better to learn with that little credit card early than with that bigger AmEx later (as we've seen... AmEx actually paid people to close their accounts because of this practice).
Also, limiting credit debt among this group isn't going to control college costs; they will continue to go up because a large percentage of students have their parents pay for it (at 4 year universities) who will take out PLUS loans, private loans, etc.. Not to mention, most of the student loans that ARE taken out are federally funded last I checked. We also treat it as an absolutely positively necessary item without which your life will be a failure; we've convinced folks of this and have kept the price-elasticity of demand very high.
Quote:
This is not true. The FED has been purchasing credit card ABS to keep credit cards flowing. They are currently are not supporting "credit card modifications" though. But the modification programs for housing are rather limited.
I was speaking about the modification programs. The housing programs may be limited, but they ARE there (and will most likely fail). The credit card companies themselves may be bailed out, but not the users (neither should really IMO).
Quote:
Gen-X was more active with the housing mess than the boomers, at least from my experience. Also, the boomers are becoming seniors, they are not "middle-aged". The youngest are around 48 years old.
In my experience, it was the both. BTW, most of the parents I knew when I was in high school were boomers (I was class of 2006), so that's why I said "middle aged." They waited a while to have kids. They were "old," but I never thought of them as OLD OLD since they still had kids. So, you must understand where I come from in that use of the word "middle aged"... I sometimes forget that I'm in my 20s, so, you know... time goes by!
Anyhow, a lot of them racked up HELOCs and such, even bragged about them. Refi'd their homes, etc. to feel rich. Then it crashed down.
.... Anyone over 21 knows that when you can drink legally, it loses any bad-assness it may have had. Go to Europe and see: they don't have binging like we have here nor do they have as many drunk drivers because driving is taken seriously as an adult responsibility.
Young Europeans do the same sort of binge drinking. Driving drunk is less of an issue in Europe due to their public transit systems, it has nothing to do with them being more responsible.
Quote:
Originally Posted by runningncircles1
Anyway, if the lenders want to change their standards, wonderful. The government has no business in doing so especially using age discrimination.
Students are graduating with too much debt and the credit card companies want badly to enslave them with debt. At some point you have to try to protect those that are too naive to do the right thing.
Quote:
Originally Posted by runningncircles1
Also, limiting credit debt among this group isn't going to control college costs; they will continue to go up because a large percentage of students have their parents pay for it (at 4 year universities) who will take out PLUS loans, private loans, etc.....
The cost of education is directly related to student debt. Credit cards are just one piece of it. But limiting just one of the problems, is still better than doing nothing.
Quote:
Originally Posted by runningncircles1
Anyhow, a lot of them racked up HELOCs and such, even bragged about them. Refi'd their homes, etc. to feel rich. Then it crashed down.
The boomers used HELOCS to buy things, but not to the extent that gen-X did. I don't know many boomers that are underwater, most still have a sizable mortgage though. The boomers had a lot more equity to tap.
On the other hand many of the Xers I know pulled most of their equity out and are now underwater.
I sense something more nefarious at work here. Student loan debt cannot be discharged in bankruptcy, but credit card debt can, and often is the first in line to taste the bankruptcy judge's blade. If a student can get credit from a CC company, it makes perfect sense for him/her to quickly run it to the limit, use the proceeds to pay off the student loan debt that can't be discharged in BK, and then wave their middle finger at the CC company in bankruptcy court. And I know a few that have done exactly that.
This appears to me to be one of those win-win political maneuvers that allow our corrupt Congresswimps to declare victory in defense of "the children" while quietly solving a growing vulnerability problem for their bankster buddies. Make sure to write them all a Thank You note.
Young Europeans do the same sort of binge drinking. Driving drunk is less of an issue in Europe due to their public transit systems, it has nothing to do with them being more responsible.
No, they don't have the same binging that we have here. And, yes, they ARE more responsible with driving. I can attest. Go there sometime and rent a car. There are no cup holders for the drivers because the over there, when you drive, you drive. You do nothing else. Period. Driving school is compulsory there, and it can cost upwards of $1000-1500 to get a license overall. The German Autobahn, for example, has higher speed limits but less crashes per capita than American freeways. Believe me, the drivers there are more responsible with driving.
Binge drinking is considered rude as well. It shows that you do not care about how you present yourself to your peers and friends. It is not seen in the amount it is here in the states.
Quote:
Students are graduating with too much debt and the credit card companies want badly to enslave them with debt. At some point you have to try to protect those that are too naive to do the right thing.
Again, you're assuming everyone should go to college. Get this idea out of your head! And, no, you do not need to "protect those who are naive" and I find it insulting that you think anyone not middle-aged as invalid and unable to use their brain. When you're 18, you're an adult. Period. You need to make decisions on your own and cut the damn cord from the helicopter parents. You might (and probably will) make mistakes, as you should have the right to. And, "enslave?" Really? Because people force you to charge up those shoes you don't need, or go out to restaurants. Or charge more on your card in one month than you make in two? When I got a credit card at 18, I knew I had to pay back the money I spend on it. I even asked my banker "what are the catches." He told me outright about my interest rates, penalties, and my right to question my statements at anytime. It's not hard to fathom. This isn't MY money, it belongs to a collective group of bank customers who are entrusting the bank to loan out the money with interest, some of which will go into their accounts. You get to use the money, it has interest on it. If you pay it back in full at the end of each month, you owe nothing. If you keep it on there for any period of time, you pay interest depending on the amount of time on there. I didn't need Calculus, DiffEq, Stats, or any complex math or finance to figure it out. Just common sense and general arithmetic.
97% of whether someone is financially fit or not is a question of will power. One percent is for if they are competent or not (and, most 18+ year olds are competent enough to understand a contract, especially if they're in college). Another two percent depends on personal circumstances such as medical and family hardships. But, for the most part, restraint and will power make up how credit worthy and financially fit someone is, and it doesn't change much with age (ask my father). If you're not able to control yourself financially at age 18 with a certain set of consequences, you won't be able to at 40.
Now, if you want to say that anyone under 21 isn't competent to understand a contract or the fact that they put an intoxicating beverage in their body will change their behavior, fine. But, you also have to say that anyone under 21 isn't able to understand their actions in a crime and aren't able to take care of themselves, thus requiring parental mediation and financial support until 21.
Sorry, but if they're naive enough to fall prey to a simple credit card contract, then maybe they can be fooled into assisting someone in robbing a liquor store. I mean according to your theory, it's the same thing: someone convincing them of free money. Then, they get said free money not realizing the strings attached. They go to court and PAY for it by being ENSLAVED to a system (jail). They were too naive to ask how they would get this money in the first place and if there were any catches.
Quote:
The cost of education is directly related to student debt. Credit cards are just one piece of it. But limiting just one of the problems, is still better than doing nothing.
No, it's directly related to the amount of funding pumped into the system by the government AND by making it a necessity with a demand curve with an infinite derivative (high price elasticity). Everyone is convinced that they need to go to college and get a desk job in the FIRE economy or they will be a failure. They major in the Liberal Arts and Humanities which don't provide any real "skills" outside of academia. They get a 4 year degree just to say they have one even when it's not necessary (most hate the work, which can be seen as colleges have dumbed down curricula since the 60s). They could have gone to a trade school or such and spent much less money and make a decent living. The only folks who need to go to college are those who want to pursue academia (go into researching their fields and teach it), or get specialized degrees (engineering, science/math majors who want to do modeling, economists for central banks and treasuries, Law degrees, etc.). If you wanted to TRULY reduce the amount of debt of college graduates, you'd allow student loan debt as a bankrupt-able liability AND change the education system from supporting a bunch of K-12 drones going into universities that they don't want to go to to supporting trade schools. Just think: if students didn't feel pressured to go to college after high school (because, as quoted from the movie "Orange County," "that's what ya do after ya graduate high school!"), AND if banks weren't guaranteed all that money back after loaning it, how fast would prices come back to reality? That'll never happen, though.
No, they don't have the same binging that we have here.
I'm sorry the facts don't fit your preconceived notions of the world, but they do indeed have a binge drinking problem. In fact, some Northern European and Eastern Europe countries have worse problems with it than the US. There is even a nice name for it "Vodka Belt":
Believe me, the drivers there are more responsible with driving.
Why would I believe you? Because they have less cup holders?!
Quote:
Originally Posted by runningncircles1
Again, you're assuming everyone should go to college.....
I'm making no such assumption.
Quote:
Originally Posted by runningncircles1
When you're 18, you're an adult. Period. You need to make decisions on your own and cut the damn cord from the helicopter parents.....
But you are not. 18 just denotes how many times the earth has orbited the sun since you were born. People mature at different rates. Although some that are 18 are perfectly able to manage their business, the majority are not financially mature. There is plenty of evidence to suggest that young adults are abusing credit cards as a result a good case can be made for laws to protect them. The law is very mild, it only prevents someone with no income from getting a credit card.
Such a law would not make sense for older adults though, for one there are many that don't have income in the standard sense.
Quote:
Originally Posted by runningncircles1
97% of whether someone is financially fit or not is a question of will power. One percent is for if they are competent or not ...
You like pulling things from your rear end don't you?
Quote:
Originally Posted by runningncircles1
Sorry, but if they're naive enough to fall prey to a simple credit card contract, then maybe they can be fooled into assisting someone in robbing a liquor store.
This has nothing to do with falling prey to a credit card contract. Rather financial management. They understand the contract, they do not understand the finer points of financial management. Not sure why you can't see the difference. Most Americans don't manage their finances well, but its particularly true for those that are younger. Of course, they like to think they have things figured out.
From my experience the thinking behind using credit cards in college goes something like this "Oh, I can use them now and pay them back later because I will be making the big bucks with my fancy degree". But after graduating many find the big bucks don't materialize, they miscalculated. It has nothing to do with them not understanding the contract.
Now, you can try to teach them that touching the stove will burn them, but its more effective to turn off the stove while you teach them.
Quote:
Originally Posted by runningncircles1
No, it's directly related to the amount of funding pumped into the system by the government AND by making it a necessity with a demand curve with an infinite derivative (high price elasticity).
You mean "low price elasticity", high is the opposite. Regardless, are you under the impression that everyone is rich? People do not pay for college from income, rather loans. As a result the indifference to price is directly correlated to the availability of loans. If loans became more limited, then the prices would drop. Less people would be able to go. Unless of course, you believe they can magically materialize the funds to pay for it.
Quote:
Originally Posted by runningncircles1
They major in the Liberal Arts and Humanities which don't provide any real "skills" outside of academia. They get a 4 year degree just to say they have one even when it's not necessary (most hate the work...
This again speaks of the loan situation. If people actually had to pay for the education upfront they would think more about what they were actually majoring in, or whether it was even worth it in the first place. You'll find that when parents are paying for the education (because they don't qualify for federal loans because they make a lot) they tend to be picky about what their kids study.
Quote:
Originally Posted by runningncircles1
If you wanted to TRULY reduce the amount of debt of college graduates, you'd allow student loan debt as a bankrupt-able liability
No, this would rob the lenders (and tax payers). The lenders are loaning money regardless of the students (or parents) credit scores. If you are able to easily discharge them then anybody that goes into it with a bad credit score will simply default! If you allow it to be discharged, then you will have to factor in credit scores. But this will keep kids from low income families out of school, the exact opposite of what the loans are suppose to help with!!!
Private student loans can be discharged, but they also depend on your credit score.
In terms of people "needing to go to college", complain to the employers. They are the ones that prefer people with college degrees.
I am all aginst people that have no income and shoutldn't be given crdit cards one but this is more governamnt intervention. Let teh crdit card compnaies decide who they want to give credit to and make it 18 and above. This is governamnt acting as parents to adults;plain and simple.Basically the governamnt has decided that americans are too stupid to knopw what to do and they have to act as parents. Sure some will get in trouble but that is all part of the risk rreward part of crdit and growing up. Thier parents should be the ones to advise them anfd everyone has to be allowed to make mistakes or your not really free. We saw alots of older adults take stupid loans ;most IMO knew what they were doing too.Let teh markets correct this becuase if the lenders lose enouhg they will change the risk to reward thinking.This is the socailist lberal way of running other lifes.We don;t need to put college loans as bankrupt type because there would be no such loans then;the lenders are not crazy has that. But if the governamnt did that then the market6s would correct it by not making the loans.
Don't get me started with the drinking laws.... those were made by a bunch of bitchy mothers on the rag who wanted to bring back prohibition. If you ask me, drinking age should come first, THEN driving age. Anyone over 21 knows that when you can drink legally, it loses any bad-assness it may have had. Go to Europe and see: they don't have binging like we have here nor do they have as many drunk drivers because driving is taken seriously as an adult responsibility.
Anyway, if the lenders want to change their standards, wonderful. The government has no business in doing so especially using age discrimination. That's for the actuaries to figure out. IMHO, if we're going to have income requirements for 18-20 year olds, we should require them for EVERYONE. I mean, who's going to do more damage: a fresh adult with a $600 limit (standard for a beginner card) with a $500/month job, or an adult who's had credit a while, $40,000/year salary, and is able to qualify for an AmEx platinum with no spending limit (it's happened before) because they didn't have to prove income? I'm just saying... better to learn with that little credit card early than with that bigger AmEx later (as we've seen... AmEx actually paid people to close their accounts because of this practice).
Also, limiting credit debt among this group isn't going to control college costs; they will continue to go up because a large percentage of students have their parents pay for it (at 4 year universities) who will take out PLUS loans, private loans, etc.. Not to mention, most of the student loans that ARE taken out are federally funded last I checked. We also treat it as an absolutely positively necessary item without which your life will be a failure; we've convinced folks of this and have kept the price-elasticity of demand very high.
I was speaking about the modification programs. The housing programs may be limited, but they ARE there (and will most likely fail). The credit card companies themselves may be bailed out, but not the users (neither should really IMO).
In my experience, it was the both. BTW, most of the parents I knew when I was in high school were boomers (I was class of 2006), so that's why I said "middle aged." They waited a while to have kids. They were "old," but I never thought of them as OLD OLD since they still had kids. So, you must understand where I come from in that use of the word "middle aged"... I sometimes forget that I'm in my 20s, so, you know... time goes by!
Anyhow, a lot of them racked up HELOCs and such, even bragged about them. Refi'd their homes, etc. to feel rich. Then it crashed down.
I agre with you, having grown up in Europe myself I know that drinking isn't such a big issue when you are allowed to do so at a younger age. Of course there are College students who as part of a competition , start the binge drinking...but over all it helps that parents are alowing their kids to drink a glass of wine at the dinner table during special occasions. It isn't such a big deal and we all know twhen things are forbidden , kids wants to do it even more. To me it always has been strange that first you are allowed to start to drive a car, you can shoot some one (when you are in the military) but drinking...wow, not till you are 21!
I had my first (small) glass of wine when I was approx. 12 years old and it was so special but on the other hand "not a big deal". It was around Christmas time and we were always allowed to drink like a kids glass of wine whenever we eat fondue. So we never even thought about a drinking age and when I reached the age of going "out" to a disco or club, it wasn't a big deal and I hardly ever drink anything else than a soda.
I know the public transport is better in Europe but not in all cities. I'm from a big city and at night you can only take a taxi which is way to expensive for most teenagers and most of the time we either went on a motor bike, bike, or one of the parents would pick us up.
I also believe the younger kids are made aware of how to use a credit card in a smart way, the less abuse there will be, but remember that most adults can't even handle a credit card so how can they ever teach their kids how to use one in a responsible way.....
Why would I believe you? Because they have less cup holders?!
Well, that part of my post went over your head. The point was it's harder to get a license to drive in Europe and it's more costly, and as so, it's taken more seriously. The cup holders story was to illustrate the seriousness of driving there. Here, people talk on their phones, eat, drink, and drive drunk. Why? Because our government worked in conjunction with Ford and GM to build a large Interstate freeway system to make a car necessary even for 16 year olds. Thus, it's made easier to get a license. Driving school isn't even compulsory here.
Quote:
I'm sorry the facts don't fit your preconceived notions of the world, but they do indeed have a binge drinking problem. In fact, some Northern European and Eastern Europe countries have worse problems with it than the US. There is even a nice name for it "Vodka Belt":
Alcohol belts of Europe - Wikipedia, the free encyclopedia
Eastern Europe is much different than Western Europe. It's full of poverty and social problems, thus alcoholism. That's like saying the US has no binge drinking problems because Utah doesn't have a lot of drinkers. It isn't based on my "preconceived" notion of the world, it's based on experience living there. Sorry, but the US loves binging more than Western Europe.
Quote:
But you are not. 18 just denotes how many times the earth has orbited the sun since you were born. People mature at different rates. Although some that are 18 are perfectly able to manage their business, the majority are not financially mature. There is plenty of evidence to suggest that young adults are abusing credit cards as a result a good case can be made for laws to protect them. The law is very mild, it only prevents someone with no income from getting a credit card.
Such a law would not make sense for older adults though, for one there are many that don't have income in the standard sense.
Then, why say that someone is an adult at age 18 if they're too naive to handle their own finances? You haven't addressed this yet. If it isn't old enough for you, why not make anyone under 21 a juvenile? It's ridiculous to say someone is "kind of" an adult, and that they are financially responsible for themselves, but they actually can't control their own finances. You can't have your cake and eat it too. If someone is financially responsible for themselves, then they are financially responsible for themselves.
And, yes a law would make sense for older adults. If they don't have the income (in ANY sense) for a $200,000 credit limit, then they shouldn't have one now should they? I'm fine with requiring credit card companies to get proof of income, but it should be required for EVERYONE. I don't know how you can disagree with this.
Quote:
From my experience the thinking behind using credit cards in college goes something like this "Oh, I can use them now and pay them back later because I will be making the big bucks with my fancy degree". But after graduating many find the big bucks don't materialize, they miscalculated. It has nothing to do with them not understanding the contract.
Now, you can try to teach them that touching the stove will burn them, but its more effective to turn off the stove while you teach them.
Again, assuming anyone 18-20 is in college. I've heard the same rhetoric from 40 years old with years of credit experience. "Oh, I'll charge this big screen TV on my AmEx and pay it off. I have a 0% introductory rate. I'll pay that sucker off in no time." Years later, they STILL have a balance because they decided to do this for EVERYTHING they bought and their interest rate kicked in. Or how about when wanting to start a business: "I'm going to make an internet start up. I'll charge some of the expenses on my card and pay them off when the business takes off!" Then, they find it was much harder than they thought, the business fails, recession hits, etc.. They miscalculated. It has nothing to do with age. It has to do with rational vs. irrational decision making, or with thinking the current circumstances would last forever. It happens to a lot of folks no matter their age.
Some people can learn that the stove is hot if you tell them. Others learn from experience. Delaying touching the stove isn't going to prevent it.
Quote:
You like pulling things from your rear end don't you?
It wasn't made to be a real statistic. It was to illustrate my point that most of your credit-worthiness is tied to your will power while some of it is circumstantial. It doesn't change with age. The addict has to have a profound impact in his/her life to want to stop using. In this case, if someone becomes addicted to credit, they have to have that moment at the grocery store line where they can't purchase their items because there is no money in their account. They have to have that moment where they realize they're dependent on loaned money for their lifestyle and because of that they're not independent. They have to have that moment where they just realize they're insolvent and must declare bankruptcy. And, sometimes, even when they get burned by the stove, they'll want it again because they get some gratification out of it (psychological hole to be filled with materialism). In that case, it's up to the gas company to turn off their line (creditors not granting credit based on experience with the customer).
Quote:
Private student loans can be discharged, but they also depend on your credit score.
It is extremely difficult to do this. As in you better be paralyzed from the neck down or some similar ailment that prevents you from working. It's very hard to get "undue hardship" enacted on a student loan, federal or private.
No, this would rob the lenders (and tax payers). The lenders are loaning money regardless of the students (or parents) credit scores. If you are able to easily discharge them then anybody that goes into it with a bad credit score will simply default! If you allow it to be discharged, then you will have to factor in credit scores. But this will keep kids from low income families out of school, the exact opposite of what the loans are suppose to help with!!!
That's only for the federal loans. They're FEDERALLY GUARANTEED. If you default, guess who gets to claim default notice and collect from Uncle Sam? That's right: Mr. Banker. The banks get their money either way. Otherwise, you'd have much higher rates and more lenders wouldn't touch the federal loan market.
I, on the other hand, was talking about private student loans. They are based on credit. Currently, Stafford limits with the average financial aid package do not cover the amount of money needed to attend the average four year university. Universities know this and know that students will pay anything to get that crappy piece of paper saying they went to college. So you have the private loan hustlers. That market grew at the fastest rate for the last 15 years. The worst part is, universities would set up financial aid packages to do this. They switched from need-based to more merit aid to get desired class enrollment statistics. Upper-middle class students, middle to upper middle class minorities with decent stats, athletes, and those from well to do families would get all the grants (but they didn't have to give them full cost because they could afford a chunk of it out of pocket) because they had a certain mold they fit into. The loans and federal grants (which at their maxima, only cover a fraction of the COA for a 4-year) would go to poorer students forcing them to go to private lenders. It's a God-awful system that you should really read up on more. If you're REALLY REALLY concerned about graduate's debt and income hardships, you'd try to stop private loans and change the aspects of merit based system for institutional grants.
Quote:
You mean "low price elasticity", high is the opposite.
I was thinking of "high inelasticity" while writing "elastic." It was 2 AM.
Quote:
Regardless, are you under the impression that everyone is rich? People do not pay for college from income, rather loans. As a result the indifference to price is directly correlated to the availability of loans. If loans became more limited, then the prices would drop. Less people would be able to go. Unless of course, you believe they can magically materialize the funds to pay for it.
Where did you imply that I think everyone is rich? All I said was that the government pumping money (grants AND loans) into tuition and fees at the standard 4 year university without building infrastructure is causing prices to escalate. Doesn't take a genius to figure that out. Also scaring people into thinking they need a 4 year degree is causing inelastic demand. People will sell their assets and organs to buy a degree these days!
Last edited by xavier132487; 05-24-2009 at 02:34 PM..
I agree and disagree with this...I feel that the age should be 18. I agree that people should have to have the ability to repay. Banks are the ones that got us into this mess...the world runs on credit thus banks run the world...is sad, and pathetic
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
, start the binge drinking...but over all it helps that parents are alowing their kids to drink a glass of wine at the dinner table during special occasions. It isn't such a big deal and we all know twhen things are forbidden , kids wants to do it even more. To me it always has been strange that first you are allowed to start to drive a car, you can shoot some one (when you are in the military) but drinking...wow, not till you are 21!
