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I don't know how the student loan bubble can "pop". Its not like you can eliminate them. If kids don't have jobs they move home with nothing, having nothing to lose and put the loans in forbearance so the interest just builds and they pay nothing. If they have a low-paying job they can go into income based repayment where the balance wont grow, but it wont go down either.. again they'll likely have very little to lose.
I know a guy with $200k in student loans, but has a good job making around $80k. Unfortunately his debt to income ratio is so high he's very limited on getting loans. The student loan costs him a little over $1,000 a month, but making $80k that's not horrible to handle, just sucks. He'd like to buy a house but can't get a mortgage until a big chunk of the loan is paid so he rents with a roomate trying to pay down the loan.
The only thing these high student loans are doing is stopping young adults from spending money on retail and helping to stimulate the economy, they're just giving all their money to the greedy banks. I have $400 a month in student loans, because of that and my mortgage I am very frugal and any extra $ I make goes straight into the loan to try to pay it off asap. Once the $400 is gone, I'll personally be putting an extra $4,800 back into the economy each year instead of paying for bank CEO's bonuses.
I'll never understand the rationale of students these days like you with loans after college. You were loaned money that you promised to pay back. You knew the rates and the payment requirements. However you feel the banks are greedy for expecting payment back for an amount you agreed to pay? Student loan rates are very affordable so calling the banks greeedy is blaming the wrong person. Blaming the government for making loans easily accessible diluting the value of a college education is who you should be blaming. With your rationale the banks should just not make you pay back your loans because you don't want to because you would rather buy a car or other things than pay back your debt. Maybe the banks should tell their staff they can't pay them because so many borrowers like you think you have no obligation to pay back something you agreed to pay. I live in such an entitlement generation it sickens me.
If you remove the court system (which the other poster claims to make people indentured servants), how would a nation effectively enforce laws?
I don't know, but you don't need to remove the courts entirely, the law could simply be changed so that someone cannot get a criminal contempt of court charge for failing to appear for a civil suit. This third option means your original stance is a false dichotomy.
If you were really a welfare baby I wouldnt be surprised if that carried over into college tuition time. I knew a family once who had more kids they could afford and just stopped working and got on welfare for a decade while all their kids went to school. Granted this was NY state which is an absolute bankrupt welfare state so it may not have been the case for you.
An increasing minority of people are majoring in STEM and most others major in some kind of preprofessional course. As was stated before only the minority of students major in esoteric liberal arts with no plans for grad school.
I majored in STEM with good grades, internships, and volunteer work from a state flagship university and my first year out made under 20k and had to move in with mom. I went back to school after a year (aquiring more debt) and now make decent cash but the loans negate the wage premium significantly. "Worthwhile majors" arent necessarily a panacea. Business is the most common major and one of the most likely to be underemployed.
I had to use private loans (parents made "too much money" for me to get aid and federal loans didnt cover everything) and since paid them back but thats where the real problem begins. If you cant find suitable work and default (and many private companies do very little to negotiotate terms) expect your balance to instantly be increased by 50%, and your wages garnished. Then if this happens again (likely) the same thing will occur again and again...until that person who had a reasonable 50k in debt is now 200k+ in the hole with wage garnishments for life.
Also Id like to see where kids with huge debts working at starbucks are getting 40k car loans. I had a huge problem even getting a cheap hyundai out of college due to lack of credit history and low wages. No way they would have sold me a car for even 20k, much less 40k.
I have a very low income due to grad school. I could pay cash for a $34,000 car, but then I'd have no money left for insurance premiums.
What are you talking about? The court doesn't use FDIC money for anything. The court isn't gambling. What makes you think this court was not applying laws evenly? Do you have examples of when this court didn't arrest someone for failing to show up to court? Following a court order to simply show up in court to defend yourself is a crime and does not make one an indentured servant.
I skimmed most of this, and am jumping right in with a general reply. Anyone who states if you're not making money it's your own fault for being lazy is obviously out of touch with what's going on.
There's a number of things -
1) more people than ever are going to college, thus diminishing the value of a degree
2) college expenses are up
I did my undergrad, went off for the Army, then came back for gradschool and noticed significant shifts since my freshman year. Both schools I attended ended up with top quality dining halls, on campus apartments, huge rec centers. My undergrad school started playing football and jumped to D1 FBS. This was a huge expense that was mostly shifted to student fees, thus upping the cost. I'm not saying this was good or bad, just more expensive. Administrative costs have skyrocketed as the number of administrative personnel is now much greater than the number of faculty.
3) public funding, as a % of school costs, is down
4) pay has essentially remained stagnant in the job market as employers try to max profit for stock holders and not for employees
I have a Masters degree in my field, did several internships while in school, and was in a management position in the military, and it took me over 6 months and 110 applications to land a job making about 33k. My wife is a restaurant general manager in training and she is paid $8 an hour, which will be bumped to $12 an hour once she takes over the store. You can't afford an apartment, health insurance, and a car on $8 an hour. This is par for the course among my friends. For example, one friend, who graduated with his Masters from Johns Hopkins - so don't give me the "only schools that matter" BS - ended up in the same situation. A mutual friend was only hired part time in his field and worked several unpaid internships. The company that hired him - part of MSNBC - did pay for additional classes in his field while he worked for them for free, and then cut him once the project was over. I could go on.
My professors who graduated with my degree came out of school making the equivalent of $55k today, and 2 positions above mine, back in the 70s - 2k. Where I went to school CNAs made $8 an hour, $12 if they had max experience. Here in North Carolina EMS workers make $27k a year. I don't care who you are, you have to agree that's underpaid.
This is not to say that the government should forgive all student loans, but merely to draw attention to the fact that the situation is a mess and it's not simply an issue of "get up off your parents couches" but much more complex than many are willing to admit.
Last edited by yellowbelle; 02-20-2016 at 10:46 AM..
Reason: language
I see this stuff every day yet lots of people do not want to believe it. Any older person who is still working or younger person who landed that rare top job out of school are the worst to talk to. If you are not at their level you are lazy, stupid, unqualified, don't want to work etc.... Of course the lack of jobs just doesn't seem possible to them.
Quote:
Originally Posted by th3_mountaineer
I skimmed most of this, and am jumping right in with a general reply. Anyone who states if you're not making money it's your own fault for being lazy is obviously out of touch with what's going on.
There's a number of things -
1) more people than ever are going to college, thus diminishing the value of a degree
2) college expenses are up
I did my undergrad, went off for the Army, then came back for gradschool and noticed significant shifts since my freshman year. Both schools I attended ended up with top quality dining halls, on campus apartments, huge rec centers. My undergrad school started playing football and jumped to D1 FBS. This was a huge expense that was mostly shifted to student fees, thus upping the cost. I'm not saying this was good or bad, just more expensive. Administrative costs have skyrocketed as the number of administrative personnel is now much greater than the number of faculty.
3) public funding, as a % of school costs, is down
4) pay has essentially remained stagnant in the job market as employers try to max profit for stock holders and not for employees
I have a Masters degree in my field, did several internships while in school, and was in a management position in the military, and it took me over 6 months and 110 applications to land a job making about 33k. My wife is a restaurant general manager in training and she is paid $8 an hour, which will be bumped to $12 an hour once she takes over the store. You can't afford an apartment, health insurance, and a car on $8 an hour. This is par for the course among my friends. For example, one friend, who graduated with his Masters from Johns Hopkins - so don't give me the "only schools that matter" BS - ended up in the same situation. A mutual friend was only hired part time in his field and worked several unpaid internships. The company that hired him - part of MSNBC - did pay for additional classes in his field while he worked for them for free, and then cut him once the project was over. I could go on.
My professors who graduated with my degree came out of school making the equivalent of $55k today, and 2 positions above mine, back in the 70s - 2k. Where I went to school CNAs made $8 an hour, $12 if they had max experience. Here in North Carolina EMS workers make $27k a year. I don't care who you are, you have to agree that's underpaid.
This is not to say that the government should forgive all student loans, but merely to draw attention to the fact that the situation is a mess and it's not simply an issue of "get up off your parents couches" but much more complex than many are willing to admit.
Last edited by yellowbelle; 02-20-2016 at 10:46 AM..
Reason: quoted post language
With income-based programs, interest continues to accrue and therefore the balance CAN increase, at least for a finite time - usually 20 or 25 years depending on the specific program - before any remaining balance is forgiven.
So a borrower potentially could pay a lot more if interest piles up for 5 or 10 years to a high balance and then the borrower earns a high income and pays it all off.
On the other hand the borrower could pile up a huge balance and pay little or nothing with a lifetime low income, and ultimately have a high balance forgiven.
You forget a few things here. First, that only applies to federal loans, and the caps of 31k for undergrads for example mean many kids are forced to get private loans. I was.
Second, interest accrues and any forgiven balance is taxable. The interest rates are high and this can likely mean the balance will be 1.5-2x the original amounts after 20 years. Then the balance is taxable income. So if you pay 20 years on a 60k loan which is now 100k then you need to pay about 30k in forgiven taxes. Either way youre screwed.
I'll never understand the rationale of students these days like you with loans after college. You were loaned money that you promised to pay back. You knew the rates and the payment requirements. However you feel the banks are greedy for expecting payment back for an amount you agreed to pay? Student loan rates are very affordable so calling the banks greeedy is blaming the wrong person. Blaming the government for making loans easily accessible diluting the value of a college education is who you should be blaming. With your rationale the banks should just not make you pay back your loans because you don't want to because you would rather buy a car or other things than pay back your debt. Maybe the banks should tell their staff they can't pay them because so many borrowers like you think you have no obligation to pay back something you agreed to pay. I live in such an entitlement generation it sickens me.
I suggest you read up on this topic. The government charges 3.4-8% interest on the loans and actually makes money on the program. They can seize your social security, tax returns, and there are no statue of limitations. The lenders have 0 incentive to care if the student actually repays them and in fact make an extra 20% during a default. There have been many scams involving department of ed employees owning stock in collection agencies defaulted loans were sold to as well.
Then you have the private companies that cover the remaining cost federal loans often dont cover. When the student defaults, they can get 100% of the original loan paid upfront by the taxpayers then sell it off to a collection agency. Many like Sallie Mae own the collection agencies theyll sell the loan to, and can garnish your wages, seuze your tax returns and suspend your professional licenses (to assure maximum default penalties) just like the government. What they dont do is negotiate forbearance options very much, or may lie about whats available to you. Many lenders like Sallie Mae also lobbied against refinancing options which is the epitomy of anti-free market.
So in a perfect world where the majority of loans were made by the schools and not the lenders and there was reasonable bankruptcy options after say 5 years of repayment, the schools would care about the value of their degrees. Prices would be in line with what the salaries from said degrees conferred and students would be expected to repay their loans.
Instead we have artificial demand created by government backed loans (sound familiar?) And way out of line prices. So when you try to sell off your house for retirement and noone can buy it for even half of what your asking due to student debt, who are you going to blame?
On a hilarious note Nelnet has a 4000 gallon shark tank in their lobby which they say are animals that represent their financial outlook or something like that. Mob loan sharks would be proud.
Benjamin Franklin was bankrupt multiple times in his life. Should he have been put in jail? The lenders and the borrowers should always assume equal risk during loans, otherwise it leads to lopsided anti-free market messes like with mortgages or student loans.
I see this stuff every day yet lots of people do not want to believe it. Any older person who is still working or younger person who landed that rare top job out of school are the worst to talk to. If you are not at their level you are lazy, stupid, unqualified, don't want to work etc.... Of course the lack of jobs just doesn't seem possible to them.
There are a TON of sociopaths both on this website and in real life
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