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'I'm a Student-Debt Slave.' How'd We Get Here?

44 pointsby mirajalmost 9 years ago

12 comments

stevecaliforniaalmost 9 years ago
How&#x27;d we get here?<p>We hyped up college: It is your goal in life to go to send your kids to college. Everybody has to go to college. If you don&#x27;t go to college you will fail.<p>Nobody talked about college as an investment: College isn&#x27;t just another step in life. It is an investment. $75K for college makes sense if you will get a degree that enables you to get an income of $120K. It does not make sense to invest $75K in a degree that might get you an income of $40K.<p>We didn&#x27;t tie the loan to the degree being obtained: Do we need workers with this degree? Is there a glut of people with this degree?<p>Etc.
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rewrewalmost 9 years ago
College costs so much, in part (and I&#x27;d argue in large part), because we flooded the market with money: <a href="https:&#x2F;&#x2F;www.newyorkfed.org&#x2F;medialibrary&#x2F;media&#x2F;research&#x2F;staff_reports&#x2F;sr733.pdf" rel="nofollow">https:&#x2F;&#x2F;www.newyorkfed.org&#x2F;medialibrary&#x2F;media&#x2F;research&#x2F;staff...</a>
rayineralmost 9 years ago
The first half of this article is almost content-free.<p>E.g. &gt; [Q:] Let&#x27;s talk about the student lending giant Sallie Mae. You report how the decision to privatize Sallie Mae in 1997 played a huge role in helping to create this debt crisis. Explain.<p>&gt; [A:] Sallie Mae was a government-affiliated corporation whose board was made up in part of public officials. When it first came into existence, it was supposed to help create a market for the student debt that the feds were issuing. But after privatization, it became a full-service, for-profit corporation that really &quot;verticalized&quot; its involvement in the student debt industry, everything from issuing loans to running collection bureaus. The concern now is we replaced a program whose real purpose was to help people go to college with something where that&#x27;s kind of a secondary goal. The primary goal, of course, for for-profit institutions is the bottom line.<p>Not a word of that explains how privatization created the debt crisis. It&#x27;s a screed against private companies running loan servicing instead of government bureaucrats.<p>&gt; [Q:] Suddenly, hedge funds, investors, lots of banks had a more direct role, not just in lending, but in the fees, services, in the collection. And Sallie Mae and other financial organizations began marketing private loans with higher interest rates and fees and with fewer relief options?<p>&gt; Right. All of the functions of the student loan program originally were run by government agencies, bureaucrats, I guess you could say in a dismissive way, but they were not motivated by profit. They were there to make the program run. When you privatize collections, you get really aggressive companies that come in there and work really hard to get the money back.<p>Ask anybody who has ever dealt with the IRS whether the government is aggressive about getting money owed to it. Besides that, private loans are a red-herring. 92.5% of student loans are owned by the federal government: <a href="http:&#x2F;&#x2F;measureone.com&#x2F;reports" rel="nofollow">http:&#x2F;&#x2F;measureone.com&#x2F;reports</a>. The interest rates are exorbitant (I pay almost 8% on mine), but that is necessary to support the extremely generous repayment terms (payments capped at 10% of disposable income). And it&#x27;s bureaucrats in charge of all this, not evil hedge fund managers.
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atriaalmost 9 years ago
I&#x27;m unique persective in that I have a degree I received 20 years ago, and decided a midlife-crisis meant going back to get an electrical engineering degree.<p>My chemistry class wouldn&#x27;t transfer so I had to repeat it. So I took it at a local community college. Before I was allowed to register, I was forced to go to an orientation. The worst motivational speaker I&#x27;ve ever seen kept hammering the students about living life to the fullest and enjoying the college life. I walked out.<p>The last time I took a class, I could take a full course load for $700. The chemistry class was $800+ alone.<p>It amazes me that if you came home and told your parents you purchased a $80k car with payments they would consider you an idiot; If you told them you wanted to pay $80k for a college (with a 50% graduation rate) and received a loan that cannot be wiped out by dissability or bankruptsy -- they would think you were a genious.
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Mzalmost 9 years ago
This makes me feel even more proud of my 20 year old self for looking around me at the people I knew who were delivering newspapers after completing a bachelor&#x27;s degree and deciding &quot;I can deliver newspapers without a degree, and my quality of life will be better if I do so without a mountain of student loans.&quot; So, I dropped out of college and went and supported my husband&#x27;s career and raised kids. I returned to school when I had some idea of what I desired to do with my life.<p>Part of what is wrong with the world is that too many people go along with the plans other people make for them. Too many people drink the koolaid and believe the hype that a degree is a guaranteed ticket to a serious career. It absolutely is not.
bcheungalmost 9 years ago
We got here because people have been brainwashed into thinking college is the only means of getting an education.<p>We have the Internet now. It make education extremely cheap. Use it.<p>Save actual teacher interactions for things that can&#x27;t be taught over the Internet.
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ta290almost 9 years ago
got here looking for sugar daddies ?<p><a href="http:&#x2F;&#x2F;www.theatlantic.com&#x2F;education&#x2F;archive&#x2F;2015&#x2F;01&#x2F;where-the-sugar-babies-are&#x2F;384547&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.theatlantic.com&#x2F;education&#x2F;archive&#x2F;2015&#x2F;01&#x2F;where-t...</a>
grossvogelalmost 9 years ago
Slightly OT: An entertaining perspective on student debt from New Orleans artist Dee-1 <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=JqbXQa05Z6c" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=JqbXQa05Z6c</a>
tn13almost 9 years ago
Because a lot of people including politicians like Obama needlessly glorified college and government started giving aide to higher education. That seems to be the problem.<p>Bright kids succeed. One of the way they succeed is by going into good colleges. But that does not mean any Tom dick and Harry could succeed going to any college.
blisterpeanutsalmost 9 years ago
This article unfortunately is lacking in useful content; the real value is in the comment section. For example, one commenter says: do the first two years in a community college and save a bundle.<p>How we got here is a complex story that can&#x27;t be explained in a few sentences loaded with obvious partisan snipes e.g. &quot;the Republicans privatized Sallie Mae&quot;, while neglecting to mention the Bush Administration&#x27;s repeated warnings about reckless lending at Sallie Mae and Freddie Mac that went ignored by a Democrat-controlled Congress. There&#x27;s more than one side to the story.<p>One of the main problems of course is that universities find it easier to raise tuition than to cut costs. Budgets rise, tuition rises, and students simply borrow more money, in a kind of death spiral that is now reaching its logical conclusion: hundreds of thousands of graduates crippled with enormous debts and an inability to earn the necessary income to pay them off.<p>When I compare the campuses of today with those of the 1970s, when I was in university, and earlier in the 1960s and 1950s when my elders were in school, I am aghast at the ridiculous and profligate expenditures that have little or nothing to do with higher education. Student activity centers came into vogue in the &#x27;70s and were built all over the country: theaters, game rooms, snack bars and restaurants, activity rooms, etc.<p>Today they are like malls complete with food courts, clothing shops, Starbucks, cyber cafes or free wifi zones -- palatial, sprawling, with high ceilings, multi-tiered glass and steel structures that run into the hundreds of millions of dollars in construction costs and then many millions in operational costs.<p>Dormitories were once the most basic housing imaginable, concrete blockhouses full of doubles and triples with cheap mattresses on wooden platforms, a cheap dresser, and military style bathrooms. Today in some places at least, they are like luxury condos.<p>Forgiving loans is not an option. Millions of Americans worked hard to pay off their own loans and feel little sympathy for those who foolishly over-borrowed.<p>The only solution is a simple one: cut costs. According to my academic friends, many universities today have more bureaucrats than professors, and better paid than professors, too. Cut the staff to the bare bones, eliminate the Olympic swimming pools and town-within-a-town developments, and focus on one thing: education.<p>I could run a university for a fraction of the cost by renting an old warehouse, subdividing into a few lecture halls and rooms, hire 20-30 professors, a custodian or two, get a bunch of chairs and white boards and wifi routers, and poof! education will result. Students can live at home and brown-bag it. In fact I&#x27;ve often thought about doing this. Find a bunch of professors who are sick of dead-end adjunct jobs and offer them a way to take back their lives.
zachalmost 9 years ago
Unlike regular loans, there are no qualifications for the United States of America&#x27;s student aid programs and loan guarantees — they are available to any admitted college student, even if you are going to circus college.<p>Whereas in Germany, for example, even though universities have no tuition fees, only 28% of high school students (equivalent to 1150+ SAT) pass the exams needed to go to them. In the US, we don&#x27;t pay for the whole thing, but we have no gate to pass through other than getting a college to admit you.<p>The problem is the implicit assumption that colleges only admit the students that are quite capable of graduating, and that the degree will be worth it. Well, those things may have been mostly true at one point, I&#x27;m sure, but without any incentives, they&#x27;re not really the case now.<p>Graduation percentage is the key to seeing how far we fall short. First off, check out this amazing article: <a href="http:&#x2F;&#x2F;www.demos.org&#x2F;blog&#x2F;5&#x2F;18&#x2F;14&#x2F;college-graduation-gap" rel="nofollow">http:&#x2F;&#x2F;www.demos.org&#x2F;blog&#x2F;5&#x2F;18&#x2F;14&#x2F;college-graduation-gap</a> or just look at the most essential chart: <a href="http:&#x2F;&#x2F;www.demos.org&#x2F;sites&#x2F;default&#x2F;files&#x2F;imce&#x2F;satincomegrad.png" rel="nofollow">http:&#x2F;&#x2F;www.demos.org&#x2F;sites&#x2F;default&#x2F;files&#x2F;imce&#x2F;satincomegrad....</a><p>Just to make this clearer, the average high school student scores about 1000 on the SAT (the NCAA only requires 800 for eligibility if you can pull a B average). The graduation percentages around 1000 are pretty bad, yet over 50% of high school students have gone to college since 1980, 60% since 1990 and up to 70% since then.<p>These graduation percentages are very challenging data. Especially looking at the students that can benefit the most from the hoped-for added earning potential. So this is difficult to confront, because it causes cognitive dissonance with our self-image as a country of opportunity.<p>If you were paying any attention during the mortgage crisis, you can see a pattern here. Everyone is encouraged to stretch to get the most expensive thing they can afford, and the loans are easy to come by.<p>Well, almost; private lenders are actually kind of strict, which means that marginal and low-ability students (or those who have poor college grades) are shut out. As in this story, they have to go to their relatives to co-sign loans instead, or lose their sunk costs (and dreams) for lack of those last few thousand dollars. Again, this is for students who aren&#x27;t qualifying for debt that can&#x27;t be discharged in bankruptcy...<p>If there was some kind of change to the employment market that significantly devalued the $1.3 trillion in student debt, that would be a heck of a write-off. So in our automated future, maybe we won&#x27;t be deciding how to give everyone free money, but instead dealing with the gigantic amount of bad student loans we have on the books.<p>Again, this article puts student debt at $1.3 trillion. That&#x27;s almost twice as much as is outstanding on all car loans, except that the cars actually exist. A lot of people never get to drive their college education off the lot. How much student aid should we budget to provide for students who never graduate, or even those who we are pretty sure never will?
TruthAndDarealmost 9 years ago
This sounds simply like someone complaining about what prices the market has settled on for education, for the skills that this education provides, and for loans. Yes, I too would like to earn more and pay less.
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