SUCKISSTAPLES said:brettdoyle said: Student loans allow people to make bad financial decisions... like pay $200k for a degree in music.
I completely agree, but how do you tell someone it is ok to take on $200k student loans for, say, a medical program ....but not OK for a music program, if their interest is music??

Credit markets can easily determine that by pricing the risk of the loan by probability being repaid and underwriting standards. But when the government guarantees every loan, no one cares if it gets repaid because there's millions of taxpayers to collect from.

I heard a story of someone who's wife took a ton of student loans, and defaulted. She spent the money on a fancy car, clothes, jewelry, and some very expensive cosmetic surgery.

The hubby makes alot of money, and was expecting a big tax refund in the mail.. well the FEDS took the 20k refund to pay down her defaulted student loans. They haven't even been living together for a few years.

nvm;

quoted wrong post

oopsz said:because there's no downward pressure on tuition, because students have access to easy creditHmm, if this kind of credit availability disappears for students like home loans have, maybe tuition rates will crash like home prices.

SUCKISSTAPLES said:brettdoyle said: Student loans allow people to make bad financial decisions... like pay $200k for a degree in music.
I completely agree, but how do you tell someone it is ok to take on $200k student loans for, say, a medical program ....but not OK for a music program, if their interest is music??
it is ok to take on $200k student loans for a medical program ....but not for a music program.

The effect this would have is that music programs suddenly have to only charge what people are willing to pay if they're not willing to pay $200k. The problem now is that most students going into college now are idiots financially and they have always been told "do what makes you happy" so they're not going to stop and think about what happens when the graduate with a music degree and 200k in debt.

If the student dies the student loan debt goes away. But if you're a taxpayer and you die the national debt is passed on to your children and grandchildren etc. That doesn't sound like a very good deal. The government is turning its own citizens into debt slaves.

Bankgeek said:If the student dies the student loan debt goes away. But if you're a taxpayer and you die the national debt is passed on to your children and grandchildren etc. That doesn't sound like a very good deal. The government is turning its own citizens into debt slaves.

Federally guaranteed student loans don't just "go away" on death of the debtor. The government repays the student loan companies.

I agree and disagree with you, nycll. I think there's a happy medium between easy unrestricted loans and free college for everyone.

I think student loans should be available to help kids go to college. But I think the easy availability of loans combined with the (ludicrously high) loan limits you can take out with no documentation doesn't help anyone except for the administrators of university endowments. Private tuition has SKYROCKETED in the past twenty years, fueled by easy loans. We have too many people doing four years at private schools because all they had to do was "sign on the dotted line". They could have received the same education benefits by doing two years at community college or at a state school.

The one thing that most impressed me about Obama during his campaign was his pledge to provide tuition credits to young people who do two years of community, civil or military service. I think more young people should start out in a cheap school, especially because so many young people have NO IDEA what they want to do with their lives.

nycll said:No, it is the best lending program in the US history, because

1. it provides poor students the money for higher education
2. it is secured with appreciating asset
3. deadbeats can't easily walk away from it because it is non bankruptcy dischargeable
4. because of 2, the market clearing rate is far less than that of credit cards

Exactly.

The student loan programs are among the best and most useful debts that one can take, and the various Federal loan guarantees are one of the few successes of a government acting beyond a strict interpretation of the Constitution.

The return for society on these loans is enormous, and they have provided many millions of individuals with access to the opportunity to work hard and build a better life they would not otherwise have had.

The loans should not be faulted because some people chose to misuse them. If you look at the majority of the student loan sob stories, there is usually one of a few common threads:

1. The student borrowed way too much for a degree of little value. I saw one story on CNN about a student who graduated with a Master's in Ceramic Arts, and over $200k in debt. That student has nobody to blame but himself. Students need to be realistic about their career prospects. They should have ample time to consider their course, given that these enormous debts arise from at least 4 years of study.
2. The student chose to live like an employed graduate rather than a broke student. "Getting ready for school" is a nice sounding idea, but it should not involve turning student loan checks into $2000 laptops and new wardrobes. Students need to learn to make do with less. Every campus is full of people who have no jobs, no savings, and no parental support, but always have the money to go have fun. How many of these people have a one-to-two Starbucks a day habit? (no, I'm not exaggerating) It isn't beneath anyone to live like a student, share an apartment, share a car, and hold back on wants.
3. The student chose to waste their free time instead of working part time. Not every major allows for part time work. Some students must spend almost all of their time studying. Not surprisingly, those academic-heavy majors tend to pay well, making full reliance on borrowed money less of an issue. If you have an easy major, and plenty of free time, you should be working part time to help lower the borrowing.
4. The student was not thrifty. Campuses are full of people who throw money away buying things they don't need, abusing cell phones, running up overdraft fees and CC interest, buying tiny quantities, etc. College students are adults and need to learn how to make money go farther. These people also don't know opportunity when they see it, be it bank bonuses, odd jobs, Craigslist postings, plasma donation, etc.
5. The student was not committed. How many of these "victims" were simply poor quality students who quit school?
6. The student used their new found freedom and cash to buy beer, pot, and condoms. Enough said.

The victim mentality needs to stop, because it will either cut back lending at one extreme, to waste taxpayer money on useless majors on the other.

I'd like to see some stories from "victims" who did everything right, but still ended up trapped under hundreds of thousands in debt. Are there any stories like this, or just ones from people who chose to be irresponsible with the opportunity given to them?

One thing is clear: for every sob story, there are tens of people who didn't come from a wealthy family, yet had plentiful opportunity made available through willing lenders. These students shouldn't suffer for the irresponsibility of others.

nycll said:
Let's think for a moment if you don't have student loans, how do you finance college education. Option 1, we make high education free, like France, Germany, UK, China, etc. This will raise everyone's tax, and may lower US universities quality since they are among the top of the world,

Just an FYI, but higher education is definitely not free in China. In fact as a percentage of per capita GDP, I would suspect it is significantly more expensive in China than the US.

Greling said: 91.8% of 2009 college grads living at home and 80% of 2008 grads jobless.
The government keeps saying that if you have a college degree you're less likely to be unemployed.