Edit

Forums ›
Finance

Zero Sympathy for Student Loan Borrowers: The Next Subrpime Crisis Brewing Underneath the Radar Archived From: Finance

  • tweet this
  • Post to Facebook
  • Text Only
  • Search this Topic »
  • Classic
  • Go to Page :
  • 1…34 5 67
alert mods    
   posted: Jul. 10, 2009 @ 12:21p

staci86 said:nycll said:No, your paper is wrong. Sallie Mae posts no systemic risk to the economy.
I didn't say it posed a systemic risk. Many of the bailed out banks and insurance companies didn't pose systemic risks either.

nycll said:
The only crucial function it serves is to service the loans. The Obama adminitration will move all the federal loans to direct loans. If Sallie becomes insolvent, it will go to bankruptcy. The bond holders will take the haircut. The servicing operation will continue as it is self sufficient.
That doesn't fit the profile of the bailouts so far, nor is it a particularly efficient or politically palatable way of doing things. Winding down Sallie Mae and transferring many of its functions to the DOE is a massive bureaucratic and administrative nightmare that will take many months, and cause serious problems. The administration then has to deal with the fallout from "shutting down" a student lender and "forcing" everyone to use "the government." That doesn't make much sense, but the American people generally don't understand how these things work. To them, it is just another government takeover.

A bailout which wipes out the common equity holders and results in de facto nationalization makes much more sense, on all fronts, and fits the pattern of the bailouts thus far.Bond holders will take losses in the bankruptcy. There is no reasons not to.


alert mods    
   posted: Jul. 10, 2009 @ 12:22p

nycll said:greling said:Explain to me how recent grads out of work are counted on the unemployment rolls. Do they have a device that can read minds?All the answers can be found here, but in short, they conduct surveys.

I know about BLS. Used their site a lot in econ.

My question was: Show me where recent college graduates who are unemployed and who never have been employed but are stilling looking for work are counted as "unemployed".


alert mods    
   posted: Jul. 10, 2009 @ 12:23p

The main problem in the US, IMO, is that any so called "school" can be eligible for federal student loans. The result is that there are “schools” out there that are set specifically to target bums. There are even instances of such school closing half way and the students are still on the hook for student loans that are already taken out.

Maybe someone from Canada can chime in, because my understanding is there the tuition is subsidized, not all the so called “college” are eligible for government assistance.

It’s time to set some standards.


alert mods    
   posted: Jul. 10, 2009 @ 12:26p

rmf1981 said:oopsz said:I think easy loans inflate the cost of an education. I think private schools are significantly above-market in terms of tuition rates, and I think some state schools are slightly above-market, because there's no downward pressure on tuition, because students have access to easy credit.

I think you are exactly correct. There is no market force holding tuition down. Easy loan money makes the costs inflate without consequence.

Explain to me this. Why did average tuition still go up last year even though student lending went through its tightest squeeze on record?

Private loans are harder to get than ever but tuition just keeps on rising....


alert mods    
   posted: Jul. 10, 2009 @ 12:39p

greling said:rmf1981 said:oopsz said:I think easy loans inflate the cost of an education. I think private schools are significantly above-market in terms of tuition rates, and I think some state schools are slightly above-market, because there's no downward pressure on tuition, because students have access to easy credit.

I think you are exactly correct. There is no market force holding tuition down. Easy loan money makes the costs inflate without consequence.

Explain to me this. Why did average tuition still go up last year even though student lending went through its tightest squeeze on record?

Private loans are harder to get than ever but tuition just keeps on rising....

I don't think we've quite seen the reprecussions yet. If tuition keeps going up, where is that money going to come from? Like they said in your video, either it's going to become a province of the "rich" -- or some colleges are going to have to hold the proverbial line.

But I think it's hard to argue that easy loan money DIDN'T lead to the loss of an incentive to hold down tuition.


alert mods    
   posted: Jul. 10, 2009 @ 12:44p

greling said:rmf1981 said:oopsz said:I think easy loans inflate the cost of an education. I think private schools are significantly above-market in terms of tuition rates, and I think some state schools are slightly above-market, because there's no downward pressure on tuition, because students have access to easy credit.

I think you are exactly correct. There is no market force holding tuition down. Easy loan money makes the costs inflate without consequence.

Explain to me this. Why did average tuition still go up last year even though student lending went through its tightest squeeze on record?

Private loans are harder to get than ever but tuition just keeps on rising....

Because the demand for college education went up. People lost their jobs and decided they need to go back to school and change careers. When demand goes up, the price goes up.


alert mods    
   posted: Jul. 10, 2009 @ 12:45p

.


alert mods    
   posted: Jul. 10, 2009 @ 12:47p

brettdoyle said:greling said:rmf1981 said:oopsz said:I think easy loans inflate the cost of an education. I think private schools are significantly above-market in terms of tuition rates, and I think some state schools are slightly above-market, because there's no downward pressure on tuition, because students have access to easy credit.

I think you are exactly correct. There is no market force holding tuition down. Easy loan money makes the costs inflate without consequence.

Explain to me this. Why did average tuition still go up last year even though student lending went through its tightest squeeze on record?

Private loans are harder to get than ever but tuition just keeps on rising....

Because the demand for college education went up. People lost their jobs and decided they need to go back to school and change careers. When demand goes up, the price goes up.
Bullshit. Costs at universities have been going up 7-10% per year every year for as long as I can remember. This is not a new thing because of demand from people who lost thir jobs over the past 2 years.


alert mods    
   posted: Jul. 10, 2009 @ 1:04p

I have no sympathy for student loan borrowers, because I personally 1) graduated from college taking $0 from my parents 2) ended up with limited amount of loans because I worked a bit during school, 3) ended up with a marketable degree and 4) realized that my loans were at excellent rates so I only paid them off once savings interest rates dropped.

These are the (some of) same reasons I have no sympathy for someone who says that they somehow were not able to get proper education to succeed in life because they couldn't afford it or were not in position socially.


alert mods    
   posted: Jul. 10, 2009 @ 1:14p

One only needs to compare the federal stafford loan limits to typical tuitions of state and private colleges to realize the FFELP program is not the reason tuitions are high.


alert mods    
   posted: Jul. 10, 2009 @ 1:21p

Don't unemployment numbers only count people who are qualified and have successfully applied to be enrolled into unemployment?


alert mods    
   posted: Jul. 10, 2009 @ 1:43p

blakwolf said:Don't unemployment numbers only count people who are qualified and have successfully applied to be enrolled into unemployment?

No. From the BLS website that nycll had linked in earlier

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:

* Contacting:
o An employer directly or having a job interview
o A public or private employment agency
o Friends or relatives
o A school or university employment center
* Sending out resumes or filling out applications
* Placing or answering advertisements
* Checking union or professional registers
* Some other means of active job search

Link


alert mods    
   posted: Jul. 10, 2009 @ 1:54p

*already addressed*


alert mods    
   posted: Jul. 10, 2009 @ 2:06p

lampy2k4 said:I have no sympathy for student loan borrowers, because I personally 1) graduated from college taking $0 from my parents 2) ended up with limited amount of loans because I worked a bit during school, 3) ended up with a marketable degree and 4) realized that my loans were at excellent rates so I only paid them off once savings interest rates dropped.

These are the (some of) same reasons I have no sympathy for someone who says that they somehow were not able to get proper education to succeed in life because they couldn't afford it or were not in position socially.

...doctors ... lawyers ... need I go on?

You obviously did a good job managing your debt. But, as has been discussed before, it's not possible in many programs to work and complete a program. Some programs ... sure ... all of them - no way.


alert mods    
   posted: Jul. 10, 2009 @ 3:08p

Someone made a good point earlier in the thread about how these days you need a degree to get even low level jobs. The kind that does not actually require skills learned in college. He also mentioned that this is a huge drag on the economy. Lots of people spending years of their life and tens of thousands of dollars getting degrees that are not actually necessary for the jobs they end up with.

The problem here is that government subsidies, as usual, created a misallocation of capital. This time human capital. It became so easy to get the money for a higher education that -too many- people got university degrees. The job market was flooded with college graduates, many of whom don't need their education to perform their work tasks. Employers had a large pool of college graduates willing to work generally cheap (due to their degrees being devalued), so naturally they selected people with degrees rather than those just as qualified without degrees. At the same time, tuitions skyrocketed with all that available credit and all the willing students.

Solution: government needs to get out of the student loan business. There will be higher interest rates and less people will go to college - which is a good thing.


alert mods    
   posted: Jul. 10, 2009 @ 3:22p

rmf1981 said:lampy2k4 said:I have no sympathy for student loan borrowers, because I personally 1) graduated from college taking $0 from my parents 2) ended up with limited amount of loans because I worked a bit during school, 3) ended up with a marketable degree and 4) realized that my loans were at excellent rates so I only paid them off once savings interest rates dropped.

These are the (some of) same reasons I have no sympathy for someone who says that they somehow were not able to get proper education to succeed in life because they couldn't afford it or were not in position socially.

...doctors ... lawyers ... need I go on?

You obviously did a good job managing your debt. But, as has been discussed before, it's not possible in many programs to work and complete a program. Some programs ... sure ... all of them - no way.
I'm in technology field, so fine, you can say that I have an average-cost degree and above-average salary.

My wife is a doctor (in residency) with $150k plus in loans. Once she is done and starts working/practicing I expect to be able to pay off half of her loans (at >6%) within 3-4 years. The second half is at silly interest rate for 30 years, so those lenders will have to wait. She did not work in medical school, obviously. She did work for a year after undergrad which allowed her to pay off her undergrad loans and save up just a bit for her first year in med school. After that, it was all about student loans to fund her education and living expenses. While I helped with periodic groceries on weekends, she never needed a dollar in cash from me (we weren't married back then).

While I can see how paying these loans could be hard for unmarried residents, they have options to defer or stretch out their payments until they are earning enough.

Both of us are very grateful for federal and state loan programs that allowed us to get our education and careers.


alert mods    
   posted: Jul. 10, 2009 @ 3:37p

"Solution: government needs to get out of the student loan business. There will be higher interest rates and less people will go to college - which is a good thing."

Don't forget the post WW2 GI Bill not only staved off the impending post war slump due to withdrawel of war demand but also contributed to unprecedented prosperity and a bulging middle class.

Also although 85% of people have HS diploma, only 27% of people have post secondary (2y + college) diploma. And college graduates on average make more than twice as much as HS graduates. It is simply a myth to say a college education is not worth it.


alert mods    
   posted: Jul. 10, 2009 @ 3:41p

I'd like to see those numbers for recent graduates. Additionally, it could be argued that salaries of HS grads are artificially being kept down due to the over-saturation of college grads in the job market.


alert mods    
   posted: Jul. 10, 2009 @ 4:03p

nyc11, your logic is college graduates make more money than high school grads therefore their success paid off.

That's absolutely flawed. The people that go to college tend to be more sucessful with affulent backgrounds... their circumstances are generally better off before they step foot in college. All of their success is not attributable to their college education.

While a good number of students learned skills to become more productive and were able to increase their income, a good number of those college applicants were better off than high school grads to begin with (they had to get through admissions somehow, meaning they were already qualified).


alert mods    
   posted: Jul. 10, 2009 @ 4:09p

lampy2k4 said:I have no sympathy for student loan borrowers, because I personally 1) graduated from college taking $0 from my parents 2) ended up with limited amount of loans because I worked a bit during school, 3) ended up with a marketable degree and 4) realized that my loans were at excellent rates so I only paid them off once savings interest rates dropped.

These are the (some of) same reasons I have no sympathy for someone who says that they somehow were not able to get proper education to succeed in life because they couldn't afford it or were not in position socially.

When did you go to school? 1985?

Cause as far as I can tell, long gone are the days when you can take a summer job and pay for most of your tuition while in school.

No, today the average tuition for one year is one year's salary for a high school graduate.

Most high school graduates these days are better off skipping college altogether, staying home, working a minimum wage job and investing their money.


 Close

Sign Me In
Nickname: 
Password: 
Remember My Login Information:

Forget your login information?

Not Already A Member?
Sign Up Now!


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.


While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2009