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Thread: Student Loans: The Next Bailout?

  1. #41
    Senior Member septimine's Avatar
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    Quote Originally Posted by splansing View Post
    I think that's a major part of the problem, for sure. The people that hand out the loans have an interest in driving up the costs. Getting their hooks into you for decades of interest payments is good business for them. The problem in this country, once again, at least in part, appears to be that the bankers actually have the wealth and influence to reach out and do what they want to do in this case: drive up the costs. The power of bankers and other forces of concentrated wealth is a bane to our existance.
    I think that ignores the other side of the equation -- people aren't being very smart about these decisions. The information has been out there for years. A lot of degrees just aren't worth it -- Psychology majors are known to have one of the higher unemployment levels along with stuff like Lit or Philosophy. These things don't really seem to reach the street level. Kids have been fed a string of lies -- basicly the Oprah line "do what you love" -- and so never seem to concern themselves that the degree they're earning may in fact cost them $100,000 plus interest and pay them $20,000 or worse mean a likely future doing jobs that pay minimum wage. Until we have a culture change and have people looking at the employment prospects of each major, it's not changing. The days of "any old degree" with any GPA giving you a future are gone. It doesn't happen that way. You need the right degree, with a high GPA and some directly related work experience to get in the door. http://www9.georgetown.edu/grad/gppi...ment.Final.pdf

  2. #42
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    Quote Originally Posted by septimine View Post
    I think that ignores the other side of the equation -- people aren't being very smart about these decisions. The information has been out there for years. A lot of degrees just aren't worth it -- Psychology majors are known to have one of the higher unemployment levels along with stuff like Lit or Philosophy. These things don't really seem to reach the street level. Kids have been fed a string of lies -- basicly the Oprah line "do what you love" -- and so never seem to concern themselves that the degree they're earning may in fact cost them $100,000 plus interest and pay them $20,000 or worse mean a likely future doing jobs that pay minimum wage. Until we have a culture change and have people looking at the employment prospects of each major, it's not changing. The days of "any old degree" with any GPA giving you a future are gone. It doesn't happen that way. You need the right degree, with a high GPA and some directly related work experience to get in the door. http://www9.georgetown.edu/grad/gppi...ment.Final.pdf
    Great post, but also add "journalism" to the list of degrees of no use.
    http://www.thedailybeast.com/galleri...sm.html#slide1
    Right now, 30% of law students who pass the bar, are without jobs as well.
    http://www-source.abajournal.com/new..._websites_stud
    Last edited by sparty; 28th April 2012 at 05:50 AM.

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    Quote Originally Posted by septimine View Post
    I think that ignores the other side of the equation -- people aren't being very smart about these decisions. The information has been out there for years. A lot of degrees just aren't worth it -- Psychology majors are known to have one of the higher unemployment levels along with stuff like Lit or Philosophy. These things don't really seem to reach the street level. Kids have been fed a string of lies -- basicly the Oprah line "do what you love" -- and so never seem to concern themselves that the degree they're earning may in fact cost them $100,000 plus interest and pay them $20,000 or worse mean a likely future doing jobs that pay minimum wage. Until we have a culture change and have people looking at the employment prospects of each major, it's not changing. The days of "any old degree" with any GPA giving you a future are gone. It doesn't happen that way. You need the right degree, with a high GPA and some directly related work experience to get in the door. http://www9.georgetown.edu/grad/gppi...ment.Final.pdf
    That's really where I start my approach to the problem. I was merely commenting on Michael's accurate point, that given the stupidity of so many people in this regard, given this climate where people reflexively sign up for a 4-5-year school at an exotic location of their choosing, the banks loaning these people money have an interest in driving up those costs, making those loans bigger. They do.

    But you are correct: that cannot happen in a world where people simply refuse to spend $100,000 on an education that won't get them anywhere.

  4. #44
    Senior Member septimine's Avatar
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    Quote Originally Posted by splansing View Post
    That's really where I start my approach to the problem. I was merely commenting on Michael's accurate point, that given the stupidity of so many people in this regard, given this climate where people reflexively sign up for a 4-5-year school at an exotic location of their choosing, the banks loaning these people money have an interest in driving up those costs, making those loans bigger. They do.

    But you are correct: that cannot happen in a world where people simply refuse to spend $100,000 on an education that won't get them anywhere.
    Well, I think we're all on the same page, for the most part. I think we need the government out. No guarentees, no nothing like that. Let the banks invest in the kid. Much more like the small business loans. You write your "college plan" which includes how you intend to pay back the money. You sit and get interviewed. You prove that you can do the college level work. and you get a loan. That's my solution -- make the parents and the kid plan on how a degree in X results in a job with enough money to pay back the loan.

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    Quote Originally Posted by septimine View Post
    Well, I think we're all on the same page, for the most part. I think we need the government out. No guarentees, no nothing like that. Let the banks invest in the kid. Much more like the small business loans. You write your "college plan" which includes how you intend to pay back the money. You sit and get interviewed. You prove that you can do the college level work. and you get a loan. That's my solution -- make the parents and the kid plan on how a degree in X results in a job with enough money to pay back the loan.
    Or, if you're upper middle crust, and your parents have planned accordingly, and you want to go to a 4-year school in California and get a degree in film study for your own edification, knock yourself out, by all means.

    I just don't have any use for people whining about the cost of something that most people not only don't need but would be better off without. Because if they didn't spend 4 years being indoctrinated with the idea that their degree entitles them to something, or renders them somehow better human beings, they'd probably be more inclined to spend that time doing something else...perhaps even something useful, like learning how to write software or operate heavy machinery or fix a car or build a cabinet. Taking 4 years to fuck off and earn an accounting degree is absolutely stupid, and nobody should have the balls to whine about how much they went into debt for that. A person ought to be embarrassed to admit to something so stupid, not bitching about it and asking others to help'em out with a little something.

  6. #46
    Senior Member septimine's Avatar
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    Quote Originally Posted by splansing View Post
    Or, if you're upper middle crust, and your parents have planned accordingly, and you want to go to a 4-year school in California and get a degree in film study for your own edification, knock yourself out, by all means.

    I just don't have any use for people whining about the cost of something that most people not only don't need but would be better off without. Because if they didn't spend 4 years being indoctrinated with the idea that their degree entitles them to something, or renders them somehow better human beings, they'd probably be more inclined to spend that time doing something else...perhaps even something useful, like learning how to write software or operate heavy machinery or fix a car or build a cabinet. Taking 4 years to fuck off and earn an accounting degree is absolutely stupid, and nobody should have the balls to whine about how much they went into debt for that. A person ought to be embarrassed to admit to something so stupid, not bitching about it and asking others to help'em out with a little something.
    well accounting is actually useful. You know those guys who do your taxes -- CPAs. I think you can do that as a 2-year as well. But anyway.

    I think my plan would cut out a lot of that garbage, as well as make parents plan a bit better. I want people to "invest" not "attend", if you take my meaning. I want the kids thinking about how a degree in X gets them a job. I want someone to ask them tough questions about WHY they need the degree, rather than having uncle sam hand out checks because you spelled your name right on the FAFSA form. If you had to prove that you're ready for college academically, had to prove that you'd thought through the "after college" plan, it's going to be hard for a kid to study Philosophy and act all shocked when it doesn't get him hired.

  7. #47
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    Exclamation

    Student loans were dischargeable in bankruptcy prior to 1976. With the introduction of the US Bankruptcy Code (11 USC 101 et seq) in 1978, the ability to discharge education loans was limited. Subsequent changes in the law have further narrowed the dischargeability of education debt.

    The exception to discharge for private student loans evolved over time. Prior to 1984, only private student loans made by a "nonprofit institution of higher education" were excepted from discharge. This was intended to protect the National Defense Student Loan Program (NDSL), the predecessor to the Perkins Loan Program. Those loans were made by colleges using a revolving loan fund created using matching federal contributions.

    The Bankruptcy Amendments and Federal Judgeship Act of 1984 made private student loans from all nonprofit lenders excepted from discharge, not just colleges, by striking the words "of higher education".

    The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 expanded this to include all "qualified education loans", regardless of whether a nonprofit institution was involved in making the the loans.
    This didn't happen in a day. Timeline at the link:

    FinAid | Answering Your Questions | Student Loan Bankruptcy Exception

    Since these loans are forever in the sense you cannot discharge them through bankruptcy, of course the total outstanding debt is going to be huge.

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    Quote Originally Posted by septimine View Post
    well accounting is actually useful. You know those guys who do your taxes -- CPAs. I think you can do that as a 2-year as well. But anyway.
    Certainly accounting is useful. The question is how much is an accounting degree from XYZ University worth, of course. And that is what we are both saying. If you're going to be the world's most kickass accountant, you're going to do things in a way that's both legal and creative and incredibly complex and solve all kinds of problems and mastermind a way for your corporation to save millions of dollars in taxes, then yeah, probably whatever schooling you go through to learn how to do that is going to be worth the investment.

    But to just "get a degree" in accounting, kind of because you don't know what else to get it in, and you don't really do anything special to earn it, don't start getting into big projects on your own as part of the process, don't really run with it and make yourself into a Jedi accountant, then it's almost certainly not worth borrowing $200,000 and going into indentured servitude for the rest of your $60K/year life, which you'll probably end up earning doing event planning anyway, since you really didn't have much of a plan for your accounting degree and wound up floating across the corporate sea and landing wherever the current carried you...

    I also think that the idea of taking student loans out of bankruptcy...it makes the problem worse. Because now the people with an interest in making huge loans (the banks) have even more of an interest in driving the price up for a degree almost without limits. The more you are on the hook for, the more you will work the rest of your life paying them off. If you could discharge the loans through bankruptcy, there wouldn't be nearly the incentive to drive up costs, because it would be irrelevant. Large numbers of people would just declare bankruptcy and get out from under the loans. In that scenario, people making the loans would be interested in keeping costs down, because they want people to take out loans they can actually pay back, as many people as possible, which means the cost of the education has to be affordable enough that the loans will be small enough that the banks could justify the risk, based on the expected return, which would be more in line with the actual increase in earnings that accompanies a degree. And if those loans were smaller, the benefit to declaring bankruptcy to get out from under them would be outweighed by the downside of declaring bankruptcy.

  9. #49
    Senior Member septimine's Avatar
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    Quote Originally Posted by splansing View Post
    Certainly accounting is useful. The question is how much is an accounting degree from XYZ University worth, of course. And that is what we are both saying. If you're going to be the world's most kickass accountant, you're going to do things in a way that's both legal and creative and incredibly complex and solve all kinds of problems and mastermind a way for your corporation to save millions of dollars in taxes, then yeah, probably whatever schooling you go through to learn how to do that is going to be worth the investment.

    But to just "get a degree" in accounting, kind of because you don't know what else to get it in, and you don't really do anything special to earn it, don't start getting into big projects on your own as part of the process, don't really run with it and make yourself into a Jedi accountant, then it's almost certainly not worth borrowing $200,000 and going into indentured servitude for the rest of your $60K/year life, which you'll probably end up earning doing event planning anyway, since you really didn't have much of a plan for your accounting degree and wound up floating across the corporate sea and landing wherever the current carried you...

    I also think that the idea of taking student loans out of bankruptcy...it makes the problem worse. Because now the people with an interest in making huge loans (the banks) have even more of an interest in driving the price up for a degree almost without limits. The more you are on the hook for, the more you will work the rest of your life paying them off. If you could discharge the loans through bankruptcy, there wouldn't be nearly the incentive to drive up costs, because it would be irrelevant. Large numbers of people would just declare bankruptcy and get out from under the loans. In that scenario, people making the loans would be interested in keeping costs down, because they want people to take out loans they can actually pay back, as many people as possible, which means the cost of the education has to be affordable enough that the loans will be small enough that the banks could justify the risk, based on the expected return, which would be more in line with the actual increase in earnings that accompanies a degree. And if those loans were smaller, the benefit to declaring bankruptcy to get out from under them would be outweighed by the downside of declaring bankruptcy.
    The concern I have with allowing all student debt to be discharged in bankruptcy is that unlike a loan for a car or a house, there's nothing to reposses if you refuse to pay. You can take my mazda if I don't pay on my car loans, but what do you take back if I don't pay on my degree? My Brain? What I think would probably happen is the end of all student loans -- mostly because I could pretty much steal a degree if I could take out a loan, graduate and then declare bankruptcy. That's not so much going to cut the costs, as the person gong to school has no need to worry about taking out the loans that he has no intention of paying back. If you make them dischargable, I think you need to have some kind of asset forfiture in the bill so as to prevent bad-faith loans. I could even see doing some sort of exchange where doing something related to the major as public service would pay back the loan. Deliquents must be made to pay somehow, and banks should not be getting a guarentee of payback -- both of those have made most people immune to the costs of college, while making colleges much less likely to check into the kid's background. Banks should not be paid back for stupid loans, but letting people take a loan for something that they can't give up seems like fraud waiting to happen.

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    Quote Originally Posted by meridian5455 View Post
    Doesn't mean that they could design a bridge.
    That would be the job of engineers. Architects just make it look pretty.

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