Student loans/debt responsibility?

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  #31  
Old 11-10-2019, 07:14 PM
retiredguy123 retiredguy123 is offline
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Originally Posted by jimbomaybe View Post
does not the interest rates depend on the likelihood of default? , if banks could not adjust for that could they stay in business ?
Yes, that is why the typical student loan is a direct loan from the Federal Government. Banks are not involved. Nobody cares if the borrower defaults because it is just taxpayer money, and the Government can raise taxes or borrow more money and increase the national debt. The current student loan debt is 1.6 trillion dollars and growing every day.
  #32  
Old 11-10-2019, 07:15 PM
OrangeBlossomBaby OrangeBlossomBaby is offline
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Getting a teaching degree is expensive but in some states you don't make minimum wage for teaching and you have to pay for all your own classroom supplies. This is breaking down how many hours you actually work, in the classroom and home grading papers, attending mandatory parent-teacher meetings, taking courses to maintain your status as a qualified teacher in your state, etc. etc. You can't just up and move to another state that pays better, those positions are already filled and there are waiting lists.

They didn't tell you all this when you decided to become a teacher. So now you can't pay the loan and your rent is late, you have no savings, you work another job to handle as many responsibilities as you can.

There are other careers in the same situation. Lots of kids went to college at the middle of the dot-com boom expecting a promised job in the tech trade. Four years later, the industry tanked and all these college graduates were out of work, and owing thousands.

Even some kids went to college to get a degree in agricultural studies to run the family farm. They graduated just two, three, or four years ago. And now there's a trade war and they will lose their farm - and have to pay back the loans.

No fault of the kids, has nothing to do with being cheap. They did the right thing, borrowed only as much as they expected to earn in their first year just like Clark Howard recommends. Unfortunately society rejected their expectations and told them they were SOL, and they'd better pay up what they don't have or else.

I don't think debt forgiveness is the right answer unless it's to a school that was shut down for defrauding the students.

But I think kids should be able to get a break on the pressure of repaying that debt. Add a couple more years to their payoff date, at no additional interest rate. Let them skip their birthday month's payment. Allow more generous deferments.
  #33  
Old 11-10-2019, 07:46 PM
dnobles dnobles is offline
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I worked in student loans. I’ve been retired 12 years and haven’t kept upon the changes. There is so much miss information in these post I don’t even know where to begin plus I don’t want to argue.
  #34  
Old 11-10-2019, 08:36 PM
Buffalo Jim Buffalo Jim is offline
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Originally Posted by dnobles View Post
I worked in student loans. I’ve been retired 12 years and haven’t kept upon the changes. There is so much miss information in these post I don’t even know where to begin plus I don’t want to argue.
I agree with you 100% . I was a senior exec at a large Regional Bank . One of the Business Lines that reported to me back when we did" Direct Student Lending" was the Federal Student Loan Program .

There is a lot more to the entire program than what has been discussed here . Like anything there is a great deal more to the entire issue .
Loans to students attending so called " Trade Schools " such a Cosmetology and Secretarial Business Schools had horrendous Default Rates . As high as 80% !
Yet for many years we were forced to process and advance loans to these students or it was considered Discriminatory . Not Discriminatory against the student but possibly as Discrimination toward the " School " . We also had to work hard at great expense to collect payments before we could declare a loan to be " Uncollectible " and turn it over to the Federal Government to exercise their Guarantee. Something like one year of zero payments . And on and on .
My Bank and many others put pressure on our Federal Representatives to institute some standards such as student graduation rates , ability to pass State Licensing Exams , Historic Loan Default Rates etc .
The result was the Federal Government simply took over the Student Loan process and took over the Student Loan portfolios from all Banks .
Apparently this was their answer to serious problems in the National Student Loan Program . This was many years ago however I must wonder if the standards were ever cleaned up .
" For Profit Schools " are major abusers of the system . You see them running Ads on TV every day .They put on hard recruiting practices to gather students , many who should not be in college or even Trade Schools . They have them borrow the max allowed which goes to those who own the schools and very few ever get a useful education .
Most are left with broken dreams and a huge debt .
Most people who attend legitimate Universities and Colleges and who Majored in anything close to useful eventually are able to build successful careers . Some sooner than others but the vast majority do .
Note : Back when Banks administered the loans it was The Federal Government who determined what interest rate banks could charge on student loans under that program. Also the abusive " school " operators donate a lot of money to their favorite politicians in order to keep their game going .

Last edited by Buffalo Jim; 11-10-2019 at 09:01 PM.
  #35  
Old 11-10-2019, 08:39 PM
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Originally Posted by dnobles View Post
I worked in student loans. I’ve been retired 12 years and haven’t kept upon the changes. There is so much miss information in these post I don’t even know where to begin plus I don’t want to argue.
First, be aware, the misinformation you speak of is the norm on this forum.

There actually is a group that openly hates facts.

Good news, FACTUALLY student loan default is down, and has been trending that way for some time. Hope that is correct information.

Student Loan Default Rate Continues to Decline


Problem, in my opinion is those loans taken in the past were great BUT what you can earn has not kept up with the cost of college costs.

Most don't think of debt as a bad thing (see US government), and I just read recently the default on car loans dwarfs default on college loans.
  #36  
Old 11-10-2019, 09:15 PM
retiredguy123 retiredguy123 is offline
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Originally Posted by Bucco View Post
First, be aware, the misinformation you speak of is the norm on this forum.

There actually is a group that openly hates facts.

Good news, FACTUALLY student loan default is down, and has been trending that way for some time. Hope that is correct information.

Student Loan Default Rate Continues to Decline


Problem, in my opinion is those loans taken in the past were great BUT what you can earn has not kept up with the cost of college costs.

Most don't think of debt as a bad thing (see US government), and I just read recently the default on car loans dwarfs default on college loans.
I don't think it is appropriate to compare car loans to student loans. Car loans are private loans made by financial institutions and they are for profit, collateralized loans. Student loans do not have any any collateral, and, when they default, the taxpayer loses, not a financial institution. The total car loan debt is about 1.25 trillion dollars as compared to the student loan debt of 1.6 trillion dollars. But, I don't think the companies making car loans are losing money. The taxpayers making student loans are losing plenty of money because, from a financial standpoint, most of them are bad loans. This is an apples to oranges comparison.
  #37  
Old 11-10-2019, 09:22 PM
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tophcfa tophcfa is offline
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Originally Posted by Bucco View Post
First, be aware, the misinformation you speak of is the norm on this forum.

There actually is a group that openly hates facts.

Good news, FACTUALLY student loan default is down, and has been trending that way for some time. Hope that is correct information.

Student Loan Default Rate Continues to Decline


Problem, in my opinion is those loans taken in the past were great BUT what you can earn has not kept up with the cost of college costs.

Most don't think of debt as a bad thing (see US government), and I just read recently the default on car loans dwarfs default on college loans.
The disconnect between the cost of a good education and what one can earn is because education is not what it used to be. When we all went to college engineering, math, science, physics, business, law, and pre-med were degrees of choice. Now kids go to school for degrees in social justice, climate sustainability, and the like. It's no wonder they can't pay off their loans. And you are correct that car loans dwarf the defaults on college loans, that is because banks can reposess your car if you don't pay the loan, but they can't take back the time you spent in college if you default on your student debt. Collateral that can be taken back is definitely worth something to a lender.
  #38  
Old 11-10-2019, 10:21 PM
OrangeBlossomBaby OrangeBlossomBaby is offline
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Originally Posted by retiredguy123 View Post
I don't think it is appropriate to compare car loans to student loans. Car loans are private loans made by financial institutions and they are for profit, collateralized loans. Student loans do not have any any collateral, and, when they default, the taxpayer loses, not a financial institution. The total car loan debt is about 1.25 trillion dollars as compared to the student loan debt of 1.6 trillion dollars. But, I don't think the companies making car loans are losing money. The taxpayers making student loans are losing plenty of money because, from a financial standpoint, most of them are bad loans. This is an apples to oranges comparison.
When the graduate ends up in Section 8 housing, collecting welfare and SNAP benefits, and has their only form of transportation repossessed because they paid back their student loan and have nothing left . . .

it's the taxpayer who will be paying for that graduate's housing, welfare check, food stamps.

Do you really think a few years worth of all those things are less expensive to the taxpayer than the student loan? If you do, then there is something seriously wrong with the cost of higher education, because it shouldn't cost more than the cost of housing, food, utilities, clothing, and transportation for a few years.

If you don't think those things are less expensive, then you probably would prefer to risk being the taxpayer who pays for the defaulted loan, than for the graduate's expenses as a result of not finding a job in the career their education was supposed to prepare them for.
  #39  
Old 11-10-2019, 10:29 PM
OrangeBlossomBaby OrangeBlossomBaby is offline
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Originally Posted by tophcfa View Post
The disconnect between the cost of a good education and what one can earn is because education is not what it used to be. When we all went to college engineering, math, science, physics, business, law, and pre-med were degrees of choice. Now kids go to school for degrees in social justice, climate sustainability, and the like. It's no wonder they can't pay off their loans. And you are correct that car loans dwarf the defaults on college loans, that is because banks can reposess your car if you don't pay the loan, but they can't take back the time you spent in college if you default on your student debt. Collateral that can be taken back is definitely worth something to a lender.
Liberal arts degrees were hugely popular in the 1960's, 1970's, and 1980's. Political science was also very popular.

College tuition in the 1960's was usually less than $2000 per year. 4 years at Harvard was less than $35,000 total, including room and board for the first two years. Now it's around $130,000 PER YEAR. The cost of education has gone up MUCH higher than the salaries people expect to get as a result of that education. And much higher than the overall rate of inflation.

That is why student loans are being defaulted. Older people are remembering how easy it was for them to get their own loans and pay them back, and not noticing how expensive it is for kids to get the same education now. "Back in my day" is obsolete, and irrelevant.
  #40  
Old 11-10-2019, 11:30 PM
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Originally Posted by OrangeBlossomBaby View Post
When the graduate ends up in Section 8 housing, collecting welfare and SNAP benefits, and has their only form of transportation repossessed because they paid back their student loan and have nothing left . . .

it's the taxpayer who will be paying for that graduate's housing, welfare check, food stamps.

Do you really think a few years worth of all those things are less expensive to the taxpayer than the student loan? If you do, then there is something seriously wrong with the cost of higher education, because it shouldn't cost more than the cost of housing, food, utilities, clothing, and transportation for a few years.

If you don't think those things are less expensive, then you probably would prefer to risk being the taxpayer who pays for the defaulted loan, than for the graduate's expenses as a result of not finding a job in the career their education was supposed to prepare them for.
This is partly because of the push to get too many people who shouldn’t be at college there in the first place. There is an imbalance. The demand and the supply do not meet.

So the kid with the PhD in philosophy ends up becoming a fisherman, my friend did. But then he didn’t study in order to make money or serve society, he studied because the subject interested him. But who is going to pay for his student loan? For his fun time at university?
  #41  
Old 11-10-2019, 11:35 PM
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Originally Posted by OrangeBlossomBaby View Post
Liberal arts degrees were hugely popular in the 1960's, 1970's, and 1980's. Political science was also very popular.

College tuition in the 1960's was usually less than $2000 per year. 4 years at Harvard was less than $35,000 total, including room and board for the first two years. Now it's around $130,000 PER YEAR. The cost of education has gone up MUCH higher than the salaries people expect to get as a result of that education. And much higher than the overall rate of inflation.
This is the market trying to correct itself. Way too many people want to go to Harvard.
  #42  
Old 11-11-2019, 02:30 AM
biker1 biker1 is offline
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Nope. Harvard is about half of that.


Quote:
Originally Posted by OrangeBlossomBaby View Post
Liberal arts degrees were hugely popular in the 1960's, 1970's, and 1980's. Political science was also very popular.

College tuition in the 1960's was usually less than $2000 per year. 4 years at Harvard was less than $35,000 total, including room and board for the first two years. Now it's around $130,000 PER YEAR. The cost of education has gone up MUCH higher than the salaries people expect to get as a result of that education. And much higher than the overall rate of inflation.

That is why student loans are being defaulted. Older people are remembering how easy it was for them to get their own loans and pay them back, and not noticing how expensive it is for kids to get the same education now. "Back in my day" is obsolete, and irrelevant.
  #43  
Old 11-11-2019, 02:31 AM
biker1 biker1 is offline
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There is nothing unique about Harvard’s cost. There are many schools with the same cost.

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Originally Posted by Velvet View Post
This is the market trying to correct itself. Way too many people want to go to Harvard.
  #44  
Old 11-11-2019, 06:10 AM
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Quote:
Originally Posted by OrangeBlossomBaby View Post
Liberal arts degrees were hugely popular in the 1960's, 1970's, and 1980's. Political science was also very popular.

College tuition in the 1960's was usually less than $2000 per year. 4 years at Harvard was less than $35,000 total, including room and board for the first two years. Now it's around $130,000 PER YEAR. The cost of education has gone up MUCH higher than the salaries people expect to get as a result of that education. And much higher than the overall rate of inflation.

That is why student loans are being defaulted. Older people are remembering how easy it was for them to get their own loans and pay them back, and not noticing how expensive it is for kids to get the same education now. "Back in my day" is obsolete, and irrelevant.



If they are smart enough to go to Harvard (whatever that is), they should understand the value of the investment they are making and the realistic ROI. "If I'm going to invest XX, how much more will I earn and how long will it take to pay it back.......taking into consideration economic impacts??"


"Harvard" educations ain't what they use to be in today's market.
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  #45  
Old 11-11-2019, 09:04 AM
Love2Swim Love2Swim is offline
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Our son and his wife each have over $200,000 in student loans, and they didn't attend fancy ivy league schools. College is way more expensive now than it was when we were students, and these young kids have been victims of predatory lenders who charged exorbitant interest rates. Our son has been paying for at least 7 years, and has not yet started paying off the principal. I personally think there should have been more government oversight of the loan process, so the financial institutions were not taking advantage of the kids. As someone else mentioned, college is now the norm. When we were younger you could skip college and be assured of a good job. Not so much anymore unless you have the skills to get into a trade, which not everyone does. I'd like to see kids being given the opportunity to attend state universities/colleges for free for two years, the same way the government sponsors free high school education. I think our society has evolved to the point where that is needed. Any college education after that would be up to the individuals. As far as dealing with the existing debt, perhaps a scheduled forgiveness program if they serve a certain amount of time in certain volunteer/government sponsored programs like teaching in problems school districts for example.
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