<p>Can this discussion possibly be taking place in the knowledge vacuum that seems to exist. As far as I know, most of these student loans are guaranteed by the federal government, and have always been. The reason for the lack of a discharge in bankruptcy is to protect the taxpayer–the lender is already protected by the federal guarantee. Of course, it doesn’t protect anyone (us) when the loan ought not to have been made in the first place.</p>
<p>Common sense economics will tell you that this program should be dramatically reduced. Its already lost a bundle, with the real reckoning still to come.</p>
<p>If there were no guarantee, no one would make these loans. They are bad bets.</p>
<p>True. It’s one of those little cycles we have. We loan money at high interest (that we know can’t be paid back) to people who should know that they can’t pay it back, then we act really surprised when the thing that we should have known was going to happen ends up happening and the economy goes sour. </p>
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<p>Don’t worry. Their children can borrow student loans too. And around and around we go, until hopefully someone in the chain strikes it rich or wins a scholarship or decides not to go to a school that costs 50k or goes to trade school or decides to become an entrepreneur or finds a great job or enters a loan forgiveness program or marries a rich person or dies in childbirth or something.</p>
<p>Folks, I haven’t done a lot of study of this problem (although I agree it certainly IS a problem and deserves a lot of study). But I will bet dollars to doughnuts that kids borrowing six figures to pay top-shelf tuition at selective private colleges is, at most, a tiny slice of the problem. The problem is what people have borrowed to pay tuition at comparatively low-cost “community colleges, public universities, and lesser-known colleges” and, of course, even lower-cost trade schools. And making student loans be underwritten solely on borrower credit means (a) effectively telling the majority of the population that they cannot obtain higher education unless they get picked for Harvard or some similarly competitive public university merit scholarship, (b) shuttering some significant portion of the country’s colleges and universities, and (c) for all but a handful of the survivors among public institutions, stripping them of any semblance of independence and subjecting them to direct political control with all that entails.</p>
<p>Now, I’m willing to entertain arguments that all of that is necessary, if unfortunate, and/or that it won’t be quite as bad as I fear. But don’t talk about massive de-funding of middle-class and working-class students without talking about what the social consequences of that will be, or what it will do to the institutions that serve them. And don’t pretend that public and religious educational institutions aren’t getting the bulk of the money now.</p>
<p>No one made either these indebted students (or mortgage holders ) Borrow the money!!! They made that choice. Decades ago I paid for college myself. Had to work during school and even had to drop out a couple of times to work more intensively, and took some loans which I fully paid off. I graduated when inflation was rampant, CDs were paying 17% and it was HARD to get a job. I realize economy can be off and life can be tough. Not much different than right now. BUT I made sacrifices and tightened my belt. I did not buy the biggest, or multiple, houses latest technology or a new car every 3 years etc. I saved enough money for my kids to go where ever they want and in fact encouraged them to take the full tuition plus rm/bd scholarships offered over the prestige school and to bank the college fund I had saved for them. They choose the prestige school but they could afford it and so that is fine. I have no sympathy for bailing out any of these overextended individuals. They had other options and chose the expensive route. This is their problem not greater society’s problem to forgive or repay their loans. Sorry sounds harsh but time for people to experience the consequences of their bad decisions.</p>
<p>It doesn’t have dollar numbers, but it has headcounts for borrowers and default rates.</p>
<p>All private 4-year colleges (which would include religious schools) account for 22% of the borrowers, and 11% of the defaults. Their default rate is half the average. Public colleges represent 49% of the borrowers and 40% of the defaults. Trade schools have 29% of the borrowers and 48% of the defaults.</p>
<p>Separately, there is indication that the default rate at elite 4-year colleges is far, far lower than the average. A Georgetown-generated article cited default rates at Georgetown, Duke, Cornell, and Vanderbilt all around 0.8% (vs. a private 4-year college average of 4.5%, and an overall average of 8.8%).</p>
<p>No, no one made them borrow these crazy sums of money. But these kids and their parents are also not experts in finance. Same with the mortgages. Working as I did in the banking industry, I used to wonder why I had to give the bank all my detailed information of my debts, salary, etc if they were just going to ignore all guidelines and common sense to offer me a mortgage that would have taken 60% of my salary. All financial experts will tell you not to go over 30% of gross income and should go lower than that for new homeowners. If my financial advisor (my banker) tells me not to worry, that I should be fine, why wouldn’t I believe? in regards to college costs, we even had parents on this site a couple of years ago saying that college costs were worth it, even if they had to take a second mortgage. 20/20 hidsight is great, but we shouldn’t assume that everyone in this situation was able to get good advice on the issue. The rise in college costs is staggering, even at public schools. When you went to school, 1/3 of your peers were also probably not taking remedial courses like at many state schools today. and tuition was low enough to afford without massive loans. We all talk about how not everyone should be going to college, but that is not the line that we are feeding our little snowflakes, not what American employers believe either. Unfortunately, when those kids drop out, they are hit with debt that a minimum wage job can’t pay. I don’t want to eleiminate the debt, but I would like to see ways to stop the interest from snowballing out of control.</p>
<p>Sometimes I feel very sorry for the students from high-EFC families who have made absolutely no provision for their children to afford college.</p>
<p>A girl from my son’s class was very, very bright…very strong grades and demanding curriculum, all SATs and SAT IIs above 700, several 5s on APs. Missed the state cut off for NMFS by 1 point.</p>
<p>FAFSA indicated family was full pay…but for years the family had been full-spend, with nice cars, lovely home and vacation home, great vacations,clothes, jewelery etc…and nothing in the bank. Like a lot of families, things have gone south.</p>
<p>She applied to a lot of schools with good merit but even then she could not really afford to go anywhere. She got a some full tuition scholarships but that was it. Her parents’ credit was so bad they could not co-sign for her for any loans.</p>
<p>So she did two years at the local community college and transferred to Ohio State. She works like crazy to pay for all she can. She feels as if her parents cheated her…they always told her she could go anywhere she could get in…who did they expect would pay? They kept giving her that line until January of her senior year. Right after the parents came back from a weekend for two in the Caymans.</p>
<p>I still don’t understand how this lifestyle jibes with having no disposable income to help her with college expenses.</p>
<p>And, as the saying goes, she will be choosing their nursing home one day.</p>
<p>*
The young woman in this article has 135k of debt that cannot be discharged? No wonder she is in bad straits. And the schools she attended gladly accepted the loan dollars.</p>
<p>My complaints have nothing to do with ideology or politics. Let’s face facts, the access to cheap student credit is hurting us all, and benefiting a class of university personnel who cannot continue to receive these subsidies. *</p>
<p>These loans may have been taken out before the bank failures. Since then, Sallie Mae and others are requiring co-signers for these big loans. Before, Sallie Mae would let naive kids sign their lives away.</p>
<p>I think the whole situation is sad. Knowledge shouldn’t be held hostage by capitalism and it is. Our country, government and humanity has been hijacked by corporate interests. I am so inspired by the voices I am hearing lately. I am proud of those standing up to bullies and tyrants. I wish there was more I could do myself. I am starting to look at everything in a new light and it is refreshing and revolutionary.</p>
<p>This will probably get deleted and I mean no disrespect to anyone here. This is just my opinion. Peace.</p>
<p>Right. It’s all the fault of the corporations.</p>
<p>The housing bubble came about through easy credit and a “everyone should own a house” mentality.</p>
<p>The student loan bubble came about through easy credit and a “everyone needs to go to college and can major in basket weaving” mentality.</p>
<p>It feels good though to blame corporations. It always feels good to cast yourself as a victim instead of just foolish and irresponsible.</p>
<p>I think one thing I can agree with you on, mspearl, is that our society is indeed quite sad to behold at this moment. The scapegoating and lack of personal responsibility seems to know no bounds.</p>
<p>People like to blame “big business” and corporations for all what ails them. Remember that corporations might legally be entities in themselves, but they are made up of people. People who go to work every day working hard to support their families. We need to stop tearing each other down and looking for scapegoats. We’re all in this together</p>
<p>^^^
People use corporations and big business as synonymous with CEO salaries and the misuse of corporate profits and the ways those profits are obtained and hoarded.</p>
<p>For example, latest news via Bloomberg re to Apple - Apple is going to increase its offshoring of jobs in China to increase stock holder profits - in other words - don’t sell our stock now that Jobs has dies.</p>
<p>MIzBee --that’s why they say Buyer beware –</p>
<p>BoxySX-- decades ago my parents informed me as I was filling out college apps that I was on my own to pay for the college education they had always expected me to obtain…been there done that. State college best option under those circumstances. One can achieve great success with “only” a state college education contrary to what many on CC seem to think.</p>
<p>A huge part of the problem is also the mentality (often repeated even on CC) that educational debt is “good debt” and that college should be paid for with “past, present and future income – in other words parental savings, current parental income and student loans” </p>
<hr>
<p>The source of the “past, present, and future income” comment is … drumroll, please … none other than the Congress of the United States of America. This is the foundation on which the concept of the federal financial aid program is built. In our country, a K-12 education is guaranteed. While education beyond the 12th grade is not guaranteed, low cost community colleges are available options. Those who choose other options are certainly welcome to do so … just like people who want something different than their local public school are free to pay money to send their kids to K-12 … but the family/student will have to pay money for this choice. That money can be savings, if the family has saved. It can be current income if the family lives below their means or cuts back current expenses. It can be borrowing, which should be done wisely (Congress doesn’t advocate borrowing ridiculous sums of money - that is personal choice).</p>
<p>I know it’s not fashionable to believe in personal responsibility, but I sure wish it was.</p>
<p>“The company will look for overseas growth to extend that legacy and remain an investor favorite.
Apple, which said its visionary founder died yesterday at 56, aims to maintain its expansion in markets such as China, fueling sales of the iPhone and iPad.” Bloomberg</p>
<p>@34 Quote from the article which is online.</p>
<p>I think the student loan debt has a lot of fault with the people who signed them. A lot of people were mislead, but in the end, they’re the ones who put their signatures on them. What were they expecting when they got out of college? And it’s not like there’s no other options. For the most part, people can always sign up for community college for two years and get a pretty cheap degree at a state university, especially if they make it into the honors program. Despite rising tuition costs, this is still possible. At least people know now how horrible debt is.</p>
<p>I think the most egregious case of student debt would have to be the case of my teacher from a novel-writing class. She turned out to be actually a very smart woman who had the chance to go to Harvard or accept a full-ride to Vanderbilt. However, since she really wanted to get away from home and thought Harvard was too stuffy, she decided to go to Tufts instead, which provided almost no financial aid for her. She also went to law school (but never ended up practicing, I think) and later returned to her home city got a masters degree in English at a good but unrecognized college. (What in the world can you do with one of those?) While I’m glad that her life experiences ended up shaping her that way so that she could find something as fulfilling as her novel-writing class, her decisions have put her into thousands of dollars of debt. According to her, she probably won’t get them paid off until she dies. This is clearly a case where someone definitely had it within their reach to avoid having so much debt, and I’m sure there’s lots of other people with similar stories.</p>
<p>Come on. Where’s your evidence for this? Easy credit, sure – via government guarantees and bank regulator encouragement. The problem isn’t basket-weaving. The problem is people trying to get trained for jobs that don’t exist, or trying to get the education they didn’t get in high school.</p>
<p>We do a horrible job of basic education for vast numbers of people, and we charge people more for post-secondary education than anywhere else in the world. I am tired of reading post after post whining about personal responsibility; we are the only developed country anywhere that regards any form of education as primarily a “personal responsibility”. Now, that choice has basically given us the best university system in the world, which is an enormous competitive advantage for the U.S. – maybe the most important one. And the government has subsidized that in a number of ways, as basically it should.</p>
<p>That’s the system. I agree, people shouldn’t be reckless with educational debt. And people shouldn’t try to scam the system. But the fundamental problem isn’t the fault of the victims, and it’s not going to be solved by telling the victims that they won’t be able to afford bread anymore, so maybe they should go eat cake.</p>