At least acknowledge that the article was about student loans, or it’s OT.
1 Like
I get that.
What I’m (apparently ineptly) trying to argue for is a flat-rate interest that a 10 year old could calculate in their head, rather than something that requires that level of explanation:
“I’d like to borrow $10,000.”
“Okay, I’ll give you $10,000 now, and you’ll pay be back $15,000 over the next 5 years.”
“So $250 a month, then. Sounds good.”
I wish I could remember where I heard a quote to the effect of: Banking should be simple- It’s basic addition and subtraction. Anything more complex means somebody is trying to hide what they’re doing.
3 Likes
The American Dream is a game of Super Mario Bros., except the true winner of the game is the one who owns the means of manufacturing pipes, mushrooms, fire flowers, and Koopa castles, rather than the poor plumbers who are ecstatic every time they get another gold coin and keep questing for the princess who is always in another one-percenter’s castle.
3 Likes
I think CarlMud is a poorly obfuscated nick for KarlMarx.
2 Likes
Thinking that the wealthy are the primary benefactors of the American Dream doesn’t make you a Marxist. It just means you’ve taken a social science course before.
7 Likes
The solution is to stay enrolled half time until death and never pay it back. It’s what I’m doing. I’m ten years in and no sweat! Never let my grace period expire. Helps to work at a college, so i can enroll in classes for free. The other upside to not having to pay it is that loan interest stays low. Half my loans are subdidized while I’m in school. If I ever had a windfall and wanted to pay them off its possible because the interest isn’t ballooning. Also, i never have to actually finish the classes. I just have to be enrolled with no more than a six month gap. Easy. Easier than always living in poverty. Only chumps leave in school deferrment. Not the best financial plan in anyone’s imagination, but certainly better than being a victim of the education industrial complex.
1 Like
The tuition bubble is so closely following the path of the housing bubble that any comments regarding the latter are on topic.
It’s a small city with a population of about 40k, the school has about 18k. That isn’t great math for the availability of part time jobs for uni students. Mankato /= Minneapolis.
2 Likes
There was an episode of “frontline” oh… 10-15 years ago… about the credit card industry.
One of their interviewees was a credit card industry consultant. He heart was two sizes to small. He looked a lot like Mr. Burns from The Simpsons. He was just dripping high functioning sociopathy. He had done a lot of work on getting people to maintain high balances and just pay the minimum so their debt did not decrease much. Previously the credit card industry had tended to set minimum payments so the balance would go away pretty quickly if you did not keep charging. His innovation was to realize that setting the minimum at or near interest only was a lot better. That the business was getting people to pay interest, not getting them to pay back principal.
At one point they asked him about a proposal to require the addition of some more reporting to credit card bills. I think it was a simple display of how long it would take for the minimum payment to pay off the debt and how much would be paid over that time. He was fine with that. It wouldn’t change anything he said. People can know how this works with a very trivial effort. They don’t. They won’t. He is confident. And it has made him quite rich.
5 Likes
But anyway. There are basically three kinds of loans it is reasonable to take out:
- home mortgages
- education
- business loans
This is because all of these are investments that have a good shot at paying themselves back. They also all tend to be fairly large. Big expenses, people need to spread out the cost or put it into the future where the thing they buy with the money helps them pay it back. (note: as a society we ought to be minimizing education loans, but in principle they are reasonable)
On the other side we have the kind of loans that are really just almost always stupid:
- payday loans
- continuing Credit card balances
- Auto loans
Now there may be some edge cases where a credit card balance is reasonable as a very rare stop-gap (but really you should have had savings to pay for it and if your finances are so dire that you can’t taking out high interest loans is likely to make it worse), In theory the same goes for payday loans, but in practice the terms on them mean that it does not.
Buying a car with an auto loan is just flat out stupid. Buy a cheaper car, save up.
Totes true! Why I had to actually say that, is beyond me, but it seems that some people actually aren’t aware that from Gen-X on, we’re doing LESS WELL than our parents, despite working as hard, if not harder. The boomers doing better than their parents is a function of that weird postwar economic boom, which included a fair amount of government intervention. We’re just not getting the same support from the state that our parents/grandparents received… Mainly due to the anti-civil rights revolt and the shift to the neo-liberal service economy and the end of the liberal consensus.
10 Likes
(post withdrawn by author, will be automatically deleted in 24 hours unless flagged)
Oh, wait, no it wasn’t!
4 Likes
I think where you and I differ is that I don’t see this person’s debt and desire to have HBO as a moral failing. If you looked at my life you’d see lots of places that I could “sacrifice” things, I’m sure. My point is that educational debt is burdensome and unavoidable for most people these days. We could all not go to college and just get “regular” jobs, or we could be autodidacts and entrepreneurs, but that’s a libertarian fantasy, because our lack of educational debt would be replaced with credit card debt or payday loans to make ends meet.
I think the system is fucked without a living wage. And I’d gladly let my loans go into default if I had to choose between decent housing, a reliable car, or a loan payment. I’m no model moral citizen.
7 Likes
For consumers who make the same payment each month, it makes no difference. For those consumers that want to pay a little extra principle when they can, it’s a worse deal.
Buying a car with an auto loan is just flat out stupid. Buy a cheaper car, save up.
Lots of automakers offer 0% financing if you have a good credit score. I think it would be stupid to pay up front if they will let you play with their money.
4 Likes
I do not believe and never said that either of these constitutes a moral failing. (Please feel free to ask me what my position is if it is unclear; I think that is less confusing than assuming and putting me in the position of having to correct you.)
The “moral failing” (less a moral failing than an intellectual failing, really) in this case is to take a loan and then complain about the completely standard terms of that loan. Had it been a predatory loan under unusual terms – sure, complain about the unusual and predatory terms. Had he turned down the loan thinking that completely standard terms including compound interest are unfair, sure complain about the “unfair” terms.
But complaining about completely standard compound interest is just stupid, in the same way it would be stupid for me to bemoan the fact that the rain doesn’t seem to make any particular effort to avoid falling on me in particular.
I was clear that it was the complaining I was objecting to, and nowhere did I say anything about the morality of debt – so your misinterpretation of my comment is not justified in any way that I can see.
Anyway, while we’re on the subject of the morality of debt…if I loaned someone money at interest, they would not be morally obligated to pay me back? Would it be like they were doing me a favor if they paid me back as opposed to willfully entering into a contract? What if I’m empowered to loan money owned collectively by a group of people? Is there less of a moral obligation to pay back a collective entity as opposed to an individual?
1 Like
Standard loan terms are a human creation whereas we don’t have any real influence over rainfall and gravity. It seems reasonable to me to state that you think standard loan terms are unreasonable if you perceive the standard practices to be abusive. Just because they’re standard doesn’t mean they’re necessarily reasonable.
2 Likes
What about complaining at the outset, “I can’t afford to do this, but I have no other alternative”? Are you then more justified in complaining about the choices you felt coerced into making?
When even an entry level position requires a college degree, and any other employment option won’t pay enough to survive, does it become more reasonable to complain about the situation?
3 Likes
We’re talking about the OP, right?
Everything about the OP screams: spoiled white middle class idiot.
As a spoiled white middle class idiot who didn’t take to the internet to complain about the obligations into which I freely entered, I think this guy is kind of a ponce.
Is that really so offensive?
Edit:
To address your specific questions, a college degree in anything (let alone social studies) is not worth the amount of debt this guy got himself into. To avoid getting in so much debt, he could have done simple and straight-forward things I wish I had done, such as taking all his core classes at a local community college while working a part time job and living with his parents. That alone could have wiped out half his debt.
2 Likes
We’re talking about compound interest. If compound interest is really a purely human construct, please explain to me why we call the natural logarithm natural instead of the “human creation logarithm” or something.
