Originally published at: https://boingboing.net/2017/11/29/somethings-got-to-give.html
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Worse part of the student loan situation is the general lack of concern with teaching students when to not get them by colleges. Obviously, such information would be disastrous to the colleges but if I had been told there’s more options to pay for my undergrad and grad level courses I would’ve taken it. Sadly, I’ve chosen to easy route and racked up the debt. Now I got 6 figures worth and no clear/easy path to pay it down short of going cheap on everything (which in Minneapolis is pretty hard to do especially due to the transit and housing aspects). Basically, I’m expecting the govt to saddle me with the debt 30 years hence or worse garnish my social security and 401k to pay debts I shouldn’t even have had been granted as loans. Either way, I expect something to budge on this issue. Sadly, I think it’s going to be in the favor of the banks who dole out these loans on the promise of guaranteed returns.
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The Democrats want to protect consumers from predatory lenders, the Republicans want to protect predatory lenders from pesky consumers.
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Something’s got to give
The government…to the banking industry…bailout money…when the unsustainability of the student loan debt bubble becomes undeniable to the denialists. That’s how we roll in late-stage capitalist America.
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That would have indeed been nice. It’s slightly different now. But when I entered college you simply signed a document as part of applying for financial aid that allowed the school to take out loans in your name. Then either accepted or rejected the package they offered. So rejecting the student loans they offered meant turning down the scholarships and what have as well. You werent told interest rates or lender names until you graduated. Only how much and what portion was subsidized loans Vs private. You could comparison shop. Get your own loans, seek detail. But it often meant forgoing financial aid from the school itself, And applying for each other kind of aid individually.
And noone would have advised you to go that route. And noone warned you it might not be smart to just sign on the dotted line.
It really is (and used to be even more so) a racket. I was looking at my loans the other day. And after lots of deferals, forebearances, some damage to my credit. So far I’ve paid more than the original principal and a boat load of interest. At at my current payment rate I will end up paying more than 3 times the original loan amount by the time I’m done.
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I can remember people complaining about the devaluation of the Bachelor’s degree, when it seemed like everybody had one. In a decade or two, that problem will be solved.
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I have no idea what this means except something is allegedly bad. Percentages of percentiles of what? That said, I think education should be cheap.
I hope every person caught in this onward & downward mess is a registered voter, I hope…
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Recently had a discussion in this area with some family, and then did a little research. Everyone was assuming higher education costs are up, and starting to try to figure out who to blame for that (eg administrators)… but… Well… Costs are not up, not recently anyway, at the local state premier research university (UW Seattle)
Look at this chart.
http://depts.washington.edu/opbblog/2014/03/special-report-state-disinvestment-public-higher-education/
Look at it again and look at the top line, total spending per student. ! This chart covers 24 years and spending per student is essentially flat (this is inflation adjusted, some bumps but its up what? around 5% over all that time).
Look at this table.
We don’t have a college cost problem at state schools. They probably ought to be spending more (education should be expected to grow as a %GDP because it is a classic poor productivity growth human interaction industry, but flat in inflation adjusted dollars == shrinking share of GDP).
We have a the state isn’t funding it nearly as much anymore problem.
We have a median family income is far lower than it ought to be because the top 0.5% took almost all the money for the last 4 decades problem. If the income distribution today were the same as in 1970 median family income would be around $95k instead of around $55k. Tuition would not be a problem for the vast majority.
Inequality. Government too small.
The real problems in america.
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Tuition costs are up in North Carolina, but that’s because the state continually works to reduce funding for all education of all types. Couple that with what must be a mandate to grow, since all of our universities have continual, massive building and real estate initiatives and are doing their best to grow enrollment. At age 39, we finished paying off my student loans just two months ago. We’ll be working on my wife’s debt for her MBA for a little longer. Both of us were fortunate that we were able to consolidate our various loans at interest rates under 3%. We were also fortunate to have our first child while I was still earning my bachelor’s and while we were broke as a joke, which translated to grant money that paid a year and a half of my tuition. I don’t even know if grants like that still exist.
I think three things about college and college costs:
-Everyone should be entitled to as much education as they want, and it should be funded by public taxes.
-Our economy doesn’t need this many college grads, and the actual value (not in dollars but in usefulness) of college educations seems to be declining.
-As a country, we should do more to promote vocational training and sending kids into the trades. That’s honorable work, and it should earn a comfortable living. Instead, our entire educational system is college-track or GTFO.
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Our government is a stick the wealthy beat us with. Unless that somehow changes, I am against expanding it.
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This is going the same way as subprime, we’re going to hit a default crisis. I know young woman getting a Humanities Ph.D with $220,000 worth of student debt. She will never pay this off! She admits it, even in the small likelihood of her getting a tenure-track position.
What Banker thought that she might pay it off is really the question. I think it’s safe to assume that if students had recourse in bankruptcy they never would have.
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I did for the local elections here in Minnesota. Don’t regret it.
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The Student Loan issue is a much slower burn but it could potentially go the same way.
The next at bat is sub prime auto loans (I am in possession of one of these!) sketchy we’ll give credit to anyone practices from car dealers/manufacturers. 10 year terms to keep monthly payments low, meaning the principal still owed plus interest rapidly outpaces the value of the car (which is on a pretty rapid down trend). They’re getting packages and codified just like mortgages were etc.
I’ve been hearing about that too, but the numbers are much smaller. The loans are typically on used cars, and under $10k.
But there are plenty of them and they’re getting rolled up into the same sort of financial vehicles home loans were. As the situations continues you’ve got people who owe more than the value of their cars trading them in and rolling the difference into a new shity loan. Meaning the total grows with time. They do offer them on newer and more expensive cars as well. And some of the same players are involved. Remember GMAC of robo signing fame? They started as GMs auto financing wing.
The student loans are a lot more money. But it’s slowed down by all those protections that come with them. The heavy deferals and forbearances, The recovery and refinance options. The fact that at least some portion are already government packed or subsidized. The fact that you can’t vacate them in bankruptcy and all that wage garnishment mean a lender can continually get something out of a borked loan. There’s less packaging of them into investment vehicles. Though they sell back and forth quite a lot, for a while there I didn’t even know who to pay or where to get a forbearance.
I think your looking at a one two punch. A smaller auto loan crash that comes pretty quick/soon. Followed by a much larger more long lived Student Loan crunch. A lot of the people with those bad auto loans are the same people with Lots of long lived Student dept too. so a crash in one may very well presage a crash in the other. I think if one goes the other will shortly after. And like I said auto loans seem to be on a faster path.
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