26 replies to this topic

[Cript]

http://abcnews.go.co...her-debt-falls/

My take: We've nationalized the student loan industry and are on the hook for every student loan that doesn't get repaid. Students can get $100,000 in student loans relatively easily even though they have no collateral and might be choosing a major that will lead to a job with no realistic expectation of being able to afford repayments.

[Waser Lave]

I can't speak for the American system of student loans but in the UK I'm not sure it's really possible for student loans to be considered as a bubble for a couple of reasons. Firstly, our student loans tend to be much lower than the kind of figures in America, with the recent rise most students will probably end up owing around $50k at the most for a 3 year degree (mine was about half that much) and, secondly, our student loan payments are only taken when earnings are over £15k (~$24k) per year so with average earnings of around £26k per year in the UK there isn't really much chance of a substantial proportion of those debts going unpaid. So to answer the question in a UK context, no, student loans are not the next bubble and, yes, government should be so involved.

[Frizzle]

I can't speak for the American system of student loans but in the UK I'm not sure it's really possible for student loans to be considered as a bubble for a couple of reasons. Firstly, our student loans tend to be much lower than the kind of figures in America, with the recent rise most students will probably end up owing around $50k at the most for a 3 year degree (mine was about half that much) and, secondly, our student loan payments are only taken when earnings are over £15k (~$24k) per year so with average earnings of around £26k per year in the UK there isn't really much chance of a substantial proportion of those debts going unpaid. So to answer the question in a UK context, no, student loans are not the next bubble and, yes, government should be so involved.

With the new uni fees going up to £9k a year it's quite possible to see some degrees costing almost as much as the $100k market (bare in mind the £-$ conversion.)

Plus, student's should have to pay interest fees and be able to provide some kind of collateral. It's ridiculous that an 18 year old can get thousands of pounds of financial aid to do a shitty art degree then drop out whilst I can't get a loan with a incredibly high paid, stable job for a newish car.

[Galadriel]

With the new uni fees going up to £9k a year it's quite possible to see some degrees costing almost as much as the $100k market (bare in mind the £-$ conversion.)

Plus, student's should have to pay interest fees and be able to provide some kind of collateral. It's ridiculous that an 18 year old can get thousands of pounds of financial aid to do a shitty art degree then drop out whilst I can't get a loan with a incredibly high paid, stable job for a newish car.

Don't be jels. The youth are the future.

[Waser Lave]

With the new uni fees going up to £9k a year it's quite possible to see some degrees costing almost as much as the $100k market (bare in mind the £-$ conversion.)

That's why I said most. Most people do 3 year degree courses and those who tend to do longer degrees like medicine or architecture are in subjects where the professions are very well paid (significantly higher than the average).

Plus, student's should have to pay interest fees and be able to provide some kind of collateral. It's ridiculous that an 18 year old can get thousands of pounds of financial aid to do a shitty art degree then drop out whilst I can't get a loan with a incredibly high paid, stable job for a newish car.

There is already interest placed on student loans (variable between the rate of inflation and inflation + 3%). What collateral do you propose an 18 year old to provide on student loans of probably at least £30k? I know I didn't own anything anywhere near being worth £30k when I was that age.

[Frizzle]

Don't be jels. The youth are the future.

http://www.bbc.co.uk.../world-19484279

"Global youth unemployment will continue rising over the next five years, according to a new report from the International Labour Organization."

That's why I said most. Most people do 3 year degree courses and those who tend to do longer degrees like medicine or architecture are in subjects where the professions are very well paid (significantly higher than the average).

Yeah but you didn't mention that.

There is already interest placed on student loans (variable between the rate of inflation and inflation + 3%). What collateral do you propose an 18 year old to provide on student loans of probably at least £30k? I know I didn't own anything anywhere near being worth £30k when I was that age.

All loans are subject to inflation bar a few exceptions. That is not calculate interest.

Collateral s/could be a good university, a good course or something their parent's own. It's unwise to give 18 years old 30-40k and not expect them to spunk it up the wall. Which most do.

[Nymh]

http://www.youtube.com/watch?v=6yhAxtcJSso

Sam's monologue pretty much sums up how I feel about education. Schools should not be as expensive as they are. People who are ambitious should not have to worry about being able to afford going to school. Adults and non-traditional students who want to further their education should not have to fret over the massive debt they're going to incur because they're not eligible for most financial aid or scholarships.

I attend college completely online, and my tuition was over $7,000 this semester (up from $4,000 my last full-time semester). Why? Whose electricity am I fueling with that money? What janitors am I paying? What buildings am I maintaining? My teachers work from home or in their spare time between their campus classes. My school is housed on a server in a closet somewhere. I don't even live on campus. I have little to no interaction with my teachers, I attend no lectures, and I rely more on google and youtube than I do my course materials. It's ridiculous to have to pay this much money for what I am receiving.

They have changed the regulations on student loans regarding bankruptcy recently, because (iirc) many post-graduate students were filing bankruptcy to get out of repaying their massive student loans. This is a good step, because it's protecting the government's investments, but I don't think any person should have to pay that much to be educated to begin with.

My take on that article: of course more people have student loans now than they did in 1989. What an absurd thing to write about without backing it up with supplementary data. Such as: The percentage of people going to college now is higher than it was in 1989 (or at any other point in the history of the US, even during the draft). It is much more expensive to attend school now than it was 23 years ago (the cost of university tuition not necessarily following, and in most cases exceeding, historical inflation rates). The National Center for Education Statistics has a chart that reflects this: http://nces.ed.gov/f...splay.asp?id=76 The far left columns show inflation-adjusted tuition over time.

Does this mean that student loans are a bubble? Not necessarily. I think what this shows is that we need to get a handle on the rising costs of education, not that we need to provide less help to those that need it.

[Drakonid]

Lol@payingforeducation

[Waser Lave]

All loans are subject to inflation bar a few exceptions. That is not calculate interest.

The way you said it made it sound like you were claiming that they weren't paying any interest at all though.

Collateral s/could be a good university, a good course or something their parent's own. It's unwise to give 18 years old 30-40k and not expect them to spunk it up the wall. Which most do.

That raises the issue of how we decide what is a good university and a good course. Then what do we do with the universities which don't fit the arbitrary characteristics used to decide how good they are? How do we mitigate against a shortage of university places if the 'good' universities can't provide enough supply to meet demand? What happens to students who no longer have parents or are already financially independent of their parents but don't have enough collateral? And so on...

Obviously there's a need to improve the quality of subjects being taken at university since a lot of people have done useless courses over the last decade or so (a degree in surfing I think was one of them...) but I think since the recession those types of courses will be killed off by a lack of demand as students seek to get more for their money.

[Sweeney]

It's more important to raise the standard of educational degrees.

You don't need a degree to do the majority of jobs in the world. Requiring a degree to be competitive in the "refuse manager" market is utterly absurd. Degrees have become popularised, and are accordingly devalued. Standards need to be raised within the higher education system, and that's basically the end of it.

[Cript]

o.0 Uhm, can I ask where you get the information that it's "easy" for students to get $100,000 in student loans?

The absolute max I would have been allowed to receive (subsidized and unsubsidized) had I taken it was around $7-8,000.
While I assume the amount of student loans you can acquire vary depending on your location and possibly the college you're attending (as I admit I don't know a lot about this issue), I could never imagine putting myself in that much debt just because I could and then going for...say an art degree.

I am a firm believer that something needs to change.
People are pretty much forced to go to College anymore. Although I have a lot of great references and experience on my resume, I have a horrible time finding an office / administrative job. (Hence why I'm now stuck in retail while going to school)
I think it's ridiculous that I am putting myself into tens of thousands of dollars of debt on the "hope" that when I obtain my CIT Degree, that I'll find a job.
When we have more educated citizens, our country as a whole does better and improves.

People who think it's the American Way to go into debt and struggle to put food in your mouth don't know the first thing about "struggling" and obviously have a warped view of what the American Dream is.

The rise in "for-profit" schools has killed us. School is 20k/year for tuition. Add housing & books and you easily get to an extra 5k/yr for a 4-year.

It's more important to raise the standard of educational degrees.

You don't need a degree to do the majority of jobs in the world. Requiring a degree to be competitive in the "refuse manager" market is utterly absurd. Degrees have become popularised, and are accordingly devalued. Standards need to be raised within the higher education system, and that's basically the end of it.

Devaluation has been a huge issue. A 2-year degree is sufficient for a huge amount of jobs but is basically looked down upon because of how easily accessible 4-year degrees are. Here in Wisconsin, we have a huge shortage of manufacturing workers. We need people who know how to do factory work and all we have is a shit ton of poly sci and art majors.

[Deathscythe]

There are several factors driving this bubble.
1. People think degrees are important - which is a load of shit.
2. People think qualifications are important - which is also a load of shit.

I agree with Sweeney completely with the devaluation of degrees. Standards do need to be raised, instead of lowered, which is what we see usually. Experience is the only thing that is required in a job. Any company that doesn't realise that is losing out.

I don't know much about the US loan system, but the amount you have to pay is ridiculous, considering what you get out of them. In Aus, our fees are subsidised and funded by the government, payable upon reaching a certain level of income. Aus fees are nothing compared to US, so it isn't a huge issue here.

[Waser Lave]

1. People think degrees are important - which is a load of shit.
2. People think qualifications are important - which is also a load of shit.

Degrees and qualifications are both important and necessary for some occupations so your statement is also a load of shit.

[Elle]

There are several factors driving this bubble.
1. People think degrees are important - which is a load of shit.
2. People think qualifications are important - which is also a load of shit.

I agree with Sweeney completely with the devaluation of degrees. Standards do need to be raised, instead of lowered, which is what we see usually. Experience is the only thing that is required in a job. Any company that doesn't realise that is losing out.

I don't know much about the US loan system, but the amount you have to pay is ridiculous, considering what you get out of them. In Aus, our fees are subsidised and funded by the government, payable upon reaching a certain level of income. Aus fees are nothing compared to US, so it isn't a huge issue here.

The two points you've made are a load of shit. Degrees and qualifications are extremely important, especially if you're hoping to do more than work in retail or provide amazing janitor services to the community.

Yes indeed, in Aus or fees are OCCASSIONALLY subsidised by the government, depending on the area of study, but they are still extremely high, and definitely come close to rivalling the U.S. It is a huge issue here, and its becoming more and more so, because as Sweendogs said, degrees have been devaluated, and so people are looking to continue on into second undergraduate degrees, honours and masters, and postgraduate degrees to stand out from the crowd, hence more absurd student loans.

I've been at uni for almost three years, and my student loans are somewhere around the $30,000 mark; and i'm no where near done.

Yeah, experience is important, but how many people are willing to give you that opportunity without some sort of degree/ qualification behind you?

[infecthead]

secondly, our student loan payments are only taken when earnings are over £15k (~$24k) per year so with average earnings of around £26k per year in the UK there isn't really much chance of a substantial proportion of those debts going unpaid.

Just because your field of work makes X amount of money, does not guarantee you it. Unemployment is always a worrying factor, and with such uncertainty with the European economy anything could happen.

[Waser Lave]

Just because your field of work makes X amount of money, does not guarantee you it. Unemployment is always a worrying factor, and with such uncertainty with the European economy anything could happen.

If they're unemployed they would temporarily stop making student loan repayments for that period so I'm not sure what your point is. I would imagine it's quite rare for highly educated people to remain unemployed for a significant enough period to mean that they don't pay back their student loans.

[Cript]

If they're unemployed they would temporarily stop making student loan repayments for that period so I'm not sure what your point is. I would imagine it's quite rare for highly educated people to remain unemployed for a significant enough period to mean that they don't pay back their student loans.

It's very common in the US. We have quite a few "99-weekers" who have been unemployed for nearly 2 years. Another thing to consider is how picky a well-educated person needs to be when looking for a job. Say you make 100K but get let go. You could easily find a job the next day for 50K and pay some of your bills but there's little chance you'd do that because you've just based every subsequent raise and job offer on that 50K number. More realistically, you're going to keep looking for as long as possible, potentially being on government assistance.

[Waser Lave]

It's very common in the US. We have quite a few "99-weekers" who have been unemployed for nearly 2 years. Another thing to consider is how picky a well-educated person needs to be when looking for a job. Say you make 100K but get let go. You could easily find a job the next day for 50K and pay some of your bills but there's little chance you'd do that because you've just based every subsequent raise and job offer on that 50K number. More realistically, you're going to keep looking for as long as possible, potentially being on government assistance.

By "a significant enough period to mean that they don't pay back their student loans" I meant like the 30 years after which the loan is written off (not sure if that's the same in the US), a couple of years is more understandable given what the economy has been like since 2008 but it still leaves them plenty of time to find a job and start paying the loan off again once the economy inevitably recovers sufficiently.

[Cript]

By "a significant enough period to mean that they don't pay back their student loans" I meant like the 30 years after which the loan is written off (not sure if that's the same in the US), a couple of years is more understandable given what the economy has been like since 2008 but it still leaves them plenty of time to find a job and start paying the loan off again once the economy inevitably recovers sufficiently.

No, the loans get paid off if they eventually have the money. Honestly, the current system, while risky, isn't "terrible." What's scary right now is that Democrats have begun floating the idea of debt forgiveness. Say you make minimum payments for X amount of years. Even though you might have only paid half the balance, they'll wipe it away. They're finally starting to realize that young people aren't buying cars or houses because their loans are so large. While I do have a house, my student loan payment is more than my mortgage. I have a great job so can afford that but others may not. Forgiving their debt is an immediate loss to taxpayers and I don't even see how they can think that's an ok option.

http://www.usnews.co...forgiveness-act

[Waser Lave]

I think the main problem with the American system is just the sheer cost of going to university. You have to question how 3 or so years of teaching and a certificate is worth the $100,000 you mention that some degree programmes cost. I'm not sure why the costs are so high, you'll probably have a better idea about that than me.

[Cript]

I think the main problem with the American system is just the sheer cost of going to university. You have to question how 3 or so years of teaching and a certificate is worth the $100,000 you mention that some degree programmes cost. I'm not sure why the costs are so high, you'll probably have a better idea about that than me.

It's high simply because it can be. Realistically, it's high because the demand allows it to be high. The demand is high simply because our culture has promoted the idea that a 4-year degree is a requirement for success. Unfortunately, because borrowing is so easy, demand isn't kept in check by price as it normally would be.

[Frizzle]

Just because your field of work makes X amount of money, does not guarantee you it. Unemployment is always a worrying factor, and with such uncertainty with the European economy anything could happen.

Mine does. By law, I cannot be made redundant or made to retire.

[infecthead]

Mine does. By law, I cannot be made redundant or made to retire.

But what if you can't find a job in the first place?

[Frizzle]

But what if you can't find a job in the first place?

Then you have no need to worry about losing your job.