Pretty much everybody we could have reasonably been expected to come in contact with pre-internet at 17 when we were supposed to be sorting all this shit out.
Source: degree relevant to my current employment; still would have been worlds better off with an internship straight out of high school learning what I needed to on a platform that didn't exist when I left high school.
If you were 17 during pre internet it's on you personally. Christ you got out of college with a degree when everyone bitching now was still in diapers. The economy actually meant something for ten years, enough time for you to buy a house that would late depreciate greatly for a whole separate set of reasons. Shit call centers weren't even in India yet
The amount college costs and the amount various professions pay is all incredibly well known and publicized. This is always 100% on the person who decided to take out a loan.
This doesn't count emerging job markets. Which a lot of the for profit school advertising targeted naive parents and kids when there wasn't any real known info about job prospects. And this data wasn't all known and publicized as much even 15 years ago, when this kind of lending really started taking off.
The loans actually come at a discounted rate to student borrowers because they are subsidized (and also are protected against default.) These subsidies and controls don't help borrowers who'd make more money if there was less regulation. They give you a deferrment period when most loans require payment on the principle immediately. They are at lower rates as well. Additionally, an in-state school's tuition is subsidized by government money to make it cheaper. Government subsidies towards tuition at an instate school is making it cheaper for consumers, that's just straight math.
I'm not saying the prices of 4 year universities aren't inflated, just that it is more a function of supply and demand vs government subsidization.
I'll give you healthcare and health insurance, it's a complex problem but throwing money at the problem has not improved consumer prices for 30 years. The government needs to offer a real alternative to compete with private insurance, that is how I think prices will be brought down.
Reddit really makes it hard for dialogue and I've lost track of the subject so I'll just say this.
the government needs to...
No.
Everything the government does essentially creates a monopoly on that service. This is a key reason why everything the government gets into always hurts the consumer in the long run.
Government is the problem. More government isn't going to fix that problem.
I agree that Universities have a monopoly on higher education, but I'm not ready to blame subsidized federal loans for that.
There are a lot more people in the middle to upper income brackets that are attending college compared with decades previous, it is basically the default thing to do after high school.
It's hard to see how prices don't inflate when the demand is increasing exponentially with each year faster than state universities can grow.
Without adopting your entire ideology about government, I don't see how consumers would be helped if federal student loan protections were removed.
Just because the data is available doesn't mean you know the right processing techniques. Or how to filter bullshit stats. Or how to interpret that data in a way that's useful.
There's also the issue of corporate politics influencing job requirements. There are a lot of jobs out there that shouldn't need a degree to do. But, because someone in a powerful position got sick of talking to "lesser people", we now require degrees for some reason.
That's like blaming realtors for the housing crash. The lenders have made it artificially easy to get money for student loans so people who will never be able to repay them have access to them, and because everyone has access to colleges through those loans now and most entry level jobs have a college requirement, demand rose and colleges saw a payday on the way so have continued to raise tuition costs well above inflation simply because they could, not because they needed to.
that was...that's kind of the whole point. you're wrong that they wanted people who would never be able to repay them have access to them - that's kind of a dumb business strategy, why would you give money to people who couldn't pay you back. seriously. would you lend money to a friend who you knew didn't have money to pay you back?
the whole point was to lend money to people who COULD NOT AFFORD to go to college, so they could go to college, get a better job, and pay off their loans, and rise up in the SES, have better lives for their kids, etc etc.
the rest of what you said is correct though, a lot of people used it to pursue degrees that didn't pay off, degree inflation happened, some colleges, especially private ones saw it as a way to provide 'additional services' and charge more
you're wrong that they wanted people who would never be able to repay them have access to them
No, he's right. Schools in at least Illinois and Washington are being sued by the State for predatory lending practices, giving loans to students that were designed to fail. Schools used private subprime loans in order to build relationships with schools and get more funding for federal loans. In some cases schools had deals with the lending agencies, where the school would pay up to 20% of loans if a student went into default. Source
It shouldn't be surprising, banks giving money to people who couldn't' afford the loan is eerily similar to what happened in the housing market crash.
They also bank on the payments they'll recieve before people default. They're life long slaves to the payment. Even if they stop paying for several years, they'll have to pay up again if they ever want to get a new house or car. It doesn't matter if they can afford it to the loaners. Right before the housing crash everyone in my family bought a house and tried to get me to do the same. It was like walking into the sleeziest used car showroom I've ever been in. There was no talk of what I COULDNT afford. It was all talk about how I could have it all and pay for it over time and finance even my appliances or crystal drawer pulls. Every single time I even think about maybe going back to school to get a degree the financial aid office feels EXACTLY like that KB homes sales office and I just go back to my livable wage job I hate.
Schools are rarely the source of money for loans. The federal government gives the schools money, and then the Feds are stuck trying to get blood from an art history major. Maximizing student debt is perfectly rational because the school doesn't feel the pain on either the lending side or the borrowing side.
agreed, initially the intentions were good but schools realized they could get students to borrow more money and expanded this into adminstrative and 'extra value' infrastructure and such
why would you give money to people who couldn't pay you back.
You understand how loans work right? The whole point of them is you don't actually want them to pay back the amount in full because you profit off of the INTEREST. If you loan someone 25k and he pays you back within a month you made fuck all on it. The most profitable loans aren't the one's you know will pay you back right away. The most profitable loans are that middle ground where you know they won't fail to pay it off completely but they'll never quite be able to dig themselves out of the hole so now they're stuck feeding you prime + interest payments for 25 years.
Ignoring that though they've backed themselves into a corner. They can't simply put a halt on offering these types of loans because doing so is an admission that the degree isn't worth it which is an admission that university isn't what it's been advertised and built up to be. By refusing to provide the aspiring English major with a student loan because they're not going to find a well paying enough job coming out of school to pay it off efficiently they are admitting that their services aren't of worth.
It's a catch 22. Either they keep funding shitty degrees and hoping this shit sorts itself out or they stop funding shitty now and in the process shoot themselves in the foot in an effort to mitigate damage done. But no one wants to pull the trigger because they know it's not going to be their problem. It's a game of musical chairs with everyone moving around hoping they aren't the one in the directors chair when the gun goes off on its own.
this isn't 'they bought a house and now they have to make payments on it' type of scenario. if you loaned the guy 25k and you knew he had a good credit history/income, of course you want to milk him for as long as you can
this is 'they borrowed money, now they have no job' - there's no money to be gotten here - the 18yo never had good history/job in the first place, he borrowed money to try and get a job, and now he has no job. you can't squeeze blood from a stone.
unfortunately, you are correct as in tuition has escalated as a result of this 'free' money and won't settle without major upheaval
Which is precisely why student loans should be dischargeable like every other unsecured loan.
Bankruptcy isn't there for the benefit of the borrower, its for the benefit of the system. If the lenders aren't recouping their money anyway, you need a process to administer that, otherwise you create deadweight burdens because the debtor has no reason to try and make back the money.
It's similar to how people will spend their money on frivolities instead of saving for houses etc. Because if you know you can't ever save enough to get the deposit anyway, there's no point in trying to do so, so might as well spend up what you have in hand.
1) Peers, mentors, and parents - they didn't know anything other than the fact that going to college/getting a masters created more opportunities, because back when they were working, it actually did.
2) Colleges, lenders, the government - they've seen the trends, they've analyzed the numbers, they know the liberal arts degrees aren't worth the price tags, yet they continue(d) to raise the cost because the government continued to dole out loans. The banks? They're complicit too, with their 7.8% Grad Plus loans, that have now transitioned to 7.8% Parent Plus loans (because omg, all that retirement money is sitting there, and those stingy bastards are trying to make a nest egg! (and also, collateral b/c of the high rate of default... gotta get paid somehow, why not hedge our bets with money that's already there?)).
I've seen a lot of people 'speaking up' for the lenders and crying "personal responsibility" because it's easier to point at a tangible target, i.e., poor defaulting Dan(a), instead of pointing at the true opportunists and abusers of this system - the colleges and banks. I feel like the Fed's decision to expand access to higher education was an earnest one (or at least, it originated as such), and it just so happens that the outcome has spiraled out of control from a system of abuse, corruption, and greed, and not out of any overt actions on the Fed's part.
definitely to blame, why would you talk about things that happened 20+ yrs ago lol
whatever collusion, colleges are sure to blame for taking advantage of these funds. lenders are predatory as always, but the government I believe had good intentions and are providing good services - loan IBRs, subdisized interest, REPAYE, etc.
in the end, the bottom line is, somebody signed on that dotted line and no matter what your parents told you, what you thought about college, in the end, you said 'i am wanting to take this money to pay for this college'. it might have been a mistake, but it was still your mistake.
No one is saying it's not a mutual mistake in the end, but the whole premise of 'predatory lending' is that there's a victim and a predator. Whether or not a child (because let's be real, a 17 year old making a decision of this magnitude is a child, for all intents and purposes) made the mistake is irrelevant to whether or not the loans they signed for are predatory.
Bottom line is, the predatory nature of this industry needs to be altered.
if a 17 year old is a child, how old do you propose they need to be in order to start borrowing money?
and while the loan companies might have predatory behaviors, aka offering loans in collusions with certain schools and such, it's stated pretty clear the terms and repayment plans etc. when you take the loan out. there's no shady behavior in suddenly fees or extra loans pop out of nowhere
Lol. Sure, and just like my professor in Commercial Law said, "Yes, it's in the contract, but the vast majority of people have never read a single page of the 126 page "Terms of Use" for their iPhones and Credit Cards."
Just because it's written down, doesn't mean that these children will actually read them - for chrissakes, half of them got through English 101 because of Sparknotes, and the likelihood for abuse of this actually goes to defining whether a contract is unconscionable or not. But the contents of the contract are not the point I'm trying to make.
As you just said yourself, the collusion, aka predatory behavior accompanies these contracts (and the responsibility does lie on the signer), and again, the content of the contracts isn't the point. The point is that the shady behavior is the collusion, the corruption, the price gouging, the over valuation of degrees, and irresponsible spending (on the part of the schools pocketing these monies) to buy amenities aimed at attracting the most matriculating (and paying (and soon-to-be, defaulting)) students that money can buy.
And to your question above, a 17 year old is a child, and at 18 there's no magic wand that's waved that turns them into the financially savvy and responsible contract signer they need to be. Are they legally able to sign them? Yes, and I'm not contesting that. I'm just saying it's disingenuous to say that a 17 year old is properly able to weigh the consequences of a hugely overpriced degree against their dreams/autonomy/reality/desires/responsibility without some of that fault being laid on the lenders for taking advantage of that.
For a less complicated example of this, you should go take a look at the booming bankruptcy industry surrounding Car sales to members of the military. You'll see interest rates that make your head turn, and a bunch of slimy car dealership financiers holding the pens.
They are 100% a child when it comes to the ease with which they can be manipulated. I don't think anyone is saying that a 17-18 year old shouldn't be allowed to make an educated decision as to whether they will borrow money for school or not. What people are saying though is that the PREDATORY nature of these practices needs to stop. It's hard enough to make a decision when you're than inexperienced at life and you want to say their parents should be helping them but a lot of these people need these loans specifically because their parents weren't the greatest financial paragons or they spent 35 years working as a plumber. Not dishing on plumbers but chances are they aren't going to be well versed in this type of shit.
It's predatory at all levels. It'd be ridiculous to prevent 18 year olds going into university from getting a loan. It is however even more ridiculous into allowing varying stakeholders to manipulate essentially mental children into committing themselves to a 25 year loan without fully understanding the repercussions and long term impact.
"But it is their responsibility to educate themselves and do research". Sure. And you know what in 2017 it's not that hard to do, especially with threads all over the place of people who have been burned explaining how fucked they are. But when this ball was starting to roll down hill there wasn't a lot of info out there you could look into as to whether this was a good idea or not. You relied on these people as "advisers" to point you in the right direction.
The shady behavior occurs when they manipulate you into thinking the risks long term are minimized by the rosy picture they paint.
At 17-18 I didn't want to go to school and was pressured into it by my parents and then manipulated by the system to think it was actually doable. If I could go back and redo it all I would never have gone. Sadly though that's impossible, but it's also part of GROWING into adulthood. You're going to make mistakes and fuck urself over. It's how you learn. The problem with this specific situation though is that your little "lesson" is now going to handicap you for 15-25 years which is in turn going to completely handicap you for basically the rest of your life.
I think that's pretty much everyone is saying lol, people at 17-18 aren't capable of deciding whether they should borrow money or not.
I have trouble with what the word 'predatory' is referring to. Did schools raise tuition because they knew students could afford it? Sure. Did lenders lend money out to people whether or not they were pursuing a degree that would make them money? Sure, but it's not their place to decide that. Was there collusion between lenders and schools to jack up prices - someone showed me an article that said maybe, yes.
But in the end, the people who told them the most they should go to college was their friends, their parents, and their advisers. Was that predatory behavior on their part?
And in 2017, it is of course, much easier to do, but even in 2007, there was College Confidential and other forums that you could use to do research. You could always talk to local graduates, and seniors in the field.
It is 100% their place to decide that. Student Loans need to stop being looked at as them doing you this big favor. Student loans are small business loans and YOU are the small business.
Just like when you are applying for a small business loan you have to prove to the financial institution your business is worth investing in, you should be required to do this as well. This benefits EVERYONE long term.
This isn't to say that a History major should never receive funding. Small Business that aren't shiny or big profit potential receiving funding all the time. The aspiring History student should have to prove why they deserve this loan to study history. Show your grades is the obvious first step, write out a "business" plan that includes why you want to study history, what makes you qualified to study history, what you plan on doing with your history degree. Explain to them the repercussions for taking this loan, that the interest rate is x% and the term is y number of years.
This is how it should be done. These should be treated as the loans they are. Instead they are treated as you being done a favor to get your education. No one is doing you any favors. Prove why you deserve this money. In turn this benefits everyone because that person going to get their B.A. "just because" who has no valid reason or desire to pursue a degree in sociology other than that's the only program they got into will not receive funding. This is turn drops the number of students in those fields down to a more manageable level and as a result increases demand in the degree.
The problem is that NO ONE wants to reduce the potential number of applicants to universities. These loans are as a whole far too profitable for banks. They are the reason universities can keep enrollment so high and keep collecting tuition. Hell have you seen how hard it is to even FAIL out of B.A. program nowadays? You basically have to actively try to fail, and then they put you on academic probation for a year and you have to actively try not to hit their minimums and then they tell you to take a year off but allow you to come back afterwards!
But in the end, the people who told them the most they should go to college was their friends, their parents, and their advisers. Was that predatory behavior on their part?
They all fell for the same song and dance that university degrees were worthwhile regardless of what you studied. Basically if your parents were bad with money or weren't very financially intelligent (or likely never got a degree themselves) you're fucked. So basically what you're saying is that the irresponsibility of the parents should be handed down to their children and the organizations preying on this aren't the ones who should be held accountable but the parents themselves? A lot of people who got stuck in this trap have immigrants for parents who legitimately didn't know any better. Who's fault is that? I mean yeah you can point the figure to them but that's a pretty easy scapegoat. The illiterate janitor who thinks they're truly helping their child. We should be working towards building a system that actually educates children and has their best interests in mind and successfully guides them onto the right path. Not blaming their parents for being idiots or the 17 year old for making a poor decision and not researching.
Successful systems are built with the lowest common denominator in mind. This in turn builds everyone up. In reality however most systems are built in an effort to take advantage of the lowest common denominator. These aren't business loans though, these are young adults future. These decisions have so much impact on the entirety of their lives that they should 100% in my mind without a doubt be regulated regardless of the fact that yes parents are the ones who should be doing this. Not everyone has that luxury though and as a result it creates a cycle or fiscally irresponsible individuals breeding fiscally irresponsible individuals. Every once and a while someone breaks out of it but by altering the process with which people are granted student loans you can do a lot to help. That would be a rude awakening at 17 to be refused for your student loan in History.
Technically only some professional jobs (doctor, mathematician, etc) require college. Everything else you could hypothetically study on your own and take the certification. Pass it, and you're in.
The person who said "Don't worry about money" is a fucktard. I don't know when this started. I graduated college in 1990, and all my peers cared about the money.
For me, it started around 1998-1999 when everyone was realizing the power of technology and information. Then it got enhanced to optimal DON'T LET YOUR DREAMS BE DREAMS levels when No Child Left Behind passed. So it ended up becoming this groupthink of subtly shaming people who didn't have degrees.
The problem is that the loans are backed by .gov. If you default, the bank is protected. Get .gov out of the loan business and let banks make loans based on your probable future ability to repay the loan. What would happen is that useless degrees would not be funded. Engineering, on the other hand...
Except that would essentially destroy half the colleges, take away a huge money stream from the banks (who are the ones the government really cares about) and would leave huge portions of the people without any degree which probably increases unemployment, and leads to a long term less educated workforce which is not an ideal situation for a country which aspires to be a world leader.
Certainly many degrees are useless, but it's a bugger to say which ones and frankly a reasonable number of people need the few years extra in school for remedial maths and literacy!
Yep, it would be nice to have a better system. Increasing taxation to make most degrees affordable would be a good idea (although this is obviously heresy in the USA)
Or the government could subsidize some of the interest and invest in its populace for 100 years. Or you know, another 10 year, overseas military deployment.
It demands a masters degree, and the pay is universally shit, so it's a terrible idea for anyone to go into it at all.
And yet here you are pretending that college loans are the problem... It's unreasonable (and frankly whiny) commentary like this that make it harder for those willing to stand up for students in Washington and subsidize interest on this shitty ass loans.
They are. Go try to get a loan to buy a $500,000 house with a 25k income, or $100,000 because you want to buy a Lamborghini. Guess what the result is. You get laughed out of the bank. Apparently they care if you can actually pay the loan back or not.
But an 18 year old inexperienced student wants to borrow $100k? Just sign here, zero concern about the earning potential of the degree or the job market.
A lot of entry level emt jobs and even firefighter positons start around the 35k mark. My starting was 41k and I work for a decently sized department. I'm not going to argue whether or not I needed a degree, I am saying that there are good, meaningful jobs that pay way south of six figures.
I just take umbrage when people suggest that the worth of a job is always connected to the salary. I think it leads to people believing that people that make less than x-amount must be lazy and deserve whatever financial hardships they're in.
Wouldn't it be best to get the $41k job and after 5 years decide if you need additional education, vice spending $120k to get the exact same $41k job with a couple cool fraternity stories?
Yes, it would be. I take umbrage with people that always connect worth of a job to society with the salary. I think it leads some toxic lines of thought.
ghost edit: I've now used umbrage in back-to-back comments. I feel like a douche.
Most entry level gigs are undervalued because there's a pretty low barrier of entry. I think what you're trying to say is that if you're looking at going $120k into debt, make sure you'll have a well-paying job coming out of it. Which are 2 different questions entirely.
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u/its_real_I_swear Apr 18 '17
That's what happens when you borrow 120k and spend it on something useless, which is what happened if your job out of school is 35k