White House rolls back protections for people in default on student loans

First intrest rates can rise, second unemployment can rapidly increase loan amounts when either the student after graduation or the parents during collage. Loans are often 50+% higher than initially expected for a huge range of reasons.

I did not want to be a shrink. I wanted to focus on research. Unfortunately, I could not afford to continue on to graduate school. My grades weren't good enough to get a scholarship. I was working as a cook at the Olive Garden, and had kids at home, so I tried a few careers that didn't work out. I wound up in the Army because it seemed like the right thing to do. I'm glad I did it.

Most schools do not require you to declare a major when applying or during the freshman year. Most people that have a major in mind when entering college end up changing it as well.

I think this is telling that MOST people do not go to college because they are super passionate about whatever subject. Most people go to college because they would like to find a job that will ensure them middle class wages.

If we fixed the job market (ie prevent jobs from requiring a bachelors or masters when many high school graduates could be trained to do it AND increase wages not just at the top of the spectrum), I have a strong suspicion there wouldn't be so many people going to college for "bullshit" degrees and even if there were they would actually be able to pay their loans back in a timely manner.

Remember, the "moral hazard" spoken of in financial bailouts is that the lenders aren't being punished for taking bad risks.

So when you are young and still have no degree nor experience in life you should be punished if you choose wrong. Unless you are rich, then if you choose wrong you have a second opportunity.

Shouldn't some of the burden be on the institutions offering the degrees? They have the money, they have the knowledge, they have resources, they should suffer a good part of the consequences of offering bad degrees.

Aren't the students with a degree that doesn't offer financial stability already punished? Aren't their dreams of having a career already broken? Isn't adding the burden of debt over that just cruelty for the benefit of for-profit education institutions?

Why shouldn't the lender also assume part of this risk?

Why is their recoupment guaranteed (student loans can't be dissolved in bankruptcy)?

Why are they always likely to be bailed out (prove me wrong by showing a student loan lender that went into bankruptcy)?

Lenders need to do more due diligence and stop lending to students that are more likely to have problems with payback. The entire liability should not be assumed by the borrowers and co-signers.

Degrees aren't like, say, sodas or toilet paper rolls, a frequently repeated purchase, in any case.

But put yourself into the shoes of an impressionable 16-17 year old. Private and flagship public universities have mastered selling their product with tours, special programs, the "college experience" etc. In addition, they sell getting a job with countless networking opportunities (especially prestigious schools).

It'd be really efficient for anyone who would need loans to get a degree to knock out all gen eds at a comm college and then transfer to an in-state university (it makes zero sense to pay 30-55K a year to take an entire schedule of calc 1 and chem 101). But it's hard to blame a 17 year old for taking the more fun and cooler option than the practical one.

I suppose if government and states invested heavily into community colleges and made them "cool" with great facilities and opportunities, more kids can be incentivized to go that route and avoid the heavy loans.

The govt makes a substantial amount of money from student loans as it currently is.

Debt, in general, must be dischargeable in bankruptcy. Otherwise the practice is equivalent to the gradual reinvention of slavery. Student loans already run afoul of this principle - let's not double down on the corruption merely to delay writing down losses that have already occurred.

I'm in your situation btw. I worked through undergrad and grad school and had my work pay for almost all of my school so I never had any debt. But I realize I was lucky and had a good situation lined up and not everyone has the same opportunities. Some people need more assistance than others, and I don't mind if the govt helps those folks out.

Um, you added this as an afterthought, but it's by far the biggest expense. We're talking probably around $500 per month on average (if you live with others) plus utilities, not to mention food. So you were able to save around $1000 per month living with parents - and that's a conservative estimate.

Many people aren't so fortunate.

Good for you, really, but it's hard for me to take that as genuine advice.

edit: Looks like this is generally wrong. I'll leave it up but see below comment.

People have been going to college in this country for a long time and only relatively recently has the outstanding amount of loans and those in delinquency have shot up. I have a hard time believing the reason is having good professors and air conditioning.

Why would you expect your university to provide dorms for you? This whole living on campus thing on Anglo universities was always weird to me. You'd only expect perks like that if you pay thousands of dollars a semester. Also Re:"Medical care": That's what universal health care is for.

My university did not provide free medical care. Professor quality has not quantifiably improved over that time.

Have sports team costs increased so rapidly in the last 10-15 years?

Personally I paid the equivalent of 16kUSD for a 4 year software degree in New Zealand, and my fortune 500 employer seems fine with it. A foreigner would have to pay double, but that's still far from US prices.

What they do have in common is being seen as indispensible or essential services. I agree they also all have tremendous bureaucracies.

For example, I think one primary source of costs in healthcare (strangely almost completely unaddressed in the current healthcare law debates) is lack of competition. Licensing laws and government regulation over procedures and whatnot stifles effective choices in healthcare.

There are many other problems too, like lack of transparency over pricing, and an inversion of the normal economic decision-making process (for example, instead of the buyer having fixed costs and benefits to choose between, they are often at best only given the option of accepting or refusing the service).

Education is a bit different, IMHO. There, you have businesses using degrees as checklist criteria and pushing off real training onto schools; schools have become administratively topheavy. Rather than being faculty-driven, they're increasingly administratively-driven (it's not uncommon to have several deans of a given college, for example). States, which have historically funded universities in the public interest, are cutting that funding and pushing costs onto students.

I guess my point is that I don't really see the solutions being the same, nor do I see simply cutting funding and "starving the beast" as the right solution. Education is already underfunded, and what tends to happen is that administrators cut other positions over their own, or over relinquishing decision-making authority to democratic processes.

Too much discussion has focused on who pays for healthcare, and in what way, or how much. It's important but not really helpful in the long-term, because the real problems are in transparency and overregulation. It's ridiculous, for example, to assume that citizens can take responsibility for their own healthcare if the government explicitly prevents people doing just that: by preventing them from making their own healthcare decisions, preventing competition, and raising regulatory hurdles to new services (e.g., in the form of drug regulation, overly strict laws about who can provide what service, and what hospitals and manufacturers must do). So we end up with a system where you can't refill a harmless medication you've used for years without getting approval of an overpaid provider, but can get a harmful opiate from that same provider when another service (from a different type of provider) would be more helpful.

The amount of money being spent in these areas is not really the problem; it's a symptom. Just cutting spending on them will not really address the problems, and may make them worse.

  And if guarantees for the loan companies are removed and the inability to free yourself from it in bankruptcy.

The government obviously never breaks even directly from this scheme. I think they've begun to exclude certain degrees that don't have good prospects which is a big debate at the moment.

A huge number of millennial college students who weren't fortunate enough to graduate into a tech career between 2007-2011 already went through this. It wouldn't be anything new.

>Not to mention the economic implications of an entire generation going into middle age already carrying massive debt - how are they going to generate asset wealth?

I mean...this is already happening. I'm not sure what you're getting at here. "Blowing everything up" is the only way to stop this cycle.

Yeah. It's time that lenders began doing diligence again on their borrowers. Even if the prospective borrower didn't know that that Kaplan degree wasn't such a great idea the loan officer at the bank would know and deny the loan.

That's absolutely false. Lenders have skin in the game - they run the risk that the borrower fails to pay back the principal. That's why they charge risky borrowers more interest.

If lenders truly had no skin in the game then loans would be nearly interest free.