Slashdot Mirror
Student Loan Debt Has Nearly Tripled (npr.org)
An anonymous reader shares a report: Recent college graduates who borrow are leaving school with an average of $34,000 in student loans. That's up from $20,000 just 10 years ago, according to a new analysis from the Federal Reserve Bank of New York. In that report, out this week, the New York Fed took a careful look at the relationship between debt and homeownership. For people aged 30 to 36, the analysis shows having any student debt significantly hurts your chances of buying a home, compared to college graduates with no debt. The cliche of "good debt" notwithstanding, the consequences of borrowing are real, and they are lasting. The report paints a mixed picture of how student borrowing has evolved over the last decade, since the financial crisis. There are some bright spots: For example, student loan defaults peaked five years ago and have declined ever since. And repayment seems to have slowed down among high-balance borrowers -- those who owe $75,000 or more. Meaning, after 10 years, they have paid down only one-quarter to one-third of what they owe.
The problem is special case cared out for student loans - in US you can't discard them in bankruptcy. This should be ruled unconstitutional. If you could discard them in bankruptcy, lenders will be forced to re-introduce risk analysis back into the system. Some loans will be declared too risky based on costs and job prospects for graduates from specific program at a specific institution. This will put pressure on universities to keep costs in check as it will be again possible to price out 'consumers' out of the system.
The headline is referring to the total amount of student loan debt, which isn't totally related to the per-person amount of debt at graduation -- for instance, if more people are going to school and taking out loans; or if people are taking longer to repay their loans, the total amount of debt will increase even without the initial per-person amount increasing.
Of course, the way that the headline and summary were written were obviously going to cause confusion. Too bad that apparently stories are posted by retarded baboons here on Slashdot.
How can we continue to believe in a just universe and freedom to eat crackers if we have no ale?
From TFA:
In the absence of more targeted grant or scholarship programs, more people are taking out student loans, and they are borrowing more. All that borrowing adds up to a total of $1.3 trillion, nearly triple what it was a decade ago.
Yeah, TFS didn't go far enough down in TFA to substantiate the TFT.
"All tyranny needs to gain a foothold is for people of good conscience to remain silent." [Thomas Jefferson]
Mark Cuban noted that colleges increase tuition to the amount that students can borrow, and suggested if they capped the amount of loans, the universities would be forced to lower tuition or lose students.
It's an interesting idea, but in the end I'd guess the lower income families would get hurt.
"Who are you?" "No one of consequence." "I must know." "Get used to disappointment."
Yea, those people that vote the way I don't like should totally not be able to vote because I don't like their decision! Everyone should think like me because I am morally superior. I am fucking better than you.
Very accepting of your fellow man, aren't you?
I don't think the quality of education has deteriorated at all, rather many students are choosing to get totally worthless degrees because they feel entitled to pursue their passion.
That said, I'm sure that schools are pumping out better and better art historians, music therapists, and western philosophy majors than ever, but that doesn't necessarily mean that these majors have any actual economic demand.
I mean think about it: Last time you were pondering your own existence, when did you consider hiring a philosopher to help?
And the reason tuition rates are going up is because of the increase in the money supply in the higher education system, which itself is entirely caused by the increased availability and ease of acquiring of student loans. And, I know an easy fix: Make it possible to go bankrupt on these loans just like any other unsecured loan. If you do that, watch how basically overnight, lenders will start scrutinizing borrowers more, and borrowers will be thinking harder about borrowing to begin with in light of higher interest and/or collateral.
< life story >
I went to a public/private university. Tuition was >40k$ / year. I was able to get 25k in grants and scholarships, but that left me and my parents with a 15k gap.
As my parents had shit credit, they couldn't help co-sign any loans. I had to get an extended family member to help.
After the first year, I couldn't afford it. Flat out.
So I dropped out after one year. No degree. Entered the minimum wage workforce making 8$/hr as a line cook. Worked my way up to Assistant Manager with... $9.50/hr...
Two years later, two shit cars later, and countless roommates later. I lost my job. My father was working as a Project Manager for a nationwide networking company. He helped me land a part time gig that paid 25$/hr but hours ranged from 0 to 30 a week depending on what projects he could help me get on.
But it took nearly 6 months before I was handed that part time gig... I also went to craigslist and worked landscaping when I could, making 10$/hr. However, during the next year, and the flaky hours, I was evicted from my apartment, and I defaulted on my student loans (yes I used all the deferred time (whatever it was really called) I could)... At this time the amount was ~10k.
Before I went into default, I knew exactly how to pay back my debt, I go to a website, enter in the amount, bank account info, done.
A couple years later I found a Software Developer position making ~45k/year. Trying to get my credit back on track, I went to research how to start paying back my debt. This was the most difficult process I could imagine. How can it be that hard to find out who you owe money to?!
A couple months later I finally figured it out, but saw that they charged enough fees for the amount go back up to the original 15k!!!! WHAT?!
Every step of the way in trying to pay back my debt, I stumble on some problem or another. Medical bill, car repair/inspection/registration, roommate leaving without notice leaving me with 2x rent.
</ life story >
I'm am incredibly happy that debtors prison is outlawed, but it seems they have just morphed it into this obscene beast that just eats anyone and everyone dumb enough to fall for this popular fallacy of graduating HS, going to college for 4 years, then landing a job that can help pay back ur debt and life style.
Now, before all you red-wing nuts say "Don't live beyond your means, get a better job, blah blah" I did all of that. Sold my car, rode public transport, lived in a 2 bdrm apartment with 6 other dudes, moved back in with my parents for a while, etc... I did everything I could to save every penny I could... still wasn't enough.
Student debt is today's slavery.
And you know what? Of my group of friends, I'm considered one of the more fortunate ones... Another friend of mine is over 100k$ in debt... And he's currently unemployed.
chapter 11 and 7 for student loans whould fix it. The banks and schools have no skin in the game.
If debt was the only factor involved in the decision of buying a house, you'd have a point.
It isn't.
For example, it could have turned out the people who took out large student loans were more willing to take on additional debt than their non-loan counterparts. Meaning they were more likely to take out a mortgage and buy a house.
Additionally, by studying it we now have a better idea of the relationship of student debt to buying a house while young. It's not a linear relationship.
So yeah, it's not actually nearly as stupid a study as you want to portray
Let's tell everyone they need college in order to be successful, but let's not be specific about what kind of college will get you success; after all a basket weaving degree is just as valuable as an engineering degree.
Let's tell them that college is so important that we'll make government-guaranteed loans available to be sure they can afford that critical degree.
We'll add to the mix the natural market reaction of increasing prices as more money is made available to pay for the product.
Then we can all act surprised as loan loads increase, the feel good degrees don't allow one to make payments causing the ability to pay those loans to decrease resulting in a requisite government-bailout for everyone who got a student loan to pay for a degree that has no value.
If you think a degree is going to have a positive economic value for you then you make the investment to get the degree. If that means working two jobs and taking 6 years to get a degree then so be it, you can make the economic decision to do that. If the economic numbers don't make sense for you then don't go to college to get a degree.
The whole story line about college being better for you economically is based on a mis-understood or mis-applied correlation: people who went to college earned more than people who didn't. That headline is based on the overall group. A more interesting question would be what is the net cost of college by degree-type. A student who spends $50,000 for a worthless degree will be overshadowed by someone who spends $50,000 for a degree ultimately worth millions. The average of the degrees is higher than those who have no college but the value is still close to zero for the person with the worthless degree and $50,000 in student loans.
That $50,000 degree worth millions isn't because of the degree. It's because of the application of the knowledge attained with the degree by a person driven enough to use that knowledge in a way that creates market value.
... I'm ready to enroll in part-time college and am torn hither and fro wether I should go to the local University (classic CS, bland curriculum, ugly wasted 80ies architecture campus, further away from where I work, PhD option, higher rank, Math 1 through 5 (scares the shit out of me)) or the local University of Applied Sciences (Media CS, neat Master Programs, easy curriculum, brand new posh campus with all the bells and whistles, more chicks on the faculty (so I hope :-) ), PhD option on the ropes (might change within the next few years), 'lesser' rank, Math 1 through 3 (scary too, but manageable)).
Mind you, aside from semester fees of ~280 Euros these options I'm toying with are free (as in beer) and those fees actually are a bargain because as an enrolled student you get public transport for free in the entire state (there actually is a little problem with students enrolling just for the benefits alone).
Bottom line:
It sucks to be a student in the US.
We suffer more in our imagination than in reality. - Seneca
While looking at debt of college, ignores the reason for the high costs. Colleges have been raising tuition prices because they know you will qualify for the loan and the loan will be repaid. There is a reason the borrowing has sky rocketed up to 1.3 trillion dollars, colleges are making buckets of money.
An example of alternatives, WGU Governors college was created to provide degrees for working people at a real affordable cost. Most people can buy a 40K car on a 6 year loan, but a 400k school loan, thats stupidly expensive.
The running joke is colleges are now just hedge funds with a college attached. And the money isn't used to lower tuition.
Selling free college is a scam the universities want, they think they will get paid at the same high price, just moving the cost to the government. (aka us the tax payers....)
I didn't even mention the money the sports teams are making also.
What your missing is the higher costs of college compared to decades past. Yes, back in the good 'ole days college was cheap enough that you could pay as you go and still graduate moderately on time. However, because costs have run out of control (you can argue whose fault that is) it would take a very long time to do that. If you are trying for a master's or phd it would be nearly impossible because of the timeliness required from start to finish.
For me, I went to college in the mid-late 2000's. I had a job every semester and even if I doubled my income during that time the dent in my loan debt would be negligible. I would still owe tens of thousands of dollars today. Although, I would be close to paying them off instead of needing a few more years. But honestly, after almost a decade of paying on them (always more than minimum sometimes double/triple) what is a few more years?
https://nces.ed.gov/programs/d...
Short version: In constant dollars, tuition has doubled since your bottle collecting days.
And the reason tuition rates are going up is because of the increase in the money supply in the higher education system, which itself is entirely caused by the increased availability and ease of acquiring of student loans.
That's a big factor. But you're also overlooking that in the last ~25 years, most states have slashed state funding to state universities.
So all these students in the "second tier" of the system are getting a double whammy. These kids would mostly be from what used to be the middle class as opposed to most of those going to an ivy league school.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
Back in the 1990's college was affordable enough that you could work part time and pay the bill.
Arizona State used to cost 1200 a semester or 2400 a year. At $5 an hour minimum wage that's 480 hours to pay your tuition. 1/4 of full time.
Arizona State now costs 5000 per semester, 10,000 per year. At 7.50 minimum wage now, that's 1333 hours required to pay your tuition. More than 1/2 time.
That's why total loans are going up significantly.
Work Safe Porn
... have a harder time buying a house compared to their piers ... I never would have guessed that! /sarcasm
Honestly, no sarcasm, I am flabbergasted that people who own piers don't own houses, but that their piers do. Or is that not what you were docking aboat?
The Quirkz Handbook of Self-Improvement for People Who Are Already Pretty Okay
And the reason tuition rates are going up is because of the increase in the money supply in the higher education system, which itself is entirely caused by the increased availability and ease of acquiring of student loans.
That's a big factor. But you're also overlooking that in the last ~25 years, most states have slashed state funding to state universities.
So all these students in the "second tier" of the system are getting a double whammy. These kids would mostly be from what used to be the middle class as opposed to most of those going to an ivy league school.
This myth won't die, will it? The funding for state schools has nothing to do with it.
https://www.insidehighered.com...
What I've found in the past when looking at long-term trends is that when state funding of universities doesn't rise, they raise tuition to "make up for it". But when the state funding goes up in the next year or whatever, the tuition never goes back down. So we have a ratchet effect.
State schools are well funded. Like most universities, they're also dramatically overstaffed, with a bunch of burdensome administrative staff members and no more faculty than before. That needs to change.
My only day job was working at Indiana University. One year they went nuts because there was a big cut in state funding. In reality, the state wasn't raising funding at the same level as the year before. We were still getting more money than last year, just not as much more as they wanted.
So we were told no pay raises, can't afford them. The morning that I was to talk to my manager about the pay raise I was walking in when I noticed the workers out front pulling up the flowers in front of our building to plant new ones. So when my manager tried to bullshit me about the "funding cuts" I shushed her and said "You know, it's funny, I *hear* about this lack of money, yet on my way in to work this morning I saw that the university is paying some guys to pull up perfectly beautiful flowers and plant new ones. See, if there really was some sort of budget crisis they wouldn't be pulling up flowers out front, because that doesn't help the university. I, on the other hand, do. So, since we're not acting like there's a budget crisis I'll assume it's made up bullshit and I'll be getting a raise this year." Yes, I was a dick. That was my largest single year raise during my four year tenure there.
I know a thing or two about this subject.
Do you have ESP?
I keep hearing this but does anybody actually have data to back it up?
The report you cite is focused on graduate degrees and debt, but let's also look at actual enrollment in humanities programs. For example, see this study. A few relevant facts mentioned there:
-- The number of bachelor's degrees in "core" humanities disciplines was at the lowest level in 2014 since 2003, constituting only 6.1% of degrees awarded.
-- The core humanities had their highpoint in 1967, constituting 17.2% of all bachelor's degrees awarded. That's back when most people got degrees in actual fields of study, rather than generic "business majors." (The shift from humanities to "business" degrees largely occurred in the 1970s and 1980s.)
-- ALL humanities degrees in 2014 were less than 10% of all bachelor's degrees, compared to 34.6% for all sciences, and 18.5% for business/management degrees.
So, the percentage of humanities degrees has basically been in decline for the past 50 years (though there was a slight rise in the early 2000s, followed by a more recent decline again). Humanities majors (particularly for bachelor's degrees) don't seem to carry that much more debt than for other fields, so I'm not sure what evidence there is to support GP's assertion that "totally worthless degrees" (which seem to be humanities for GP) are a significant contributor current problems.
Oh, and then we have the question of whether these actually ARE "totally worthless degrees." Once again, let's look at data from actual studies:
-- In 2013, the unemployment rate for Americans with a bachelor's degree in the humanities was 5.4%.
-- Across bachelor's in all disciplines, unemployment was 4.6%.
-- Unemployment for those with only a high school diploma, meanwhile, was 9%.
Oh, the next question will be -- "But surely they don't earn anything to pay off their debt!?" Once again...
-- Median salary for bachelor's degrees in humanities in 2013 was $50,000
-- Median salary was $57,000 for all bachelor's degree holders
-- High school diploma holders, median salary of $35,000
Bottom line -- humanities degree graduates may have a slightly harder time finding a job than your average bachelor's degree holder, and they may earn a bit less, but calling such degrees "totally worthless" is simply not supported by the evidence. They certainly are significantly better than having no degree at all in most cases.