30% of America's Student Loan Borrowers Can't Keep Up After Six Years (cnbc.com)

The IRS recently ruled that under some circumstances employers can link their 401(k) matching contributions to the amount of an employee's student loan repayments -- making it easier for recent graduates to take advantage of this employer benefit. But that's one spot of good news in a sea of bad, according to one anonymous Slashdot reader: Two new articles criticize America's student loan policies (under both the Obama and Trump administrations). CNBC cites reports that within six years, more than 15% of student borrowers had officially defaulted, while 10% more had stopped making payments and another 4.8% were at least 90 days late. And for-profit colleges fared even worse, where nearly 25% of graduates defaulted, and a total of 44% faced "some form of loan distress."

These trends were masked by Department of Education reports which stopped tracking repayment rates after just three years (reporting defaults rates of just 10%), according to Ben Miller, senior director for post-secondary education at the left-leaning Center for American Progress. "Official statistics present a relatively rosy picture of student debt. But looking at outcomes over more time and in greater detail shows that hundreds of thousands more borrowers from each cohort face troubles repaying."

Comments

And of those that went to Trump University

[Anonymous Coward]

100% can't keep up.

But MAGA

Re:And of those that went to Trump University

[WorBlux]

Trump "university" was never accredited, and thus students were never eligible for federal loans to cover admission.

Tax cuts for billionaires!

[Anonymous Coward]

Come on everyone - let's all chip in to cut education funding so a billionaires can get tax cuts they don't need!

Re: Tax cuts for billionaires!

[kenh]

Betsy DeVos? How many people entered college, then left college, and fell years behind on their loan payments under Betsy DeVos? (Reminder, she's been in office less than two years.)

Betsy doesn't set admission criteria, Betsy doesn't set tuition rates, and she definitely didn't establish student loan repayment regulations... Pseudoscience ill-equipped, borrowing tens of thousands of dollars to finance remedial math and english classes to compensate for their miserable high school educations are a bit responsible? When you borrowed $60-100K to study some useless major (like womensstudies, French literature, or philosiphy) how big you plan on paying back? Didn't you understand that $60K over 10 years is $500/month, every month, for the next ten years - that's $500/month before you pay rent, but food, a car, or utilities/cellphone/etc?

Let's talk about debt and committment

[grasshoppa]

Help me out here; people accepted these loans, having access to the terms ahead of time, correct? They were adults, presumably, who made these commitments, right?

Why, then, should we be looking to forgive them for making bad choices? Stupid decisions should be painful, so as to teach people not to do them anymore.

I say this as someone who will be paying off his student loans for at least the next 20 years. I made a remarkably stupid decision and I'll own the consequences.

Re:Let's talk about debt and committment

[Gravis Zero]

Stupid decisions should be painful, so as to teach people not to do them anymore.

This implies that attending college is a stupid decision. However, there is significant evidence to the contrary.

Honestly, someone should hit you upside the head for submitting that post because stupid decisions should be painful.

Re: Let's talk about debt and committment

[ShanghaiBill]

It's time we also start looking at greedy colleges who continue to jack up tuition.

Obvious solution: Enroll at a different college.

Re:Let's talk about debt and committment

[ShanghaiBill]

This implies that attending college is a stupid decision. However, there is significant evidence to the contrary.

A college degree is correlated with financial success, but it is not clear if it causes that success, especially for artsy degrees. A tech degree is almost certainly worth it. A business degree is likely worth it. But not much else.

Re:Let's talk about debt and committment

[grasshoppa]

This implies that attending college is a stupid decision. However, there is significant evidence to the contrary.
Is there, though? What we have evidence for is the massive student debt problem across the country. Colleges may provide a boost in income, but apparently it's not enough to offset the cost; ie, they simply aren't worth it anymore.

That's what we have evidence showing. What were you suggesting?

Re: Let's talk about debt and committment

[grasshoppa]

There's plenty of contempt to go around.

Colleges and the government have effectively conspired with each other to transfer vast amounts of wealth from A to B, leaving C holding the bag. While the adult students are stupid for accepting the terms, the colleges are taking advantage of their immaturity to write a blank check for unlimited funds..so of course the price of college skyrockets. Why wouldn't it? They've been given a license to print money, and it's assured because the government presses teachers and other educations to espouse the values of college degrees.

I don't know how this carousel stops, but it's going to violent and messy when it does.

Re:Let's talk about debt and committment

[shess]

Help me out here; people accepted these loans, having access to the terms ahead of time, correct? They were adults, presumably, who made these commitments, right?

Why, then, should we be looking to forgive them for making bad choices? Stupid decisions should be painful, so as to teach people not to do them anymore.

I say this as someone who will be paying off his student loans for at least the next 20 years. I made a remarkably stupid decision and I'll own the consequences.

True enough, but it's also true that incoming students are not well-qualified to figure out whether their education will result in good value for their money. An 18-year-old is taking on loans to pay for school because "everyone" says it's important. Or an older student is taking on loans to enable a career change because their existing setup isn't working out for them. Meanwhile, the school is like "Oh, yes, you absolutely need this, and here are some people to help pay for it."

I'm not saying that students shouldn't get to make these choices, or that they shouldn't have consequences. But we should realize that a completely unregulated market is going to result in a lot of unnecessary inefficiencies and pain, and insofar as schooling benefits society, society should optimize for benefits and against inefficiencies. The trite way to put this is that we don't need a billion people with advanced degrees in Underwater Basketry, but we also don't need a million Registered Nurses or teaching assistants who spend their lives under stress because they are subject to debts they didn't realize they'd never be able to pay off.

Re: Let's talk about debt and committment

[DatbeDank]

You don't say? Because I had to fish a resume out of the trash from HR because it came from a community college instead of a recognizable one.

Colleges are like brand names. You might not like to hear it but a lot of people get filtered out because of bullshit HR drones picking 4 year colleges over community colleges.

Re:Let's talk about debt and committment

[Billly Gates]

No one is talking about loan forgiveness. What the article is about the mess they and society are in.

Here are the facts:
1. If you have a HS diploma you will live with your parents until 40 and have a life of poverty. HR won't give you the chance to build your resume outside of your grocery store or McDonalds. It kind of forces you to go to a trade school or a university of you want a non horrible sucky life. Don't bother talking about your friend Jon or yourself if you developed computer skills in the late 1990s. That was abnormal and still a very minority statistic.

2. Cost of living is VERY VERY HIGH. You can't attack the kids for not planning when your first jobs pay $35,000 a year with no experience. How the fuck can you pay rent of $1500 a month with that kind of salary? Let alone pay off the loan and a car payment?

3. Asshole College Admins jerked up the prices. Free money Wahoo! What do you do? You jack up prices to the max. Now you Mr. Smarty Pants who doesn't want to pay $30,000 a semester has to compete with Mike Ditwiit who didn't do the math. If you don't pay he will!

4. Federal Government guaranteeing the loans. Hey if you can't loose either way why not keep screwing people over and raising prices?

5. State Governments no longer funding Universities. This is a HUGE one. During the recession of the early 2000s states no longer subsidize the universities due to the free money from the federal student loan program.

So you can blame the kids for being stupid but if you are older which I assume you are, then you have no right to speak as you never had to pay these outrageous prices the youngers folks pay today. In the 1970s you could work at McDonalds and pay your Harvard Degree no problem. This is not true today.

It is a mess in America and it needs fixing FAST. Solution would be caps on the Federal Student Loan Program and maybe an ability to pay calculation put in. If the degree doesn't have the odds statistically of being able to be paid then the government funds less. This will force states to pay back into the University program and lower costs for students. Also the Federal Government could finance trade schools and community colleges differently. Not everyone is meant for University and less than 1/3 people have degrees. Plumbing for example is much cheaper to learn and pays good if you have plenty of experience. Maybe tax breaks for apprentice programs with plumbers, air craft techs, electricians, etc?

Also Maybe a discount tax for those who completed these programs for 5 years so they can keep more of what they earn as well as $40,000 is shit pay and even programmers starting out make $50,000 only if you don't have years of experience to back you up.

Re: Let's talk about debt and committment

[El Cubano]

I don't know how this carousel stops,

Speaking as someone who teaches at the university level, there is an amazing amount of wasteful spending. This is made possible by, in fact caused by, the schools being flush with money (in the form of federal student grants and loans). The solution is to let the air out of the balloon by reducing the amount of money available. Of course, as you point out ....

but it's going to violent and messy when it does.

Yes, it certainly will be. Cutting off the flow of money will prevent some students going to college and it will hurt the schools as they will have to decide what is important and what can be cut. However, there does not appear another viable path to restore the balance. The effect will be similar to a significant market disruption: painful for the established players and rewarding to those who can adapt.

Re: Let's talk about debt and committment

[ShanghaiBill]

Solution: Go to CC for the first 2 years, then transfer to the 4 year college for your junior and senior year. Your degree is identical to those who were there for all 4 years, but it cost you much less. The tuition is much less, and you can live at home rent free, with Mom buying the groceries.

At least in California, the 2 year community colleges are set up as "feeders" to the UC and CSU systems. It is much easier to transfer CC->UC than CSU->UC.

Re: Let's talk about debt and committment

[msauve]

"It's time we also start looking at greedy colleges who continue to jack up tuition."

They're just doing what comes naturally - trying to maximize profit by rent seeking. Blame the wide availability of grants and subsidized loans, which is well intentioned, but produces higher tuition as an unintended consequence.

Re: Let's talk about debt and committment

[BlueStrat]

So fix the actual problem

The "actual problem" is one nobody here even wants to admit exists.

It's government guaranteed/backed student loans. Colleges and universities have every economic motivation under such a system to raise tuition to ridiculous extremes as the current reality has born out.

You end up with people who should not have gone to college saddled with debt they cannot hope to ever repay. Even those for whom a college education would otherwise be a good choice are saddled with enormous debt they'll be repaying for a significant fraction of their lives.

Get the government out of the student loan business.

Strat

Re: Let's talk about debt and committment

[ShanghaiBill]

The four year colleges don't like to give credit for community college classes.

In California, it is very clear which CC credits will transfer to UCs and CSUs. The students know this information upfront. Remedial classes for stuff you should have learned in high school does not transfer. Most other credits do transfer.

CC is an especially good choice for people that goofed off in high school. After 2 years at a CC, the 4 year colleges will only look at your CC grades, and ignore your HS GPA.

Re:Let's talk about debt and committment

[anegg]

Because you shouldn't have to spend half your working life paying half you money to a university and the other half to a bank for an overpriced education and excessively inflated interest loans... from an EU students perspective it looks like pure insanity over there.

And you don't have to do either of these things in many cases in the U.S. I attended my state's public university - due to my (and my family's) lack of affluence, I received financial aid (grants), borrowed a reasonable amount of money, and worked through the school year to afford college. I graduated, got a job, and paid my (reasonable) loans back in a couple of years by not spending too much money on anything else. That was almost 30 years ago. Now my daughter is going to be attending college (my son will follow in two years). Due to my and my wife's relative affluence (thanks to our college educations, fairly steady work, and dedication towards savings while living well within our means), she will not receive any financial aid. However, she is attending a public university that is regarded as one of the best value colleges in the US, we can fund the majority of her (relatively affordable) education expenses, and she is working summers to cover the rest.

It is possible to rack up huge student loan debt, especially attending an expensive educational institution in the U.S. But it isn't mandatory. I believe that every U.S. state has one or more public universities/colleges that offer degree programs to in-state students at rates that while (in my opinion) are higher than they should be, aren't impossible to afford through some combination of family savings, financial aid, student work, and (when necessary) reasonable student loans.

Re:Let's talk about debt and committment

[tburkhol]

5. State Governments no longer funding Universities. This is a HUGE one. During the recession of the early 2000s states no longer subsidize the universities due to the free money from the federal student loan program.

At every state school I've been able to find detailed budgets, the per capita cost of education has more-or-less matched inflation back to at least 1980. The major difference is that in the 70s and 80s, 70-ish% of the cost was paid by state allocations, while in 2000s-10s, 60-ish% of the cost is paid by tuition. States spending on education has not increased as fast as enrollment, and the difference has to come from somewhere.

Problem is exacerbated by colleges competing for students by offering better campus life. Dormitories today are palatial compared to the 90s. Exercise facilities are luxurious. That's all got to get paid for, and not much of it gets paid by the state.

Re: Let's talk about debt and committment

[Dayze!Confused]

That's precisely what I'm doing right now, and I checked with BOTH the CC and the University about which courses will transfer and which courses are needed. There was often a disconnect between the information that our CC had about the program requirements of the University that they are a feeder school for. Just blindly taking classes and hoping for the best at transfer time is a recipe for disaster.

Re:Let's talk about debt and committment

[nbauman]

Help me out here; people accepted these loans, having access to the terms ahead of time, correct? They were adults, presumably, who made these commitments, right?

Why, then, should we be looking to forgive them for making bad choices? Stupid decisions should be painful, so as to teach people not to do them anymore.

I say this as someone who will be paying off his student loans for at least the next 20 years. I made a remarkably stupid decision and I'll own the consequences.

OK, I'll try to help you.

Adults who made these decisions should pay the painful consequences of their stupid decisions. That will teach people not to do it any more, and it will eliminate the stupid people from the economy.

You're only looking at one stupid guy, the student. I'm looking at the other stupid guy, the banker who issued the loan.

During the S&L crisis, one banker said, "Anybody can loan money. What makes you a banker is that you can get your money back again."

In other words, a banker is supposed to evaluate the creditworthiness of a loan, and decide whether the loan makes sense and whether the lender is likely to repay it. That's the skill of a banker. (Once, banks were part of the community. Bankers knew who worked hard, who drank, who was a good businessman and who had unrealistic dreams.)

A student should make a realistic financial plan before he takes a student loan. If it doesn't work, he shouldn't take the loan, because he knows it's going to lead to disaster.

But the banker should also make a realistic assessment of the loan, and if the student doesn't have a realistic likelihood of paying the loan back, he should deny the loan.

In law, when you have a contract, with a consumer who is the buyer, and a skilled professional who is the seller, the seller is held more responsible for the decision than the consumer. That's the way it should be, because the seller is at a great advantage over the buyer. "Buyer beware" went out with the consumer movement. The banker is the guy with more knowlege. The bank is also a big institution, which is in a better place to assume risk than the individual student.

I think that when some ordinary consumer bought a house with a $1 million loan, and then found out that his house was worth only $0.5 million after the S&L crash, he should have been able to settle with the bank for $0.5 million, and forgive the rest of the loan. They're the bank. They're in the business of taking risks.

What about all the poor banks that get stuck with bad loans? Well, they were obviously incompetent bankers and the economy would be more efficient without them. That's the free market. If all your loans are going bad, maybe you're in the wrong business. Maybe instead of banking, you should learn coding or something.

Similarly, I've read the original arguments for eliminating bankruptcy for student loans, and I think they're bullshit. The bank should be able to size up a student and decide whether he's good for the loan. If he's taking out $100,000 in loans to study acting, you should point to the average income of employed actors and tell him it's unrealistic. Maybe he should study coding or something.

If your loan customer is 10 years out of college, still making $10,000 a year, with his interest rising faster than his income on a $100,000 loan, it's time to face facts and realize the loan will never be paid off. We don't have indentured servants in America. It's time for bankruptcy. There's a reason why we've had bankruptcy since the 16th century.

I know that a lot of people were brought up to believe that their word was their bond, and they should always do the right thing. I remember a brother and sister who inherited their father's business (wholesale clothing, or something like that), and they went bankrupt. They spent years paying back every cent they owed to their creditors. After that, they had a reputation in the industry that was worth more than money. They cou

Re:Let's talk about debt and committment

[syzler]

True enough, but it's also true that incoming students are not well-qualified to figure out whether their education will result in good value for their money. An 18-year-old is taking on loans to pay for school because "everyone" says it's important. Or an older student is taking on loans to enable a career change because their existing setup isn't working out for them. Meanwhile, the school is like "Oh, yes, you absolutely need this, and here are some people to help pay for it."

If an 18 year old is not well qualified to figure out whether their education will result in good value, then wouldn't it be safe to argue they are not well qualified to figure out the election issues of the day? Sign contracts without consent of a legal guardian? Make medial decisions?

18 year olds are either responsible enough to be adults or they are not responsible enough to be adults. They cannot play both sides of the fence. If they agreed to the term of the loan, they should be held accountable to the terms. Growing up, the young adult should have had better instruction/guidance on finances and responsibility from an authority figure such as a parent or at a minimum a teacher, however agreeing to the loan was ultimately the young adult's decision.

Re:Let's talk about debt and committment

[syzler]

No one is talking about loan forgiveness. What the article is about the mess they and society are in.

Here are the facts: 1. If you have a HS diploma you will live with your parents until 40 and have a life of poverty. HR won't give you the chance to build your resume outside of your grocery store or McDonalds. It kind of forces you to go to a trade school or a university of you want a non horrible sucky life. Don't bother talking about your friend Jon or yourself if you developed computer skills in the late 1990s. That was abnormal and still a very minority statistic.

I'm calling BS. Sure I work as a Unix systems administration and I came into the field in 2000, however 4 out of 5 people in my department with ages ranging from 22 - retirement do not have college degrees. The people in other departments (wireline installers, telephony switch engineers, sales team, etc) I work with routinely make $75K - $130K and most (if not all) do not have college degrees. My uncles who work in various blue collar jobs (1 is a machinist, 1 is a carpenter, and 1 is a factory worker) only have high school diplomas and all make $70k+.

On the flip side I have two siblings with college degrees who make <$30k due to decisions they have made.

Re: Let's talk about debt and committment

[jpaine619]

Could you be any bigger of an asshole? You admit you made one poor decision after another and yet you want to penalize everyone else. First the colleges have too much money, then the professors are being paid too much... You even have a problem with how much money researchers are being paid.

Why are colleges jacking up tuition? Think that maybe it's supply and demand? The government got involved, via the student loan program, and massively increased the amount of people who had the money to go to a university. The universities can't take everyone who applies, so how do they reduce the demand? Simple, they jack up the prices. This is a consensual arrangement. 100% of their student population is there voluntarily. If someone doesn't like, or cannot afford, the tuition they don't go to the fucking school. If demand falls too low, the school will reduce tuition until it hits a balance between available seats and applicants.

I'm fairly certain your university didn't force you to attend either. You saw the prices and you decided that the prices were what you were willing to pay. And now, like a spoiled millennial fuckwit, you want to bitch about it after the fact.

Everyone bitches that education is underfunded in this country and here you are suggesting that even more money should be taken from the schools. How about you man up, take responsibility for your decisions, and move on like a fucking adult?

Here's a bit of advice. These kinds of situations will keep coming up your entire adult life.. Purchase a house you can't afford? Yeah, the bank is gonna take it back. I bet you'll bitch about that too. Most people aren't going to have a lot of sympathy for your foreclosure either. See, most of us buy what we can afford, and when we make a mistake we learn from it. We don't run around bitching about how stacked the deck is, because it isn't.

Am old school but

[oldgraybeard]

maybe those going to collage are not doing a proper ROI (Return on Investment) analysis before making their collage and funding choices.
A collage degree does not guarantee financial success. The entire process needs to be approached and executed with diligence and awareness.
Since it seems to me even public collages have no problem helping students run up huge debts they know won't provide the student with a marketable
skill set to lay a firm foundation for paying back the borrowed money. The collages (public and private) are corrupt and deeply involved in this problem.

Just my 2 cents ;)

Legally adults, probably, actually adults,

[waspleg]

no fucking chance. I work K-12. Starting probably as early as elementary the lie that going to college will some how entirely protect you for life dropping you in to a high paying cushy job and all you have to do is plan your vacations is inculcated. This is the result of the shrill EVERYONE MUST GO TO COLLEGE!!! screaming for generations.

Education, like healthcare, should be good, and free, for all. We don't need more aircraft carriers.

Re:Legally adults, probably, actually adults,

[ShanghaiBill]

So too many people go to college ... and the solution is to make it free so fewer people go?

And you are a school teacher? We may have found the root problem.

Re:Legally adults, probably, actually adults,

[waspleg]

No, free means people don't take out loans they can never pay back and just like the health care means single payer which means driving a harder bargain and bringing price down. You're already paying for it since the Gov't backs the loans.

I also never said I was a school teacher I said I work K-12. Reading comprehension much, smart ass?

Adam Smith, laughing his ass off

[argStyopa]

If we had just let the market work, the only people that would have been going to college would have been the wealthy, those that actually earned scholarships or those WHOSE STUDY HABITS & MAJOR SELECTION would have shown to a commercial lender that they were a worthwhile risk.
The end result would have been college costs not rising at 3x inflation, no public money wasted on students whose prospects were poor anyway, likely many more engineers and a lot fewer Russian Medieval Literature majors serving coffee at Starbucks.

But no. The social engineers felt it was necessary that everyone go to colleges, with Pell Grants and government backed loans, the result being now a college degree is pretty much a requirement for any job (whether it requires it or not), and students with no serious prospect of decent income are saddled with ridiculous debt.

Nice job, social engineers.

Re:Socialists: WTF did you think was going to happ

[gweihir]

It has nothing to do with Socialism. In most of Europe University if free or costs a token amount. This has not driven quality into the ground. What you actually observe is a market failure where blind trust in capitalism has turned out to be very, very stupid, because capitalism as practiced today is all about short-term profits and no strategic view.

Plan ahead and it's 100% transferrable

[raymorris]

Every syate i have lived in has guarantees about which credits transfer from a community college to a state university, will degree programs that transfer 100% of all credit. The guarantee is "if you get an associates degree in any of rhe following majors, all credit will transfer to a bachelor's degree in the same field at the state university".

If you take puppetry, ceramics, and floral design at the community college, those may not transfer toward a bachelor's in chemistry. In orser for the credit to transfer 100%, one needs to plan ahead and take appropriate courses. One easy way to get transfer credit to virtually any school is to take the core general studies courses - English, Math, History. Floral design probably won't transfer, so don't take that course expecting it will count toward your bachelor of science.

Yep. I graduated with more money than I started

[raymorris]

You're absolutely right. It doesn't have to be that way, either.

I took a long break from college, going back later in life. By that time I had already learned some painful lessons abkut debt, having learned from my own mistakes.

I went to a very inexpensive state university and rather than graduating with a mountain of debt, I graduated with MORE money than the roughly $0 I had when I started school. I chose a degree in a field that's in demand, and a program I which I earned respected industry certifications like Cisco CCNA as part of my degree program. Halfway through school, the certifications and things I had learned allowed me to double my income.

Shortly after graduating, I landed a job making just shy of $100K in Texas (equivalent to $200k on the coasts).

Tuition at WGU is $6,000 / year, minus the $1,500 tax credit, so my total cost of school for four years $18,000. Except halfway through I had those certs which got me a job where my employer paid part, so the total cost to me was about $15,000. No need to graduate with $90,000 in student loans!

The $24,000 (or $15,000) cost of my degree was a great investment to start earning $100,000/year, so perhaps it makes sense for the government to encourage people to study fields that are in demand, via a school that provides good value. The problem is some people's idea of "fairness" means they have the government encouraging people to spend any amount of money to study any ridiculous thing.

If you want to see seven years at $50,000/year studying French History, you can sure do that if you have the $350,000 to spend. If you DON'T have $350,000, it's probably dumb to go $350,000 in debt studying French History at Yale. Perhaps the government shouldn't encourage people to do that.

No, for what I wish was the last time, that's not

[rsilvergun]

the problem. College was _always_ this expensive. We haven't done anything radical to colleges. The dorms aren't that nice. There's a few that are and they're for the rich kids. You pay extra to get into them, there's fewer of them and most kids pay for the cheap dorm or off campus living (or with their folks). I'm putting a kid through college right now.

Public Universities are _public_. They don't operate on supply and demand. They don't raise prices just because they can. Again, I'm putting a kid through college and saw this first hand. My kid's program had half as many slots as qualified (GPU > 3.8) applicants. They used interviews, sports and volunteer activities to sort out who got in (no, they did not use skin color). If it was supply & demand they'd have just raised tuition unit they only had the # of applicants for slots. Like you do for a Britney Spears concert or a sports game.

What made the price of college sky rocket was Clinton & Bush slashed federal funding. Again, college was _always_ expensive. You didn't notice because 70-80% of the cost was paid by the federal government. The Mega Corps allowed this because they needed a trained workforce. Now that they've got H1-Bs and outsourcing they don't need us anymore; and they wanted those tax dollars back. So they bought off Congress & the last several presidents for tax cuts and had funding slashed. You and your children have been made obsolete.

Go drag your ass down to your local University and pull up some college newspapers on microfiche from the late 90s/early 2000s. You'll find story after story, all meticulously researched by college economics professors, discussion this and how loans would start cropping up leading to a debt crisis. What you will _not_ find is any discussion of this in the regular newspapers (outside of a few left wing rags). Our mass media is owned by billionaires and they squashed these stories.

Why don't we teach basic finances in high school?

[Solandri]

I never understood why basic financial management wasn't a required high school course. I suspect a lot of these kids taking on $20k per semester loans (assume they manage to pay $10k themselves via part-time work) are figuring ($20k)*(2 semesters)*(4 years) = $160k. And they figure if the college degree means they'll earn $10k more per year, then it will have paid for itself in ($160k) / ($10k per year) = 16 years. They figure they can scrimp and save for 16 years and pay off the loan.

Which is completely wrong.

• First if the loan has a 5% interest rate, then total interest over 16 years works out to just shy of $73k. meaning the payback amount is $233k, not $160k.
• Second, while the loan interest is tax deductible, the principal payments are not. So your expected $10k per year payment is mostly after-tax income. Which means if you're in the 24% tax bracket (income $82k+ per year), then only 31% of that ($73k / $233k) is tax-deductible. Basically ever $1 pre-tax income you put aside for loan repayment becomes only 85.5 cents after taxes that you can apply to principle..

So the $10k you thought would go to pay for your loan is actually only $8550 after taxes. And (on average) only $5900 of it goes to pay back the loan principal. Which works out to a 27 year payback. Except extending the length of the loan by that much increases the expected interest from $73k to $132k. Which makes it take even longer to pay back the loan.

At $10k per year pre-tax income set aside for oan repayment and 5% interest, it actually takes more than 30 years to pay off a $160,000 loan. If we taught our kids this stuff in high school, they wouldn't get a $160k loan to pay for college. They'd tell the school asking for $30k per semester in tuition to go take a hike. During the housing crisis, people complained that lenders were preying on naive homebuyers, getting them to sign on to loans which they had no realistic hope of ever repaying. Well, the exact same thing is happening to students with student loans.

Re:Why don't we teach basic finances in high schoo

[apoc.famine]

I never understood...

That is abundantly clear based on your nonsensical post.

Instead of making shit up in a failed attempt to prove your point, why don't you do a little research first? Start here: https://www.bls.gov/emp/chart-...

HS Diploma: $712/week or $37k/yr
Bachelor's Degree: $1173/week, or $61k/yr

Sure, making up a number and choosing $10k/yr more per year makes college not seem worth it. Now redo your math with $24k/yr more. And don't forget to include the difference in unemployment rate and benefits too.

Re:Socialists: WTF did you think was going to happ

[serviscope_minor]

I'm always amazed at the stupidity of socialists and the general population.

This is one of the most droolingly stupid posts on this thread. How on earth you can you believe that the loan based system with massive protection only for companies is "socalist"?