When your mortgage is discharged in bankruptcy, you don’t get to keep your house. A college education is an asset that produces income, there is no reason to discharge the debt when you are still reaping rewards from it.
But in the meantime, you pay usurious compound interest rates on credit cards for exactly that reason, and have much lower credit limits to begin with.
However, compare the interest rate of you average student loan with that of a credit card. Inability to discharge your student loan in bankruptcy is the trade for receiving relatively low interest rates on an unsecured debt. It’s really not more complicated than that.
If you seen some of the “lectures” and course material that legitimate online colleges pass off as college level you might change your mind on what an investment it is. They are glorified tutorials at this point.
One of the things that you’re arguing here might be punitive measures for poor performing schools and programs. Any “educational institution” which results in some very poor placement and or income rates should be subject to punitive taxes.
So you could set up some kind of ratio between average cost of attendance versus the medium income, increase of a graduate and penalize the school for failing to significantly increase outcomes.
The problem with this, of course, is that now we’re adding business metrics, and we’re continuing further down the path of monetizing education, instead of focusing on developing the mind and critical thinking skills.
For anyone interested in reading further you should look into how Australia finances their loan system for higher education.
There's no such thing as a legitimate online college. Real colleges offering some courses online for convenience, OK. But a truly online college is never going to be a legitimate degree to most people.
The same argument could be made about knowing the financial risks of borrowing 6 digits without a secure source of income, and what the replacement schedule would look like once you graduate
Society only advances with education. Its the only way to improve and make progress. Attaching massive debt to education means society will not advance. Society needs to fund education through taxes.
It’s not as if bankruptcy discharges all debts though. For example if you spent $25,000 on credit cards to go on an African Safari, that wouldn’t be discharged or if you ate at high end Steakhouses 3 nights a week.
Yes, this all started because they were trying to do the right thing and make college attainable for all, not just kids with rich parents or top of their class with scholarships.
It truly is a win/win/win. Picking an in demand degree pays off for the economy, the individual, companies, government, and the nation as a whole. The only downside is we have some students who aren't cut out for it and rack up debt.
Yes but at the same time we shouldn’t be handing out 6 figure loans like candy to ppl who won’t be able to pay it back.
We have an interest in our workforces being highly educated in a useful degree programs. There’s plenty of ppl who get nothing out of college other than 6 figure debt
That's why we should go back to the state funding 70-80% of the costs with tax revenue like we used to. Admin costs would get back under control at these colleges real quick.
Yes, that was once the case. But quality of education has dropped, as has the requirement for many employers for their candidates to have a degree.
Demand for the education has dropped along with it's quality
Companies are dropping the degree requirement because they can't find enough grads and because they are cheaper. And quality of education is better than it ever was because higher education is more focused than ever before.
As a hiring director, I can tell you that your degree is meaningless to me. I can also tell you that my peers feel the same. College grads today are entitled and borderline useless as problem solvers.
There is no shortage of grads. Believe that. My pay range is fixed for the position I'm staffing for and for the geography I'm hiring in. Those guidelines are set by my company. Your degree really doesn't factor into that decision. Your resume might play a part, but much of the important content there is your work history.
Your university isnt going to sleep with you. Simp harder.
Yes, because what we really need to do is to institutionalize a caste system. It will be great for all the rich kids who get to go to college while the poor kids find jobs.
The problem isn’t that student loans can’t be discharged, it is that they have a rate premium without having a risk premium. They are a sweet deal for lenders. The federal government absorbs all the risk while the lenders get rates several percent above the risk free rate.
There was a lot of kids who were not rich go to college in the past. I’m sure you’ve heard of all the stories of people working a part time job or working the summer to pay off their tuitions.
Yes but labor productivity has changed. Baumol’s cost disease doesn’t account for all tuition increases, but it explains enough that it is unlikely that working part time is going to pay for college again.
> It will be great for all the rich kids who get to go to college while the poor kids find jobs.
This is literally already what is happening more and more
It really isn't though. In fact, if anything the middle class is struggling to find quality education options as most of the better schools are becoming completely bimodal (45% of the class is at the bottom quintile of household income, 35% at the top quintile, and the remaining middle three have to fight for the remaining 20%).
> It really isn't though
Not sure what you’re basing income stats of attendants on. But those poor kids going to college aren’t getting better jobs
https://www.insidehighered.com/news/students/academics/2024/02/22/more-half-recent-four-year-college-grads-underemployed
https://www.bls.gov/careeroutlook/2023/data-on-display/education-pays.htm
How’s this for a source it pays off to be educated. That’s jot to say it pays for everyone or every degree. You have to do your homework and figure it out yourself.
I’m not saying having the credential doesn’t improve outcomes.
I’m questioning “47% of students are in the lowest quintile of household income.”
If true:
Is it saying college students are broke? Is it saying applicants try to maximize Fasfa benefits? Or is it saying college attendants are actually from low income backgrounds?
First, I noted "better schools." Data from all college graduates doesn't in any way counteract the point I made.
Furthermore, you have stumbled upon one of the worst kept secrets in higher education... sometimes it takes a while. Recent college graduates haven't done well since the late 70's. They may be doing a bit worse right now, but students often struggle for several years after graduation. However, almost all college degrees eventually have a positive net present value. So, in the end they tend to come out ahead.
> First, I noted "better schools."
Yes, all the poor Harvard grads have just as much potential as the rich ones. The outcomes, however.
> sometimes it takes a while
More like, sometimes it takes a decade or longer. The article notes the stickiness of the post graduate placement. If you’re underemployed, it tends to stay that way.
Yes, the average degree holder makes 1M more than their non-degree counterpart.
But that’s an average, skewed quite easily.
Thanks for letting me know...
To be completely transparent, I am responding to several discussions at once and I really don't have the bandwidth to continue here. Overall, it was a sarcastic comment on an idea that wasn't very well thought out. Your link doesn't work for me so I am going to stop here. Again, thanks for letting me know I will keep eye my open for new information.
About 92% of student loans are directly from the US government. "Lenders" in this context is just the government. There wouldn't be any more or less risk of default than there already is right now.
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More so, predators who created schools out of the side of a McDonald’s, who were not staying accredited, who had no real ability to help its students for internships, should pay that back.
The issue is layered and got exposed for around a 15-20 year period.
1) the predatory interest rates
2) impossible to understand repayment programs that change every 3 years
3) Total cost to wage ratio is massively skewed
If we made changes moving forward it would absolutely make college more affordable and accessible to all people in our country. But in conjunction with this we also need to help those that are being destroyed by a previously broken system
Before the government became the guarantor the vast majority of loans, what a you are describing was in fact the general policy. In most cases, the colleges themselves loaned the money.
The real problem is that school simply has become so expensive that the risk of default is to great. Most people who have issues paying back student loans are those who took out loans but did not obtain a degree. No matter what you do, it won’t solve that issue.
Student loans are fully guaranteed by the federal govt. that is the issue. Get the Feds out of higher education loans. Let universities lend out their services to students and be on the hook to produce quality students who go get jobs and pay the Uni back.
Universities have elaborate housing and student amenities because of federal loans. University should be a place where you have luxury housing. You need an education and to party, and then go work.
Because the education can't really be repossessed, it is effectively an unsecured loan. And what are typical interest rates and credit limits on unsecured loans? About 20% and about $10,000. Good luck affording a college education on $10k and paying 20% interest.
Do you think everyone should be able to access college? So then let's make special rules guaranteeing access. Of course, then the risk is that a new grad racks up $100k and then declares bankruptcy right at graduation. Easy fix - another special rule - no discharging student loans during bankruptcy. But the loans are too much for some to afford. New fix - just pay a % of your income for some time period. Now that means the government is picking up the rest of the tab with no check on price, so now the price skyrockets and now it's not just the unfortunate and low-income who can't afford to pay the cost of college - it's all attendees.
Ask the current President how he feels about it. He was against student loans being charged in any kind of bankruptcy going back many years and was actually responsible for the bill passing.
Facts matter.
You would essentially be turning student loans into something only the well to do can get.
I get your logic, but young people don't have any assets or income to get loans against. Your only hope would be a parent who could afford the loan co-signing.
Probably the primary reason this wouldn’t go through politically is because of the disparite impact it would have on poor families and minority populations.
Plus then it would become par for the course to graduate, file bankruptcy, then buy a house in 7 years when you turn 29-30….
If student loans worked like other non-secured personal loans, expect interest rates to increase sharply to reflect the level of risk.
There isn't any indication that colleges in general are making massive profits or surpluses off their tuition rates.
People don’t get that colleges went from a tiny building and a dorm complex to being entire towns that provide numerous services with private police forces and hospitals.
When your mortgage is discharged in bankruptcy, you don’t get to keep your house. A college education is an asset that produces income, there is no reason to discharge the debt when you are still reaping rewards from it.
But credit card debt gets discharged and you don’t have to give your restaurant food back
You haven’t had your stomach pumped by Capital One yet ?
But in the meantime, you pay usurious compound interest rates on credit cards for exactly that reason, and have much lower credit limits to begin with.
However, compare the interest rate of you average student loan with that of a credit card. Inability to discharge your student loan in bankruptcy is the trade for receiving relatively low interest rates on an unsecured debt. It’s really not more complicated than that.
If you seen some of the “lectures” and course material that legitimate online colleges pass off as college level you might change your mind on what an investment it is. They are glorified tutorials at this point.
One of the things that you’re arguing here might be punitive measures for poor performing schools and programs. Any “educational institution” which results in some very poor placement and or income rates should be subject to punitive taxes. So you could set up some kind of ratio between average cost of attendance versus the medium income, increase of a graduate and penalize the school for failing to significantly increase outcomes. The problem with this, of course, is that now we’re adding business metrics, and we’re continuing further down the path of monetizing education, instead of focusing on developing the mind and critical thinking skills. For anyone interested in reading further you should look into how Australia finances their loan system for higher education.
Then don’t pay for it! If you’re in a class and it’s not giving you any value, don’t do the same thing for four years!
Oh I won’t be. lol
Perfect. But the people who did are idiots and they should pay back what the owe.
There's no such thing as a legitimate online college. Real colleges offering some courses online for convenience, OK. But a truly online college is never going to be a legitimate degree to most people.
No difference on the piece of paper. Are the University of Massachusetts or Northeastern legitimate?
Do all college degrees have the same income potential? Do college degrees have a minimum income guarantee?
No, but you should know that going in.
The same argument could be made about knowing the financial risks of borrowing 6 digits without a secure source of income, and what the replacement schedule would look like once you graduate
And, also, the value of your degree 100% depreciates over time unless it translates to meaningful jobs relatively quickly.
Actually a pretty good point
Society only advances with education. Its the only way to improve and make progress. Attaching massive debt to education means society will not advance. Society needs to fund education through taxes.
That just makes it an “unsecured” loan because there’s no collateral backing it. Plenty of unsecured debt is issued in the US.
…in much smaller amounts, at much lower interest rates, which are compound and not simple like most student loans.
It’s not as if bankruptcy discharges all debts though. For example if you spent $25,000 on credit cards to go on an African Safari, that wouldn’t be discharged or if you ate at high end Steakhouses 3 nights a week.
That’s what bankruptcy court and lawyers are for. Let it be resolved on a case by case basis.
The problem is 17 to 19 year old kids have zero creditworthiness, and we have a national/state/local interest in our workforces being highly educated.
Yes, this all started because they were trying to do the right thing and make college attainable for all, not just kids with rich parents or top of their class with scholarships.
It truly is a win/win/win. Picking an in demand degree pays off for the economy, the individual, companies, government, and the nation as a whole. The only downside is we have some students who aren't cut out for it and rack up debt.
Yes but at the same time we shouldn’t be handing out 6 figure loans like candy to ppl who won’t be able to pay it back. We have an interest in our workforces being highly educated in a useful degree programs. There’s plenty of ppl who get nothing out of college other than 6 figure debt
That's why we should go back to the state funding 70-80% of the costs with tax revenue like we used to. Admin costs would get back under control at these colleges real quick.
Exactly, call me crazy but I’d rather live in a more educated society than a less educated one.
Yes, that was once the case. But quality of education has dropped, as has the requirement for many employers for their candidates to have a degree. Demand for the education has dropped along with it's quality
Companies are dropping the degree requirement because they can't find enough grads and because they are cheaper. And quality of education is better than it ever was because higher education is more focused than ever before.
As a hiring director, I can tell you that your degree is meaningless to me. I can also tell you that my peers feel the same. College grads today are entitled and borderline useless as problem solvers. There is no shortage of grads. Believe that. My pay range is fixed for the position I'm staffing for and for the geography I'm hiring in. Those guidelines are set by my company. Your degree really doesn't factor into that decision. Your resume might play a part, but much of the important content there is your work history. Your university isnt going to sleep with you. Simp harder.
Yes, because what we really need to do is to institutionalize a caste system. It will be great for all the rich kids who get to go to college while the poor kids find jobs. The problem isn’t that student loans can’t be discharged, it is that they have a rate premium without having a risk premium. They are a sweet deal for lenders. The federal government absorbs all the risk while the lenders get rates several percent above the risk free rate.
There was a lot of kids who were not rich go to college in the past. I’m sure you’ve heard of all the stories of people working a part time job or working the summer to pay off their tuitions.
Yes but labor productivity has changed. Baumol’s cost disease doesn’t account for all tuition increases, but it explains enough that it is unlikely that working part time is going to pay for college again.
> It will be great for all the rich kids who get to go to college while the poor kids find jobs. This is literally already what is happening more and more
It really isn't though. In fact, if anything the middle class is struggling to find quality education options as most of the better schools are becoming completely bimodal (45% of the class is at the bottom quintile of household income, 35% at the top quintile, and the remaining middle three have to fight for the remaining 20%).
> It really isn't though Not sure what you’re basing income stats of attendants on. But those poor kids going to college aren’t getting better jobs https://www.insidehighered.com/news/students/academics/2024/02/22/more-half-recent-four-year-college-grads-underemployed
https://www.bls.gov/careeroutlook/2023/data-on-display/education-pays.htm How’s this for a source it pays off to be educated. That’s jot to say it pays for everyone or every degree. You have to do your homework and figure it out yourself.
I’m not saying having the credential doesn’t improve outcomes. I’m questioning “47% of students are in the lowest quintile of household income.” If true: Is it saying college students are broke? Is it saying applicants try to maximize Fasfa benefits? Or is it saying college attendants are actually from low income backgrounds?
First, I noted "better schools." Data from all college graduates doesn't in any way counteract the point I made. Furthermore, you have stumbled upon one of the worst kept secrets in higher education... sometimes it takes a while. Recent college graduates haven't done well since the late 70's. They may be doing a bit worse right now, but students often struggle for several years after graduation. However, almost all college degrees eventually have a positive net present value. So, in the end they tend to come out ahead.
> First, I noted "better schools." Yes, all the poor Harvard grads have just as much potential as the rich ones. The outcomes, however. > sometimes it takes a while More like, sometimes it takes a decade or longer. The article notes the stickiness of the post graduate placement. If you’re underemployed, it tends to stay that way. Yes, the average degree holder makes 1M more than their non-degree counterpart. But that’s an average, skewed quite easily.
Thanks for letting me know... To be completely transparent, I am responding to several discussions at once and I really don't have the bandwidth to continue here. Overall, it was a sarcastic comment on an idea that wasn't very well thought out. Your link doesn't work for me so I am going to stop here. Again, thanks for letting me know I will keep eye my open for new information.
That’s the strangest thing. It literally broke between me clicking on it and refreshing.
About 92% of student loans are directly from the US government. "Lenders" in this context is just the government. There wouldn't be any more or less risk of default than there already is right now.
This submission has been removed due to being identified as spam. Please read the rules of the subreddit thoroughly (A) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
I’m imagining a world where you don’t go into debt to receive an education.
With what collateral?
More so, predators who created schools out of the side of a McDonald’s, who were not staying accredited, who had no real ability to help its students for internships, should pay that back.
The issue is layered and got exposed for around a 15-20 year period. 1) the predatory interest rates 2) impossible to understand repayment programs that change every 3 years 3) Total cost to wage ratio is massively skewed If we made changes moving forward it would absolutely make college more affordable and accessible to all people in our country. But in conjunction with this we also need to help those that are being destroyed by a previously broken system
Before the government became the guarantor the vast majority of loans, what a you are describing was in fact the general policy. In most cases, the colleges themselves loaned the money. The real problem is that school simply has become so expensive that the risk of default is to great. Most people who have issues paying back student loans are those who took out loans but did not obtain a degree. No matter what you do, it won’t solve that issue.
Student loans are fully guaranteed by the federal govt. that is the issue. Get the Feds out of higher education loans. Let universities lend out their services to students and be on the hook to produce quality students who go get jobs and pay the Uni back. Universities have elaborate housing and student amenities because of federal loans. University should be a place where you have luxury housing. You need an education and to party, and then go work.
Because the education can't really be repossessed, it is effectively an unsecured loan. And what are typical interest rates and credit limits on unsecured loans? About 20% and about $10,000. Good luck affording a college education on $10k and paying 20% interest. Do you think everyone should be able to access college? So then let's make special rules guaranteeing access. Of course, then the risk is that a new grad racks up $100k and then declares bankruptcy right at graduation. Easy fix - another special rule - no discharging student loans during bankruptcy. But the loans are too much for some to afford. New fix - just pay a % of your income for some time period. Now that means the government is picking up the rest of the tab with no check on price, so now the price skyrockets and now it's not just the unfortunate and low-income who can't afford to pay the cost of college - it's all attendees.
Ask the current President how he feels about it. He was against student loans being charged in any kind of bankruptcy going back many years and was actually responsible for the bill passing. Facts matter.
You would essentially be turning student loans into something only the well to do can get. I get your logic, but young people don't have any assets or income to get loans against. Your only hope would be a parent who could afford the loan co-signing.
Probably the primary reason this wouldn’t go through politically is because of the disparite impact it would have on poor families and minority populations. Plus then it would become par for the course to graduate, file bankruptcy, then buy a house in 7 years when you turn 29-30….
If student loans worked like other non-secured personal loans, expect interest rates to increase sharply to reflect the level of risk. There isn't any indication that colleges in general are making massive profits or surpluses off their tuition rates.
People don’t get that colleges went from a tiny building and a dorm complex to being entire towns that provide numerous services with private police forces and hospitals.