Help! Defaulted Student Loans (and other debt fun)

[Dr. Do Itch Big]

31 minutes ago, CousinsCowgirl84 said:

It is a little interesting that republicans understand the concepts of investment regarding money but are completely clueless when in comes to investment in people. You could try to write it off as they only care about themselves, but if they understood the concept of investment regarding people they would know that it’s actually in their own self interest to invest in people and get them returns (lower crime rates, fewer people on welfare, more productive work force, more entrepreneurs, larger amounts of disposable income) but they just don’t seem to understand the concept at all.

If I was a conspiracy nut I would argue the super influential do understand the value of education, but will use their power to prevent it, to keep people down. Can’t have the sheep become educated.

 

im not that cynical 

[Renegade7]

12 minutes ago, Dr. Do Itch Big said:

If I was a conspiracy nut I would argue the super influential do understand the value of education, but will use their power to prevent it, to keep people down. Can’t have the sheep become educated.

 

im not that cynical 

 

You should be.

[The Evil Genius]

 

[Renegade7]

That's nice, is that going to court, too?

 

Does executive branch use general counsel to help determine if something will survive the Supreme Court, or do they ever go to them directly first?

[PleaseBlitz]

20 minutes ago, Renegade7 said:

That's nice, is that going to court, too?

 

Does executive branch use general counsel to help determine if something will survive the Supreme Court, or do they ever go to them directly first?

100% they have counsel opine on this. That said, it seems like a political win for Biden if he keeps trying to forgive student debt and the Supreme Court, which is pretty much an arm of the GOP right now, keeps overturning it. So even if counsel thinks it’s shaky legally, that shouldn’t necessarily stop Biden from going forward. 

[tshile]

(Not that anyone cares)

 

I totally support this, and I was against the previous plan and glad it failed the SCOTUS test. 
 

my understanding is this is about fixing the predatory/for-profit part of student loans. If you’ve been correctly paying for 20-25 years it seems reasonable your debt should be paid off. If it isn’t, then something is wrong. I’m ok with fixing that. I was never for the for-profit/predatory side of things. I was just against blanket forgiveness for people who willingly signed up for a debt, and doing nothing for people that made different life choices to avoid the burden of the debt. 
 

(i reserve the right to change my opinion on this if it turns out I’m wrong as to what this new move is about or how it works)

[Renegade7]

Yea, one of the few things nearly as brutal as the cost of the college now is the cost of repayment because of the interest rates.

 

This is a good start with respect to keeping people from paying on the loans for nearly the remained of their lives (which I've meet people reserved to never paying off, jus chugging along with the debt until they die).

 

That's doesn't sound healthy as "part of the deal for bettering oneself", but it's only one part of the larger issue in regards to growing tuition costs and why we have this atrocious interest rate issue in the first place.

 

If the loans are garrunteed by the government, why the insist on the bank continuing to try and make as much fmof a profit off that loan as possible?  At some point I wish someone would talk me out of pushing for interest free student loans, but I'm not backing off the needed for reeling in tuition costs because it's growing unsustainably.

[tshile]

5 minutes ago, Renegade7 said:

Yea, one of the few things nearly as brutal as the cost of the college now is the cost of repayment because of the interest rates.

 

This is a good start with respect to keeping people from paying on the loans for nearly the remained of their lives (which I've meet people reserved to never paying off, jus chugging along with the debt until they die).

 

That's doesn't sound healthy as "part of the deal for bettering oneself", but it's only one part of the larger issue in regards to growing tuition costs and why we have this atrocious interest rate issue in the first place.

 

If the loans are garrunteed by the government, why the insist on the bank continuing to try and make as much fmof a profit off that loan as possible?  At some point I wish someone would talk me out of pushing for interest free student loans, but I'm not backing off the needed for reeling in tuition costs because it's growing unsustainably.

well I think the idea is the government doesn’t directly loan the money and therefore there must be an incentive for the people that do. One incentive is the government backs it, another is there is some money to be made. I don’t know what the right % is but I’m ok with the idea until it becomes overly burdensome or predatory. 
 

In the interest of keeping my post as short as possible - there’s a whole discussion about how free or cheap loans allows people to skirt due diligence on ROI when borrowing money as well as how it’s contributed to the inflated price of college. 

additionally there are the following unfortunate truths:

- not everyone should go to college

- not every degree is for a field where the pay justifies the cost of the degree

 

i agree with the idea that in general it’s better for the population to be more educated than less

 

but the problem with the “free” college idea, and the problem with our student loan system, and how it incentives people to chase degrees that aren’t worth the cost, and allowed cost to balloon as schools chase the free/cheap money students get access to, is very real and worthy of a big discussion. 
 

in fact - my biggest issue with the original idea is it did absolutely nothing about the cost of college. It’s akin to amnesty for immigrants - sure it sees a problem and attempts to do something about it, but it doesn’t do anything about the core issue and simply means we’ll be back where we started soon enough. 
 

you may even encourage the problem to get bigger as future prospective students start to operate under the guise that “one day the government will wipe the debt away anyways…”

 

[Renegade7]

@tshile

 

That's fair to say the interest rates can't be zero as the government isnt doing the lending themselves and asking banks to do it for them.  They are a business. But the interest rates, imo, have to be reasonable, otherwise this also is like a form of forgivenesa but not addressing what needed the forgiveness in the first place.

 

Agree everyone is not meant for college, not all college degrees are created equal, and there needs to be more honest conversation about trade schools and limiting post-secondary education necessary to at least get in or stay in the middle class in this country. 

 

If the cost incentive is designed to keep people from getting degrees that probably shouldn't, I don't believe that's working...there's a serious disconnect regarding return on investment and there are folks laughing to the bank over other folks falling for it over and over again.

 

If state run colleges are primarily funded by the state government and claiming they need to raise tuition to close budget gaps, at what point do we accept these services operating at a lose like with do mass transit?  Like is a state run college acting like a business in order to survive?  Addressing that may be only reasonable way to bring tuition costs down (private colleges may have to jus to compete if state run drop to where they need to be, unless they own being expensive, like Harvard or Yale).

Edited July 14, 2023 by Renegade7

[tshile]

I don’t think the current system disincentivizes the problem. I think it has exacerbated it. 
 

free/cheap money means people spend it more haphazardly. That’s why the fed uses interest rates to control inflation. The more expensive it is to borrow the more frugal people are about borrowing. 
 

Suddenly that housing upgrade isn’t worth it

or that degree for a job that doesn’t pay well. 

[PleaseBlitz]

On 1/6/2021 at 10:11 AM, PleaseBlitz said:

Personally, I think everyone should have to pay back their student loans, but the interest should be knocked down to 0.5%.  The 0.5% will pay the cost of servicing (which is a real cost), but otherwise remove the profits for student lending.  This would dramatically reduce the burden on borrowers.  The 2019-2020 federal student loan interest rates are currently 4.53% for undergraduate loans, 6.08% for unsubsidized graduate loans and 7.08% for direct PLUS loans.  That adds thousands or tens of thousands of dollars to the total repayment and, as is often the case, kills people doing income-based repayment because the interest compounds until they are just totally ****ed.  So basically, I think student should pay back the money the borrowed with nearly zero interest. 

👆

[Renegade7]

11 minutes ago, tshile said:

I don’t think the current system disincentivizes the problem. I think it has exacerbated it. 
 

free/cheap money means people spend it more haphazardly. That’s why the fed uses interest rates to control inflation. The more expensive it is to borrow the more frugal people are about borrowing. 
 

Suddenly that housing upgrade isn’t worth it

or that degree for a job that doesn’t pay well. 

 

But there's gotta be a point where it's too expensive, there's data to suggest we are on the wrong side of the bell curve right now:

 

https://fortune.com/2023/03/09/american-skipping-college-huge-numbers-pandemic-turned-them-off-education/

 

Quote

What first looked like a pandemic blip has turned into a crisis. Nationwide, undergraduate college enrollment dropped 8% from 2019 to 2022, with declines even after returning to in-person classes, according to data from the National Student Clearinghouse. The slide in the college-going rate since 2018 is the steepest on record, according to the U.S. Bureau of Labor Statistics.

 

 

Edited July 14, 2023 by Renegade7

[tshile]

@Renegade7

 

my understanding is admissions are falling for males (particularly white makes) but rising for everyone else. I’m not sure how that squares with the stat you’re citing. 
 

and generally I would agree we should be on the other side of the curve

 

but I would add - that’s a good thing. And erasing student debt without actually fixing anything, should cause the course to revert, and I think that’s a bad thing. 
 

the government making it cheaper to attend school, without doing anything about the actual cost, is going to continue to drive up the cost of schools and create future situations where bailouts of past students are needed. 
 

it’s an inadequate solution. It’ll likely make things worse. 

[Renegade7]

6 minutes ago, tshile said:

@Renegade7

 

my understanding is admissions are falling for males (particularly white makes) but rising for everyone else. I’m not sure how that squares with the stat you’re citing.

 

 

I've read similar concerning white males, but article I Posted shows that's not the whole story:

 

Quote

Even more alarming are the figures for Black, Hispanic and low-income students, who saw the largest slides in many states. In Tennessee’s class of 2021, just 35% of Hispanic graduates and 44% of Black graduates enrolled in college, compared with 58% of their white peers.

 

This seems to be a cross-demographic issue, imo.

 

Quote

and generally I would agree we should be on the other side of the curve

but I would add - that’s a good thing.

 

And erasing student debt without actually fixing anything, should cause the course to revert, and I think that’s a bad thing.

 

the government making it cheaper to attend school, without doing anything about the actual cost, is going to continue to drive up the cost of schools and create future situations where bailouts of past students are needed.

 

it’s an inadequate solution. It’ll likely make things worse.

 

I agree what we're being charged for college needs to change, not jus how much we pay (especially if the "after 20 years in row rest is gone" becomes the de facto solution to this, that is a bad idea).

 

I stand by the need to come after why colleges, especially state run colleges, are raising tuition like this in the first place.  Government is one of the few entities that can operate certain segments of itself at a lose for the better of its constitutes in a way businesses can't. 

 

If the NYC subway system raised fares to make the system break even, no would would be able to ride it, and they know this and accept this, so they don't do that.  That'd where I want to see us with college, in context that right now NYC subway isn't free to ride, neither is DC metro.

[CousinsCowgirl84]

Hot take:

 

Biden’s “I’ll cancel your student loans and make the rich pay for it” is Trump’s “I’ll build the wall and make Mexico pay for it”

[tshile]

18 minutes ago, CousinsCowgirl84 said:

Hot take:

 

Biden’s “I’ll cancel your student loans and make the rich pay for it” is Trump’s “I’ll build the wall and make Mexico pay for it”

Kind of. 
 

the problem is the use of “rich people”

 

recall Hillary Clinton’s platform was something like “people from families making less than 100k” would get free college. It may have been like 120k, but it was something like one of those. 
 

there are tons of families in high cost of living areas pulling in 100k that would punch you in the face if you had the gall to tell them in person they make too much to need help funding their children’s college tuition. 
 

im guessing but I’ve noticed dems platform seems to have moved to 400k being the dividing line of who’s rich and who’s not. As an aside - I’m not sure how I feel about that being the dividing line but surely it’s better than 100k. 
 

but the point is the use of the term “rich” is bogus. It means different things to different people. I really wish we’d develop a way to chain income to cost of living so we can normalize income levels so we can draw lines that easier for everyone to relate to. 

Edited July 14, 2023 by tshile

[CousinsCowgirl84]

I thought they said they was gonna tax the top 1 percent more to pay for it. Something like that. We can agree them peoples is rich.

[tshile]

3 minutes ago, CousinsCowgirl84 said:

I thought they said they was gonna tax the top 1 percent more to pay for it. Something like that. We can agree them peoples is rich.

Top 1% looks like just over 500k household or 408k individual

 

top 1% in net worth is just north of 11.5 mil. 

Edited July 14, 2023 by tshile

[The Evil Genius]

1 hour ago, CousinsCowgirl84 said:

I thought they said they was gonna tax the top 1 percent more to pay for it. Something like that. We can agree them peoples is rich.

 

Top 1% and Tesla drivers. 😁

Edited July 14, 2023 by The Evil Genius

[TradeTheBeal!]

Certainly don’t mind paying another point to free up some liquidity/borrowing power for my Mazda demographic.

 

Its just good business.

[ClaytoAli]

1 hour ago, TradeTheBeal! said:

Certainly don’t mind paying another point to free up some liquidity/borrowing power for my Mazda demographic.

 

Its just good business.

Whaaaaat!!!!!

 

I didn’t even see you at the meet up last week.

[PeterMP]

So  a few things:

 

1.  Against "free" college or even federal government backed loans that are interest free, unless the federal government is going to get involved in assessing the quality of the degrees.  Corruption does exist (even in public schools), and if there is a chance to get money by offering worthless degrees, some school/state is going to take advantage of it.  Especially today with the spread of online classes and auto graded assignments.

 

2.  A couple of state schools have looked at why tuitions up.  Reasons include increased costs and flat or slightly decreased inflation adjusted state funding while the number of students went up.

 

Increased costs are mostly due to increased health care costs.  Many other industries have out sources much of their work force and so haven't had to pay the full increase in health care costs.  Need help with your internet, phone plan, or a bill.  Plan on talking to somebody outside of the US.  Have a question about your college bill, schedule, etc.  You'll almost certainly talk to somebody in the US and even a state employee in most cases that has a pretty good health care plan.

 

There have also been increases in costs due to increased administration.  These largely come from federal requirements.  Things like Title IX, EPA regulations, and the ADA have all increased the size and so cost of college administration.

 

And then a few other things have also contributed.

 

The decrease in the number of people going to colleges will be good for state tuitions if the states maintaining inflation adjusted funding.  From about 2000 to today we've gone from about 12 million to about 15 million people in public institutions with state aid generally across the board when corrected for inflation barely budging.  The extra costs of educating more people in a more technological advanced era has been pushed to tuition.

 

https://www.cbpp.org/research/state-budget-and-tax/state-higher-education-funding-cuts-have-pushed-costs-to-students

 

Since most state university systems are (indirectly) controlled by elected officials, changing this requires people to actually care, communicate with elected officials, and vote accordingly.

 

(Which means given our current environment, it is not going to happen at any large scale.)

 

In state college tuitions should be brought down.  The federal government should not pick up the costs but should do things to encourage states to control their in state tuition while maintaining a robust education system for their in state students (don't create a system where most in state students are getting a lower level of education to satisfy federal requirements).  And if students want to something "extra" and they have to pay a premium of that "extra" (as loan costs or interest), then I don't really have a problem with that.

Edited July 14, 2023 by PeterMP

[CousinsCowgirl84]

3 hours ago, The Evil Genius said:

 

Top 1% and Tesla drivers. 😁

😬😭

[China]

First on CNN: Biden administration launches new income-driven student debt repayment plan

 

The Biden administration is launching a beta website for its new income-driven student loan repayment plan today, officials told CNN, allowing borrowers to begin submitting applications for the program as federal student loan payments are set to resume in October.

 

The SAVE, or Saving on a Valuable Education, plan was finalized after the Supreme Court struck down President Joe Biden’s student debt forgiveness initiative in June. It marks a significant change to the federal student loan system that could lower monthly loan payments for some borrowers and reduce the amount they pay back over the lifetime of their loans.

 

“Part of the president’s overall commitment is to improve the student loan system and reduce the burden of student loan debt on American families,” a senior administration official said, previewing the beta website first to CNN. “The SAVE plan is a big part of that. It is important in this moment as borrowers are getting ready to return to repayment.”

 

Federal student loan borrowers can access the beta website at https://studentaid.gov/idr/. The enrollment process is estimated to take 10 minutes, and many sections can be automatically populated with information the government has on hand, including tax returns from the IRS, administration officials said.

 

Click on the link for the full article

[China]

Here’s why some economists are concerned student loans may cause the next big bubble

 

The U.S. has amassed more than $1.7 trillion in outstanding student debt, according to the Federal Reserve Bank of St. Louis.

 

Billions of dollars worth of student loans are packed and sold as assets known as student loan asset-backed securities to some of the biggest investors in America.

 

But as student loans continue to balloon, experts have expressed growing concerns surrounding the SLABS market. The worry is that SLABS could pose a systematic risk to the American economy, similar to how subprime mortgage-backed securities contributed to the crash back in 2008.

 

“I saw the parallels and it really freaked me out because I realized that this cycle was only going to repeat,” said Allison Pyburn, an asset-backed securitization expert and former editor-in-chief at Debtwire ABS. She continued, “I think one of the key ways to uncover the similarities between student loans and mortgages is to look at the affordability issue.”

 

The national cohort default rate for student loans has plummeted, according to the U.S. Department of Education, boosted by the payment pause during the Covid-19 pandemic. But the Consumer Financial Protection Bureau estimates that one in five student loan borrowers have risk factors that could cause them to struggle when federal student loan payments resume in October.

 

“I think what’s scary about it and what was scary about 2008 was the tremendous uncertainty that everyone had about what valuation even was,” said Pyburn.

 

But not every expert sees eye to eye.

 

“I think to say this market is going to be the trigger of the next financial crisis is really overstated,” according to Xiaoqing Eleanor Xu, a professor of finance at Seton Hall University.

 

Elen Callahan, head of research at Structured Finance Association, added, “The SLABS market is much smaller and therefore poses less of a systemic risk to the economy.”

 

Increased credit enhancement, following the devastation of the 2008 recession, was put forth to protect against this exact scenario.

 

Click on the link for the full article