
The Absurdity of Student Loan Debt - formikaio
https://medium.com/s/story/the-absurdity-of-student-loan-debt-fb61fdca7d8c
======
BearsAreCool
What angers me the most about debt like this is people often take on far more
debt than they need for a degree. For example, going to a university in a
different country/state where they cannot get any of the scholarships intended
for residents. Another one a lot of my friends have done is going to a
university that is substantially more expensive for very little gain. Another
common one is renting student housing when it is perfectly feasible to live at
home and commute. While the debt still may be excessive, it can be
substantially reduced.

Also, a specific thing for anyone working on a degree (particularly an
undergrad), check out CLEP exams. Very affordable per credit hour and you
don't need to spend a semester listening to a professor [1].

[1] [https://www.elearners.com/education-
resources/finances/savin...](https://www.elearners.com/education-
resources/finances/saving-money-with-clep/)

~~~
Joeri
_people often take on far more debt than they need for a degree_

I suspect it's the same thing as when buying a house. The numbers are too big
and become just numbers, without a corresponding value. 10K more or less
doesn't seem to matter all that much, while in other cases one might agonize
over a $50 price difference.

~~~
bdcravens
“Financial bike shedding”

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dokein
Student loans should be dischargeable in bankruptcy after 10 years post-
graduation (and not fully guaranteed past a certain amount, say $10K or $20K)
-- hear me out.

The common reason student loans are NOT allowed to be dischargeable is
because, in the minute after graduating and without collateral, the student
can declare bankruptcy with no effect (the vast majority are not buying a
house within the time it would take for their credit to repair).

This has the side effect of blunting market forces. It is the same amount of
interest and same approval process to get 200K for medical school as it does
for an art degree, despite market forces suggesting that the former are vastly
more needed (ok, granted, there's the AMA, but that's another discussion). It
doesn't matter to the bank -- after all you can just repay a little bit until
you're 70 years old.

Allowing things to be dischargeable 10 years after graduation would
reintroduce market forces. You want 200K for medical school (maybe we change
the post-graduation length a bit to account for residency / fellowship)?
Great! Almost guaranteed well-paying job out the other end.

But 150K for an expensive art school + MFA? You better be prepared to have
your credit looked at under a microscope. Application rejected.

What would this mean? This would mean that schools would actually have either
a) provide more value to the individual, b) charge less or c) accept much
smaller classes. It would mean they would probably have to focus most of their
energy on education + job placement rather than funding more school athletics
and building a fancier dorm.

~~~
bradleyjg
There isn't much of a market for market forces to act upon. The overwhelming
majority of student loans are made directly by the government with terms and
underwriting (or lack thereof) set by Congress, not competition.

~~~
gwright
It isn't specifically said, but I assumed that the parent was implicitly
suggesting a switch back to private loans with market mechanisms instead of
the current government loan mechanism.

~~~
bradleyjg
If so, the post buried the lede. That’d be a bigger change than allowing them
to be discharged in bankruptcy.

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andrew_
Outrageous student loan debt, and the lack of means to pay for them after
spending, has been an issue for at least 10 years now and has been thoroughly
documented. It shouldn't be a mystery to anyone at this point, and it's
baffling why people are still taking on these large debt loads for degrees and
programs which don't have a snowball's chance in hell of paying off the debt
in a reasonable amount of time.

My own personal experience with bad debt was my own fault, so I have a habit
of blaming the person who willfully enters into debt; I opened a credit card
as a young man without understanding the system, racked up huge balances, was
eaten alive by interest and was forced to go into collection and settle. That
effectively crushed my credit for 8 years. I did however learn a ton and was
able to rebuild my credit. My children won't have to learn the hard way,
unless they choose (operative word) to ignore the lessons I had to endure.

So without blaming the author for their own actions and writing it off as a
"you should've known better"; Is the greater problem these days of a predatory
nature by lenders, ignorance (willful or not), or a complete lack of education
about an education? Or perhaps D. All of the above.

~~~
Intermernet
As much as it's tempting to blame the author for the predicament she finds
herself in, the reality is that those who offer these finance arrangements
know that they're offering them to people who will be beholden to them for
most of their lives. This is legal, but morally abhorrent. I don't know how to
stop this trend, other than to tell a whole bunch of young people that they
can't afford to learn further in the US educational system.

~~~
djrogers
> other than to tell a whole bunch of young people that they can't afford to
> learn further in the US educational system.

There are tons of alternatives to funding a very expensive university through
debt. Work part time, pick a cheaper school, get a bunch of credits at
community college, or do all 3. And that is all without a single scholarship -
of which there are many you may qualify for.

It’s irresponsible to just throw your hands up and claim that there’s no other
way around it...

~~~
Can_Not
Ok but what about the people who already work one or two part time jobs,
already picked the cheaper community college, already aren't buying $5 coffees
from Starbucks daily, already don't eat out all the time, already don't pay
for cable, already didn't buy a new iPhone this year?

Assuming everyone's already well off and just living above their means isn't
very helpful when education itself is the thing that's costing above most
people's means.

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anoncoward111
Awesome post :) There's a lot of victim blaming in the student loan debt
world. Let me attempt to explain how we can fix the system.

1) Education is too expensive (especially relative to the value it delivers).

2) But, that money isn't even going towards the underpaid adjuncts who teach
the classes. wtf??

3) Tuition expenses mostly go towards administrative salaries, very very old
established professors, and buildings and services. This needs to change.

4) But it can't change, because you can't just open a college and get it
accreditted easily. This is a regulated industry, just like the health
insurance industry. You have to do the song and dance for months in front of
regulators, who have their own interests in keeping competitors out.

So, all in all, the student gets screwed, the company that hires them receives
questionable value add, and the college administrators and banks make a
killing.

It is a massive wealth transfer that delivers little value.

~~~
dpark
> _Tuition expenses mostly go towards administrative salaries, very very old
> established professors, and buildings..._

At many (most?) universities, established professors make only slightly more
than new hires because the budget simply isn’t there to pay significantly more
and so the salary range compresses. And honestly, instructor pay seems like a
_good_ place to be spending money.

On the other hand, administration costs are out of hand. Some universities
have crossed the 50% threshold and now spend more on administration than
everything else combined.

~~~
anoncoward111
We agree, I promise. Administrative costs are far and large the major problem,
as well as needless capital and operational expenses like multi million dollar
landscaping and etc.

However, I seriously must qualify your statement. There are adjuncts making
20-30k per year, with no benefits. Then there are tenured professors who
barely do any teaching anymore making upwards of 200k per year. Some also hold
simultaneous administrative positions.

So you have to tread carefully. I think what you are trying to say is that
paying a tenured associate professor 60-80k per year is a reasonable expense.
I agree with this statement.

~~~
dpark
> _I think what you are trying to say is that paying a tenured associate
> professor 60-80k per year is a reasonable expense._

Depends on the field. You aren’t hiring PhDs in computer science with that
salary. They’ll leave for industry immediately. You’re also not hiring
qualified instructors in CS at $20k for the same reason.

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ilarum
In the US, do student loans need collateral? I recently went through the
process in India and was quite surprised at the amount of rigour - the bank
requested a lot of information including grades since high school, discussed
potential earnings and requested that the familial home be hypothecated to the
bank.

~~~
wincy
Not at all. You can spend six years get a degree in photography and museum
curation at an expensive art school, get 130,000 in student loan debt, then
live with your parents while you pay 20% of your income in perpetuity. (A
friend of mine’s real life situation)

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darkerside
The debt in this case was self imposed, and I'm completely confused about
that. To follow a passion, why not take classes at a community college? I may
be leaving empathy here, but but the decision seems inexcusably foolish.

Relatedly, I remain confused about why, in another common case for further
education, parents are allowed to take these loans out on behalf of their
children. College at this point serves a couple of purposes in society, but
the financial driver is probably that it is a sign of successful parenting. If
a parent can't afford to send their children to college, they should have to
do so with a collateralized loan, not one they can saddle upon their child.

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tlot90
When people like Gillette take on debt, why is there never minimal cost-
benefit analysis? Or do they ignore it? It's refreshing to read a reflection
like hers.

~~~
dpark
> _is there never minimal cost-benefit analysis?_

Of course not. A huge portion of the population has essentially no
understanding of finances, which is why they need to do things like call to
ask why their loan balance is going up. Worse, there is a feeling of
helplessness when finances seem like a mystery, hence in this case actually
needing someone else to _tell_ them to call and ask.

This is why the cries of “free market!” when, e.g., discussing caps on
usurious rates at payday loan companies are missing the point. People get
trapped in debt with no way and no _understanding_ of how to get out.

~~~
darkerside
That's what bankruptcy is for. It's actually an elegant solution for
uncontrolled personal debt. The problem is that we haven't figured out how to
properly apply that tool (or an alternative) to higher education.

~~~
peatmoss
I keep waiting for an article wherein the author details their move overseas
and renunciation of US citizenship to start a debt-free life in Germany or
Australia.

------
ourmandave
_The first bill I received for my MFA loans was for $416.

I panicked and applied for an income-based repayment plan, which, paired with
my habitual underearning, lowered my payments to $96 a month.

After five years of payments, I now owe more than what I originally borrowed
because my payments haven’t even scratched the principal._

Income based repayments forgives the loans and interest after 25 years.

Original principal is $44,000. $96 X 12 = $1,152 / year. 25 X 1152 = $28,800
total repaid.

So, 20 years to go...

~~~
bradleyjg
Keep in mind that under current law that forgiveness is taxable income to the
borrower. So he'll still be left with one quarter to one half the forgiven
principal, which by that time may well be greater than the original principal
even in real terms.

~~~
ourmandave
Yes, but by then a person with a Masters in Fine Arts will be making $150,000
annual.

Of course, a Subway 6" combo will be $60 too.

~~~
bradleyjg
That’s why I said real terms. Grad PLUS loans are at 7%. CPI is at 2.8%.

------
mnm1
Either we figure out a way to fund education properly like taxes (which we
already pay so it's a matter of relocating money at the government level only)
or we end up in a system with millions of stupid people unprepared and unable
to contribute to society enough to survive, let alone enough to give something
back. We're already most of the way there and the society that we're creating,
a society that values stupidity over knowledge yet feels entitled to all the
benefits of knowledge and the technology knowledge creates, is frightening.
The anti-intellectualism is frightening. The stupidity and almost inevitable
poverty and violence that follow are even more frightening. You'd think the
government would be more concerned about such a situation and would want to
fix this, but like most political issues in our stupid-first society, this has
become a partisan issue. I hope we figure out how to stop being a stupid-first
society and figure out how to advance in the world before we turn the whole
country into the third world shithole most of rural America has already
become.

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awat
This sounds like a story of someone growing personally to be a contributing
member of society.

Perhaps we shouldn’t be beating these people over the head with debt for
trying to better themselves.

------
arcbyte
Good for her writing openly about her struggles! Sharing is often hard, but
can have an immensely positive effect on others who may be stumbling on the
same path.

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drtillberg
Reminds of the story of a theater student who was swindled by the "Nigerian
mafia", left penniless, and turned that calamity into performance art.[1] The
irony of analogizing a swindle to debt from an MFA is rich, of course.

[1] [https://podcast.duolingo.com/episode-5-helen-
brown](https://podcast.duolingo.com/episode-5-helen-brown)

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wickedOne
according to wikipedia[0] "As of Quarter 1 in 2012, the average student loan
balance for all age groups is $24,301"

which to me doesn't sound too bad (i.e. less than a year of salary). is that
inaccurate and is she talking about a complete different figure here?

in the netherlands it's fairly common to finish school with a couple of
thousand euro's in debt, so why is this such a big issue in the usa?

0 -
[https://en.wikipedia.org/wiki/Student_debt#United_States](https://en.wikipedia.org/wiki/Student_debt#United_States)

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eternalban
"I now owe more than what I originally borrowed because my payments haven’t
even scratched the principal."

It is not "absurd". It is a working solution to a socio-political problem [for
the modern Lords]. See Serf for a historic reference.

------
ranic
MFA in creative writing and professional software developer here. I took out
nearly twice as much as Gillette did to get my MFA over the course of a two-
year program.

A lot of the people I spoke to in school decided to fork over that much cash
because they'd been brainwashed into believing that there was value in the
pursuit of your dream and that that value was intangible. Some of that started
when we were kids when our parents told us we could be anything we wanted to
be. We grew up expecting we would do whatever we wanted simply because that's
the way we imagined the world should work and that if we did it well enough we
would be successful.

Of course in reality we'd most likely never be able to make the kind of money
that would allow us to repay those loans and live comfortable lives and retire
at the modest age of 65, but there would be value despite that. You can't
possibly quantify that value sufficiently enough to compare it to anything
else before you dive in. My school happened to be fairly upfront about the
downsides of their six-figure (over two years) tuition and would regularly
advise that if you could not support yourself you ought to drop out. But so
many students consciously decided to ignore the hardship they were going
through because they thought it was temporary.

Some of the younger students got funding from their parents and never thought
twice about the finances. Many of the older students, myself included, had
saved up for the experience and had done an honest, sane calculation of the
costs and whether they could bare it. We knew we'd return to our careers
afterward and we'd make good money and be perfectly satisfied in our literary
obscurity. Some got modest financial aid. Some got free rides. A select few
got lucky and received six-figure book deals shortly after graduation. But
others, who had only just begun their careers, who weren't talented enough for
scholarships, who had not received the kind of financial education I and many
others had, who didn't have the career prospects, are bludgeoned every month
by their spectacular debt.

I own a small apartment and make good money as a software developer. My wife
also works and we are very comfortable, but I look at my debt every day and
think about all the things we could have had that might have been more
valuable. I began school thinking I would never marry and would never have a
kid because I didn't really want those things for myself. But I unexpectedly
met my now-wife and we chose to have a kid and I realize that my two-year
indulgence could have been my kid's college tuition. Or a good chunk toward
private school. Or a down payment toward a house in the burbs. And I would
happily trade in my degree for that if I could.

Every time I get together with my writing friends, we always talk about
selling our books and making good money for them. It seems possible because we
see our lucky few classmates have done it. It's a strange illusion, but it's
one of the few things that makes the burden a bit more bearable.

The absurdity in my mind continues to be that any of us saw that much value in
the degree in the first place. It's easy to say in retrospect that it wasn't a
good financial decision, but there's a lot of pressure at the outset to pursue
an idealistic vision. It's something people say they wish they'd done and when
you have the opportunity and the gumption to do it you feel like you're doing
something right. It feels heroic. Not a lot of people are willing to talk you
down from it.

I'm pretty certain an MFA as a degree doesn't need to exist, but it's a cash
cow for art schools, so the economics make sense for them. But it should be
more than a debate about student loans. Adjuncts are underpaid, students are
overpaying, and the people who run the programs continue to present the
illusion of value. I'm not sure that more financial education is a perfect
solution either because the system is exploitative.

------
internetman55
Middle class should be able to afford college tuition. Stop being fancy when
you're not and live within your means

~~~
pliftkl
A college tuition in what sense?

College degrees have different values - an engineering degree has a very
different value than a history degree. Since the tuition at four year schools
for both degrees is (largely) the same but the financial value after
graduation is different, I would argue that one of those degrees is a luxury
degree while the other is not.

If you're arguing "the middle class should be able to afford college tuition
without debt", that's a slightly different argument, but I'm not sure it has
any merit (given the above that students make _choices_ about what degree to
seek and that some degrees are luxury degrees).

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kryogen1c
It troubles me that topics like this usually turn into FUD about the 1%
instead of recognizing government interference and subsidation as the problem.
The parable of the scorpion and frog [1] is exactly relevant. I wish Americans
would stop shouting for more government to fix problems the government created
in the first place.

[1]
[https://en.m.wikipedia.org/wiki/The_Scorpion_and_the_Frog?wp...](https://en.m.wikipedia.org/wiki/The_Scorpion_and_the_Frog?wprov=sfla1)

~~~
jakelazaroff
Neither the article nor the link you share mention the government or the 1%,
or even investigate causes or solutions for student loan debt at all.

~~~
kryogen1c
The article is about student loan debt, and my claim is that it's the
government's fault. My link is purposefully not on topic - that's the purpose
and definition of a parable.

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marcoperaza
“MFA in creative writing”

The article should be titled “The Absurdity of Useless Degrees”. It’s a very
different calculus for someone taking out loans for an engineering degree.

~~~
131012
By reading strictly your sentence, I sense a definition of useful as "the way
to repay a big debt".

~~~
marcoperaza
If you’re taking out a loan to pay for the degree, you’d better believe that’s
the definition.

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saas_co_de
Just don't pay. It is shocking that people feel compelled to repay crooked
loans issued by crooked banks run by people who are just playing a game of who
can steal the most.

~~~
bryondowd
If you don't pay, it destroys your credit rating, which in many areas means
you won't be able to rent a place to live from anything but a private party. I
believe they could also potentially get an injunction against you and garnish
your wages, but I'm not certain about that. Your college also may withhold
your transcript, which can impact some employers who require that.

Lots of ways they can make your life just as miserable for not paying.

~~~
saas_co_de
True. There are always consequences. But if you refuse to pay then you learn
how to survive all of the threats you mention which is worth the cost. The
point is that the vast majority of debts are legally invalid and
unenforceable. They are just a con. Whether you chose to be a mark or not is
up to you.

