
'I'm a Student-Debt Slave.' How'd We Get Here? - miraj
http://www.npr.org/sections/ed/2016/07/11/484364476/im-a-student-debt-slave-howd-we-get-here
======
stevecalifornia
How'd we get here?

We hyped up college: It is your goal in life to go to send your kids to
college. Everybody has to go to college. If you don't go to college you will
fail.

Nobody talked about college as an investment: College isn't just another step
in life. It is an investment. $75K for college makes sense if you will get a
degree that enables you to get an income of $120K. It does not make sense to
invest $75K in a degree that might get you an income of $40K.

We didn't tie the loan to the degree being obtained: Do we need workers with
this degree? Is there a glut of people with this degree?

Etc.

~~~
dominotw
>We hyped up college: It is your goal in life to go to send your kids to
college. Everybody has to go to college.

I've seen many of my friends spend all their income on house/rent just to live
in a good school district. There is no way they are going to let their kids
not go to college, they have already created a narrative, a spiral for their
kids, no way a kid can escape college at this point. Sunken cost bias.

They spend thousand of dollars on all kinds of things like swimming, piano,
ballet, science clubs, coding clubs, robotic clubs, social work club ect. All
gears towards making their Stanford application look good. There is no
stopping now, wheels are already in motion, full speed ahead.

Kid's view of his life is a hero who lives up to expectations, against all
odds. Each test is a battle that must be won. He has been raised on a constant
diet of praises for his 'good work', his mind conditioned to keep the praises
coming at all costs. The narrative has been set, love is love of success, fear
is fear of failure.

~~~
superuser2
The tech community is sort of unique in refusing to acknowledge any meaningful
difference in the quality of education and research taking place at different
institutions. It may be imprudent to set up your child's life according to
"all educations in a given field are created equal" if their interest turns
out to be in a field that doesn't agree.

~~~
dominotw
>if their interest turns out to be in a field that doesn't agree.

I always wondered how 'interests' come into being. Would love to read more
about this if anyone has pointers.

~~~
analog31
Some of my parents' interests rubbed off on me. I think it was because they
treated those interests as things with inherent value, even if that value was
just pure enjoyment, rather than as hoops to jump through _en route_ to a
lucrative career. A lot of my interests were due to what I might call peer
pressure of the good kind, i.e., they were things that my friends talked about
at school, such as music, electronics, and computers.

The only thing I can suggest is to surround your kids with interesting things
and interesting people. We're fortunate to live in a neighborhood where you
can't swing a cat without hitting someone with an interesting occupation,
ranging from academics to artists and musicians.

~~~
wallflower
> I think it was because they treated those interests as things with inherent
> value, even if that value was just pure enjoyment, rather than as hoops to
> jump through en route to a lucrative career.

That's awesome!

Slightly off-topic tangent (how music is becoming a career track in China):
[http://www.nytimes.com/video/business/international/10000000...](http://www.nytimes.com/video/business/international/100000004491181/88-keys-
to-her-future.html)

~~~
analog31
I've heard that a jazz musician can make quite a bit of money in Shanghai
right now.

------
rewrew
College costs so much, in part (and I'd argue in large part), because we
flooded the market with money:
[https://www.newyorkfed.org/medialibrary/media/research/staff...](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf)

------
rayiner
The first half of this article is almost content-free.

E.g. > [Q:] Let's talk about the student lending giant Sallie Mae. You report
how the decision to privatize Sallie Mae in 1997 played a huge role in helping
to create this debt crisis. Explain.

> [A:] Sallie Mae was a government-affiliated corporation whose board was made
> up in part of public officials. When it first came into existence, it was
> supposed to help create a market for the student debt that the feds were
> issuing. But after privatization, it became a full-service, for-profit
> corporation that really "verticalized" its involvement in the student debt
> industry, everything from issuing loans to running collection bureaus. The
> concern now is we replaced a program whose real purpose was to help people
> go to college with something where that's kind of a secondary goal. The
> primary goal, of course, for for-profit institutions is the bottom line.

Not a word of that explains how privatization created the debt crisis. It's a
screed against private companies running loan servicing instead of government
bureaucrats.

> [Q:] Suddenly, hedge funds, investors, lots of banks had a more direct role,
> not just in lending, but in the fees, services, in the collection. And
> Sallie Mae and other financial organizations began marketing private loans
> with higher interest rates and fees and with fewer relief options?

> Right. All of the functions of the student loan program originally were run
> by government agencies, bureaucrats, I guess you could say in a dismissive
> way, but they were not motivated by profit. They were there to make the
> program run. When you privatize collections, you get really aggressive
> companies that come in there and work really hard to get the money back.

Ask anybody who has ever dealt with the IRS whether the government is
aggressive about getting money owed to it. Besides that, private loans are a
red-herring. 92.5% of student loans are owned by the federal government:
[http://measureone.com/reports](http://measureone.com/reports). The interest
rates are exorbitant (I pay almost 8% on mine), but that is necessary to
support the extremely generous repayment terms (payments capped at 10% of
disposable income). And it's bureaucrats in charge of all this, not evil hedge
fund managers.

~~~
learc83
>payments capped at 10% of disposable income

That's what almost everyone fails to mention every-time "crippling student
loan debt" pops up. It's capped at 10% of disposable income, and disposable
income is calculated as 1.5x the federal poverty level. So if you're making
under that (because you're stuck in a part time food service job), you pay
nothing. As you make more money, you'll pay more, but it will never go above
10% of disposable income, and you can write off up to $2,500 per year in
interest paid on the debt (so if you're making very little you'll be able to
take a deduction for almost the entire amount you pay). Then if you haven't
managed to pay off your loans after 20 years of making payments, the debt is
cancelled [1].

The Obama administration also changed the eligibility for income based
repayment plans, so that people with older student loan debt can sign up for
them as well.

[1] There's still a problem with the IRS taxing cancelled deb but, it's not as
bad as it seems.

First, You're only taxed up to insolvency. So for instance, if you have more
liabilities than assets (including the student loan), the tax debt is
cancelled. This is likely the case for someone who didn't make enough to pay
off the loan in 20 years.

Second, sometime over the next 20 years as more and more people face this
situation, congress is likely to do something. There are no interest groups
fighting for the status quo, it won't cost that much, and it looks good as a
press release, so there's good reason to think congress will fix this.

~~~
tedunangst
The failure to mention isn't accidental. People click on stories with big
numbers. The bigger the number, the more clicks, so only the most biggest
largest numbers get reported.

------
atria
I'm unique persective in that I have a degree I received 20 years ago, and
decided a midlife-crisis meant going back to get an electrical engineering
degree.

My chemistry class wouldn't transfer so I had to repeat it. So I took it at a
local community college. Before I was allowed to register, I was forced to go
to an orientation. The worst motivational speaker I've ever seen kept
hammering the students about living life to the fullest and enjoying the
college life. I walked out.

The last time I took a class, I could take a full course load for $700. The
chemistry class was $800+ alone.

It amazes me that if you came home and told your parents you purchased a $80k
car with payments they would consider you an idiot; If you told them you
wanted to pay $80k for a college (with a 50% graduation rate) and received a
loan that cannot be wiped out by dissability or bankruptsy -- they would think
you were a genious.

~~~
SilasX
Don't forget to mention that you took out the loan so that you could learn
critical thinking and how to learn.

------
Mz
This makes me feel even more proud of my 20 year old self for looking around
me at the people I knew who were delivering newspapers after completing a
bachelor's degree and deciding "I can deliver newspapers without a degree, and
my quality of life will be better if I do so without a mountain of student
loans." So, I dropped out of college and went and supported my husband's
career and raised kids. I returned to school when I had some idea of what I
desired to do with my life.

Part of what is wrong with the world is that too many people go along with the
plans other people make for them. Too many people drink the koolaid and
believe the hype that a degree is a guaranteed ticket to a serious career. It
absolutely is not.

------
bcheung
We got here because people have been brainwashed into thinking college is the
only means of getting an education.

We have the Internet now. It make education extremely cheap. Use it.

Save actual teacher interactions for things that can't be taught over the
Internet.

~~~
superuser2
You can get a K12 education on Khan Academy, sure, but in the US that's
already "free" (property taxes).

Can you find a collection of Coursera courses that is actually a reasonable
substitute for a 4-year degree in CS? There are certainly a handful of
interesting topics, but I'm not seeing the whole picture.

~~~
bcheung
> reasonable substitute for a 4-year degree

You're still thinking in terms of a "degree". Education is not a checkbox on
the road to getting a job. That's the old thinking, and it is doomed. A better
question is what skills and experience would I need to be valuable in the
workplace. Education, especially CS is an ongoing process that never ends.

Speaking from personal experience, I did a little bit of community college but
dropped out because I didn't think it was worth paying tons of money for
something I could learn from a $40 book (or free online now).

I'm working as a software engineer now and am earning more than most of my
peers with CS degrees. No college degree, no Coursera certificates, just real
world experience and learning what I needed to.

~~~
superuser2
>Education is not a checkbox on the road to getting a job

Hit the nail on the head.

There is education for its own sake, for personal intellectual growth -
reading, writing, and discussing philosophy, literature, (pure) math, social
sciences, etc. which is really best served by a 4-year residential experience
_with others who actually care about it_.

And there is education for

>what skills and experience would I need to be valuable in the workplace.

which may be best served in MOOCs, community college, specialty career
training schools, or simply on the job.

Their unholy alliance in the university system is making both worse. Education
for its own sake is dragged down by people who don't want to be there and
don't really have the mental horsepower but are simply collecting a credential
on their way to a job. It's made unaffordable to those who actually want it by
all this demand from people who just want credentials.

Career training is dragged down by adherence to the structures and costs
associated with liberal education (dorms, classrooms, libraries, etc), slowed
down by all that "distracting" liberal education imposed along the way.

It's time the two were severed entirely.

------
ta290
got here looking for sugar daddies ?

[http://www.theatlantic.com/education/archive/2015/01/where-t...](http://www.theatlantic.com/education/archive/2015/01/where-
the-sugar-babies-are/384547/)

------
grossvogel
Slightly OT: An entertaining perspective on student debt from New Orleans
artist Dee-1
[https://www.youtube.com/watch?v=JqbXQa05Z6c](https://www.youtube.com/watch?v=JqbXQa05Z6c)

------
tn13
Because a lot of people including politicians like Obama needlessly glorified
college and government started giving aide to higher education. That seems to
be the problem.

Bright kids succeed. One of the way they succeed is by going into good
colleges. But that does not mean any Tom dick and Harry could succeed going to
any college.

------
blisterpeanuts
This article unfortunately is lacking in useful content; the real value is in
the comment section. For example, one commenter says: do the first two years
in a community college and save a bundle.

How we got here is a complex story that can't be explained in a few sentences
loaded with obvious partisan snipes e.g. "the Republicans privatized Sallie
Mae", while neglecting to mention the Bush Administration's repeated warnings
about reckless lending at Sallie Mae and Freddie Mac that went ignored by a
Democrat-controlled Congress. There's more than one side to the story.

One of the main problems of course is that universities find it easier to
raise tuition than to cut costs. Budgets rise, tuition rises, and students
simply borrow more money, in a kind of death spiral that is now reaching its
logical conclusion: hundreds of thousands of graduates crippled with enormous
debts and an inability to earn the necessary income to pay them off.

When I compare the campuses of today with those of the 1970s, when I was in
university, and earlier in the 1960s and 1950s when my elders were in school,
I am aghast at the ridiculous and profligate expenditures that have little or
nothing to do with higher education. Student activity centers came into vogue
in the '70s and were built all over the country: theaters, game rooms, snack
bars and restaurants, activity rooms, etc.

Today they are like malls complete with food courts, clothing shops,
Starbucks, cyber cafes or free wifi zones -- palatial, sprawling, with high
ceilings, multi-tiered glass and steel structures that run into the hundreds
of millions of dollars in construction costs and then many millions in
operational costs.

Dormitories were once the most basic housing imaginable, concrete blockhouses
full of doubles and triples with cheap mattresses on wooden platforms, a cheap
dresser, and military style bathrooms. Today in some places at least, they are
like luxury condos.

Forgiving loans is not an option. Millions of Americans worked hard to pay off
their own loans and feel little sympathy for those who foolishly over-
borrowed.

The only solution is a simple one: cut costs. According to my academic
friends, many universities today have more bureaucrats than professors, and
better paid than professors, too. Cut the staff to the bare bones, eliminate
the Olympic swimming pools and town-within-a-town developments, and focus on
one thing: education.

I could run a university for a fraction of the cost by renting an old
warehouse, subdividing into a few lecture halls and rooms, hire 20-30
professors, a custodian or two, get a bunch of chairs and white boards and
wifi routers, and poof! education will result. Students can live at home and
brown-bag it. In fact I've often thought about doing this. Find a bunch of
professors who are sick of dead-end adjunct jobs and offer them a way to take
back their lives.

------
zach
Unlike regular loans, there are no qualifications for the United States of
America's student aid programs and loan guarantees — they are available to any
admitted college student, even if you are going to circus college.

Whereas in Germany, for example, even though universities have no tuition
fees, only 28% of high school students (equivalent to 1150+ SAT) pass the
exams needed to go to them. In the US, we don't pay for the whole thing, but
we have no gate to pass through other than getting a college to admit you.

The problem is the implicit assumption that colleges only admit the students
that are quite capable of graduating, and that the degree will be worth it.
Well, those things may have been mostly true at one point, I'm sure, but
without any incentives, they're not really the case now.

Graduation percentage is the key to seeing how far we fall short. First off,
check out this amazing article: [http://www.demos.org/blog/5/18/14/college-
graduation-gap](http://www.demos.org/blog/5/18/14/college-graduation-gap) or
just look at the most essential chart:
[http://www.demos.org/sites/default/files/imce/satincomegrad....](http://www.demos.org/sites/default/files/imce/satincomegrad.png)

Just to make this clearer, the average high school student scores about 1000
on the SAT (the NCAA only requires 800 for eligibility if you can pull a B
average). The graduation percentages around 1000 are pretty bad, yet over 50%
of high school students have gone to college since 1980, 60% since 1990 and up
to 70% since then.

These graduation percentages are very challenging data. Especially looking at
the students that can benefit the most from the hoped-for added earning
potential. So this is difficult to confront, because it causes cognitive
dissonance with our self-image as a country of opportunity.

If you were paying any attention during the mortgage crisis, you can see a
pattern here. Everyone is encouraged to stretch to get the most expensive
thing they can afford, and the loans are easy to come by.

Well, almost; private lenders are actually kind of strict, which means that
marginal and low-ability students (or those who have poor college grades) are
shut out. As in this story, they have to go to their relatives to co-sign
loans instead, or lose their sunk costs (and dreams) for lack of those last
few thousand dollars. Again, this is for students who aren't qualifying for
debt that can't be discharged in bankruptcy...

If there was some kind of change to the employment market that significantly
devalued the $1.3 trillion in student debt, that would be a heck of a write-
off. So in our automated future, maybe we won't be deciding how to give
everyone free money, but instead dealing with the gigantic amount of bad
student loans we have on the books.

Again, this article puts student debt at $1.3 trillion. That's almost twice as
much as is outstanding on all car loans, except that the cars actually exist.
A lot of people never get to drive their college education off the lot. How
much student aid should we budget to provide for students who never graduate,
or even those who we are pretty sure never will?

------
TruthAndDare
This sounds simply like someone complaining about what prices the market has
settled on for education, for the skills that this education provides, and for
loans. Yes, I too would like to earn more and pay less.

~~~
vkou
When it comes to pricing education, there is nothing remotely resembling an
efficient market.

~~~
TruthAndDare
Maybe so. I don't know that that changes anything. In fact, I'm not sure what
you even mean by "efficient market" in this context.

