
Student Debt Lawsuits Are a Lucrative Business - thisisit
https://www.nytimes.com/2017/11/13/business/dealbook/student-debt-lawsuits.html
======
exabrial
Good Lord. There are two issues with college tuition:

The first problem is people are not shopping around for a college education.
There are thousands of incredible colleges around the USA that will give you
the same or better education as a pricey school on the coasts.

I did my easiest credits at Bulter County Community, then Wichita State
University, before finishing up at Kansas State University. I only took on
about $8k of debt for a degree in Information Systems (computer science with
an emphasis in business classes) from their engineering school (which is one
of 24 schools that has a nuclear reactor on campus). K-State itself was a hoot
to go to, it's a great little school in a swanky town isolated by 2 hours of
prairie grass.

The second problem is people are paying way too much for a nearly useless
degrees that some colleges offer. You can get a degree in "music therapy" or
"insurance administration", both of which a motivated individual could also
get on-the-job training for.

Somewhere there should be a list of "Degrees you should not get if you're
going to pay more than $x for" to help bright-eyed high school kids make good
decisions.

~~~
hibikir
Shopping around for college education only makes sense if your career path
doesn't take the name of the institution into account. Careers are so path
dependent that landing in a worse first job can make a huge difference in
lifetime earnings.

See, a good engineer I know, who studied in University of Missouri Rolla.
Their CS degree is not all that different from a big name, as far as
curriculum is concerned, but many HR departments won't recognize the place,
especially if it's a company from the coasts. If you don't find a way to break
through that social class, the best you can hope for is a Midwest Enterprise
company, which will not pay as well, and will not teach as well. Then your
resume will be thrown away at many hip companies, because working at such
companies is seen as a negative, not as a positive: To climb out of a good
education with a bad name to a place that pays top dollar can be a huge
struggle. If instead you go to the Right University, you can then move on to
the Right Company, and you can keep working at said places, or get venture
capital to start your own thing, because you were already in the inside track.
That's what you are paying for at the coastal university, not a dramatically
superior education.

You are right though, in that there are many degrees that are terrible
investments in all but the topmost universities. You'd be surprised by the
kind of companies that will interview you anyway if you have an irrelevant
degree from Harvard.

~~~
ROFISH
Heh, I went to that school and I had the same problem: literally everyone
would ignore me because I went to a Midwest state school.

I went and did my own thing so my story is fine. But I wonder about how much
good talent is ignored just on the basis of where one went to college.

~~~
madengr
I went to KU. Living in KS and making just as much as those in the coastal rat
race, without the crazy housing prices. If you know your shit, you'll do fine.

------
arcanus
It is remarkable that you cannot declare bankruptcy from student debt. We have
essentially decoupled the price of college from the expected return.

~~~
ChrisBland
If we didn't prevent it, then you'd be stupid to not go to college take out
$120k in loans and then declare bankruptcy at 22 prior to taking a job (you'd
have no income and no assets). You'd be 29 by the time the bankruptcy fell off
your credit report, meaning credit might be tight in those years to buy a car
or house, but you'd be debt free - something many people in their 20s and 30s
would gladly do if they were given the option. Since a degree is not tangible,
there is nothing to secure it with, they can't foreclose on your education
like they can a piece of property. Without anything to secure it, there would
be 0 market for college loans except for the privileged who can pay out of
pocket for their education. IMO the only way to solve it is to put the school
on the hook for part of the $$ if the default rate exceeds X%. Then it forces
the school to look at costs, as well as expected outcomes of the program. At
the end of the day, maybe giving an 18 year old 120k to study underwater
basket weaving for 4 years is not the best investment of money?

~~~
Posibyte
The bank should be entirely at fault here. If they looked at a student's
request for a loan that said _I 'm taking a basket-weaving class at Cornell
and I need $120k to attend_ then it's the bank's prerogative to look into the
student's past performance, the rate of return for basket weavers, and the
bias to which Cornell would prompt higher or lower returns in this area.

Just like any area of lending, it's on the bank to assess the risk of lending.

(And as an aside and I say down below: This is why I feel banks shouldn't be
in this position.)

~~~
xeromal
I agree that our student loans are junk and need a revamp, but if banks only
loaned for the rate of return of a job, we'd have engineers and no one else.
There is something to said for having artists and philosophers are "useless"
as their degrees are perceived to be.

~~~
ProblemFactory
> if banks only loaned for the rate of return of a job, we'd have engineers
> and no one else.

But is it really worse than the current situation - where people borrow to
study something enlightening but economically questionable, and then struggle
for decades as they can't pay the debts nor declare bankruptcy?

I agree that studying arts is worthwhile, both for the individual and society
as a whole. But there has to be someone to tell the 18-year-olds that they
can't borrow $100k for it, or they are making things worse for themselves.

Perhaps if banks adjusted loan amounts to potential future income, then arts
faculties will be forced to lower tuition fees. And some students will
correctly see that they just can't afford it - better to discover that before
starting instead of after graduation.

------
Sir_Cmpwn
>In Miami, a law firm working for Transworld brought a lawsuit last year
against Antonio Fuentes, seeking payment on a $13,356 student loan. With
interest and fees, Mr. Fuentes now owed $25,322.31, according to the
complaint.

>“Many judges take the attitude: ‘I paid my student loans. You ought to pay
yours. Don’t give me this nonsense about technicalities.’”

That judges are even allowed to do this is awful. Why should this person have
to go through the arduous and expensive appeals process just to get justice
administered correctly?

~~~
alexanderstears
Because there isn't enough skin in the game. Judges don't get punished for bad
decisions and Transworld was allowed to mislead the courts for too long.

~~~
Verdex_3
I don't think judges should necessarily be punished for bad decisions. The
judiciary is a mechanism for allowing society to get along peacefully with one
another (ie you can take your grievance to a judge instead of to the mob). I
don't really want judges having to worry about punishment when doing their
job.

On the other hand. Incompetent and corrupt judges have no place in the
judiciary because it's basically an attack on the citizenry's ability to live
peacefully. Now you need money, power, or violence to live security and that
doesn't go well. Incompetent results in dismissal forever (sorry I don't have
a good test for this). Corruption results in loss of past, present, and future
benefits and significant jail time.

Third parties abusing the judiciary to abuse the citizenry is just as bad as a
corrupt judge. Their end should be in a jail cell.

~~~
logfromblammo
You forgot lazy. What do you do with the judges that simply can't be arsed to
read the filings or briefs, and arbitrarily rule against those that seem to be
making the most work for them? They want a light calendar, so they can spend
more time doing literally anything else. So what do you do with those who will
only do their job half-assed?

~~~
WorldMaker
Vote them out in the next election?

~~~
logfromblammo
I think I'd be willing to move to wherever place it is you may be thinking
about where that actually works.

I _always_ vote "do not retain" in every election that allows the public to
vote for judges, on the off chance that someone else that knows something I
don't may need the help in removing a bad judge, and none of those judges ever
failed to remain on the bench.

But most places that I have lived don't even vote on judicial retention. The
only reliable way to get rid of a judge is to get them appointed to a more
prestigious circuit, which would be a pyrrhic victory.

------
dsfyu404ed
I'm rarely one to advocate for legislating solutions to problems but forcing
schools be responsible for more of the communication with
student/customer/debtor when it comes to loaning money, collecting payments
and handling defaults would really cut down on the number of student loans
that aren't paid back on schedule.

If the school is responsible for the overhead cost of that communication they
will have a strong incentive to make their students capable of paying back
their loans or accessing the various deferment/income based repayment options
in order to avoid the cost of collections.

A work study student who hates their minimum wage job will be a lot more
helpful to a debtor who received a payment due and is calling the 1-800 number
on it because they are confused than some random person in a call center
that's an Nth level subcontractor for some bank that owns the debt.

A work study student who hates their minimum wage job will be a infinity more
helpful to a debtor who is in default and is calling the 1-800 number on it
because they are confused than some random person in a call center who makes a
commission based on how they handle the account in question.

If the school was responsible for the cost of communicating with the debtor a
lot fewer loans would make it into default in the first place.

~~~
politician
Given the benefits schools receive from being able to raise prices year after
year with such limited downside, your idea makes a lot of sense.

It might be some way to impose some kind of responsibility onto the schools.

------
emodendroket
I suspect these guys are not the only debt collectors operating this way, but
the whole thing is shameful. Talk about an industry crying out for more
stringent regulation.

~~~
ams6110
Is it more shameful than the colleges and universities that push students to
taking out these loans (calling them "financial aid") knowing full well what
waits them on the other side?

~~~
StudentStuff
No way to discharge these loans besides leaving the country and going native
elsewhere, or paying them off entirely. Essentially, if your gamble doesn't
pay off, you get a life long debilitating STD known as student loans.

------
aplummer
I think this is another situation where you can look at the models in the UK,
Europe, other similar countries to find solutions.

If I grew up in the US and could have managed it, you can study in Germany as
a foreigner for free. Other countries like Aus have a system where your loan
is interest free and indexed with inflation, and you start paying it off after
you make about $35k per year as a percent of income.

~~~
godelski
Here in America we gain interest while we are in school and have to start
paying it off 6mo after we graduate. For context, that is the average time it
takes a student to get a job (right when they are also paying moving costs and
such). Payment used to initiate after 9mo after graduation.

~~~
tudelo
Not all loans accumulate interest while attending school. Look at unsubsidized
vs subsidized federal loans.

~~~
EADGBE
Not all students qualify for such subsidations.

------
smaddox
I just had an idea this morning for how to fund universities that I think
could solve many of the issues associated with student loans. The idea is that
instead of students paying tuition, they would sign contracts to pay a
fraction of their income for several years after graduation, e.g. 1% of income
for 15 years (perhaps with a cap). Enforcement could be difficult, but this
would _much_ better align incentives with the desired result, i.e. to educate!
It would also incentivise universities to help alumni get and hold high paying
jobs.

Starting such a university would require a lot of startup capital, but it
would become self sustaining in less than a decade.

------
googletazer
Imagine a world without ever inflating funny money, where people only buy what
they need instead of junk.

~~~
matt4077
The funny thing is that inflation would actually be among the easiest ways to
get out of such debt.

~~~
googletazer
You're right, but why cure the symptoms? Take care of the disease instead.

------
geggam
Slavery is illegal.

Letting people enslave themselves however is not.

An indentured servant or indentured laborer is an employee (indenturee) within
a system of unfree labor who is bound by a signed or forced contract
(indenture) to work for a particular employer for a fixed time. The contract
often lets the employer sell the labor of an indenturee to a third party.
Indenturees usually enter into an indenture for a specific payment or other
benefit, or to meet a legal obligation, such as debt bondage. On completion of
the contract, indentured servants were given their freedom, and occasionally
plots of land. In many countries, systems of indentured labor have now been
outlawed.

When you are enslaved by the monetary system... well... You made that choice

~~~
Thorncorona
That's a terrible argument. Even in the 1600s where indentured servitude was
commonplace, the system was essentially slavery, with comparable death rates.
Hell America had a rebellion because of white slavery - Bacon's rebellion.

We got rid of slavery because of the social impact and also because of the
moral implications. There's no reason to bring it back in another form.

~~~
geggam
Its not an argument. Its an observation of the existing monetary system.

When you borrow on your future earnings you are essentially putting yourself
in indentured servitude to the banks.... and this is your choice.

No one forces you to do this.

