
Why Those Student Loans Aren't Getting Paid Off - lsh123
https://mises.org/blog/why-those-student-loans-arent-getting-paid
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supergeek133
Instead of dealing with increasing costs of student loans we've thrown more
money and accessibility at it (government sponsored, government backed, etc).
Universities responded in kind with increasing tuition because well, people
can get the money!

The other thing that happened is more and more of the job market requires a 4
year degree and some experience for entry level jobs! So while the price of
education has increased, what your salary is after you are done has either
decreased or not kept up.

We've overpriced the purchase of a degree, and made them a commodity in the
job market making their value go down.

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squozzer
I think we blew past the point of moral hazard when a degree became so
expensive it required taking a loan.

Education has become one of the major economic predators of western
civilization.

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wjnc
Substitute 'western civilization' for US/UK? In Europe there still are many
countries with free or cheap higher education.

Education as a consumption good funded by loans is tragic though. The most
expensive consumption good in a lifetime ...

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squozzer
I might have gone a bit hyperbolic on that. And I always wanted to study at U.
Göttingen.

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programmarchy
Seems crazy that loan underwriters wouldn't take the type of degree into
account. Shutting off the price signal of which jobs are in demand in the
market seems extremely irresponsible. Reminds me of subprime lending problems
that gave way to 2008.

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ouid
Student loans are federally insured, so no one cares at all about the
likelihood that the student will be able to pay it back.

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Pyxl101
These federally insured loans seem to be a common source of problems. The
massive moral hazard means that incentives don't operate correctly. How do we
fix it? Can we wind down and stop federally insured loan programs?

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Broken_Hippo
Likely not.

Students coming out of high school have no credit and generally only have a
low-paying job. It takes some years to remedy these. The solution would be to
have a co-signer, generally parents or other family member. This leaves young
folks very much subject to circumstance. Orphan or in foster care? Good luck.
Parent that thinks education is sinful, disowns you due to lifestyle, or is
one of the 'you aren't my responsibility at 18' crowd? Even more good luck.
Parents supportive but have bad credit? Yup. No loan for you.

This wasn't a problem when it was actually feasible to work your way through
college, but it simply isn't anymore. A few pull it off, but many more simply
can't.

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sokoloff
I'm in a strong financial position and support my kids and their education to
a very great extent.

Even given that, I'm unlikely to co-sign on a substantial loan for their
education. Most parents would be even less willing (or in a less strong
position) to co-sign for a loan that can't be discharged in bankruptcy. (And I
completely support why they can't be discharged in bankruptcy.)

What we might be able to do is transition the federal guarantee to a private
(or possibly still federal) insurance program with properties like variable
PMI, factoring in credit, degree, grades, criminal record, or anything else
actuarially linked to future repayment prospects. I don't love that idea, for
many of the same reasons you mention, but that is a possibly workable middle
ground of sorts.

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mkautzm
"But today, in a period when employment and earnings are vastly better than
what they were in 2010, the delinquency rate for student loans is more than 11
percent..."

Might wanna check your crystal ball on that one:
[https://en.wikipedia.org/wiki/Household_income_in_the_United...](https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Recent_trends)

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legitster
???

The link you provided clearly supports this statement.

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typetypetype
It's an interesting idea to treat educational loans like home loans, where the
bank appraises the value of the home and sets loan limits accordingly.

