
The Student Debt Problem Is Worse Than We Imagined - boulos
https://www.nytimes.com/interactive/2018/08/25/opinion/sunday/student-debt-loan-default-college.html
======
acjohnson55
It's a damn shame we've let this crisis reach this scale. Along with
healthcare, climate change, the debt, our inauguration, and so on, we've been
essentially frozen for most of my life as politicians concern themselves more
so with existential power struggle. The right wants to bring us back to the
gilded age, the left makes headlines but is barely relevant, and the center is
trying to squeeze bandaid solutions while just trying to fend off populism on
both sides.

It shouldn't be controversial that we need an educated population and we need
young people who aren't in debt up to their eyeballs. It's time for some hard
choices, because the wheels are falling off.

~~~
drcode
I must say, as someone who made quite a few sacrifices to pay off my school
debt, I'll be pretty miffed if less responsible people from my same generation
get a break on their loans.

~~~
thatjsguy
Somebody getting a break doesn’t bring you down, it just brings them up. I’m
sorry you had to pay off your loans. I’m paying about $100,000 myself. But
even if I didn’t get amnesty, I’d rather not have one more graduate who, like
me, has sincerely considered whether simply being dead would be easier to deal
with. And there are a lot of people like that. I’d rather be in debt forever
if it means that subsequent multitudes can be free of the burden I carry. At
least someone gets some relief.

~~~
drcode
> Somebody getting a break doesn’t bring you down, it just brings them up.

Well, the assumption here is that the money to "bring them up" can just be
materialized out of thin air and doesn't have to be taken from other people,
in turn.

~~~
stormbrew
The converse of this being the assumption that having a huge number of people
stuck with hundreds of thousands of dollars of debt is not itself a drag on
society that eventually comes out of other people's pockets one way or another
anyways.

"I survived a bad system" is not justification for the perpetuation of that
system.

~~~
citrablue
Similarly, people who survived the system should have just as much access to
remedies as people currently in their own difficulties.

~~~
thatjsguy
Absolutely, but if we have to deal with the burden while ensuring future
students don’t have to suffer (because let’s face it: short of Jesus Christ
coming back and demanding it, I don’t see private loan forgiveness in our
future), I’d rather do that. I just want SOMEONE to have a break. It doesn’t
have to be me.

------
lowpro
Still being in college, so many people I know just assume debt is no issue.
It's not a concept that hits close to home, and most people seem to be fine
with repaying them forever, like buying a new phone every 2 years or a new car
every 3. I've never known anyone who couldn't get a loan, no matter how bad
their grades or weak their employment after college looks. I don't really
understand how that works and who would loan them money in the first place,
but I feel bad that so many just assume they debt they take on will be
automatically paid for.

Many I know use their loans for not just school, but life. They spend money
like they're rich and already have jobs when they're broke college students
living off loans, and it just seems to me either the government, the banks
loaning the money, or the schools, are using this monetary ignorance to their
advantage. It'll fold some day I assume, considering student debt is 50% of
the assets of the Federal Government [0], if those default rates rise to high
that could wreck havoc in the trust of the financial well being of the US
government (Disclaimer: I'm a student, I don't really understand most of
what's happening here)

[0] [https://s3-us-west-2.amazonaws.com/gs-
live/uploads%2F1521231...](https://s3-us-west-2.amazonaws.com/gs-
live/uploads%2F1521231220079-studloanpie.png)

~~~
user5994461
>>> I've never known anyone who couldn't get a loan, no matter how bad their
grades or weak their employment after college looks.

Student loans are risk free for the lender and very profitable. They will
always be granted.

~~~
nafey
What are the consequences of non payment? Debtor's prison?

~~~
PretzelFisch
They will garnish your wages. if you default and destroy your credit rating.

------
ProfessorLayton
Student loans are a huge drag on the economy, as it postpones other key events
in one’s life, such as buying a home.

But something else is going on as well. Lots of these articles talk about
student loans as an _average_ , however, the _median_ defaulter looks very
different — The median defaulter does so with a loan of _Just under 10k_ [1]
and not the average of 22k as shown in this article.

It is worth discussing why the median defaulter is unable to pay roughly $100
per month (assuming a 10y payment plan), and how to address that issue. When
viewed from this perspective, the problem does not seem insurmountable.

I was lucky enough to not need to borrow more than the average amount and pay
it off quickly.

[1] [https://www.americanprogress.org/issues/education-
postsecond...](https://www.americanprogress.org/issues/education-
postsecondary/reports/2017/12/14/444011/student-loan-defaulters/)

------
magnusss
It seems like the majority of the commenters here are missing the point. The
huge overhang of student loan debt is not a result of kids who go to a four
year college, graduate with an unmarketable degree in philosophy, fall on hard
times and then default. It's kids who go to barber school (and the like)
taking on $30k of debt, then realizing they don't make enough money cutting
hair to support themselves, much less pay back a loan. There's a _huge_
population of people like that.

Source: [https://www.ed.gov/news/press-releases/us-department-
educati...](https://www.ed.gov/news/press-releases/us-department-education-
releases-national-student-loan-fy-2014-cohort-default-rate)

~~~
anjc
> There's a huge population of people like that.

The problem is the lender, surely

~~~
alistairSH
The problem is that the lender exists in the first place. Becoming a barber
shouldn’t require a five-figure investment. At most, it should be a few weeks
of classroom and “lab” training, followed by a short apprenticeship.

------
goolulusaurs
It is obvious the college education system is flawed just from it's incentive
structure. Colleges don't get paid based on the amount that you learn, they
get paid based on the amount of your time they take up. Up to a point they
even have a disincentive to aid learning, since they make more money when
their students have to repeat classes.

Each additional semester gives the colleges many more opportunities to get
money from students, so it should be no surprise that an environment of
wastefulness flourishes, where students are encouraged to change majors midway
through their degree programs and classes are taught by grad students who have
never been trained as educators.

If we really want to fix education we have to find some way of ensuring that
universities interest are actually aligned with educating their students.

Maybe a way to do this would be to separate teaching from testing. Have
testing be established by some external body, and make it so both the
university and the student receive a payout when the student succeeds on the
test. Something like that would clearly require big changes in the way that
people pay for college, but it seems likely that major changes will be needed
anyway.

~~~
dstaley
> Maybe a way to do this would be to separate teaching from testing. Have
> testing be established by some external body, and make it so both the
> university and the student receive a payout when the student succeeds on the
> test.

This is basically what standardized testing is all about, and it's a
significant contributor to the inadequacy of education in the United States.
We haven't figured out a scalable way to measure classroom outcomes.

~~~
lotsofpulp
How does standardized testing contribute to the inadequacy of education? If
anything, it shows which students need help, as opposed to grade inflation and
throwing out A grades to everyone that hands in a homework assignment on time.

Local parents can influence grades, but they can’t get past standardized
testing (which is why colleges use SAT/ACT/AP grades to filter rather than
GPA).

Perhaps funding as a result of standardized testing is a problem and distracts
from teaching. But the actual problem is children who grow up in unsupportive
environments with lack of parental guidance. That socioeconomic class divide
exposed by standardized testing isn’t going to be fixed by getting rid of
standardized testing.

~~~
sethammons
Standardized testing leads to teaching to the test, and the tests need to be
easily gradable, so we teach kids how to take tests that represents content in
a mannor that is a mile wide but an inch deep. Multiple choice is a crap way
to measure most understanding.

This doesn't take away your other point: unsupportive environments. Socio-
economically disadvantaged kids are truly disadvantaged.

~~~
distances
> Standardized testing leads to teaching to the test, and the tests need to be
> easily gradable, so we teach kids how to take tests that represents content
> in a mannor that is a mile wide but an inch deep.

Not true, the test could be arranged in other ways depending on the goals.
I've taken one standardized suite of test, after 12 years of schooling, and
the questions were quite deep enough.

The limited number of questions you can cram into six hours per subject meant
that the math test could contain only one task in statistics, one in geometry,
and so on; with luck you could do well while lacking in some areas. That would
be a gamble though.

~~~
sethammons
As a former math teacher in a disadvantaged area, I'm going to have to stick
to my original statement. It could be different in other regions of the world,
but, in the US, because funding is based on test scores, and teachers are
required to teach the test concepts, whether students are ready for them or
not. Students have to cover so much material in a given time period. For many,
the time to truly "get" the material is not there. They can memorize
something, test on it, move on. The fact that some students are capable of
getting through this and learn or retain information does not mean it is a
good method of doing things.

As a practical example why multiple choice can be unfair: a student could
understand that solving for the roots of a parabolic curve (quadratic
equation) could model the landing point of a ballistic projectile. They could
understand the difference of squares method to solving quadratics, factoring,
solving linear equations, etc. But a simple arithmetic mess up (they add
instead of subtracting on one step even though they wrote a subtraction sign)
leads to the wrong answer. Because it is a multiple choice test and because
test makers have seen this same error before, the wrong answer the student
found is one of the multiple choice solutions. Boom. Zero credit on that
question. This failed to measure the student's understanding. How do you get
around that? More questions with more nuances.

Can you get signal on student understanding from multiple choice tests? Sure.
Is it good? Depends on the test and it is hard to write good tests.

~~~
distances
I tried to suggest that different goals could mean a different test setup.
Instead of a multiple choice test after each course you could have a proper
test after a longer period, where grading would consider in the full solution
/ essay.

I understand that it may be incompatible with the current US practice, but I
don't see why each test should be standardized. Locally arranged course exams
with a common state/nationwide final exam with proper grading resources should
be enough as far as I see.

------
theLotusGambit
Perspective (anecdote) from a high school student: There is a real push for
college. It's an unstated assumption that you're going to go, and the topic of
debt seems to be passively avoided ("Don't worry, it'll all work out!"). We
receive a grade for the college application process, so you can't not apply.
College is still probably a good deal the majority of the time I think, but I
wish there was some acknowledgement that it is less important in some fields
than others. As for me, I think I'll take a pass on it, for now anyway.
There's always time to change my mind later on.

~~~
karmelapple
There is a high school class dedicated to applying to college, with the “final
project” being that you applied somewhere? Wow... this is surprising to me!

Can you apply to any school, including trade schools for, say, welding?

~~~
theLotusGambit
I'll be honest, I have no idea! I can't remember the topic of trade schools
ever being brought up in class or otherwise. I think you could probably do it,
but it would be very unconventional.

~~~
OkGoDoIt
So they have an actual class dedicated to teaching you about this, and that
class fails to enumerate all of your options? That seems like a sub-optimal
situation. Sounds like my sex-ed class in Georgia which never even discussed
birth control.

~~~
throwawayjava
_> So they have an actual class dedicated to teaching you about this, and that
class fails to enumerate all of your options?_

Two thoughts: (1) such courses are often opt-in and don't necessarily have
tons of free time for off-topic discussions; and (2) many schools with such
courses do in fact have robust CC-tracked options that all-honors students are
not exposed to.

1\. A class like this was offered by my high school (years and years ago...) I
didn't take it. However, from what I remember talking with friends, our
school's course was explicitly for people who were planning on going to
college. So it'd be kind of weird to discuss alternatives. That would be like
mentioning in a Biology course that Physics or English are also legitimate
fields of study.

You'd _think_ such a course would be wishy-washy and have plenty of time for
discussing alternatives, but actually it was quite a serious thing.. Most of
the students who took the course thought they were on-track for ivy league
applications and then got a dose of reality in the form of a below-average
standardized test score. They had a couple months to learn how to pattern-
match and flash-card their way into the 90th percentile starting from the 50th
percentile. I distinctly remember more than one person dropping AP Calc so
they could focus on the college prep course...

(In other news, grade inflation and subjective grading are harmful because
they are sparse & deceptive reward signals!)

2\. Community college was very much _not_ looked down upon; in fact, we had a
robust partnership with the regional CC system and many students would spend
junior and senior years splitting their week between HS and CC.

However, if you were honors/AP/college-tracked, then you wouldn't really know
that those students even existed unless you socialized with those students. I
only knew about these programs because of my friend group.

At a recent reunion, I talked with some guys who I recognized from my AP
courses. They were complaining that our high school didn't offer non-college-
tracked options. I mentioned the various programs my friends had made use of
and they were shocked and swore up and down that those programs didn't exist
when we were in school.

I wonder if either of these two things is true for OP. IME it's fairly rare
for an entire high school -- let alone an entire school district -- to not
have robust options for CC-tracked students. Maybe in super-affluent areas?

 _> Sounds like my sex-ed class in Georgia which never even discussed birth
control._

Yeah... state law. Same for me. I had a teacher who risked her job to give us
good info. If that was the case for anyone else reading this, consider looking
up that teacher and sending a gift card or something their way. Doing so is a
huge personal and professional risk.

~~~
CamTin
IME the idea of "tracks" is totally foreign to most urban school districts. We
know about "honors classes" and the "vocational students" from movies, but the
whole school system only exists to get students to pass state minimum
requirements in whatever sketchy, technical way they can, or else house them
until they turn 16 and can drop out. The "advisors" presumably exist to check
a box on some state form: they certainly don't offer any actual assistance or
advice in applying for school beyond being the office where you sign up for
ACT or SAT test dates and handing out FAFSA forms.

The idea that a high school would have anything to do with preparing you for
post-secondary education, or advising you on what type of institution to get
it from, is totally foreign in districts like this.

------
phil248
"...averaging $22,000 in debt by graduation"

That is not very much money. That's a modest new car or a down payment on a
small home in a cheap zip code. At low enough interest rates, that monthly
bill will be less than most people's cell phone or cable bill.

I think that's a reasonable price for something as unique and transformative
as a college experience.

There is obviously a serious problem here, but not necessarily for those
students who end up with less than 30k in student debt and do not default.
That appears to be the majority of students. I'd like to know how many
students are earning a bachelor's degree with more than $30k in debt, and how
many of those students attended public universities.

~~~
Amorymeltzer
I think there are a few main issues with the arguments you're presenting here
on the numbers.

First off, $22,000 isn't nothing. According to this[1], the rate for
subsidized undergraduate Stafford loans climbed from 4.45% to 5.04%. Taking
4.5% over 25 and 10 years[2] gives monthly payments[3] of $122.28 and $228,
respectively. That's definitely more than what my spouse and I pay each month
for our phone bill (US, two smartphones, mid-tier data, major carrier). The
total cost for 25 and 10 years at 4.5% comes to $36,685 and $27,361.

Second, saying that amount is just a "new car or down payment" might be true
but those are major events and expenditures. Put another way, if it is
equivalent to a nice new car or a down payment, having student loans means
they _can 't do one of those things_. That's the cost — not just the money,
but something that affects their life for years because they've had to delay
some other important purchase. The ripple effect means they build equity
later, save less for retirement, etc.

Regardless of value or difficulty, the fact remains that these kids _are_
indeed defaulting. TFA says that one out of every eight public school kids
defaults on their loans, and there is no sign that rate it doing anything but
increasing. As you say, this is a serious problem.

1: [https://www.washingtonpost.com/news/grade-
point/wp/2018/05/1...](https://www.washingtonpost.com/news/grade-
point/wp/2018/05/10/interest-rates-on-federal-student-loans-set-to-rise-for-
the-second-year-in-a-row/?noredirect=on&utm_term=.f88611e9eba9)

2: [https://studentaid.ed.gov/sa/types/loans/subsidized-
unsubsid...](https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized)

3: [https://www.bankrate.com/calculators/mortgages/loan-
calculat...](https://www.bankrate.com/calculators/mortgages/loan-
calculator.aspx)

------
IMTDb
The VERY worrying part is that those number have started to be recorded in
2012 - just after the previous crisis, when the economy was booming.

Current unemployment rates in the US are very very low. When they start going
up again the share of student struggling to replay will be out of control/

------
ChuckMcM
The 'for profit' chart there is the whole story. If your business model is
that you can give someone money and then force them to pay it back without any
ability to discharge it, you have essentially re-invented indentured
servitude. And it attracts scumbags more strongly than a half dead bleeding
seal attracts sharks.

We have gone through a couple of very public shutdowns as some of these for
profit schools lose their accreditation (and thus their ability to sucker
students into student loans). It hurts people who are trying to do the right
thing (get an education so that they can improve their job prospects) and it
fails to punish the real problem which are people who sell these worthless
degrees for over inflated prices.

~~~
ChuckMcM
I tend to integrate under the curve[1]. Sub prime mortgages didn't tell the
whole story either, but what they did was take an at risk population (people
who wanted to own a house but didn't have the credit to get a loan) and fix
them up with loans they couldn't repay.

That doesn't have anything to say about the folks who could qualify for home
loans on their own under the stricter rules and could pay them off. That
business was fine as well.

There are large numbers of for-profit schools who have taken that playbook and
replicated it exactly, find people who "want college" but have either not been
able to qualify for a state school, and provide a "college product" bundled
with a "loan product" knowing that many of those students will never be able
to repay the loans. But everyone in the pipeline gets a bit richer in the
churn, and the people who take it in the shorts are tax payers and these poor
kids who have a bunch of debt and still no way to pay it off.

[1] _88 percent of graduates from for-profit colleges had loans (average debt
of $39,950)_ \-- [https://studentloanhero.com/student-loan-debt-
statistics/](https://studentloanhero.com/student-loan-debt-statistics/)

------
brink
The article says the average is $22k, but Forbes says the average for 2016
students is $37k.
[https://www.forbes.com/sites/zackfriedman/2018/06/13/student...](https://www.forbes.com/sites/zackfriedman/2018/06/13/student-
loan-debt-statistics-2018/)

~~~
paulmd
Forbes doesn't say that (as noted by the popup, opinions of contributors are
their own), someone who blogs for Forbes says that. Forbes is just Medium with
a financial slant, these days, there are no qualifications required to be a
contributor and there is no editorial oversight.

------
l1ambda
You used to be able to apprentice for just about any profession at all, often
earning money while doing so. Perhaps social norms need to adjust and bring
back apprenticeship. Perhaps we are on that course now having reached the
tipping point of student loan debt and with the death of the 4 year degree.

Education is free (MIT has free courses, and there are lots of opportunities
nowadays for self-study); it's a degree that's expensive.

~~~
realo
Hi. Old grumpy engineer here.

Most young people we hire straight out of the university are at about the
level of “apprentice” anyway.

The best just learn faster later on.

The university degree in E.E. is just a ticket to being apprentice somewhere.

------
Simulacra
The problem of universities selling overpriced degrees that have little to no
market value, while using students as a cash cow to gouge with the costs of
books, classes that are not needed, parking fees, and everything else is far
worse than anyone can imagine.

------
fzeroracer
In a fit of irony I managed to graduate college because I was too poor to pay
for college. FAFSA covered everything I needed, although I had to make large
medical sacrifices along the way.

Needless to say student debt in America is out of control. We told kids
endlessly that they should chase their dream and become who they want while
pulling the rug out from under them and using predatory loaning practices.

It's another ticking timebomb that when it goes off it's going to cripple a
large amount of Americans. We need to be funneling more money into our school
system and actually make college free.

~~~
Delmania
I don't think making college free would solve the issue. We have this
narrative that you need college to get ahead when there are many quality trade
schools, on the job training, and (perhaps a bit controversial) the military.
I think we need to give seniors the full picture of options.

~~~
fzeroracer
The first two options are only viable in a couple of sectors and increasingly
(in my opinion) we've seen on the job training for low-experience workers
vanish in the software sector. Not everyone is going to want to go the trade
school route and again, limiting educational options by wealth is why we're in
this situation in the first place.

And the military is a no-go. We already use it as a welfare gate for poor
Americans, creating a society where the poor have to serve in the military to
survive while the rich skip out. This is a dystopian ideal to me.

------
dev_dull
There really needs to be some “free market” ideology injected into the way
loans are dispersed. First of all students need a way to declare bankruptcy.
Second, we _must_ take into consideration future earnings potential when
deciding how much and at what rate.

~~~
pmarreck
Permitting bankruptcy would instantly add more risk to the lender and thus
instantly boost the interest rate on the loan, potentially pricing it out of
the range of the student.

~~~
wycs
And permiting indenture is better? College is a signalling racket status good.
Cut the loans and watch as tuition magically decreases to maintain
equilibrium.

~~~
pmarreck
I actually fully agree. I wasn't arguing my personal point, just stating a
fact

------
Gustomaximus
I've wondered if an good way to fund universities would be offer them x% of a
students tax return for X years after graduation.

That way universities would likely focus their courses on areas that get
people employed, while cross subsidising some areas they feel add value to the
educational environment. Or require popular courses that dont deliver returns
as for some upfront payment. Even use data if it's that granular to even see
what department heads or other facets create the best results.

~~~
mschuster91
> That way universities would likely focus their courses on areas that get
> people employed, while cross subsidising some areas they feel add value to
> the educational environment.

As if that would happen! The "unproductive" courses (aka everything but STEM)
will all be eliminated as there isn't money for them. Society will lose as a
result. Fund _everything_ by taxpayers instead like Europe does.

~~~
assblaster
What do you think about these data for the number of students in Europe
stratified by course of study compared to the United States?

[https://ec.europa.eu/eurostat/statistics-
explained/images/2/...](https://ec.europa.eu/eurostat/statistics-
explained/images/2/20/Number_of_tertiary_education_graduates_by_field%2C_2015_%28thousands%29_YB17.png)

[https://nces.ed.gov/fastfacts/display.asp?id=37](https://nces.ed.gov/fastfacts/display.asp?id=37)

Your assertion that society will lose if gender studies majors for instance
decrease in output is debatable. In fact, a decent argument can be made that
certain majors have a role in indoctrination that make society worse off
because of increased fractionation, division, and tribalism.

~~~
mschuster91
> In fact, a decent argument can be made that certain majors have a role in
> indoctrination that make society worse off because of increased
> fractionation, division, and tribalism.

Or maybe because minorities actually (thanks to social media and progressive
whites) have a meaningful voice now? Of course white men are frightened by the
prospects of them no longer being the sole rulers.

> Your assertion that society will lose if gender studies majors for instance
> decrease in output is debatable.

It's not just about "gender studies". How can you, for example, quantify the
"productivity" of an archaeologist, a historian, or an artist? You can't.

------
smitch1000009
The most worrying thing is the concluding paragraph. We somehow need to give
schools more money to fix the problem?

------
olivermarks
NYT headline reminds me of the 2008 housing bubble crash. There were hundreds
of other articles and blogs on how corrupt US mortgage lending, repossessions
and banking was from about 2003 on, but the NYT didn't go near it until the
collapse. Now we have this...'Worse than we imagined' \- who's we? The NYT?
Lots of commentary on this reality already as well...

------
gamechangr
I co-signed a loan for a friend who worked in as a Chemical Engineer for GE.
Long story short, he had his Visa revoked, so I ended up on the hook for $16k
of his student loans.

I took a look at some of the financing terms and they are completely
ridiculous. He paid $130 a month and at the end of the year he had only paid
down $70 in principal.

These terms should be criminal.

~~~
harryh
(130 * 12 - 70) / 16,000 = 9.375%

That's a bit high but doesn't seem totally out of line for an unsecured loan.

~~~
gamechangr
I can see your math, but actually it was nothing like that (but I didn't
realize the extra info would be interesting to anyone - my fault). I should
have given more information, now it sounds a bit misleading, but it's
incredibly frustrating that corporations get away with this.

It was a 2.5% loan that balloons up to 6% loan after two missed payments, but
that's not the confusing part.

Interesting loophole, when he was sent back to Mexico - his payment lapsed for
6 months before I was made aware that payments were being missed. They claim
they are not allowed to disclose when payments are missed (but I'm allowed to
be held responsible as the co-signer of course).

Student loan laws have a maximum amount of interest that can be charged and
are not allowed to change the payment. They are allowed to redirect all
payments to interest until all penalties are paid.

Long story short - 12 & $130 = $1560 in payments made little to no
difference...$70 to be exact. Even more annoying, all of the payments post
showing principal being paid (and then it's "retracted" to pay for interest
the following month). Each month it would show the principal being repaid at
$33 and then the following month would be the same exact balance as the month
before.

I had to call the help line to figure out why $33 principal reduction never
lead to a lower balance....and that's with me paying attention to the details.

I paid it off for my friend and wish nothing but the best for him, but no one
should have to deal with the joke of an industry like Student loans.

~~~
harryh
Accruing penalties when you fail to make payments is typical for almost any
kind of loan. It is also totally normal for penalties to be paid before
principal. I'm really not sure what your complaint is.

~~~
gamechangr
I did not expect for the interest rate to double with two missed payments.
(yes there were low at 2.5% ).

I did not expect to be financially responsible for the entirety of the loan -
but not be allowed to know if it is current or behind.

I did not expect that when an interest rate is capped for student loans, that
there is an unlimited and compounding penalties that you are again -
responsible for - but not allowed to know if you are in good standing.

Every other loan that you owe - they have to tell you what you owe and what
the terms are. Not co-signing though

~~~
harryh
They have to do that for student loans too. Even if you're co-signing.

You should go back and look at the document you signed. It's a contract just
like anything else and if your counter-party doesn't abide by the terms then
you have grounds to get out of the contract.

------
chadcmulligan
I'm not in the US, but whatever happened to student activism, protests and so
on? There's no way they're going to rollover and say sure, don't worry about
it, same with health care, working conditions and everything else that seems
to be on here regularly.

You guys invented the protest movement, seems like some marches on DC would
get these things fixed, complaining on Internet forums doesn't really make a
difference.

------
sb8244
One of the best decisions, in hindsight, was going to a smaller state school
in PA rather a larger private or non state funded school.

It was probably 30% the price of Penn State and the fact that no one has heard
of the school outside of the state hasn't affected me since graduation.

I can't imagine a private school that charges upwards of 50k per semester all
in. However, that was the norm around the area I grew up in.

------
bernardino
I wonder how startups like Sofi ([https://www.sofi.com](https://www.sofi.com))
and Sixup ([https://sixup.com](https://sixup.com)) play into this. Are they
better options than what the school offers in terms of loans, etc?

~~~
chiefofgxbxl
(Strictly speaking for myself, and my experience may not be representative of
what others are experiencing).

I investigated Sofi as an option to consolidate my several loans into one.
This would simplify my payments, and get me a lower interest rate.

Sofi's offer was actually a poor one for me. They would've provided one large
loan as opposed to the numerous loans I have, but the rate was skewed so much
toward the highest end of the spectrum.

I rejected the offer out of concern that I would be locked in to a single
high-rate loan that looked good on paper because the rate was slightly lower
than my highest rate. The nice thing about having numerous loans as I do now
is that they are "compartmentalized". If I want to pay one of the loans off I
can do that and lower my total monthly payments. But if I consolidated and had
one large loan, if I pay 50% of that loan, it's not like 50% of my monthly
payments go away.

Hopefully this makes sense. I'm not a financial guru, so maybe there's
something I'm missing in this equation.

------
pwned1
With PAYE and IBR, it seems like one could permanently take a couple of
classes, receive all of the loan money for "living expenses," and then run up
an unlimited amount of student loans... and they never have to pay back more
than just a percentage of your income...

~~~
ben1040
Any amount forgiven at the end of an IBR term is considered taxable income, so
at some point you're going to just trade your student loan servicer's payment
plan for an installment plan with the IRS.

And if your IBR payment isn't enough to cover the interest as it accrues, your
balance at the end might be pretty big.

There was a story in the WSJ about a dentist who currently has $1MM in student
loan balances and is on IBR. When the IBR period expires, he'd be likely to
have a $2MM balance forgiven and consequently a $700K tax liability.

[https://www.wsj.com/articles/mike-meru-has-1-million-in-
stud...](https://www.wsj.com/articles/mike-meru-has-1-million-in-student-
loans-how-did-that-happen-1527252975)

~~~
pwned1
Generally the IRS will not tax you on a forgiven debt to the extent that you
are insolvent. Insolvent to the IRS mean more liabilities than assets.

[https://www.irs.gov/newsroom/what-if-i-am-
insolvent](https://www.irs.gov/newsroom/what-if-i-am-insolvent)

------
Jupe
Perhaps I'm missing something, but it seems a big leap to base such
exaggerated projections from only 2 years worth of data. All the graphs have 0
(zero) as their first year data point (2012) and indicate that tracking ceased
in 2014.

------
danschumann
I hated having student debt. It was abysmal. Dave Ramsey got me healed up
though.

------
forapurpose
I know it's oversimplified, but it results from American business' assertion
that the 'free market' is the best solution to all problems, and American
acquiescence to it. In other words, it comes from try to squeeze profit from
every damn thing, from people's health, to education, to privacy, to
government services (i.e., 'privatization') to everything else.

I think the free market is a great tool, but like every tool it is good for
some problems and not for others, and also it's a means to accomplish our
goals, not an end in itself.

~~~
pakitan
Except that, the way education works in USA, has little to do with the "free
market". The free market is _vastly_ distorted by the government guaranteeing
student loans. I can assure you the picture would be very different if lenders
had to actually assess every single loan candidate and applicants had to put
up some collateral for the loan. The endless stream of free money to the
universities would then stop and the students will get more careful with
choosing a college and a degree. I'm not saying free market is the best way to
go about education but it's certainly better than what USA has now.

~~~
forapurpose
IMO, this is yet another conservative argument to put more money in their own
pockets (by reducing taxes, accomplished by reducing investment in education).
No matter how cynical, the results of the argued policies are always the same.

Colleges are not victims of some Godlike invisible economic hand; they set
their prices as they wish, and before this dogmatic obsession with the market,
they set the prices to education as many people as they could - that was their
mission, not money. Instead, they are acting as market participants selling a
service for which there is inelastic demand - their customers almost can't say
no; education is almost invaluable. Therefore they can raise their prices
indefinitely - similar to health care.

The problem is not that we are funding students. The problem is market pricing
for education.

------
krnsll
Student loan terms and agreements should start accounting for a person's
performance before taking on the loan (so high school, undergrad, whatever
previous degrees) along with projected capacity to repay based on : -family
record on debt repayment; -the projected choice of area of study and standard
earnings projections of these degrees.

The system as currently constituted does not incentivize rational and
pragmatic decision making on part of the students. Part of it will have to
come from a change in the undergrad model: make people choose/apply a major or
a broad area of study and allow for a certain amount of wiggle room. This way,
for many undergrad will possibly be shortened and focussed or more vocational
for others. We also need to find some way to force educational institutions to
put skin in the game-- they currently get all their money without offering any
guarantees on employability.

Presently, as a recent college grad, I saw far too many people on debt
pursuing degrees unlikely to result in immediate or high paying employment --
eg., Any humanities field ending in "-studies". These people likely will not
be in a position to pay the full value of their debt back anytime soon, nor
will their degree hold any value (beyond sentimental) if they don't choose to
go to grad school. Moreover, by giving them the same interest rates, we are
implicitly penalizing/shifting burden on STEM students who essentially
subsidize their credit/risk calculus.

------
booleandilemma
It’s alright, I can assure everyone here that the government will cover all
outstanding student loans the same day I’m finished paying mine off.

------
carc1n0gen
I consider myself very lucky to of had the ability to live at home for my 3
years of college. Then after my first year, I was able to get a job as a web
developer at the college through a special program they do. Thanks to that
job, I was able to pay for year 2 and 3 myself and had very little debt to pay
off.

------
njarboe
"nearly 1.3 million borrowers — were not in default, but were either severely
delinquent or not paying their loans."

I wonder what "in default" means if it does not mean "severely delinquent or
not paying their loans". I did not see any explanation in the article.

~~~
onetimemanytime
default might mean x months behind, (6?) or when the lender has to take the
loan off the books since it's not likely to be collected at face value.

------
lxe
Is interest included in the "$23 billion owed?" A $20k Stafford loan at 6.8%
generates around $7,000 in interest over the 10 year repayment plan. That's
around 38% of the principal.

------
wpdev_63
Reminder: Your future employers care more about side projects and experience
than some writing on a piece of paper. You don't need to go to college to be a
kick ass programmer.

~~~
Kephael
It's very difficult to start your career at leading companies such as Google,
Facebook, etc without going to a reputable school.

~~~
IMTDb
That's why you usually do not start there. Google might require a degree, but
your local hairdresser does not ask for one as long as you can create his
website. Then move your way up from there. After several years recruiters will
be more interested in your experience, projects and contributions than your
non existing degree.

EDIT: other options include working at startups/smaller companies,
contributing to open source to get social validation of your abilities,
learning some skills through coursera/online courses, ...

~~~
Kephael
That's absurd, you're much better off going to a reputable school, working
hard, grinding leetcode, completing internships, and then getting a $150k+/yr
TC job to start. You'll come out far ahead by going to a good school. If
you're able to start at Google while you're still in high school, that's a
different story.

~~~
sosilkj
"$150k+/yr TC" ... is that considered an average/expected comp coming right
out of college these days?

~~~
IMTDb
It's the compensation some expect, not the one they get. And if they took a
student loan based on those calculations, they end up being the subject of the
article.

------
ur-whale
Where is this a problem apart from the US?

Any folks from countries where education is for sale want to chime in on what
it looks like at their end of the woods?

~~~
kazen44
In the Netherlands they recently (3 years ago) scrapped the
"studiefinanciering" (study financing) which was a grant gifted to college
student to support them in their living. It was replaced by a loan type system
where students are able to lend money from the goverment against a 0% (for
now) interest rate.

You have 35 years to pay back the loan, with an interest rate set every 5
years. You only start paying back the loan if you make more then the the
minimum wage (or if you make more then 143% of the minimum wage if you have
children)[1].

Defaulting on the loan is possible, although i have no clue how easy that is.
(It probably involves being placed under "Schuldsanering"[2])

The system has been highly critized as getting a loan is extremely easy and
many first year students just loan the maximum amount allows. (which is a
staggering 1300 euro a month, for comparison, the old system was a grant of
rougly 400 euro a month).

College costs itself is funded mainly by the goverment, as both Universities
of applied science and universities of science have major oversight from the
goverment.

The subsidized collegecosts are the same for everyone regardless of major(2000
euro a year roughly). This subsidizing only applies on your first bachelor of
first masters though. If you want to do more then one bachelor/masters, you
pay the full price, which is depend on major.

1: [https://duo.nl/particulier/studieschuld-
terugbetalen/terugbe...](https://duo.nl/particulier/studieschuld-
terugbetalen/terugbetalingsregels.jsp)

2: [http://www.financieelbewind.nl/wnsp-wat-is-
schuldsanering.ht...](http://www.financieelbewind.nl/wnsp-wat-is-
schuldsanering.html)

------
bogomipz
Can someone say at what point does delinquency turn into default?

Also I was under the impression that student loan debt could not be charged
off, even in bankruptcy.

~~~
debtfreer
Default usually occurs around 120 days after the last payment has been made.

Federal student loans typically have mechanisms (deferment, forbearance,
income-based repayment plans) that make it nearly impossible to truly default
on the loans.

Private student loans are similar to unsecured consumer debt. Once the unpaid
mark crosses 120 days or so, the loan is effectively collected like any other
debt (though debt collectors, collection attorneys, and lawsuits).

Student loan debt is presumably not dischargeable in bankruptcy, unless the
debtor can prove that the debt would create an undue hardship and other
factors which are very difficult to achieve (see the Brunner Test for most
jurisdictions or the Totality of the Circumstances test for the 8th Circuit).

~~~
bogomipz
>"Federal student loans typically have mechanisms (deferment, forbearance,
income-based repayment plans) that make it nearly impossible to truly default
on the loans."

Ah ok, so the default referred to in the article is "default" as a status
designation and not defaulted in the sense that the lender is taking a loss. I
think this is what I wasn't understanding. Thanks.

------
yuhong
What is fun is paying off debt by selling Bitcoin, and students by definition
would know more about Bitcoin than the average person.

------
m1573rp34130dy
its unfortunate that so many individuals, AND institutions have fallen prey to
social engineering with regard to the college/university scam/paradigm... the
pricetag of an education is artificial, the physical experience of exposure to
tech and mech is not however... ...being of an independent learning
persuasion, is underated... the movie g00dw1ll hun7in6 depicts a talented
person that has assumed a wide base of rounded education independently and
eventually is endorsed by the academic community... that person is not a myth,
there are many like that character, the academic community however is a good
old boy mentality, and the possibility that someone may present challange to
the degree program is almost nonexistent... at best a selected set of year1
courses may be waived...THERE ARE PEOPLE THAT HAVE THE CEREBRAL FORTITUDE TO
WALK INTO A UNIVERSITY AND SAY I DESERVE A PhD PLEASE GIVE ME MY SHINGLE AFTER
I DEMONSTRATE MY OPINION IS BASED IN FACT! Far too many of these people are
turned away, or left to languish in an academically feeble learning
institution. A greater number are imprisoned financially by the debt trap that
is unlike any other loan... learning is free has no costs and is only limited
by the self... EDUCATION IS A TRAP! its time to rethink the value of real
learning versus education

------
purplezooey
Sorry this is the baby boomers' fault. They got educated for free when state
budgets were flush and times were good. Since then, all they do is vote in
wildly ineffective hard right people and vote down any kind of bond or tax.
This leaves colleges with no state support, so the burden is passed to
students. Hoping the next generation does better in their political choices.

