
Profits from student loans are ‘obscene’ - boh
http://www.washingtonpost.com/blogs/post-politics/wp/2013/07/17/warren-profits-from-student-loans-are-obscene/?tid=rssfeed
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jtome
Just some context: Student loans outstanding will exceed $1 trillion this year
[http://usatoday30.usatoday.com/money/perfi/college/story/201...](http://usatoday30.usatoday.com/money/perfi/college/story/2011-10-19/student-
loan-debt/50818676/1)

The amount universities are charging students is what's 'obscene' to me.
Making 5% profit on "obscene"ly risky loans isn't the cause of the US's
student debt problem. This just sounds like populism and pandering.

~~~
InvisibleCities
>Making 5% profit on "obscene"ly risky loans isn't the cause of the US's
student debt problem. This just sounds like populism and pandering.

Student loans are federally guaranteed (i.e. if the student cannot repay the
loan, the federal government will), so they aren't risky at all; the bank is
getting its money either way. If you're going to shill for the banking
industry, you're going to need to try harder than that.

~~~
jtome
Um...what?

I had said that it isn't obscene for the federal government to make 50 billion
dollars a year off a much larger amount of very risky loans that it bears
almost all the risk for, and you accuse me of "shilling for the banking
industry".

I think it is _you_ who needs to try harder.

EDIT: changed all to almost all, since not all loans are federally guarenteed
as warrenm points out

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sentenza
As a dude from Europe, I'm used to hearing Americans complain about their
student debt.

Then I recently read that some American government programs give out student
loans at rates of up to 9%. Even though I'm not in any way affected, this
makes my blood boil.

If you are from the US, want a decent education, don't qualify for a
scholarship and probably won't get into MIT anyway, please consider going
abroad for your studies. In many countries over here you pay your living
expenses, a relatively small fee (<200€ per semester) and that is it.

Granted, you'll have to spend some time learning a weird language and you will
most likely get some sort of culture shock, but in the end, you can get a
decent education here without ruining yourself.

Here are some links:

[http://studieren.de/checklist-germany.0.html](http://studieren.de/checklist-
germany.0.html) [http://www.studyinpoland.pl/en/index.php/education-in-
poland...](http://www.studyinpoland.pl/en/index.php/education-in-
poland/19-questionsanswers)

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jasonkolb
This is economics 101... Monopolies are bad, especially when they're protected
by the government. It's absolutely sickening that you can't get rid of this
debt even in bankruptcy, and these loans are given our to practically
everyone. It's encouraged, in fact. This influx of guaranteed money inflates
prices as well of course, to absurd levels.

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acheron
Are we really doing this? Not that student loans aren't a good topic for
discussion, but basing it off of obvious political posturing with little basis
in reality is a bad place to start.

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HarryHirsch
It cannot be said often enough: state and federal support for universities has
dropped considerably, and _that_ is the root cause for the rise in tuition.
Nothing else.

Again: the burden has been shifted from the taxpayer to the student.

~~~
pandelume
Baloney, my friend. Government student loans are the PRIMARY reason the costs
of college have skyrocketed. End them - observe as the army of administrators
dwindle, the pointless BS classes disappear, the tuition bills decrease.

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tn13
Somehow the title moves the focus away from problem. The real issue is not
about obscene profits. Apple might be making obscene profits from iPhone.

The real problem is how Universities and Government have managed to create a
monopoly and milk the future generation of their country.

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NTDF
Is it really this hard for Americans to understand that this whole thing is
not sustainable?

I am not an American but I have lived here for the last 3 years. There are few
things that I find really strange.

What is wrong with the fee structure of universities here? The tuition is
ridiculously high for the standard of undergraduate education. High tuition
creates two very fundamental problems in the society.

First, barrier to entry is very high. Not everyone can afford college. This
creates a class of undereducated people. Normally, a set of population being
undereducated is not a problem (actually it is a good thing from the
macroeconomic perspective). But that is not true for America. Life in America
is ridiculously complex. There are multitude of choices for everything and
everyone is expected to make informed decisions.

But the underclass does not know how to make such choices. The underclass
never got a chance to get educated and well-informed of their choices. How the
fuck does the American society think they will live their lives? Will they
make good health choices? Good career decisions? How will the underclass
sustain themselves?

Second, to solve the "barrier to education" problem, we created a loan program
which gives money to every one. Econ 101: As a necessity for growth, a loan
has to make a profit. The government giving out easy loans is not a solution
at all. This just pushes the problem to a point in future. Meanwhile, the
loans create underclass 2, a generation coming out of school with debt. I've
seen friends paying their loans off until 10 years after graduation. What a
burden. This burdened underclass 2 does not have the freedom to switch jobs
easily, take risks, make expensive (hut healthy) choices. For a consumer-
driven economy like we have in America, this is toxic.

How hard is it to understand that we are just pushing the onus on to someone
else in the future. Honestly, I'm quite scared to have kids here. They are
going to suffer a lot. Why?

\- Because even with a decent salary, I won't be able to buy a house, send
kids to good schools and activities, save for their college education and make
healthy lifestyle choices, all at the same time. Forget starting my own
business or vacations or pursuing my hobbies

\- So, my kids will end up taking a toxic loan which they'll take years to pay
off

\- That means when (if) they marry and have kids, they are in a worse position
than I am right now to do anything. Their off-springs will have it even worse.

There is no guarantee that this will not burst like the housing bubble. The
people affected by these would be young citizens. These same young citizens
(and their off-springs) have to lead the country to the future.

If we value freedom and individualism so much here, the barrier to getting
information and sound advice should be much much lower...aka education and
healthcare should be fucking cheap. Education should not be a profiteering
pipe-dream for anyone. It is a matter of people's lives.

A few folks will call me socialist for saying this but hey, if making
education and healthcare cheap does not make sense to you, I don't give a fuck
about what you call me. Btw, I am no Obama fan either.

At the current rate, all we are creating is underclasses that is not good for
a consumer-economy reeling in debt. (sidenote: A consumer-based economy
submerged in debt is never good news. Consumer-based economies need citizens
with sound financial status to keep them the economic engine running)

