
America’s Student Debt Machine - patagonia
https://www.motherjones.com/politics/2018/08/debt-student-loan-forgiveness-betsy-devos-education-department-fedloan/
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skh
I teach at a community college. Increasingly we are becoming a business and we
now actively recruit people who realistically can’t get a college degree. Due
to lower per student funding by the government we rely on tuition and need to
market and recruit. We have become like a smarmy for profit. It’s a bad trend
for society.

This semester before classes started we had seminars on helping students
dealing with food insecurity and housing security. The whole time I’m
wondering why are we asking students who are hungry or homeless to take on
unforgivable debt to pay for tuition. The system is rotten.

The standards have eroded. Increasingly I see barely literate people being
passed through the system. I pass people who don’t deserve to pass because I’m
hounded by administration on the importance of having a high passing rate. I
need a job so....

~~~
golergka
So, people are basically paying a stupidity tax. The same tax they essentially
pay in many, many other circuimstances, out of their own bad judgements and
lack of information.

At the same time, everybody seems to agree that a merit-based society is a
good thing. That your intelligence, ability to make good life choices and
decisions, and stick to them, should give you success. And at the same time,
most of the people measure success not in absolute terms, but in relative,
social ones, comparing peers. So, aren't stupidity taxes, in all of it's
shapes and forms, an essential part of merit-based society?

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petermcneeley
This is a broken window economic fallacy. Meritocratic sorting is a good thing
but at a cost of 100k and years of peoples lives its probably quite harmful.
Just like its far better that the window is never broken, its far better for
society if the people didnt waste this time and money.

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dimillian
In France, I did apprenticeship (3 days works, 2 days school) as Software
developer, meaning that I did not payed for school, I was actually payed to go
to school. And it was full salary, I did that for 3 years. Got my bachelor,
quite a lot of money and 3 years of experience. So I "began" my life with
money, experience and diploma.

It was not prestigious school, nor prestigious diploma, I could have continued
for a master, but IMO, I value experience far more than diploma, and where I
worked/work also.

So my question is Americans? What's the deal. Same for France too, I guess our
profession as developers allow that, I can understand that for some other
fields you need prestigious schools and requirements to get hired for a good
salary.

~~~
stevenwoo
It's been a slow gradual boil since about the 1970's when college prices
started increasing out of proportion to the cost of everything else, and no
one stepped in to reform things since it mostly worked for the universities
that could charge more and more, and make more and more money, except as the
article notes - to make it possible for students to get more loans. Combine
this with healthcare costs in America rising faster than college and
stagnating wages for the average American over the same period of time and the
added debt of college crushes a lot of people as the individual examples in
the article note.

Companies have not very often sponsored college students in America, except
for some profession like rural doctors where it's local government choosing to
help pay for an exceptional debt load for an unpopular lifestyle choice (being
primary care physician for a large geographical area).

The other option off the top of my head for Americans is to join one of the
military services to fund education.

How did you find the apprenticeship and how did you decide to choose that
route? Not sure of much like that in America except some of the construction
trades like electricians/plumbers.

~~~
dimillian
It's very common in France for private school to advertise apprenticeship.
Because it's a way for them to get more students, and more money, as the
company pay the school + the student. It's hard, but not impossible for a
student to find a company willing to sponsor them. In the end it can be a bit
cheaper than a full time employee + you get a few state taxes cut if you have
student/apprentice in your payroll.

For me, after college I was searching for that specific thing. That was my own
requirement, I wanted to dev full time while getting a diploma as a
"safeguard" and "to look good on my resume".

Actually school is more a side effect of me working. I continued school
because it was possible to work same time, if not I guess I would have stopped
after college diploma (BAC in France).

~~~
jbn
Watch out, "college" in US English means "university", while "college" in
French means "high school".

Your sentence "if not I guess I would have stopped after college diploma (BAC
in France)" does not mean what you think it means. You meant (I believe,
correct me if i'm wrong) that you would have stopped after high school (i.e.
when passing the final "baccalaureate" exam).

PS: note however that the baccalaureate diploma is in fact (this is a little-
known fact, even in France) a University degree in France. it's the first univ
degree that exists in the French education system, it sanctions the end of
high school. Weird, I know.

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hb3b
I am really sorry for anyone who has piles of student loan debt. But with that
said, there is no reason in my mind for someone to not consider state schools.

State University of New York (of which I'm a graduate) estimates the yearly
expense of a commuter student to be $17,320 @ a 4-year school, less if you
live at home, buy used books, take the bus, or go to a community college. It's
really affordable!

And there are so many opportunities for part time work on college campuses.
Everything from grunt work to being a TA to being compensated for working for
a department. Hell, I worked in the nursing department as a comp sci student
sorting files and research articles for professors.

Along with this, programs like CLEP and DSST exams that let you test out of
gen-ed coursework for $180 a pop. The savings can be in the thousands!

So for those students who aren't going to an IVY on a full or partial ride, or
those going to med school, I say do some research before committing to a
private school. There is absolutely no reason in my mind why somebody ought to
take on such massive debt and I am totally against the idea of our government
being in the student loan business.

~~~
wilsonnb3
I disagree that ~$70,000 for a four year degree should be considered
affordable, even if private universities cost many times that.

I do agree that public schools are generally a better financial option, as are
community colleges.

~~~
dgzl
I believe the parent is considering that price to include housing and other
necessities as well. I really think you'll have a tough time finding a decent
University that would cost less than that for a year's worth of use.

~~~
greedo
No, that's for a commuter student. Room and board would add much more to the
debt total.

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debtfreer
During the private student loan heyday circa 2000-2007, anyone with a decent
bank affiliation could spin up a "private student loan" company, write up
thousands of loans, and sell them off to the bigger banks and trust
portfolios, with very little regard to the student's ability to repay. It was
a very fly-by-night operation with sketchy advertising practices.

When the credit crisis hit, these companies were one of the first to cut off
the tap. And it was a literal overnight cessation of loan originations.

Buried within these promissory notes were odd mechanisms for calculating
variable interest, accounting fees, and cosigner releases. Despite the
variable rate moving very little on a month-to-month basis, students in
repayment would see 20% of their payment applied to principal one month, then
8% applied the next month. Some servicers would not apply extra payments to
principal, opting to apply payments to the next month's payment (which results
in maximum interest for the bank) unless the debtor followed a convoluted
trail of paperwork to force the bank to apply the extra payments correctly.
Co-signer releases would be advertised at "24 months of on-time payments" but
by the time the debtor reached that mark, they'd receive letters informing
them that the promissory note had a clause that allowed the servicer to change
terms, and the co-signer release was now 36 or 48 months.

Even servicers of the federal student loans would engage in sketchy practices,
such as charging the debtor an fee to enter into a hardship forbearance. You
can Google which servicers were fined heavily for these practices by the CFPB
during the last administration.

~~~
dragonwriter
> Even servicers of the federal student loans would engage in sketchy
> practices, such as charging the debtor an fee to enter into a hardship
> forbearance.

Actually, just encouraging forbearance when switching to income-based
repayment was available was a legally available option was a bigger one, which
the main service of federal loans (Sallie Mae—now Navient) was charged with
engaging in.

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alienreborn
Best thing I've ever done as far as college is concerned is

1\. Saved up money by working before going to Masters.

2\. Lived with 3 others in a two bedroom to save money.

3\. Chosen less prestigious institution in a smaller town which is
significantly cheaper than one of the bigger schools to which I got admit to.

Graduated with no debt.

~~~
whorleater
Best thing I've ever done as far as college is concerned is

1\. Did well in high school to qualify for merit scholarships

2\. Chose a top 10 college for my field

3\. Get a job starting at >100k per year

Graduated with debt paid off in less than a year

(this is comment is intentionally snarky to point out that "I did X and this
is how I avoided loans" stories are usually unique to a person and
circumstance, and ignores the very real problem that student loans are opaque,
confusing, and intentionally manipulative for young borrowers, which was the
point of this article.)

~~~
alienreborn
It wasn't meant to snarky. I would've been under debt too if I wasn't educated
about this by my family/friends etc.

~~~
intended
Non American here.

I’ve known about what works in the American education system since the 1990s
and before. When I was in my early teens.

Meaning that if you were one of the people in the know, you knew the path that
made you the most money.

Strangely, This is a privilege, one not enjoyed by most Americans.

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Taylor_OD
Graduating without debt has affected my outlook and early career much more
than I realized it would have. I paid for school with a combination of sports
and acting scholarships and some money my parents had been saving for school
since I was a child.

Getting out without debt allowed me to move to a city right after school with
some meager savings, take a few months figuring out what I wanted to do, and
take a job that paid very little upfront but had a large potential payoff.

I can count on one hand the number of people I know my age without any student
debt. It's insane. It's also limiting with dating. It's odd to think I may
inherit (in some way shape or form) 25K-100K of student loan debt from a
significant other.

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40acres
I was talking to my girlfriend the other day about this trying to wrap my head
around what this will mean for the economy 20-30 years from now. We don't have
student debt so we're in advantageous position. I keep wondering, what will
happen to the housing market once the boomers die and their estates (and
homes) are put on the market -- do prices drop because so many people have
debt and can't buy homes? Do they rise because the gap is filled by foreign
investors and those who don't have debt and/or have the wealth to scoop these
homes up? I haven't been able to find any literature w.r.t to the long term
impact of the student debt crisis.

~~~
1290cc
If you google you will find some data on this, GenX/Millennials are due to
receive the largest pot of inheritance of any generation before them!

~~~
dragonwriter
> If you google you will find some data on this, GenX/Millennials are due to
> receive the largest pot of inheritance of any generation before them!

The fact that a handful of their age-peers (who are already quite wealthy
because of the advantages of family wealth) will be fabulously wealthy on
levels not seen before in history will not be of much benefit to the majority
of people in those generations.

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chiefalchemist
> "According to a 2012 study, 65 percent of newly hired nonprofit workers had
> student debt, and 30 percent owed more than $50,000. In order to keep people
> working as public defenders, or rural doctors or human rights activists,
> something had to be done. PSLF was an attempt at a fix."

So the root problem was jobs that didn't pay well __, but the solution was
student debt forgiveness? That is, find a problem, solve a symptom, the
problem remains, and the symptom becomes a bigger and more expensive problem.
But the politicians got more votes, and the taxpayers stuck with the bill.

This article should have focused on this. This is the lesson that voters are
unwilling / unable to learn.

 __and perhaps ppl taking on more de

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madengr
The real problem is she paid $70k for a masters degree to be frigging
bureaucrat. The second is that the federal government loans money for this
crap.

Sheesh, I paid $0 to get a MSEE as TAs pay no tuition. Then was paid as an RA,
so essentially was paid to do an MSEE.

People are crazy.

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chriselles
Student debt is an issue close to my heart.

I received my undergrad from a middle tier small public state university in
the US.

I received a very good ROI on the money spent.

25 years later(graduated 93) the out of state cost has exploded 500%

Meanwhile starting salaries for Liberal Arts grads has barely moved since
1993, only circa 10% or so.

“Purchasing” a salary with a degree should have a positive ROI, rather than a
negative ROI.

My thoughts are as follows:

Universities should have the same standards as print advertisers and used car
dealers.

Graduation rates, starting salary rates, return on education $ invested rates
should be independently audited(like readership audits for advertisers in
print ad industry).

And education consumers should have car industry Lemon Law like protection
against universities selling indentured servitude rather than value-add
education.

My kids use Khan Academy, Duo Lingo, Amy.ac AI Math Tutor(disclosure, I’m on
the cap table as investor), and Fender Play 5 days a week.

I’m rooting for Ed tech outfits like Khan Academy, Coursera, EdX(and of course
Amy.ac) as an Ed Tech sector to transform education.

We are looking hard at Harvard Extension School for our children as a possible
hybrid option for them.

1)School brand value 2)Online and in person learning requirements
3)educational rigor 3)Value of #1 & #2 & #3

While Harvard Extension School is traditionally for adult employed
learners(and has been around for a long time as a correspondence school), I
think their branded hybrid approach points to the future.

All I know is that countless middle to bottom tier schools are doomed.

To me, the financialisation of higher education achieves two goals:

1) Banking sector profiting from indentured servitude

2) University white collar worker bloat is akin to the “manufacturing” blue
collar construction jobs that evaporated after the housing bubble of 2002-2009

Just my 0.02c

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hollaur
Is there a way to dig up the average credit score of student loan borrowers at
the time they received their first loan?

If the government didn't do credit checks, which I don't remember them doing
on mine, then wouldn't this be the epitome of predatory lending?

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jxramos
Guys we just need to make college free and shake down these greedy fat cats
who are splurging off their huge profit margins. Right??!!!!?

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cascom
shocker - government program is poorly administered and a private contractor
is poorly supervised.

~~~
skh
The thing that shocks me is how Americans casually accept that government will
pooprly run some programs. It’s almost expected that this be the case. Indeed,
one of the two major parties sometimes actively seeks to prove incompetence.

~~~
sjg007
It is worse than that, the republicans seek to actively destroy programs that
help people out. There is no reason we need private loan servicers for
example.

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merpnderp
And your opinion is exactly why nothing ever gets reformed. Republicans almost
never want to "destroy" programs, they want to make them more efficient. My
state spends $1k more per capita on public services than Texas, but no one
would ever claim we get $1k more per capita in public services. We do have
many more per capita administrators for our departments.

But anyone who wants to solve this probably of deep institutional inefficiency
is accused of "destroying programs".

~~~
bobmarley1
See Betsy Devos and Mick Mulvaney. They are literally gutting their respective
Departments for the direct benefit of private corporations. You can tell
yourself that they are just trimming fat all you want but please explain how
removing protections for student loan borrowers or dismantling consumer
financial protections helps anyone but corporate bigwigs?

