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Americans Are Paying $38 to Collect $1 of Student Debt (bloomberg.com)
287 points by JumpCrisscross on May 19, 2017 | hide | past | web | favorite | 225 comments

A supposedly college educated American can't make $5 a month payments in order to clear their credit report and set themselves up for $0 per month payments from that point forward? And it's the loan servicing companies are to blame?

What am I missing here? Is it too hard to Google "income based student loan repayment" and read for a few minutes to know what to ask for? Or these people would rather have creditors calling them all day and a credit score of 300?

It's a completely separate matter that the Obama administration setup a system where we pay $1800 to debt collectors to collect $45 just so that the payer can default again. What is the point of collecting $5/month? I understand maybe trying to get at least a regular payment setup -- that's probably worth paying the debt collector $50 if they can manage it. But $1,800? Wow...

It's not that simple

– parent loans are based on the parents' income, which makes income-based repayment useless

– loan servicers don't want you on income-based repayment, so if you ask them about it they're not helpful whatsoever

– they fuck up the paperwork CONSTANTLY, almost every year I have to apply for income based repayment 2-3 times because they lose the paperwork or make some asinine error

– no one is actively educating grads about the program because there's nothing to be gained from it

– if you get married your spousal income is factored into the payment, even if your spouse also has loans

It's not a one time simple thing and you're done situation. It's a pain in the ass and almost no one will help you figure it out.

This is an industry that thrives on the illiteracy the average American has in personal finance. I know multiple people who ruined their credit because they didn't know the unemployed get temporary loan deferments.

I went on deferred payments when I lost my job 2 years ago, after missing the first payment they called me and set me up on a 0 payment deferment plan. After I got my job and made my first payment they called me again and set me up on an income based repayment plan.

Both times they called me, emailed me the forms, and helped me set everything up. I think they people who are defaulting are the ones trying to ignore everything and ducking calls.

Parent loans leave the parent on the hook, not the student so I don't know why youre bringing that into the fold.

Things aren't that complicated, you have multiple (usually 8, one for each semester) loans at different interest rates and you need to repay them. Not that hard.

>Parent loans leave the parent on the hook, not the student so I don't know why youre bringing that into the fold.

Because the family arrangement might still be for the student to help repay them -- or be forced to later by changing family economics -- when he graduates.

The parent is on the hook if you want to completely destroy your relationship with your parent, sure.

> the illiteracy the average American has in personal finance

These are supposed to be college educated Americans.

I didn't understand that our tax brackets in the US are marginal (i.e. we don't pay 35% of our entire income if we are in that bracket), until a quarter way into my PhD program.

It never ceases to amaze me some of the basic stuff in life I still don't know.

Luckily I researched how to pay off my undergraduate student loans in the best manner as soon as it was time to start ponying up.

> I didn't understand that our tax brackets in the US are marginal (i.e. we don't pay 35% of our entire income if we are in that bracket), until a quarter way into my PhD program.

Is this common? How do we educate people about this? How can we have a serious conversation on tax reform when people don't know what system we have now? Personally, I want an end to most deductions and credits (but honestly because there are so many that I'm not using and never will use). However, if wager that the only people who know about them are the people who use them.

For example, the Masters exemption for Airbnb hosts makes no sense.

Misunderstanding how marginal taxation works not only seems common in the US, but I suspect it's something that is encouraged, as a way to get poor people to support cuts in taxes on the highest brackets.

It also causes folks in one tax bracket to keep their income down for fear of paying way more. I've had conversations with multiple people who were deadly afraid of earning another dollar because they thought their entire income would be taxed at that rate. They were only disabused of the notion after bringing up the IRS tax tables and calculating it all.

Also the United States tax code is amazingly complex.

Yes and simplifying it involves in pissing off a lot of people. Closing loopholes makes people made. People who have money. People who will spend money to keep things the way they are. And (sometimes) we are those people.

I don't know how we can ever actually simplify the tax code.

I also didn't understand the marginal aspect of tax brackets myself until about the same point as OP. We only ever talk about tax brackets as a percentage, I feel, so that aspect just never comes up. It's an easy assumption to make.

(And even if you feel like that assumption is nonsense, since it results in absurd situations like an income increase resulting in a net loss: I would say most Americans don't expect the laws or tax code their government makes to behave sensibly, so this just isn't a red flag.)

> How can we have a serious conversation on tax reform when people don't know what system we have now?

We have this issue in a number of areas, not just taxes; e.g., tech issues (encryption, net neutrality) in politics.

(And I find this happens a lot, not just in politics. For example, I feel that I've run across a number of people who think that because C++ lacks garbage collection, that C++ code must therefore be littered with manually new/delete calls; thus, GC is "better", because folks don't realize that an alternative, RAII, exists.)

Live in the UK, we get taught that sort of stuff in high school. Every term we'd have one morning for PSHE (personal, social, health and economic education) where we'd learn things like how to fill in taxes, how to create a CV and also some more varied ones like how to play poker.

Although occasionally they were hit and miss (pornography is as bad as cocaine was a memorable one), I really valued them as useful life skills. The Wikipedia article gives an excellent definition [0]:

> Personal, social, health and economic (PSHE) education has in various forms been part of the National Curriculum for schools in UK since 2000 ... PSHE education is defined by the schools inspectorate Ofsted as a planned programme to help children and young people develop fully as individuals and as members of families and social and economic communities. Its goal is to equip young people with the knowledge, understanding, attitudes and practical skills to live healthily, safely, productively and responsibly.

[0] https://en.wikipedia.org/wiki/Personal,_Social_and_Health_Ed...

How old are you? I was never taught anything useful like that in secondary school. I'm 32.

Not the chap you're replying to, but we had that in middle school. I'm 27. I think it was a reasonably new thing here. I don't remember them teaching us much about economics, all I remember is a lot of drug paranoia, and how to make a CV that wasn't awful (which to its credit I felt was worthwhile)

I feel like there would be a relatively short list of high value topics: basic financial knowledge (interest on savings & loans, personal accounting), mortgages, how to choose a job specialization (including objective numbers on salary / hiring in various fields), how to apply for employment, how to find better employment, how to avail yourself of the various government-funded services (library, medical, etc) or interact with their private equivalents, basic legal knowledge.

Summary versions that could easily be knocked out in a single year-long grade school course.

The biggest point of teaching these to everyone would be to address income inequality. Because if you're from an affluent family, these topics are usually information you have ready access to via your parents. If not... you really don't, and that has an impact on your chances of success in life.

Sure. But they are also folks that dropped out for whatever reason. Additionally, most folks take out the loan when they are still in high school. A lot of these folks only had a short class in personal finance, if any. Mine was when I was in 8th grade (out of 12). This lasted for 6 weeks, but only once a week. During that time, the "special teacher" - a car salesman - gave us extra credit if our parents looked at a car.

I have encountered American university students who did not understand how percentages work.

Most people don't understand how percentages work.

Ask people these questions:

1) I'm going to sell you a TV. It's priced at $300. I'm going to give you a 10% discount. What will it cost after the discount?

2) I'm selling you a washing machine. You're paying me $500. It's already had a 10% discount. How much did it cost before the discount?

Most people can get an answer for (1), but they do it by mashing buttons on their smartphone calculator app. They don't know the method; they would not be able to talk through the method on paper. Most people can't give you an answer for (2) even after some time mashing buttons on their calculator.

People can't spot misuse of percentages (eg, the "politician's bridge" (also called the Mexican Bridge from How to Lie With Statistics))

This isn't just the general population. We find some scary lack of understanding of percentages in doctors.


> In one study, physicians were asked to give the chances of malignancy with a 1% prior probability of occurring. A test can detect 80% of malignancies and has a 10% false positive rate. What is the probability of malignancy given a positive test result?[3] Approximately 95 out of 100 physicians responded the probability of malignancy would be about 75%, apparently because the physicians believed that the chances of malignancy given a positive test result were approximately the same as the chances of a positive test result given malignancy.[4]

> The correct probability of malignancy given a positive test result as stated above is 7.5%

Gerd Gigerenzer's book Reckoning with Risk has many examples of this.

I agree that innumeracy of various degrees is a widespread problem, but I do think the last example is because the term "false positive rate" sounds to many people like it should mean the false discovery rate. I'm sure there are some people who do have trouble reasoning from the correct definitions, but mis-identifying/remembering the semantics of the values provided leaves no chance for succesful calculation.

Of course, these are well-known examples. Recently it was claimed in a Dutch newspaper that a soccer player paid over 100% in taxes (but still received money).

The particular students I met did not understand the idea behind percentages and could not calculate 10% of a given price.

That's not a lack of understanding of percentages, but of Bayes' rule, which arguably is in a completely different realm of conceptual sophistication.

Gigerenzer's point is that the same people who don't understand the example when given using percentages find it trivially easy to answer if you give natural numbers such as "1 in 1000 people".

I took a brief course in accounting. The instructor was a former used car salesman. So we were talking about that business, and he said that the dealership didn't make money off of the cars, they made money off of the financing. And they made that money because the customers simply could not understand interest rates and payments. He said he'd repeatedly patiently explain the options to them, how the higher payment plan would save them money in aggregate. They'd eye him suspiciously, tell him they weren't going to be taken in by shenanigans, and always pick the lowest monthly payment plan, which was always the costliest to them.

This is what happens when you dog learning arithmetic in school, wondering what use it possibly can be. Not understanding arithmetic will cost you real money, a lot of it, throughout your life.

And "college educated Americans" are supposed to be "financially literate" (to the point of knowing the various intricacies of loans) because?

Tons of them can't even place France on the map...

Is your degree in personal finance?

Much of a college education is "learning how to learn", not necessarily stuffing one's mind with facts.

There are innumerable books on personal finance. I expect a college educated person would have no trouble picking one up and reading and understanding it.

It's not quantum electrodynamics.

> Much of a college education is "learning how to learn", not necessarily stuffing one's mind with facts.

I think most degrees are just rote memorization. You must be referring to comparative literature or math or philosophy or something.

It's about learning how to learn. I got much better at learning during college, and many have told me the same thing.

If you picked a college that consisted of rote memorization, you were rooked. Due to google, rote memorization is rather pointless.

I think college tends towards learning a lot about a little with a bunch of handholding. Autodidacts are more likely to have learned how to learn.

I see this a lot with junior devs at work. People are intimidated by what they don't know and ask for help or get frustrated or despondent - approaching things with a bit of bravery and analytical method is unusual. Those people are exactly the ones you want to keep, of course.

I don't care what they're supposed to be — there's little to no personal income management in american curriculum from elementary to college. Adults in the US don't even understand how taxes work. Entire industries thrive on this fact.

PAYE does not take into account spousal income if you file taxes separately. Your other statements are correct. One really has to research things and it appears many do not.

EDIT: The PAYE plan does not take into account spousal income if you file taxes separately. People should be aware of this.

Married filing separately is a filing status of last resort. You really only want to do that if you'll save a ton of money through PAYE. Financially you'd be better off not getting married in these cases.

Apparently you can file separately in order to not take spousal income into account, then file an amended return to make it joint instead without recalculating the debt relief. Seems a bit shady to me, but apparently not uncommon.

Yes it is better not to get married in such a situation. At least financially speaking. But it is still false to say spousal income is always taken into consideration.

From the article:

> All that's needed to enroll is some paperwork that enables contracted loan servicers to confirm borrowers' annual earnings, but experts inside and outside the government say they don't know why this step isn't completed, and distressed borrowers are left stuck in debt collectors' sights.

My guess would be that the loan servicers in question aren't bothering to tell anyone about the program, and nobody else can make it available in the first place. Even this article just mentions "some paperwork" instead of mentioning any details.

> Is it too hard to Google "income based student loan repayment" and read for a few minutes to know what to ask for?

If you aren't already aware of this option, how are you supposed to know the exact phrase to Google for? Maybe the issue is that we need more education about the options available for repayment.

Well, adjust the search accordingly. How about, "I can't afford my student loan payments"?

That still presumes that the person who should be searching is aware that there are options to search for in the first place. If you assume that your only options are to either pay the amount you're billed monthly or default, it might not occur to you to try to solve your problem by searching Google.

An educated person ought to have enough perspicacity to know that there might be other options. At least one should have enough wherewithal to attempt a simple search.

>An educated person ought to have enough perspicacity to know that there might be other options.

Probably depends on the degree someone would associate getting a piece of paper for time served in a university as well as coming out heavily in debt is equivalent to an education.

This seems to ignore the fact that people are irrational (I cite the difference between classical Economics and Behavioral Economics). Especially when they are emotional, which is exactly the case when they are under an immense debt load, in default, with little to show for progress.

> An educated person You seem to presume that just because someone has student loans, they are educated. If you look at the DoE and Congress going after the predatory loan practices of for-profit colleges in both misleading recruiting and sub-par {education, graduation, job prospects}, there is a sizable population of people with large student loans and nothing to show for them.

That search is just going to get you people trying to scam you.

I wonder how people get through college unable to use google.

They somehow managed for hundreds of years prior to the Internet.

Knowing how to use Google is different from recognizing when to use it.

Perhaps the burden on the loan holder is more than financial. Credit aside, paying $5 per month on student loans of say $80k isn't much better than paying $0. You still won't pay them off in your lifetime.

Edit: I missed this part:

> The consumer bureau estimates that the vast majority of borrowers who rehabilitate their defaulted debt with $5 monthly payments are eligible for $0 payments after they exit default, under an income-based repayment plan. But about 90 percent of debtors who rehabilitated their debt failed to enroll in these programs, according to the CFPB’s analysis.

In that case $5 * N months is an inexpensive temporary peace of mind even if the looming debt remains.

My friend had this issue when health issues required her to drop out senior year. No degree, but saddling debt. The deals you make are always temporary and often misunderstood. If 90% of borrowers aren't doing something, there's a reason.

The best thing that she was able to do was to declare chapter 13 bankruptcy, which shut down the collections bullshit and trickery and let her pay debt down. In her case, the student loans picked up a prorata share of her payment which put a dent in the balance.

The institutions of higher learning taking this money could force their indebted students to study this process, learn about career and work options, or even nudge them toward likely job trajectories, but they don't and no one forces them to.. They're happy to continue selling a dream and hobble these poor students who haven't had proper guidance with debt. Frankly it's shameful.

Parent loans, not loaning money from parents, will not restructure payments based on income of the student. About half of my undergrad loans are parent loans.

Are you talking about PLUS loans? Because those ARE loaning money from parents; it's just that the parents borrowed the money to loan it and it's the parent's responsibility to pay it off. The government loan isn't to the child in the first place.

Or am I misunderstanding?

I don't know the difference. Only that my parents have loans from my undergrad, and I can choose to just not pay them, but I'm not a piece of shit (aka, my younger two siblings). But those loans can not get adjusted payments based on my income.

Some 'anecdata': 2 people I've known personally basically seem to fall in the category of "my credit score is 300 and bill collectors call but I don't make enough money so screw them I'm not paying." Just because someone attended college doesn't mean they have made wise decisions about taking loans and what to study (if they've even finished a degree). That $5 is towards a pack of cigarettes or gas for their car, why would they 'give that away?'

Then they go into rehabilitation with minimum payments, so they can get more student loans and not pay those back either. And the saga continues

Income based repayment can be way too high. Think two or three hundred when you are already living paycheck to paycheck.

> Close to 80 percent of borrowers who rehabilitate their debt make the minimum $5 monthly payment, according to a 2015 estimate by the National Council of Higher Education Resources, a lobbying group that represents student debt collectors and servicers. That means the Education Department is paying its debt collectors up to $1,710 per borrower to collect around $45, regardless of whether the borrower continues to make her payments.

In other words, the government is paying through the nose in order to artificially reduce actual default numbers.

Here (Canada) you can get your loan forgiven if you can plead your case. This only applies to government loans and not private ones made directly through banks.

Tuition fees are still outrageous compared to what they used to be, the subsidies are slashed to nearly nothing, but at least you're not going to be bled dry if you can't get a job when you graduate.

Don't you see the connection? School fees are high partly because people can get free money to pay them. This of course screws the people who do not take the free money by defaulting on loans.

Pretty much, why is an "inexpensive" college over $12k a year, with community colleges charging upwards of $7k a year? Seems crazy that the minimum you can spend on college is $40k, how is that accessible to the average person?

Well, when you consider the average car price in the US was $33k in 2016, it doesn't seem that unreasonable.

Yeah, unless my parents were in the top 2%, I doubt they'd be buying me a new car, let alone one near average cost. Instead, I get to use a value-free truck that I've welded back together! The joys of going to a commuter college.

They did try to make it bikeable, by increasing parking costs and getting the county to reduce bus service. Oh, and the shower areas that UW/UWB/Seattle Colleges put into their new buildings to get LEED certified? Those are all locked up, cause screw bikers!

I doubt that students:

1. Have money to buy a new car

2. Can buy a new car every year

They could buy a new car every year if they give up avocados. But you know college kids, they're all high on guac.

Looks like were there some downvotes. I think folks missed the sarcasm and Australian news: https://www.theguardian.com/lifeandstyle/2017/may/15/austral...

While that comment is ridiculous, I live where the cost of avocado spread on toast is around $6 after tax and a cup of coffee is around $4-5 after tax.

The point is not entirely without merit.

This is a major city but not like SF or somewhere crazy.

That was a story that I found outrageous.

I recall my distant relative and another few of my friends got a house here in Toronto when they were 1/4 - 1/3 of what they are now. All while their salary being maybe 10% less.

And then the older generation starts lecturing us... Completely disconnected with the current reality.

Of course, the houses were cheap back then because it was a petty undesirable place to be.

Incremental change tends to be less noticeable if you see it every day, but as someone who visits Toronto just a handful of times per year it blows me away how much the city has changed in even just the last 10 years. Once old and run down neighbourhoods that I wouldn't ever want to live in are now highly desirable places to be. While I'm a bit too young to have much perspective on the situation 20-30 years ago, from what I've learned from those who lived in those neighbourhoods back then, it was even sadder and even scary to live there.

I am surprised they were only 1/4 of what they are now.

> Once old and run down neighbourhoods that I wouldn't ever want to live in are now highly desirable places to be.

There's never really been "scary" places to live in Toronto apart from a few neighbourhoods and housing projects. The places that people describe as scary just have a lot more "character" than other parts. You'll see mentally ill people on the street, those with physical disabilities, those who are dirt poor. In other parts of the city they're swept away or ignored.

What you're describing is gentrification. Gentrification has happened.

I'm going to have to disagree with you on your first point. A friend of mine purchased a house from in what is now a bustling tech community with all kinds of money around, but the past is still evident. There were bars on the windows. Visible damage to the home where someone tried to break in. Others who lived in the area in the past also echo similar sentiments of how it used to be.

Of course those are just anecdotes, but the data confirms it. Crime rates have declined meaningfully over the years. Gentrification made these nice places to live, but the decline in crime is why they are less scary. Unless you are trying to imply that crime isn't scary?

Most of the crime comes from crackhead types, and those people are allergic to conflict. They like to break into places when nobody's home, grab a few things and bolt. They love garages, they hate homes.

I've known people that have lived in Parkdale for thirty years, and while it's better now, less petty crime, it's never been an especially violent place. "Sketchy" in Toronto means places where you can't leave your bike unattended for six seconds or where your garage will be ransacked by people every couple of years if the door isn't locked properly.

Gentrification pushed the troublemakers further away, jacked up rents, and changed the demographics substantially. It's a whole different town in some places.

Car prices have basically doubled from that era, while tuition has gone up five fold or more. That's the problem.

Don't talk average car prices, some people spend stupid amounts of money on luxury vehicles. Look at the easily accessible, low-cost options like Kia and Hyundai. Those are half that price.

Average car or average new car?

Financial aid, scholarships, and Federal loans (to an extent) help a lot for sure.

Not partly, it's single handedly responsible for it.

No. Pretty much every aspect of higher education is subject to some degree of Baumol's cost disease, as well.

Not completely true. With the advent of ScanTron, Blackboard, online tests and quizzes, etc. much of the 'manual' work of teaching can be automated. Couple this with online classes, and one professor can run WAY more sections of a class than he could if he had to physically teach all of these classes. Even with in-person lectures and automated grading, labor productivity has increased dramatically in the last decade or two.

It is true that "running sections" has gotten more efficient, but that has nothing to do with education. Lectures have repeatedly been shown to be the worst method of teaching, and being able to speed up exam grading does nothing for that. It's also impossible for our lone professor to grade homework in a mega-section without an army of TAs (who cost money).

Baumol's cost disease concerns jobs whose labour productivity does not increase. It's obvious that teaching has increased in productivity. So where is the money going? Administration and capital expenditure.

Universities compete for the top students. They spend huge amounts of money on elaborate buildings and fancy landscaping. They hire more and more staff to run these facilities and cater to students' every little need. The pool of top students is limited, making this a zero-sum game. This is why tuition keeps going up.

The connection is that as subsidies have dropped, fees have skyrocketed.

When I was in school the tuition was $3500/yr. and I was in one of the most expensive programs in the whole university. I knew people in other programs paying as little as $2000/yr. Foreign students, who didn't receive any subsidies, paid about $19,000 for the same thing.

That was the kind of money you could easily make over the summer even at a mundane job if you were careful about saving.

Now for a basic arts degree get ready to fork out $10,000 or more. Some CS people are paying $16K a year. I'm not sure how you'd come up with that kind of scratch except with a student loan.

Education is not something that should be driven by demand pricing. Of course there's demand for education, society demands it, and as such, society should help offset the costs. Would you rather live in a place where half the people had a university education or where half the people had barely finished high school?

No, the government is paying private contractors to advise debtors, which is a market-based approach utilizing efficient private enterprise. Hence the 38 to 1 ratio is quite obviously the most efficient that can be done - this is just economics 101.

Just imagine if the government would simply employ people to advise debtors directly, how inefficient that would be, how unhelpful the advice would be, how much money would be wasted! They'd probably spend more money on that bureaucracy than what little revenue they'd bring in!

I too am thankful for the efficiency of the market. Contracting works a lot like this as well. Efficiency uber alles, as I like to say.

> In other words, the government is paying through the nose

With our money, one might add.

It would be much better to send those defaulters to prison where the annual cost is typically more than the most expensive colleges in the country...oh wait, maybe we should just send them to college and pay for it, that might save even more money?

Before we start paying for it, we should ask why the costs have increased so dramatically in the last 10 years, and why the benefits of a degree have gone down. Then, neither debt nor debt collection would be an issue.

After all, the reason people can't pay back their debts is 1) even state colleges are expensive, and 2) the job market doesn't reward degrees. It's not like changing the payer of tuition from the individual to the government is going to change either of those issues.

It doesn't take a Kreskin.

1 - There are an amazingly large number of well compensated overhead positions and offices compared to the 90s.

My alma mater, a large state university literally had to buy a 9 story office building to house administration.

2 - They spend money like water.

Example: The student internet network was run when I was there in 1996 by three telecom/network guys and a little army of student helpers who did installs and support for $4.25/hr. Now the costs are 25x, and the contractor has also built a small office building next door to house their people.

Example: Capital costs run amok. My alma mater has built a Tier-4 data center that is 15% occupied, a football stadium, a monumental second library that doesn't contain many books but does contain a lot of marble, a business school building, an art building, a bunch of extra dorms, and a gas fired power plant.

Example: New dorms are hotel like, with multiple fitness centers, TVs approximately every 10 linear feet, and associated parking structures.

The school I'm thinking about is doing well, but they've probably bonded nearly a half billion worth of capital projects alone that are not research funded. If you had 0% 30 year bonds that's over $1500 a student alone for 30 years assuming 10,000 students.

No need to be coy -- what is the university you're talking about?

What's happening in one place is probably happening in more than one place... so everywhere.

I didn't call them out because they aren't doing anything unusual.

Drive around any town. The colleges and hospitals are wrapping up an orgy of construction in most places. The root causes are very similar

I agree that the system doesn't reward degrees. It merely requires them as a ticket to ride.

I'd say that we're getting less productivity gains out of degrees these days likely because a lot of people get a degree, then get a job that uses absolutely nothing they learned from that degree.

In that case, the degree is more or less worthless, and only proves to the employer that you can jump through the hoops. And between a known hoop-jumper and some random person, most companies would rather take the hoop-jumper.

> It merely requires them as a ticket to ride.

sounds suspiciously like the advertising landscape, where it's a zero sum game. You pay $X to advertise to obtain Y% marketshare gain, but if your competitor also spends $X, it nullifies your Y% marketshare gain.

Replace the above with a college degree and job, and it seems the same.

Except that neither is actually a zero sum game. If Pepsi and Coca-Cola both spend $1B in advertising neither may gain any proportional market share but they would still expect to collectively benefit from converting some coffee/tea/juice drinkers to their product.

In the case of raising the bar for a basic education across the board, at least in theory, we would expect to increase national/global GDP.

I'm not saying the increase in either case warrants the respective cost, but dismissing improvements in education on the grounds that life is just one big zero sum rat race seems overly simplistic.

Without advertising spend, the best search engine in the world would have been a university research project (the original Google based on Page Rank.)

I would not see many of the quality TV productions, because I don't have pay TV and I don't pirate. (Survivor etc).

Advertising spend paid for instant search, voice search, knowledge graph, Chrome and even Android.

I've a friend who teaches electrical engineering at K-State University. He says that a pretty good number of his students are merely trying to get a degree, not actually learn/understand it. The minimum required to pass is all they would know at their peak.

I'm conflicted with engineering education.

On one hand, you really need to get a basic grasp of the fundamentals of a lot of areas. Even if you forget it, I like to think it's all in there somewhere, and would at least require less time to re-study it.

On the other hand, when you are actually working on a project, or at a job, typically you zoom in on one area of focus. For example, I have a Comp E degree from UIUC, and I had to take analog signal processing. Got a C, and never used it in my professional career.

But subjects that I have used, the course material was such a survey over the problems that it's only the very beginning of what you might need for the work. Therefore much study is required anyway on the job.

Then the practical experience, with test equipment, devices, best practices, isn't even usually taught in college.

I mean, is this surprising? Despite the original purpose of college, today the majority of people only go to college because they want a decent job.

If your best shot of getting a decent job requires you to first get a 40k piece of paper, many people will do this and they will put in the minimum amount of work to get what they want. I mean, it's efficient after all isn't it? Why work more for the same result?

This idea is formalised in the concept of "positional goods" [0]. Fred Hirsch coined the name in his book The Social Limits to Growth, which I definitely recommend - it contains a lot of interesting discussion about the place of positional goods in the economy, and how the rising share of consumption of positional goods affects welfare.

[0] https://en.wikipedia.org/wiki/Positional_good

> Before we start paying for it, we should ask why the costs have increased so dramatically in the last 10 years

When I started college in 2000, in-state tuition at my alma mater (a major state university) was $3,021 for 2 semesters. I just looked and it's now $10,968 for the same 2 semesters. In 17 years, tuition went up 263%. From what I can tell, inflation over the same period was 42%.

At this rate, I'm scared that I will literally never be able to save enough to put my daughter through college without taking out loans, assuming tuition continues this trend. Something has got to give.

If she's young enough to learn another language well in time, you could consider sending her to Europe. All in all, it's still cheaper and possible to get by with summer jobs and some help from parents.

Yes, at KU in 1994 it was a little over $100/credit*Hr. Tutituon was free if you were a TA. I had an RA and TA, so I got paid to go to grad school.

Now I have two kids in elementary school, and I'm socking away $2k/month for college savings, wondering if that will be enough. I figure $80k/kid.

Yes, it is outpacing even healthcare and child care spending. Definitely beyond inflation.

It seems to me the answer isn't all that difficult: colleges in other countries are much cheaper, or even free. So just move to someplace like Germany.

> 2) the job market doesn't reward degrees

Oh, it does. The schools and banks have just positioned themselves to capture as much of the added value as they can - which might take away a lot of the financial upside, but the difference in unemployment rate is still quite significant.

> but the difference in unemployment rate is still quite significant.

I was expecting significant to mean more than 1.3 percentage points[1] over the entire population of the same age[2], especially given those who have certain difficulties will most likely never attend college, and will struggle in the workplace because of those difficulties (think mental disabilities as an example). Handing a degree on a silver platter to someone in that position isn't really going to help them.

Knowing that such people exist and need to be accounted for, while seeing how close the numbers really are, I'm even less convinced that the market rewards degrees than I was before I read these comments.

[1] https://fred.stlouisfed.org/series/LNU04027662 [2] https://fred.stlouisfed.org/series/LNS14000048

Sorry for the lack of clarity, I was referring to the combination of unemployment rate and workforce participation rate (which is 74% with bachelor's degree or higher, 58% with high school only). There's doubtless some confounding factors there, but it shows where the jobs are going. I don't think those inherent difficulties for certain people you mention don't need to be considered separately because the market doesn't care why you didn't attend college - part of what the market is rewarding is, frankly, either not having or being able to overcome inherent difficulties.

( https://fred.stlouisfed.org/series/LNS11327662 and https://fred.stlouisfed.org/series/LNU01327660 ) -- edited to fix links

How are you establishing causation here? Of course, older generations are far more likely to have only high school, if that. It seems likely that older generations are less likely to be participating in the workforce. I'm not sure if this data includes beyond retirement age, but certainly early retirees would be included in the participation rate.

More interesting would be to narrow our criteria down to ages 25-34 to see how the rise in postsecondary schooling has changed the employment landscape over time. My opinion is that the unemployment rate is on trend[1], and while participation is unfortunately skewed from the 60s to the 90s due to rising of women coming into the workplace, since the 1990s there is little change in participation despite rising rates of postsecondary attainment[2]. If the workplace valued college, shouldn't we see a more obvious change over time corresponding with rising rates of postsecondary attainment?

[1] https://fred.stlouisfed.org/series/LNS14000089

[2] https://fred.stlouisfed.org/series/LNS12000089

Nobody has ever asked to see my degree or if I have one. They only care what I can do and how much it will cost. I looked into taking a few classes but saw that tuition has quadrupled making 2 classes cost more than an entire semester when I was in school only 10 years ago. Not only that, there are fewer professors and more non-professors teaching. Professors still do not make 100k even if they teach all day every semester so all this extra money isn't going to them.

>Professors still do not make 100k even if they teach all day every semester

That's not true at all. When I was in school, I used the state's public employee salary lookup to checkout how much my professors made. Almost all of professors (all of the professors and associate professors, and several of the assistant professors) in my department were making more than 100k. In addition, I was in a low cost of living area compared to most of the US.

I looked outside of CS as well. Humanities departments weren't paying that much, but most 100k pretty normal in most of the hard science departments, and the business school professors were making even more than the CS department.

Sure the adjuncts and grad students weren't making anything, and there are too many of them.

Also no one has ever asked if I had a degree either, but that's because it was on my resume. Without a degree you're going to get screened out before you even talk to someone a lot of the time.

When did you go to school?

There are different strata of academic. The adjuncts make peanuts and are either people who are stuck with a vision of being in academia or outside professionals earning a buck.

Tenure track professors end up making good money, which imo is well deserved.

Now you also have this middle tier of professors who are wandering nomads on 2-3 year contracts. They have a professor title, make better money than adjuncts, but tend to get dropped at the end of the contract. My neighbors boarder is one of these folks -- she commutes about 200 miles from her home and stays in my town for 2-3 days. This is her third contract like this.

At large state universities pay is good. It goes down dramatically when looking st regional state universities and community colleges. Also over 50% of higher education is taught by non-tenured or tenure track faculty. Pay for such workers is low and frequently don't include benefits.

At my university (large state research school), professor salary was dependent on grants.

Professors get big grants? They get nice salaries.

I wonder if anyone has done an itemized breakdown of where each dollar of tuition goes to? How much to the teaching staff, how much to building maintenance, etc. Would be interesting.

I don't have the numbers with me right now (on phone), but the ratio of administrators to professors has gone through the roof over the past few decades. This is where a lot of the money is going.

Facilities have also improved quite a bit at many schools.

Over the same period, the ratio of adjunct faculty to permanent faculty has also increased. Meanwhile, the permanent faculty are burdened with even more administrative duties (e.g., committees).

The administrators learned that they could eat high on the hog on the government's dime, and they have done so with a frightening degree of efficiency.

Someone should start a college with only a few administrators and simple buildings. It could cost at least 1/4th of what it costs now.

Then that brings up the next issue -- would students choose the simple college over the more expensive one? After all, they can get a loan for both, and many 18-year-olds make different (less beneficial) choices then they would later in life.

"...frightening degree of efficiency." Sounds like they are good administrators at least.

It's all facilities and administrators.

> ask why the costs have increased so dramatically in the last 10 years

This is easy its because the government increased the amount students are allowed to borrow. It's a 1:1 ratio

Is that true though? I thought it was more because funding has been cut so the costs are shifted from taxpayers to the students.

That is part of the issue, but it is also an excuse so that universities can hire vast numbers of administrative staff that they have historically never hired. Why should a small satellite campus of a major university have 2 officers on duty 24/7, when they respond to anywhere from 5 to a dozen incidents a month?

That is 8 full time employees plus space & equipment doing a BS job that should be handled by local police (who also happen to be overstaffed). Should a university really be blowing that much cash needlessly?

Security officers might not be the best example. A university needs insurance and chances are the cost of setting up and maintaining a security force is less expensive than paying a higher insurance premium.

Most universities are self-insured from what I've seen, in the education industry most schools are self-insured too.

>we should ask why the costs have increased so dramatically

>It's not like changing the payer of tuition from the individual to the government is going to change either of those issues

Some believe the ready availability of government-backed loans is partly responsible for the dramatic tuition increases.

I've not had much luck finding historical tuition data, but was able to get some Stanford data going back to 1920. Here is a graph of Stanford tuition from 1920 through 2011: http://i.imgur.com/fXnjDNn.png

The data from 1920 through 1990 was only for every ten years, then it becomes yearly after, which is why the first part of the graph has more straight segments. Note the tuition axis is on a log scale.

Comparing Stanford tuition growth by decade to inflation, here is how much Stanford tuition every 10 years was above the inflation adjusted tuition from 10 years earlier:

  1930: 183% 
  1940:  41%
  1950:  13%
  1960:  22%
  1970:  85%
  1980:  27%
  1990:  39%
  2000:  29%
  2010:  23%
From this, it appears that if government loans affected Stanford tuition that did not manifest as a long term change in the growth rate. It looks like the long term growth is about 30ish% a decade in reasonably "normal" times. If the loans affected the growth rate it seems to have mostly been confined to around the time the loans first became widely available. In other words, if the loans had an effect, it seems to have been more of a level shift than a growth rate shift.

I'd like to see similar data for other schools.

Well, it could, if paired with a bigger government role in public universities.

Ah yes. Like setting a price ceiling? Adding more administrators, managers, and bureaucrats to "find where all that money is going"? By paying teachers less?

It's not an easy task to reduce the cost of something... this is even more so when the government is the one doing it.

It's actually really easy to cut the costs on things, and all you need to do is cut all the levels of useless middlemen taking their cut.

Kind of like how Canada uses this one simple trick to cut their health care expenses.

When you pass laws to force government organizations to be wasteful, they will comply. Outside of that, not wasting taxpayer dollars is generally a high priority.

A great example of laws purposefully foot binding & hobbling organizations is USPS, who is not allowed to up the ante and offer any modern services, and has to severely overfund their pension obligations, to the point that they are funding pensions for people they haven't hired.

Well, no, you probably need far fewer administrators, actually.

I think GP was making this suggestion in a sarcastic jab about what cost reduction efforts look like when done by government.

OK, but I don't think it holds up. The US has one of the systems of education (and healthcare, too) with the least government interference and it's wildly expensive. As far as I am aware the biggest drivers for rising tuition costs are construction and increasingly large administrative departments.

The US has tons of government interference in all of those areas though!

Compared to other OECD countries not really.

Can you imagine trying to convince tax payers who don't even agree on universal healthcare that they should now pay NYU's tuition for someone studying Intersectional Feminist Literature?

Yeah what a crazy hippie liberal idea...supported by, for example, the ruling center-right Christian party in Germany.

Americans really need to get over their dumb cultural hangups on a lot of issues. (Also, universal healthcare does enjoy very wide support already.)

What is that person going to do for work afterwards that it's worth it for society to do this with its limited resources, given that they're not independently wealthy, and they haven't been developing their skills for a career on the side? I don't mean to be snarky, I'm genuinely curious.

If I'm not mistaken, historically, only the rich have gotten these sorts of degrees.

They are going to have a well practiced ability to analyze text, data and other sources and understand, critique or respond to arguments presented.

Liberal arts teach you about thinking.

I dual majored in CS and History, concentrating on the path that Marco Polo supposedly took to China's the people and cultures there. The later has been far more helpful to me that the CS stuff, which was mostly theoretical bullshit.

Good point, and I'd add that a circumspect citizenry with experience in many varied areas of thinking is necessary for democracy to function well. It's probably worth it to society to fund for that benefit alone. Thanks for the reminder.

You did get a fairly in-demand degree job-wise to go with it, though. Do you feel like the history degree by itself would have been good enough work-wise?

I've had this debate with colleagues and friends many times.

I struggled with choosing CS because everyone assumed I'd go to school for computer related stuff from age 8. I wanted to be sure I did what I wanted to do. But I also wanted good job prospects!

End of the day, CS opened doors to good jobs immediately after college. Without that, i problably would have gravitated towards teaching, sales, law or something similar.

Between luck, hustle, timing and what I know (not necessarily in that order), I'm pretty happy with how things have turned out. Had I taken another path, I tend to believe I would land in a similar place. But who knows!

I similarly was a computer kid, but took a different path (English, Philosophy), and I did end up in the same place. After teaching English for a year in Korea, I spent a year pounding out the lightest CS degree I could. Now I have a healthy dev career, and I don't regret lib arts at all (except maybe wishing I did them at the same time, instead of serially).

Makes sense. I think your approach is a good one - mix passion and practical.

> If I'm not mistaken, historically, only the rich have gotten these sorts of degrees.

I'm fairly confident you're quite mistaken.

It's very possible. Do you know of any evidence of a large number of people in the lower classes getting college degrees that had very little direct career relevance outside of a few spots in academia?

So part of the reason we are in this situation and the costs have skyrocketed is because the government got involved in loaning money for school. We follow that up by getting the government involved in loan collections and obviously they've screwed that up entirely. So your suggestion is to now have the government get involved in paying for the college altogether, and then expect that NOT to go wrong in any way?

Whatever happened to trade schools and apprenticeships anyway?

The 60s-80s-born generation performed a real doozy and told their kids "you can be anything you wanted!", so of course we ended up with a culling in trades and "plebian" jobs, and an explosive influx into "soft skills" like history, literature, etc., since that's far better than milling drill-bits all day right?

The craziest thing is that this has been a totally first-world thing. Any english/american university student will tell you how engineering degree courses are made up predominately of foreign students, where-as the less employable and "trade"-producing courses are dominanted by the firsr-world population.

I did Physics. It was 130 students 120 white male, 9 white female, 1 black female. Zero international students

Same university, but mechanical engineering, 70%+ black, 70%+ international students (india/china essentially).

So, to answer your question to what happened to trade schools: they still exist, but the first world young white generation doesn't want to do it anymore, and foriegn/black students have filled in the gap, for whatever that may be.

We did send them to college... and I can guarantee you that we are paying for it.

It doesn't seem to have helped much if all you need to not default is $5/mo and yet what's the default rate again?

Here's the thing, if you do as many seem to be suggesting and give up on collections for this small percentage of loans, then your default rate will go up as people realize there are no consequences.

It's not as if we are spending $38 for every $1 in student loans - the vast majority of them have no money spent on collections.

$38 seems crazy high to me, and given the fact that it's the federal government in charge I'm sure it's horrifically inefficient, but we can't just walk away from the money or it all goes to hell.

> then your default rate will go up as people realize there are no consequences.

I don't see a problem with that. How about this - in a similar manner to the 'starve the beast' ideological mantra we can starve the student loans beast to force change.

(Just like starve the beast I expect that it wouldn't work and we'd just end up totally messing up some systems that rely on that money, but desperate times right?)

It's a very bad idea to train everyone that their debts are optional, and that they have no obligation to pay them back. Loans for people who won't abuse the system will become much more expensive to make up for those who don't pay them back.

Debts are optional to repay, and there are legal frameworks to resolve debt disputes if you choose not to. Businesses do it every day why shouldn't people?

Student loans are completely outside of this framework because they're risk-free for the lender and can't be discharged at bankruptcy by the lendee.

Because of this the loan costs for those that present a good and bad debt proposition are basically the same - I'd call this more of an abuse.

I completely agree that they shouldn't be risk free - that was probably a harebrained idea to make college cheaper and more accessible to everyone, but it completely messes up the incentives.

And I know they're technically optional. What I was saying is that we shouldn't be trying to build the idea that it's OK to default if you're better off financially not paying people back into our culture. Trust is important to the functioning of society.

> What I was saying is that we shouldn't be trying to build the idea that it's OK to default if you're better off financially not paying people back into our culture. Trust is important to the functioning of society.

I disagree with this. We saw people during the GFC screwing themselves by continuing to pay mortgages that they were underwater on out of some misguided sense of honour.

In that case, they should have walked away and left the bank saddled with the stranded asset. Loans are a commercial proposition with a risk and a reward. Introducing washy hard to define concepts like 'trust' to pressure one side only screws the good guys - the unscrupulous ones will do what they want.

Better to have a clear playing field where both lenders and lendees understand there will be situations in which the loan isn't going to get repaid and have the risk of that priced in.

But we already do this with businesses... We live in this bad idea system you are describing, except that the little guy is getting screwed while fictional business entities ride high amongst the waves.

You seem to be saying the equivalent of "Businesses are acting shitty, so individuals have to be shitty to compete".

That's how you end up in a society that no one wants to live in. We should find ways to bring the standards of business up, not bring the standards of individuals down.

Would you be ok with instituting a law that mortgage and medical debts can no longer be discharged through bankruptcy?

I bet people get really irresponsible when they realize they don't have to pay these debts, they just have to take a massive hit to their credit score....or maybe, most people don't become irresponsible, the people that really need the help get it, and a couple take advantage of the system.

No, that's not what I'm advocating for at all, nor would I bring back debtor's prison, or any of the other relics of The Bad Old Days. Just advocating against trying to tell people that it's totally OK to declare bankruptcy in the event that it makes more financial sense for them. It should be reserved for completely untenable situations, and unless you had a reasonable expectation that it would work out, there should be a at least some personal shame involved for having made such poor decisions, such that they don't make the same mistakes again. We shouldn't try to normalize it.

You're spending other people's money. Treat it with respect.

> there should be a at least some personal shame involved for having made such poor decisions

What about the shame of the lender for making poor lending decisions?

> We shouldn't try to normalize it.

Why not? The only reasons you've given is "because it makes for a nicer society" but I don't actually see how it does. All you're doing is taking one of the few tools the individual has to mitigate financial problems away from them because you want to moralise their failure.

It's not like declaring bankruptcy is a walk in the park. It's a total pain and really negatively impacts your ability to do a lot of stuff. It is already a last resort for individuals and they shouldn't be stigmatised for taking it.

> You're spending other people's money. Treat it with respect.

No you're spending your own money, gained through a business transaction in which the lender has accounted for the risk of non-repayment.

I actually think it makes for a potentially nicer society if lenders are incentivised to have a stake in the successful outcome of their clients. If the client is culturally conditioned to try and pay their loan even after the point it makes no sense to, then the lenders will put more and more onerous terms and rates on loans because they know the person will never give up. Lenders will have to make sure it's a good deal for their clients, not just themselves.

I don't think anyone is suggesting walking away from the debt. The article explicitly mentioned that many of these should be forgiven, but the paperwork isn't offered or filled out. Instead, the collection agency keeps getting money for keeping a debt open, even if it has no chance or purpose for repayment.

>I don't think anyone is suggesting walking away from the debt.

Why not? This is exactly what should happen. Students should be able to discharge their student loans in bankruptcy.

The problem is that lenders have little to no risk in making these loans, so they do. And colleges have high tuitions because loan money is easy to get, so colleges find all kinds of stuff to spend it on (usually building fancy new buildings). That needs to change: make loan money harder to acquire by making it risky for lenders to give it out, and the money will dry up, and tuitions will fall.

>> Students should be able to discharge their student loans in bankruptcy.

No. Bankruptcy is touted as being an absolute last resort that destroys lives. That's not the case, particularly if you are young. It's better to file for bankruptcy if you believe you will not be able to pay off your debts within a few short years. If student loans could be dumped with bankruptcy, every student would be advised to file for bankruptcy before their first payment became due. Bankruptcy would become the norm for many 21-24 year olds.

Yeah, so what's the problem with that? If lenders don't like it, they shouldn't be lending out easy money for degrees that aren't going to result in the student paying the loan back within 5 years.

Also (you might like this proposal better), it would make sense for bankruptcy law to have a provision for student loans that you can't declare bankruptcy to dodge the loans within 5 years of graduation. Then only students with little hope of repaying the loans, and who have likely already defaulted, will actually declare bankruptcy.

The end effect I'm looking for is for lenders to think twice before lending money for student loans.

It's a delicate line to walk. If lenders thought twice before lending money for student loans, only the rich (ie: 1%) would be able to enroll in postsecondary education. It might just be a lose-lose scenario for the 99% when college and university are expensive. We would all prefer that the population at large is educated, but when that education doesn't guarantee success in a career, who should pay for the failures?

Now I somewhat understand the few countries who offer "free" education (ie: funded by taxpayers). The incentive should be to offer free education for degrees that practically guarantee employment benefiting society. If you major in something widely considered useful, enjoy your free ride. If you prefer to major in something wishy-washy as far as society is concerned, you can pay for it yourself. Such an ugly compromise. :/

open up collections to the free market. it will lower cost to collect

"I don't see how anyone wins from this system other than the collection industry," said Adam S. Minsky, a Boston-based lawyer who represents student debtors.

The thing is, that's precisely the point of the system. The same can be said of health insurance. It isn't to service debt, it is to prop up an industry that has grown around servicing that debt.

how spicy... the government is trying to collect money when they are so far in debt. It is time to get honest about the cost of education and healthcare.

The collection industry. And presumably Mr. Minsky.

Plus, de Vos.

Why does the government even pay companies to manage and rehabilitate student loans? Even if a student defaults on said debt, that debt is practically impossible to discharge even if you file for bankruptcy.

The biggest problem I have seen is people can get into situations that instead of just owing the government the debt starts getting passed around like a hot potato and it becomes increasingly difficult to get a hold of who owns your debt right now.

Has anyone actually dealt with a default? Sadly, I have. It's like dealing with a thug, mixed with trying to do taxes on your own with no knowledge of the exact repayment. It's a tricky system they run. I went through default 3 times, once with my payment being higher without any transparency, and when I tried to pay the difference, I was apologized to, and kicked off. I don't know if it's been made better in the past few years, but that was the worst experience for an education I don't even use today.

How about we make a website where it is easier for students to pay back your loans? The healthcare.gov for student loan payback?

As one commenter said, it's difficult to pay back your loan when your debt is being passed around to different collectors like a hot potato and it's increasingly difficult to get a hold of who owns your debt right now.

Edit: already exists, it's called Studentloans.gov.

Putting the "Student Debt" essential concept and current state aside, I mean, this phenomenon got to get a deep massive reform, but just regarding the topic of the title.

Sometimes, you'll pay $38 to collect $1, cause, otherwise, you will face a reality where you have $100 to collect and not $1.

In other words, enforcement costs and ROI shall not be measured by direct results and achievements, rather by the side effect of prevention.

It might costs $250K to put in jail someone who robbed 10 houses in total amount of goods of $10k. But you'll do it all the way to alram others.

Suppose student debt payments were capped as a fraction of income, say 10%. It seems like this would align everyone's incentives correctly toward the student succeeding​.

we have to do something about the interest rates though, there are tons of programs to help cap your payment...but you're just kicking the can down the road as your balance goes up.

Or conversely, it would completely remove some individual's incentive to ever make life choices that would lead to paying that debt off.

Only that strange hypothetical person whose entire life goals revolve around avoiding payment of student debt.

I have a lot of friends from high school who seem to fit that description

But people like making money. It's not as if most people would say "aha! If I take a low paying job for the rest of my life I'll never have to pay off this debt completely!"

Some might I suppose.

It's not as simple as "people like making money". That's just one part of the job. People who pay more on their loans with increasing income will behave like people behave when taxes go up - the pay will be comparatively less important when weighed against things like working conditions, commute time, and interest in the work.

They can live on an island with the people who avoid earning any money so they don't have to pay tax.

"Completely" seems like an exaggeration. I would have guessed that it removes something like 10% of the incentive to make more money.

I don't think student loans are the primary motivation to earn more for people that have any hope of paying them off.

this is already the case. you just have apply for it as opposed to being the default behavior.

Seems​ like means testing this can only distort the incentives and introduce bureaucracy. If it were priced in universally we might actually see costs drop.

On the other hand, if there's no efforts made to collect than no-one would want to pay.

It's like prison and retention. It's not worth it for the people it directly effects, but it is good because it encourages people to avoid it.

Maybe? I'm not sure the analogy helps here, as it seems unclear that prisons are an effective way to discourage crimes.

This here govt website suggests is the act of being caught that is the major deterrent to crime, not the severity of the punishment https://nij.gov/five-things/pages/deterrence.aspx

Original source: http://www.jstor.org/stable/10.1086/670398?seq=1#page_scan_t...

Or prisons do discourage crimes, they just don't do so very well if the suspects aren't brought to justice. People are natural gamblers, and will be likely to discount the risk of punishment if there's a decent chance they'll get away.

Put another way, Americans subsidize 97% of the financing of assisted post-high-school education, regardless of profitability or how inefficiently such financing is structured.

For students reading this, Germany offers absolutely free college & university education to everyone...even Americans coming there and most classes are in English.

There is usually a small fee of a few hundred Euros. Or at least, that's what a few German students told me.

Yes there is a registration fee, per semester. It avoids people who are not actually studying claiming student benefits (on public transport etc), and helps a little to clean the records for people who have effectively dropped out (and might instead be job seeking).

   The Us government would  be better of using those billions to paying of loans in liu of service. 
     You became a doctor or lawyer using goverment loans pay it off by working part time in goverment hospitals, health clinics and legal clinics. You got an MBA or became an Accountant pay it of by working part time in goverment administration or in goverment schools etc.

Gotta prove that point, though. One thing I have learned is that, proving points, enforcing some rules, is expensive and wasteful.

More efficient to take tax refunds.

I know a few that had their wages garnished for non-student loan debt. Between that and tax refunds as you mentioned - there shouldn't be any reason to have collectors.

Gotta prove that point, though.

Only tangentially related but what is up with the massive increase in URL length?

Taking this one for example:

h t t p s://www.bloomberg.com/news/articles/2017-05-19/americans-are-paying-38-to-collect-1-of-student-debt

If you include the question mark query parameter separator, the tracking parts take up as many characters as the entire reference to the article itself:


Am I just being an old-man-get-off-my-lawn about this or is there an actual purpose?

> &utm_medium=email&utm_source=newsletter&utm_term=170519&utm_campaign=bloombergdaily

Those are urchin tags, aka Google Analytics: https://ga-dev-tools.appspot.com/campaign-url-builder/

I am on your side. This stuff annoys me as well and I've posted about it in the past to no effect. The trailing tracking garbage in urls should be algorithmically removed. If this results in a paywall access block, then posts with such domain names should be blocked. It is absolutely not reasonable to post links that lead to paywalls because that is clearly and by definition, spam. Posting a link in the hope that it will result in someone buying something is totally different from posting a link to something that is news or discussion worthy. Posting commercial links such as all paywalls are is fundamentally spamming and is reasonably removed, blocked, and the poster banned.

Interestingly, I can't open the full link in incognito mode with uBlock Origin enabled. If I remove the tracking cruft, page loads fine.

Sorry, my bad. Shall trim going forward. I consume most of my news through newsletters emailed to a separate email account. (Separate so (a) it's out of mind, (b) doesn't buzz my phone and (c) lets me enforce my rule around deleting any I haven't read by the end of the day.) Didn't realize my trackers were transmitting.

Apologies in retrospect; I wasn't trying to come down on you. You posted the link you were given. My angst is aimed at the people who craft those links, either intentionally or programmatically.

No offense taken! In fact, thank you. I generally browse through Tor. Sort of defeats part of the purpose behind that if I distribute unique referral tags :P.

We need to stop Government backed student loans immediately. Then we can watch tuitions drop like a rock!

If and only if we stop Government backed student loans will I be OK with some debt forgiveness or amnesty program.

It would be better if the states didn't treat education like indentured servitude. Society as a whole benefits immensely from an educated populous, and our tax dollars should in turn recognize this. Instead we have a population that's​ indebted to corporations precisely because there's no other means to pay of their student debt. Why take the risk of a startup or independent venture when you have 100k in debt to pay for an education that makes you a productive member of society.

This is why a media studies degree is useless (assuming thats what the journalist writing this story got) as they probably don't teach basic math.

The point of collection is that it also acts a deterrent. So the $38 spent are not just to get the $1 back but also to tell others that government will go out of the way to get back that debt.

That $38 needs to be compared with the total $s that come in as repayments.

Also this is the reason why government should not be in the business of giving loans.

You just made that up and then complained about journalists that did actual reporting on the issue, and I don't even think you read the actual article.

That's an absolutely insane way to do statistics. You can't just say "it's a deterrent" and then magically assume that anyone who pays their debts wouldn't have in absence of the evidently horribly inefficient debt collecting process.

It's a pretty safe bet that if no one was collecting this debt, not many people would pay it back.

Even if they didn't have collectors at all it'd trash your credit. Without even getting into the issue of whether there is a more efficient way of collecting.

99% of college graduates would be in a financially better state if they could forget all their student loans in exchange for a credit hit.

Credit is nice, but it is not NEARLY as nice as not having debt.

That's true, but I would bet money that if you were able to take the pulse of Americans collectively you'd find people putting way more weight on their credit scores than is strictly rational. I've lost count of the number of times I've seen it suggested that people do irrational things like carry revolving credit card balance or take out loans they don't really need to "build credit."

Most debt collectors aren't going to do much more than ruin your credit and call you a lot anyway.

Actually, allowing students to discharge their debt would solve this problem as lenders would start means testing students to see if they are credit worthy.

Unless you're looking at their parents pretty much no student is "credit worthy" for a loan into the tens of thousands of dollars in the traditional sense.

Or add together the effects of all deterrents, like trashing your credit or just plain guilt.

If you think people will pay nevertheless government should declare the payment voluntary and see how many people pay.

That's not at all what he's saying. To judge the efficacy of a deterrent, you need to be able to identify the expected payment rate in the absence of said deterrent. The problem with that is that identifying the difference is incredibly difficult. If not damned near impossible.

That said, I'd question the deterrent effect. Per the article, nearly 40 percent of 'recovered' borrowers default within the next three years. Combined with paying debt collectors "nearly 40 times what they bring in," it seems as if there's a measurable problem with the current approach. But is that a problem with current recovery efforts, or merely a symptom of a larger issue? Like with most things student loan-related, there are no easy answers here.

A few DB entries scan trash somones credit rating which is a deterrent and extremely cheap. Further many people feel an obligation to pay down debt even when they can walk away without consequence.

Right. Like, say, capital punishment.

Horrifically inefficient. But hopefully effective for a larger audience.

That is why non-recourse private debt sells for 40 times par /s

If deterrence is the main value here, surely they can still improve the process a bit?

you're right about the total cost of collection. it should be measured on actual collections not just defaults.

but in this case it sounds like a substantial amount of that expense goes towards getting people back onto plans. so thats obviously a default-specific expense.

I have to disagree with your assessment about wether the government should be in the student loan business. Providing employment for the sake of community/national services is the exact role of government.

Right, we have a term for "when you won't pay more to enforce than the cost of the violation":

The term is "non-enforcment".

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