Student loans ...
19 responses | 0 likes
Started by carlberky - April 26, 2019, 4:40 p.m.

https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp

Elizabeth Warren has advocated forgiveness for student loans. I'm assuming that she knows that in February 2016, the U.S. Treasury Department revealed in its annual report that student loans account for 31% of all U.S. government assets.

If she doesn't know that, she's hasn't researched the subject, or if she does know, she's blowing smoke to get the student vote. 

Either way, even as a liberal Democrat, she doesn't get my vote in 2020.

Comments
By joj - April 26, 2019, 5:43 p.m.
Like Reply

I wouldn't advocate total forgiveness, but some sort of "hair cut" is in order.  We bail out banks, but not the youth?  It is a ball and chain that will be a drag on them going forward.  Maybe we can throw them in jail like the good old days?  Not going to get paid back that way.

By mcfarm - April 26, 2019, 6:20 p.m.
Like Reply

the crime is not with the students...the crime is with higher education raising rates faster than Hill erased illegal e-mails.....If Mitch Daniels at Purdue can go 3 straight years with tuition remaining the same why can't everyone else.....Purdue tuition is now lower than some fancy private catholic high schools in Indiana....go figure

By metmike - April 26, 2019, 6:47 p.m.
Like Reply

Carl,

Thanks for bringing this important topic up!

Another opportunity to learn about what's going on. 

Wow, I had no idea it was this bad. Read the stats at this link below. Mind boggling.


General student loan debt facts

https://studentloanhero.com/student-loan-debt-statistics/

"Among the Class of 2018, 69% of college students took out student loans, and they graduated with an average debt of $29,800, including both private and federal debt. Meanwhile, 14% of their parents took out an average of $35,600 in federal Parent PLUS loans.

You’ve probably heard another scary statistic: Americans owe over $1.56 trillion in student loan debt, spread out among about 45 million borrowers. That’s about $521 billion more than the total U.S. credit card debt."

With regards to the policy of forgiving student loans.................that would buy tens of millions of votes.

By metmike - April 26, 2019, 6:56 p.m.
Like Reply

Like mcfarm stated, a big part of the problem is the rising cost.


1100%: Graph Illustrates Shocking Rise in College Tuition Since 1978

http://www.jenx67.com/2014/09/1100-graph-illustrates-shocking-rise-college-tuition-since-1978.html


Skyrocketing College Tuition

By wglassfo - April 26, 2019, 7:30 p.m.
Like Reply

I HAVE READ IN DIFFERENT ARTICLES THE AVERAGE STUDENT LOAN IS 33,000.00 give or take a bit. If true then approx. 4,000.00 or less would pay the loan in 10 yrs  Is that  a ball and chain??. That works out to 80.00/week

If you have 100,000.00 in loans then you are not the person I would want to hire. You are not a responsible person unless I plan to pay accordingly

That much student loan would affect your work performance, possible family problems etc. and no way do I want you on my team

Students need to do a bit of school shopping with an eye to cost. Debt, with no realistic view to ROI is the biggest danger we all face. Some people can have millions of debt and prosper

Others will fall flat on their nose with 10,000.00 of debt

In our business most capital cost must have a ROI of 5 yrs.

I would expect to re-pay a student loan in no more then 10 yrs. or I am going to the wrong school

My grand son paid most of his expenses  as he went along, plus bought a new p/u in the last yr of school.

His 1st yr of full employment after completion of school will net him approx. 70,000.00 in wages with approx. 10,000 of loans, plus some  loan on the truck

He will be debt free after one yr.

Gotta think about the whole picture

He had this arranged while going to school

His buddies played while he worked during the summer

And no, he will not have his income from the family, with a silver spoon.. He will work at least 1/2 of his time for other people and more than 1/2 of his wages will be off farm.

He is 19 yrs old and hopes to earn more off farm income as he assumes more responsibility, if he can prove his worth.

He works on the family farm during spring and fall only.

He could work after normal work week hrs if that was  the only job offered. He has already started work off farm as soon as he wrote his last exam

Now that is one example why there should not be a national student loan problem. There are numerous other possibilities




By metmike - April 26, 2019, 7:58 p.m.
Like Reply

I think that because the government is so willing to loan massive sums of money to students/parents that don't have it to pay "whatever" the cost of tuition is, these colleges can jack up tuition into the stratosphere because the normal balance between demand/supply that controls prices in the free market has been disrupted by an   intervention which one side is using to price gouge.


For balance, below is an article that justifies the cost of tuition and claims it's not price gouging and just the result of  an increase in demand, with the benefits paying off with more college educated kids.

https://www.bestvalueschools.com/understanding-the-rising-costs-of-higher-education/

 I'm all for this but there are 2 items that I disagree with on their position.

1. You can't justify a 1,000% increase in tuition based on any amount of increased demand. These institutions, that were already making money 30 years ago, are making gobs and gobs of money. Making money is not a bad thing..............but every extra dollar of money that they make is an extra dollar of student loan debt in the system. If they only got half as rich, the student loan debt would plunge by hundreds of billions and they would be doing just great.

2. They are NOT providing an affordable education to these kids. They are offering them an UN-affordable education.  So the government steps in and pays the unaffordable, over inflated rates and the kid gets stuck with the bill for the next 10 years and/or the government does..........and the colleges make off like bandits because they always get paid up front by the government.


Tim will disagree with me on this one but like with medical care, I think the government needs to step in and force prices back down. That will never happen but in the absence of doing that, if you forgive the student loans you put the tax payers on the hook and greatly magnify an already extraordinarily unbalanced government debt balance that is going to kill our country at some point. If you stop loaning the money so freely, then kids, especially poor ones can't go to college.

The rational option is to reign in the stratospheric profit margins of these colleges but thats almost impossible with the free market system set up the way it is now.

I am not a Bernie Sanders fan but mainly because he is so adamant about the climate crisis and consistently makes up all sorts of exaggerated junk (anti)science things and sells them with his enthusiastic "save the planet"  complete crapola as we enjoy the best weather/climate in the last 1,000 years.

However, there are 2 big crisis's in our country right now that WILL NOT resolve using the free market.  The health care system and college educations. The costs to maintain both just cannot be maintained, especially since they continue to escalate higher.

The free market system cannot work to cut costs down to manageable levels. People can't shop around for the best price on emergency care for instance and the cost for our drugs is many times higher for the same stuff in other countries.

We have more and more elderly at higher and higher costs. It will break the system and sooner than you think. Colleges are not going to cut tuition by 50% unless an entity makes them.

So it seems like some form of socialism will be needed to intervene. We hear how great the current system is.............but only because we are ignoring the inevitable disasters and current crisis caused but the current great system.

 I guess it will just have to get bad enough for enough people to realize it.

And the way that things work in realms like this the medical/health care crisis is that they keep getting worse and worse gradually with nothing done to change the REAL problem(Obama care had the right idea but wrong methods) because the REAL solutions would be extraordinarily unpopular..........until the system that its based on suffers a collapse...................THEN, there is no choice but to make the unpopular changes...........after causing much suffering to all of us.


 The medical and health care system that we have today is collapsing right now in front of us. The collapse will be accelerating because there is not 1 iota of substantive actions being proposed to solve the real problem. Bernie has the right idea though.

https://theweek.com/articles/809992/slowmotion-collapse-american-healthcare-system


By wglassfo - April 27, 2019, 7:32 p.m.
Like Reply

Hi Mike

Your part about health care,  I agree with you

You folks need to make some hard choices

Do you want all the bells and whistles or do you want basic services at a slightly slower pace

You simply need to look at Canada and realize if you want a hip  operation in a week then you pay a high rate

If you wait 3-4 months then the system is much cheaper. You will not die from a hip problem. Just get started sooner and plan accordingly

you pays your money and take your choice

Nobody in Canada dies because of lack of health care

But elective procedures do have a waiting list

Take your choice as I said above

Now: on to student loans

I said 33,000.00 give or take

You said something like 28,000.00 Now if you take either number and try to tell me that is too much to pay in student loans, you must live under a rock

True there is no reason to jack up tution rates but 28-33,000.00 is not a ball and chain

If you studied basket weaving and racked up loans such as these numbers then that is your own fault and to some extent the parents for allowing a college education with no value, especially if the parents assist with money

If the education was designed to prepare you for the work force, who can't re-pay some 30,000.00 in loans

This is an example of people wanting free stuff instead of working and making sound decisions that can be paid

You make this sound like a disaster

If people want free stuff then maybe it is a disaster

30,000.00 plus or minus of student loan is not a disaster if students will work to pay the loan

Now to go a step further, and read my post above. Why can't most students do something similar to my grandson. Maybe they want life on a silver platter, free stuff, an education not suitable for the work force or??

Not everybody will benefit from a college education

Somebody has to be a plumber, electrician, roofer etc. I know of people that have a small family run business that net 2000.00 or more/day for a single workers labour 

The good workers with excrellent workmanship are run off their feet

Trust me as our house is just old enough for a "do over"

Quality workers are in short supply and we either pay of hire shoody workmanship

Guess who are the busy people we hire and charge accordingly

I really think this is student loan thing is so much garbage it is truly disgusting, to even talk about it

Many people are simply soft and lazy

When our fore fathers opened up the frontier did they work or sit on their butts

The workers with fore sight prospered

Soon they hired more workers, whilst working along side with the hired help

We have lost the ability to work and succeed or fail

How many of todays people would take axe in hand and work all day to fell one tree

I admit I would not do it today, but I would have a plan to afford to hire it done or not spend the money

Take a lesson from my grandson for all those who claim the student loan is too much

Our whole family for 3 generations had student loans and we paid them all in a timely manner

What is the problem??? 

By mcfarmer - April 27, 2019, 10:44 p.m.
Like Reply

I think the percentage rate could be lower.  Most student loans are pretty high rate.

By cutworm - April 27, 2019, 11:21 p.m.
Like Reply

"If we are loaning money we essentially don't have ,to kids who really have no hope  of paying it back, in order to train them for jobs that don't exist, I might suggest that we have gone around the bend a little bit" Mike Rowe

https://www.youtube.com/watch?v=qzKzu86Agg0

By metmike - April 27, 2019, 11:49 p.m.
Like Reply

You make some outstanding points Wayne.

"Not everybody will benefit from a college education"

This is very true. My oldest son decided that college was not for him. He's been working for Toyota in conveyence for the last 7 years and makes something like 70K/year with wonderful benefits.

Here's one way to look at it.


 Let's say that he instead, went to college and ended up as one of those with 33K in student loans after 4 years. He has a friend that graduated with a degree in occupational therapy(which is my daughters degree) with well over 100k in student loans, so we could use his friend.

One can say that he could easily pay that off in a short period of time with a good paying job...........this is true but lets compare his current financial status of NOT going to school vs going to school. 

NOT going to school and working for Toyota, he didn't start at 70K but we'll use 50K+, since he's been on midnight's with a 7% shift premium and got alot of overtime. 

That's 200K worth of income during those 4 years. Of course he would have had to pay taxes, so lets knock it down to 150K and call that the amount he would have had to the plus side vs 33K to the minus side with the student loan debt.

Even though he was still living at home during his first 4 years working for Toyoto, he wouldn't have saved 150K. This is a simplistic hypothetical example that overlooks a great deal but to use for this purpose, which is too show a huge difference(183K in this case) between working full time coming out of high school and paying full tuition for 4 years that has to be made up for with a much higher income out of college vs not going to college. 

In this case, how much would he have to make at his college educated job and how long would he have to work there for in order to recoup the 183K?

He IS making 70K at Toyota now, so if his college educated job was making 70K, then he stays 183K behind. I mention that right off the bat because there are plenty of college educated young people with 4 year degrees that can't get a job making more than him..............and end up doing what he is doing after wasting 4 years of income producing years going to college. 

Note I didn't say wasting 4 years. There is an educational enrichment/experience that has a non monetary value but we are talking strictly money here. 

His after college job at 90K, or 20K/year higher than non college would allow him to catch up on the 183K after 9 years or 13 years after high school, when he is 31 years old, not considering promotions or pay raises.

How many college educated jobs make 90K/year.......with just 4 year degrees? I'm betting far less than half, which is a big reason that some of them with those 4 year degrees work at Toyota with him.

Often, the big paying, 6 figure salaries come with a masters degree or in a profession that requires 6 or 7 years of schooling and much higher tuition. 

My daughter is an occupational therapist and had to go to school for 7 years. We paid out over 150K during those years.........ouch. My son has a friend that graduated with an occupation therapist degree with over 100K in student loans owed. 

His friend is 100K behind and if he had worked at Toyota, would have been 250K ahead during those 7 years for a difference of 350K to make up working as an occupational therapist. 

I just looked up the average salary for an occupational therapist..............83K.  This is 13K better than working at Toyota. To make up for the 7 years of lost income going to school and the increase in debt that my buddy has, while making 83K vs 70K will take him 27 years. (350K divided by 13K).

The point is that we have been brainwashed to think EVERY student should have the opportunity to go to college because college, transforms most people into  wage earning powerhouses that leave un college educated people in the financial dust.

Of course I'm comparing this to Toyota and my sons job. For non college educated jobs, this is certainly one of the highest paying but in thinking about the math above and comparing lost income during the college years, it appears that we are over promoting college and suggesting earnings power benefits that don't add up when stacked up against the COST of going to college today.

The bottom line is that a college degree is not worth as much as what its being sold as and colleges are price gouging for something that they want us to think has more value than it does.

Going to college for 4  or 6 or 7 years, TAKES AWAY income earning for those years. You better dang well be getting something that greatly increases your earning power to make up for that. 

Tuition has gone up 1,000% in the last 4 decades.  How much has the earning power of college educated kids vs non college educated kids gone up in that time?  Even if it went up 50%, which probably is being generous..........colleges are ripping us off. 


 


By metmike - April 27, 2019, 11:58 p.m.
Like Reply

Here is a story that tells us that college educated kids double their earnings power.

College Degree Nearly Doubles Annual Earnings

https://www.thoughtco.com/college-degree-nearly-doubles-annual-earnings-3320979


"Just in case you still had some doubts as to the power of a college degree, the U.S. Census Bureau has released data proving the substantial value of a college education in the United States. Workers 18 and over sporting bachelors degrees earn an average of $51,206 a year, while those with a high school diploma earn $27,915. But wait, there's more. Workers with an advanced degree make an average of $74,602, and those without a high school diploma average $18,734."


After reading a story like this, all parents will think "my kid MUST have a college degree, this proves the value"

Well, I really do have an oldest son, his name is Quinn. He really does work at Toyota and really does make that much money. He really did drop out of college and if he would have went to college for 4 years, he really wouldn't have been able to find a job in the field that he was studying(computers) that makes more than he does now.

Again, Toyota pays some serious money and more than any other non college educated jobs that I know but the stories, media, colleges and government pretend as if this realm does not exist.


Also, the brightest, most talented kids go to college and the least capable with the least gifted in cerebral functioning not going to college. This has a great deal to do with the income earning power too.

Let's put it this way:

Let's say college did not exist and we took 10,000 people with IQ's of 120 and followed their careers/jobs for 20 years, then took an average of their annual wages. This is group #1. 

We also followed another group of 10,000 people that had IQ's of 90 for a similar number of years and took an average of their annual wages. This is group #2. 

Guess which group would make a great deal more than the other ones.

In the real world, there is college and in the real world, the majority in group #1 would go there because they are the most talented to begin with.  They would be pursuing those careers that promise a high salary. Colleges do the educating but they don't provide the talent and brains or work ethic. 

Getting a general college degree today is nice but in many cases, is worthless in the job market because you can learn non specialty profession jobs quickly with on the job training.


By TimNew - April 28, 2019, 7:52 a.m.
Like Reply

The government decided to make education affordable in the 70s when I was paying about 500/semester tuition at a state university.  They've done a swell job, right?   What happens to cost when you dump unlimited supplies of money into a system? This is a commodity forum so I guess that should not be hard to answer. 

And we have people who want government to work the same magic on healthcare. They've done a great job so far. 

By mcfarmer - April 28, 2019, 2:54 p.m.
Like Reply

“The government decided to make education affordable in the 70s when I was paying about 500/semester tuition at a state university. ”


And I paid a little over $3000 for my first Mustang, a well equipped Mach 1. Could you get a new one for ten times that ? I know construction workers today don’t make ten times what I got back then. Iowa State isn’t ten times $500/ semester tuition. ‘Course you might have gone to a more elite institution.


But you’re right, if you can’t afford a mustang, an education or health care for that matter you shouldn’t expect help getting it.

By TimNew - April 28, 2019, 4:11 p.m.
Like Reply

With the data MM supplied, and all the data out there, are you really suggesting that educational costs have kept pace with inflation?  I'm certain I must be misreading you. 


My fact based supposition is that government has a really crappy record on controlling costs.  Do you really want to debate that?

By mcfarmer - April 28, 2019, 5:30 p.m.
Like Reply

No, I’m saying it’s silly to take one item, compare it to the average inflation rate and say the government screwed it up.


My Mustang example is much higher than the inflation rate. Bad ? No, much better car.

Health care much higher. Bad ? No, much better care today.

Higher education, higher. Bad ? No, much more expensive to teach current science and technology courses. Junior high students are extracting DNA for jebus sakes. 


Many things work to pull down that average inflation rate, technology sector for example.


Now if you want to go back and drive 1970’s cars, have 1970’s health care and teach 1970’s courses have at it.


Me, I’ll take the cleaner air, safety features, health innovations and top level arts and  science instruction any day.


Wages haven’t kept up. I saved enough for that Mustang in maybe eight months. Few construction workers could do that today.


McFarmer out.

By TimNew - April 28, 2019, 6:16 p.m.
Like Reply

Seems the New York Times, of all sources disagrees with you.   Not only with your "Higher Quality of Education" thinking,  but also your car analogy.  They seem to think, and all the data supports that thinking, that the vast majority of tuition increase has been due to administrative costs,  not that class room.. Dang!!!   How do schools justify, or pay for that massive increase in admin?

https://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html


Here's yer car thang.  Per the NYT.


"In other words, far from being caused by funding cuts, the astonishing rise in college tuition correlates closely with a huge increase in public subsidies for higher education. If over the past three decades car prices had gone up as fast as tuition, the average new car would cost more than $80,000."


And the admin thang??

"By contrast, a major factor driving increasing costs is the constant expansion of university administration. According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions."


As you apparently skimmed over it. here's some data MM provided.


Skyrocketing College Tuition



But surely, that "Magic Wand" that only the government has can fix all of this,  right?

By mcfarm - April 28, 2019, 7:46 p.m.
Like Reply

and Tim add to that huge cost the cost of graduating kids today with the reading, writing and math skills of 8th graders....yes we should be quite proud of the trillions we have spent....

By mcfarmer - April 28, 2019, 8:25 p.m.
Like Reply

OK, I should thank you for reminding me of two things.


One, my explanation skills are sometimes lacking.

Two, why I should just let some statements lie  there unchallenged. It’s really fruitless.


So, without the deflection some folks enjoy let’s start at the beginning. We’ll go slowly.

You bemoaned the fact your $500 education of yesteryear  cost so much more today  than inflation would warrant and blamed  government meddling.

I tried to illustrate, with granted very simplistic examples, that you can’t compare prices of complex products like education, health care and cars simply by applying the common consumer price inflation rate to them. It’s the old apples and oranges thing.


You can do this with number two pencils,  basic Bic pens, a loaf of bread, a pound of hamburger, a dozen apples and so on. You can not do it with items that are not comparable to the same products of forty years ago. It’s very simplistic to think health care, cars and education prices should progress at the basic inflation rate. The inflation rate really means nothing when applied to specific items, unless those items are so basic as to be unchanged in the intervening years. Even then supply and demand screw up the comparison. 

That’s why the whole “parity” argument in agriculture is flawed. But that’s another topic.


I’ll let someone else have the last word.

By TimNew - April 28, 2019, 8:43 p.m.
Like Reply

http://money.com/money/4008049/college-costs-100-years-inflation-1915/


When the data makes an argument look foolish, most people making the argument will acknowledge that their argument/logic is flawed. 

The fact that the increase in education has been shown to be largely due to administrative costs instead of actual classroom costs would convince most .  Some will deny that data. The people who think throwing more money at a system  is the solution. 

There has been a spike in education costs that strongly correlates to a government effort to make education more affordable by throwing billions at it. But surely that must be an apples/oranges thang,  right?


Whatever  <G>


BTW, another of the many facts that seemed to escape you.   You introduced the  argument comparing car cost to educational cost.  remember?  Both have gone up dramatically since the 70's.  That was a few posts before you called it an invalid argument..  Apples/oranges...