9 ms·

Just some context: Student loans outstanding will exceed $1 trillion this year http://usatoday30.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-

by jtome 13y ago

Just some context: Student loans outstanding will exceed $1 trillion this year http://usatoday30.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1 http://usatoday30.usatoday.com/money/perfi/college/story/201... The amount universities are charging students is what's 'obscene' to me. Making 5% profit on "obscene"ly risky loans isn't the cause of the US's student debt problem. This just sounds like populism and pandering.

BrainInAJar 13y ago
Universities charge students what they do because the students get loans to pay for them and the true cost is hidden.
InvisibleCities 13y ago
>Making 5% profit on "obscene"ly risky loans isn't the cause of the US's student debt problem. This just sounds like populism and pandering. Student loans are federally guaranteed (i.e. if the student cannot repay the loan, the federal government will), so they aren't risky at all; the bank is getting its money either way. If you're going to shill for the banking industry, you're going to need to try harder than that.
- warrenm 13y ago
  some student loans are federally-guaranteed, not all (though, perhaps, most)
- jtome 13y ago
  Um...what? I had said that it isn't obscene for the federal government to make 50 billion dollars a year off a much larger amount of very risky loans that it bears almost all the risk for, and you accuse me of "shilling for the banking industry". I think it is you who needs to try harder. EDIT: changed all to almost all, since not all loans are federally guarenteed as warrenm points out
awj 13y ago
I don't know that you can pin this solely on universities. Simple supply and demand states that they'll keep raising rates until the market stops following them. Each group has a hand in this mess, including the students themselves. Pointing to only one group suggests that we can find a solution there. I really don't think that's the case with this problem.
- jtome 13y ago
  Although I think you're right about everyone sharing blame I think as not for profits this type of behavior is egregious from universities.
pessimizer 13y ago
There's nothing risky at all about federally guaranteed loans that cannot be discharged with a bankruptcy. It's pretty much printing money.
- andrewpi 13y ago
  They might not be dischargeable in bankruptcy, but a recent article I came across mentioned that a huge percentage of outstanding loans are technically in default. Those are loans that are way behind in payments.
  - pessimizer 13y ago
    Until 2010, and still on the guaranteed debt outstanding since 2010, if someone defaulted the government would pay it off. This would not discharge the debt, it would just become a debt owed to the government. http://www.nolo.com/legal-encyclopedia/what-is-federally-guaranteed-student-loan.html http://www.nolo.com/legal-encyclopedia/what-is-federally-gua...
Shivetya 13y ago
I am thinking her name should be Senator Soundbite. The majority of students have twenty five thousand or less in student loans. There are better alternatives than adjusting the rate to making sure students who want an education can afford it. Increasing Pell grants is one, having colleges which don't have price ceiling match them or not receive aid is another. Public Service programs which give way to loan forgiveness; you pay a percent of income for a number of years and the loan is forgiven provided you choose an approved career path. I would love to see another alternative listed in a recent businessweek article, limiting loan amounts based on what is studied. That would fix the problem with some colleges which sell degrees in low paying fields but charge exorbitant fees. Still key is the rampant rise in tuition and related costs which is a reflection of easy money, as in the loans are just so easy to get
gte910h 13y ago
It's not 9% profit. It's 9% per year. That can be double or even triple the cost depending on the timeline of payback

by jtome 13y ago

BrainInAJar 13y ago

Universities charge students what they do because the students get loans to pay for them and the true cost is hidden.

InvisibleCities 13y ago

>Making 5% profit on "obscene"ly risky loans isn't the cause of the US's student debt problem. This just sounds like populism and pandering. Student loans are federally guaranteed (i.e. if the student cannot repay the loan, the federal government will), so they aren't risky at all; the bank is getting its money either way. If you're going to shill for the banking industry, you're going to need to try harder than that.

warrenm 13y ago
some student loans are federally-guaranteed, not all (though, perhaps, most)
jtome 13y ago
Um...what? I had said that it isn't obscene for the federal government to make 50 billion dollars a year off a much larger amount of very risky loans that it bears almost all the risk for, and you accuse me of "shilling for the banking industry". I think it is you who needs to try harder. EDIT: changed all to almost all, since not all loans are federally guarenteed as warrenm points out

awj 13y ago

I don't know that you can pin this solely on universities. Simple supply and demand states that they'll keep raising rates until the market stops following them. Each group has a hand in this mess, including the students themselves. Pointing to only one group suggests that we can find a solution there. I really don't think that's the case with this problem.

jtome 13y ago
Although I think you're right about everyone sharing blame I think as not for profits this type of behavior is egregious from universities.

pessimizer 13y ago

There's nothing risky at all about federally guaranteed loans that cannot be discharged with a bankruptcy. It's pretty much printing money.

andrewpi 13y ago
They might not be dischargeable in bankruptcy, but a recent article I came across mentioned that a huge percentage of outstanding loans are technically in default. Those are loans that are way behind in payments.
- pessimizer 13y ago
  Until 2010, and still on the guaranteed debt outstanding since 2010, if someone defaulted the government would pay it off. This would not discharge the debt, it would just become a debt owed to the government. http://www.nolo.com/legal-encyclopedia/what-is-federally-guaranteed-student-loan.html http://www.nolo.com/legal-encyclopedia/what-is-federally-gua...

Shivetya 13y ago

I am thinking her name should be Senator Soundbite. The majority of students have twenty five thousand or less in student loans. There are better alternatives than adjusting the rate to making sure students who want an education can afford it. Increasing Pell grants is one, having colleges which don't have price ceiling match them or not receive aid is another. Public Service programs which give way to loan forgiveness; you pay a percent of income for a number of years and the loan is forgiven provided you choose an approved career path. I would love to see another alternative listed in a recent businessweek article, limiting loan amounts based on what is studied. That would fix the problem with some colleges which sell degrees in low paying fields but charge exorbitant fees. Still key is the rampant rise in tuition and related costs which is a reflection of easy money, as in the loans are just so easy to get

gte910h 13y ago

It's not 9% profit. It's 9% per year. That can be double or even triple the cost depending on the timeline of payback