Discharge Your Student Debt

Discussion in 'Business & Economics' started by Michael, May 13, 2015.

  1. Michael 歌舞伎 Valued Senior Member


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    From: ZeroHedge

    Dear Class of 2015,

    Because we recognize your plight, allow us to provide you with a bit of friendly advice as it realtes to your student loans. Once you are uncerimoniously thrown from your dorm into the less-than robust US jobs market, you will likely discover that contrary to what you were told in your economics courses, the US economy is but a shadow of its former self.

    Because you probably didn't study to become a petroleum engineer, you will likely find your student debt burden to be quite onerous. The key to having it discharged is to make just enough money to stay clear of bankruptcy, but not enough to really survive above the poverty line. This is because it's hard to have student debt discharged in the event you go completely broke.

    However, if your discretionary income is so small as to render you incapable of making payments, the government will start you on a program whereby a monthly payment of zero dollars counts towards the 300 "payments" you need to make to have your debt forgiven. Toe this line carefully (i.e. don't slip up and start making too much discretionary income) and the entirety of your student debt will be forgiven in 25 short years without your ever having to pay a dime.

    You're welcome,
    Zero Hedge
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  3. joepistole Deacon Blues Valued Senior Member

    Well the unemployment rate for college grads is lower than for those without college degrees. Additionally, this is where personal accountability comes into play. College students should know before they begin taking college classes how much they can expect to earn upon graduation and act accordingly. If they pay $200k for a degree which will only allow them to earn 34k, who is at fault? It's kind of like the guy who buys a fancy car and then discovers he cannot afford it. They should have thought of that before they began their studies and borrowed the money. At some point, people need to learn the meaning of accountability.
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  5. origin In a democracy you deserve the leaders you elect. Valued Senior Member

    That's right in the US college is for rich people. Plus look at the bright side, those absurdly high interest rates will provide a lot of income for our government (why the hell do you think rates are so high?).
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  7. joepistole Deacon Blues Valued Senior Member

    Hmm, then how do you explain me? I put myself through college. I paid my own bills. I worked my way through college. I wasn't partying on weekends with a bunch of spoiled or otherwise entitled kids. I was too busy working. I didn't have family wealth. I didn't have a family. My father was a poor sharecropper. My parents were dead by my 12th birthday.

    What high interest rates are you talking about exactly? While going to college, they are zero for most loans. It's difficult to do better than zero. And once one graduates 9% maximum isn't by any means draconian.

    And that doesn't change the fact that if you borrow 200k for a 34k job prospect, maybe you shouldn't be in college.
    Last edited: May 14, 2015
    Aqueous Id likes this.
  8. iceaura Valued Senior Member

    So did I. That option is no longer available.

    For starters, complete abandonment of non-vocational education, except for the idle children of the irresponsible rich.

    Second, we have a very bizarre calculation confronting a 17 year old high school student: I wonder what odds against collegiate failure, unsuccessful job interviews, or national economic downturn, would be acceptable to this hypothetical well-informed 17 year old decision maker - given that the penalty for finding those circumstances upon leaving school is approximately equivalent to a medium length prison sentence. That is, for five or ten years after leaving school you can't get married and support as family, you can't buy a house, you may not be able to maintain a car, and you are working bad jobs for long hours you cannot quit.

    Compare the visible cost/risk vs benefit of college with that of serious entrepreneurship in the drug trade, or professional high end theft, or the like.

    Middle class and poor people, those without demographic and family connections to high paying jobs, cannot go to college on those terms. Maybe a trade school - but even those are getting expensive, and of course just as with a four year college there are no guarantees of any job - at all - upon graduation.
  9. Aqueous Id flat Earth skeptic Valued Senior Member

    I took it Origin was being facetious. Students are typically poor, outside of the small fraction who begin college wealthier than most folks will be at retirement. And of course students are recruited based on demonstrated accomplishments, thus a dirt poor kid mastering the violin may win a 4 year scholarship at Juliard just as one who arrives at orientation in a Bentley may wave off the exorbitant cost of Harvard Medical School.

    State universities are typically established to help reign in the cost for state residents. Out-of-state tuition may be double or triple the cost, while foreign students may face ten times the tuition.

    The problem with the OP is that it sets the expectation that college loans average around $200k, when in fact the average is closer to $30k. It also ignores the actual way students fund their education, which includes loans, grants, scholarships, student earnings and support from their parents. We should look for some actual estimates of these combined amounts to get a more realistic perspective.

    In my own case I did not even apply for loans (plus grants) until I decided to quit my job so that I could graduate sooner and thereby reach my entry level salary sooner. It was strictly an economic decision, in part spurred by thinking about the time value of money thanks to solving many homework problems in economics - contrary to the veiled attack on academia in the OP, which disparages the value of such courses.

    For this reason I quit my job and piled on the courses. I completed a 4 to 4-1/2 program in 2-1/2 years. It turned out to be an excellent selling point in my job interviews. I was hired several months before I would graduate (to begin receiving benefits early) and six months after graduation I received a raise that covered the monthly cost of my loan repayment.

    Everyone's situation is different. But my decision to maximize my gain clearly paid off - just as the formulas I studied in economics (finance) predicted.

    Moral of my story: don't knock it 'til you've tried it.
    joepistole likes this.
  10. joepistole Deacon Blues Valued Senior Member

    Actually, it is still possible. And I know this because my son is doing it. My son never asked for my support, though I did offer it. My son is putting himself through college, just as I did, and he takes some pride in doing it. It's not easy, it wasn't easy when I did it. And to Aqueous Id's point, he isn't paying anything close to 200k for his education.

    But I do think it is easier today, because typewriters have gone the way of the Dodo Bird and been replaced with fancy computers and there is this thing called the internet and virtual classrooms which makes research and attending class much easier. People can go to class naked today and never leave their room. Back in the day, I had to drag myself into the classroom several times a week, and if I needed to do research, I had to spend time in this place called a library. I spent many nights in the library.
    Last edited: May 15, 2015
  11. Michael 歌舞伎 Valued Senior Member

    If it were illegal for the Central Bank to bail out the rich in 2008, many in the 0.1% would be in the bottom 99.9%, at the same time the State would have lost tax income, would not be able to backstop massive $200,000 loans and Universities would have had to lower their prices. Because the State's revenue would have dried up, many of the obligations it made (that was shafted onto the Millennials) would not be paid and to generate more money the State would have loosened up regulations making it easier for Millennials to create their own value through free-trade.

    Most of the banks we're familiar with would have gone belly-up. Responsible lending institutions would have expanded market share - this would have been virtuous. They'd be the ones lending to Millennials. My guess is, it'd be easier to secure loans for STEM degrees and perhaps a premium for PhD's who's topic is A History of Animal Pattered-Pants in the mid 1920 - 70s.

    Oh well, you're the one who said their no inflation. And didn't Joe just say he worked his way thought University?

    The role for the Millennials is to get on the dole and pay Joe rent. Done and Done.

    Hope you like the New Economy. It's here to stay.
    A few more steps and we can legally enshrine the various ruling Oligarchies into Hereditary Law to fanfare and flag waving.
  12. iceaura Valued Senior Member

    You have a genius for making statements not merely wrong, but the opposite of the facts. I'm the guy arguing for higher effective inflation rates than the official ones.

    The idle children of the irresponsible rich would be decreased by how much? They aren't the ones borrowing from the State anyway.

    Unlikely. Those are the students with the 200k loans that need government backstop - the children of the idle rich do not lean toward engineering and the like. And most of the low level STEM jobs would be at risk - math teachers, insurance industry employees, civil engineers, etc, - so the payback uncertainty would be very large for a student from any background other than great wealth.

    First to go belly up would be the for profit schools - the private enterprise folks, currently sucking government titty. Next would be the vo-techs currently being relied upon to provide machinists and the like. Those philosophy departments and art schools you find supernumerary? They are very low cost, and produce lawyers and executives and schoolteachers etc. Much better bets. They'll stick around - like in the Middle Ages, when all this stuff you want actually existed.

    With no help from his parents at all. And he's working at WalMart or a temp agency to pay for it and his rent and clothing and medical care and so forth, and not accumulating debt.

    Because that's what it takes, to be an option. The occasional individual can beat it - I recall classmates in college who had found legitimate jobs that paid very well, usually through family connections, and worked with their school requirements or even fields of study - but as an option for any given student? No way. They are going to be borrowing, or they are not going to be in school.

    The question would be: of 100 17 year olds contemplating that decision in 2006, how many would have failed if they tried it? Given the job market of 2009, the typical 17 year old's assessment of employer's needs and wants, the fate of the typical teenager in their confrontation with college work, that kind of thing.

    For most 17 year old kids, large debt for college is a highly uncertain and very risky gamble. There is a penalty for failure, even just bad luck, and it's not a small one. There's a probability of failure, and that's not small either.

    So like the guy said - working one's way through college is no longer an option. Not really. And borrowing to pay for college is an increasingly dubious risk. Look at the median cost of college, the median wage job available to a recent high school grad, the median room rent and food costs, and never mind medical care (maybe move to a State that's signed on to Obamacare - but then that's out of State tuition, yikes) - it's not happening. The kid will end up doing something else, hopefully before the debt burden has piled too high.

  13. Michael 歌舞伎 Valued Senior Member

    Um, no. If STEM are in short supply then the price goes up and people go into that field. When you don't have a government distorting the free-market it's quickly understood what the value of a good STEM professional is. Unless you think society is past the needs of medical doctors, researchers, engineers, chemists, etc...

    Universities charge as much as they do for degrees because the government allows students to take humongous loans. If those loans were unavailable, then University tuition would fall in price. Also, Universities would probably start offering novel solutions. For example, perhaps they'd offer 'free' education now for payment later. This would actually incentivize Universities to produce high quality graduates - as opposed to the pump-and-dump factories many Universities have become (or are in the process of becoming). I'm sure degrees in Plant Equity Studies would dry up quickly enough - freeing resources for more useful pedagogy.

    Don't worry, soon politicians will make University 'free' and we'll see functionally illiterate graduates at a rate similar to Government schools. Oh, and as a consolation prize, 'free' medical care will probably kill at a similar rate.
  14. joepistole Deacon Blues Valued Senior Member

    Said the pot to the kettle, while Michael usually gets his facts wrong, so do you.
    And where is your evidence for that assertion? We shouldn't be bailing out people who buy a Venom GT and then discover they can't pay for it. People need to have some degree of accountability for their decisions. As has been repeatedly pointed out to you, most degrees do not cost anywhere near 200k dollars. Very few of our teachers, civil engineers, insurance industry employees pay 200k for college education. Most people don't graduate from ivy league schools who charge that much money for a college degree.
    I hate to tell you Ice, but Wal-Mart isn't the only employer in town. Not everyone works for Wal-Mart or a temp agency. And yes, with no help from his parents. There are some employers who are supportive of their employees who seek to advance their education (e.g. Star Bucks, the federal government, et al). http://www.pbs.org/newshour/bb/starbucks-offering-workers-college-education-hold-debt/
    Some people work full time and go to school as I did. In my son's case, he has a stock portfolio and a garage full of toys (e.g. motorcycles, kayaks, etc.). I went to school full time and worked full time. It's called work. It can be done, especially now because of the internet. I did it (without the internet) and my son is doing it. My son works fulltime, but he isn't carrying a full college workload as I did.
    It takes work Ice. It takes patience and persistence. In my son's case he spent years sailing in the Baltic Sea and saving his money. Instead of jumping into debt right out of high school, he saved his money. Saving seems to be an anathema for some people. Back when stocks were out of favor in 2009, he listened to his father and began pouring his savings into stocks and has profited handsomely. This week he purchased a brand new dirt bike. It's amazing what leveled headed people can do.
    Last edited: May 17, 2015
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    From video at: http://www.bloomberg.com/news/videos/2016-05-13/the-united-states-of-indebted-students

    US students owe more than 1.3 trillion dollars. That is more than total student debt of all other students on Earth.*
    That adversely effects their buying homes, cars, getting married, population growth, etc. - large part of why the "recovery" is so slow. In the last decade their debt butden has trippled! Watch the brief video for more.

    * Most advanced countries have higher taxes and low cost (or free) colleges.
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Here is start of Bloomberg article on the rapidly growing* (in US, not elsewhere) student debt:
    * US's fastest rising debt type:

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    This will end badly for the US.
    See same at: http://www.bloomberg.com/news/articles/2016-05-13/student-debt-is-eating-into-the-household-budget
    Student loan repayment is a major reason why wealth is becoming ever more concentrated in the US.
    Last edited: May 15, 2016
  17. iceaura Valued Senior Member

    US businesses looking for well-educated and capable entry level employees in the future - especially in technical and scientific fields - will be able to hire foreigners and keep them happy more cheaply than they can hire an American who has to make enough money to pay off large loans. Plus, they will have less of the productivity hit and turnover costs associated with stress and financial difficulties among the indebted.

    And if they hire them into foreign subsidiaries, they also save a bundle on health care.

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