The guy with $160k in student loans had his parents cosign his student loans and then left the country. What a jackass. Leaving all of that debt for his parents to figure out, while he ran away from it all.
This is painting with a broad brush-- 160k in student debt is on the higher end of the spectrum, even for individuals who pursue secondary degrees (MD, JD, MBA, etc) or choose to pursue programs at for profit schools.
Perhaps this individual was pressured heavily at 17 and 18 (by parents, guidance counselors or whomever else was in a position of authority over them as a young adult) to jump on the bandwagon and before they were old enough to assess the value of the education being provided for themselves, it was too late.
Why on earth anyone would think an 18 year old is mature enough to sign away six digits worth of debt but not drink a beer is just boggling to me.
Another point to consider is that many young people believe their parents (and their parents generation as a whole) signed up to pay these costs: both when they chose to become parents and when they collectively chose to slash public funding to universities.
> Another point to consider is that many young people believe their parents (and their parents generation as a whole) signed up to pay these costs: both when they chose to become parents and when they collectively chose to slash public funding to universities.
Your parents have no obligation to pay for you through college. Nice parents do so. But there's certainly no "obligation".
And if your parents cosign a loan for you, I would hope that you would at least have the personal honor to help your parents with the financial issue, rather than run away to Germany.
Or at very least, run away WITH your parents, together. The fact that he's separated from his parents speaks volumes about the situation. His relationship with his family has been likely stressed due to this debt issue.
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I think I'm mostly on the side of the students throughout the article. But in this particular case, the person's behavior is so egregious I felt like it needed to be pointed out.
Just a quick data point for you: Most of the "top 20" universities that I was looking at 10+ years ago were going to total more than $40k in loans per year, and that was prior to the insane educational inflation we've seen more recently.
My alma mater has climbed up to nearly 70k/year as of this year... It's completely nuts, but if you didn't get that chopped down by financial aid grants and had to pay it all via loans, it wouldn't take long to get ridiculously in hock.
Even better, it's up 20% from when I graduated, just a few years ago... Gotta pay those six-figure salaries for assistant deans of XYZ, $25/hr cafeteria workers and security forces to make sure adult students aren't drinking hard alcohol somehow.
I laugh and hang up the phone when they call up and dun me for alumni donations.
I would say no... It's a prestigious name to have on the piece of paper, but I'm not sure that's worth starting out in life with a full mortgage-worth of debt... I think I'd have had to double down and go through the I-banking/consulting/doctor/lawyer track to try to dig out, rather than go into something I actually kind of enjoy.
I was poor enough that the financial aid made it a better decision - something like 3-5k more per year than going to my state university, which doesn't look anywhere near as good on a resume.
Just depends on where they went to school. Dartmouth and other "Ivy League" schools cost close to 45K/year. Most state schools are more affordable. I was lucky to go to a state school that had reciprocity with my home state, so I was able to pay in state tuition, even though I lived in a different state.
Even with in-state, I still paid around 13K/year. The deal I struck with my parents was they pay for two years, I pay for the rest. They figured if I flunked out, it would happen within two years. If I wanted to get my degree, I'd work hard and earn it mostly on my own, which I did.
A co-worker's kid just graduated from Cal Poly. Said he spent $22k/yr for everything (room, board, tuition, books). So, $30k isn't a crazy number per year.
To put it in perspective, my brother is 17 and getting ready to pick a school. He was looking at anywhere between 70k to 180k for an Engineering school on the East Coast.
My public school alma mater is now about $12k/year just for tuition for in-state students. That doesn't include food or housing. Most students take four years to graduate. That's a $48k floor; private school costs more, living away from home costs more.
If these are federal, government issued loans, can't those be collected via the IRS? And can't the IRS block renewing your passport when living abroad? Some countries have those kinds of laws. That seems like an effective way to collect on the debt.
(Not that I'm pro student debt: I live in a country with free higher education, and I don't think it's healthy to have to start your life with massive amounts of debt. )
Usually this is done by taking your tax refund to pay off tax debts you may have. They can also garnish your wages to pay the debt off. There are also professional boards that can/will revoke your professional license if necessary.
This is a type of loan that can't be discharged through bankruptcy either. Best plan is to contact the Dept. of Education and set up a payment plan. Even if you're paying $20/month it will keep you off the radar of the government looking to collect on your student loans
No, they can't. The IRS will turn over any funds due to you to the DOE, but they won't pursue the debt itself for them (a collections agency does so), nor will the IRS prevent you from renewing a passport over student loans.
Disclaimer: Helped a friend negotiate ~$100K in defaulted student loans down to ~$10K while he was out of the country.
Signed contract/agreement. Try to default on that and I'll have my attorney take you to court and report you to the Consumer Financial Protection Bureau. The protections afforded by the FDCPA [1] against debt collectors are significant (although, in my opinion, do not go far enough).
Yep. I had heard about it in private equity plays, i.e. a fund acquires a loss making business to turn around and force the lenders to write off 30% of their debt, but never with student loans.
I've had success negotiating certain matters with the tax authority in a similar way, when dealing with unclear laws.
I'm not pro-student debt, but all of the stories in this article are super irresponsible to me. All of my friends and I graduated at the worst time possible, shortly after the 2008 crash. It was a terrible time to enter the job market (unless you were a developer, but still, salaries were low and I worked hard to earn what I do now which apparently is now just considered market-rate).
Anyway, all the english majors and political science majors etc struggled to find jobs, but they found shitty jobs nonetheless. They chipped away at their loans, changed it to lower payments, or just paid interest for a while. Where are they now 5 years later? Their loans are mostly paid off and they're in better jobs.
My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work. The stories where their parents have to deal with phone calls are especially bad.
> My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work.
The ol' puritanical work ethic. No, you need to make the best business choice. If a corporation defaults, no one cares. But your degree is worthless or provides you no benefit? You never get away from it.
When you can walk away, walk away. Its okay for the Fed to QE till the cows come home to prop up asset bubbles, but not okay for the US DOE to forgive loans on educations that have little value? Please.
I guess it just comes down to the type of slavery you want for the next generation. At least you have the option of not buying a home or equities in inflated markets, but garnishing your wages or your tax returns forever? We should be shocked about those who don't emigrate to countries that treat them better. I'm very surprised first world countries with declining populations haven't made an active advertising/outreach effort to appeal to young US graduates with large amounts of debt.
I think the government should fund education directly, with tuition being free to students.
Right now, we have this joke where schools can raise rates as much as they want, because you must have a degree to be competitive (inelastic demand). Combined with cheap, government-backed lending, its a disaster. Its a long-term payday loan, no more, no less.
At least when the money flowed without discretion for housing, you could walk away from your house.
If you pay for it directly, you control the costs.
No different then single payer healthcare.
Also, credit card and personal loan debt is unsecured; we don't prohibit that from being discharged in bankruptcy. Student loan debt is the only debt that can't be discharged.
Because they don't have enough credit history to do so. You can get a credit card for a few thousand dollars with no credit history. Not tens of thousands of dollars.
The problem isn't the debt type. The problem is the government needs to use its regulatory authority to enable cost controls on education.
And that is the difference between a credit card/personal loan and a education loan. The student doesn't have enough history. Nothing stops anyone from forming a business that gives students a loan with is dischargable in bankruptcy except that business may have a tough time staying solvent.
I can't reply to you post below but do agree that cost control is the key. But giving free tuition is not the answer to cost control. It needs to be something more.
In most other spending, the government tends to negotiate. There are requirements on the bidder and the bidder with the lowest bid wins. Example of cost control. What do propose as a similar mechanism in education?
Taxes? Ya'know the same way we used to fund most of higher education. But we've cut a large portion of tax funding for higher ed in the last several decades. The job market requires more skills and education (apparently) and for whatever reason government officials have decided to make it more difficult for citizens to acquire those skills.
> The job market requires more skills and education (apparently) and for whatever reason government officials have decided to make it more difficult for citizens to acquire those skills.
My public high school was extremely expensive. Public schools are paid for by property tax in the US and taxes in my home town were extremely high. Most of that went to fund the extremely competitive and highly ranked school system.
What's a general education degree worth? I ask because a lot of state schools won't even put you into a degree program until your 2nd or 3rd year. We're asking teenagers to make lifelong commitments knowing they don't have enough knowledge or experience to do so.
I think the president has it almost right. Deny student loans to worthless colleges. The degree is a byproduct since it is the coursework that counts.
Deny student loans to all for-profit colleges. They only exist to suck up GI bill money anyway.
Mandate a gap year between high school and college: minimum age for attendance ought to be 19, barring a few exceptions. Many of my friends have gone on to be perfectly successful, but only after deciding after the first year that college is not for them. Too late; they already had loans. Had we all taken a year to truly ruminate on what we want to do, we'd all ended up a lot better.
One private-sector approach would be to fund education with equity instead of debt. Lenders can agree to fund a student's tuition in exchange for X% of their income for some fixed number of years Y after graduation. The lenders can choose X% and Y, within reasonable limits. After that period expires, no matter how much has been paid, the student has no further obligations.
The average cost of a 4-year undergraduate degree in the United States, including room and board, is around $76k. A lender might agree to pay this in exchange for 20% of wages for 10 years after graduation. The median income for fully-employed people with undergraduate degrees in the United States is $56k per year, so assuming the student earns that the lender gets a total return of $112k, or 47% ROI, over ten years.
That's roughly the same as debt with an interest rate of 4.7% percent, which is similar to what lenders are charging these days. The difference is that this scheme shifts the risk to the lender, where it should be: banks are experts of credit risk assessment.
Since lenders only get paid when the student does, their interests are better aligned. If you graduate and end up making a very high salary, they get a lot of money (and so do you of course); if you can only get minimum wage jobs, the lender doesn't make a profit. So they actually has an incentive to ensure the students earn more money after graduation to maximize their own return. Lenders would probably start competing with each other on job placement programs and whatnot.
It also puts the burden of the cost of education on the lenders, not the students. Lenders here have more bargaining power with schools, so they'd be better able to apply downward pressure on tuition fees.
Well, that was the whole point of the idea, wasn't it? Less loans for worse-paying fields would mean less people pursuing them, and this is where supply and demand curve kicks in, lowering prices of studying in these fields.
Student debt should be abolished, its a huge brake on the economy, only serving finance, which at this point in the debt supercycle is draining real productivity.
Just like you have the option of not taking on medical debt by getting out of the ambulance while you're having a heart attack?
No. You don't have the option to not take on student debt unless a) employers stop requiring it for an entry level job or b) the US government sees enough social progress to remove the need to take out loans for education.
Casting a college education as a matter of life and death is an excellent example of the kind of rhetoric which produces results like those under discussion.
Employment situation directly leads to living situations. Unemployed? You're going to be in poverty or homeless.
Its hard enough to get a job today with a bachelors degree. Without one? Much harder, if at all.
Getting a degree is truly a life or death situation. With proper social safety nets, single payer healthcare, and so forth, it would not be. But the way things are today, it is.
Oh. Well, that explains why I've been dead these past fifteen years, instead of making a good living as a software developer with a high-school education.
But totally unrepresentative, the plural of anecdote, et cetera, of course. I must simply be one of the privileged 95%.
Not at all, though I think many more can (and do) than are given credit for being able to. But I'm enough to disprove the overheated "get a college degree or you'll die!" stuff that's flying around right now.
Fair enough, I'm definitely with you on the point of people not giving themselves enough credit. Unfortunately society tends to beat independent thinking out of us, and where I grew up it was definitely hammered into your mind that you "need" to go to college. I once had a teacher though that took a good 15 minutes aside one day, to lecture us how while this mentality came from a good place, we should really assess our future for ourselves and consider things like trade schools + apprenticeships.
There are plenty of people who have jobs that don't have Bachelors Degrees. You don't need a degree to work retail, to work in a supermarket, to be a barista, to work in sales, to drive an Uber. A degree is not a requirement to live, and to claim otherwise is offensive to those people who work damn hard.
I have a Bachelors Degree. Didn't ace it, but did pretty well. But it's been completely useless for my work & employers didn't care about it - they're more interested in what you can do than in the random letter soup after your name. I've seen 4-year graduates who literally didn't know what an array was.
(The one place where I have found a degree to be useful is in moving overseas, where visa programs prioritize someone with a Bachelors Degree.)
Based on the articles it does not seem that most of the kids in the article really thought through what it means to take out large amounts of debt. (Including roping in parents as co-signers.)
To be fair the US Congress didn't think this through either since most programs to improve access appear to be loan-based.
I'm not sure what bubble you're living in, but some of my tech colleagues (making six figures) have enough student debt that they'll be paying it back for the rest of their working lives.
For less well-off people, a single misstep (or illness) can throw them into insolvency. This is an insane price for individuals to shoulder just to get on a level playing field (aka getting an education).
I don't know how it's possible for someone making six figures to have so much student debt they'll spend the rest of their career paying it off.
Say you take home 6K/mo after taxes and 401K contributions. This is reasonable for a dev making 100-150K. 2K to rent. 1K to bills, groceries. 1K to entertainment. You can now contribute 2K/mo to your loans. Even with a massive loan of 200K you could pay it off in 10 years.
10% interest that doesn't go away. At 10% interest it would take 18 years to repay a 200k loan at $2,000/month if you never missed a payment or had any penalties.
If you were to move to my country, Uruguay, and pay for rent, normal expenses and private education for 7 years (Comp. Sci. being 4-5yrs) you still would barely be above half that amount of money.
Why do you guys pay that much for a degree? Just haven't considered moving (and I don't mean here, I'm pretty sure there are many other countries in a similar or better situation) or is it something else?
20k on the low end? Where is charging $5k/year only? Berkeley is $14k, ucsd is $13.5k, UW Madison is $9k, georgia tech is $10k, ohio is $10k, minnesota is $10k (all costs in-state.)
I think a more reasonable budget is $25k/year on the low end: tuition, books (often $500-$1k/semester in engineering or similar programs), food, rent, etc. In CA if you live close to a community college, you can do the first two years for much less money and live at home, but we have perpetual budget crises so you will probably have to waste an extra year because you'll have a hard time getting into classes.
I was only describing tuition, not cost of living. And took into account taking advantage of community college for all the prerequisites you can.
That said, my undergrad in Arkansas was probably only 15K/year with cost of living included. I had friends who paid < $200/mo for rent. Location, location, location.
1 - whether you have access to inexpensive public education also wildly varies depending on where your parents live;
2 - Universities w/ better rep makes it far easier to get those first 1-2 jobs. After that it matters much less, but a great univ will open doors for the rest of your career.
Do you have a source for this? Considering I've been looking at in-state MN costs for a couple years now, that's absurdly low.
Current costs for in-state attendance including everything reasonable you would expect (aka fees) is more along the lines of $25k/yr then of course add in your daily living expenses on top of it.
This of course assumes you will be living on-campus. Even if you assume free rent and free food, you are talking $15k/yr for tuition and books alone.
I fell out of my chair when I heard what US students pay. It's pure predatory ponzi finance really.
Worst, people spin morality plays out of it, without ever doing the math or looking at systemic flows and going... 'hmmm maybe all this talk about personal responsibility and fortitude is completely irrelevant in the face of systemic unsustainability'
They are "making six figures", yet "they'll be paying it back for the rest of their working lives"? How did they end up with over $2 million for debt? (half of $100,000 times 40 years is $2 million)
Suppose they took about 7 years to get both BS and MS degrees. (the PhD is normally "free") This would amount to about $300,000 per year. That is overpaying for school by a factor of 6 to 100, depending on the school.
You know, if you make $100k, you don't actually get $100k. In the US, you'd be happy to get low 60s. And if you live in an area like sf, you may reasonably spend $2k/mo after tax to share an apartment.
Now subtract rent, which in most tech hubs is at least $1500 / month. Now you're left with ~$47k. After the cost of food, transport, and a little travel let's say you still have ~$35k. So each year of working pays for one semester of NYU. Not "the rest of their working lives" but even a generous salary takes a while to chip away at the loans students are currently taking out.
No, I don't mean Austin. I mean real Texas. Actually, it seems the better deal is Florida. (for example, Palm Bay is an easy commute to companies like Harris) You can eat non-organic food, including beans and rice. Do not travel. Carpool with your spouse. Do not buy furniture.
Consider the tax advantage of buying a home and having kids. Your taxes plunge. You can end up paying nothing, even with a 6-figure salary. Kids and houses are way more affordable than you might think.
Sure, you can live in rural tx, but good luck getting a job that pays $100k there. Remote employees can do it, but you're almost certainly not going to get that straight out of university. And this is the first time I've seen someone claim kids net save money =P . That would be, ah, different from the experiences of everyone I know.
Also, your calculations ignored interest. Even 5-8% interest on private student loans adds up in a hurry.
So we should tell our kids to work hard and good a good degree so they can get a good job so they can sit in an empty apartment eating organic rice and beans?
The typical state school runs $10k/yr (for just tuition); $40,000 of student loan debt should be no problem for a person making $100k/yr to pay down in five years. My partner managed to do that on less than 50k/yr ($800/mo over five years, about 1/4-1/3 of take-home pay at that salary).
So, a person making $100k/yr that can't manage to pay for their college education either spends too far too much of their income, or horribly overpaid for school.
I think this quote from the first segment sums it up
"I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back. Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference."
Emphasis added.
I am sympathetic however - people under 35 were sold a bill of goods - we were told "go to college, get a degree, and they will be a good job waiting for you" which turned out to be a load of malarkey - the problem isn't that you need to take loans out, its that student loans are not dischargeable - if normal lending standard applied, you'd see a whole lot less student debt, and the cost of education would likely drop precipitously.
But most of these examples in this piece have small amount of debt, something along the size of a car loan, with generous and long repayment terms - its much harder for me to accept someone crying hardship when they owe less than 40k. Even if the amounts were larger, once you take on the debt, it's yours, you own it, no matter if you want to pay it back or not.
I posted this up elsewhere, but $40k can be paid off in five years if you toss $800/mo at it. That's hardly an insurmountable debt burden. Sure, it sucks, but it's gone before well before most people would turn 30.
But yes, bankruptcy should absolutely apply to student loan debt if the individual can't pay.
I think the reason bankruptcy doesn't apply is so that lenders are more willing to give out student loans (which is good, more educated society, more opportunities) and also so they lend them out at a lower rate.
Without this, banks might require very good credit to give out loans (hard for young students to acquire).
Actually, the government guarantees the loans on behalf of the student. So if the student fails to pay, then the government will foot the bill.
The reason bankruptcy doesn't apply to student loans anymore is because a bunch of a-holes in the 70s started getting massive loans for their graduate degrees and immediately declaring bankruptcy after graduation (but before getting a job).
> Actually, the government guarantees the loans on behalf of the student. So if the student fails to pay, then the government will foot the bill. The reason bankruptcy doesn't apply...
So what are the conditions in which the guarantor will be required to take ownership of the loan? Death? Anything else?
If any of these examples had anywhere near $800/mo of disposable income I would be shocked. I'd guess less than 10% of student loan holders could afford to pay $800/mo on their loans.
Man, I don't want to pay back my car loan either but those are the rules for getting a loan. They're taking a super irresponsible approach to the problem IMO.
I had exactly the same reaction: higher education is overpriced and has perverse incentives, but these individuals hardly seem like the most deserving of compassion for their circumstances.
> I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back.
No shit
> Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference.
He didn't have to; it was a choice.
Let's change the system of higher education, but lets also get some better standard-bearers.
I find myself seriously wondering whether the Vice author intended readers to sympathize with his subjects, or despise them.
Partly I think this might be just my bias, inasmuch as I opted against taking on a six-figure debt load as my first adult act, and have discovered that not going to college is hardly the kiss of career death it's made out to be.
But I really don't think you have to be me to find someone who got his parents to co-sign that six-figure debt load, then skipped the country and left them holding the bag, almost beneath contempt.
You get what out of your university what you put into it. If you attend your top state school, go into an employable field, and put in a lot of effort you won't need to emigrate.
Did I miss out on some fabulous career path because I chose my state school over Drexel, Urbana, etc.? That's not entirely fair comparison for every student because Virginia Tech is a phenomenal engineering school. The point still stands though, are there any states in the USA that don't have a high quality state school?
>Where are they now 5 years later? Their loans are mostly paid off and they're in better jobs.
This is missing the magical step 2 just before "Profit!". How did your "English major" friends manage to pay off their their student loans from shitty jobs in 5 years? Even state school tuitions are now starting to reach several tens of thousands of dollars per year. For private universities, the annual tuition is often significantly higher than the median annual salary of their graduates.
Mostly paid off != paid off. After a few years you get raises, you get better jobs, you save money by living at home. Etc. My story may be anecdotal but my point still stands. People in the article are irresponsible.
Exactly. Besides, mostly paid off != paid off. I went to a UC so by the time you graduated loans were about $20k-$50k depending on how much you take out. Live at home, work hard, chip away at your loans, they'll be mostly gone after 5 years.
My story is anecdotal but it's true. Who says you have to repay a loan on the standard terms? I also said mostly gone. If standard is 10 years than after 5 years half is gone. Pair that w/ an accelerated payoff and you're looking at loans that are "mostly" paid off. IMO a lot more responsible than the stories in the article.
> My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work.
There is no reason to praise hardship. Saying that they shouldn't inflict extra hardship on others (their parents) is fine, but the ridiculousness of the situation is not something we should pride ourselves on getting through.
No one's parents worked hard so their kids would have as hard of a life. It's so they have an easier one, and that's something we should aspire to.
Hard work is part of it, but it is really about responsibility. I know when I was an 18 year old I was not the most responsible person, but my parents had taught me enough about money matters to not doing anything too stupid.
Since I mostly f'd off in HS, I had few scholarship options (and the state lottery had not come into effect yet), so I went to a decent nearby college and lived at home while working 20ish hours/week. Even then, some of my peers who went away to big schools with big price tags were saying I was missing the 'real' college experience because I had a job and lived at home. To me the real experience was not worth that kind of money.
Also, having his parents co-sign and then bolt is just a selfish jerk thing to do. My parents had to cosign for the initial loan I received, but from there on I either paid or took loans out on my own. Given how little money my parents already had, seeing them willing and excited to co-sign made me sad. My parents only had 3 years of college between them, but they taught me a lot of life lessons that formal education seems to miss.
The student loan industry is rapacious and unethical. Would you feel comfortable selling someone an English or Communications degree for a $200K which will accrue compounding interest?
Institutions that feel comfortable doing this are profiting from factories of debt-peonage. This includes both for-profit and non-profit institutions. They must be stopped.
Educational institutions are ostensibly founded on the magnanimous goal of educating people. If they must lend to be sustainable they should do so without charging interest.
And student loans should be disclosable in bankruptcy. If you're bankrupt, you're bankrupt!
No. If we continue to make educational debt non-dischargeable through bankruptcy, then millennials should be doing more to avoid paying back their loans (in an attempt to break the system) if they cannot secure a good job.
Baby boomers get to lose hundreds of thousands of dollars on their homes and walk away scott-free, but heaven forbid we forgive 40K in student debt for someone making 13$/hour.
We love to express the sentiment that business owners do not owe the working class anything. And that's true. But somehow we gloss over the fact that the working class does not owe their masters anything either. Owners are not entitled to cheap wages. We're all in this together...and if not, then many people say 'fuck it I'm doing what's best for me!'
Expecting people to act in the best interests of society is a wholly stupid notion. If you want people to do what's best for their neighbors, then you must make it semi-convenient to do so.
> yes our education system is backwards, but millennials need to learn some form of hardship or hard work.
Hmm, I wonder if we can come up with similarly nasty and unhelpful instructions for other generations, based on stereotypes and anecdotes.
E.g.: baby boomers with failing health should just accept that they're going to die, and stop overburdening Medicare with expensive treatments that only give a few more years of life.
Well I'm actually a millennial and your example was far more dark than mine. I got lucky in that I'm a developer, so finding a job wasn't so bad. But people who graduate college with a "useless" degree aren't so useless. Everyone has to start from somewhere and I think people lack the humility and confidence to deal with tough situations like a shitty commute, shitty pay, or having to live at home for a while. Honestly, none of these solutions are as bad as running away from it and leaving your parents to deal with your problems.
I couldn't totally agree more. Private school at $30,000 / year, private university at $53,000 - who does that? When my sister and I went to college, we had no delusions that we were going to go to in-state public universities where we qualified for in-state rates. Some of our friends even went to community colleges the first few years, then transferred to save even more money. Many of us had part time jobs and/or internships the whole time.
Also at the time, we knew we were going to need to be sponsored by companies if we wanted to stay in the US so we both chose practical degrees which would most likely lead to sponsorships for our H1B visas (ie engineering degrees).
I don't understand these people who willingly choose to go to EXPENSIVE private schools they COULD NOT afford, take HUGE loans they COULD NOT HOPE to repay on degrees that will barely pay for those loans. Then they have the audacity to feel entitled NOT to pay back those loans.
"the name Sallie Mae sounds so friendly; she's just your cute aunt making soup" - seriously?
I'm not pro-student debt. This all needs to change but all of the stories in this article are super irresponsible to me. All of my friends and I graduated at the worst time possible, shortly after the 2008 crash. It was a terrible time to enter the job market (unless you were a developer, but still, salaries were low and I worked hard to earn to earn what I do now which apparently is now just considered market-rate).
Anyway, all the english majors and political science majors struggled to find jobs, but they found shitty jobs nonetheless. They chipped away at their loans, changed it to lower payments, or just paid interest. Where are they now 5 years later? Their loans are paid off and they're in better jobs.
My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work.
In "Europe" student loans are almost unheard of. Some of "Europe" will pay for tuition and living expenses like its your full time job.
Student loans in "Europe" are treated like any other line of credit. You walk into a bank and ask for one. If it doesn't work out you can discharge it through bankruptcy like any other loan.
As a European, I am starting to think that we should build a wall, and make the US pay for it, to prevent all of these people from coming in. It is not their best people they send us: it's the ones that default on their loans! Wake up Europe! Let's make Europe great again!
I have to wonder how these debt refugees are getting their requests approved. Is German border policy lax enough that "I don't want to pay my debt" is enough to get citizenship?
Live there 2 years, problem free, and have a decent understanding of the German language and citizenship is almost guaranteed. Also helps to be from the right countries (US, Can, Aus, NZ, Western Europe).
No. You need an immigrant visa. These aren't impossible to get just most Americans don't want to do the research or jump through the hoops to do it.
Just like the US, most of Europe does not want new immigrants to be a drain on their social services. If you can find a job before you apply or have a very large bank account it's almost a give they'll give you a visa. A popular option is to get your TOEFL certificate and become an english teacher. Others are get a student visa or marry a EU citizen.
I have relegated myself to thinking this is another generational shift.
I see it across the board with my nephew, his friends and the young people I talk to everyday. At first I really felt like I was just being the "old guy" and thought my parents probably said the same thing about me. Now, I just accept this as the new normal for this generation.
To me, it's sad when you see kids with no sense of responsibility and have no drive to earn anything in their life.
EDIT: Yes, I know most generations usually give off an air of irresponsibility (baby boomers, hippies, Gen X, Gen Y) but this generation is so inwardly focused and lacks any kind of responsibility, it's borderline alarming.
The only difference between this generation and the last is that there is more visibility into creative opportunities you can make to benefit yourself, and a louder platform to stand on once you've made those decisions. Thinking that this is the generation that truly - for real this time - is just so much more flighty and irresponsible than the others is simply narrative fallacy.
And in response to your other reply noting this is a "cultural (American)" thing: well yes, because American student debt is not common in other countries. I'd argue it's likely more national than cultural, as it's driven by external context.
That's my two-cents, and they come from someone who naysays most of the non-evidenced-based comments spouted about Millenials.
It would have been more interesting to interview those of us who live in Europe and still manage to pay our US student loans.
It's a giant pain in the ass, from lenders who have no way of taking payment from anything but a US bank account, lenders who's systems can't handle a foreign address, and lenders who you can only pay via PayPal.
I think my favourite was the lender who told me to wire the money to a friend in the US and then they could pay my loan for me...
> "The federal government doesn't have really strong tools for collecting debt from people who move overseas,"
For now...The US government successfully pressured foreign governments into adopting banking reforms that make it a significant burden for an American to control a foreign bank account. So, it's safe to assume that the USG is capable of compelling foreign banks to hand over the assets of persons in default of their DoE loans.
Private loans are another matter, but I wouldn't be surprised if private lenders find a way around this. International banks have deep pockets and can probably buy up the debt of these fleers for pennies on the dollar.
I agree with the student who says it's an act of civil disobedience. Many of these companies should not exist after fucking up our economy, yet it's the students who have to pay them back? That bailout money could have gone to education, yet it went to prop up these criminal entities. And the federal government? Like they give a fuck about anything but money. Please. If they cared about the actual people living in this country, education would be free. Nothing is owed. Not to mention the absurd amount of taxes everyone pays for war and other bullshit that's unnecessary. The people want education, not war, and the government and our society has failed them. I understand there's a lot of stupid people in this country, but there's also a lot of people who want to actually make something of themselves and they shouldn't be held back by the idiots.
It gets especially fun geopolitically. You can force countries to take out new loans to repay older ones, even when they cannot meet their interest payments, paint them in the media as lazy, ignorant and irresponsible. Why invade a country when you have the IMF?
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[ 3.1 ms ] story [ 222 ms ] threadIts going to put downward pressure in the price of education. We really need an international market for education.
Perhaps this individual was pressured heavily at 17 and 18 (by parents, guidance counselors or whomever else was in a position of authority over them as a young adult) to jump on the bandwagon and before they were old enough to assess the value of the education being provided for themselves, it was too late.
Why on earth anyone would think an 18 year old is mature enough to sign away six digits worth of debt but not drink a beer is just boggling to me.
Another point to consider is that many young people believe their parents (and their parents generation as a whole) signed up to pay these costs: both when they chose to become parents and when they collectively chose to slash public funding to universities.
Your parents have no obligation to pay for you through college. Nice parents do so. But there's certainly no "obligation".
And if your parents cosign a loan for you, I would hope that you would at least have the personal honor to help your parents with the financial issue, rather than run away to Germany.
Or at very least, run away WITH your parents, together. The fact that he's separated from his parents speaks volumes about the situation. His relationship with his family has been likely stressed due to this debt issue.
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I think I'm mostly on the side of the students throughout the article. But in this particular case, the person's behavior is so egregious I felt like it needed to be pointed out.
In the article it hints at $30K a year. That sounds like a LOT of money, and then five years of education give you the $160K.
I can kind of understand medical school costing that kind of figure, but I cannot see how an undergrad degree could cost that.
Mine was approx $8K/year or $24K over three years. Still a LOT of money, but compared to his $30K/year, $160K total it is chump change.
Even better, it's up 20% from when I graduated, just a few years ago... Gotta pay those six-figure salaries for assistant deans of XYZ, $25/hr cafeteria workers and security forces to make sure adult students aren't drinking hard alcohol somehow.
I laugh and hang up the phone when they call up and dun me for alumni donations.
I was poor enough that the financial aid made it a better decision - something like 3-5k more per year than going to my state university, which doesn't look anywhere near as good on a resume.
Even with in-state, I still paid around 13K/year. The deal I struck with my parents was they pay for two years, I pay for the rest. They figured if I flunked out, it would happen within two years. If I wanted to get my degree, I'd work hard and earn it mostly on my own, which I did.
(Not that I'm pro student debt: I live in a country with free higher education, and I don't think it's healthy to have to start your life with massive amounts of debt. )
Usually this is done by taking your tax refund to pay off tax debts you may have. They can also garnish your wages to pay the debt off. There are also professional boards that can/will revoke your professional license if necessary.
This is a type of loan that can't be discharged through bankruptcy either. Best plan is to contact the Dept. of Education and set up a payment plan. Even if you're paying $20/month it will keep you off the radar of the government looking to collect on your student loans
Disclaimer: Helped a friend negotiate ~$100K in defaulted student loans down to ~$10K while he was out of the country.
You approach it as such: "I have X for you now (with X being about 1/10 of the total obligation). You either take that, or you get nothing."
To be able to do this, you must have X, and you must be able to negotiate from a position of power (it has to be very difficult for them to collect).
[1] https://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices...
I've had success negotiating certain matters with the tax authority in a similar way, when dealing with unclear laws.
Anyway, all the english majors and political science majors etc struggled to find jobs, but they found shitty jobs nonetheless. They chipped away at their loans, changed it to lower payments, or just paid interest for a while. Where are they now 5 years later? Their loans are mostly paid off and they're in better jobs.
My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work. The stories where their parents have to deal with phone calls are especially bad.
The ol' puritanical work ethic. No, you need to make the best business choice. If a corporation defaults, no one cares. But your degree is worthless or provides you no benefit? You never get away from it.
When you can walk away, walk away. Its okay for the Fed to QE till the cows come home to prop up asset bubbles, but not okay for the US DOE to forgive loans on educations that have little value? Please.
I guess it just comes down to the type of slavery you want for the next generation. At least you have the option of not buying a home or equities in inflated markets, but garnishing your wages or your tax returns forever? We should be shocked about those who don't emigrate to countries that treat them better. I'm very surprised first world countries with declining populations haven't made an active advertising/outreach effort to appeal to young US graduates with large amounts of debt.
Right now, we have this joke where schools can raise rates as much as they want, because you must have a degree to be competitive (inelastic demand). Combined with cheap, government-backed lending, its a disaster. Its a long-term payday loan, no more, no less.
At least when the money flowed without discretion for housing, you could walk away from your house.
With housing it is secured against the value of the house but with education there is nothing.
No different then single payer healthcare.
Also, credit card and personal loan debt is unsecured; we don't prohibit that from being discharged in bankruptcy. Student loan debt is the only debt that can't be discharged.
The problem isn't the debt type. The problem is the government needs to use its regulatory authority to enable cost controls on education.
Why? Why would education be no different than any other sunk cost, like a military or transportation infrastructure?
"Bootstraps"
I think the president has it almost right. Deny student loans to worthless colleges. The degree is a byproduct since it is the coursework that counts.
Deny student loans to all for-profit colleges. They only exist to suck up GI bill money anyway.
Mandate a gap year between high school and college: minimum age for attendance ought to be 19, barring a few exceptions. Many of my friends have gone on to be perfectly successful, but only after deciding after the first year that college is not for them. Too late; they already had loans. Had we all taken a year to truly ruminate on what we want to do, we'd all ended up a lot better.
The average cost of a 4-year undergraduate degree in the United States, including room and board, is around $76k. A lender might agree to pay this in exchange for 20% of wages for 10 years after graduation. The median income for fully-employed people with undergraduate degrees in the United States is $56k per year, so assuming the student earns that the lender gets a total return of $112k, or 47% ROI, over ten years.
That's roughly the same as debt with an interest rate of 4.7% percent, which is similar to what lenders are charging these days. The difference is that this scheme shifts the risk to the lender, where it should be: banks are experts of credit risk assessment.
Since lenders only get paid when the student does, their interests are better aligned. If you graduate and end up making a very high salary, they get a lot of money (and so do you of course); if you can only get minimum wage jobs, the lender doesn't make a profit. So they actually has an incentive to ensure the students earn more money after graduation to maximize their own return. Lenders would probably start competing with each other on job placement programs and whatnot.
It also puts the burden of the cost of education on the lenders, not the students. Lenders here have more bargaining power with schools, so they'd be better able to apply downward pressure on tuition fees.
No. You don't have the option to not take on student debt unless a) employers stop requiring it for an entry level job or b) the US government sees enough social progress to remove the need to take out loans for education.
http://www.bls.gov/opub/ted/2015/unemployment-rates-by-educa...
Employment situation directly leads to living situations. Unemployed? You're going to be in poverty or homeless.
Its hard enough to get a job today with a bachelors degree. Without one? Much harder, if at all.
Getting a degree is truly a life or death situation. With proper social safety nets, single payer healthcare, and so forth, it would not be. But the way things are today, it is.
But totally unrepresentative, the plural of anecdote, et cetera, of course. I must simply be one of the privileged 95%.
I have a Bachelors Degree. Didn't ace it, but did pretty well. But it's been completely useless for my work & employers didn't care about it - they're more interested in what you can do than in the random letter soup after your name. I've seen 4-year graduates who literally didn't know what an array was.
(The one place where I have found a degree to be useful is in moving overseas, where visa programs prioritize someone with a Bachelors Degree.)
I can't think of any other loan that is this generous with its terms.
To be fair the US Congress didn't think this through either since most programs to improve access appear to be loan-based.
I'm not sure what bubble you're living in, but some of my tech colleagues (making six figures) have enough student debt that they'll be paying it back for the rest of their working lives.
For less well-off people, a single misstep (or illness) can throw them into insolvency. This is an insane price for individuals to shoulder just to get on a level playing field (aka getting an education).
Say you take home 6K/mo after taxes and 401K contributions. This is reasonable for a dev making 100-150K. 2K to rent. 1K to bills, groceries. 1K to entertainment. You can now contribute 2K/mo to your loans. Even with a massive loan of 200K you could pay it off in 10 years.
If you were to move to my country, Uruguay, and pay for rent, normal expenses and private education for 7 years (Comp. Sci. being 4-5yrs) you still would barely be above half that amount of money.
Why do you guys pay that much for a degree? Just haven't considered moving (and I don't mean here, I'm pretty sure there are many other countries in a similar or better situation) or is it something else?
It's when you get to private universities that you see 200K+ degrees.
I think a more reasonable budget is $25k/year on the low end: tuition, books (often $500-$1k/semester in engineering or similar programs), food, rent, etc. In CA if you live close to a community college, you can do the first two years for much less money and live at home, but we have perpetual budget crises so you will probably have to waste an extra year because you'll have a hard time getting into classes.
That said, my undergrad in Arkansas was probably only 15K/year with cost of living included. I had friends who paid < $200/mo for rent. Location, location, location.
Even U Arkansas tuition/fees are $8.5k/year.
Two more thoughts:
1 - whether you have access to inexpensive public education also wildly varies depending on where your parents live;
2 - Universities w/ better rep makes it far easier to get those first 1-2 jobs. After that it matters much less, but a great univ will open doors for the rest of your career.
Do you have a source for this? Considering I've been looking at in-state MN costs for a couple years now, that's absurdly low.
Current costs for in-state attendance including everything reasonable you would expect (aka fees) is more along the lines of $25k/yr then of course add in your daily living expenses on top of it.
This of course assumes you will be living on-campus. Even if you assume free rent and free food, you are talking $15k/yr for tuition and books alone.
https://www.google.com/search?q=minnesota+tuition&oq=minneso...
also, I read the 3rd row instead of the second; 3rd (room and board) says $10k, 2nd row says $14k in-state tuition. Sorry to get your hopes up =P
Worst, people spin morality plays out of it, without ever doing the math or looking at systemic flows and going... 'hmmm maybe all this talk about personal responsibility and fortitude is completely irrelevant in the face of systemic unsustainability'
Suppose they took about 7 years to get both BS and MS degrees. (the PhD is normally "free") This would amount to about $300,000 per year. That is overpaying for school by a factor of 6 to 100, depending on the school.
Now subtract rent, which in most tech hubs is at least $1500 / month. Now you're left with ~$47k. After the cost of food, transport, and a little travel let's say you still have ~$35k. So each year of working pays for one semester of NYU. Not "the rest of their working lives" but even a generous salary takes a while to chip away at the loans students are currently taking out.
No, I don't mean Austin. I mean real Texas. Actually, it seems the better deal is Florida. (for example, Palm Bay is an easy commute to companies like Harris) You can eat non-organic food, including beans and rice. Do not travel. Carpool with your spouse. Do not buy furniture.
Consider the tax advantage of buying a home and having kids. Your taxes plunge. You can end up paying nothing, even with a 6-figure salary. Kids and houses are way more affordable than you might think.
Also, your calculations ignored interest. Even 5-8% interest on private student loans adds up in a hurry.
So, a person making $100k/yr that can't manage to pay for their college education either spends too far too much of their income, or horribly overpaid for school.
"I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back. Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference."
Emphasis added.
I am sympathetic however - people under 35 were sold a bill of goods - we were told "go to college, get a degree, and they will be a good job waiting for you" which turned out to be a load of malarkey - the problem isn't that you need to take loans out, its that student loans are not dischargeable - if normal lending standard applied, you'd see a whole lot less student debt, and the cost of education would likely drop precipitously.
But most of these examples in this piece have small amount of debt, something along the size of a car loan, with generous and long repayment terms - its much harder for me to accept someone crying hardship when they owe less than 40k. Even if the amounts were larger, once you take on the debt, it's yours, you own it, no matter if you want to pay it back or not.
But yes, bankruptcy should absolutely apply to student loan debt if the individual can't pay.
Without this, banks might require very good credit to give out loans (hard for young students to acquire).
The reason bankruptcy doesn't apply to student loans anymore is because a bunch of a-holes in the 70s started getting massive loans for their graduate degrees and immediately declaring bankruptcy after graduation (but before getting a job).
So what are the conditions in which the guarantor will be required to take ownership of the loan? Death? Anything else?
> I think at this point I owe about $40,000. I really, truly, honestly don't want to pay it back.
No shit
> Sure, I realize the responsibility I took on when I signed the papers and agreed to take out the loans, but I should have never had to do it in the first place. I feel some sort of civic duty not to pay them back, as if my small protest will make any kind of difference.
He didn't have to; it was a choice.
Let's change the system of higher education, but lets also get some better standard-bearers.
Partly I think this might be just my bias, inasmuch as I opted against taking on a six-figure debt load as my first adult act, and have discovered that not going to college is hardly the kiss of career death it's made out to be.
But I really don't think you have to be me to find someone who got his parents to co-sign that six-figure debt load, then skipped the country and left them holding the bag, almost beneath contempt.
Did I miss out on some fabulous career path because I chose my state school over Drexel, Urbana, etc.? That's not entirely fair comparison for every student because Virginia Tech is a phenomenal engineering school. The point still stands though, are there any states in the USA that don't have a high quality state school?
This is missing the magical step 2 just before "Profit!". How did your "English major" friends manage to pay off their their student loans from shitty jobs in 5 years? Even state school tuitions are now starting to reach several tens of thousands of dollars per year. For private universities, the annual tuition is often significantly higher than the median annual salary of their graduates.
There is no reason to praise hardship. Saying that they shouldn't inflict extra hardship on others (their parents) is fine, but the ridiculousness of the situation is not something we should pride ourselves on getting through.
No one's parents worked hard so their kids would have as hard of a life. It's so they have an easier one, and that's something we should aspire to.
Since I mostly f'd off in HS, I had few scholarship options (and the state lottery had not come into effect yet), so I went to a decent nearby college and lived at home while working 20ish hours/week. Even then, some of my peers who went away to big schools with big price tags were saying I was missing the 'real' college experience because I had a job and lived at home. To me the real experience was not worth that kind of money.
Also, having his parents co-sign and then bolt is just a selfish jerk thing to do. My parents had to cosign for the initial loan I received, but from there on I either paid or took loans out on my own. Given how little money my parents already had, seeing them willing and excited to co-sign made me sad. My parents only had 3 years of college between them, but they taught me a lot of life lessons that formal education seems to miss.
not so sure about all of that
Institutions that feel comfortable doing this are profiting from factories of debt-peonage. This includes both for-profit and non-profit institutions. They must be stopped.
Educational institutions are ostensibly founded on the magnanimous goal of educating people. If they must lend to be sustainable they should do so without charging interest.
And student loans should be disclosable in bankruptcy. If you're bankrupt, you're bankrupt!
Baby boomers get to lose hundreds of thousands of dollars on their homes and walk away scott-free, but heaven forbid we forgive 40K in student debt for someone making 13$/hour.
We love to express the sentiment that business owners do not owe the working class anything. And that's true. But somehow we gloss over the fact that the working class does not owe their masters anything either. Owners are not entitled to cheap wages. We're all in this together...and if not, then many people say 'fuck it I'm doing what's best for me!'
Expecting people to act in the best interests of society is a wholly stupid notion. If you want people to do what's best for their neighbors, then you must make it semi-convenient to do so.
Hmm, I wonder if we can come up with similarly nasty and unhelpful instructions for other generations, based on stereotypes and anecdotes.
E.g.: baby boomers with failing health should just accept that they're going to die, and stop overburdening Medicare with expensive treatments that only give a few more years of life.
Also at the time, we knew we were going to need to be sponsored by companies if we wanted to stay in the US so we both chose practical degrees which would most likely lead to sponsorships for our H1B visas (ie engineering degrees).
I don't understand these people who willingly choose to go to EXPENSIVE private schools they COULD NOT afford, take HUGE loans they COULD NOT HOPE to repay on degrees that will barely pay for those loans. Then they have the audacity to feel entitled NOT to pay back those loans.
"the name Sallie Mae sounds so friendly; she's just your cute aunt making soup" - seriously?
Anyway, all the english majors and political science majors struggled to find jobs, but they found shitty jobs nonetheless. They chipped away at their loans, changed it to lower payments, or just paid interest. Where are they now 5 years later? Their loans are paid off and they're in better jobs.
My point is, yes our education system is backwards, but millennials need to learn some form of hardship or hard work.
https://www.fvap.gov/citizen-voter
Student loans in "Europe" are treated like any other line of credit. You walk into a bank and ask for one. If it doesn't work out you can discharge it through bankruptcy like any other loan.
Dont you need an extended work visa in order to work for that long?
Just like the US, most of Europe does not want new immigrants to be a drain on their social services. If you can find a job before you apply or have a very large bank account it's almost a give they'll give you a visa. A popular option is to get your TOEFL certificate and become an english teacher. Others are get a student visa or marry a EU citizen.
I see it across the board with my nephew, his friends and the young people I talk to everyday. At first I really felt like I was just being the "old guy" and thought my parents probably said the same thing about me. Now, I just accept this as the new normal for this generation.
To me, it's sad when you see kids with no sense of responsibility and have no drive to earn anything in their life.
EDIT: Yes, I know most generations usually give off an air of irresponsibility (baby boomers, hippies, Gen X, Gen Y) but this generation is so inwardly focused and lacks any kind of responsibility, it's borderline alarming.
And in response to your other reply noting this is a "cultural (American)" thing: well yes, because American student debt is not common in other countries. I'd argue it's likely more national than cultural, as it's driven by external context.
That's my two-cents, and they come from someone who naysays most of the non-evidenced-based comments spouted about Millenials.
It's a giant pain in the ass, from lenders who have no way of taking payment from anything but a US bank account, lenders who's systems can't handle a foreign address, and lenders who you can only pay via PayPal.
I think my favourite was the lender who told me to wire the money to a friend in the US and then they could pay my loan for me...
For now...The US government successfully pressured foreign governments into adopting banking reforms that make it a significant burden for an American to control a foreign bank account. So, it's safe to assume that the USG is capable of compelling foreign banks to hand over the assets of persons in default of their DoE loans.
Private loans are another matter, but I wouldn't be surprised if private lenders find a way around this. International banks have deep pockets and can probably buy up the debt of these fleers for pennies on the dollar.
It gets especially fun geopolitically. You can force countries to take out new loans to repay older ones, even when they cannot meet their interest payments, paint them in the media as lazy, ignorant and irresponsible. Why invade a country when you have the IMF?