College/tuition: The largest of scams in plain site

The irony of complaining about the cost of education and misspelling ‘sight’.

 

Regarding the automobile/airline industry, the assets would be there, but would the demand for cars/travel still be there without government intervention?

Regarding the bank bailout, didn't the vast majority of banks repay those funds?

 

To clarify a little, I'm not saying we should not have done those other bailouts. For some of them at least, the benefits to people of avoiding the economic disruption of many simultaneous corporate failures was greater than the costs of stopping them. Just that if we're thinking about costs and benefits of bailouts with a lens on risk management, we can see that student loan borrowers are badly exposed and don't have any of the sophisticated risk management tools we routinely employ in other parts of the economy. So when you have many people facing an unresolvable credit hazard at the same time, it is much alike in severity to the country facing mass layoffs in an industry collapse, except it goes on and on for years. Given the lack of other mitigations, the costs of the bailout convert completely to benefits for people, whereas a corporate bailout spares them from employing some of their risk mitigation fallbacks, like bankruptcy.

 

Young adults do have risk management tools. They can work and save money before going to college. They can first earn credits at community college. They can go to in-state colleges. They can be realistic about whether or not their chosen degree can pay for their student loans. They can go to trade school instead of college.

I understand that many young adults don't fully understand what they're getting into with regards to student loan debt, but this problem isn't remotely close to a collapse of an industry. Failing industries have a domino affect that would greatly impact society as a whole.

IMO, you're being shortsighted with this comparison.

Then the focus should be on mitigations, not a bailout. A one-time bailout doesn't solve the underlying problem whereas the corporate bailouts did.

Also, there's a reason the government wanted those companies to avoid bankruptcy, and I think you're overlooking it.

 

Lobbying power? Campaign donations?promise of board seats after leaving office?

How is that relevant to the discussion?

 

You don't think the simultaneous collapse of major industries would have a major, negative impact on society?

 

You know, creating an entire class of people with 30+ grand in debt merely for wanting to be more educated doesn't have any cascading effects. It's an effect free situation.

 

No. I don't like communism. Let corporations fail due to bad practices. Invisible hand will solve this.

 

Awesome. Then you're against student loan debt cancellation, right? After all, they signed on the dotted line, didn't they?

 

If you want to know how far the concept of "capitalism" has gone down the shitter due to propaganda by wealthy capitalists over the past century just look at how ardent modern "anti-communists" who constantly call any sort of reform on our economic system as communist encroachment discusses access to education and how Adam Smith discussed it.

Ya I think it makes logical sense to seperate education from "the market". Humans don't have a right to a iphone but they have a right to education.

 

Going from "where we are" to "where we want to be" has to be a gradual change, especially when "where we want to be" isn't necessarily provided for by the Constitution or current law.

 

I wouldn't call those risk management tools. That's risk avoidance. And if you risk little, you reap little. Risk management is taking the risks you need to take but finding someone to be an offtaker for your risk, and perhaps you take someone else's risk that you can take. Maybe a guy going to truck driving school can also buy shares in a trucking automation company so that if his occupation becomes obsolete maybe at least his stock portfolio is doing well, or vice versa. Your version of risk management would advise Lehman Brothers to buy treasury bills instead of investing in companies.

I guess I'd say the same. You underestimate what a drag the student loan debt problem is. The shape of the disaster is different. Industry collapses cause acute but usually short-lived pain that impacts many. Industry dysfunction, like we have in education and healthcare, is a dull ache that goes on forever and impacts everyone. They're both bad.

I agree the focus should be on mitigations. My preference is to make state school, or at least community college, free. If Republicans hate loan forgiveness, I'm not sure there is a word to describe their feelings about free college. But with free college, students put some of their education risk on taxpayers, but the government can manage the risk by making decisions about who and how many students they'll accept in the Poetry department.

At the very least, we should be able to declare bankruptcy and discharge these debts.

But even if we're not there yet, student loan debt is not just a outcome of education risk, it is itself a risk of other downstream effects. High debt households are less likely to buy a house, less likely to make other (hopefully more successful) financial investments, have lower credit, higher interest rates, lower consumption, higher bad debt rates, likelier to become homeless, likelier to have children in poverty, likely to have children with lower educational attainment, and so on. Canceling some student debt won't prevent the creation of more student debtors, but can reduce the likelihood of other bad things to result from the current indebtedness and prevent the problem from snowballing.

 

Risk avoidance is a type of risk management.

On what are you basing this statement?

Hypothetically, if this were the case, what's to stop freshly graduated students from immediately declaring bankruptcy?

I would argue the opposite. Without addressing the underlying cause, a one-time cancellation of student loan debt would cause the problem to snowball. Colleges would be emboldened to charge more.

 

Here's a singular example of the effects at a systemic level.


https://www.nar.realtor/research-and-statistics/research-reports/the-impact-of-student-loan-debt

Overall, genz and millennials are "starting" their lives later as in buying a home and having kids and that has many cascading consequences.

Student loan debt isn't the only problem contributing to fewer genz and Millennials being homeowners compared to previous generations at the same age. Housing costs are the other large factor.

Honestly you shouldn't be surprised by a situation where thousands of people have to spend 300(roughly the average monthly student loan payment) for a decade having massive systemic effects on multiple markets.

 

And water is wet. It's common sense that the more debt a young adult is burdened with, the later in life he/she will buy a home and start a family.

The poster I responded to said I underestimated the drag of student loan debt. I'd like to know why he thinks that.

 

Well Said

Rocket River