everyone should prioritize paying off debt, its a huge risk factor in your life and a big hurdle on trying to achieve financial independence. for example owning your home free and clear is a great shield against market downturns because your shelter is covered and your risk of homelessness is drastically reduced. Even when the housing market crashes like in 2008, you are safe because you've lost nothing until you sale your home and no one is coming to take it away from you.

https://www.youtube.com/watch?v=XI4UT1JvIc4

@Putz that's a bit of a strawman. Freezing interest after x number of years is not the same as what you described.

If people continue to miss payments they will still receive late fees and could be sued for not holding up their end of the contract.

All it would do is make it so the money they spend would go towards paying off the loan, not the interest. It wouldn't effect the loans minimum monthly payment.

Freezing interest rates after ten years basically means that the credit agency rather than getting 300-500k in payments for a 100k loan over a 35 year period, would instead only get 200-300k.

It wouldn't require increased taxes, and it would still be a terrible situation for people to put themselves into. It just wouldn't be hopeless.

If anything loan sharks would need to raise the APR on student loans, which would deter them even more.

5% interest is a lot less scary than 15%

@DJ_Anuz its not a straw man, there is no incentive for early payment if you freeze the interest from accruing. it doesn't require increased taxes because an increase in taxes would assume some level of burden being placed on the state which wasn't discussed. to get a lender to offer a top end on interest earning, they would require either a higher interest rate ( to make up for the freeze) or a higher fee structure (also to offset the loss of revenue from the investments).

we aren't talking about "loan sharks" are is define as being ran by organized crime and as such operates in the black market (completely unregulated or protected by the legal system).

the end result is and always will be that the profit margin must meet or exceed the profit margin of other investments. no matter what scheme you come up with you still end up faced with either the banks making the same profit margin (just wrapped in a different contract term) or the burden being passed on to society. otherwise the money used to finance the loans can be leveraged more successfully in the market until rates reach competitiveness

btw in NZ, you get your student loans through the state and they take the payments directly out of your paycheck to ensure payment is received

step 1 for resolving the student loan crisis would be to limit what student loan funds cover, i.e. don't cover anything outside of tuition. yes this may reduce access to higher education but it would also greatly reduce misuse of funds

i actually have no issue with the government backing student loans at local levels, just against government doing it for 4m sq miles/330m people

@Putz
"there is no incentive for early payment if you freeze the interest from accruing"
So not paying a loan before you incur ever more interest before it was put on freeze (his idea was after 10 years remember) isn't an incentive?
You could say makes it less then the one before, but not no incentive.
As you said tho ya it would create the lender push this lost revenue else where, if it was more in the first 10 years maybe more people would choose not to proceed (which i think you both think that's a good idea).

Not really sure how i feel about it, but its something to think about.

what would be the incentive for early payment for years 10-30?

Paying something off before you get more year of interest?

paying off after you've hit the cap (i.e. freeze) and before the end of the loan life. Basically the period of loss for the loan provider because returns have already been maximized

Again, i'm not saying its a good idea or not. My only point was that if you can pay it from any year from 1 (when you get it) to 8-9 (before a freeze kicks in) and save money that is still an incentive to do so.

but that doesn't address the problem, because that is the same incentive that you have without the freeze

I'm getting lost by your replies..

doesn't matter the freeze idea is dumb, it creates incentives for bad behaviors (i.e. not paying off your debt) which would move the penalties associated with the bad actors onto good actors (those who would typically pay off debt early or onto society who would have to back the debt)

the real question is:

1) should government (i.e. society) back student loans
2) should government regulate student loans
3) what level of government is appropriate for 1 or 2 if either is deemed appropriate

until you get past those, discussing policy is pointless

Well, as long as you said its pointless i guess that's the end of it.

it is because the parameters of the debate are not set or as a minimum the position is not clear

So, its not my idea, but i don't see how its not clear. He thinks after 10 years if haven't payed for your loan, it would be a good idea to stop interest on it. So people don't feel they are just fighting a never ending uphill battle and think they can really pay it off at some point.

I'd still have to think about it, as i do see some good and bad that would come from something like that.

@Putz We're in agreement that the government shouldn't back student loans. That's how we got into the problem that we have in the first place.

You can't avoid making payments on your student loans. After you graduate if you don't pay off the balance of your minimum payments for 270 days your loan defaults and you receive massive penalties and consequences. So even if your interest is frozen after ten years, you still have to make your minimum payments.

I know that the student loan agencies are technically not loan sharks, but I use the term because student loans are predatory. You have millions of developing teens going to school and being indoctrinated at every corner of society that the only way to make it in America is to go to college. Then you have society encouraging them to get loans and financial aid to do it, and gave them a system where they can get the loans regardless of their credit history. It's not so easy to tell someone indoctrinated in that way that going to college was "their choice" so they now should have to be perpetually paying the interest on their loans until the day they die.

If you freeze interest rates, then the credit agencies will still make well over a 50% return on their investment to your loan, and the govt wouldn't be spending any additional money. I think it should be combined with the government no longer backing student loans, but even if they did so, the credit agencies would just hike up the interest rates, disincentivizing people from taking the loans in the first place.

Your argument that people won't pay off their loans until the 10 years when interest freezes just doesn't make sense since legally they can't do that, and logically that would be a sure fire way for people to maximize the amount of interest they pay.

As is, if you are only making your monthly payment on a 100k loan, you are likely to pay well over 300% in interest by the time you've paid it off. Ohh you will also most likely be dead or dying, so there is that too.

https://thecollegeinvestor.com/14926/happens-dont-pay-student-loans/

@DJ_Anuz http://esotericawakening.com/the-scam-and-how-it-works

What does that article about the federal reserve have to do?

Also I generally check out when someone starts their article with "The Zionists/Globalist's..."

I'm in agreement that the Federal reserve is sketchy. How we go about abolishing it is the question.

Yet another moron, color me surprised

Seems this place is a hangout for literal retards

Yet here you are

Not for long, this place is a shithole for donkeys

>Tags me in post completely unrelated to the topic at hand.
>Calls me a moron.

The freeze idea is pretty good depending on how you structure it. I mean the market has already created a freeze solution in the credit markets. Fair enough it's generally for revolving debt, but I think we can make a special case here. Also there are 0% bonds so the argument over no return on principle is useless.
All you have to do is backload the interest, give them say 5 years interest free to pay off their debt, if they don't all that interest accrues at once. Many thing already do this. It is a FURTHER incentive for early payments in-fact PAYING OFF all the debt.
Realistically, I don't think this would happen forever as the next generation won't be stupid about college because they will see what happened to this generation.
The issue isn't people getting stupid degrees, it's adverse incentives to get the degrees in the first place. After all a Woman's study degree has more weight than most STEM degrees now. If you want to talk about quality of education that's a moot argument at this point. You could even say that the market is valuing Woman's studies over STEM, but we both know that's intellectually dishonest if you just do some basic research into government regulations.

Furthermore you could utilize actual puts to hedge against default on any of these student loans that don't do early payment
Realistically student loans are an anomaly in the debt market as far as they are structured
Why? Government ensures payment, any other debt instrument would utilize a CDS or some other hedge in case of default
That's part of the reason why the mortgage crisis happened because government backed mortgages were slapped together with normal mortgages

Furthermore, you want to go into why revenue at major companies isn't growing much anymore? They don't fund R&D as much because they are forced by the government to retain these diversity admin positions or get fined. What this results in is inevitable cuts to the R&D workforce because R&D takes years to return on investment, look at Boeing they literally slapped bigger engines on a smaller plane and called it a new plane. Where were they spending their money? Lobbyists and government compliance people. I mean aviation is heavily regulated and they need to comply with certain regulations to work with the FAA, but this isn't FAA spending it's diversity spending on ensuring that they comply with Washington's minimum wage laws and diversity laws.
All these things work together to form a hydra that is slowing bleeding the economy dry. Companies don't spend money on training anymore because they spend it on stock buybacks and compliance instead. That's why degrees are required for so many positions because it forms a "basic level" since the companies can't afford, or be assed, to train the new people themselves.

@DJ_Anuz student loans are not predatory. You do not have to take them, predatory would be taking advantage of someone in "need".

Freezing makes no sense becauss in order to loan money you need to still recover a certain amount of profit per year over the life of the loan. A freeze only pushes the profit into the earlier years of the loan (higher apr or increased fees). Else it cannot compete with other investment opportunities.

You also continue to blame society for getting into this mess as a means to put it on society to fix it (which would be a seperate debate). That does not change the idea that a freeze is a bad idea.

A 50% return on a 30 year loan is garbage. No institution would accept that. The rate of return would have to remain competitive with other investment opportunities.

You should be paying well over 300% interest in a 30 year loan. That's how loans work especially high risk unsecured loans. Look at buying a house, you will do near that and a house is considered a "secure" loan.

@IImploreYouToRemoveYourself companies ask for degrees and want to limit the amount of training they have to not because they can't afford it (they just pass costs on to the consumer) but because it makes good business sense, they are hiring the most skilled/educated person they can for the role. And if there is a surplus of college educated people on the market, they will start with them. Btw college educated doesn't mean no training required. It means they are (theoretically) more capable to learn quickly, know how to have a professional conversation, have some familiarity with industry terminology, are interested enough in the career to make a personal investment into it, etc

Off topic, nice debate on if to many kids are going to college (which includes some discussion if our college model is obsolete): https://youtu.be/7VTQ-dBYSlQ

@Putz A degree is merely an economic signal, and given how much turnover companies have with these positions: average tenure at google is 2 years - average cost of simply FINDING someone is $4k that's before wages, benefits, H1B. It doesn't make any sense for a company to hire someone with no experience, which is why companies are now hiring people with no college degrees but they have years of experience, especially in things like programming. There are certain degrees that are required for regulations: JD for law, MD for medical practice, DDS for dentistry, you need an engineering or science degree to patent anything (legally), engineering degree is required for PE designation, but 90% of degrees are useless as they only serve as an economic signal that someone went through 4 years of something. Which is where the problems stack up for a lot of businesses, they simply throw bodies at the problem. Lots of sales positions are hiring right now and there is no mentorship or training for a lot of those positions. Sales is not something that needs a degree in general. Except for government required licenses.
As far as professional conversations, universities are a bubble they are not going to learn that unless they intern, which at that point why not start out, sort of Euro-style and have a co-op? Familiarity with industry terminology is again better learned in industry as academia is generally BEHIND what industry is doing

So @DJ_Anuz if your saying the government should no longer secure loans. The can we assume your saying the government should regulate the terms of the loans?