Message from @Mandatory Carry
Discord ID: 589300031866273792
we certainly need to see improvements in public education, if your signing up for student loans, and you don't understand how loan repayment works that is a failure of public education. Granted i still contend that parents on the responsibility to fill in the gaps in public education.
If you fail to understand how loan repayment works and your signing a contract for a student loan, there is either a gap in your education (which is a good reason to require parents cosign for student loans), you are knowingly making an investment in your future (and your prepared to take the good or bad results of that investment), or your not mature enough to weight the opportunities and costs of that investment (a case for raising the age of emancipation)
It actually isn't the Department of education but the accreditation agencies. Though the DoEd only funds accredited colleges/universities
Ends up being adverse incentives
and yet we've seen certification growing in influence in employee selection. which means there is gaps in higher education even after paying all that money
Well if you want the worst of it, let's go back to your example of $150k for a stupid degree. These days getting a Master's in women's studies will get you a "DIVERSITY ADMIN" position with like 70k plus benefits. Biology masters will get you a shot to the back of the head. At least PhDs get paid, sort of, so they probably won't be in debt at that level, but with cost of living and all that they can be a bit.
STEM is just a meme to decrease R&D wages
70k for a 150K degree, no reason you can't pay that off
what's it cost to live, 20k, taxes take another 14k, that still leaves you with 36k a year to pay off your degree, your free in under 5 years
and getting to live your dream as a diversity admin
average tuition & fees for an american state university is 10k. there's no reason to have 150k debt
even if you pump in an extra 20k a year for living expenses, you still only at 120k debt for a 4 year degree, and that assumes you don't earn any income while in school
also assumes you do all 4 years in university like an idiot instead of doing the first 2 years in community college and transfer in credits
@Mandatory Carry where did you get your loan if the interest was frozen? I'd like to refinance my wife's college expenses please.
@Putz you're actually better off doing two years of your primary credits at a university, and then doing your generals after at a community college.
Makes you less tied down.
Through the State Of Oregon, but all of them are like that... All loans are like that, your rate is fixed when you sign. Home, car, school, whatever...
I said frozen, not fixed. Frozen implies you no longer pay interest.
And some loans have variable interest rates. (Though you would be a moron to sign onto them)
Oh that would never happen... I owe $6Øk-ish, and I'd fight you over that.
@Mandatory Carry , @DJ_Anuz is talking about putting a cap on interest such that you could technically take as long as you like to pay off a debt and the total interest is not paid. That of course removes fair market value from the loan. Encouraging people to prioritize other forms of spending (buy a house, car, etc) over the loan. To counter this you would need to increase the interest rate of the loan to offset the "freeze" making the loan more expensive for those with good behaviors (paying off debt earlier or prioritizing debt reduction) to benefit those with bad behaviors (not prioritizing paying off debt).
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.
@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.