Occupy Wall Street PROTESTERS Not Letting Up - Nationwide

[Spartana]

But aside from that, my point is that *student loan debt isn't special.*

All other forms of debt can be restructured and forgiven via the bankruptcy courts -- except student loans.

I agree with you that student loan debt - really any debt that was voluntarily taken on (rather then due to unforseen circumstances like medical issues) - should be treated the same. The difference is that I personally don't agree with the current bankruptcy laws for voluntary debt - whesther it is a student loan, home loan, credit card debt, car loan, etc... I feel that bankruptcy (at least the kind where you can wipe out your debt obligation and retain ownership of your assets - including an education) should only be allowed when a person UNvoluntarily gets in to debt - like a medical situation. As far as choosing to voluntarily get into debt for other things, well... I feel that if you reaped the benefits of those loans (say an education, a home to live in, goods and services you bought on you CC, a car to drive) then you should be made to pay for them even if it's at only 10% of your disposable income or drawn out over your lifetime. I do firmly feel banks should lower interest rates and restructure loans to help enable people to pay them back but I don't believe people should be able to file for bankruptcy in those cases. Even for people who are unemployed or have no income, I feel that they should still, at some point in their lives, be made to pay back that debt. And just because the banks take most (all) of the risk when lending money I think that actually makes it even more important to repay since the level of risk - and the greater the debt forgiveness - the more it impacts not only investors, but other borowers as well. However I certainly feel a great deal of sympathy for anyone who has high student loan debts and is unemployed. Same with houses that are underwater. And postponing repaying those debts would be great = especially if there was done in an interest-free way. But I did look at the OWS websites and have sort of obsessively watch everything - right and left as well as moderate - that I could find about it, and while of of it I agree with (especially getting business out of Healthcare) but much of ther debt relief they asked for I completely disagreed with. I think it's unfair to those who were abvle to pay off student loans and homes. Even people with paid off homes still lost up to 50% of their homes value - money they may have planned on in retirement. Should they be reimbursed for their student loans and the drop in their home values? My old house went up from $250k to over $500K then back to around $250K. If I had stayed there - and the banks or feds forgave debt for everyone in debt - then I ure as heck don't think they would pay me $250K because my house value dropped due to the economy. Although that would be sweet :-). I wonder if they would reimburse me for college too? OK only in my dreams I guess :-)!!

And Zoebird (and anyone) I don't feel that anyone who wants debt relief or forgiveness is morally wrong at all - heck if I was in the same situation and it was something that was available I would take advantage of it. I was just pointing out what "I' personally see wrong with the system - as well as reprocussions to allowing debt forgiveness on such alarge scale - heck even on a smal scale. I personally don't think corporations and govmint should be allowed debt forgiveness either but that greatly impacts who groups of people - thousand, millions - and is in a different ballpark IMHO.

[Spartana]

It makes loans affordable. 99% of students with loans are insolvent when they graduate. Everyone could declare bankruptcy. You'd have to charge 50% interest rates from the few that paid to cover the losses.

Why would a parent pay for college? Save the money, have the kid borrow, discharge the debt in bankruptcy, then give them the cash you saved on tuition to tide them over.

Good point - something I didn't think about. May change my mind about my above statement. Maybe some compomise could be had - say no bankruptcy filing on student loan debt until at least 5 (10?) years after you graduate. Of course, after reading that curently you only need to pay 15% of your disposable income and the debt can be discharged after 25 years seems very reasonable to me and maybe doesn't need changing.

I also don't remember there ever being this many - or this high dollar amount - of student loans back 20 or more years ago. Back in my day, if you couldn't afford college you worked flipping burgers while attending community college at night for 2 years before attending an in-state university while living at home with your parents and still flipping burgerss. Seems a shift in attitude has occured for alot of younger people. Sort of a "I deserve the best of everything even though I can't afford it so will finance it". I see this not with just college, I see this with everything - clothes, activities, toys, etc.. Even with the kind of "first" cars they buy - or more likely Mom and Dad buy for them. I mean when I was a teenager in the mid 70's NO ONE drove a new car. No one had designer clothes and expensive toys. Everyone had a job after school flipping burgers. Guess the expectation to have the best - be it a luxury car or an Ivy Leaque education - isn't something kids are willing to delay gradification for or do with out. If it were me I would be out picking fruit to earn money for college - or to pay off college. And at $150/day according to an apple grower in Washington state who will lose his harvest (and cause an increase in apple prices as well as possiblily lose his small family farm) if he can't find more employees. That's about the 20th farmer I've heard about this last week in a similair situation. I feel like I want to rent a big bus and go to OWS with a banner that says "Picking not Protesting. Save the American family farmer. Save jobs for legal residents. Earn money for College." Not that anyone would join me. Gosh dern young whipper snappers :-)! Now I'll take my crumengeuony old self back to watching geritol commercials :-)! Of course if I had gone to an Ivy League college instead of joining the Coast Guard and then going to a state school on the GI Bill I might actually know how to spell - might :-)!

[JaneV2.0]

...
I also don't remember there ever being this many - or this high dollar amount - of student loans back 20 or more years ago. Back in my day, if you couldn't afford college you worked flipping burgers while attending community college at night for 2 years before attending an in-state university while living at home with your parents and still flipping burgerss. Seems a shift in attitude has occured for alot of younger people. Sort of a "I deserve the best of everything even though I can't afford it so will finance it". ...:-)!

My college education--four-year university degree spread over six years--cost me roughly the same amount as a one-year certification program I pursued at a community college thirty years later--$3000. I haven't analyzed it, but my take is that education is vastly more expensive than it used to be.

[ApatheticNoMore]

It has an increased a lot and a lot of why it has increased is the ready availability of credit (there are probably other factors but that is a major one). I don't think loans were so readily available in the past. But as soon as easy credit has driven up the price of something, it becomes more and more necessary for any individual to take on credit to get anything. It is the same thing that drove housing, ok houses have been bought on credit for a long time, but never with so little in downpayment required.

Really a tragedy of the commons or what have you situation. We might ALL (except for some banksters mkay) be better off WITHOUT all this credit! But as soon as the majority are financing things on credit and driving up the price, it becomes more and more necessary for any given individual to do the same. Still there are some options to avoid or at least minimize it (state and community colleges), but even they are going away.

[Spartana]

It has an increased a lot and a lot of why it has increased is the ready availability of credit (there are probably other factors but that is a major one). I don't think loans were so readily available in the past. But as soon as easy credit has driven up the price of something, it becomes more and more necessary for any individual to take on credit to get anything. It is the same thing that drove housing, ok houses have been bought on credit for a long time, but never with so little in downpayment required.

(

Good point. I wonder how many Ivy League and private universities would begin lowering their prices and offering more scholarships and grants if people fled in droves to public school or trade schools. And while yes the price of college has gone up in 30 years, salaries have too. Plus state schools - especially here in Calif and especially at community colleges - haven't risen by that much. I think one-unit of credit at a local community college is $22, and it was around $11 30 years ago. Where as salaries for flipping burgers has gone from about $2/hour to over $8/hour (minimum wage in Calif) on average and closer to $10/hour in reality. Calif Minimum wage when I got out of HS in 1975was $2/hour, 30 years ago is was $3.35/hour

In Calif State University: "As of 2010, students enrolled in more than six units per term pay $4,026 per year in tuition fees. For part-time students enrolled in six units per term or fewer, annual tuition is $2,334 (Non-residents pay an additional $248 or $372 per unit; the maximum additional cost is $11,160 per year). The cost of books and supplies varies by campus, but usually costs around $1,500."

"California community colleges, tuition runs $20 to $26 a unit, with most classes being three or four units. For a full-time student taking 12 units per semester, annual tuition at a California community college is approximately $480 as of the 2009-10 academic year (Non-residents pay an additional $140 to $199 per unit)."

That's not much more than it cost me 20-some odd years ago. Live at home with the parents, get 5 roomates at the dorm, buy used books and re-sell them, or ya... and flip burgers a few hours a week :-)!

[Zoebird]

I agree that there is a way to get an education and not get into debt. I wish that I'd taken that path (and not gone to law school at all).

How does a person "give back" an education? I can understand the house, consumer goods, car, etc -- but what? they're going to take the education out of my brain? my experience? Or is it that they just take the degree away (e.g., I can no longer claim that I have the degree?).

[Zoebird]

When a bank borrows to make other loans, known as leverage, it does increase risk. Some of the banks in the housing bubble were leveraged 30 to 1, which left too little capital to cover losses.

How is this not corrupt behavior? And why are banks considered special?

read many posts in this stream -- like spartana's. "any voluntary debt you take on should be paid back, no matter what."

but not banks? people who make big financial decisions that creates bubbles that impact the whole economy? really? they shouldn't have to pay it back, even if they are bankrupt or whatever?

and they get bailed out, but the bail outs have no trickle-down?

In a pure free market you would see much better risk pricing and perhaps greater concern about getting repaid.

Really? Because as far as I can tell, the US market has been freer in the last three decades than in decades prior, and that deregulation is married to this current situation, which was about corporate greed, not making good financial decisions for the businesses themselves and the economy as a whole. It was high risk behavior in the extreme. Certain people got really wealthy, but pretty much everyone else got screwed, right?

We as a matter of social policy have intentionally diminished those market concerns to make student loans more affordable and available, but we should not be surprised when we find out we have financed billions of dollars of education for which there is not an economic basis.

This is absolutely the case, and the same situation with keeping the interest rates low (at the Fed and such) -- which is demonstrated by the quote from the Austrian quote.

The Austrian School of Economics sees higher rates as leading to greater investment in order to earn the interest to pay the depositors.

Higher rates encourage more saving and thus more investment and thus more jobs to increase production to increase profits.

Higher rates also discourage economically unproductive lending such as consumer credit and mortgage lending.

Also consumer credit tends to be used by consumers to buy imported products whereas business loans tend to be domestic and lead to more domestic job creation [and/or capital investment in machinery] in order to increase production to earn more profit.

I think the question, too, depends on what we are considering a "free market."

Nearly every market has some regulation -- and I think that is important. The real risks to the free market (not of the free market, but TO it) is government incentivizing high-risk behaviors such as consumer, home, and student loans.

This creates a more realistic "free market."

And, i think it's well within the government's rights (assuming that a government bank is constitutional -- and the founding fathers debated about this extensively, but we'll assume that since we've had it since Hamilton, it's constitutional) to moderate interest rates in order to buffer inflation and stabilize the currency.

I would like to point out that i DO think about these things, so i'm slightly offended by the notion of "think about how. . ." in your last statement ERG. Yeah, i DO think about it.

it doesn't mean that we would agree on solutions. And I don't think we have to. But to assert that someone who disagrees with you ISN"T thinking about these issues is offensive.

[Yossarian]

How is this not corrupt behavior? And why are banks considered special?

If you have been reading as much as you say you know the answer. Banks were bailed out because people viewed the collateral consequences of allowing them to fail as likely to cause a lot of harm to the rest of society. That's why the Democrats voted for the bailout, that's why the EU is now bailing out their banks.

Because as far as I can tell, the US market has been freer in the last three decades than in decades prior, and that deregulation is married to this current situation, which was about corporate greed, not making good financial decisions for the businesses themselves and the economy as a whole. It was high risk behavior in the extreme. Certain people got really wealthy, but pretty much everyone else got screwed, right?

That's true for the broader credit crisis but not relevant to our discussion of student loans. The government meddles in the student loan market, which creates distortions. Like making credit available to people who may not otherwise get or be able to afford it. Which also means there are lot's of loans out there that have mispriced risk and may not be repaid.

[JaneV2.0]

I checked tuition for the University of Washington, and it was 8700 for in-state, and 25000 for out-of-state students, per year. Clearly, it's a lot harder to work your way through school these days. Hourly wages haven't gone up much, but tuitions have skyrocketed.

[ApatheticNoMore]

The way you do it (and it used to be very possible before they starting cutting classes so much) is go to community college for the first 2 years, and then only go to a university for the remaining 2. Therefore even at $8700 a year for two years you don't go any more into debt than frankly many people do for a *CAR*! Now the Cal State system is cheaper than that in CA so it wouldn't even run you that much (the UC system can run as much as 12k a year but my understanding, and I could be wrong, is you need to look at the fine print there, that you only really pay that full amount if you have an income of 80k or so or more). So sure there are some working professionals it will hit but frankly they can manage it.

For years and years CA has had cheaper tuition than the rest of the nation. But the cut backs to classes are what is really hurting. It is NOT THE PRICE that is the problem! Community college are as Spartana pointed out DIRT CHEAP (frankly too cheap IMO, so cheap they aren't taken seriously by students), but this doesn't really mean that much if it is nearly impossible to get classes because of class cutbacks. And that is the real problem with college education around here! What can I say we should have raised taxes (and you can bet I pay those taxes!) and not cut back the colleges so much as was the governor's plan. It was blocked by state republicans. It's not that there aren't other problems (the salaries of administrators have gone through the roof and are indeed obscene), but cutting back college funding doesn't hurt the administrators, it only hurts anyone who wants a public college education! I mean we really had a plan that worked with the 3 tier college system (community colleges, cal states and UCs), but it can't survive an era of budgetary austerity. But CA really did have (in the past I'm afraid) a better state college setup than most of the rest of the nation.