Fed student loans set to double 3.4% to 6.8%

[nrubenstein]

The reason college education is expensive really boils down to supply and demand. People are willing to pay higher fees and more and more people think they need college when in reality many people that attend college don't really need to and shouldn't. The price will come down when the demand decreases. There are a lot of other problems that tie into the unnecessarily high demand for a college education that I'm too lazy to go into.
Take welding. There's a shortage and you can make a great salary with enough skill and certifications. And the education is actually really affordable. That's only one example of hundreds. Once enough people figure that out, hopefully only those that need to attend college will go and prices will come down.

The problem is that getting any kind of job that requires basic reading/writing skills now requires a college degree. At a minimum. It has no relation to what you're capable of (and let's be honest here - most bachelor's degrees these days consist of remedial learning of the things you should have picked up in high school). Therefore, you are forced to get a degree if you want to do a job that doesn't fall into the skilled labor category. Many people don't want that/aren't capable of it/don't expect to be physically able their entire careers. Job security for skilled labor is not great on average.

So you have to get a degree if you want to have choices. That's just how it is. My wife went through this - she did very, very, very well in tech for a while after dropping out of college, but as tech became more and more structured, it became more and more difficult to get a job until she had to give up and go back. Once she got her degree, getting a job was easy again. It's not as though she actually learned anything. She just checked the box.

[bmwstephen]

You've got it backwards. The people with good jobs are not often gaming the system in that way. Yes, there are always some assholes, but most people don't want to risk their credit/employment/reputation in that way. A bankruptcy haunts you for longer than 7 years, depending on your line of work/need for credit.

The problem is that student loans are a VERY high risk proposition. Giving lots of credit to an 18-year old who may or may not even graduate should earn returns that more closely resemble credit cards. If not higher, given the risk inherent in loaning more than a few thousand bucks. The way that we get around that is by making student loans federally guaranteed and/or impossible to discharge. Realistically, giving someone $200K to pursue, say, an Art History major is fucking stupid. Unless, of course, you can chain them down indefinitely. If the loans weren't subsidized in this manner, you would either have a lot fewer Art History majors, or it would cost a lot less to get that degree.

I didnt get it backwards. Look into the movement to prevent such bankruptcies. Started in the 70s because the only reason you attend college was to enter into a stable high paying position. Repercussions of bankruptcy had very lill effect on students that have it planned out. the 1974 and 1984 student loan acts were a response to that. obviously those amendments came into effect in response to such devious activities.

You seem to perceive bankruptcies as the last resort people take. But in a business financial sense its the best tool to get ahead and smart people have utilized it. Look at a tool like donald trump, you know how bankruptcies he has declared in his lifetime? It had little affect on his networth. My parents declared bankruptcy and loss their home 2 years ago. Today, they are about to close on a new house and their credit score shot back up to 620 from 380 thanks to the resilient ways you can rebuild your credit worthiness now a days that you did not have in the past.

[z31maniac]

You've got it backwards. The people with good jobs are not often gaming the system in that way. Yes, there are always some assholes, but most people don't want to risk their credit/employment/reputation in that way. A bankruptcy haunts you for longer than 7 years, depending on your line of work/need for credit.

The problem is that student loans are a VERY high risk proposition. Giving lots of credit to an 18-year old who may or may not even graduate should earn returns that more closely resemble credit cards. If not higher, given the risk inherent in loaning more than a few thousand bucks. The way that we get around that is by making student loans federally guaranteed and/or impossible to discharge. Realistically, giving someone $200K to pursue, say, an Art History major is fucking stupid. Unless, of course, you can chain them down indefinitely. If the loans weren't subsidized in this manner, you would either have a lot fewer Art History majors, or it would cost a lot less to get that degree.

True, but the avg student loan debt is closer to $30k, and business/communications/computer science/marketing are the most common degrees.

Acting like everyone who uses student loans is a Liberal Arts major at an Ivy League school belittles your point.

[nrubenstein]

True, but the avg student loan debt is closer to $30k, and business/communications/computer science/marketing are the most common degrees.

Acting like everyone who uses student loans is a Liberal Arts major at an Ivy League school belittles your point.

My point was that taking out a large loan to get a degree in a field that doesn't pay shit is probably not something that we should subsidize too much.

I'll grant that my perspective on dollar amounts is skewed. Keep in mind that I live in an area where K-12 tuition in private schools is frequently $40-50k/year. I worked out recently how much it would cost to replicate my own education if we have a kid and it came to a terrifying number.

[z31maniac]

My point was that you're choosing an incredibly small portion of college students to damn the current lending setup, I'm saying your criticism isn't valid because of that.

Yes, you also live in the MOST expensive place in the country. And the VAST MAJORITY of people go to public. So comparing what it take to privately educate a child in the most expensive part of the country is hardly a fair comparison.

Again.

I was publicly educated K-12, then went to a state college, used student loans and Pell grants to get through school, and now I make a fairly decent wage, especially considering the state I live in.

I'm paying back my student loans, I've purchased a house in my community (well within my means) and keep as much of my money local as possible.

I was able to consolidate my loans at less than 2%. Has this been a bad investment?

[ficklerx]

You have to treat the purchase of an education like any other financial transaction. My wife's education was her second degree in a totally different field than her first degree. But she hated that field and wished to pursue another. We looked at her returning to school from a return on investment perspective....both financially and from a job satisfaction standpoint.

Total tuition was well into the six figure range in 3 years. The school was private and local so with two children it made since. Living at a distance and supporting two households would have costs almost as much.

If she desired, she could gross the total cost of her tuition in a year. That is where the financial transaction makes since. How many degrees can theoretically generate the total cost of the education in a single year? Being happy with your career is important, but it's not worth it if you a financially hamstrung before your first paycheck.

[herbivor]

The problem is that getting any kind of job that requires basic reading/writing skills now requires a college degree. At a minimum. It has no relation to what you're capable of (and let's be honest here - most bachelor's degrees these days consist of remedial learning of the things you should have picked up in high school). Therefore, you are forced to get a degree if you want to do a job that doesn't fall into the skilled labor category. Many people don't want that/aren't capable of it/don't expect to be physically able their entire careers. Job security for skilled labor is not great on average.

So you have to get a degree if you want to have choices. That's just how it is. My wife went through this - she did very, very, very well in tech for a while after dropping out of college, but as tech became more and more structured, it became more and more difficult to get a job until she had to give up and go back. Once she got her degree, getting a job was easy again. It's not as though she actually learned anything. She just checked the box.

My sister never got a degree and was applying for a job that required a degree, even though she had all the skills to do the job. She was sad and asked my advice. I told her to lie on her resume and say she got a degree in English with a 3.2 GPA. She got the job and saved herself thousands of dollars. It goes to show you how much bullshit it is that people value a degree over actual skills.
A college degree is necessary and very important with many jobs, especially technical ones, but there are a lot of jobs that don't really require a degree that people with degrees compete for, and lots of well paying jobs that don't require a degree at all.
You can't blame the students for the general problems with unaffordable tuition and mounting debts. It's much more complex than that. Trade deficits, a failed primary education system, and government aid in general create the problem.

[Farbin Kaiber]

I told her to lie on her resume and say she got a degree in English with a 3.2 GPA. She got the job and saved herself thousands of dollars.

I'm sorry, and maybe I'm wrong, but lying is both immoral, and wrong, not to mention lying on an application can be punishable by immediate termination in most fields/careers. Right?

Kinda shows what type of person you are, and causes me to have a bad picture painted of people who think like you think.

[nrubenstein]

My sister never got a degree and was applying for a job that required a degree, even though she had all the skills to do the job. She was sad and asked my advice. I told her to lie on her resume and say she got a degree in English with a 3.2 GPA. She got the job and saved herself thousands of dollars. It goes to show you how much bullshit it is that people value a degree over actual skills.
A college degree is necessary and very important with many jobs, especially technical ones, but there are a lot of jobs that don't really require a degree that people with degrees compete for, and lots of well paying jobs that don't require a degree at all.
You can't blame the students for the general problems with unaffordable tuition and mounting debts. It's much more complex than that. Trade deficits, a failed primary education system, and government aid in general create the problem.

It's about covering your ass. Hiring someone without a degree means that you have to go to bat for them and convince everyone that they are worth talking to. And the added problem is that comparatively few people come out of high school with basic competence in reading and writing.

Lying about the degree isn't a great idea. Eventually, someone is going to check and that always looks bad.

[nrubenstein]

My point was that you're choosing an incredibly small portion of college students to damn the current lending setup, I'm saying your criticism isn't valid because of that.

Yes, you also live in the MOST expensive place in the country. And the VAST MAJORITY of people go to public. So comparing what it take to privately educate a child in the most expensive part of the country is hardly a fair comparison.

Again.

I was publicly educated K-12, then went to a state college, used student loans and Pell grants to get through school, and now I make a fairly decent wage, especially considering the state I live in.

I'm paying back my student loans, I've purchased a house in my community (well within my means) and keep as much of my money local as possible.

I was able to consolidate my loans at less than 2%. Has this been a bad investment?

You've done well. Congratulations. Your singular example of doing well is even less relevant than my, admittedly, extreme example. A very large percentage of people graduate from school these days unemployed and in debt and with no ability to escape the loans. That's the problem.

[z31maniac]

You've done well. Congratulations. Your singular example of doing well is even less relevant than my, admittedly, extreme example. A very large percentage of people graduate from school these days unemployed and in debt and with no ability to escape the loans. That's the problem.

I know many more people who have gone to school, have jobs, and are earning a decent living, than I do people who have gone to school, racked up crazy amounts of debt and are now flipping burgers at McDonalds.

[BraveUlysses]

My sister never got a degree and was applying for a job that required a degree, even though she had all the skills to do the job. She was sad and asked my advice. I told her to lie on her resume and say she got a degree in English with a 3.2 GPA. She got the job and saved herself thousands of dollars. It goes to show you how much bullshit it is that people value a degree over actual skills.
A college degree is necessary and very important with many jobs, especially technical ones, but there are a lot of jobs that don't really require a degree that people with degrees compete for, and lots of well paying jobs that don't require a degree at all.
You can't blame the students for the general problems with unaffordable tuition and mounting debts. It's much more complex than that. Trade deficits, a failed primary education system, and government aid in general create the problem.

FYI she could still be fired for that kind of thing--my company will fire your ass in a second if they find out you have lied about your degree.

[coldweatherblue]

bastards going after undergrads now..

i have hundreds of thousands of $$$ in student loans at 6.8%. started borrowing in 2008 and they've always been 6.8%. if i would've been born like 3 years earlier they would all be financed at ~2-4% before congress fixed them.. son of a bitch.

http://studentaid.ed.gov/types/loans/interest-rates

[SmokeE30]

I'm paying a handful of different loans ranging from 3.5-9.25% interest. Some government and some private. And some government loans the government gave to private loan banks to collect... I could have a nice new car with what I pay monthly and that car would have a lower interest rate. I gave serious thought to buying a sweet new car driving it for a month then selling it. Pay off my student loans, default on car payments, with a lower interest and the ability to be erased with bankruptcy I don't know why people don't do it. I could probably afford to move out of my partners if I did ditch the loans somehow

[BraveUlysses]

I'm paying a handful of different loans ranging from 3.5-9.25% interest. Some government and some private. And some government loans the government gave to private loan banks to collect... I could have a nice new car with what I pay monthly and that car would have a lower interest rate. I gave serious thought to buying a sweet new car driving it for a month then selling it. Pay off my student loans, default on car payments, with a lower interest and the ability to be erased with bankruptcy I don't know why people don't do it. I could probably afford to move out of my partners if I did ditch the loans somehow

You can't sell the car without paying the loan on it off first. You probably wouldn't be able to get the ultra low interest rates car manufacturers are offering while you are carrying all of that student debt.