What does a $1million student debt look like?

[dogmush]

I'm going easy on the lenders because they are lending to the letter of the law they are federally mandated to follow. It's the same thing that happened during the mortgage mess of 2006-2009. Sure, some lenders are taking advantage of loose regulations but the majority are simply following the Student Loan Lending Guidelines set forth by the fed.gov. If things are going to change they will need to change at the guarantor (government) level, not the lender level.

Brad

If the fed.gov stopped guaranteeing student loans, I suspect that the lending practices vis-à-vis "being able to pay it back" would tighten up by the end of that business day.

The lenders are being perfectly reasonable with their lend/risk calculations.  There is effectively no risk to them.  Why wouldn't they lend?

[Brad Johnson]

If the fed.gov stopped guaranteeing student loans, I suspect that the lending practices vis-à-vis "being able to pay it back" would tighten up by the end of that business day.

The lenders are being perfectly reasonable with their lend/risk calculations.  There is effectively no risk to them.  Why wouldn't they lend?

Exactly.

Brad

[KD5NRH]

I think if Uncle Sam wasn't picking up the tab, the lenders might be a little more careful who they are loaning to and for what.

I'm not against all Federal backing, but they should set hard limits both on how much they will guarantee for a given degree type and what grades must be maintained to continue eligibility.  If someone's acing their way through engineering while working full time, I have no problem with them being eligible for a lot more loan (and grant) money to let them cut back to part time work as the classes get harder than the one who's constantly barely above academic suspension level but wants to borrow their way through a PhD in pop culture studies without having worked a day in their life.

Of course, guarantee level becomes less and less important with both higher grades and more marketable degrees; the lender should be willing to risk some beyond the guaranteed amount on the hypothetical engineering prodigy with a decent work ethic, who, barring an untimely death or TBI, will almost certainly be able to pay it back easily, and nothing beyond it for the professional welfare queen.

[MechAg94]

I think it would be best to just get rid of the government grant and loan money completely for a while.  Schools are using it as an excuse to raise tuition and other costs because demand is artificially inflated and students are incentivised to go to the more expensive schools instead of starting with junior college or going to a less expensive school to begin with. 

[dogmush]

I'm not against all Federal backing, but they should set hard limits both on how much they will guarantee for a given degree type and what grades must be maintained to continue eligibility.  If someone's acing their way through engineering while working full time, I have no problem with them being eligible for a lot more loan (and grant) money to let them cut back to part time work as the classes get harder than the one who's constantly barely above academic suspension level but wants to borrow their way through a PhD in pop culture studies without having worked a day in their life.

Of course, guarantee level becomes less and less important with both higher grades and more marketable degrees; the lender should be willing to risk some beyond the guaranteed amount on the hypothetical engineering prodigy with a decent work ethic, who, barring an untimely death or TBI, will almost certainly be able to pay it back easily, and nothing beyond it for the professional welfare queen.

^
[ahem]

That disproportionately impacts students of color and the poor, while favoring white, male, STEM students.

Why so racist?

[/Dr. Pop Culture Studies voice]

[T.O.M.]

Having just finished paying off my law school loans in 2016, I'll throw this in the mix.  I took out the least I could.  Covered tuition, books, and $400 a month for rent.  The school financial aid advisor encouraged me to take more for living expenses, clothing for intern ships and interviews, etc.  Actually discouraged non-law related work as it would interfere with studies and student life.  I knew students who did that,  and also took loans for a new car, Bar exam review courses, nice watches, etc.  Once upon a time, a majority of law students could walk into a job making high five to six figures.  The prevailing advice was to get out buy a house, use an equity loan to pay off the debts and take the tax break.  If the theories haven't changed (and young lawyers are saying frightening things), its no wonder debt is so crazy.

[Hawkmoon]

I think it would be best to just get rid of the government grant and loan money completely for a while.  Schools are using it as an excuse to raise tuition and other costs because demand is artificially inflated and students are incentivised to go to the more expensive schools instead of starting with junior college or going to a less expensive school to begin with. 

Agreed.

[K Frame]

Well, at least he has a relatively useful degree to show for his $1 million debt.

I was fully expecting to see a weepy story about some idiot who ran up that debt while studying the ethnography of ancient lesbionic basket weaving.

[Pb]

One of the best things that could happen to higher education would be for the federal gov to stop being involved in anyway with grants and loans for higher education (GI bill potentially excepted).

Tuition would drop like a rock and stupid, lazy students everywhere would abandon the campuses.

[MechAg94]

One of the best things that could happen to higher education would be for the federal gov to stop being involved in anyway with grants and loans for higher education (GI bill potentially excepted).

Tuition would drop like a rock and stupid, lazy students everywhere would abandon the campuses.

But then what would become of the stupid, lazy professors and faculty?  The Horror!

[T.O.M.]

One of the best things that could happen to higher education would be for the federal gov to stop being involved in anyway with grants and loans for higher education (GI bill potentially excepted).

Tuition would drop like a rock and stupid, lazy students everywhere would abandon the campuses.

Keep the GI Bill.  I've seen a whole lot of vets put that education to good use.  It's a hell of an option for someone who wants to go to college but can't afford it at age 18-20 years old.

[lupinus]

Well, at least he has a relatively useful degree to show for his $1 million debt.

I was fully expecting to see a weepy story about some idiot who ran up that debt while studying the ethnography of ancient lesbionic basket weaving.

That organic ancient lesbionic basket weaving you pastey cis *expletive deleted*it lord.

Sent from my Pixel XL using Tapatalk

[K Frame]

That's MR. pastey cis *expletive deleted*it lord to you, pal!


Sent from my SM-G960U using Tapatalk

[MechAg94]

Keep the GI Bill.  I've seen a whole lot of vets put that education to good use.  It's a hell of an option for someone who wants to go to college but can't afford it at age 18-20 years old.

I had not imagined that GI benefits would be rolled in with govt backed student loans and grants.  The various GI benefits are separate and part of the benefit of signing your life over to the military for a period of time. 

[Pb]

But then what would become of the stupid, lazy professors and faculty?  The Horror!

Well, that IS a problem!