The Student Loan Crisis

[Cicero]

Obviously a massive issue both individually and economically. Here are some pretty damning statistics I've found online. 

Quote

1. The single largest consumer debt. Topping mortgages. 

2. The average student graduates with £35-50,000 in student debt. 

3. Only a reported 33% of college grads found jobs lined up before they graduated. And of that 33%, only 78% had jobs that pertained to their degree.  (2017) 

4.  1 in 4 borrowers default on their student loan debt 

5. Tuition costs keep rising annually. 

 

 

 

 

 

 

 

[Azeem]

Students who are unable to manage their money hasn't helped this situation either. A lot of students don't know what they want to study and they end up changing their majors.

Higher education at any level in America is way too expensive.

[Harry]

I graduated in Australia with an engineering degree and a $40k College debt. In Australia this was a loan scheme from the government which was issued at the inflation interest rate of approx 2.5%. I paid it back in around 8 years of working.

Since then the rate has gone up to around 4% and fees have gone up. But it's never been called a crisis here.

The idea of writing all student debt sounds pretty outrageous imo. Some democrats have touted this and I wouldn't have regard for it.

[nudge]

Didn't pay a cent for my 4-year Bachelor's and my Master's cost me 1500€ in total.

The idea of being tens of thousands in debt after graduating sounds scary to me. 

[tlr]

I'm one of the ones under the new style British scheme; I think I'm in debt to the tune of about £40,000 - no intention of verifying that number as it's just depressing. I was fortunate enough to be a bit of a niche area and I have somehow ended up in a realtively safe, well paying job. Even now though I still only pay off about £25 per month. 

The number does seem overwhelming but in reality I don't find it too daunting, like fuck are you ever going to get as generous a loan for anything else in life, and I'm only 28 years (!) off the state writing it off anyway.

What I think is more urgent, as a society and in Britain at least, is adressing this trend of every man and his dog going to uni. The threshold seems to have shifted from 'the bare minimum you need is a good set of GCSEs and something from college to 'a 2:1 or bust'. God knows it isn't sustainable. If my field of work had presented itself differently about 7 years ago I would have been more than happy to do an appreticeship / factory floor kind of role and earned my way up frpm there. Sadly the line at high school and college just drove all bar the thickest kids towards uni. That trend is reversing slightly now, but in that gap you've had hundreds of thousands of youngsters doing what I did.

[Harry]

1 hour ago, nudge said:

Didn't pay a cent for my 4-year Bachelor's and my Master's cost me 1500€ in total.

The idea of being tens of thousands in debt after graduating sounds scary to me. 

In our case it's money owed to the government, and it's paid back out of your pre tax income by increasing your marginal tax rate, and repayments only start once you're earning for than 45k...

So it paid itself back over time without me ever having to do anything, and once it the debt reached zero it was like getting a 7.5% pay rise.

Ultimately it's a user pays system but it's debt that is as low as governments own borrowings. I favour this over a free system as I think there needs to be some accountability on those who study to be prudent with their tertiary education.

[nudge]

56 minutes ago, tlr said:

What I think is more urgent, as a society and in Britain at least, is adressing this trend of every man and his dog going to uni. The threshold seems to have shifted from 'the bare minimum you need is a good set of GCSEs and something from college to 'a 2:1 or bust'. God knows it isn't sustainable. If my field of work had presented itself differently about 7 years ago I would have been more than happy to do an appreticeship / factory floor kind of role and earned my way up frpm there. Sadly the line at high school and college just drove all bar the thickest kids towards uni. That trend is reversing slightly now, but in that gap you've had hundreds of thousands of youngsters doing what I did.

A thousand times this; "getting a degree" has pretty much turned into obsession. Universities operating mainly as businesses and offering tons of completely useless degrees, dumbing down their instruction and lowering their standards to accommodate everyone is another thing that bugs me. 

Not everyone should go to college, there are plenty of great and important jobs that require technical or mechanical skills that can only be taught at a trade school or an apprenticeship.

[nudge]

1 hour ago, Harry said:

In our case it's money owed to the government, and it's paid back out of your pre tax income by increasing your marginal tax rate, and repayments only start once you're earning for than 45k...

So it paid itself back over time without me ever having to do anything, and once it the debt reached zero it was like getting a 7.5% pay rise

That sounds ok, especially when it comes to getting a STEM or medicine degree or others which are in high demand. I have a feeling that plenty of people are getting degrees that are essentially useless though and have a huge debt after graduating they still need to repay one day. That's pretty stressful and depressing; sounds like a waste of both time and money...

[tlr]

7 minutes ago, nudge said:

A thousand times this; "getting a degree" has pretty much turned into obsession. Universities operating mainly as businesses and offering tons of completely useless degrees, dumbing down their instruction and lowering their standards to accommodate everyone is another thing that bugs me. 

Not everyone should go to college, there are plenty of great and important jobs that require technical or mechanical skills that can only be taught at a trade school or an apprenticeship.

Indeed, it is a sad situation, both in terms of respectable academic institutions taking anyone that's not nailed down, and the poor people who get sucked into it. We had college results day over here last week and my old uni posted photos of their clearing offices - just a sea of staff attached to phones and computers. It honestly remids me of the old stories of soldier recruitment - doesn't matter at all about skills, ability or desire is, so long as the recruiters get the numbers in!

[Toinho]

1 hour ago, Harry said:

In our case it's money owed to the government, and it's paid back out of your pre tax income by increasing your marginal tax rate, and repayments only start once you're earning for than 45k...

So it paid itself back over time without me ever having to do anything, and once it the debt reached zero it was like getting a 7.5% pay rise.

Ultimately it's a user pays system but it's debt that is as low as governments own borrowings. I favour this over a free system as I think there needs to be some accountability on those who study to be prudent with their tertiary education.

Yeah think mines around 30k at the moment. Doesn’t bother me one bit, except if I could go back in time I would have made some voluntary repayments when I was abroad because indexation made it worse...

I have no real intention to pay it off outside of forced tax time payments though. (Think it’s 2-3k for the financial year just gone) hopefully gone in a decade...

[Harry]

Just now, nudge said:

That sounds ok, especially when it comes to getting a STEM or medicine degree or others which are in high demand. I have a feeling that plenty of people are getting degrees that are essentially useless though and have a huge debt after graduating they still need to repay one day. That's pretty stressful and depressing; sounds like a waste of both time and money...

Yes it probably is. Ultimately 18 is quite a young age and many people are not ready or mature enough to jump straight into full time work. From that perspective any University degree which Foster's a much greater degree of independence than high school is valuable.

But some people like the subject matter and the intellectual elitism of being a student and happily pursue a number of degrees. This is when it's problematic.

[Azeem]

25 minutes ago, nudge said:

A thousand times this; "getting a degree" has pretty much turned into obsession. Universities operating mainly as businesses and offering tons of completely useless degrees, dumbing down their instruction and lowering their standards to accommodate everyone is another thing that bugs me. 

Not everyone should go to college, there are plenty of great and important jobs that require technical or mechanical skills that can only be taught at a trade school or an apprenticeship.

Wish you were my parent 

[Harry]

9 minutes ago, Toinho said:

Yeah think mines around 30k at the moment. Doesn’t bother me one bit, except if I could go back in time I would have made some voluntary repayments when I was abroad because indexation made it worse...

I have no real intention to pay it off outside of forced tax time payments though. (Think it’s 2-3k for the financial year just gone) hopefully gone in a decade...

You know you can tick a single box on a form with your employer to get that annual repayment money taken out gradually as an extra 5% income tax? I found that much nicer than a single lump sum in June.

[Toinho]

3 minutes ago, Harry said:

You know you can tick a single box on a form with your employer to get that annual repayment money taken out gradually as an extra 5% income tax? I found that much nicer than a single lump sum in June.

Sorry I should’ve written clearer. It does come out in my fortnightly pay. Just didn’t know how much until end of financial year. I wasn’t clear. 

[nudge]

9 minutes ago, Harry said:

Yes it probably is. Ultimately 18 is quite a young age and many people are not ready or mature enough to jump straight into full time work. From that perspective any University degree which Foster's a much greater degree of independence than high school is valuable.

But some people like the subject matter and the intellectual elitism of being a student and happily pursue a number of degrees. This is when it's problematic.

I'm of opinion that ideally in most cases people should take a year off after high school in order to figure shit out before enrolling in a university. I'm obviously not talking about boozing the year away in some "exotic" destination wasting their parents' money but rather gaining some insights and preferably work experience at different jobs. That'd give them much more maturity and independence than any university degree and chances are they'd be able to make a better informed choice when it comes to choosing their field of study. 

[Azeem]

@nudge for parent of the year award

[Honey Honey]

1-2% tax for the rest of your life to go on a 3 year bender. You need 4-15% tax to do it again when you are in your late 60s 

[Harry]

1 hour ago, nudge said:

I'm of opinion that ideally in most cases people should take a year off after high school in order to figure shit out before enrolling in a university. I'm obviously not talking about boozing the year away in some "exotic" destination wasting their parents' money but rather gaining some insights and preferably work experience at different jobs. That'd give them much more maturity and independence than any university degree and chances are they'd be able to make a better informed choice when it comes to choosing their field of study. 

Yeah ultimately it's personal development, responsibility and accountability that's required. Even compulsory (or at least high uptake) national service would go a long way.

[Inverted]

Part of the problem in Britain is that we have an insane desperation to make people "productive" as quickly as possible. Which means forcing people to pick their career at 17/18, getting them into uni, and then spitting them out into the job market to start their career at 21/22. Or in England, even earlier.

And we're even thinking about cutting the length of degrees. 

In other countries there's less of an urgency. In Denmark for example, many people simply work in an unskilled job for a couple of years after high school while they decide what they want to do. It's not unusual to meet an undergrad in their mid-20s. Plus, getting a masters degree on top is a matter of course for most fields, if you do go into uni. 

People in Britain have no time to think seriously about their future, or to experience the world of work before they're being pressured to decide what they want to do forever. It's completely natural that everyone ends up deciding to go to uni, expecting that they'll work something out along the way. 

I decided to go study law just because I was good with words, it sounded respectable, and my family (none of whom had ever been to uni) wouldn't accept me going to do something that didn't seem to have good prospects. It was blind luck that I ended up quite liking it. 

At least in Britain we have some kind of forgiveness in place for student debt. In America it's psychotic - you can't discharge it even in bankruptcy. If anyone in America makes a bad investment, they're entitled to go bankrupt and start afresh - except students, for some reason. 

[Pyfish+]

I've been graduated 5 years now and still not paid a single penny of it back because I still don't earn over the threshold. It's awful knowing there's a debt I cannot pay.

[Inverted]

1 hour ago, Pyfish said:

I've been graduated 5 years now and still not paid a single penny of it back because I still don't earn over the threshold. It's awful knowing there's a debt I cannot pay.

Can you not volunteer? With Scottish living support loans I'm pretty sure you can pay ahead of schedule. 

Though in most cases I'm not sure it makes much sense to. The interest is tiny and it cancels eventually. 

[Harry]

1 hour ago, Pyfish said:

I've been graduated 5 years now and still not paid a single penny of it back because I still don't earn over the threshold. It's awful knowing there's a debt I cannot pay.

Surely you can repay, you just haven't reached the point where repayment is compulsory and happens automatically...?

[Eco]

Obviously a criss here in America. 

Out of high school, I was offered a couple of running scholarships, but didn't want to pursure them, and so my Dad offered to pay for me to go out-of-state to the University of Alabama. 4 years of that cost him around $120k

My wife is a teacher, went to school here in Gerogia so it's MUCH cheaper, and her Student Loans were at $25k, and probably now closer to $20k. 

My wife's cousin though went to a private college, Northwestern, for engineering, graduated in 6 years with his undergrad and masters, and owes a whopping $500k. Luckliy for him, he started his own company with some college roommates, and they now own a 1/2 billion dollar company that continues to grow. I'm honestly not sure what he would have done if he hadn't hit it big with their company. 

[Rucksackfranzose]

3 hours ago, Eco said:

Obviously a criss here in America. 

Out of high school, I was offered a couple of running scholarships, but didn't want to pursure them, and so my Dad offered to pay for me to go out-of-state to the University of Alabama. 4 years of that cost him around $120k

My wife is a teacher, went to school here in Gerogia so it's MUCH cheaper, and her Student Loans were at $25k, and probably now closer to $20k. 

My wife's cousin though went to a private college, Northwestern, for engineering, graduated in 6 years with his undergrad and masters, and owes a whopping $500k. Luckliy for him, he started his own company with some college roommates, and they now own a 1/2 billion dollar company that continues to grow. I'm honestly not sure what he would have done if he hadn't hit it big with their company. 

Wow! As someone coming from a country were university is free except for tuition fees of about 50 Euro a year, I shudder.

[SirBalon]

1 minute ago, Rucksackfranzose said:

Wow! As someone coming from a country were university is free except for tuition fees of about 50 Euro a year, I shudder.

€50 a year?!? 

You should take a look at the UK’s prices.