WTF? Govt rewarding bad behavior Part II

[Anonymous]

Anonymous wrote:

Anonymous wrote:

TheManWithAUsername wrote:

Anonymous wrote:Am currently earning 6 figures on a theology major. I don't see why I should pay a higher interest rate than some underemployed IT major just because you think you know who is going to be successful in life. You really have a problem with bitterness.

I moved this from the metathread.

I won't defend the other PP's ideas, but I think the response to this is that the question should be, "Why should the government subsidize theology and other liberal arts degrees?" (The subsidy here is in the guarantee of the loan.) I support government investment in the hard sciences, but generally not in the liberal arts.

Theology major again. I now do research and analysis that helps government work better and be less wasteful and saves the Feds money! Are you saying that my work is less important than what a scientist does? Again, responding to the earlier pp's complaint, why should I have to pay more for my education than the guy who sets up computers in my office? I don't begrudge him whatever salary he makes but he does not deserve a lower interest rate on student loans than I do.

You major doesn't match your job, what was the point of that, you should've studied management, processes or business anlaysis etc... You'll probably reply back with it helped me read and write blah blah blah, every major has minimum reading and writing requirements. Do you utilize the systematic and rational study of religion and its influences and of the nature of religious truths, or the learned profession at your job?

I am married to an Econ major from a top private university. He went into IT when he graduated...nothing to do with his major but he got a SUPERB education. He is now the top consultant in an obscure IT software making huge amounts of money. I really think it wouldn't have mattered what he majored in. He is a genius, highly ambitous/motivated and works his butt off. I know so many people excelling in fields that they did not 'major' in. I am the exception in that I am working in the exact field I majored in. I don't think many know they're 'calling' at 17 or 18 years old. However, a great education which exposes people to new concepts and ideas is a good thing.

[Anonymous]

1) How does changing the interest rate base on your major decrease the total amount of loans being taken out? The market will adjust and maximize the amount of money/loans. 2) How do you determine which degrees will be in demand in future years? You are saying the government should choose the degree and college/university you get/attend? Future income is some what tied to your degree and the college/university the degree was granted. Government picking winners and losers. What about removing the government loans from the picture and let tuition prices react in a more free market way?

[Anonymous]

Anonymous wrote:

create an incentive by mandating higher interest rates on degrees that don't pay well. I don't understand how you can charge the same amount of money for every major where as 3/4 of them are worthless and low paying.

Not very free market of you, is it? I guess the invisible hand is only good, true and God-fearing when it moves people the way you want it to. If a liberal had suggested that we "create an incentive by mandating" anything, you'd be screaming and howling about interference in the sanctity of the free market, and accusing whomever made the suggestion of being a socialist.

I swear, it's exhausting keeping up with you conservatives sometimes.

A study needs to occur to find out which majors cause the most amount of defaults. Free market allows for the lending institution to charge interest based on the risk of the loan defaulting. No other loan type blindly lends out money without assessing the risk of repayment. This would solve a majority of the problems. What its wrong work this idea, explain to me why every other loan evaluate s default risk except for student loans.

[Anonymous]

Anonymous wrote:1) How does changing the interest rate base on your major decrease the total amount of loans being taken out? The market will adjust and maximize the amount of money/loans. 2) How do you determine which degrees will be in demand in future years? You are saying the government should choose the degree and college/university you get/attend? Future income is some what tied to your degree and the college/university the degree was granted. Government picking winners and losers. What about removing the government loans from the picture and let tuition prices react in a more free market way?

you can still save your own money and spend it as you wish, its when you borrow should the risk of default be assessed by the lending institution (government or private). you can determine risk by starting salaries of majors by looking at stats such as nace.

[Anonymous]

A study needs to occur to find out which majors cause the most amount of defaults. Free market allows for the lending institution to charge interest based on the risk of the loan defaulting. No other loan type blindly lends out money without assessing the risk of repayment. This would solve a majority of the problems. What its wrong work this idea, explain to me why every other loan evaluate s default risk except for student loans.

The word you're looking for is underwriting, and it isn't really necessary because student loans are not dischargable in bankruptcy, so there is virtually no risk of full default. It may take longer for the lenders to get their money, but they still get the vast majority of it. And underwriting costs money, and why spend if you don't have to? These are basically risk-free loans. Also, many private lenders, which loan an increasing amount of student loan debt, often offer lower interest rates if there are co-signers (mostly parents) - so now there are two people on the hook. And still no available bankruptcy protection.

FWIW, majors don't "cause" defaults. Defaults occur well after majors are selected. What you''ve identified is a potential correlation. And - stop me if you've heard this before - correlation =/= causation.

[Anonymous]

Anonymous wrote:

A study needs to occur to find out which majors cause the most amount of defaults. Free market allows for the lending institution to charge interest based on the risk of the loan defaulting. No other loan type blindly lends out money without assessing the risk of repayment. This would solve a majority of the problems. What its wrong work this idea, explain to me why every other loan evaluate s default risk except for student loans.

The word you're looking for is underwriting, and it isn't really necessary because student loans are not dischargable in bankruptcy, so there is virtually no risk of full default. It may take longer for the lenders to get their money, but they still get the vast majority of it. And underwriting costs money, and why spend if you don't have to? These are basically risk-free loans. Also, many private lenders, which loan an increasing amount of student loan debt, often offer lower interest rates if there are co-signers (mostly parents) - so now there are two people on the hook. And still no available bankruptcy protection.

FWIW, majors don't "cause" defaults. Defaults occur well after majors are selected. What you''ve identified is a potential correlation. And - stop me if you've heard this before - correlation =/= causation.

the proposals include loan forgiveness and bankruptcy discharge. If someone screwed themself by picking a non employable major they couldn't bitch and moan about their student loan debt being unpayable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

A study needs to occur to find out which majors cause the most amount of defaults. Free market allows for the lending institution to charge interest based on the risk of the loan defaulting. No other loan type blindly lends out money without assessing the risk of repayment. This would solve a majority of the problems. What its wrong work this idea, explain to me why every other loan evaluate s default risk except for student loans.

The word you're looking for is underwriting, and it isn't really necessary because student loans are not dischargable in bankruptcy, so there is virtually no risk of full default. It may take longer for the lenders to get their money, but they still get the vast majority of it. And underwriting costs money, and why spend if you don't have to? These are basically risk-free loans. Also, many private lenders, which loan an increasing amount of student loan debt, often offer lower interest rates if there are co-signers (mostly parents) - so now there are two people on the hook. And still no available bankruptcy protection.

FWIW, majors don't "cause" defaults. Defaults occur well after majors are selected. What you''ve identified is a potential correlation. And - stop me if you've heard this before - correlation =/= causation.

the proposals include loan forgiveness and bankruptcy discharge. If someone screwed themself by picking a non employable major they couldn't bitch and moan about their student loan debt being unpayable.

Whose proposals include loan forgiveness and bankruptcy protection? Obama's?

[Anonymous]

Floated by the same asshole lib who made the debit card rules.

http://www.examiner.com/homeland-security-in-chicago/durbin-views-obama-on-student-loans-as-not-going-far-enough-1


"Durbin’s “Fairness for Struggling Students Act”focuses on lending treatments by privately issued student loans in bankruptcy the same as other types of private debt. "

[LeesburgResident]

Oh no, 16:37, are you implying banks might be at risk for making bad student loans?

I agree that while correlation does not cause causation, the insurance and underwriting industries do operate on some degree of that assumption.

Or, auto insurance for a 16 year old who drives a Corvette is always going to be pretty pricey.

If banks are going to be on the hook for student loan defaults (Good Thing), they have the right to charge higher interest rates on higher-risk loans (more Free Market).

Likewise, those in charge of counseling students regarding college finances have a fiduciary duty (or should) regarding expected salaries for all graduates from that college, default risks for an intended major, etc.

[TheManWithAUsername]

Anonymous wrote:

TheManWithAUsername wrote:I assume you're the same person advocating for taxing the poor more to discourage poverty.

I think you missed the point of the other post, it's not taxing the poor more, its having the poor pay something into the tax system. Taxing more would imply they are already taxed.

The posts I'm referring to suggested or stated that we should tax the poor more than the rich to encourage people to be rich instead of poor.

[Anonymous]

Under the new version of Pay As You Earn, borrowers would pay 10 percent of “discretionary income,” defined as total income above 150% of the federal
poverty level (about $16,000 for an individual). After 20 years, the loan is forgiven.

Assuming that a successful college graduate would earn, on average, $80,000 per year over the course of the 20-year obligation period, the repayment burden under the new plan will total somewhere around $4,500 per year, or $90,000 for the life of the loan. A less successful graduate who earns say $50,000 per year, on average over the 20-year obligation period, would have a repayment burden of just $1,500 per year, or just $30,000 over the life of the loan.

For students anticipating an average income, Pay As You Earn provides an incentive to borrow heavily: If you’re only going to repay $30,000 to $90,000, why not borrow $200,000? Frugality will be for suckers.

Hello folks. It is bad policy done purely for political reasons.

[TheManWithAUsername]

Anonymous wrote:

TheManWithAUsername wrote:

Anonymous wrote:Am currently earning 6 figures on a theology major. I don't see why I should pay a higher interest rate than some underemployed IT major just because you think you know who is going to be successful in life. You really have a problem with bitterness.

I moved this from the metathread.

I won't defend the other PP's ideas, but I think the response to this is that the question should be, "Why should the government subsidize theology and other liberal arts degrees?" (The subsidy here is in the guarantee of the loan.) I support government investment in the hard sciences, but generally not in the liberal arts.

Theology major again. I now do research and analysis that helps government work better and be less wasteful and saves the Feds money! Are you saying that my work is less important than what a scientist does?

How should I know? I don't know exactly what you do.

Anonymous wrote:Again, responding to the earlier pp's complaint, why should I have to pay more for my education than the guy who sets up computers in my office? I don't begrudge him whatever salary he makes but he does not deserve a lower interest rate on student loans than I do.

This is ridiculous.

First, there are obviously very many theology majors doing more useful work than very many scientists. We're talking about trends and the most efficient use of large sums. Do you contend that the average theology BA is more useful to society than the average engineer or plumber? If not, drop this stupid anecdotal stuff.

Second, I don't care what you make. Actually, if your major can reliably make a lot, I don't know why we need to subsidize the loans.

Third, your very important job presumably has nothing to do with your major, and so doesn't reflect its value. It sounds like you're a lot like a lot of us; you bought a pedigree and some basic skills training. The rest was waste. You may have enjoyed it, but I'm not interested in subsidizing your amusement.

[Anonymous]

The problem is not that student loans are not paid back. So, this what's your major = you pay back your loan is not relevant. The problem is the cost of a degree and future growth in that cost b/c the availability of loans. The loans are a pot of money that the academic industrial complex sees and will work to get.(Ike's speech talk about this complex also!) The way forward is not to impose some 5 year plan to produce x amount of software engineers for the great good. Market forces should determine this. Conservatives, as soon as they get in power, the state b/c the answer to everything. How far have the conservatives fallen.

[Anonymous]

PP WTF are you talking about? This is liberal Obama's plan.

[Anonymous]

Anonymous wrote:The problem is not that student loans are not paid back. So, this what's your major = you pay back your loan is not relevant. The problem is the cost of a degree and future growth in that cost b/c the availability of loans. The loans are a pot of money that the academic industrial complex sees and will work to get.(Ike's speech talk about this complex also!) The way forward is not to impose some 5 year plan to produce x amount of software engineers for the great good. Market forces should determine this. Conservatives, as soon as they get in power, the state b/c the answer to everything. How far have the conservatives fallen.

I'm not entirely sure what the other points of this post are, but the bolded part is spot on. And the proposed policy is flawed because it further decreases any accountability for loans, which in turn incentivizes lenders and borrowers to make/take even bigger loans, which in turn encourages colleges to increase tuition at a rate that far outpaces inflation.