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Half of Outstanding Student Loan Debt Isn't Being Repaid
Though millions of borrowers are in default, only 10 percent have enrolled in income-based repayment plans
U.S. students owe more than $1 trillion in student loans, and more than 7 million students are in default, according to the Consumer Financial Protection Bureau.
Outstanding student loan debt is now the second largest form of consumer debt, but about half of the $1 trillion in student loan debt isn't being repaid because the borrowers are struggling to make payments, according to an analysis released Monday by the Consumer Financial Protection Bureau.
http://www.usnews.com/news/articles/2013/08/06/half-of-outstanding-student-loan-debt-isnt-being-repaid
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leveymg
(36,418 posts)and repayment needs to be keyed to post-graduation income, not on a set schedule. It's the only way to avoid a collapse of the system at the bottom - make the rich pay their proportionate fair share.
Eleanors38
(18,318 posts)and to put people in the street. It's nothing but walking debtors' prison. And it WILL result in people turning away from high-level training & education at the worst time.
customerserviceguy
(25,406 posts)of not giving student loans out to people taking courses of study that have a low chance of finding gainful employment from those educations later?
Whatever we shoveled at the maw of the higher education industry, whether it was to the fly-by-night BS training programs that advertise on Judge Judy, or the most prestigious universities, they all gobbled it up and kept demanding more. We have an education bubble that now rivals the already-burst housing bubble.
magical thyme
(14,881 posts)I also checked out the starting salary at the local hospital before taking out any loans.
When it came time for clinical training, one of the program directors showed up in a panic. They couldn't find clinical slots for half the students. Labs normally take students in training to evaluate them prior to hiring. Nobody was hiring.
6 months later, half the graduating class couldn't even get job interviews, let alone offers. Some of these students were applying all over the country and not hearing anything back.
In the meantime, having graduated summa cum laude, I was one of the half who got an offer. Per diem, a couple days/week. Only one student in our entire class got a full time offer.
Oh, and my offer was 25% less than what HR had told me was the starting range. IOW, we were lied to about 100% employment, lied to about salary ranges, and suckered totally.
But yeah, if only students would get degrees where there's a chance of gainful employment. 
Thank Dog for the income based repayment plan or I'd have lost my house by now. Instead, I'll carry this debt for 25 years and then owe humongous taxes when the debt is forgiven.
Liberal_in_LA
(44,397 posts)
customerserviceguy
(25,406 posts)Ten years ago, I got an associate's degree in computer networking. My handle tells you what happened to that.
Here's my point: If people who get degrees in medical, engineering or science fields can't find work, why are we funding art history majors?
reformist2
(9,841 posts)It has to be said, the student-loan program that rubber-stamps most loans for students is largely to blame.
Lee-Lee
(6,324 posts)They don't have to worry about costs because rubber stamped loans will cover whatever they charge.
The rise of higher education costs, well above the rate of inflation, is due to irresponsible running of schools and just plain greed, the administrators know they are saddling the students with massive debt but it allows them to have all the big stuff on campus, plush offices, and everything else their hearts desire.
mike_c
(37,051 posts)I'm a full time, tenured university professor. The rise in tuition cost has paralleled the general rise in the cost of doing business, such as rising energy costs, building costs, etc. But the REAL reason for dramatic, year-to-year increases in college tuition, at least at state schools, has been ongoing disinvestment of public funds in higher eductation.
The cost of tuition at a California State University campus was once fully funded by the state legislature-- from tax revenues, of course. At that time the CSU was a model for the entire world, and it became the largest university in the world, a distinction that it still carries if I'm not mistaken. When I went to work here, public investment in higher ed was already declining-- by the mid 1990s students paid about 20% of the direct cost of instruction in the form of tuition, and the legislature paid the remaining 80% as a public good. And it is a public good-- not only does it produce an educated work force, but studies have shown that every dollar invested in higher ed in California ultimately returns more than four dollars in lifetime tax revenue from graduates and in other economic benefits to the state.
Currently, CSU students pay almost half of the cost of instruction. The legislature pays, on average, about 56% of the cost. That disinvestment, from 100% of the cost of instruction to just over 50% represents most of the increase in tuition at the CSU. At the same time, "belt tightening" at the campuses in response to those dramatic cuts has seriously compromised the quality of instruction that once made the CSU an international model. So students are paying more and getting less as the state disinvests in the future of its own citizens and its own economic success in a generation or so.
nil desperandum
(654 posts)I like your points, but I think it's more accurate to say that compared to inflation the costs associated with education since 1958 have risen on average 1.78 times the actual inflation rate. That's a fairly significant cost factor differential and not comparable with any business model I've been associated with over the last 33 years of my working career. I realize that might not be accurate for CSU but across the nation on average is fairly accurate.
I think it's important that we look at what is driving the cost of that tuition and determine if it's an actual cost of delivering a high quality instruction or a facet of some other unseen cost factors associated with running a college.
I agree with you that as a public good educating our populace is an important aspect of a successful powerful economy. I do believe that not every student requires a 4 year BA or BS to become gainfully employed, there has been a serious decline in heavy manufacturing in this country largely due to the free trade agreements that have destroyed the wage and union structure across the nation. Many of those blue collar jobs had great wages and benefits but were largely shown as jobs for people who were unworthy of supposedly better things. I still remember my guidance counselor telling me that without college I might be stuck getting my hands dirty (heavens to murgatroyd) for the rest of my life as if there was some shame in honest, good paying blue collar labor.
According to some articles there are as many as 3 million jobs unfilled currently in the US, many of them decent paying blue collar jobs. I would like to think we are smart enough to figure out how to get folks into that work, and smart enough to let people know that honest blue collar work is a respectable and decent paying living. Running any computer operated machine tool pays far more than the Walmart slave labor force receives and as a nation we should recognize the value of an economy that contains both the high tech silicon valley workplaces and the heavy blue collar industry that manufactures the necessary components for all of it.
Thank you for advancing this discourse, it's imperative that we get this right for the health of the nation's future.
Turbineguy
(40,054 posts)What's down is up.
Moral Compass
(2,389 posts)Our children shouldn't have to mortgage their lives to access higher education. I'm watching my children do it right now and it makes me sick, but they're brilliant and ambitious and I just have to hope it works out. But this isn't the way it should be.
Even at state schools tuition is insanely high. And there are not guarantees that that education will get you to where you want to get to.
Yet, you cannot discharge your debt through bankruptcy nor can you sue the school from which you graduated for providing a defective product.
That debt you take on is yours for life. Hope you can make enough to simply service it...
This debt, hung so firmly around our children's necks and exempted from bankruptcy by a cruel, unthinking Congress, will in the future keep our economy for achieving any real growth. Want to buy a house? Well your DTI is too high. Want to buy a car? Well, with that DTI you're going to have to pay a much higher interest rate. Want to start a business? Well, you can't get a loan because you're buried in student loan debt.
With so many getting suckered by these phony for-profit "universities" whose graduates are not even considered for interviews it is no wonder that there are so many in default. When the current employment outlook for graduates of the most reputable institutions is so bleak what can those that get lured in by for-profit colleges with their worthless degrees do? Yet these poor suckers, taken in by aggressive unethical sales people, cannot even seek the protection of bankruptcy.
They are now our nation's indentured servants. In some ways, we are treating them even worse than slaves are treated.
This issue will fester and explode. We will have to deal with it. But the question is always who will pay?
Igel
(37,530 posts)When you calculate profit on the student loan debt that's owed to the government, you include this as an asset and can't write it off. You also don't write off the interest.
If you make reasonable assumptions about default then the government student loan program is in the red. If you assume that all assets will be repaid--no matter what the current state of affairs is--then it's in the black.
Wording is also funny. If the government pays, it's an investment. If the student takes out a loan, it's at best like a mortgage. More often it's just a crippling expense.
I viewed my student loans as an investment.
oldhippie
(3,249 posts).... the accounting terms or the red/black balance sheet. They just want free education for everyone.
bigapple123
(23 posts)what's to stop people from staying in college for seven years studying and partying?
oldhippie
(3,249 posts)... "education" be free? Just the tuition? Or should the government (or somebody) pay for food, shelter, beer, and other "normal" living expenses while studying?
I really like learning and going to school. I could do that for a long time. I'm 65 years old, retired, and I am still taking college courses (though I have to pay for them. Damn!)
bigapple123
(23 posts)the reason why student loans cannot be discharged in bankruptcy was that doctors and lawyers would declare bankruptcy right after graduation.
Unlike a car or a house, education can't be repossesed. the only logical thing without collateral would be to charge even higher interest rates to cover students who default willingly.
probably the students who take out the loans will have to pay. otherwise people who have paid down their loans will be enrages.
KansDem
(28,498 posts)When I started undergraduate school in the 1970s, I remember hearing about students who borrowed big to attend medical school. Then once they graduated, they'd declare bankruptcy and in seven years, be free and clear and in a growing practice.
Liberal_in_LA
(44,397 posts)like a car or a house or the junk people buy when they run up credit cards. An education can't be
returned.
That's what I've heard is the logic behind excluding them from bankruptcy. that said - medical bills can be discharged
although the medical procedure can't be undone.
limpyhobbler
(8,244 posts)debts from education ?
Seems nuts.
customerserviceguy
(25,406 posts)is the only kind of loan that a person can get without a job, without a credit score, or without a reasonable plan of using that education to find a job with it to repay that loan.
Why should that all be on the backs of the taxpayers alone?
limpyhobbler
(8,244 posts)I'm talking about private student loans that are not backed by the government.
They are strictly from banks.
Why should those be treated any differently that regular consumer debt ?
If you take a loan from a bank, and invest in a cocaine import warehouse, if the investment goes bad, you could potentially declare bankruptcy.
If you take a loan from a bank, and invest in a college degree, and then your investment goes bad, you can not do a bankruptcy.
Yet at the same time, such loans don't have any of the regular protections of government-backed loans, like the income based repayment options.
This type of loan falls outside of any regulation. These were pushed hard by banks for several years, in a very predatory way.
They need to be brought either under federal protection with the government loans, or treated like regular consumer debt. We cannot have a wild west sacrifice zone of $200 billion dollars worth of unregulated outstanding debt.
This is unregulated predatory lending. There are bills in Congress to address this and the CFPB has been allowed to study it but not regulate it, which is better than nothing.
There is a good long report here but skimming it could give an understanding of the scale of the problem.
http://files.consumerfinance.gov/f/201207_cfpb_Reports_Private-Student-Loans.pdf
Lee-Lee
(6,324 posts)Nobody would loan for them because of the risk.
limpyhobbler
(8,244 posts)Either regulate these loans under the federal regulations and provide income based repayment options, or treat it like normal consumer debt, like a mortgage
If it doesn't fall into one of those two categories, then it should not exist.
There is no place for unregulated predatory lending in America. There is no room for inescapable debt that is not regulated to keep the repayment terms fair.
End it.
We could attack it two fold.
First, reign in crazy costs.
Second, educate kids going in to school on just what debt it, how it affects their future, how likely their chosen educational path is likely to produce an income that can repay that debt, and the alternatives.
It is pretty sad that institutions that are supposed to be all about educating do their best to keep their students very ignorant on debt, the true costs of that debt, and the true possible future income from the education they provide.
Instead of educating students about debt they, they just keep encouraging them to go more and more into debt so the school gets more and more money.
Debt is fine, if it is used responsibly. The problem is students, prodded by those who are supposed to be teaching and guiding them, are using it very irresponsibly. Mostly because nobody ever teaches them about it.
limpyhobbler
(8,244 posts)They do nothing to protect the millions of people whose lives are being destroyed by these unregulated debts.
I'm all for the reforms you mentioned to prevent the problems happening to another generation.
But the fact is, the banks have already stopped (slowed way down) pushing these unregulated loans. There was a time period where they got away with it. About a decade or so.
What I'm hearing from you sounds Republican to me. You are saying that the government should do nothing to protect people with privately held student loans. You are saying it is OK to have a class of loans out there with no income based repayment options, but also no regular consumer protections like bankruptcy.
You said the problem is the people who take out the loans. In other words "Let the buyer beware". You are 18 years old and you may be signing up for a lifetime of servitude.
Instead I'm saying something different:
Ban predatory lending, and provide relief for those already victimized by it.
bigapple123
(23 posts)What exactly do you mean by predatory lending? Is it loans to a certain age groups? Do you want to ban banks from giving student loans to 18 year olds? Would these 18 year old then have to wait until they are 21 before going to college?
Do you think there should be no private loans at all and all student loans should come from the government?
How do you prevent people from taking out large loans (lawyers, doctors, MBAs) and declaring bankruptcy right after graduation?
limpyhobbler
(8,244 posts)For the purposes of this conversation, what I want is to bring private bank loans under either one of the two currently existing regulatory systems.
I'm ok with either choice.
1) Revert the law back to the way it was before 2005. Under that system debtors with private bank education loans had the same consumer protections as debtors with other private bank loans.
or
2) Regulate education debt according to the same system that we currently regulate federal-program student loan debt. This would offer the income based repayment options that are currently only available to debtors with government-program debt.
That's all I'm saying here. Regulate the banks.
under option 1, are you okay with lenders charging fair market interest rates for long term unsecured debt?
Lenders don't lend people money to gamble or drink booze. there's credit cards and payday loans of course but these are very short term debt and charge high interest rates. car loans and home mortgages are backed by collateral. so for unsecured education loan where the borrower has the option of declaring bankrupt after graduation, are you okay them lending at interest rates above credit card rates to account for the longer term? or do you think this is predatory lending?
under option 2 the government takes a loss on ibr schemes. why would any bank agree to lend money at these terms where a loss is all but certain?
limpyhobbler
(8,244 posts)I'm not concerned with protecting banks. Only concerned with protecting humans.
The whole frame of looking at it is different.
Try making a $200/month student loan payment when you have a $900/month disposable income and then get back to me.
No I'm not OK with any of it since I think the whole system is screwed up. But as to your question I do think education loan interest rates should also be regulated, and low. And if no bank finds it profitable to make education loans with that kind of regulation then they don't have to do it. And good riddance to them, we don't need them. The federal programs are much better. My guess is they will still find it profitable to lend because this was the law in America until 2005 and the banks were happily making enourmous profits straight through.
Under IBR schemes you say banks would "take a loss". Cry me a river. Banks got bailed out during the crash of 2007-2008, and they have and will continue to benefit from massive corporate welfare every which way. Which we pay for. The people got stuck holding the bag, and ground up by the system. People with underwater mortgages, facing foreclosure are the well known example. There are many parallels between the sub-prime mortgage lending bubble that let up to the crash, and the private education lending bubble that was going on the same time. Some college diplomas are not worth the paper they're printed on. Even technology degrees do not necessarily live up to the earning value people expected. The economy crashed, the jobs got outsourced, and guest workers were imported from overseas. If someone took on a large debt expecting a $60,000/year income, but instead gets a $18,000 income, that's going to be a hard loan to pay back.
The primary concern ought to be how do we do what's fair and right by people. People who work hard and play by the rules should not get ground up in the system - in the education system, financial system, housing system, health care system.
How do we protect people from getting raped by banks - that ought to be the top concern. Not how do we protect banks to make sure they can stay profitable.
Travis_0004
(5,417 posts)Obviously private student loans to provide a service to people, and people currently take advantage of them, so they are needed. The federal programs are better, but they have limits.
And quit talking about the banks getting bailed out. Yes, they took a loan, but it has been repaid (at least by all the major banks). GM took out a loan, should they give me a discount on the next car I buy?
limpyhobbler
(8,244 posts)Just because some people are willing to purchase a shitty financial service proves to you that it should be available for sale?
Any type of loan a bank wants to make is ok with you?
If a bank wants to charge 50% interest, that's ok with you?
If a bank targets a vulnerable population with misinformation, that's ok with you?
If bankruptcy laws are all repealed, would you be ok with that?
I'm kind of shocked the amount of free market dogma I'm hearing regarding what seems like some pretty basic, mild financial regulation, on a supposedly democratic website.
Are you against seat belts in cars? After all why would people buy them if they didn't need them. People must need cars without seat belts because they buy them. That proves we shouldn't require seat belts in cars. 
Bank of America and the others would not even exist if the taxpayers had not bailed them out, and continue to bail them out in the form of implied subsidies . They have no rights. They take no risk - and get all reward. They have no right to offer bad deals to consumers any more than GM has the right to sell cars without seat belts. The simple fact that people are willing to buy something does not in any way prove that companies should be allowed to sell it.
bigapple123
(23 posts)In general, a bank should trust an interest rate that takes into account:
(1) The term of the loan
(2) Whether there is collateral
(3) The credit quality of the borrower (unsecured assets).
Based on these criteria, student loans are the worst loans to make. They are long term; there's no collateral; and the borrower is usually broke. In addition, many students drop out and don't complete their degree.
There's a difference between "free market dogma" and being unrealistic. You might as well ask banks to give out interest-free loans; never gonna happen.
limpyhobbler
(8,244 posts)bigapple123
(23 posts)both your options are unworkable.
Banks will not offer student loans if anyone can
(1) declare bankruptcy after graduation
(2) pay a small portion of their income and never repay the loan fully.
What about students who need to borrow more than government loans allows e.g. doctors and lawyers?
limpyhobbler
(8,244 posts)
Xolodno
(7,349 posts)Its only useful if you work at minimum wage. I inquired about it, but the payment would have been more than I pay now...even the rep I was talking to realized the plan was baloney. When you consider the cost of living, mortgage or rent, car payment, etc. stuff you cant live without (hey, you have to eat, roof over your head and drive to work so you can actually pay the loan, etc.)...the "income based" is only their if you got a crappy job. Even then, I'm pretty sure it hurts like hell for those who work at bare minimum.
Removing student loans from bankruptcy was over reach. If they did an acid test of current income to loan (realizing a person can only pay certain amount vs. the max)...it would still be better than what they have now. Shoot, even if was a small percentage against future earnings, they would get their money against high earners. But no, they push the loans on to you, and then expect you to pay where even mobsters wish they have the ability to do.
shanti
(21,799 posts) here's the thing: people are desparate, and will take out all kinds of loans to survive. That is the reason for the jump in defaults. Pay people a living wage, and this wouldn't happen.
2naSalit
(102,739 posts)all those thousands of nontraditional students who went to college later in life to gain what they couldn't prior to the loan possibility or because they were urged to when all the jobs they once had became "automated" sent overseas or they were no longer capable (physically or education-wise). Many took the loans as an investment in their futures with every intention of repayment. And many who are in default now graduated right around or after 9/11/2001 which screwed hundreds of thousands who may even have had a good paying job lined up after graduation but that fizzled into thin air as the world came to a screeching halt. And then there are those who had nearly the same thing happen seven years later in 2008/2009.
So what did all those older graduates with no reasonably paid job to help with paying the cost of their education/mortgage?
Working temporary, part-time jobs just to keep a roof over one's head, and many who have children is a basic necessity and the damned loans can wait... like who's going to die or starve to death because the newly impoverished can't pay the #300 -$1300 a month for loans that are impossible to pay after the rent is paid?
But the collectors are always calling and the mailbox fills with notices that if you can't pay the $3,000 monthly interest you will be in collections. It's a vicious circle and the young AND the older students have no chance at getting a job even after a couple years because you need to have transcripts to prove what you studied and your grades but can't have access to them because you owe money for your loans if you're in default.
Our country is so messed up in so many ways, makes one wonder how it can be fixed, or IF.
Demo_Chris
(6,234 posts)Unless we ALSO implement free college education for all. Otherwise it would become just another wealth transfer to the wealthy (who will always make up the majority of college attendees).
jtuck004
(15,882 posts)What does SocSec have to do with Education?
jtuck004
(15,882 posts)unless something changes and we start creating hundreds of thousands of better jobs than the part-time mcjobs that are continuing to replace what we had.
oldhippie
(3,249 posts)I hadn't thought about the lessening of SocSec payments.
jtuck004
(15,882 posts)to a way to increase the odds that a person will live in poverty when they are older. Because, since it's guaranteed by the government, that's one of the few things social security payments aren't secure from, I think.
Spitfire of ATJ
(32,723 posts)Demo_Chris
(6,234 posts)Either college should be free for everyone or no one.
Spitfire of ATJ
(32,723 posts)Hell, some of it is chasing people to the grave.
Demo_Chris
(6,234 posts)Spitfire of ATJ
(32,723 posts)Demo_Chris
(6,234 posts)The first phase must be government intervention and take over to control costs, along with a massive investment into education infrastructure and personnel. Until the system is in place to handle the added students -- and there would be tens of millions -- any talk of debt forgiveness is unconscionable. It would be nothing more than a one time transfer of wealth from the taxpayers to those affluent enough to afford college now, they get their education for free while everyone else gets the bill, and nothing else would happen until enough of the top 10%ers feel the pinch, then we'd do it again.
We need top attack this problem systematically and fairly or not at all.
Spitfire of ATJ
(32,723 posts)The high school I went to was built in the 1920s and originally had a copper observatory dome on the roof.
That was back when there was a word you don't hear anymore: Philanthropy.
oldhippie
(3,249 posts)... it that says no person nor organization shall be able to charge anyone any fee or payment for providing education to anyone.
Instant free education. Everyone, rich or poor, could take advantage of that and get an education.
There's no need for phasing anything. Just do it.
bigapple123
(23 posts)but who's going to pay for it? Or should educators work for free?
oldhippie
(3,249 posts)The rich, of course. And college educators are probably overpaid and should contribute more of their time and expertise to the common good. They will probably be happy to do that.
limpyhobbler
(8,244 posts)And people who are wealthy do not have large student loan debts to be forgiven.
Student loan debt affects the working class and middle class. It disproportionately affects people of color.
Exactly the opposite of what you said. Forgiving (or reducing, or even regulating) these debts helps the middle class and working families the most.
Spitfire of ATJ
(32,723 posts)jtuck004
(15,882 posts)not getting jobs, and more 20 year-olds living at home with their parents than at any time in the past several decades, many barely makgin minimum wage, if that, where is the money supposed to come from?
Yet we keep signing them up for debt, and more debt, and more debt, as if the economy is going to turn around any day now, like we are just one more rousing speech away from that golden staircase upwards.
Just a note - a large proportion of student loans go to places like Harry's Barber College, ITT Tech, Harry's Welding school, Harry's Medical Assistant School Where We Charge You $6000 in Tuition for a Several Week Course so you can get a Job at a Nursing Home Professional College...
Actually, if we weren't being so generous with those we could simply provide free tuition at state universities for thousands of students, and just start teaching all that crap at a junior college for a lot less money. Wonder if we hold up the people that run some of those places as traitors and offer them free passage to an airport lounge outside of this country?
My point is that there is not a snowball's chance in Fukushima that much of that money is going to be paid back this side of their getting Social Security, and the total is going to be so large by then it will just seem silly. And they will never, ever be able to build up the wealth that would pay for our country to run, which is necessary unless we restructure the country.
SoCalDem
(103,856 posts)Graduate with (or drop out with) $30K of debt...and latch onto a low pay job..or no job.. & how the hell do you pay back money owed with NO MONEY?
Liberal_in_LA
(44,397 posts)to pay the payments on low paying jobs
davidpdx
(22,000 posts)They have another thing coming.
Orrex
(67,104 posts)Unless you're lucky enough to be dead of totally & permanently disabled, of course.
I suppose you could also work under the table for the rest of your life and hope that the tax penalties don't bite you in the ass.
I'm not scolding you, by the way--the student loan industry is one of the worst blights on society, so anything that inconveniences the industry gets a big smile from me.
But I don't see how you can avoid their goons forever. If you have a workable scheme, let me know!
Dash87
(3,220 posts)When the student loan bubble pops, the ticks will jump off the students and latch onto the government for sustenance.
You've already paid (taxes). The lenders just don't need your money yet because their horrible, short-term tunnel vision hasn't fully blown up in their faces yet.
a la izquierda
(12,333 posts)Graduate "scholarships" often pay below the poverty line.
I borrowed for 13 years of school, 4 years for the BA, 2 for the MA, 7 for the PhD. My parents didn't pay a dime. I have a job (university professor at a big state school), but whatever costs universities collect from students don't go to paying professors...thankfully I pay for 10 years and then I'm done.
KansDem
(28,498 posts)I went the same route but no "university professor at a big state school" for me.
After working adjunct a couple of years and applying to every full-time opening that I was remotely qualified for with no success, I managed to find a job not in my field that pays about 2/3 of what I thought I'd be at this time when I was handed my PhD. I hate my job, but it buys food and pays the rent with not much left over. And it does cover my monthly student loan repayment.
I consider myself luckier than many.
a la izquierda
(12,333 posts)I think that's all there is to it at this point. I have many friends who are better scholars than I can hope to be...and they are unemployed.
Our field is an unpleasant one.
hobbit709
(41,694 posts)Orrex
(67,104 posts)You can pay them $300 per month voluntarily, or they can garnish your wages for $300 per month.
See how accommodating they are?
liberal N proud
(61,194 posts)Schools lure high school grads in with promises of graduating and getting a job in the field of their dreams. Couple that with the fact that no one finishes school in the normal 4 years and the lack of jobs when they graduate and you have disaster.
And these people are saddled with it for the rest of their lives in poor credit scores.
KansDem
(28,498 posts)...to make available their placement rate.
If 100 students have graduated with a specific degree and only 12 found positions, then the department would post a "12% placement rate." Might make some potential students think twice about attending that school.
I mentioned this (in passing) to a newly-arrived professor at a faculty mixer where I was completing my PhD, and he said, "Higher education is for personal enrichment." He was adamant (I ascribed this to his "new" status and his desire to not make any enemies so soon after arriving). I thought bullshit, pal, if this department were placing 88% of its graduates, that would be the selling point for all prospective students.
To the prospective student --
University department that places 12% of its graduates:
You'll like it here, because we are an institution that believes higher education leads to personal enrichment 
University department that places 88% of its graduates:
You'll like it here, because we place 88% of our graduates!! 
oldhippie
(3,249 posts)Just out of curiosity I looked up the placement stats at the university where I got my BSEE:
The overall University placement rate for the Class of 2012 was 96 percent.
Over the past three years, an increasing number of Clarkson graduates are electing to enter directly into the workforce
The reported information percentage was the highest it has been in the last five years
Average starting salary:
Clarkson University graduates, on average, begin their careers at highly competitive rates. According to Payscale’s 2011 College Salary Report, the average starting salary of Clarkson graduates is $57,900 placing us #17 out of 1003 universities listed in this independent compensation benchmarking service.
http://www.clarkson.edu/career/about/placement/
Granted, it is a small, private university. When I went there in the 60's there were no financial assistance programs. I had a couple of scholarships and borrowed a couple thousand dollars from various family members. I paid it all back within three years, even though I was in the Army at the time. Different times.
lumberjack_jeff
(33,224 posts)If there is no prospect of earning enough with the degree to repay the loan, the loan should be denied.
It's doing the borrower no favors to pretend that the tooth fairy will repay the loan.
reformist2
(9,841 posts)And here we are quibbling about what interest rates the students are going to pay. Absurd! We need to be talking about reducing their principal balances - and reining in college tuitions.
jwirr
(39,215 posts)Hopefully some of these students will at least take a look at it.
bhikkhu
(10,789 posts)which isn't too bad. The sum of loans outstanding is about $1 trillion, and the sum of loans in default is $9 billion.
Which is to say that 9% percent of the outstanding student loan balance is in default. It doesn't make as good a headline that way, but it would highlight that smaller borrowers, those that may have tried college but didn't gain degrees, disproportionately default on their loans.
on edit: as a side-note, the 90+ delinquency rate on credit card debts is about 9% too.
reformist2
(9,841 posts)Bunnahabhain
(857 posts)I do not think the true upside will be allowed. Think of the mega millions earned by all top athletes coming out of college; football, basketball, etc. Also think of all the IBs and such. Somehow I think "income based repayment" will only apply to regular folks and the true upside will get to skate.
bigapple123
(23 posts)so people who earn degrees that get good jobs (finance, engineering, science) will have no reason to opt for an income based repayment program.
people who earn degrees that have poor job prospects (humanities, ... studies) will have no hope of paying off their loans and will want an income based repayment program.
Maybe students shouldn't earn degrees that have poor financial prospects, rather than wanting students who have good jobs to subsidize them?
Safetykitten
(5,162 posts)
gulliver
(13,978 posts)http://www.ed.gov/news/press-releases/first-official-three-year-student-loan-default-rates-published
sad-cafe
(1,277 posts)at 15%
MFrohike
(1,980 posts)Federal student loans are in effect a tax on education that also functions, through the servicers, as a welfare program for financial institutions. Bravo.
Marrah_G
(28,581 posts)Frankly when you have people living so close to the edge, how does anyone expect them to pay back loans.
I am job hunting right now for a second job, I see jobs that NEVER used to require college now demanding Bachelors degrees and paying 10 bucks an hour.