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...so when does the student loan crisis hit?

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
Placing the Blame as Students Are Buried in Debt

Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college, and they maintained a blind faith that the investment would be worth it.

Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle. For much of the time since her 2005 graduation, she’s been enrolled in night school, which allows her to defer loan payments.
She recently received a raise and now makes $22 an hour working for a photographer. It’s the highest salary she’s earned since graduating with an interdisciplinary degree in religious and women’s studies.
http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html?pagewanted=1

Who is to blame?
Stupid mom and stupid daughter. Not for being poor and going to NYU, but for being poor, going to NYU and getting a WORTHLESS degree.

It's just a terrible example on which to base an article, asking this question. You would have to assume that most people going to college are going to be more responsible than people who took out the liars loans for their mortgages, if only because you cant bankrupt your way out of the debt... but is another meltdown imminent?
 
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Silver

find me a tampon
Jul 20, 2002
10,846
0
Orange County, CA
Can you discharge student loans in a bk?

Anyways, the problem is systemic. We've been telling kids for years that without college, they will be a failure. Then we shipped off most of the jobs that actually required people to make something, underscoring the first point. Then we have the banks making a killing on government backed student loans, and colleges that have less interest in education and more in the size of their endowments.

And yeah, a photography degree is really kind of stupid. That's a trade, you'd be much better off working way down on the totem pole for those first 4 years. As ohio mentioned in another thread, flexibility is a key now, and a photography (or engineering) degree doesn't help out with that.
 

TheMontashu

Pourly Tatteued Jeu
Mar 15, 2004
5,556
0
I'm homeless
All I have to say is one of my friends got her loaned pulled for her senior year at UC davis. This girl has been on her own since 15 and didn't have a parent to co sign the loan. So she dropped out senior year.

Oh and she managed to battle cancer her freshmen and sophmore year and still manage to keep her grades up

Edit, she's getting a real degree too.....
 
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KavuRider

Turbo Monkey
Jan 30, 2006
2,566
3
CT
Can you discharge student loans in a bk?

Anyways, the problem is systemic. We've been telling kids for years that without college, they will be a failure. Then we shipped off most of the jobs that actually required people to make something, underscoring the first point. Then we have the banks making a killing on government backed student loans, and colleges that have less interest in education and more in the size of their endowments.

And yeah, a photography degree is really kind of stupid. That's a trade, you'd be much better off working way down on the totem pole for those first 4 years. As ohio mentioned in another thread, flexibility is a key now, and a photography (or engineering) degree doesn't help out with that.
Pretty sure you can't discharge student loans in a BK.

My parent's are really pushing me to go back to school and "just get a degree in something". While I understand their point, I'd rather not get saddled with a ton of debt and no clear plan of action.
 

eaterofdog

ass grabber
Sep 8, 2006
7,827
909
Central Florida
I saw some friends do the useless degree thing. Years and years and tens of thousands of dollars wasted. So your working a **** job AND making payments on a useless degree.

Despite the clear warnings when taking the loans, some people still think they can walk away like it's a credit card. It can be done, but there had better be a REALLY good reason.
 

jonKranked

Press Button, Receive Stupid
Nov 10, 2005
62,427
8,679
media blackout
so what exactly was she planning on doing with a degree in religious and women's studies? being a nun? now that's a lucrative profession :rolleyes:
 

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
i think the bigger issue the death of shame:

Owners Stop Paying Mortgages, and Stop Fretting
ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”
fcuk these buncha fapbagging cunts. blame everyone but who signed the dotted line.

and more will surely come from the student loan pool, too, when the value of their degree is deemed to be less than when they first made the pursuit of what amounts to be a poor business decision.

why not bail out bp? based upon what they knew at the time, it was fine for drilling far off-shore, but just b/c of a minor selfish shortcut, their stock prices are plummeting. nobody's perfect, right?

if these adult children want a real education, they should own their problems. they'd grow up over night & we'd all benefit.
 

Pesqueeb

bicycle in airplane hangar
Feb 2, 2007
31,077
6,130
Riding the baggage carousel.
i think the bigger issue the death of shame:

Owners Stop Paying Mortgages, and Stop Frettingfcuk these buncha fapbagging cunts. blame everyone but who signed the dotted line.

and more will surely come from the student loan pool, too, when the value of their degree is deemed to be less than when they first made the pursuit of what amounts to be a poor business decision.

why not bail out bp? based upon what they knew at the time, it was fine for drilling far off-shore, but just b/c of a minor selfish shortcut, their stock prices are plummeting. nobody's perfect, right?

if these adult children want a real education, they should own their problems. they'd grow up over night & we'd all benefit.
For once, I absolutely 100 percent agree with you. I've said before in some other threads that these home owners walking away is the height of morally reprehensible behavior. No one forced you into interest only, ballooning mortgages. Didn't understand what you were signing for? Too fvcking bad, if you didn't understand what you were legally roping yourself into you shouldn’t have signed the paper. These people belong in jail.
 

profro

Turbo Monkey
Feb 25, 2002
5,608
282
Walden Ridge
Just another example of how our society and culture suck. I agree with Silver. America has put such a worthless premium on college education. Why can people not live, survive, and be happy with anything otherwise?. We have elevated our "quality of life" to a point where it doesn't work. America has told Americans that anything less than upper middle class is not acceptable. There is no going back. We are such snobs.

I have student loans for two engineering degrees. Was it worth it? I don't know but I know this for a fact... The more money for make, the more money you spend.
 
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dante

Unabomber
Feb 13, 2004
8,814
9
looking for classic NE singletrack
That was another thread.

God forbid everyone play by the rules that business does, eh?
Yup, corporations can discharge debts, get contracts cancelled, etc all under chapter 13 bankruptcy (or even flat-out allowing commercial properties to go into foreclosure due to nonpayment), but god forbid the guy down the street should be able to do the same.

As for student loan debts, if we treated mortgages like we treated student loan debt, we wouldn't be in the place we are now. With federally backed student loans, borrowers get a lower interest rate (due to federal backing), and there's only a limited amount of money available. However, that debt will follow you to the grave, since the government ALWAYS gets its money back and can't be discharged under bankruptcy.

However, with mortgages, there is no clawback provision for the US Government. They're stuck holding mortgages if deadbeats don't pay, and there's no recourse for the government to get its money back. There *should* be two different mortgages; one federally backed and one privately backed. Federally backed loan is cheap (4%) and only up to a certain amount of $$ (200k? 250k?), and is not able to be discharged in foreclosure. If you foreclose, the government will still come after you for the debt.

The other loan option is a privately backed loan, higher interest rate (6%?), available for any amount of money that a bank is willing to lend, and the normal rules of foreclosure apply. If banks want to prepackage mortgages into CDOs and MBSs and play all sorts of games with their investments, fine, do it under their own backed mortgages. If the US is holding the mortgage, it in affect is lending money to the public at far better rates than they are receiving now.

But it'll never happen........
 

Toshi

Harbinger of Doom
Oct 23, 2001
29,518
3,003
I like the sound of that idea, dante. :thumb:

NYU and that particular degree is indeed a bad example. My wife, Jessica, is going back for a masters at NYU and the yearly loans (including room and board) are a staggering $62k... per year.

Ridiculous.

Good thing I'm a doctor, eh? She'd NEVER be able to make back $100k in loans with the extra income that a masters grants a teacher (if she could even find a teaching job in this climate), let alone the pittance that performers earns.
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
Just another example of how our society and culture suck. I agree with Silver. America has put such a worthless premium on college education. Why can people not live, survive, and be happy with anything otherwise?
On the other hand, only 25% of the US population has a bachelor's or more. And there are a lack of qualified nurses and teachers (and Im sure some other positions) which require degrees. I know it bothered me, not having a degree, so to sit here now that I have one, and complain about people doing the same wouldn't be right. I do think career counseling should be much more intensive across the board however, to save people from getting "Women's and Religous Studies" degrees, and other worthless BS. (see what I did there?)
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
51,745
4,661
In a van.... down by the river
For once, I absolutely 100 percent agree with you. I've said before in some other threads that these home owners walking away is the height of morally reprehensible behavior. No one forced you into interest only, ballooning mortgages. Didn't understand what you were signing for? Too fvcking bad, if you didn't understand what you were legally roping yourself into you shouldn’t have signed the paper. These people belong in jail.
Have you read the text of a mortgage contract? It's a business arrangement. Everything spelled right out there in black and white. I don't hold it against someone defaulting on a mortgage that is holding the deed to a worthless property. The *banks* of all the parties should have forseen the bubble bursting. After all, it's not like it hasn't burst time and time again through history. :rolleyes:
 
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$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
Oh and she managed to battle cancer her freshmen and sophmore year and still manage to keep her grades up
sorry if this has already been covered, but did you hit this, too?
Have you read the text of a mortgage contract? It's a business arrangement. Everything spelled right out there in black and white. I don't hold it against someone defaulting on a mortgage that is holding the deed to a useless property. The *banks* of all the parties should have forseen the bubble bursting. After all, it's not like it hasn't burst time and time again through history. :rolleyes:
unable to pay != unwilling to pay.
 

Pesqueeb

bicycle in airplane hangar
Feb 2, 2007
31,077
6,130
Riding the baggage carousel.
God forbid everyone play by the rules that business does, eh?
Don't get me wrong, businesses should be held to at least the same standard. Gov't bail out of big banks while letting individuals hang out = BS. I think thats why these individuals don't care. They see big banks getting away with behavior that while it might not have been illegal, it certainly should be, so people just say "fvck em". That doesn't make an individuals actions like walking away from a contract right.

Have you read the text of a mortgage contract? It's a business arrangement. Everything spelled right out there in black and white. I don't hold it against someone defaulting on a mortgage that is holding the deed to a worthless property. The *banks* of all the parties should have forseen the bubble bursting. After all, it's not like it hasn't burst time and time again through history. :rolleyes:
Yea, as a matter of fact I have, twice (2 homes) and trust me, as a blue collar guy with a technical degree its not exactly easy reading. But I knew exactly what the terms of my loan were and bought a home I could actually afford under those terms in spite of the lenders trying to push me into fancy balloon or other shifty loans because I (mostly) understood them. I managed to figure out all by my own undereducated self that they were potential bull sh*t so I have no sympathy at all for people who were buying houses as get rich schemes or using them as ATM’s or just flat out didn’t understand or do the math on what they could afford and/or lost when the bubble burst.

As for student loans, the wife and I are paying on her loans for a degree she has yet to use in her actual field of study (sociology), but on the other hand, she couldn’t be teaching without it (had to have a bachelors). Correct me if I’m wrong but I was under the impression that all this student loan stuff was recently overhauled so that its all in the Governments hands now, and I believe part of it was loan forgiveness after a certain number of years and/or public service.
*edit
And I'd like to point out that the bimbo in question is making 22 bucks an hour as a photog assistant. Thats better than what the airline I work for starts people at by a fair amount. Hell, I would have to guess I was employed for a good couple years before I hit 22 bucks an hour. She didn’t have to rack up 100,000 in school debt to make 22 an hour. She could have gotten a technical degree in 18 months for a couple grand at the right school and be way ahead. Again, individual poor life choice /= my problem.
/rant
 
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dante

Unabomber
Feb 13, 2004
8,814
9
looking for classic NE singletrack
Don't get me wrong, businesses should be held to at least the same standard. Gov't bail out of big banks while letting individuals hang out = BS. I think thats why these individuals don't care. They see big banks getting away with behavior that while it might not have been illegal, it certainly should be, so people just say "fvck em". That doesn't make an individuals actions like walking away from a contract right.
It makes it *as right* as a corporation walking away from a contract, whether it's a labor contract, commercial mortgage contract, or any other of the myriad of reasons companies have defaulted on their obligations. Until CEOs and all stockholders (owners) of a company are held personally liable for the actions of that corporation, I don't see any difference between companies defaulting on their obligations and borrowers walking away from their mortgages. It's a financial decision, and everyone has to act in their own best interest.

Yea, as a matter of fact I have, twice (2 homes) and trust me, as a blue collar guy with a technical degree its not exactly easy reading. But I knew exactly what the terms of my loan were and bought a home I could actually afford under those terms in spite of the lenders trying to push me into fancy balloon or other shifty loans because I (mostly) understood them. I managed to figure out all by my own undereducated self that they were potential bull sh*t so I have no sympathy at all for people who were buying houses as get rich schemes or using them as ATM’s or just flat out didn’t understand or do the math on what they could afford and/or lost when the bubble burst.
Yup, and I also have zero sympathy for banks who pushed those no-doc liar Alt-A loans, Option ARMs, Balloon mortgages, or any other crap on people and then got burned for it.

Face it, a mortgage contract is just like any other contract, and there are penalties spelled out for not fulfilling your obligations. If you live in a non-recourse state, the obligation the borrower has is to pay the mortgage each month, and if they don't the bank receives the house as payment. It's just too bad the banks didn't bother to actually require a significant enough downpayment to protect themselves, or do *any* diligence on the borrower. But hey, they're the ones that wrote up the contract, so fvck 'em.
 

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
I don't see any difference between companies defaulting on their obligations and borrowers walking away from their mortgages. It's a financial decision, and everyone has to act in their own best interest.
the way i read this is morality/ethics do not come into play. in fact, they shouldn't be considered, for they can make matters rather inconvenient.

and if a company can do it, and individuals can do it, then the state isn't far behind.
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
51,745
4,661
In a van.... down by the river
the way i read this is morality/ethics do not come into play. in fact, they shouldn't be considered, for they can make matters rather inconvenient.
IMO in a financial contract they don't, really. As long as you abide by the terms of the contract... why should it be considered immoral/unethical in ANY way - as long as you're abiding by the terms of the contract?

and if a company can do it, and individuals can do it, then the state isn't far behind.
You'd be *really* naive to think the state doesn't realize they too can throw in the towel. History is chock full of states that have...
 

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
15,854
2,090
Colorado
The US won't ever default... It will just print copious amounts of cash to pay it's debts. Waimar Republic here we come!
 

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
15,854
2,090
Colorado
Yup, the smartest investors in the world think that this is going to happen, and that's why the 10y treasury note is currently predicting <3.3% annual inflation for the next 10 years. RUN FOR THE HILLS!!!! :panic:
The smartest investors in the world also didn't think the housing bubble would pop, or that Lehman or Bear would go down...
 

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
15,854
2,090
Colorado
Not so sure about Waimar...... Zimbabwe maybe? :think:
Know your history. It's one of the reasons why Hitler was able to take power after WW1.



By late 1923, the Weimar Republic of Germany was issuing two-trillion Mark banknotes and postage stamps with a face value of fifty billion Mark. The highest value banknote issued by the Weimar government's Reichsbank had a face value of 100 trillion Mark (100,000,000,000,000; 100 billion on the long scale).[9][10]. At the height of the inflation one U.S. dollar was worth 4 trillion German marks. One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.28×1019, or 33 quintillion) Marks.[11]
 

dante

Unabomber
Feb 13, 2004
8,814
9
looking for classic NE singletrack
The smartest investors in the world also didn't think the housing bubble would pop, or that Lehman or Bear would go down...
The problem I have with the "OMFG inflation is going to hit" argument is that it is an emotional response, not a rational one. The government is spending a lot of money, therefore inflation *must* go up. There are plenty of examples of when this hasn't happened (fast forward a few years from your Weimar example to when Hitler was in power before WWII, and embarked on a spending program that dwarfed the Weimar gov't, or Japan in the 1990s that ended up with a mountain of debt but no inflation), but the gold bugs and lately the far right, seem determined to claim that it is an absolute certainty. Basically when Glenn Beck is telling me one thing, and the purchasers of US Treasuries are telling me something else, it's not really that hard to figure out who I'm going to listen to. (setting aside the fact that gold is a HORRIBLE hedge against inflation, as anyone who bought gold between 1980 and 1982 can attest)

Right now the signs point to either deflation or disinflation (a nice happy way of saying deflation, or at the very least no inflation), or at least that is the primary concern of the Fed. The housing market is deflating, and there's no sign AT ALL that it's going to come back any time soon. Oil is deflating, although it's volatile enough that it's not exactly a very good barometer. M3 is contracting at 10% / year. That is a REALLY bad sign. Combine that with the fact that the GOP is going to resist any and all calls to fight deflation (looser monetary supply, lowered lending standards, additional stimulus spending) and you have an "I win or you lose" scenario; If inflation hits, the US Gov't has the tools to fight it. They may be unpopular, but the government can raise interest rates, cut spending (which it's already looking at doing), raise lending / capital requirements (which it's already doing) at major banks, etc.

If deflation hits, we are PHUCKED with a capital PH. There's no way in hell the GOP is going to allow another stimulus package, or any additional government spending, or borrowing, or whatever else is needed to increase M3. It would be political suicide for the Dems to try it. One only has to look back at the political discourse on The Great Depression to see that the political parties are *still* blaming the other for it. The Democrats place the blame for the "double-dip" recession in 1936/37 on the fact that the Republicans insisted on greater banking reserves (pulling money out of circulation) and cutting government spending (just like they are now), while the GOP claims that FDR's spending policies caused/extended The Depression. No one is able to stop and take an objective look at it without it being politicized by one side or the other.

So yeah, if I had to place money on one side or the other, and knowing that we have the tools (politically) to fight inflation but not deflation, guess which side I'd be on.......
 
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KavuRider

Turbo Monkey
Jan 30, 2006
2,566
3
CT
I do think that the incessant cries of "we're phucked" in regards to the economic future of this country is one of the big reasons why people are just walking away from their debt.

I mean, if what dante says is true, and we really are screwed, then what will it matter?
 

dante

Unabomber
Feb 13, 2004
8,814
9
looking for classic NE singletrack
^^^ Keep in mind "phucked" is relative. Even during the "Great Depression", the worst financial crisis in our country's history, unemployment only reached 25%, meaning that 75% of the nation's adults were employed. Those people had jobs, paid their mortgages, bought food, cars, etc. It was not a Zimbabwe-style collapse, with unemployment reaching 94%!!

Some food for thought, cartoons from the Great Depression that could just as easily be printed in the WSJ today...





 

KavuRider

Turbo Monkey
Jan 30, 2006
2,566
3
CT
^^^ Keep in mind "phucked" is relative. Even during the "Great Depression", the worst financial crisis in our country's history, unemployment only reached 25%, meaning that 75% of the nation's adults were employed. Those people had jobs, paid their mortgages, bought food, cars, etc. It was not a Zimbabwe-style collapse, with unemployment reaching 94%!!
Thanks dante :thumb: