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Old 03-28-2014, 09:59 AM   #1
217Bimmer
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Student loan bubble: when will it burst?

Do you think it will burst and when/what will cause it? What do you think the ramifications will be? Who here has loans and what is your plan for repayment? My brother in law and sister in law have over $130k in student loans, mostly from him going to law school. Their plan is to pay the minimum for 20 years or whatever it is and then it is forgiven.

It just doesn't seem sustainable that companies and the government are loaning out huge amounts of money of which people aren't paying back in a timely manner and may never pay back. These huge amounts of loans are falsely building up an economy of higher education. With this money universities are building huge new buildings to compete better for this loan money they get from students.

At some point these loans will stop being made and this revenue stream that all of these institutions rely on will disappear. It will most likely mean the collapse of many colleges.

To me, the biggest lie is that everyone needs to go to college. People in trades make really good livings doing very important work. And the fact that so many people are paying $20k-50k per year for the first two years of college where they could take the same basic level classes at a community college is just asinine and compounds the student loan issue.

What are your thoughts? I feel that it is a hopeless spiral that no politician wants to touch. Who wants to be known as the politician who took student loans away from people in need? As usual it will be left to the taxpayer to bail everyone out of the mess when it comes crashing down.
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Old 03-28-2014, 10:02 AM   #2
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I have no solutions, but I agree with just about everything you said. College is expensive BECAUSE of student loans.
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Old 03-28-2014, 10:05 AM   #3
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I agree with everything you said, it's only a matter of time before this goes bust just like housing did and this will be worse because even bankruptcy cannot take them away.

I have student loans but I have a job capable of supporting them. Little Johnny who was told to follow his dreams and go to a $50k a year art school is going to get fvcked.

I halfway blame the colleges for even offering those BS "degrees" but I understand that it's a business and they are in it to make money.
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Old 03-28-2014, 10:07 AM   #4
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In a purely economic sense, there has to be a point where high college prices reach a point of diminishing returns where a universities revenue actually decreases because they are pricing themselves out of the market.

Now, where that point occurs is up to speculation and probably entirely dependent on the school. It is pretty irrefutable, though, that the ease of obtaining a student loan (or loans) has driven the cost of college up dramatically.

Personally, I don't have any student loan debt (I'm lucky) but I know people that have tons and it's a major drag on them financially. Some realize it and strive to earn more money to cover the cost, others post on FB about forgiving all student loans ( )
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Old 03-28-2014, 10:15 AM   #5
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My loans are under 2% and I'm never planning to pay more than the minimum because of the low interest. I have better ways to make use of my money.

With my kids, I'll be highly recommending that they go to the school which offers the best financial package as to avoid any unnecessary debt. Unless you need a top tier education for some reason, find a school which relates to your area of study and go with one that is on the cheaper end of the spectrum for you.
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Old 03-28-2014, 10:16 AM   #6
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Imagine if colleges could only charge what people could pay? Those were the good old days, and they all seemed to be able to stay in business.

My #1 recommendation would be - community college for 2 years, ace everything, transfer.
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Old 03-28-2014, 10:19 AM   #7
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Imagine if colleges could only charge what people could pay? Those were the good old days, and they all seemed to be able to stay in business.

My #1 recommendation would be - community college for 2 years, ace everything, transfer.
That's not a bad idea, but depending on the person the first two years of college are good for making connections that pay off later on and after college (I know they did for me )
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Old 03-28-2014, 10:25 AM   #8
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It won't go bust. Nothing backed by the federal government will ever go bust (such as Stafford loans). They will just levy a tax on us to pay for it.

EDIT. They will say it is "too big to fail" and will label everyone opposed to it as "anti-education". Something along those lines.
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Old 03-28-2014, 10:26 AM   #9
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I have 280,000 and my wife has 250,000 in loans. BOOM.
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Old 03-28-2014, 10:27 AM   #10
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i blame it on the stupid kids, as you said most can go to a cc and get the basic core classes completed for a quarter of the cost. But these days everyone needs a fancy license plate that advertises where they went to school. As if the universities give two shits about YOU. They care about the money.

My cousin just finished at Uni of Delaware, he's in the hole for 120k. I'll be done in june, with not a cent owed to anyone. But i'm not in a big uni though, thankfully.
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Old 03-28-2014, 10:28 AM   #11
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I have 280,000 and my wife has 250,000 in loans. BOOM.
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Old 03-28-2014, 10:29 AM   #12
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I have 280,000 and my wife has 250,000 in loans. BOOM.
Lol

Have fun being in debt till you're dead
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Old 03-28-2014, 10:30 AM   #13
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I have 280,000 and my wife has 250,000 in loans. BOOM.


I hope either of you studied medicine, engineering, or law, or something that actually would pay off in the future. If not, i would get my ass off e46f and go find something to pay that **** off.
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Old 03-28-2014, 10:32 AM   #14
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I hope either of you studied medicine, engineering, or law, or something that actually would pay off in the future. If not, i would get my ass off e46f and go find something to pay that **** off.
Both went to medical school
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Old 03-28-2014, 10:36 AM   #15
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It is perfectly feasible for a 18-20 year old to pay for their own tuition at a CC by working a part-time minimum wage job. Then they can just transfer to a big name school and pay half the tuition cost it would have been had they went there all 4 years. Those 2 years could still end up being $100K in tuition/living expenses, however, depending on the school they choose to transfer to. I think one really has to evaluate their major and understand if the more expensive school would be worth it or if going to a state school would suffice. I was lucky enough to get grants for both undergrad and grad school although for the latter since I chose to move away from home I needed student loans to pay for my living expenses.
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Old 03-28-2014, 10:37 AM   #16
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I agree with everything you said, it's only a matter of time before this goes bust just like housing did and this will be worse because even bankruptcy cannot take them away.

I have student loans but I have a job capable of supporting them. Little Johnny who was told to follow his dreams and go to a $50k a year art school is going to get fvcked.

I halfway blame the colleges for even offering those BS "degrees" but I understand that it's a business and they are in it to make money.
this is a big concern. there is nothing of asset value. it's much like the credit card debt bubble, which is a whole other issue. when it is time to pay back the loan there is no house to take. they will have to start taking brains.

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I have 280,000 and my wife has 250,000 in loans. BOOM.
jesus! that takes some work! are you and your wife in medical school? i hope so because being a surgeon is about the only way you will pay it back.

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i blame it on the stupid kids, as you said most can go to a cc and get the basic core classes completed for a quarter of the cost. But these days everyone needs a fancy license plate that advertises where they went to school. As if the universities give two shits about YOU. They care about the money.

My cousin just finished at Uni of Delaware, he's in the hole for 120k. I'll be done in june, with not a cent owed to anyone. But i'm not in a big uni though, thankfully.
I wouldn't put all the blame on the kids. It's like the housing bubble. People were told they could afford these homes and were given the money without any thought on not paying it back. Kids are told they need to go to a 4 year college in order to get a good job and oh by the way here is a big chunk of money to pay for it and you won't have to think about paying it back for a long time. Can you really blame them for thinking of the best case scenario where they get a great job because of their degree and have no problem paying it off?
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Old 03-28-2014, 10:39 AM   #17
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Also, as an important note, the average amount of student debt per graduated student is around $29K which isn't HUGELY cumbersome, in my opinion. The concerning idea is that 10 years ago the average was around $18k.
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Old 03-28-2014, 10:41 AM   #18
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Quote:
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Also, as an important note, the average amount of student debt per graduated student is around $29K which isn't HUGELY cumbersome, in my opinion. The concerning idea is that 10 years ago the average was around $18k.
Thankfully I have no loans, my undergrad is 60k a year and law school is about 50k. That. Would. Suck.
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Old 03-28-2014, 10:48 AM   #19
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Also, as an important note, the average amount of student debt per graduated student is around $29K which isn't HUGELY cumbersome, in my opinion. The concerning idea is that 10 years ago the average was around $18k.
it's all fvcked up!!! less tax revenue is going to schools these days. this must be because our tax rates have gone down, right? WRONG tax rates are the same or higher, they have just shifted funding away from schools over to other bullsh1t programs and to make up this gap schools increase tuition, which is no problem because students can just qualify for student loans.

at some point we just need to have a mass execution of our politicians who are royally fvcking our country back into the stone age!!!
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Old 03-28-2014, 11:06 AM   #20
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I made sure I got a job that supports paying the student loan off. I tend to take bonuses, excess money, and tax refunds and dump as much as I can into the loan so it's gone faster.

The rest of the year I simply pay the minimum required for the loan. That way every single payment is on the principle and already past interest for the year. I should be done within a year or two.
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