# Reforming Student Loans



## dancingalone (Jun 2, 2010)

http://finance.yahoo.com/college-ed...udents-are-buried-in-debt?mod=edu-collegeprep

This is a rather sad story.  Short version:  young lady borrows almost $100,000 to attend NYU to study a major of 'religious and women's studies'.  Now she is working and having difficulty making ends meet even while her loan payments are on deferment.

There's a lot going on with this that might be interesting to discuss.

1) Should banks and lenders be more selective with their student loan underwriting to make sure the client has a good prospect of repayment, even if that means adding the studied major in as an underwriting metric?  Should the federal government add tighter loan guidelines along the same vein.

2) What can be done to make the entire cost of education more transparent to naive people like this young lady and her mother?  Would they have benefited from a spreadsheet comparing the costs between NYU and a more affordable alternative like one of the SUNY schools?  We require food companies to print labels that indicate the nutritional content of their food.  Maybe something similar for the higher education sector is called for?

3) Finally, should college be de-emphasized in the US?  We have hundreds of colleges and universities all fighting hard for their tuition dollars, often with elaborate relationships with the federal financial aid system.  Have we reached the breaking point where too many people who have no business attending college are?  What is the answer if so?


----------



## Blindside (Jun 2, 2010)

I'm sorry, but even I figured out when I was 18 that really expensive colleges weren't in the budget, and that my career would have to pay back my loans.

Its on the head of the borrower, we aren't talking about paying for a heart transplant here.


----------



## dancingalone (Jun 2, 2010)

Blindside said:


> Its on the head of the borrower, we aren't talking about paying for a heart transplant here.



That's true enough, but the federal student loan programs creates a distortion in the market for education.  When you can easily receive tens of thousands of dollars in loans to study something that appears on the face to be impractical and without income producing potential, there's something wrong with the system itself.

Loans are being made without considering the ability to repay at all.  It's almost like the subprime mortgage crisis we just had.


----------



## tellner (Jun 2, 2010)

The reforms currently making their way through Congress will help. The only reason private banks are involved in the process was hard-core arm-twisting lobbying by the banking industry a couple Administrations back. They insinuated themselves in as a very high-priced middleman continuing the pattern of wasting public money by shoveling it into private hands at an obscene markup. Cutting out a couple layers of middlemen with money wasted in profits at each stage will lower the cost of student loans. 

The other part is harder. We have become a nation which exports its jobs and has explicit policies in place to suppress wages. Every time the economy starts generating jobs and worse, raising wages, Volcker or Greenspan has been there to "curb wage inflation" by creating a mini-recession.


----------



## Big Don (Jun 2, 2010)

How about something really simple, automatic payments deducted each pay period from the graduate's bank account?


----------



## dancingalone (Jun 2, 2010)

tellner said:


> The reforms currently making their way through Congress will help. The only reason private banks are involved in the process was hard-core arm-twisting lobbying by the banking industry a couple Administrations back. They insinuated themselves in as a very high-priced middleman continuing the pattern of wasting public money by shoveling it into private hands at an obscene markup. Cutting out a couple layers of middlemen with money wasted in profits at each stage will lower the cost of student loans.



This might address some of the administrative cost of loans (but I have my doubts).  I was really thinking more of the problems resulting from the student loans being so freely available however.  My feeling is that some tightening of the standards for underwriting should be made to better reflect the credit risk.  Since the federal government is the guarantor for many if not most student loans, there's little incentive for the lenders to take the loan process seriously - they just hand it out like candy.  




> The other part is harder. We have become a nation which exports its jobs and has explicit policies in place to suppress wages. Every time the economy starts generating jobs and worse, raising wages, Volcker or Greenspan has been there to "curb wage inflation" by creating a mini-recession.



A new thread might be better for this discussion if you're interested in expanding further on your idea.


----------



## Empty Hands (Jun 2, 2010)

dancingalone said:


> Since the federal government is the guarantor for many if not most student loans, there's little incentive for the lenders to take the loan process seriously - they just hand it out like candy.



That may be true generally, but in this specific case only a small portion of her loans were federal.  The lion's share were private (unsubsidized).  I don't think it has so much to do with federal guarantee as it has to do with the fact that it is nearly impossible to discharge student loan debt.  It is one of the few debts that follow you through bankruptcy.  

More generally, I think the financial industry has realized that they can make a lot of money by ignoring risks they used to take seriously.  Even if the government doesn't bail them out when everything catches up to them, the individuals make a huge amount of money until that day.  Plus when everyone else is taking huge risks and making a lot of money, the company will not look kindly on risk-averse, lower profit managers.  We saw that just recently with the absurd leverage that financial companies were taking on with no thought to the future.


----------



## tellner (Jun 2, 2010)

dancingalone said:


> This might address some of the administrative cost of loans (but I have my doubts).  I was really thinking more of the problems resulting from the student loans being so freely available however.  My feeling is that some tightening of the standards for underwriting should be made to better reflect the credit risk.  Since the federal government is the guarantor for many if not most student loans, there's little incentive for the lenders to take the loan process seriously - they just hand it out like candy.


An old economics professor of mine did a lot of research on the student loan business. From what I remember of his results - years and years of data - it mirrored private vs. public health insurance. Overhead was over 30% in the privately-run programs, less than 5% in the publicly-run ones. Advertising costs and profits were zero in the public programs, high in the private ones. The real problem is one which we've seen with mind-numbing regularity in the mania for privatization. The savings are generally illusory. The process privatizes benefits, socializes costs and encourages risk since the government is underwriting but not regulating. 

A new thread might be better for this discussion if you're interested in expanding further on your idea.[/QUOTE]

Indeed. But it's the other half of the equation. From the 1940s to the late 1980s a college degree, let alone a graduate degree, gave people a very good shot at upwards economic mobility and entry into the middle class. That is no longer the case. Grants have disappeared to be replaced by ever higher interest-rate loans. Costs have risen far in excess of inflation. The chance of landing a job which will pay back the loan has dwindled.

It's easy and a damned lie to take the simple-minded, doctrinaire, movement-conservative Party Line and say it's the fault of the undeserving poor and capitalists who were just too damned nice to them. The real causes are structural and have been building for decades.


----------



## Carol (Jun 2, 2010)

I have a B.Mus. from Berklee College of Music and am trying to finish my B.S.I.T. at UMass Lowell.  

To date:  no loans, no money from mommy and (sadly) no tuition reimbursement.


----------



## Bruno@MT (Jun 3, 2010)

Apart from the cost of transportation (I commuted by train to and from college), food, writing materials, etc... my tuition cost my parents roughly 400 euros per year. That was for a Masters Degree in electronics at a good college.

Of course I live in an evil state where the cost for eduction is largely socialized. You should hang on to your 100K student loans until they can pry them from your cold, dead fingers


----------



## dancingalone (Jun 3, 2010)

Empty Hands said:


> That may be true generally, but in this specific case only a small portion of her loans were federal.  The lion's share were private (unsubsidized).  I don't think it has so much to do with federal guarantee as it has to do with the fact that it is nearly impossible to discharge student loan debt.  It is one of the few debts that follow you through bankruptcy.



I'm not necessarily advocating student loan debt dischargable through bankruptcy.  Especially those guaranteed by the government.  



Empty Hands said:


> More generally, I think the financial industry has realized that they can make a lot of money by ignoring risks they used to take seriously.  Even if the government doesn't bail them out when everything catches up to them, the individuals make a huge amount of money until that day.  Plus when everyone else is taking huge risks and making a lot of money, the company will not look kindly on risk-averse, lower profit managers.  We saw that just recently with the absurd leverage that financial companies were taking on with no thought to the future.



This is the exact aspect of the student loan industry I am concerned with.  I would like to see reform made so that they will consider risks appropriately.


----------



## dancingalone (Jun 3, 2010)

Bruno@MT said:


> Apart from the cost of transportation (I commuted by train to and from college), food, writing materials, etc... my tuition cost my parents roughly 400 euros per year. That was for a Masters Degree in electronics at a good college.
> 
> Of course I live in an evil state where the cost for eduction is largely socialized. You should hang on to your 100K student loans until they can pry them from your cold, dead fingers



You are paying for the full cost of the education, just not directly.  How much of your yearly income is drained away by your government to pay for this and other social services?


----------



## dancingalone (Jun 3, 2010)

Carol said:


> I have a B.Mus. from Berklee College of Music and am trying to finish my B.S.I.T. at UMass Lowell.
> 
> To date:  no loans, no money from mommy and (sadly) no tuition reimbursement.



After exhausting my trust fund from travelling around the world and studying martial arts for over 10 years, I used the last bit to attend university since it seemed that I needed to support myself.  Guess what?  I considered the cost of education since I was paying for it upfront with cash.  I didn't attend an expensive private school enrolling at the good old University of Texas, whose tuition at the time was about $1200 a semester due to partial funding from the state and before tuition deregulation.  I also studied a "practical" field, knowing I would need to start earning income right away after graduating.

It seems like you're much in the same book I was, Carol.  When you can conveniently dump all the costs away on some nebulous student loan, the immediacy of the situation is lost and you don't think about the huge sums you have to repay some day.


----------



## dancingalone (Jun 3, 2010)

tellner said:


> An old economics professor of mine did a lot of research on the student loan business. From what I remember of his results - years and years of data - it mirrored private vs. public health insurance. Overhead was over 30% in the privately-run programs, less than 5% in the publicly-run ones. Advertising costs and profits were zero in the public programs, high in the private ones. The real problem is one which we've seen with mind-numbing regularity in the mania for privatization. The savings are generally illusory. The process privatizes benefits, socializes costs and encourages risk since the government is underwriting but not regulating.



But no one said anything privatization.  Education is one of those cases where the government can and should be involved for a number of reasons, not the least of which is the societal desire to educate people.  I think governmental sponsored student loans are a very good thing.  It's the current execution of them that is faulty.  Uncle Sam should take a stronger role in promoting certain types of education that is needed:  perhaps capping the loans for relatively unneeded fields while subsidizing degrees in math, science, and engineering.  Law school loans should come at loan shark rates.  





tellner said:


> Indeed. But it's the other half of the equation. From the 1940s to the late 1980s a college degree, let alone a graduate degree, gave people a very good shot at upwards economic mobility and entry into the middle class. That is no longer the case. Grants have disappeared to be replaced by ever higher interest-rate loans. Costs have risen far in excess of inflation. The chance of landing a job which will pay back the loan has dwindled.



Degrees used to mean something.  Even if it was in a liberal art or a social science, you knew the graduate could read, write, and have a certain knowledge of the world and of society.  Not so true today.  Too many people who are not college material are attending the system, watering down schools and curricula.  I believe more of an effort to divert money from colleges and universities to technical and vocational training should be made, if the plan to do so is a good one.



tellner said:


> It's easy and a damned lie to take the simple-minded, doctrinaire, movement-conservative Party Line and say it's the fault of the undeserving poor and capitalists who were just too damned nice to them. The real causes are structural and have been building for decades.



The last sentence is true enough, but I really don't believe you have to frame this as a political argument.  The problem exists and it is not constrained to Dems and Repubs, and neither should be the solution to it.


----------



## Bruno@MT (Jun 3, 2010)

dancingalone said:


> You are paying for the full cost of the education, just not directly.  How much of your yearly income is drained away by your government to pay for this and other social services?



Yeah I did the math. Turns out that the entirety of my social contribution is lower than the price of just a decent US health insurance. On top of that I get free dental care, paid for education, almost zero medical co-payment and a temporary social safety net for if I ever get jobless. EDIT: I just checked, and it's about 13% of my gross income. That also includes pension plan payments.

Turns out that the above is fairly affordable once you cut out all the lawyers, the insurance company execs, stockholders and other people siphoning off the money that is supposed to work for your benefit. I am prepared to discuss the philosophical pros and cons of socialization as soon as the US manages to come up with a privatized system that enables all of the above at comparable prices. Until then: no contest.


----------



## dancingalone (Jun 3, 2010)

Bruno@MT said:


> Yeah I did the math. Turns out that the entirety of my social contribution is lower than the price of just a decent US health insurance. On top of that I get free dental care, paid for education, almost zero medical co-payment and a temporary social safety net for if I ever get jobless. EDIT: I just checked, and it's about 13% of my gross income. That also includes pension plan payments.
> 
> Turns out that the above is fairly affordable once you cut out all the lawyers, the insurance company execs, stockholders and other people siphoning off the money that is supposed to work for your benefit. I am prepared to discuss the philosophical pros and cons of socialization as soon as the US manages to come up with a privatized system that enables all of the above at comparable prices. Until then: no contest.



If you are really just paying 13% of your gross income for all those services, then it's readily apparent that you're being subsidized by the tax payments of others, Bruno.  It's surely not worth bragging about, although certainly that's a good deal for you while you can get it.

The Greeks have their own setup with lots of goodies.  That's not going so well for them right now and I'm already reading about similar strains in the PIGS countries.


----------



## Bruno@MT (Jun 3, 2010)

dancingalone said:


> If you are really just paying 13% of your gross income for all those services, then it's* readily apparent *that you're being subsidized by the tax payments of others, Bruno.  It's surely not worth bragging about, although certainly that's a good deal for you while you can get it.
> 
> The Greeks have their own setup with lots of goodies.  That's not going so well for them right now and I'm already reading about similar strains in the PIGS countries.



Those are bold words. I have a decent middle class income. I am above the median pay range. Ergo it is not me who is being supported. Middle class is supporting the others. But even that I don't mind. Because I support the others and still pay less than you. That is harnessing the economics of scale while preventing 3d parties from leeching money.

But do you have any idea how much of you money is siphoned off to pay for lawyers, administrative people, insurance company cost + profits? A doctors visit over here costs 22,7 euros for a consultation, and that is without the subsidizing. I get a refund for 18 euros or so. given the average length of a doctors visit + the administrative details, do you really think a doctors visit should cost much more? Do you really think getting a couple of stitches and an X ray should cost hundreds of dollars or even more?

Far from being supported by others, I simply benefit from the fact that no scumbags are getting rich off payments that I would have to pay in the US because the medical industry is colluding with the insurance providers.

And the benefit works the other way too: because health care is costs little, here, noone will sue another because of a sprained ankle or such things. Again -> less money to lawyers or expensive insurance. It is also very rare for doctors to be sued here -> doctor does not need expensive CYA insurance for which he has to amortize the cost over his patients.


----------



## Grenadier (Jun 3, 2010)

Don't go to a school that you cannot reasonably afford.  Furthermore, don't take out more loans than you can expect to pay back, plain and simple.  

If you absolutely must go to an expensive school, then it's up to you to secure the money.  There are ways, such as scholarships, ROTC, etc., that will allow you to pursue your degree.  

While some folks throw barbs for suggesting such a thing, there is no reason why someone can't go to a reasonably priced state school for a degree that doesn't give you as good of a paying job, versus paying 30K+ / year to attend a private school.  

I've seen some kids go to Ivy League schools for 4 years, get their degrees in ethnic studies, and come out owing 150K+ in loans, and find themselves facing a large debt, and poor job prospects.  They could have gone to any number of inexpensive state schools nearby, and come out with just as good or poor, of a pool of potential jobs, as their Ivy League counterparts did.  

In the end, employers look at your GPA, your test scores, your work experience, and your recommendations.  As long as you come from an accredited place, the school prestige doesn't make that much of a difference.  




Big Don said:


> How about something really simple, automatic payments deducted each pay period from the graduate's bank account?



Actually, there are incentives in place to allow the loan corp. to go through automated bank drafts.  I have this on my loans, and as agreed to, the loan company that I use, dropped the interest rates by a quarter point.  

This works fine for people who honestly intend to pay back the loan, but for those who don't, they would simply close the bank account.


----------



## CoryKS (Jun 3, 2010)

She pursued a worthless degree with a steep price tag and racked up enormous amounts of debt to do it. I assume that with each loan the terms were discussed so I don't see why this is a cause that requires "reform", unless we are now viewing college-bound students as the intellectual peers of payday cash loan recipients. Maybe the real reform should be to encourage colleges to reduce the markup on the quilted two-ply they are selling.


----------



## dancingalone (Jun 3, 2010)

Bruno@MT said:


> Those are bold words. I have a decent middle class income. I am above the median pay range. Ergo it is not me who is being supported. Middle class is supporting the others. But even that I don't mind. Because I support the others and still pay less than you. That is harnessing the economics of scale while preventing 3d parties from leeching money.



I am merely going by your own words, Bruno.  You say you pay 13% gross for education, health care, and your safety net which I imagine includes unemployment insurance and other welfare measures like food aid, rent assistance, etc.

Meanwhile Belgium (you're Belgian, right?) has some of the highest tax rates on average workers.  http://www.justlanded.com/english/Belgium/Belgium-Guide/Money/Income-tax 

Something doesn't add up and I find it hard to believe that such a huge discrepancy can be explained by a wasteful US system as you posit.


----------



## dancingalone (Jun 3, 2010)

CoryKS said:


> She pursued a worthless degree with a steep price tag and racked up enormous amounts of debt to do it. I assume that with each loan the terms were discussed so I don't see why this is a cause that requires "reform", unless we are now viewing college-bound students as the intellectual peers of payday cash loan recipients. Maybe the real reform should be to encourage colleges to reduce the markup on the quilted two-ply they are selling.



Well, the US high school system which is funded by state and federal money is geared to encourage students to attend college.  I think there is some room in there for better disclosures of financial costs of attending college as well as the near-future impact of students considering the system pushes students to college that may be better served by another path.

When you have people who say they would happily return their college education if they could, to me that indicates the experience is overly saturated and a return to basics is in order.  Since the US federal financial aid system is a major contributor to this problem, it's not unreasonable to think that some reform should start in that quarter.


----------



## Empty Hands (Jun 3, 2010)

dancingalone said:


> Even if it was in a liberal art or a social science, you knew the graduate could read, write, and have a certain knowledge of the world and of society.  Not so true today.  Too many people who are not college material are attending the system, watering down schools and curricula.



First: how do you know that's true?  Second: everyone attends because they have no choice.  Industry has gone credential mad.  Do you know that almost every listing for receptionists, assistants (executive or otherwise), and administrative assistants (secretaries) requires a degree?  These are not very well paying jobs, either.  You need a college degree now to do jobs that used to require a high school diploma, if that.  And they pay less to boot.  

I don't think you can claim it's because educational standards have lowered, either.  High school graduation rates and certainly college attendance rates are higher than they were 30 years ago, and much higher than 50 years ago.  Curricula have become more diverse and more demanding.  It is a myth that the 50's were an educational golden age.


----------



## Empty Hands (Jun 3, 2010)

dancingalone said:


> This is the exact aspect of the student loan industry I am concerned with.  I would like to see reform made so that they will consider risks appropriately.



I guess the point I'm trying to make is that the entire financial industry has gone down this path.  The entire financial industry is not federally subsidized.  Therefore any move to combat this culture of risk has to go beyond ending or tightening federal subsidies.

Part of it has to be making the financial companies pay when their risks blow up in their faces.  They can't expect to privatize the profits and socialize the risk - although they have bought that for themselves.  Thus campaign finance reform has to be part of the solution, or the companies just buy themselves more favorable rules.

A fine line has to be walked though.  Federal bank bailouts prevented our recent recession from becoming a depression.  I'm not sure where the balance lies, or what would be most effective.


----------



## dancingalone (Jun 3, 2010)

Empty Hands said:


> First: how do you know that's true?



By participating in interviews and secondary resume screening (after HR sifts through the first wave).  Perhaps I am becoming jaded, but I am less and less impressed by college graduates with each year, even if some of them came from respected schools.  I have worked in the banking and legal fields to give you a frame of reference.



> Second: everyone attends because they have no choice.  Industry has gone credential mad.  Do you know that almost every listing for receptionists, assistants (executive or otherwise), and administrative assistants (secretaries) requires a degree?  These are not very well paying jobs, either.  You need a college degree now to do jobs that used to require a high school diploma, if that.  And they pay less to boot.



I agree.  How do you turn back the clock?  



> I don't think you can claim it's because educational standards have lowered, either.  High school graduation rates and certainly college attendance rates are higher than they were 30 years ago, and much higher than 50 years ago.  Curricula have become more diverse and more demanding.  It is a myth that the 50's were an educational golden age.



Perhaps I misspoke.  It's the quality of the masses of college students that has declined.  To be somewhat harsh, there's a saying about 'garbage in, garbage out'  that applies here.  I think the Europeans actually do this better where they have viable vocational school tracks, and I thought there was a movement to emulate them, but perhaps not.


----------



## Empty Hands (Jun 3, 2010)

Grenadier said:


> As long as you come from an accredited place, the school prestige doesn't make that much of a difference.



Generally I agree, but there are still many jobs and industries where it matters a lot.  Finance and law, for instance.


----------



## Empty Hands (Jun 3, 2010)

dancingalone said:


> I agree.  How do you turn back the clock?



I don't know.  Generally, companies demand the credential because they can, and it acts as an easy, thought-free screening mechanism.  Maybe if the system was tightened and fewer people had degrees, it wouldn't be such an issue.  A lot of people would suffer in that transition though.

Perhaps rebuilding our industrial and manufacturing base could provide lucrative jobs for those not inclined to college.  To do that though, we have to get protectionist and reduce free trade to a minimum.  With our current political situation and the vested interests of so many companies with so much money in the current situation, I don't see that happening.  Campaign finance reform again, I suppose.  Keep the whores (politicians) and the Johns apart.


----------



## CoryKS (Jun 3, 2010)

dancingalone said:


> Well, the US high school system which is funded by state and federal money is geared to encourage students to attend college. I think there is some room in there for better disclosures of financial costs of attending college as well as the near-future impact of students considering the system pushes students to college that may be better served by another path.
> 
> When you have people who say they would happily return their college education if they could, to me that indicates the experience is overly saturated and a return to basics is in order. Since the US federal financial aid system is a major contributor to this problem, it's not unreasonable to think that some reform should start in that quarter.


 
The financial aid system is responding to demand.  I agree with you that the colleges are saturated with students who really don't belong there, but I don't think that targeting the aid will help until you get people to start thinking realistically about higher ed.  Otherwise we'll just see articles about people like this one who, rather than whining about how nobody told her that poor financial decisions and a joke degree would affect her future, would instead be whining about how they didn't get the opportunity to go to college because the big bad financial aid system denied them a loan.


----------



## dancingalone (Jun 3, 2010)

Empty Hands said:


> I don't know.  Generally, companies demand the credential because they can, and it acts as an easy, thought-free screening mechanism.  Maybe if the system was tightened and fewer people had degrees, it wouldn't be such an issue.  A lot of people would suffer in that transition though.
> 
> Perhaps rebuilding our industrial and manufacturing base could provide  lucrative jobs for those not inclined to college.  To do that though, we  have to get protectionist and reduce free trade to a minimum.  With our  current political situation and the vested interests of so many  companies with so much money in the current situation, I don't see that  happening.  Campaign finance reform again, I suppose.  Keep the whores  (politicians) and the Johns apart.



I'm all for education but it needs to be meaningful, particularly if it is funded by public money.  The type of training needed by society should be encouraged by a slotting system.  In other words, tie public grants and loans into degree and majors.   The number of slots for needed fields like medical training or engineering would be higher.  Fields in which we currently have a glut of people such as the law should have little to no availability through the financial aid program.  If you want to do it, but all means, but do it entirely without government money.

I won't get into free trade or campaign finance reform since those are big topics worthy of their threads.  I'm not at the polar extreme on either topic and would happily read any such discussion.


----------



## Bruno@MT (Jun 3, 2010)

*@dancingalone:*
Aye. We do pay a fair amount of tax. Sadly, competency in one area does not guarantee competency in other areas. Take an area the size of New York City. Split that in 3 states. Give each state a full blown government. Give the entire area also a full blown federal government. Then divide each state in provinces and give each of them a government. Then divide each province into many counties. Give each of those a local government...

Besides, there is 1 thing you have to understand to make sense of Belgian taxes: refunds. And before I continue, I know this is not the American way. It is just how our system works ok?

Everyone pays taxes based on the assumption that they have no property, and no responsibilities. When I lived at home and had no wife / kids / mortgage, I got no refund.

Then, as I got a mortgage, we got an annual tax refund. With each kid you get, your refund increases again. There are a multitude of other refunds that you get or don't get, based on your situation. For example, someone with 4 kids pays zero taxes.

As you can see, this changes the picture quite a bit. People here pay a significant amount of taxes, but also get a reasonable sum back in refund. As a result, not everyone pays the same amount. I agree that we can discuss this back and forth, but the main answer to your question is that when all is evened out, we pay less taxes than would appear at first glance (which is indeed among the highest in Europe).


----------



## Grenadier (Jun 3, 2010)

Bruno@MT said:


> Besides, there is 1 thing you have to understand to make sense of Belgian taxes: refunds. And before I continue, I know this is not the American way. It is just how our system works ok?
> 
> Everyone pays taxes based on the assumption that they have no property, and no responsibilities. When I lived at home and had no wife / kids / mortgage, I got no refund.
> 
> ...



Actually, that is quite similar to the American income tax system.  You get deductions for the above reasons as well, in addition for other reasons.


----------



## jks9199 (Jun 3, 2010)

Bruno@MT said:


> *@dancingalone:*
> Aye. We do pay a fair amount of tax. Sadly, competency in one area does not guarantee competency in other areas. Take an area the size of New York City. Split that in 3 states. Give each state a full blown government. Give the entire area also a full blown federal government. Then divide each state in provinces and give each of them a government. Then divide each province into many counties. Give each of those a local government...
> 
> Besides, there is 1 thing you have to understand to make sense of Belgian taxes: refunds. And before I continue, I know this is not the American way. It is just how our system works ok?
> ...


You miss an important difference: you're discussing an area the size of the state of Maryland, with a population of about 10.5 million (about twice Maryland's, or about half of NYC's).  And it's a rather more homogeneous population than any part of the US...

There are a lot of things that are much harder to carry out and apply in the US than in other parts of the world due to the very different structure, even as questionably-overstrong the federal government has become.

Our current college pricing system is broken, and the student loan issues are simply a symptom and reflection of that.  Schools have been known to raise prices not to be able to provide better services, but because if they're too inexpensive, they're perceived as being less good.  Schools are supporting large farm programs for professional sports, sometimes at the expense of the education programs.  And there is an over-emphasis on the need to go to college...


----------



## RandomPhantom700 (Jun 3, 2010)

Big Don said:


> How about something really simple, automatic payments deducted each pay period from the graduate's bank account?


 
You're assuming that most of the graduates in this position have the money in their accounts to pay back the loans.  We're not talking about creditor evasion here, Don; most of the graduates, myself included, would love to have available money to repay.  

The fact of the matter is that graduates such as myself agreed to the loans in an era when a degree meant you'd get the job you needed after graduation.  Now enter 2008, when the market takes a crap and graduates such as myself are just entering the job market.


----------



## Makalakumu (Jun 3, 2010)

dancingalone said:


> The Greeks have their own setup with lots of goodies.  That's not going so well for them right now and I'm already reading about similar strains in the PIGS countries.



That's propaganda.  In the US (and now worldwide), we are being fed a line that states that the PIGS are in trouble because of their social services.  The only thing that can help are austerity measures that feed more and more money into the banks.

The reality of what is happening in those countries and our own, has little to do with the services.  It was caused by the rating of derivative junk as AAA and it's trading on the open market as real assets that supposed to back up the money being used on these services.  Then, the agencies that rated them and sold them, conspired with the central banks, and naked short sold them in order to reap a profit on the way down by cashing in on insurance policies and bailout money.  

It's a total scam in which paper with a supposed value is being used to transfer items of real value into the hands of the few.  The cost of this is being monetized as debt and THAT is what the government's are REALLY struggling with.  So, when the financiers and their corporate media mouth pieces are saying that all of these problems are the result of runaway socialism, it's total ******** propaganda.  

We dealing with unprecedented financial shenanigans that are being wrapped up in lies in order to further game the system.


----------



## dancingalone (Jun 3, 2010)

maunakumu said:


> That's propaganda.  In the US (and now worldwide), we are being fed a line that states that the PIGS are in trouble because of their social services.  The only thing that can help are austerity measures that feed more and more money into the banks.
> 
> The reality of what is happening in those countries and our own, has little to do with the services.  It was caused by the rating of derivative junk as AAA and it's trading on the open market as real assets that supposed to back up the money being used on these services.  Then, the agencies that rated them and sold them, conspired with the central banks, and naked short sold them in order to reap a profit on the way down by cashing in on insurance policies and bailout money.
> 
> ...



Well, I actually work in the financial sector, so what you are arguing isn't new to me.  There's even a certain level of truth to it.

But you're going overboard with this type of world view.  Like all sovereign entities (including the US), the PIGS countries don't have enough cash flow on hand to service their outgoing obligations, so they are subject to vagaries of bond offerings and any pressures applied through market actions, 'sinister' or not.  

It's a fundamental truth that the PIGS are in trouble financially because they SPEND more than they have on hand, and in fact they spend more than their revenues suggest they can afford.  That is not propaganda at all.


----------



## Makalakumu (Jun 3, 2010)

Cut the military budget by 90%.  Invest half the money into Universal Health Care and as much Education as people want and give the other half back to the people.  Watch as our country flourishes again.  Simplistic, yes, but that is only because we need to reform our financial system and deal harshly with the financial terrorists who control everything.  

Anyway, student loans are the closest thing we have to debt slavery.  They cannot be discharged by any means and they ensure that a person has to do what they are told in order to hold a job.  Don't step out of line, don't protest anything, don't make waves, don't try to change anything.  They are a measure of how much the Elite fear an educated public.  

Sometimes, I think US graduates should take their degrees and move to countries where the jobs are, sticking the criminal, predatory, and elite controlled government with the bill.  Take what you want and screw the rigged system that delivered it.


----------



## CoryKS (Jun 3, 2010)

maunakumu said:


> Cut the military budget by 90%. Invest half the money into Universal Health Care and as much Education as people want and give the other half back to the people. Watch as our country flourishes again. Simplistic, yes, but that is only because we need to reform our financial system and deal harshly with the financial terrorists who control everything.
> 
> Anyway, student loans are the closest thing we have to debt slavery. They cannot be discharged by any means and they ensure that a person has to do what they are told in order to hold a job. Don't step out of line, don't protest anything, don't make waves, don't try to change anything. They are a measure of how much the Elite fear an educated public.
> 
> Sometimes, I think US graduates should take their degrees and move to countries where the jobs are, sticking the criminal, predatory, and elite controlled government with the bill. Take what you want and screw the rigged system that delivered it.


 
Wow, that's a whole lot of crazy in a few short paragraphs.


----------



## dancingalone (Jun 3, 2010)

maunakumu said:


> Cut the military budget by 90%.  Invest half the money into Universal Health Care and as much Education as people want and give the other half back to the people.  Watch as our country flourishes again.  Simplistic, yes, but that is only because we need to reform our financial system and deal harshly with the financial terrorists who control everything.



I rather see the DOD award contracts to US companies based on a semi-competitive basis so long as the bulk of the manufacturing is done in the United States.  We need to regain our manufacturing base again with the accompanying jobs.



> Anyway, student loans are the closest thing we have to debt slavery.  They cannot be discharged by any means and they ensure that a person has to do what they are told in order to hold a job.  Don't step out of line, don't protest anything, don't make waves, don't try to change anything.  They are a measure of how much the Elite fear an educated public.



Why should they be dischargeable if they were made with US backed monies?  I don't want my tax dollars to disappear in bankruptcy court.



maunakumu said:


> Sometimes, I think US graduates should take their degrees and move to countries where the jobs are, sticking the criminal, predatory, and elite controlled government with the bill.  Take what you want and screw the rigged system that delivered it.



Easier said than done.  Many European countries have laws that make it difficult for someone to just pack up and move there and start working if you're not 1) a citizen of an EU nation or 2) related or married to an EU nation citizen.  Australia is about the only 'western' type democracy that has relatively easy immigration.

Of course, if you want to move to Panama, I understand there's somewhat of a 'gold' rush going on right now, so that might be a good choice.  The jobs seem to be flowing to India & China, but I am not sure the average American would want to move there and work for the wages paid locally there.   People who think creatively might be able to channel their American educations and backgrounds into a good situation though.


----------



## Makalakumu (Jun 3, 2010)

dancingalone said:


> It's a fundamental truth that the PIGS are in trouble financially because they SPEND more than they have on hand, and in fact they spend more than their revenues suggest they can afford.  That is not propaganda at all.



The fact that they are now spending more then they have on hand is not questioned.  It's how they got there.  

Let me give you a real life example.  Here in Hawaii, we have a gigantic state run department that controls every school in the state.  This is similar to how many of the countries in question run things, so it's a good analogue.  When it comes to the benefits offered it's workers, there are pools of money that go into insurance, retirement, and operating expenses.  

The operating expenses are payed out, but the insurance and retirement expenses can be invested and grown in order to protect against losses from inflation.  What happened here and in all of these countries is that these pools of money were siphoned off when their managers were sold AAA derivatives that were in reality junk.  When the hedge funds naked short sold their own products, they crashed the value, cashed in on the insurance policies, terrorized the government to bailout the insurance wings of the banks, and left gaping holes in the accounts that were supposed to take care of workers benefits.

In terms of real money, what this looks like for the HI DOE budget is that out of 2.4 billion, one billion now goes to service the debt that was created by this financial fraud.  All of these government agencies are in the same boat because they did the same things, the money was there to pay for these benefits and then it was gone.  

We aren't being told what really happened to the money.  We ARE being told that the government is spending more then it has.  This is true.  In addition, we ARE being told that the workers are to blame because they and everyone in the society were living beyond their means.  That is a lie.  It is propaganda that hides what really happened to the money.


----------



## Makalakumu (Jun 3, 2010)

CoryKS said:


> Wow, that's a whole lot of crazy in a few short paragraphs.



Crazy is true and it's also what we need.  The system we have is FAR crazier and will destroy our country.


----------



## Makalakumu (Jun 3, 2010)

dancingalone said:


> I rather see the DOD award contracts to US companies based on a semi-competitive basis so long as the bulk of the manufacturing is done in the United States.  We need to regain our manufacturing base again with the accompanying jobs.
> 
> 
> 
> ...



All good points and it's why I think we should just socialize the cost of education.  Trying to game a system that is trying to game you ultimately is a lose lose situation.  I think that if our society supported people to educate themselves to whatever level they wished without having to worry about loans, we'd create a new American Renaissance.  Think about the productive/creative capacity that is lost by denying education to those who can't pay?  Society supporting education is one of the few collective economic policies that I support.


----------



## dancingalone (Jun 3, 2010)

maunakumu said:


> The operating expenses are payed out, but the insurance and retirement expenses can be invested and grown in order to protect against losses from inflation.  What happened here and in all of these countries is that these pools of money were siphoned off when their managers were sold AAA derivatives that were in reality junk.  When the hedge funds naked short sold their own products, they crashed the value, cashed in on the insurance policies, terrorized the government to bailout the insurance wings of the banks, and left gaping holes in the accounts that were supposed to take care of workers benefits.



You are zeroing in on the recent financial swap scandals as the primary cause for the weakness of pension funds, retirement plans, sovereign solvency, etc.  This can't be further from the truth.  

It's been well known that all of those entities were already in financial difficulty even before the current recession hit.  Aging subscribers/citizens simply consume more and more health services as they age and obviously they're eligible for whatever social net payments exist such as Social Security or whatever the local European equivalent is called.  The total sum of expected payout obligations exceeded the revenue coming in.  All this has been expected even without the financial scenanigans you harp on.



maunakumu said:


> In terms of real money, what this looks like for the HI DOE budget is that out of 2.4 billion, one billion now goes to service the debt that was created by this financial fraud.  All of these government agencies are in the same boat because they did the same things, the money was there to pay for these benefits and then it was gone.



What are Hawaii's demographics?  I had understood they pretty much follow the same California/NY recipe of overly generous benefits without the financial strength to back them up, especially in times of recession and exacerbated by the state's aging populace.  Under those situations it would be no surprise that they are in trouble today without blaming it on the investment banks.

You only have to look at the Keiki Care debacle for a microcosm of what happens when you offer a free lunch.  People tend to take you up on it, and SURPRISE!  you tend to run out of money.


----------



## CoryKS (Jun 3, 2010)

maunakumu said:


> All good points and it's why I think we should just socialize the cost of education.


 
Why, so we can all pay for this girl's stupid life choices?  She got a degree in frickin' religion and women's studies, why would I want to help her pay for that?  Tell you what - I'll buy some fries from her.


----------



## dancingalone (Jun 3, 2010)

maunakumu said:


> I think that if our society supported people to educate themselves to whatever level they wished without having to worry about loans, we'd create a new American Renaissance.  Think about the productive/creative capacity that is lost by denying education to those who can't pay?  Society supporting education is one of the few collective economic policies that I support.



I am in favor of widely available education too, but it needs to be connected with the current needs of the country.  And it needs to be practical.  We shouldn't make kids who want to work in oil fields take courses in history and art.  

I would like the idea of a new shortened bachelor's degree that is strictly about courses in one's major with no general education component.  Perhaps these degrees could replace the existing Associate's degree which is largely meaningless as they are designed today, with the primary purpose of being a transfer credential into a 4 year program.


----------



## Makalakumu (Jun 3, 2010)

CoryKS said:


> Why, so we can all pay for this girl's stupid life choices?  She got a degree in frickin' religion and women's studies, why would I want to help her pay for that?  Tell you what - I'll buy some fries from her.



There aren't a lot of people who actually want to study those things and you'd be surprised at how these types of education create benefits for yourself.  

If you think about this from an investment/return point of view, investment into education brings some of the highest returns as far as real productive value is concerned.  It's far better then military which only produces negative returns and acts as a drag on society.  

An investment on a degree of which you think is worthless produces more value then investment in a bomb or a missile.  It's a matter of priorities.  I'm always going to support a person's desire to better themselves and I think society should as well.


----------



## Makalakumu (Jun 3, 2010)

dancingalone said:


> I am in favor of widely available education too, but it needs to be connected with the current needs of the country.  And it needs to be practical.  We shouldn't make kids who want to work in oil fields take courses in history and art.
> 
> I would like the idea of a new shortened bachelor's degree that is strictly about courses in one's major with no general education component.  Perhaps these degrees could replace the existing Associate's degree which is largely meaningless as they are designed today, with the primary purpose of being a transfer credential into a 4 year program.



Yeah, great idea!  The only problem I foresee is giving the government too great of a hand in choosing for a student.  I foresee a system in which people choose how they want to be educated and society supports that individual's decision.  It's the best of both worlds, IMO, and actually increases liberty for all.


----------



## CoryKS (Jun 3, 2010)

maunakumu said:


> There aren't a lot of people who actually want to study those things and you'd be surprised at how these types of education create benefits for *yourself*.


 
That's because most people are sane enough to realize that they will ultimately have to pay for it, and that the degree isn't going to help them with that.  I bolded the last word because it is key - the benefits, such as they are, accrue to the person who holds the degree, so that person should be the one to pay for it.  



maunakumu said:


> If you think about this from an investment/return point of view, investment into education brings some of the highest returns as far as real productive value is concerned. It's far better then military which only produces negative returns and acts as a drag on society.


 
Sorry man, you're wharrgarbling again.  I am absolutely not going to discuss ROI with someone who considers student loans as a form of "debt slavery".  You absolutely have no idea what you are talking about.  



maunakumu said:


> An investment on a degree of which you think is worthless produces more value then investment in a bomb or a missile. It's a matter of priorities. I'm always going to support a person's desire to better themselves and I think society should as well.


 
I think you should give me $100,000.  I promise I'll better myself with it.


----------



## Makalakumu (Jun 3, 2010)

dancingalone said:


> You are zeroing in on the recent financial swap scandals as the primary cause for the weakness of pension funds, retirement plans, sovereign solvency, etc.  This can't be further from the truth.
> 
> It's been well known that all of those entities were already in financial difficulty even before the current recession hit.  Aging subscribers/citizens simply consume more and more health services as they age and obviously they're eligible for whatever social net payments exist such as Social Security or whatever the local European equivalent is called.  The total sum of expected payout obligations exceeded the revenue coming in.  All this has been expected even without the financial scenanigans you harp on.
> 
> ...



Again, it's more complicated then people simply using a service.  Also, the financial shenanigans that are happening now have simply taken other forms in the past.  For example, my state legislature is currently trying to find 25 million in off the book expenditures.  We've got government agencies in my state that haven't had a real audit since 1972.  So, yeah, it's not one thing like the swaps of these CDOs, it's a number of things that have built and built with the CDO swaps being the landslide that eventually broke the system.  

And there can be no doubt that they broke the system, our Auditor recently uncovered that the governor OKed a CDO swap in a retirement account to the tune of several billion dollars.  The account now has about 250 million in it.  The auditor was nearly fired and the case was quickly swept under the rug.

The idea of providing for the social wellfare with certain things is unrelated for the most part.  That's what people need to understand and THAT is what is being used to confuse people to transfer their tax moneys in Austerity Measures to pay off these fraudulent deficits.  This looks like a subject for another thread...


----------



## Makalakumu (Jun 3, 2010)

CoryKS said:


> That's because most people are sane enough to realize that they will ultimately have to pay for it, and that the degree isn't going to help them with that.  I bolded the last word because it is key - the benefits, such as they are, accrue to the person who holds the degree, so that person should be the one to pay for it.


 
Dude, people do not live in a disconnected world.  When one person in society gets a degree, that education benefits everyone around them because of what they can create with it.  When I said, "yourself" I meant *you*, because whether you like it or not, YOU are the indirect and direct beneficiary of other people's education.



CoryKS said:


> Sorry man, you're wharrgarbling again.  I am absolutely not going to discuss ROI with someone who considers student loans as a form of "debt slavery".  You absolutely have no idea what you are talking about.


 
That's your loss, braddah.  I understand this issue very well, but it's different then your understanding.  



CoryKS said:


> I think you should give me $100,000.  I promise I'll better myself with it.



Certainly.  I'll trade one missile for your education.


----------



## dancingalone (Jun 3, 2010)

Well, I never got the impression that Hawaii was a particularly well-governed state.  I think looking around the country, some states are in better shape than others, even with the current projected deficits.  You likely know which ones they are - they're generally the states that have resisted growing state programs, even during the good times.


----------

