[Boards: 3 / a / aco / adv / an / asp / b / bant / biz / c / can / cgl / ck / cm / co / cock / d / diy / e / fa / fap / fit / fitlit / g / gd / gif / h / hc / his / hm / hr / i / ic / int / jp / k / lgbt / lit / m / mlp / mlpol / mo / mtv / mu / n / news / o / out / outsoc / p / po / pol / qa / qst / r / r9k / s / s4s / sci / soc / sp / spa / t / tg / toy / trash / trv / tv / u / v / vg / vint / vip / vp / vr / w / wg / wsg / wsr / x / y ] [Search | | Home]

When will the student debt bubble burst and what will its consequences

This is a blue board which means that it's for everybody (Safe For Work content only). If you see any adult content, please report it.

Thread replies: 34
Thread images: 4

When will the student debt bubble burst and what will its consequences be?
>>
It isn't a bubble. It will not burst. There is no excess speculation driving the cost up and no assetts to give up if you default to cause it to burst.
>>
>>977974
Student loans are already backed by the government. So there is no vicious cycle of margining off the loans like the banks did in the housing situation.

A massive number of graduates need to default, massive like in the 100,000s. Then the government will lose expected income that will be noticeable. Then they will garnish wages of those 100,000s because you cannot default on government backed loans.

It will then become a California default situation where a private bank will then have to cover the debt impact of the government and the Fed would be faced with the impacts of having almost 0 loan rates and no way to pay off the debt the banks are covering.

So they might push then into negative interest rate territory like Swiss and Japan have been doing in hopes people spend more money and more of that tax trickles back into the government.

The implications for our dollar would be terrible. But it would bring in the tax the Fed needs to cover the loss when no one can pay the loans.
>>
>>977978
The speculation is a college degree will allow a person to get a well-paying job, which will then be able to pay off student loans plus interest. What happens when the job market becomes too saturated with college (happened before, pre-revolution Iran had tons of unemployed college grads because not enough jobs were available that need college grads)? If grads have no (well-paying) jobs, and cost of college keeps going up, we sooner or later will see a mass-default on student loans. Won't this have a massive effect on the economy?
>>
>>977984
The most noticeable consequence is that the government will cancel the subsidized loan program. This will severely cut college revenue and could potentially close lots of for profit colleges.
Then banks will step in and offer incredibly high risk loans to go to school.

Odds are people will just stop going to college and colleges will stop charging 250k for a 4 year program.
>>
>>977987
>Odds are people will just stop going to college and colleges will stop charging 250k for a 4 year program

Which University charges $250k for a 4 year program?

Average College debt in the US is ~$30k.
>>
It won't "bust" in the same way we saw the housing bubble bust.

Student loan debt will just eventually get to the point where there will be too many graduates with too much debt and little to no income to start paying back on them. Those people will live their lives in poverty.

Those loans are already guaranteed, so the money for this "bust" is already ear marked, and even expected.

The government will eventually be forced to just write it off. During that time, we'll have a lot of politicians running campaigns on student loan reform and loan forgiveness, but it will all be lip service and the cycle will start over again.
>>
>>977995
>Which University charges $250k for a 4 year program?
NYU. Over $50,000 a year with some of the most notoriously shitty financial aide in the country.
>>
>>977995
http://www.savingforcollege.com/tutorial101/the_real_cost_of_higher_education.php

Private schools are the real killer in college education.
>>
>>977999
>NYU. Over $50,000 a year with some of the most notoriously shitty financial aide in the country.

according to this it's not much at all.
http://www.nyu.edu/life/resources-and-services/nyu-studentlink/bills-payments-and-refunds/tuition-and-fee-rates/leonard-n--stern-school-of-business.html
>>
>>978004
You have to live somewhere too and eat. Many students get loans to pay for housing and of course living expenses.

We can argue about if going to school is a full time job, but in the end the cost to just go to NYU comes right up to 50k a year when you look at all the lesser known costs.
>>
>>977995

I assume he's exaggerating for effect, but out of state and for profit colleges can easily hit two to sometimes three times the average
>>
>>977974
>government backed investment
>price in orbit
>everyone convinced its a sure ticket to riches, so pay in spite of the exorbitant price
Yep looks eerily similar to the housing bubble.
>>
>>977974
It can't burst because the debt doesn't go away. Unless the government forgives them.
>>
>>978066
>2006
>>
>>978022
Only if you don't consider the most important parts of the housing bubble, namely mortgage-backed securities and forged credit ratings.
>>
>>977978
>people paying $150k to get college education that still doesnt guarantee them a job at mcdonalds so they go back to living with their parents who are paying the loans
>It isn't a bubble
ok obama whatever you say
>>
>>978004
NYU student here, when I graduate my total tuition cost is going to be somewhere in the 280K range, not counting any of the (fucking insultingly low) financial aid.

Afaik it's one of, if not the most, expensive school in the country.
>>
>>978418
What contagion is there when the bubble "bursts"? How would students defaulting on loans from the government cause a financial crisis? Especially considering there's nothing the government could take as collateral.
>>
>>977974
debt forgiveness for joining the military ;)
>>
>>977974
Hey guys. I have the choice of getting a proper education and being in debt for 2 ~ 4 years (depending on which jobs I can get after), or I could forgoe university and remain in my station in life.

I check the job postings on various websites and it seems money and adventure are just thrown at you for having a bachelors degree, whereas if you have no degree at all you're not even fit to work anything that isn't manual labour or retail.

Is this the great scam of the century? Be a skill-less wage-slave or get skills and spend a certain number of years in servitude paying off loans before you can finally shed your shackles.

And there are millions of people who get stuck in the endless pit of misery that is unpayable student loan debt.
>>
>>978456
if you are going to get a good major; and you are going to try your ass off for maximum GPA, meaningful student associations, connections with professors and classmates, etc. ; and you are going to care about each and every class and what knowledge you can gain from them

then i say go

if college is going to be a schedule and effort burden in addition to the financial burden, please go work and advance in life that way. you will even make money the whole time.
>>
>>978456
Go into business IT. My friend has an 80k job lined up after graduation doing IT audits for companies. He has like a C+ average.

But seriously though, you don't "spend a certain number of years in servitude". It's debt just like any other debt, and it's a good kind of debt (unless you get private loans). Unless you're the type who believes everyone with a mortgage is a slave, it's seriously no different.
>>
https://reason.com/archives/2015/05/22/is-the-student-loan-bubble-starting-to-p
>>
When the interest rate goes up
>>
>>978521
Student loan interest rates are already at 6%. It's not like they're low. The fed doubling the FFR isn't going to make it jump to 10%
>>
>>978439

sovereign debt bubble. Mass government default
>>
File: 1422038194032.png (444KB, 465x455px) Image search: [iqdb] [SauceNao] [Google]
1422038194032.png
444KB, 465x455px
>>979375
>the US government will default because of student loans

Is this what /biz/ has really become?
>>
>>977974
global sovereign debt crisis
> a more efficient economy
> the end of American socialism
>>
>>979577

it certainly wouldn't be the sole reason

http://nypost.com/2010/06/06/subprime-goes-to-college/
>>
>>978439
>What contagion is there when the bubble "bursts"?
colleges close down you bumpkins
>>
>>979648

colleges are allegorically the home builders of the housing bubble

now ask yourself who is the creditor? what is the collateral?

One could argue the 'asset' is the present value of the increased productivity of a graduate over their lifetime. However there is no way to separate this asset from the debtor other than paying it off or insolvency

If that wasnt scary enough, the government is effectively monetizing the debt via federal aid, as this asset when purchase via tuition immediately becomes salaries and expenses for educational materials, thus entering the money supply. During the housing bubble, capital was pent up in the homes value and not turned into wages or disposable goods.
>>
File: file.png (93KB, 500x500px) Image search: [iqdb] [SauceNao] [Google]
file.png
93KB, 500x500px
>>978418
>It's bad and bubbles are bad therefore it's a bubble
>>
>>977989
Both of these would be a good thing.

>>978004
>according to nyu.edu
Thread posts: 34
Thread images: 4


[Boards: 3 / a / aco / adv / an / asp / b / bant / biz / c / can / cgl / ck / cm / co / cock / d / diy / e / fa / fap / fit / fitlit / g / gd / gif / h / hc / his / hm / hr / i / ic / int / jp / k / lgbt / lit / m / mlp / mlpol / mo / mtv / mu / n / news / o / out / outsoc / p / po / pol / qa / qst / r / r9k / s / s4s / sci / soc / sp / spa / t / tg / toy / trash / trv / tv / u / v / vg / vint / vip / vp / vr / w / wg / wsg / wsr / x / y] [Search | Top | Home]
Please support this website by donating Bitcoins to 16mKtbZiwW52BLkibtCr8jUg2KVUMTxVQ5
If a post contains copyrighted or illegal content, please click on that post's [Report] button and fill out a post removal request
All trademarks and copyrights on this page are owned by their respective parties. Images uploaded are the responsibility of the Poster. Comments are owned by the Poster.
This is a 4chan archive - all of the content originated from that site. This means that 4Archive shows an archive of their content. If you need information for a Poster - contact them.