> Seriously, though, this is a real problem and we need to do something

the thing we have to do is not borrow money we can't repay. capitalism is a distributed system. borrowing money you can't repay is a broken local protocol. don't try to fix that with anything but fixing it locally.

If all loans were always repaid, we'd have no risk premiums, and the world would be incredibly different than it really is: Almost every worthwhile investment that has moved the world forward involved significant chances of loans not getting repaid.

What is broken with student loans is that the current scheme messes with almost every sensible market incentive out there: Colleges get more expensive for little to no reason, people can get into big loans for degrees that will never pay off, and the companies lending the money are, in practice, guaranteed repayment by the treasury, so ultimately the whole scheme leads to far higher prices than, say, college in Europe, but only provides better outcomes for some school+major combinations.

Let's not forget, the system leads to degrees that have low expected values to end up being unaffordable, while prices would go down if the system wasn't built with the silly guarantees that it has. Putting the blame on the borrower alone and ignoring the insane system design is just shortsighted.

If someone went to try to launch pets.com today, we'd not blame the founders alone for the VC's loss: They carry responsibility too for betting on a horse that had no chance of even finishing the race. A VC takes risks, but also expects losses. Anyone making loans should consider chances of delayed payments and of losing all the money completely.

Let's go back to your idea of protocols. Imagine we are making a requests over a network and expecting the network to not be lossy, and to never have long network partitions, or for other servers to go down. We can be angry at the network or the server on the other side, but in practice, what we do is understand that failures exist. Expecting everyone to pay you back all the time is like expecting a distributed database to be reliable all the time. I can scream at the network or the database vendor, but ultimately the joke is on me for expecting impossible things.

I was forced when I was 17, to pick a private college, people didn't let me do what I wanted.

At same time, I was repeateadly promised by all 'adults' that I was very intelligent, and that getting into a college would ensure I would get a job, and it is why it was so important.

After lots of struggling I ended doing what people wanted, got in a college, and I had no way to pay for it, so I got into debt too. (and I hate debts, I used to never get into any debt at all).

Around time I graduated, the last crash happened, my country never really recovered from it...

I am 29 now, and I can't get unemployment benefits, because I was NEVER employed in first place, all work I list on my LinkedIn was by freelance-style contracts, I never found the promised jobs...

I did recently finished paying almost all my debts (I still have some, and my net worth is still negative).

But 'not borrowing money' wasn't really an option.

This is at least partially true, but ignores the "reality on the ground." Even many entry-level jobs require a college degree now, and forgoing a college education makes you unhirable in many markets. Until that changes, "college you can't afford" is pretty much a mandatory expense.

There are ways to minimize the cost -- basically two years at a community college and two years at a state school -- but the days of being able to afford college by working a part time job are long over. The reality is, if you want to participate in today's job market, you probably must take on at least some college debt.

I think college degree is highly overrated, and higher education is very inefficient overall. But it is like a prisoners' dilemma, where all of the to-be-students would be better off if say 70% of them didn't go to college, but no individual has the incentive to decide so.

They wouldn't need to pay the enormous tuition, and as the job market would change (as far less people would have a college degree), the lack of degree wouldn't hurt them.

College degrees are oversaturated, but there's no real alternative outside of a few fields where education isn't as important as experience.

College degree nowadays is basically a pre-requisite for not getting your resume thrown out at first glance.

College degrees used to be a signaling method. It was something rare and desirable. And like many rare and desirable things, the intrinsic value gets bolstered by a perceived value. The value and rarity drives commoditization, eventually making it not rare. (unless it can't or is too exepensive e.g. changing platinum to gold)

Everything has a mix of intrinsic and perceived value and this changes over time. The more a thing is composed of perceived value the more volatile it is. I'd say all stocks are composed of at least 50% perceived value.

Perceived value can often drag intrinsic value upwards so investing in things with high perceived value can still be lucrative. Analysis moves from fundamentals to psychohistory. (bad psychohistory) Probabky based on some combination of time to death of cultural momentum and half life of faith isotopes.

College degrees were a thing that quickly lost perceived value because it was based on rarity. (the only rarity that doesn't drive itself to commoditization is useless rarity like expensive wines and designer bags. 100% pure perceived value things not worth commoditixation)

At an individual level the high intrinsic value degrees do well but overall they haven't as most degrees in the US were supplementary for Masters of the Universe type. Education to fill the void in your life.

The post WW2 dominance faded though and the upper levels of Maslow's pyramid were no longer the issue. Basic survival and making a living was. Globalization also created huge pressure and competition for useful jobs.

What happened in the US was essentially a dearth of sinecure positions based on a secure moat that is now deteriorating. Those who are hit hardest by this desire a return to the past, in their eyes this is being "More American". They simply can't compete with a workforce with much stronger work ethics out of having much more experience with dealing with daily survival of a more extreme kind.

This is how the education system is failing. A country for abundance needs either output or the ability to extract rent via moats or force. The US also has a strong immigration culture that can "steal" output from other countries. Though at the cost of making "doing right by americans" a very loaded and confusing idea to parse.

> the thing we have to do is not borrow money we can't repay.

Literally nobody takes student loans that they are capable of repaying. Why would you, unless you could get a 0% APR?

It'd be nice if young people - possessors of great foresight and fonts of wisdom, all - could predict whether they will be able to repay the very substantial loans they're likely to rack up in college. We are not living in a world, or an economy, where making such a prediction is easy or straightforward.

Literally nobody? My younger brother went to a state college during a time where he qualified for a ~3.4% loan from the government. I told him to take his time paying (for now), because a no-load passive index fund will yield higher than that. The past 3 years have been tremendous in terms of returns. He essentially used his student loans to net 12-18%. When family members caught wind of this, they told him it's not the best move, and our father paid off his loans.

So. No. Not literally nobody.

Using student loans as a form of leverage to invest in the stock market isn't new, so yeah, not "literally nobody." Point taken I guess.

It's just such a shockingly bad idea. We went from the topic of the average kid's inability to gauge the future value of their degree to the topic of the average kid's ability to predict the stock market well enough that using leverage to invest makes sense.

> Literally nobody takes student loans that they are capable of repaying.

Probably one of the most incorrect sweeping generalizations I have ever seen.

I finished my BS in CS about 3 1/2 years ago with about $44,000 in student loan debt. I'm currently on track to pay them off within the next 3 years. It'd probably be only 1 or 2 years if I didn't buy a car.

> Probably one of the most incorrect sweeping generalizations I have ever seen.

Not really, you simply didn't read my comment and the comment I responded to very thoughtfully.

The point of my reply is twofold. First, the obvious: you wouldn't take that loan unless you needed the money for your education (or wanted to gamble on the stock market, apparently, as one poster mentioned, but let's put that aside). If you can pay for your education without it, with saved money or through scholarships or grants, you'll do it. If you can't pay for your education, you take the loan. In that sense it wasn't a deep point, it was basically a tautology to point out how vapid the grandparent's comment was: "the thing we have to do is not borrow money we can't repay," "borrowing money you can't repay is a broken local protocol." As if arranging student loan financing were in some way similar to extending credit to a successful business that needs a little extra cash on hand until the end of the month. Ridiculous.

Second, and on to the more important point that I made in the second paragraph: if we assume the grandparent really means "will not be able to repay after several years of college" the problem with this whole line of thinking becomes obvious. The average student embarking on college has no idea whether they'll graduate successfully. They have no idea whether they'll be able to find a job in their field and they certainly have no idea how much they will be paid. In short, they have no idea whether they'll be able to repay that loan. In terms of policy, saying they should not take a student loan which they will be unable to repay is not an answer to anything since at best they're making an educated guess. In a situation like that, where people are guessing, the expected outcome is that a lot of people will guess incorrectly.

What if I can afford to repay it? So what? My wife and I can easily afford the 1500$ a month minimums we have to pay(We pay more than our minimums in an effort to expedite the process) but while we do pay off these loans we also choose not to have children, or buy a house, or buy cars. I can say without a doubt that our educations have been valuable, but not in the sense that we learned have anything other than that higher education is a signaling scam designed to keep people poorer than ourselves outside of the working class.

Money is not as important as living a full life. Sometimes trade offs must be made

What you're suggesting means abolishing student loans, since no student can (presently) repay their loan amount (or they wouldn't need it), and you're speculating on their future prospects. That is one option, but as I said elsewhere in my post, most options make it so that poor people can't go to college. That, IMHO, is bad for society.

That just drives down the price of borrowing money until a borrower is found and the market clears. You could just as well place the blame on aging savers driving the price of borrowing down until taking on massive amounts of debt to get ahead in life through college looked reasonable.

And we also need to make the loans dischargable and place some of the burden on educational institutions. Aside from universities that can be very selective, all other schools have an incentive to bring in as many students as they can. They have no financial risk if the students drop out.

> They have no financial risk if the students drop out.

I like this and would love to see more commentary on it. Taking one step back, the system is broken because we removed the primary safeguard: Bankruptcy. If we could declare bankruptcy to discharge loans, it puts the burdens on banks to only make loans they evaluate as having a reasonable rate of repayment on. We've removed that check. In turn, we have a completely predictable outcome. So, as far as I know the only alternative is to provide another, equally robust counter (like your suggestions, or just "free" tuition) to balance.

I completely agree, this is going to be a problem for our generation. For those of us who are lucky enough to not have any student debt, how can we take advantage of this?

Well, as someone recently off the scrolls of student loan debt, I can tell you this -

Save. Don't spend it. Save it. Invest it wisely.

Paying my shit off gave me an incredible sense of freedom, even though I still have a wife and kid and household to maintain, the usual job pressure, etc. I thought about it, and the sense of relief was from knowing that I was free of debt service, so the best thing I can tell you is to save your money and not make a single interest payment more than you need to.

Save and invest as much as you can. 10% of income is a good goal, more if you can do it.

I think that there has to be some responsibility pushed back onto the universities and banks that are selling these loans for defaults. I think it's obscene that colleges are selling near-useless degrees to 18 year olds for $50k+. There has to be some incentive for either colleges to charge less for certain degrees or push people into degrees that will lead to higher paying jobs, or simply get pickier about who they admit.

But there isn't any risk to the school or the lender. Anyone can get student loans up to the federal cap, and they're practically not dischargeable, either.

The incentive has to come from somewhere else, but most solutions involve making it a lot harder for poor people to go to college. It's a tough problem.

Make the schools have to refund some of the money if their students default.

I paid off most of my loans the first year after graduating, but held onto the lowest interest one with minimum payments despite having been able to pay the whole thing off for five years because I expect the same - the week after I pay the damn thing off is the week unconditional loan forgiveness happens and I wasted all my money.

It's already hurting the housing and consumer spending segments, as per the incessant and continuous "Millenials are killing the X industry" clickbait every other hour.

Replace X with home ownership, car ownership, renovation, Chili's, Applebee's, and whatever else services the traditional nuclear family.

Damn millenials killing everything indiscriminately.

Our economy is built off of the boomer generation and their behaviors. They enjoyed stable, living-wage jobs, affordable housing, dirt cheap education, etc.

Now we have an emerging gig economy, ridiculous tuition costs (and the expectation of a degree to do more or less anything), cheap credit to prop up the housing market (did we learn nothing in 2008?).

IMHO, it hasn't hurt housing enough, and politically, that's going to stay as long as possible. A lot of boomers also have a large portion of their net worth tied up in their home, and letting that bubble burst will just swap economically disadvantaged millenials for economically disadvantaged boomers. Even setting aside the fact baby boomers also run our political institutions, for a variety of reasons, it's still better to have young people who can't buy anything because they still at least can work, versus a bunch of displaced retirees who also can't work any more. It's a really shitty situation. I try not to blame an entire generation too much because it's more complex than that, but I'm in my mid-30s and feel like I got really lucky. The generation right behind me really had the ladder pulled up before they could get to it.

The baby boomers cry about millennials killing X industry while in the same breath cry about millennials acting entitled for demanding reasonable wages.

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