The official term is SLABS: Student Loan Asset Backed Securities. Here's a recent paper on the subject.
But lenders aren’t going to suddenly go from approving 100 loans a month to just 10 a month. The incentive structures are designed to weasel and lie to pump out flattering bottomlines every quarter.
You can trot out the statistics but you can’t change human behavior without changing the incentives.
There’s been massive capital movement across the globe. Money moving out of China and Russia in particular. And the gulf countries with a surplus of cash thanks to multiple years of expensive oil.
But it’s really just speculation. I haven’t noticed an influx of ore Chinese buyers into my market.
Yes prices are crazy but if demand is still not being met, then prices are meant to be crazy.
Education doesn’t have this kind of contagion. If you stop paying your student loans it has very little impact on the value on my education.
It's never been more true that education is overpriced and underdelivers.
The contagion may not be "house goes bust and my house value goes down"... but there is a contagion: My degree is now no better than the degrees for the mills pumping out idiots while lowering standards and full of soft degrees filling the markets with "educated" people that aren't qualified to fill a coffee cup at starbucks.
If you don't see a market flooded with lower value results as devaluing the worth of higher education then you're not looking closely enough.
But, CDOs go a step further. You may have more or less risk tolerance. So we chop it up. You can buy something that gets paid back if 70% of the loans are good, or only if over 70% or over 80%, or even over 90%. The less likely you are to get paid back, the more you make.
So the person who absolutely wants to get paid back gets a small interest rate. The person who only gets paid back if literally every loan pays off gets a much higher rate.
In 2008, what happened is all those people buying the "very safe" 75-85% failure rate sections also were getting wiped out.
https://www.investopedia.com/terms/c/cdo.asp
Or if you prefer the Big Short explanation:
You take a bunch of loans and bundle them together and securitize the bundle to sell to the public. Mortgage CDOs crashed the global economy in 2007-8.
Interests are all well and good, but costs are real. Following passion is for rich people (or people who get unlimited student loans).
I think this is a truism that people want to be false.
But in any developed country, most poor people are pretty rich when compared to the world, and it offers them lots of freedom to choose what field they want to work in, where they want to work (both city and company), etc. There isn't the expectations that sons take their fathers' jobs and that daughters take their mothers' (often being a homemaker).
It still sucks to be relatively poor in a developed country, but most are rich enough that they can follow their passions in ways their grandparents never could and half the world can't today.
Many have drowned in student debt following their passions, but this wouldn't be so in many countries that have university education fully covered or significantly subsidized by taxes.
Once something is paid for with tax money, then the people paying the taxes want a say in how it's spent -- which is not just reasonable, it's a requirement of a liberal democracy.
It's fine to speak from one's experience, but to say that someone else should make the decision one thinks is wise based on a single comment is either ignorant, arrogant or both.
Edit: I replied to you @allenrb, but I'm not directing these thoughts toward you. I'm just pointing out a general behavior I see (but wish I didn't) on the internet and HN.
Personally, if you’re going to be miserable anyway (as most Americans are these days), it’s probably better to be miserable with money than without money, lol
And idk. My best friend from high school moved out here with me and he's a waiter making 40k a year and seems totally happy. Works like 30 hours a week, no mental stress, able to work out and work on himself. I think money is highly overrated.
But I think my main point is both of us have a way of becoming sustainable so you might as well do what makes you happy instead of working a job you hate for 8 years. Being a waiter making 40k isn't enough long term, but working your way into a higher end establishment or management is. A girl I dated started out as barista, became a store manager, and is now the regional manager and makes ~125k a year and more importantly she is a perfect fit for the job and enjoyed it the entire time.
All I'm trying to say is there are a lot of paths to a sustainable life even when following your natural inclinations.
But anyway OP responded his son's not super interested in college anyway so his plan sounds good to me anyway.
Seems to me like your hygiene factors are all taken care of, but the motivators are lacking. I hope I get to be in your situation soon, as I got laid off and trying to get back in.
I grew up having to do two part time jobs and go to school part time to put myself through college (late start too, only graduated at 25). I wasn’t financially prudent post-college either, took me a few years to get that taken care of as well. As far as I’m concerned, I don’t think I can have enough money - which I acknowledge can be a recipe for misery but I think I’m ok being miserable if I had loads of money.
> every day I wake up dreading going to work
This sounds terrible. But at least you have a job. Many people wake up with dread every day for whether they or their baby will starve to death.
Also, it’s never too late to change.
Academia should be a place for people who run away from money, because it's the last thing upon the list of interests for them. Academia should be a place for joy in learning concepts, and in some circumstances, which strive to be useless. Mathematics is one of the most exemplary fields for this, which is summed up quite nicely with the following quote:
"The mathematician does not study pure mathematics because it is useful. He studies it because he delights in it, and he delights in it because it is beautiful."
Never go to a university expecting to improve your wealth status, because it very likely won't happen. Turn elsewhere to find wealth.
If you don't do a modicum of Research before you take on tens or hundreds of thousands in debt to invest in something, that's on you and you alone.
If people were not bailed out and subsidized we would not have these issues of this magnitude.
Regardless of whether the parent can support that tuition cost or the kid has to take on loans themselves, it should be up to the individual whether they take on that risk irrespective of the parent's financial situation, which is I think where this heavily-downvoted reply was going.
As somebody who's education was way less supported than the rest of my family, who came out with a better job than all of those others in spite of that, there's a decent chance your kid will resent being "held back" by such a choice for a very long time if you give them trade school as their only option in life.
Lots of people find ways to be successful in the arts by eventually finding something cross-disciplinary, and with the direction most non-white-collar jobs in the US are heading I wouldn't bet my kid's life on trade school. What made sense as a sentiment on Mike Rowe's "Dirty Jobs" 10+ years ago doesn't quite hold up as well today, and those projects were funded by the Koch brothers and the whole "trade school is just as good" thing should be taken with a mountain of salt. I'd love to see more data proving trade school proves better today, especially for young adults with educational backgrounds and access to learning and job opportunities whose parents are in the economic class to be browsing HN
The mortgage CDO's where tranched in 2008 also.
I thought the government guarantees these loans, but maybe I mis-read that, mis-understood, or something changed. I think the borrower is still on the hook and accrues fees if they don't pay but I also thought the federal government literally paid to keep the bank whole.
Have to wonder how this interacts with the US healthcare system. As people get older they are more likely to have health problems that prevent them from working and cost a bunch of money.
The secret is to lend money and then make people spend it on something worthless. You know, the easiest way is to lend someone money so they can gamble the money away. You might now argue that this is terrible for the lender, but only if the lender doesn't own the casino. Then the gambler ends up in massive debt for no benefit. It doesn't matter if the borrower repays the loan or not because the lender didn't lose a single penny and every payment results in profit.
This is just a hypothesis because I am not aware of any banks or financial institutions operating an educational institution, except maybe lambda school which was heavily incentivized to get people to sign up for income sharing agreements but then only deliver some low quality MOOCs with the only source of support being TAs who themselves are former lambda school graduates.
> Two of three have gone to public schools so far, and we've paid through the nose for it. We are pushing our third towards some sort of trade school.
Jesus Christ. You're gonna give child one and two full opportunity to realize whatever potential they have, but steer child three?
US community (2-year) colleges tend to be very affordable.
US public universities may have lower fees for in-state students. UC Berkeley costs some $46K per year for CA residents - not particularly affordable to begin with - but charges an extortionate $33K "nonresident tuition fee" on top of that for non-resident students (including students under 24 with non-resident parents/guardians.)
Public Universities are ones funded by the state, to varying degrees.
Private Unis have their own funding, usually through a mix of tuition and large endowments.
I went to school from 87-91. I could already see the problem starting. I was hoping this bubble would burst before my own children went to school. Two of three have gone to public schools so far, and we've paid through the nose for it. We are pushing our third towards some sort of trade school.