<p>fair enough, dadinator.</p>
<p>But, you do know what I am really saying.</p>
<p>"Well, okay. If you believe it is ethical to allow students to borrow at this level, I certainly respect your right to this opinion. "</p>
<p>I did not discuss the ethics of allowing students to borrow at any particular level. I said I do not think that it is a threat to the financial system in the way that subprime loans were. And that one reason, is that any non payments/late payments (call it default, call it banana if you like) should have peaked between 2008 and 2010. </p>
<p>Thats all I said. I do not see anything you have said that contradicts that.</p>
<p>Well, I agree that it is not a "threat’ in the way that subprime loans were, but I do think that having a substantial number of college graduates enter the economy already in significant debt effects their future economic power, which effects the economy adversely. </p>
<p>I also believe that it is an example of irresponsible lending policies, which is probably enough out of me on this matter.</p>
<p>As a frequent lurker and infrequently poster I have been following this thread with interest. At the risk of being way off topic, there is a question which has been bouncing around in my head for a while thought Id throw it out here </p>
<p>Are we asking ourselves and our sons and daughters the wrong or maybe just too limited of a question? Instead of status parchment to loan value, instead of what college experience is the right/best/challenging, instead of LAC vs. public vs. private should we be asking our young adults the following:</p>
<p>In a few years when the college experience is just a memory how do you want to be LIVING YOUR LIFE?</p>
<p>College is 4 years maybe a few additional for extended stays and grad school. The point being, the college experience is really only a small portion of a lifetime. The after college phase is with any luck much, much, much longer.</p>
<p>Do they want/desire/have the drive to put in 90+ hour workweeks for years on end to achieve a financial or status goal many years down the line. Do they want to go down a passion/career path, which will require their energy and presence during weekends, holidays and family events as a predictable requirement for success? Do they wish to conscientiously pursue a dream, which will leave them in debt with no reasonably predicable path to relieving themselves of the burden? And, if there is a debt load after graduation, how long are they willing to postpone parts of the next phases of their lives for the privilege of the specific college experience. </p>
<p>And from the parents perspective is it guilt driving us to feel obligated to purchase something which puts us at financial risk. How susceptible have we become, without even knowing, to all the marketing efforts around us. </p>
<p>Okay, that was more than just one question …</p>
<p>great post, deitz.</p>
<p>"but I do think that having a substantial number of college graduates enter the economy already in significant debt effects their future economic power, which effects the economy adversely. "</p>
<p>clearly someone making thousands of bucks in student loan payments will be spending less on goods and services while they repay that loan. OTOH by making the initial tuition payments with that loan, they bought services, creating employment (college profs, college janitors, all the folks that those people bought things from etc) so its essentially a wash. Kind of how the choice of how to finance a car is a wash.</p>
<p>Well, I don’t agree that it is a wash.</p>
<p>I believe, personally, that schools including “loans” in their “financial aid” packages is unethical. I believe allowing kids this age to borrow money at these levels, with no clear understanding (and, at this age they have NO clear understanding) of what this means is not the same. Also, somebody going in for a car loan will be put through credit tests, and at least part of the responsibility is on the lender to vet the ability to repay.</p>
<p>I seriously question these garuanteed student loans, which do not require lenders to even look at a major to determine future ability to repay, these loans, which, btw, are NOT low interest. As I said before, it’s one thing with the Staffords, another thing with the private loans for so much money, plus interest.</p>
<p>Anyway, this is just my opinion. I’m sure other opinions are equally as valid.</p>
<p>dietz199, standing up and clapping for your intelligent, thoughtful post. This is from someone who cam get caught up in the idea of giving our only child “the best”. I was actually initially disappointed my son didn’t choose the most expensive university he was accepted to. Not because it was expensive but the acceptance rate was 16%. Like an idiot I forgot how he was ready to apply the day he visited the OOS public he chose, an excellent school which he loves. Clearly mom doesn’t always know best.</p>
<p>busdriver…your friend in post 353 can afford $20,000/year out of pocket from current income for college (I wish I could say that!) and you say they are unlikely to qualify for need based aid. In my opinion, first, they may have had some savings leading up to this point. But let’s say they saved nothing for college. The college costs $50,000/year. The kid takes out student loans for $5000/year. The parents now could borrow $100,000 for the remaining costs over four years. I don’t have a loan calculator and so this is very very rough, but maybe that means they have to pay $12,000/year for ten years or some such which is less than they are paying currently for the four years of college and so should be able to manage a lesser amount per year after graduation. I know you said they were near retirement but I don’t know if you mean ten years out or less. Maybe they retire in ten years when done paying off college.</p>
<p>367</p>
<p>As I have now said in two posts (I must not be writing clearly enough) I am NOT addressing whether any particular loan is in the STUDENT’s interest. Thats really another discussion, I think. I am addressing the impact on the economy.</p>
<p>It clearly would be very foolish for me to run out and take out a big loan to buy a cadillac. Both because of my finances, and my driving preferences. But it would, on the whole, be a GOOD thing for the US economy if I were to do so. </p>
<p>Whats good for an INDIVIDUAL is not always whats good for the economy.</p>
<p>Right now millions of people are rebuilding savings, paying down debt. That is very clearly the wise thing for them to do for their personal finances. The net result, when all try to do it at once, is to hold down aggregate demand, keep unemployment high, reduce GDP by billions of dollars, and subject millions of people to devestated lives. And in fact, to make it more difficult for many people to save. </p>
<p>[Paradox</a> of thrift - Wikipedia, the free encyclopedia](<a href=“http://en.wikipedia.org/wiki/Paradox_of_thrift]Paradox”>Paradox of thrift - Wikipedia)</p>
<p>BTW, this brief lesson in macroeconomics has been given to y’all free of charge. It cannot however be used as credit towards an econ major at most accredited institutions. You MAY use it as study material for your macro exam.</p>
<p>I really wouldn’t use message board material as study material for MACRO boys and girls. 
Feel free to use the material handed out in class.</p>
<p>“I really wouldn’t use message board material as study material for MACRO boys and girls. Feel free to use the material handed out in class.”</p>
<p>while thats good advice in general, in this case theres nothing incorrect in anything I have said (but yeah, if your macro prof says “austrian school” without giggling, you would be well advised to ignore what I have written till AFTER you get your grade)</p>
<p>I can give a better sourced version later. That will cost y’all, but you will be happy to know that loans are available.</p>
<p>I think post #367 is an example of using a theory to explain an action in a different context.</p>
<p>There is a difference between everybody saving and people taking out loans they can not afford…</p>
<p>EDit: As poetgrl has pointed out…I mean post #370.</p>
<p>You might also consider taking an eithics class, as well. And, you might ask yourself the ethics of a society which relies on its children’s borrowing to get out of a mess created by the adults. Again, however, for the sake of your grade you’d better just study what the prof. recommends.</p>
<p>dstark, did you mean post #370?</p>
<p>Uhhhhh…yes…</p>
<p>"I think post #367 is an example of using a theory to explain an action in a different context.</p>
<p>There is a difference between everybody saving and people taking out loans they can not afford… "</p>
<p>yes theres a difference, they have absolutely opposite effects.</p>
<p>There is little difference in the macroeconomic effect of someone choosing to save less and someone else choosing to borrow.</p>
<p>Are you an economics professor?</p>
<p>“There is little difference in the macroeconomic effect of someone choosing to save less and someone else choosing to borrow.”</p>
<p>“Someone”?</p>
<p>You are talking about one individual?</p>
<p>“You might also consider taking an eithics class, as well.”</p>
<p>Phil 14 -ethic reasoning. An A-, IIRC.</p>
<p>" And, you might ask yourself the ethics of a society which relies on its children’s borrowing to get out of a mess created by the adults."</p>
<ol>
<li><p>Ethics applies to individuals. “Societies” are not moral actors, they are not ethical or unethical</p></li>
<li><p>I did not say we SHOULD encourage student loans or not. I merely pointed out that student loans do not necessarily harm the economy in the ways some have stated, and that individual harm and harm to the economy do not align. </p></li>
</ol>
<p>Why do you keep on twisting my DESCRIPTIVE statements on the macro effect of student loans into a suggestion that students SHOULD take out loans? </p>
<p>" Again, however, for the sake of your grade you’d better just study what the prof. recommends"</p>
<p>FYI - the reference to the prof was a joke, hon.</p>
<p>hon? I knew I recognized you.</p>
<p>Yes, I was kidding, as well. Have a good one.</p>
<p>"Are you an economics professor? "</p>
<p>Not yet. Ive never taught. A friend did offer to refer me to teach a single course at night in a specialized area (NOT macro) she thought I was particularly qualified for, despite my lack of a PhD, offered locally by a top 50 univ. At the time my kid was still home and I passed on it. </p>
<p>If I got the offer today, I would consider it. It would increase our EFC, but we would reduce our kid’s loans. ;)</p>