Student loans need an overhaul in the form of underwriting and risk management. Too many people are graduating with degrees that have virtually no ROI and can never pay back their loans. There needs to be a cap for how much can be borrowed for degrees that don't have economic viability.
The fuel driver who just came to my home to deliver oil informed me that he had more than 100k in student loan debt for a film degree that he never used. My neighbor's daughter went to private universities for her undergraduate and graduate degrees. She has a Master's in History, with a specialization in the Vietnam War. Her post-graduate employment is as a manager for Bath and Body Works.
I have a B.A. in Philosophy that cost my parents around $120k. After graduation, I ended up working in a call center and then going back to graduate school to earn an MSW, which did lead to stable employment and a salary of more than $84K. If I could do it all over again, I wouldn't have gone to school at all and would have invested that money.
The most logical place to start, in my humble opinion, is risk management underwriting for nonviable degrees. I fully support one's free will to study what they want, but the cost of these degrees is a life sentence for many. I truly do not believe that young people can estimate the consequences of their actions with taking out these loans. It's clear that when the bill comes due, most don't think it was worth it.
Underwriting and Risk Management is Needed for Student Loans
byu/SolientGreen88 inStudentLoans
Posted by SolientGreen88
15 Comments
Federal caps for undergraduates are already low and reasonable. Parents just need to say “no” instead of taking PPLs for stupid degrees.
We need to stop commodifying education. Education isn’t something that should be measured in ROI. Having an educated populace is good for society, full stop.
I think people are afraid to say to their kids that a dream might just be that – a dream, a one in a million chance. My parents paid for my undergrad (I used loans to get my grad degree) and I was told that I needed to study something that would make me employable. So I found a degree that I liked (finance and economics) that made me employable for the long term. Was it fun being told that as someone about to go off to college, not really. But it was practical and kept me on track.
And people forget that dreams change…and if you’re really passionate about something at a young age, find ways to be employable but get into it in a different way. I feel like you hear stories about someone ending up doing something that wasn’t what they started. You can still have dreams and pursue them, but you can be smart about it too.
Fellow Risk Manager here. Hell no, college should be free. If we can afford to blow up children in schools, maybe we can afford to educate our young adults. For film school even.
WHat limit would you set for a Medical Student?
All these degrees are “viable”…just stop letting foreigners take 20% of jobs. Decrease the cost of degrees. Don’t require a degree for most jobs.
There’s no reason why you can’t be a banker, manager, salesperson, probation officer, writer, etc etc with a “basic” degree.
Nope. It’s impossible to predict what degrees will make money and when. There should be no student lending industry for that reason. A university degree is designed to teach you something about everything, and everything about something, to make you capable of critical thinking, a certain kind of work, be more aware of the world around you instead remaining in a bubble, and make you an informed voter. Its value is priceless for any country that considers itself highly advanced.
Student lending is a scam because there is no collateral. It is designed for parasitic companies to own you for life.
Federal student loans as a program needs to just end. It drives up tuition costs and in general is not a plus for the borrowers.
Then, if private lenders want to loan an unemployed 18 year old $100,000, that’s their business.
I hope the young women and men considering loans read stuff like this. No one is saying don’t go to college. It’s about not taking out loans that you’ll never be able to pay back, OR that you’ll spend 10,15,20 years paying back. It’s not how people should want to live their lives.
And I’m not criticizing either. I was that kid 10 years ago. I was unwilling to listen to anyone or anything. 10 years later and it was clearly a mistake.
I think the solving real issues has to come from the family themselves. I don’t think we will get a ton of help from the government on this issue, so it’s up to families.
The parents have to say no. They have to be just as worried about the ROI, payback amount, and predatory practices of private student loans. It can’t be “well I’ll just co-sign for my kid because that’s what they want and I love them and it’s their loan not mine” Again, I get it. Those were my parents. It was always good intentions. It was always loving me and wanting me to succeed. Now we are both feeling the repercussions of those bad decisions. Me in what should be the best years of my life, and them in what should be their retirement years.
The other thing is how do we get these kids to understand how dangerous this shit is, without making them have to go through it? I’ve seen it on this page. There are kids who seem almost determined to sign their futures away to these loans, so certain things will work out in their favor with getting a job. My argument to this is not about the job. If you truly believe you’ll get a six figure job out of college with a bachelors degree, more power to you. Dream big, make it happen, and pursue that goal. I think that’s great. But you absolutely don’t need to take the most expensive route possible for that bachelors degree. There are solid and proven steps to reduce costs while getting your degree. CC first, work/save, work/payment plans, waiting until you’re 24 for better odds at fafsa aid if you come from the middle class, and that’s just to name a few. And if for some reason NONE of these things work for you, it does not mean you have to take out tens or hundreds of thousands of loans.
How do we break the cycle? My passion for this topic isn’t centered around me. My fate is sealed. But it would be nice to help kids not make these same mistakes.
The problem isn’t the degrees or the people studying them. The issue are employers who don’t value certain degrees. How about make college affordable for everyone who wants to learn- subsidies, UBI and healthcare for all – would go a LONG way to fixing most of the issues you’re describing. But then again, I grew up watching Star Trek and I was paying attention!
This was always about the greed of the financial industry to indebt people for life at scale for obscene profits before the young marks had a clue. Underwriting and risk management tools serve the purpose of preventing many groups from borrowing for their education and improving their future earnings.
What is needed is to stop predatory behavior and put people in jail like they do for other financial crimes. Good consumer education from independent sources is also necessary. But that would take honest politicians who represent the best interest of the people not their donors and a financial industry that plays it straight.
Who gets to determine what a “non-viable” degree is? I have a BA in history and am doing ok. Humanities degrees, like history, teach critical thinking and writing skills. A classmate of mine makes a good living as a technical writer with their history degree. History majors often go to law school. But regardless, an educated population benefits everyone.
Plus, even if you determine that only STEM degrees are “viable,” once there is a glut of STEM majors those jobs won’t have as much of an ROI.
Loan caps do help, but there needs to be a wholistic approach including realistic counseling to parents and students and a better system of post-secondary education.
We need to get off of the “well rounded education” system. I’ve been to college twice (in person at a big 10 U in 2009, and online only in 2020), graduated once. Neither time did I feel like the additional classes outside my major benefit me. It’s not a cutesy game of teaching adults life lessons, this shit is expensive as hell and if you don’t want to participate in amenities or benefits, tough shit your just paying for it for everyone else. Even the classes within my major didn’t really benefit me in preparing me to do the jobs I’ve held with my degree (psychology/social work). It’s a racquet for a lot of programs
America is the only country with this problem.
The system doesn’t need risk management, it needs to be destroyed and replaced with a better one.
Just because you get a “valuable” degree doesn’t mean you’ll get to use it. Faulty logic.