This is why a media studies degree is useless (assuming thats what the journalist writing this story got) as they probably don't teach basic math.
The point of collection is that it also acts a deterrent. So the $38 spent are not just to get the $1 back but also to tell others that government will go out of the way to get back that debt.
That $38 needs to be compared with the total $s that come in as repayments.
Also this is the reason why government should not be in the business of giving loans.
You just made that up and then complained about journalists that did actual reporting on the issue, and I don't even think you read the actual article.
That's an absolutely insane way to do statistics. You can't just say "it's a deterrent" and then magically assume that anyone who pays their debts wouldn't have in absence of the evidently horribly inefficient debt collecting process.
Even if they didn't have collectors at all it'd trash your credit. Without even getting into the issue of whether there is a more efficient way of collecting.
That's true, but I would bet money that if you were able to take the pulse of Americans collectively you'd find people putting way more weight on their credit scores than is strictly rational. I've lost count of the number of times I've seen it suggested that people do irrational things like carry revolving credit card balance or take out loans they don't really need to "build credit."
Actually, allowing students to discharge their debt would solve this problem as lenders would start means testing students to see if they are credit worthy.
Unless you're looking at their parents pretty much no student is "credit worthy" for a loan into the tens of thousands of dollars in the traditional sense.
That's not at all what he's saying. To judge the efficacy of a deterrent, you need to be able to identify the expected payment rate in the absence of said deterrent. The problem with that is that identifying the difference is incredibly difficult. If not damned near impossible.
That said, I'd question the deterrent effect. Per the article, nearly 40 percent of 'recovered' borrowers default within the next three years. Combined with paying debt collectors "nearly 40 times what they bring in," it seems as if there's a measurable problem with the current approach. But is that a problem with current recovery efforts, or merely a symptom of a larger issue?
Like with most things student loan-related, there are no easy answers here.
A few DB entries scan trash somones credit rating which is a deterrent and extremely cheap. Further many people feel an obligation to pay down debt even when they can walk away without consequence.
you're right about the total cost of collection. it should be measured on actual collections not just defaults.
but in this case it sounds like a substantial amount of that expense goes towards getting people back onto plans. so thats obviously a default-specific expense.
I have to disagree with your assessment about wether the government should be in the student loan business. Providing employment for the sake of community/national services is the exact role of government.
There ARE dozens of app stores. These two are very very strong ones. The thing is how long Apple and Google and continue to squeeze people until someone will come up with a clever trick to bypass their payment system.
Sure there are alternatives on Android and the Windows phone platform (which nobody uses because running multiple app stores is cumbersome) but Apple has their entire ecosystem, silicon to cat videos, locked down hard.
True. But then question is whether money saved by offering the lower pay is worth the additional productivity brought in by new employee or not. If it is not then it is fair to say there is a shortage of people in Tech industry.
The arbitrary speed limits on US highways have hurt US Auto industry and world auto industry a lot in terms of kinds of roads we build and the kind of cars we built.
Imagine how much innovation that could not happen there.
In what way would it not? ISPs could leave everything as it is, and there'd be no change. But without net neutrality they will have the ability to extort cough, sorry, "request" that companies and (potentially) customers pay them extra for prioritizing certain content. They'll also have the ability to deprioritize content, potentially costing companies that don't pay (why I call it extortion) customers. If Comcast does this to Netflix (deprioritizes) then Comcast can drive customers to their own VOD services. If Netflix doesn't pay, Netflix loses customers, Comcast gains customers. If Netflix does pay, Netflix retains customers, Comcast gains money.
Either way, Comcast is better off. The primary issue is that ISPs are not just ISPs. They have many services which compete with 3rd party providers (some big, some small) and their market position will allow them to abuse the hell out of both customers and other service providers.
Basically the ISPs held one service for ransom by slowing down the traffic enough to make it run poorly until the service paid the demands.
We can probably expect to see more of this in the future. Amazon and Google should probably start setting aside a warchest for the inevitable shakedowns.
Because the initial increase in pay and lifetime increase in earnings is well worth it. Why do so many people get car and house loans they take more than 2 years to pay off?
Because it doesn't necessarily have to cost that much. There are world-class universities in Europe, Australia, Japan, etc. that don't cost $60k+ a year.
> Because it doesn't necessarily have to cost that much.
Makes no sense to me. Any person who thinks something is more expensive than it can be; can start his own college and win over the market while making a lot of money.
How can a person claim to know the value of other people's labor ?
> Makes no sense to me. Any person who thinks something is more expensive than it can be; can start his own college and win over the market while making a lot of money.
No, because there are enormous barriers to entry. We can, however, see that many other countries have similarly good universities that don't cost as much per pupil.
> How can a person claim to know the value of other people's labor ?
Every person who has ever hired someone does that.
Eh, I tend to disagree. Great university's for sure, but the large majority of universities (particularly those accessible to anybody) reside in the United States. Now, I do agree that a university education doesn't have to cost as much as it does, but the scale of world-class universities in the rest of the world is dwarfed by the United States. Maybe students should not stop coming to US schools if they cost so much, as well. Idk?
Apologies, I meant to type "the large majority of great universities". Obviously there are more universities across the planet combined than there are in the United States.
1. Those are a very small portion of the total available jobs. Even if every 18 year old had the aptitude, there aren't enough of those jobs.
2. It's a LOT easier to get into all of those fields with a relevant degree. As noted elsewhere, a degree is a strong signal that you can perform at least some of the work.
Most companies that hire for those jobs in practice require a college degree to get to the interview stage.
Also: youth with nontraditional backgrounds (e.g. women, ethnic minorities) obviously begin the IT hiring process at a disadvantage. Having a 4-year degree can level the playing field with "traditional" applications possessing only a HS diploma.
America is one of the most entrepreneurial countries on earth.
There are plenty of fields that you can enter with no college degree and build your way up to a great living. Even for very "white collar" jobs we are starting to (slowly) move away from a pedigree-based economy towards a skills-based economy.
The point of collection is that it also acts a deterrent. So the $38 spent are not just to get the $1 back but also to tell others that government will go out of the way to get back that debt.
That $38 needs to be compared with the total $s that come in as repayments.
Also this is the reason why government should not be in the business of giving loans.