> if you were to limit the amount of educational debt someone could take on — for example by only making the first $20k non-dischargeable. It would fix the delinquency problem, drastically lower the total annual student loan rate, and cause private tuition prices overall to decline, but it would be called institutional racism.
The solution to structural racism is more scholarship money, not more debt. Pell and Social Security supplement grants have gotten really meager since when I went to school.
> I think we already went through this cycle with housing, when ~15 years ago politicians started saying that owning a home was a right and everyone should own one, regardless of ability to pay.
Ahh yes, this old card. Blame the poors for financial crisis. Buddy most of the defaults weren't from poor people buying homes. People with good credit scores leveraged that score to speculate, over 85% of the defaults were for investment properties. Most of the mortgage defaults were done by your doctors, lawyers, realtors, general contractors, and business owners who watched one too many episodes of home flipping shows and thought they could get in on a good deal.
>> The solution to structural racism is more scholarship money, not more debt
I completely agree, scholarships and grants should be greater than the loan debt that a student takes on, and the maximum financial aid for a student should be capped annually in some way. There are simply too many student loans being made available to students that don't need them. I have a colleague that got a full ride through undergrad but managed to graduate with over two hundred thousand dollars in student loan debt. It is predatory lending to loan students more money than they need to cover their cost of education and cost of living (for a student).
“When the economy slowed, defaults went up across income spectrums. But while the chance of a low-income borrower defaulting increased from 6 percent pre-crisis to 12 percent post-crisis, the chance of a high-income borrower defaulting went from almost zero to around 5 or 6 percent. And the latter group was defaulting on bigger loans.” [1]
I think the homeownership rate over time also tells a story, but perhaps this is dwarfed by the rate of sales and the collapse of prices causing ~25% of houses to actually be underwater.
However if you look at Mortgage Origination by Risk Score over time [2] and Debt-to-Income ratio over time [3] there is truth to the claim that the overall portfolio of homeowners also changed in the lead up to the crisis.
That's not to mention the lenders who signed people, knowing that they were taking on low-grade debt, to have someone package those mortgages with the good ones to obscure their risk and sell them to speculators.
The solution to structural racism is more scholarship money, not more debt. Pell and Social Security supplement grants have gotten really meager since when I went to school.
> I think we already went through this cycle with housing, when ~15 years ago politicians started saying that owning a home was a right and everyone should own one, regardless of ability to pay.
Ahh yes, this old card. Blame the poors for financial crisis. Buddy most of the defaults weren't from poor people buying homes. People with good credit scores leveraged that score to speculate, over 85% of the defaults were for investment properties. Most of the mortgage defaults were done by your doctors, lawyers, realtors, general contractors, and business owners who watched one too many episodes of home flipping shows and thought they could get in on a good deal.