Early College!

[sedrosken]

I applied, got accepted, did the testing, etc etc etc. I will actually technically be graduating high school a year later but with my associate's degree in hand.

I did something called compass testing, maxed out the scale in english with a 99, did pretty good in pre-algebra with an 86, and totally bombed the algebra segment with a 36 (makes sense, I haven't had a full algebra class yet). Nevertheless, the guy handling the testing told me that was more than sufficient to get into Math 100.

 

[ddrueding]

Awesome. Khan Academy is better than any Algebra class I've seen. Particularly if you are the self-guided type. I loved the ability to rewind and fast forward around the course without bugging anyone.

 

[CougTek]

Congratulations. The sooner you can get out of school with a diploma, the earliest you can start earning money. It's important to have your basis right, but as you'll learn later in your life, it's on-the-field experience that counts the most. In order to get that, you need to be hired and you won't if you don't have a diploma.

 

[time]

Congratulations, especially since you don't live in Australia:

Government proposes to tax dead students

 

[time]

Just to clarify, student loans in Oz already aren't forgiven under *any* circumstances. Merely becoming disabled or contracting a terminal illness won't cut it. Neither will bankruptcy.

Soon, common degrees may cost about $100,000. If, through chance or illness, you never earn enough to repay it, that debt with 4% interest will increase to about $1 million if you manage a lifespan of 79 years or so. At the current maximum of 6%, you'll be a millionaire the wrong way around at age 60.

 

[jtr1962]

It's even worse here in the states. When a loan goes into default, the total amount plus a ~25% collection fee can be rolled into a so-called "rehabilitation loan" where the debtor must make at least 10 on-time monthly payments to have the default cleared from their credit records. If they can't continue making payments, the loan can go into default again with the same procedure. It's not unheard of for people who graduated with $10,000 or $20,000 in loans to owe a few hundred thousand by the time they're 30. I'm also pretty sure this practice is 100% illegal because most student loan promissory notes cap the collection fees of 25% of principle, but nevertheless student loan guaranty corporations are getting away with it for now. The trick is to just not sign any papers authorizing a rehabilitation loan. The only options left for them to collect at that point are tax refunds and wage garnishment. If you don't get refunds, and are self-employed, they really can't touch you.

 

[time]

I'm afraid they really can touch you in Australia - the collection agency is the ATO, the local equivalent of the IRS. Not only is it a legal requirement for employers to apply a tithe to worker's wages, the ATO presents you with a bill at the end of the year - whether you made payments or not. If you don't pay the bill, they can use debt collectors and even seize your possessions. Even if you're broke and declare bankruptcy, this debt is never waived.

You should understand that Debt can be quite different here when compared to the USA. For instance, you cannot walk away from a mortgage: if your house is worth $300,000 but your mortgage is $500,000, the bank will sell your house and then pursue you for the $200,000 shortfall.

In many ways, Oz is a right-wing nutter's wet dream.

 

[Stereodude]

You should understand that Debt can be quite different here when compared to the USA. For instance, you cannot walk away from a mortgage: if your house is worth $300,000 but your mortgage is $500,000, the bank will sell your house and then pursue you for the $200,000 shortfall.

Banks in the US can and do the same thing. There are stories about banks going after people for the loss related to a short sale even though they signed off on it.

On the education loan front, I agree that you should not be able to have them disappear with bankruptcy. Otherwise most people would simply declare bankruptcy right after college when they don't have any assets and end up getting whatever education they wanted for free.


Congrats on the early college sedrosken. An associates degree isn't really worth much, but it'll be less money out of pocket afterward to get a bachelors.

 

[Clocker]

Congrats, sedrosken, for getting something in return for your hard work and dedication to your education!

 

[jtr1962]

On the education loan front, I agree that you should not be able to have them disappear with bankruptcy. Otherwise most people would simply declare bankruptcy right after college when they don't have any assets and end up getting whatever education they wanted for free.

I might be on board for this if you couldn't discharge credit card debt in bankruptcy like you can now. At least the educational loan went for someone trying to better themselves. A lot of credit card debt is just from people buying junk they don't need.

Maybe a good compromise here is to only allow discharging the student loan in bankruptcy after 10 years. Most people at least pay back a portion of their loans by then and won't declare bankruptcy unless they really have no choice because it will affect their credit rating.

 

[Chewy509]

In line with JTR mentions, in most European countries where loans are used for University level education, the state will wipe the debt if not paid after 15-25 years, as it's assumed that after this time if you haven't warned enough to repay the debt, you're highly unlikely to in the future. (It's more cost effective to write off the debt than it is to chase it).

However as someone who recently completed there Bachelors Degree in Australia, I am a little worried about the new changes to the HECS loan repayment system, especially the lowering of the minimum income amount to start repayments and now the inclusion of interest charges on the owing amount. It seems Australian politicians don't care about the long term effects of these moves...

 

[P5-133XL]

Not to do anything to offend, but I believe in PERSONAL responsibility in this instance. No one forced you to take the loans. People with money to loan will only do so if they are highly likely to get paid back and they make the rules to ensure that. It is not the politicians fault for making these loans so available and enticing that you signed away your future ignoring the possible consequences of failure. You choose that for yourself. You took on the risk for the potential reward, and if the reward does come thru and you get hounded by debt collectors and garnishments and the like for the rest of your life then it is your fault and no one else's.

Society wants educated citizens. A quality education costs a lot. Not everyone can afford it but everyone wants their sons and daughters to have the option. People with money to lend only do so if they can practically guaranty the return of that money plus profit. The politicians here are only trying to do the best they can to promote societies goals. There is no point in creating a loan program so that everyone has that option with no one offering money so they have to create the rules that guaranty the repayment. My observation is that tax payers have shown only a very limited willingness to guaranty large private debt even for good goals.

So the world is stuck with lot of people that took on a lot of debt. Is it really the politicians fault for making it easy to take on the debt but hard to fail to pay it back? Do you really want a society where only the rich get a college education because that is what you are asking for when you want to make it easier to default on those loans.

 

[Stereodude]

I might be on board for this if you couldn't discharge credit card debt in bankruptcy like you can now. At least the educational loan went for someone trying to better themselves. A lot of credit card debt is just from people buying junk they don't need.

People get lots of degrees they don't "need". If you go to some expensive school that costs $30k a year and get a worthless communications degree why should you be absolved of that?

Maybe a good compromise here is to only allow discharging the student loan in bankruptcy after 10 years. Most people at least pay back a portion of their loans by then and won't declare bankruptcy unless they really have no choice because it will affect their credit rating.

Maybe after 15 years if you're forced to pay at least some percentage of your income each year prior. And the amount you can borrow for a degree is indexed to the salary of someone working in the field the degree is for. If you want a worthless degree great, but you won't be able to borrow very much to get it.

 

[Stereodude]

Is it really the politicians fault for making it easy to take on the debt but hard to fail to pay it back? Do you really want a society where only the rich get a college education because that is what you are asking for when you want to make it easier to default on those loans.

I'm not sure that only the rich would go to college. Colleges would have to lower their prices and compete or go out of business. When you let people borrow what amounts to an unlimited amount of money the price of college will inflate to get as much of that money as possible. Colleges are also out off control in an arms race of sorts with each other to build the nicest buildings & dorms and have the most elaborate campus.

 

[P5-133XL]

Now it is the fault of the colleges? At least in my neck of the woods there is lots of competition from beauty school to Ivy league and everywhere in between. It is national. Some stay near, but it is a rite of passage to go off to college which means anywhere in the country and a few go international.

Phrase of the day: Personal responsibility

 

[Chewy509]

P5, I totally agree, one should have personal responsibilty to repay their debts. (My personal debt is approx $25K total, and have started repaying my debt already). For clarification, in Australia, the government will take on the student loan only for your first university level degree (if you wish to complete multiple degrees, you are entirely self-funded, but there are exceptions, like there are PhDs placings that are government funded as well), and the current situation is that, the loans are interest free, and repayments are garnished directly from your wages by your employer when you earn over a certain amount per fortnight (as time has already mentioned). (An employee has very little control over this).

The current cultural belief here, is that all students should have access to University level education irrespective of background or financial status. The student loan (HECS) system currently allows that.

My concerns with the recent changes in Australia (and I don't have a concern on the interest charge aspect as it's expected to be the same as the cash rate), but the minimum income threshold when repayments start. For some, lowering the repayment threshold will put some effectively below minimum wage (especially if they have a family to support on a single income), making the first 5-10 years post graduation very, very difficult financially. There are other changes, but currently most university placements (for non-medical degrees) are very fixed priced (most have their fee rates set by the government). The amount a Uni can charge per course will become open-ended, but I personally don't see much change to the current fee schedule as they don't want to price themselves out of the market.

However on the flip side, with the changes, when I was at Uni, there were a lot of students there that I don't think should have been there, and these changes will make students actually commit to their studies rather than pissing around for 3-4 years. (Which should lead to those that want to be there, doing well and not being hindered by the slackers).

Mind you, Germany seems to do quite well providing University level education at no cost to their citizens...

Anyway, sedrosken congratulations on your placement. I hope you do well.

 

[jtr1962]

I'm not sure that only the rich would go to college. Colleges would have to lower their prices and compete or go out of business. When you let people borrow what amounts to an unlimited amount of money the price of college will inflate to get as much of that money as possible. Colleges are also out off control in an arms race of sorts with each other to build the nicest buildings & dorms and have the most elaborate campus.

That's exactly what happened. We never should have made large amounts of money available as student loans. All it did was drive up the price of college to the point where many people have no choice but to borrow to get through school. As a society however we're now faced with several issues which will probably make a student loan bailout inevitable. One is that we have a significant amount of money going to repay student loans instead of it being spent on other things. This is dragging down the rest of the economy. The other is once some percentage of borrowers default, which probably will happen given present wages and unemployment rates, it could send the entire economy collapsing like a house of cards.

In the long term we should phase out student loans and replace them with a system of grants and merit scholarships. You make a valid point about borrowing for worthless degrees with little chance of financial return. We shouldn't subsidize people getting such degrees. However, society needs doctors, engineers, etc. We're starting to have shortages in many key areas because it's getting too expensive to obtain a degree. I don't feel someone who has the potential to be someone of value to society should not go to school, or start their adult life heavily in debt, simply because they were born to poor parents.

Another problem here is the one I mentioned. If all we asked those who own student loans to pay was the principal and a nominal interest rate we would have a lot lower default rate. Right now we have mercenary student loan guaranty agencies causing the amounts people owe to double, triple, and more with collection fees which as far as I can tell are illegal because they violate the terms of most promissory notes. It's a sad fact that these agencies actually make more money when someone defaults, so when someone can't pay, they pretty much do everything they can to ensure the loan goes into default instead of working out a more reasonable payment schedule. Collection fees and the like shouldn't be added to any student loan. It's like a person owes $200K on a mortgage, defaults, and then in three or four years they owe $500K. It's a back door way of adding a usurious amount of interest. It's also a way of essentially guaranteeing that the person will be in debt for life. There's something seriously wrong with a society where pensioners still owe money on student loans, even ones who made a good faith effort to repay.

 

[jtr1962]

For clarification, in Australia, the government will take on the student loan only for your first university level degree (if you wish to complete multiple degrees, you are entirely self-funded, but there are exceptions, like there are PhDs placings that are government funded as well), and the current situation is that, the loans are interest free, and repayments are garnished directly from your wages by your employer when you earn over a certain amount per fortnight (as time has already mentioned). (An employee has very little control over this).

That's better than the system in the states. As i said, I have zero problems getting a person to repay the principal and if applicable the interest. It's the collection fees which cause loan amounts to balloon to levels which can never be repayed. It seems like this isn't a possibility under the present system in Australia.

Mind you, Germany seems to do quite well providing University level education at no cost to their citizens...

I don't know what system they have in place but there's actually a good rationale for providing college level education for free to those it would benefit. In the long run society typically will get more in taxes from a college educated person than it will spend on their education. Moreover, the amount of money for education is fixed by the amount the government is willing to bankroll, so you won't have college costs rising way faster than inflation rates (a big problem here in the US)

 

[Chewy509]

It seems like this isn't a possibility under the present system in Australia.

Unfortunately, with the recent changes the Australian government has announced, it will become a possibility. (The common theme is that the students loan system here will move to a US style system).

 

[jtr1962]

Unfortunately, with the recent changes the Australian government has announced, it will become a possibility. (The common theme is that the students loan system here will move to a US style system).

Yeah, but hopefully usurious collection fees won't be a part of that. We're actually starting to have a serious discussion here on getting rid of that aspect of the student loan system.

 

[jtr1962]

In all this side discussion about student loans, I almost forgot-congratulations sedrosken! The earlier you complete college the better from both a personal and financial standpoint.

 

[Stereodude]

Now it is the fault of the colleges? At least in my neck of the woods there is lots of competition from beauty school to Ivy league and everywhere in between. It is national. Some stay near, but it is a rite of passage to go off to college which means anywhere in the country and a few go international.

Phrase of the day: Personal responsibility

I didn't say it was the fault of the colleges. I'm with you that it ultimately is an issue of personal responsibility for the student and their parents. What I said is that the colleges have had a hand in worsening the problem.

 

[Handruin]

People get lots of degrees they don't "need". If you go to some expensive school that costs $30k a year and get a worthless communications degree why should you be absolved of that?


Maybe after 15 years if you're forced to pay at least some percentage of your income each year prior. And the amount you can borrow for a degree is indexed to the salary of someone working in the field the degree is for. If you want a worthless degree great, but you won't be able to borrow very much to get it.

Interesting. I got a degree in communications and I paid back all my loans without ever wanting them to be absolved. Good to know it was worthless.

sedrosken, congrats on getting into college early. Do well, and stay curious. Have the desire to want to know more and try hard.

 

[Howell]

Congratulations sedrosken! From dual enrollment to AP classes there are many ways to pay as little as possible for college.

 

[Stereodude]

Interesting. I got a degree in communications and I paid back all my loans without ever wanting them to be absolved. Good to know it was worthless.

I didn't make it up.

 

[Santilli]

Congrats Sedrosken!

I'm 130 grand in the hole. I got hooked on teaching special education for 10 years, after graduating from law school. My loans are split between collectors, so I can't consolidate at this point.
They want so much money in payments, considering my income, and my 60 year age, it's a fucking joke.

So, anyone able to guess in 1997 that getting a law degree was going to enter into the worst financial situation since the great depression?

Sometimes the system needs to forgive people for not having crystal balls.

 

[Santilli]

Sucks sometimes....

 

[Handruin]

I didn't make it up.

You embellished by using the word worthless which was not in your esteemed article. That degree may not be of the highest return but it's not worthless. The three itemized careers under that degree aren't a good representation either.

 

[Santilli]

law in our area is really bad. An attorney I know has had his per month cut from 10 grand, to 700 dollars, and, He
is the rain maker????!!!!
He's on 30 percent commission on his billings.

 

[Stereodude]

You embellished by using the word worthless which was not in your esteemed article. That degree may not be of the highest return but it's not worthless. The three itemized careers under that degree aren't a good representation either.

Yes, it was hyperbole to make a point. It's not a high return career for most people. There are of course always exceptions.

 

[sedrosken]

No one forced you to take the loans.

Maybe not literally, but we as students are very much pressured to take the higher education. And to get a higher education, unless you were born with the silver spoon in hand, you have to take out loans. It isn't like the 1980's anymore where if you had a job while you were in college you didn't have to worry about debt. The price of an education has risen exponentially in the last 20 or so years.

They are all about telling us that we are pretty much worthless without a college education. They don't come right out and say it exactly like that, but they start pulling out figures like "the average college graduate makes twice as much money in their lifetime as a high school graduate," which, while they seem legit... the ultimate goal of this campaign is not to inform kids about the benefits of college, rather it is to prey on their uncertainty about the future and make them take out loans in the future. What they don't tell us is that it will take upwards of twenty years to pay off these loans.

The early college program is covered entirely by the high school, which seems crazy for my high school (something like three teachers are retiring and their courses are either being dropped altogether (art) or migrated to online classes (spanish). I imagine that's why only three kids out of our entire school are selected for this each year.

 

[P5-133XL]

College has always been very expensive relative to the income of students, the 80's no different. Even back and earlier then those numbers for lifetime earnings existed and were true, just like now. Loans, even back then were normal for everyone except for the rich or those that qualified for scholarships/sports. The more things change, the more things stay the same.

I will even agree that for public colleges, the drop in govt. subsidies over time has been transferred to students tuition so there is something to you having to pay more on a real dollar basis for state universities. Not so true for the private college. It is a question of the national debt messing with the economy and ability for the govt. to pay for it because half the tax dollar goes into paying interest on the national debt instead of productive use of that capital.

I will also agree that public k-12 education sucks compared to when I was there. The result is many programs in k-12 have been cut like art, music, even physical education. There just isn't the money that there used to be to pay for it. I am surprised that only 3 students in your specific high school are selected for early college programs but if you were one of them that is a good sign that you are likely to qualify and receive scholarships.

Pursue that option aggressively and do not exclude private colleges for while they tend to be much more expensive they also tend to have much better endowments so they give more for scholarships. I assure you that full-ride scholarships (or an accumulation of multiple scholarships) do exist even at state universities for I have two nieces that have gotten such.

 

[ddrueding]

I don't know how one would calculate for interest and inflation, but discounting that, if a $125,000 college degree earns you $1.50/hr more over a 40 year working career of 40-hour weeks, it just breaks even. So far in my life, I don't think it would have penciled out.

I'm pretty sure that inflation makes it more attractive and interest/opportunity cost make it less so, but I don't know how those would play out.

In any case, making such a long-term bet with such narrow margins doesn't make sense to me.