STUDENT DEBT: America's Next Bubble?

(Applications Advice, Letters of Recommendation . . . )
User avatar
Samara
Posts: 3245
Joined: Wed May 11, 2011 4:26 pm

Re: STUDENT DEBT: America's Next Bubble?

Postby Samara » Sat Aug 20, 2011 8:33 pm

Blessedassurance wrote:
Samara wrote: Yep, that's how demand works. If I'm willing to see one movie per month at $10/ticket and two at $7/ticket, and the government gives me a $3 coupon, I'll see two movies instead of one and more movie theaters will open. My consumption changed, but my demand curve didn't. If studios misrepresent how good their movies are, I'll want to see two movies at $10 and three movies at $7, thus changing my demand curve.


Producers enter the market to take advantage of the increase in price due to the increase in demand.

The problem with government subsidization is that it creates demand where none would have existed. The increase in demand relative to supply causes a rise in tuition and the proliferation of producers at the new higher equilibrium which further creates an increase in supply of JD-holders relative to demand of labor which drives down price to a lower equilibrium (and unemployment).

The availability of alternate means of financing which you speak of is also a consequence of governmental interference to the extent that the loans are non-dischargeable.

All this analysis of a bubble-burst requires the participation of rational , informed agents and viable substitutes, rendering the point moot. The educational bubble is not going to burst anytime soon. Cooley will continue to meet its quota, JDU notwithstanding (snowflake syndrome, knowing an employed Cooley grad etc). The government can quit subsidizing education but that will open up a whole new pandora's box. The onus is on the ABA to restrict the supply of JD-holders in a manner similar to the AMA but that also involves trade-offs.

I think we can all agree on this.

User avatar
Blessedassurance
Posts: 2081
Joined: Mon Jun 27, 2011 3:42 pm

Re: STUDENT DEBT: America's Next Bubble?

Postby Blessedassurance » Sat Aug 20, 2011 8:43 pm

Samara wrote: That is the conclusion I would make. Schools are raising tuition at a crazy rate and it doesn't seem to have any significant effect on consumption. The elasticity is determined by what applicants think they can get from acquiring a degree, i.e. future earnings and such, not the price of borrowing.


That is not an entirely accurate conclusion. The elasticity is affected by ability to "pay".

A lot of people fancy living on an island but they simply cannot afford to do so. The benefits of living on a tropical island under coconut trees with a bottle of whiskey is not in question, the barrier is affordability. The schools keep increasing tuition due to the seemingly-inelastic demand created by loans, subsidies coupled with unrealistic expectations created in part by false advertising.

You're partly right though.

User avatar
monarchylover
Posts: 199
Joined: Wed May 11, 2011 5:17 pm

Re: STUDENT DEBT: America's Next Bubble?

Postby monarchylover » Sat Aug 20, 2011 9:45 pm

Samara wrote:
monarchylover wrote:
Samara wrote:
monarchylover wrote:The graph says absolutely nothing about a student loan "bubble" dumbass. Also, NO the housing bubble crippled the economy because it affected peoples retirement funds brought down entire insurance companies and destroyed towns. If your dumbass abandons payments on your student loans they will garnish your wages and tax returns. You can't just "walk away" from student loans like mortgages that destroyed entire communities including the businesses that resided in them...

Umm...wut? I think you're conflating the housing price bubble with Wall Street credit default swap practices.


please edjumacate yourself on CDSs http://en.wikipedia.org/wiki/Credit_default_swap the CDS's backed the bad mortgages so when they defaulted the CDS's were suppose to cover the default as a type of insurance which AIG held a shit ton of which they did not have the funds to cover.

I understand that, but, arguably, the housing bubble popping would not have had the massive deleterious effect you cite if it had not been magnified by CDS practices. Student loans are not linked to CDS or any other practices. Therefore, you can't make the comparison you make. Because mortgages were also highly leveraged by the government through Fannie Mae and Freddie Mac, we probably can see what kind of effect a student loan bubble would have by looking at the housing bubble divorced from the CDS effects. That's certainly difficult to do, but we can probably learn a lot by trying.


Which is why I said student loans will not make the housing bubble look like a blip.........

User avatar
Samara
Posts: 3245
Joined: Wed May 11, 2011 4:26 pm

Re: STUDENT DEBT: America's Next Bubble?

Postby Samara » Sat Aug 20, 2011 10:28 pm

monarchylover wrote:Which is why I said student loans will not make the housing bubble look like a blip.........

I guess we're agreeing for different reasons.

User avatar
20160810
Posts: 19648
Joined: Fri May 02, 2008 1:18 pm

Re: STUDENT DEBT: America's Next Bubble?

Postby 20160810 » Sun Aug 21, 2011 4:26 am

“I still have student loans,” David Guard, a graduate of Gettysburg College and American University, told Fox News recently, as lawmakers and the White House bickered over the debt ceiling. “I could see an increase in those interest rates.”

Read more: http://www.foxnews.com/politics/2011/08 ... z1VeMKpxiz


I think I might be able to figure out the problem here...




Return to “Law School Admissions Forum”

Who is online

Users browsing this forum: BlendedUnicorn, eminentdomain, Gordon_Cole, IExistedOnceBefore, InterLaw, ss12345, TirantMartorell and 21 guests