[analog31]

To me, this seems like a possible case where people are rational agents, but they don't have comprehensive information. Selling a financial instrument that someone can't possibly understand is unethical, and should be illegal. My own rule of thumb is that the higher responsibility goes to the bigger guy.

[Mirioron]

You can buy a car without knowing anything about cars. You can buy a house without knowing anything about them. Do you think the seller is being unethical in these cases too? Particularly when you're buying the car from a manufacturer or the house from a large broker. What about selling a computer to somebody that is computer illiterate?

I agree that what the banks are doing is very likely unethical, but I think your generalization about the bigger guy having more responsibility doesn't always hold.

The other problem is that people will generally say that they understand even if they don't. Maybe a mandatory class on basic finance and economics would be a good idea.

[analog31]

Cars and houses are both heavily regulated for the exact reason of information asymmetry. Markets appear to have regulated computers, but I don't know if that can be generalized to other kinds of products.

I agree that schools should teach about personal finance. My son was assigned a paper to write on the payday loan business, and it was pretty eye-opening for him.

[paulddraper]

> Cars and houses are both heavily regulated for the exact reason of information asymmetry.

Not really. I've bought and sold houses and cars while knowing relatively little.

The real difference between cars, houses, and educations is that the first two are collateral and lenders do due diligence to avoid foreclosure.

Educations can't be forclosed on -- there is no collateral, and relatedly the loans are non-dischargable.

[qaq]

Why? google search of student loans problems turns up literally a ton of results on very reputable sites discussing these issues. If a person can not be bothered to make a simple google search before making a 100K decision I don't think the problem is the bank.

[ransom1538]

"I don't think the problem is the bank."

Oh. It sure isn't the bank's problem. You can't even default on a government backed student loan. The bank is incentivized for you to fail and rack up fees.

[qaq]

don't doubt that but starting salary of 20K with masters degree tells me the choice of degree was not optimized very well. There are many ways to get degree for close to free just takes a bit of effort but paying down 200K is def. significantly more effort.

[tehwebguy]

Because most 18 year olds don’t think the entire financial system is designed to make them into financial slaves? Someone with authority says they are offering something good and smart for their situation so they believe them?

[qaq]

So it's reasonable approach to spend 100K and literally do 0 research into it? and it is someone else's fault if things do not workout?

[tehwebguy]

Basically yes, that is exactly reasonable.

The banking institution which created, offered & services the financial instrument you’re describing has about 1 trillion times more data on the risks and the possible outcomes. They should absolutely have the responsibility when offering 5-6 figures to 18-year-olds.

[qaq]

Well than I have a bridge to sell you. You can not make a system where there is no personal consequences to making dumb decisions there is no "they" who will take a fall for you.

[tehwebguy]

Then we should consider rewriting the laws which made a system where there is no consequence for lenders who make dumb decisions about who they lend to, and possibly consider consequences for the colleges they are basically colluding with?

See the problem now?

[givinguflac]

I would argue the majority if not all of those websites didn’t exist for people who are struggling today. For new students, sure. But someone struggling in this situation didn’t have these resources in early 00’s.

[qaq]

That it is I guess a valid point. But people are still taking out those loans even though all this information is one search away.

[iampims]

This happened 10 years ago, and while I don’t doubt there were articles warning you about the dangers of student loans, it probably wasn’t as visible as it is today.