We need to just move past the college model. They’re just expensive certification programs at best, in terms of utility. The actual teaching/learning (which I feel they do a bad job of) and the testing/certifying can be separated from each other and democratized (opened up to competition, made more available). The current costs of college are ridiculous, and a minor 10% tuition cut from the $70K/year cost mentioned in this article isn’t going nearly far enough. I also feel there isn’t a good reason to limit the number of students who can be certified to a Harvard or MIT level, for example, and we can change that.
Moreover a lot of college seems like activities the public shouldn’t be subsidizing. A jobs program for overpaid administrators. A portfolio of majors that are not rigorous and seem more like hobbies. Pet research projects for tenured professors that often has low return on investment. Local college town economies. And so on.
Top tier colleges (and even state colleges) teach a lot more than what is inside of a book. They teach interpersonal skills, social skills, work ethic, self care, professional networking, etc.
I think it is misconception that these schools are respected because they teach the subject matter better, or that they provide no value outside of the lecture hall. If anything, >50% of the value is outside of the lecture hall.
Also, I don’t think academic research shouldn’t be expected to have any return on investment. The job of a professor is to further academics, not profit.
Time and life end up teaching those things because normal interactions end up teaching those things.
This is ascribing four years of interacting with other people to colleges. Four years of work experience in a given job makes someone far more valuable than four years of college preparing to start the same job. College isn't the only place to learn. Art history can be studied as a hobby any time in life.
The idea that using four years to learn english 101 while accumulating massive debt instead of focusing on becoming valuable enough to start working in an industry you want is a destructive mentality. If typical college was much cheaper and more focused there might be more validity to it.
Four years of working earns money instead of bleeding it. You meet people that actually know how to do the things you want to learn instead of guessing at them.
Vocational schools already exist, if students want to attend one, they already can. Liberal arts schools are very intentionally not that.
It is certainly possible to learn broad range of subjects outside of a structured environment, but it is improbable, which is why we value structured educations.
The idea that it is learning outside a structured environment is "improbable" is part of the problem. Most college isn't very structured in the first place.
I think it is a problem with expectations. Kids seem to take on massive debt, then wonder why the job they get after spending four years at a school taking lots of classes that have nothing to do with the skills they need doesn't pay well enough to make their debt seem worthwhile.
The truth is that lots of kids are pushed into a path that wastes a huge amount of their time, energy and money, because what they need to actually become valuable is going to happen after they graduate.
I agree, that expectation is absolutely the problem. A liberal arts education is not and has never been intended to be a job-training program.
The trope that kids should "go to college so they can get a job" has elements of truth but is wildly misleading when most interpret it to be a causal relationship. I don't blame post-secondary academics for this -- this is mostly a cultural problem. The last couple generations have been raised with a cultural expectation that 'success' equals 'college-bound', and secondary school advisors are not willing to rock the boat by suggesting anything otherwise.
> They teach interpersonal skills, social skills, work ethic, self care, professional networking
This suggests that people who don't go to college lack interpersonal skills, work ethic, ability to self care; Seems like all of these are important, especially for the other 34%.
But the other response is, this is a loud siren for nepotism -- and potentially other isms; as opposed to meritocracy, thanks for including "professional networking".
Or do plumbers, car mechanics, home builders, beauticians, and (in trade school, programmers) not have/need work ethic or self care ?
> This suggests that people who don't go to college lack interpersonal skills, work ethic, ability to self care;
No I am not suggesting that. These skills are not boolean, they are all a varying continuum, and they can be learned in different ways.
Liberal arts schools don't teach these things because they cannot be learned in a different way, they simply teach them because they are important to their educational mission. Colleges don't need a monopoly on conveying these skills to have it as an important part of their value proposition.
But that's not what you're saying. Your comments suggests that a college education is necessary to learn these skills; That removing student loans would somehow decrease work ethic.
The irony of the West Point cheating scandal coming out that denies that even the most prestigious college that focuses on values fails to instill values disproves your suggestion very strongly.
> They teach interpersonal skills, social skills, work ethic, self care, professional networking, etc.
Judging by the amount of screaming children we've seen exit these institutions, they're either not teaching those things, or are doing an extremely poor job at it.
The coddling companies have to do for new grads entering the workforce is a testament to the lack of interpersonal skills, social skills, work ethic, self care, etc. that they gained while away at these institutions of higher learning.
Regardless of your personal opinion on recent grads, an accurate measurement of success can only be made with the control group. There is definitely no shortage of bad employees in the non-college employment track... and oftentimes the behavior can far surpass a "screaming children" characterization.
>There is definitely no shortage of bad employees in the non-college employment track... and oftentimes the behavior can far surpass a "screaming children" characterization.
There are a lot of alternatives being tested out right now. Most of them do a great job of the training and certification parts of college.
The problem is that we've also loaded in a "maturation/social growth" responsibility onto college. It's a place where teenagers can move out and meet people their age from different places and do dumb things with minimal consequences. Lots of people argue that this, and the networking opportunity, are the far greater part of the value of college, and nobody seems to have a good alternative for that.
I wonder how much more of this we'll see going forward. As the article says, the number of high school graduates is going down simply due to demographics which means tough times for those schools who can't attract new students.
I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our state school. You get out of any education what you put into it.
All that being said, the Pandemic is not going to be enough to fix the tuition problems across the board. Federally subsidized student loans need to GO AWAY. They've allowed students to enter into debt, the only long term contracts kids under 18 can legally sign, for something they can never declare bankruptcy on.
Schools have soaked up that student loan money, increasing costs as the amount kids qualify for goes up. It all gets sucked into administrative costs. Very little of that money even get to professors, many who still depend on grant writing to fund their departments.
Schools will scream and moan if the federal government stops backing student loans, but it needs to happen. They've exploited a system to take more public funds without actually contributing significantly a better education for students.
I think we should start limiting tuition by making it be tied to the first year salary of students graduating from the same school with the same degree. If you want federal money, that is the rule. And room/board must be optional, you can't be forced to live on campus.
That might work for Computer Science where grads can be employed quickly and at very solid wages but it won't meaningfully apply for most fields like business, chemistry or physics.
Then those schools will be disincentivized to charge people for degrees that won't pay for themselves, which is good
which will result in more people going into degrees where people can be employed quickly at solid wages, which is good
which will result in a scarcity of people going into the fields you mentioned, which will increase the wages in those fields which will incentivize people to go into them
this, like most things, is a supply and demand problem, and we have created too much supply in certain areas
They will also be disincentivized to offer those degrees at all. Which, IMO is definitely not good. Obviously these issues are nuanced and complicated...
They’re not nuanced or complicated. If society (taxpayers) want the benefit of a populace educated in those fields, they need to pay for them by funding schools.
I want a populace educated in those fields, and there are much betters way to do it than robbing the citizenry. One way might be to agree to work for a company afterwards who might pay for it, another to join the army in exchange for paying for it. Another might be to stop ensuring loans so that prices fall and become attainable to someone working part-time and going to school. Loans become not such a burden then, if you even want them. Lots of ways.
Even if schools could accurately estimate the "value" of a degree based on expected future earnings, that estimate is going to be affected by a potential student's employability, and the risk that the student may not complete the program.
"Tie student loan funding to the value of a degree" is a fantasy. In the real world, what would actually happen is that student loans would become limited to those who could put up some sort of collateral, which for the figures involved involved in a typical college education would largely limit it to the already-wealthy.
If the goal is to provide the non wealthy with the ability to attend higher education facilities, then scholarships or grants or taxpayer funding for the school is the proper method.
Giving out blank check loans with no underwriting standards does not help the non wealthy. It results in what has already happened in the US, schools collect as much tuition money as they can since why not, and the non wealthy end up indebted for the rest of their life.
This is also the same reason that payday loans are predatory. You are giving someone a loan who has been rejected by all other credit institutions. The only reason why you are giving that person a loan is because you want to take advantage of their weaknesses and make a profit out of their misery.
The only real way to help is by giving out money that they don't have to pay back.
Is college a form of jobs training or a way to make yourself better?
There is the disconnect, because both are true in different amounts for different people.
If it is just jobs training you are correct. We shouldn't have "under water basket weaving" type courses because there is no market for that. There is some need for art, but only in the context of art is useful to make better marketing materials, so the degree should be offered by the business school in context of marketing courses. History is useful to make you a well rounded critical thinker, but if you are going for a history degree it should be sponsored by the school that will eventually give you tenure as a professor.
If you just want to make yourself better: art is very interesting as a subject. Have fun learning it. Likewise history is interesting even if there are no job prospects. However because these are no job prospects (this generalization is of course false - but true enough for discussion) you shouldn't be getting such a degree if you cannot self finance it from your current job.
Both of the above arguments makes for a worse world in my opinion.
I think the simple answer is to look at how many Euro countries pull off having good universities for low cost... and copy them. No need to reinvent what has already been done. Just need to "port" it to America.
You should compare the actual effective taxation rates. For example, high earners in Norway get taxed about ~8% higher than comparable earners in California but that comes with affordable healthcare, education, and government-backed pensions that people can actually survive on.
So they tax 8% higher than USA's highest tax state?
> affordable healthcare, education, and government-backed pensions
Affordable healthcare, education, and pensions are wonderful things and I want them as well. It's immoral to provide them through the federal government though, it should be done privately through the market.
When you consider that there is no limit to the size of a company it is pretty obvious why monopolies form. A lot of markets only really need one company that provides a service or product for the entire economy. With healthcare it is extremely obvious that having one provider is beneficial because you want everyone to be on the same health insurance plan. The problems are that monopolies usually abuse their power so you need put it in control of an accountable entity such as the government.
Consider it from a different perspective: CEOs don't become billionaires because they are multiple times more productive or competent than other people but rather because there is no need for a second equally competent CEO. One CEO is enough to serve an entire market and so all the market power concentrates in the hand of the CEO who can then abuse it for his benefit.
That is another myth that is floating around the US. CA actually has progressive tax brackets (i.e. the rate changes quite a bit from bracket to bracket) and only few get into the top state brackets, whereas most of the other states that have income tax, >90% of people are in the top bracket as the top bracket is around $10k (looking at https://tax.idaho.gov/i-1110.cfm).
It depends from country to country. Germany pulls it off by tracking most students out of the university path at a young age. Instead, those students are basically forced into vocational schools. The US public would never accept that.
You still need to be upper-middle-class to rich to go to university in Germany. The difference is that you don't have to pay for it.
If you take on a loan for college then you better hope you get a job out of it. If you want a degree with no economic prospects then you can just pay for it yourself. Remember college used to be an upper class thing where people chose their education freely precisely because they already had the ability to support themselves.
There is the other factor that a worker without a degree in the USA is partially redundant. A lot of jobs that do not require a degree can and have been moved to other countries. You are free to move there and work at your low skilled job there. There is a lot of demand there but not in the USA. You can chalk this up to an incompetent government or central bank but the reality is that as an individual you have no power over this and therefore an economic degree is your best bet.
The alternative to connecting college with the job market is to introduce a job training program inspired by Germany and let people enter a three year job training program in exchange for lower wages. That ship for this has sailed a long time ago. Now that college has been burned into the minds of everyone it will take decades to reverse the trend even if you start today with full force. Germany still has the lowest youth unemployment rate in the EU and is in the top 4 world wide.
>Federally subsidized student loans need to GO AWAY. They've allowed students to enter into debt, the only long term contracts kids under 18 can legally sign, for something they can never declare bankruptcy on.
I think that's something that many people would agree with, but how do we go forward with making that happen?
Running for federal office with that platform, and supporting others that do.
Only problem is you will lose to other politicians that are able to promise lower taxes because giving out federal loans to students is cheaper for taxpayers than giving money to schools directly. People will vote for the person “helping” students by lending them money, rather than the person that has to help students by giving schools money, and therefore raising taxes.
Introduce a ceiling on the total amount of federally subsidized student loans that a person can get in a year. The ceiling steps down every year, until the loans have completely gone down. Start the first ceiling 2 years from now, so students and institutions have time to plan for the change, and complete the phaseout 8 years from now. That's how I'd do it.
As for how you would do it, you'd have to convince your congressional representative that reform is worth doing, and is worth the inevitable political cost to them. Making loans somewhat harder to get will inevitably make universities upset with the politicians (as universities are the ones that actually receive the bulk of the financial benefit from these loans). For this reason, I see this reform as unlikely to happen, at least as I described it. You would have to pair it with more direct funding for universities.
Continue to remind people that incomes have held stagnant with the rise of post secondary education – Meaning that the promise of higher incomes as a result of higher education from decades ago never materialized.
The vast majority of students are only taking on these loans because they have been lead to believe that their income will increase, more than offsetting the cost of the loan. But we know very well now that it doesn't play out in practice. As we educate away those flawed ideas from history, those with profit motive will be scared away, leaving those who are there for education's sake. When only they are left, costs will start to align with what education is actually worth.
Then again, a diamond remains forever, so perhaps you cannot educate the educated.
It is detrimental to an individual to decide to sit out the whole educational arms race of degrees and credentials. I agree it would be better overall if people didn't have to go thru it. But for a single person to decide to sit it out, they're shutting themselves out of a lot of high paying jobs that only recruit college graduates. You can be successful as a high school graduate, but it's a lot easier to get your foot in the door of a lot of places if you went to the hiring manager's favorite college.
It is detrimental to an individual to have disabilities that prevent going to college. Those people will statistically earn less than, for lack of a better word, normal people. And normal people will earn less than the outliers on the other end of the spectrum. If you have the capability of graduating with top honours from Stanford, there is no benefit to actually doing it. It is beneficial to be born as the kind of person who can achieve that goal.
There is no arms race, simply a misunderstanding of the data around the filtering that takes place with increasing levels of academic rigour. Those who fall down to that rigour also fall down to the rigours of the working world, statistically.
And funded by investors seeking to capture the economic gains made from it. That students are resorting to having to take out loans to fund their hobby shows it is only that.
Make student loans no longer exempt from bankruptcy. The rationale for making student loans persist through bankruptcy is that students could just declare bankruptcy after graduation, since they probably have no assets. Maybe make the exemption only last 10-15 years. The permanence of student loans means lenders have no qualms against writing loans for people who will likely not be able to pay them off for decades, or ever. Reducing ability to default makes the loans more accessible, yes, but in effect it's shifting the burden to students - students who are often young people not well equipped to make long term financial decisions.
Yes, this will mean lenders will be much more reluctant to issue student loans. It will likely prompt lenders to offer loans contingent on certain majors. This is a big, big reason why universities are heavily opposed to student loan reforms. The uncomfortable reality is that many universities are funded through what essentially amounts to predatory loans, and halting the practice will cut into university funding.
>The permanence of student loans means lenders have no qualms against writing loans for people who will likely not be able to pay them off for decades, or ever.
Worse, lenders write, and universities accept applications for people they know statistically 99.999% they will not get past the first year.
>And universities accept applications for people they know statistically 99.999% they will not get past the first year.
Universities do this on purpose because between 500 student lectures and on-campus housing requirements undergrad freshmen and sophomores have a massive profit margin per body whereas juniors and seniors are in classes that have much more resources spent per student and often don't live on campus.
> Worse, lenders write, and universities accept applications for people they know statistically 99.999% they will not get past the first year.
Sounds like the subprime mortgage scam by the banks, given that they know the US government is going to subsidize the 'losses' and they will have extracted their profit one way or another. Anyone who thinks Socialism is some de-facto virtuous ideal needs to see that collusion between State and X happens in just about every Industry already for private largess. And often is sanctioned, regulated or at least likely to have light to no punishment if caught: see banking fraud.
I honestly want COVID to make the University model obsolete, it will have been worth it if people see how nebulous and impractical the absurd expenses when in reality you can do 75% of courses online anyway; its entirely a predatory model. This is such a drag on young people's lives to have 50k+ in debt in your 20s and are some how sold the idea that you are 'making it' by working to pay that off just to get some entry level position you could have done with a 1-2 year apprenticeship by the time you were 16 like they do in many Germanic Countries.
It's absurd to think this model can go on, and as you mentioned the pernicious statistic rates they are worse because not only is it short sighted thinking that doesn't add value to Society, it can only extract it from those least likely to afford it.
I got honors and letters of recommendations while I was in my undergrad and the only time I ever too them out were to show employers when I applied/interviewed for jobs, and most didn't care either; otherwise they sat in a desk in an envelope as they're reminders of time poorly spent in something I had no interest in by the time I was a sophomore and would come to hate entirely but couldn't get out of until I was 26 due to the debt.
Maybe we should set student loan rates to reflect the actual risk being assumed instead of offering deceptively low interest rates with the fallback of modern indentured servitude. People might think twice about going to school if their student loan interest rates reflected the actual risks they were taking on.
Exactly. Currently, since students cannot get rid of student debt, student loans are essentially risk-free for banks. They should be required to lend at the risk-free rate.
This is wishful thinking. There is no collateral for a school loan. Banks have to make up for that risk somewhere. Students will have nothing to lose by staging bankruptcy, and banks will stop giving out loans.
Bankruptcy tanks your credit rating for years. Most of a decade, ~7 years IIRC. If student loans could only be cancelled via bankruptcy after 10-15 years, that would mean students trying to cancel their loans through bankruptcy would be doing it in their early to mid 30s assuming they graduated at 21 years of age. Their credit scores would be ruined until their 40s at least. Few people would pursue this route just to save some money on education.
If a graduate doesn't have enough assets by 30 to make bankruptcy a bad option, then I think it's fair to tell the lender that they made a bad investment and that the loss is reasonable. If this is how it worked, student loans to good universities would still yield a good return. It'd probably incentivize universities to track students' earnings after graduation, and focus on improving that figure. Lenders would probably stop writing loans to degree mills, or non-rigorous universities that don't substantially improve the employment prospects of students.
What problem does that solve, then? Wow, you can be bankrupt, and never be able to buy a house or car. How is that a solution? It's the same problem as now - "you can't get a house/car because your loan makes you unable to afford it." This doesn't solve the problem. See, it's just a garbage solution thrown out because it "sounds" good but on inspection it's just BS.
It's not feasible to make student loans able to be eliminated via bankruptcy without restriction, since students could just go through bankruptcy right after graduation and plan around being unable to get a mortgage or car loan until they're 30. If you graduated with a degree in CS, and landed a six figure tech job it'd still make sense financially to go through bankruptcy and save potentially hundreds of thousands of dollars in student loans, even though you could easily pay it off over several years. This let's the student exploit the lender.
The status quo of making student loans not cancellable through bankruptcy makes it so that lenders can act in a predatory manner and issue loans to go to ineffective institutions that don't improve earning potential. They know students won't be able to pay for decades, but they don't care because the student is stuck with the debt and has no way of getting rid of it. This lets the lender exploit the student.
Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.
The easier it is to eliminate a student loan the easier it is for a student to exploit the lender, and take the loan intending to go through bankruptcy. The harder it is to eliminate a student loan, the easier it is for banks to write loans they know students can't pay off. The optimal spot is somewhere in the middle, where the student has an escape valve - but one that is only feasible to take if you have no significant assets by the time you're 30 or 35. If the lender is worried that a student debtor won't have enough assets by 30-35 to make bankruptcy a bad option, then they will think twice about issuing the loan.
>The optimal spot is somewhere in the middle, where the student has an escape valve - but one that is only feasible to take if you have no significant assets by the time you're 30 or 35.
The optimal spot is to not let 18 to 21 year olds borrow six figure sums without understanding the ramifications of it. There is no need for these loans to exist. The cost of higher education is high because the loans exist. The loans exist because exemptions to bankruptcy law were created specifically for those loans.
You're saying the same thing as the parent post, but they're describing mechanism to discourage lenders from making these loans and borrowers from gaming the system. You just say the system is broken and shouldn't be.
You're not failing to explain anything, what you're explaining isn't a hard concept and everyone understands what you're saying. We're just saying: it doesn't work/nor does it make sense.
> Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.
So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again. So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.
Yes, the 30+ year olds have to make the tough decision of defaulting on their loans and severely limiting their ability to secure loans in the future, vs. continuing to work towards paying off their student loans. If there was no repercussion to defaulting on loans why would anyone ever pay off a loan?
This is precisely why it makes sense to restrict ability to default on student loans for a certain duration. Even if you have six figure salary as a new grad, it'd still make sense to default on your student loans immediately after graduation and plan your life around having a terrible credit score until your 30s. Pay for cars in cash, and don't plan on buying a house until one's 30s. Everyone would do this because it's basically getting money for free. And consequently nobody would issue student loans, even to students going to good schools and studying in demand majors, because students can effectively just walk away from the loans.
Yes, it's not doing anything for people 22-30. This is deliberate. The point is to make sure students who can pay off their loans do pay off their loans. We make recipients of student loans wait until 30-35 to be able to default on loans so that only the ones who are genuinely stuck with loans they can't pay off go through with the default. Yes, their credit score will tank. But that's the consequence of defaulting on a loan. If you could default on a loan without impacting your credit score, you'd be a fool not to default on every loan you have right now - but you wouldn't actually have any loans because nobody would lend money under sucha scenario.
> If there was no repercussion to defaulting on loans why would anyone ever pay off a loan?
> Are you joking? Do you not realize that any current problems were caused by the current system?
What's even more telling is how that all happened when I was in school, prior to my JR year defaulting on student debt was what most did when they got to the professional levels and secured a decent job--and this was back when university costs were much lower and more broadly available, too.
I've had several boomer aged physicians/surgeons/anesthesiologists/lawyers laugh about it when I was in motorsports and told us to explore it despite the stigma as it 'paid in the end.'
In many ways I think this predatory model of extracting wealth from the youth is not only short sighted its absurd; reducing the quality of life with underemployment/unemployment creates lost generations like they have in Japan, and unless the goal is to lower the population at all costs then not much 'good' comes out of it except Zombie banks, high national//coprprate debt ratios, mass impoverishment of Society as a whole and suicide as proved by the last 30 years of Japanese Sociological observations.
Then again, some study using Machine Learning was stated to have had 'break through' results identifying India was not in poverty, only to see that Apple factory workers were paid $7/month instead of the ~$100 and proceeded to smash the factory.
Are people still in doubt we live in a Dystopic Cyberpunk existence already? Its not just an overly hyped game, its clear to see we've been in one for over a decade now. Its just not all neon, robotic enhancements and flying cars; everything else seems to be lock step with the genre from an untouchable Corporate Class, decaying environment, to poor living standards, wide spread disease and poverty.
Are you joking? Do you not realize that any current problems were caused by the current system?
>So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again.
Seriously. The inability to discharge debt is the primary source of crushing debt. Predatory lenders can turn you into a debt slave through student loans and you have zero recourse. Since student loans are guaranteed by the government it doesn't matter to the lender whether you are able to pay the loan back or not. They can just give a $100k loan to someone who is 100% going to drop out. It doesn't even have to be your fault. Universities are incentivized to spend money on student retention and basically zero money on actual education.
>So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.
Except lenders are not going to hand out $100k loans willy nilly anymore. They will actually have to look at what and where you are studying. If students can discharge their debt then it's possible for lenders to make losses and do you know what businesses hate the most? Damn losses. Those losses will have to be covered higher interest rates and do you know what happens when people are faced with greater interest rates? The maximum principal they can borrow shrinks and there will be no more infinite flood of money that inflates tuition costs year by year. What about people that can't afford the loans? They can always choose a cheaper degree. If getting a CS, EE, civil engineering, law, medicine, whatever degree improves your employment chances so that you can pay off your loan without trouble the interest rates are going to be way down and thereby make it extremely obvious which degrees and schools are the most lucrative. You'll be able to measure the quality of a college and its degrees by the interest rates the lenders charge and even in the worst case you can get rid of the loan trivially. Collges will be able to make money off of good education instead of just admitting as many students as possible by luring them in with an expensive lifestyle.
It's funny how Americans keep telling me about the advantages of hire and fire and how it increases economic efficiency while simultaneously they have the most socialized private education industry on the entire planet which means they get none of the benefits of socialized education and none of the benefits of private education. Seriously your current system is so broken even abolishing it completely without a replacement would still lead to better outcomes than whatever crap you currently have.
"Few people would pursue this route just to save some money on education."
You seem confident saying this, but countless youths have accumulated hundreds of thousands of dollars of debt they won't pay off until their mid 40s at no-name liberal arts schools and degree mills
But what good is a credit rating? Plenty of people are willing to offer you a credit card after declaring, simply because of the 8 year prohibition on serial bankruptcy.
There is no collateral for credit card loans either.
> Banks have to make up for that risk somewhere.
Private student loans have pretty much shriveled to a drop in the ocean of higher-ed financing since they were excluded from the federally-subsidized loan programs (for quite a long time the only “federally-subsidized” loans are direct federal loans), so banks don’t need to do anything; privately-originated loans are only a factor for unaccredited schools whose programs are not eligible for federal loans.
The only lender relevant for federal loans will do exactly whatever federal policymakers decide is desirable, so need to motivate lenders is not a constraint on policy choices.
Not true, I went to a top accredited school and had to take out private loans (at 9.5%) when I exhausted their aid and federal resources and my parents were tapped out
>There is no collateral for credit card loans either.
Which is why credit card companies don't give you 100K in credit cards, but you can get that in student loans. Heck, they generally won't give you more than a few K in credit cards until you've demonstrated some credit trustworthiness.
> There is no collateral for credit card loans either.
And? So? Low balance credit cards don't have collateral. High balance ones require impressive proof of income,credit history, etc. This isn't an argument.
Your second point needs a HUGE citation. Please provide, thanks.
I think banks stopping giving out these loans would be a benefit - it would have a crushing effect on tuition and move the conversation to cost containment and educating the most cost effective way possible.
Income Sharing Agreement - You go to school, possibly with a small stipend, and in return the school gets (say) 10% of the first 7 years of your income, possibly capped at a max repayment amount.
I think this is another good model. Purdue is one relatively well-known university that offers this. What's crucial about an ISA (especially an ISA that only collects on income beyond a threshold) is that the university then has a direct incentive to actually improve students' employment prospects.
Then again, the Lambda school ISA selling issue demonstrates the potential to eliminate this alignment of incentives. In universities, there's also the issue that colleges might only accept ISAs with students interested in majors with good employment prospects. But if we view university as an investment where the return is better employment, then this is working as intended.
Consider the debt burden on society, whether that burden is borne by the students themselves, or by the government, may be roughly equal. If anything, the government pays less interest.
My thought is that in the future, privatizing higher education will seem like a quaint historical anomaly, like privatizing health care, both of which have made themselves at least twice as expensive as necessary.
If we can't force private colleges out of existence, we could concentrate on solving the education funding crisis starting at the level of state and regional colleges and trade schools. Preferentially direct research funding toward those schools, to build or expand on research institutes in areas where a few extra jobs would be welcome.
Ironically I believe we could destroy the private colleges by eliminating all government oversight of the admissions process, and letting them compete with one another with no restraint.
I really think you need to reconsider your stance on private colleges..
For example, BYU and BYU-Idaho provide affordable education for tens of thousands of students every year. Sure they're religious, but they serve as price competition to state schools in the area, keeping prices down across the state of Utah.
Secondly, the reason things are so expensive is because the federal government gives loans to everyone, driving up prices. Why would public colleges ever cease their continuous tuition increases if the government gives unlimited loans to anyone, regardless of the price? The federal government should just give a set amount per year to states that the states can allocate among their universities, so that they can continue operating, and then get rid of government funded loans.
With the government funding the schools directly, they will have enough to set up lower cost programs and then be forced to compete for the lower amount of dollars provided by students, driving down prices.
Also, the federal government should put a condition on this money that if a college takes it, they have to charge the same for in state and out of state tuition, creating a more national, competitive market for students in order to bring prices down.
Maybe we'd see more schools go to a partial or full online model, which could really drive prices down. Honestly part of the federal money could be conditioned on creating online programs which are even cheaper for students.
All good points. I remain skeptical that loans are what drove prices up. Declining public funding has also played a role. Sending money directly to public colleges rather than sending that money through a twisted loan system makes more sense to me. And the state / regional colleges are cheaper to operate.
I'm paying tuition to two of those schools right now for my kids -- a state "flagship" university, and a regional campus of the state university system.
There are certainly tiers of private colleges, and I wouldn't want to mess with religious schools. I'm mainly thinking of letting maybe the top 20 private colleges in the country become the destination for the top 20000 kids based on whatever criteria they want. But don't let that system continue to distort educational policy and funding for the rest of us.
If the government suddenly stopped willing to back student loans, without question the cost of tuition and/or the amount of 'scholarships' offered to students would respond commensurately.
Here's one idea: Cap the amount that all student loans can collect at something like 15% of taxable income, for max 20 years after signing. After that they are written off. But let the lenders see everything -- school, major, test scores.
This ensures loans can never become a crushing burden. But more importantly, it incentivises the banks to provide very useful information to the potential students. Unlike colleges who, since they get paid up front, are strongly incentivised to let marginal students study expensive things.
> Here's one idea: Cap the amount that all student loans can collect at something like 15% of taxable income, for max 20 years after signing. After that they are written off.
Make it the 10% of discretionary (not gross), and up the limit to 25 years of any of the loans covered graduate or professional study, and you'd have an existing option for current federal student loans.
Make this the only option for federal loans, remove private loans from the protection against bankruptcy discharge, and you the job is done.
> But let the lenders see everything -- school, major, test scores.
Private lenders can, AFAIK, already put terms like this in contracts if they want.
Honestly, vote for people like Yang, Bernie and Warren. Talk to people and try to get it into their heads that voting for the well-being of everybody - not just a select group you belong to (ethnicity, sex, social status, job, region, etc.) - is better for the country.
That might include you taking a hit e.g higher taxes, but it's group think and individualism that brought the country to its current state.
> Federally subsidized student loans need to GO AWAY.
The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take, on what these loans do. Removing them will hurt about about a generation of students from the very low to the upper middle class set until the academic<>employment market adjusts. What do I mean?
A simple, pragmatic fact is degree from a name-school, vs. a no-name school, is a differentiator to a student who knows what they're doing. This is especially true with grad schools where it's professionally-focused on the outcome. NYU Law vs. CUNY Law. UMass Dartmouth CS vs. BU CS. You're buying a network and a door opener with the latter. One resume gets you an informational interview, a priv'd coop/internship, an alumni network and so on, and the other has an uphill battle. For many underpriv'd students, that network-buy is life changing. I wish it wasn't the case, but pretending that it isn't is damaging. This is just the way of things at the moment.
By getting rid of fed-sub'd loans, you:
- take away motive-neutral funding route for your cheap but no-name undergrad -> good grad school -> good new career
- open only profit-motive funding routes from private loan companies, which.... this never works out well for consumers.
- open this priv'd route of good schools to increasingly only the elite.
I'd agree with the point that a cheap state school for undergrad, a "known" school for grad school funded by however one can get it funded makes more financial<>career sense, but that nuance didn't exist in your argument.
These loans have destroyed any chance that a generation of underprivileged students will achieve financial prosperity.
If they go away, the federally subsidized loan programs will likely be phased out over ~5 years or so. The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
>The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
[Citation needed]
We already know who the "good bets" are. They're the rich kids. And if you think "income sharing" and the private sector will drive rates down from a federally-subsidized ("predatory") rate, well, I don't know what to say.
I certainly don't think burying underprivileged students under a mountain of debt at graduation is a good thing. I'd very much like to see costs come way down, and I do agree that doing something about the loan system is a piece of the puzzle. But the reason the underprivileged are taking on this debt is that they're attempting to move up, in a way that avoiding debt by avoiding higher education will never achieve. Unfortunately, higher education has become the only way to hang on to an otherwise-falling standard of living; wage stagnation despite increasing education level.
An alternative to the current system which would be very disruptive and allow for a lot of experimentation and alternatives would be to have state level or national level certification exams that would need to be passed to obtain a degree.
The exams could then also show percentiles, so even if you were self taught you could be ranked against Ivy League students.
Cons to this approach would be the same issues that exist with standardized testing today. Emphasis on only learning to the test, high stress make or break testing (although this already exists with the SATs and other exams). I'm sure there are also a number of other cons.
Pretty much all private student loan borrowers pick off the "good bets". Because the government rate is the floor.
This was Sofi business model. I remember looking at their securitizations and most were graduate school loans for top schools( Wharton, Harvard, Columbia, etc). It wouldn't be rare for an entire securitization of thousands of loans to have no loans even 30 days delinquent. And they paid back quickly too.
> Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates
You can trivially add the inefficiency you so desire by letting the government only cover part of the loan up to a set amount. If the government only guarantees loans up to 30k you can still get an additional 30k loan at your own risk to pay for a 60k degree.
But it's not a guarantee that as a mostly unqualified and unemployable high school kid that they can predict the economy and job market 4-5 years ahead of time and if they just take on a crushing amount of debt for an education that they will become financially prosperous or even qualified to work in a given field with just a bachelors. Oh, and we provide almost no social safety nets should they fail and the debt can't be discharged.
Yeah people roll these dice and win, but plenty of people roll the same dice and lose.
It used to be [1][2] until competition was largely regulated out of existence (much to the benefit of doctors and insurance firms). It might be "private sector", but it sure isn't subject to market forces.
It's no accident that those industries with the most anti-competitive regulations are those with the highest costs and poorest service (which ironically begets more anti-competitive regulation).
Tensions between supplier and consumer are profit opportunities for extant and would-be competitors. That no one is stepping in to reap those profits is a strong indicator of a (state-enforced) anti-competitive environment.
> the chief aim of many fraternal orders appears to be the exploitation and control of physicians in the interests of the numerical and financial growth of the lodges and mainly at the expense of physicians.
> The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
Maybe.
Or maybe the the costs and loans will remain huge - but now with parents as co-signers, and only available to people whose parents are homeowners with good credit.
> this is an extremely privileged take, or at least naive take, on what these loans do
> For many underpriv'd students, that network-buy is life changing.
I think that the belief that federally subsidized student loans need to /not/ go away is in and of itself a naive take -- about as naive as believing you can "buy" access to a network. These students you are talking about are not buying a network -- they are buying a signal and a brand. But the signal and the brand don't necessarily unlock access to the network, nor the presumed career opportunities that should unlock.
And why should it? After all, if universities wanted explicitly justify the expenditure in careerist terms, they'd offer the ISA-style funding arrangements that most reputable code academies offer. But they don't. You should ask yourself why that's the case, and why for many of these underpriv'd students you mention, this is a very expensive lesson they learn the hard way. You should ask yourself what happens when the student slips through the cracks and ends up with no job and a ton of debt. You should ask yourself if the whole thing is a scam -- because if this scenario doesn't make you imagine it might be one, I don't know what will.
Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble?
> Do you think that granting mortgages to NINJAs (no income, jobs or assets) had any affect on the sharp rise in housing costs leading up to the ‘08 bubble?
While NINJAs certainly didn't help with the situation leading up to the GFC in 2008. Let's make one thing abundantly clear. Subprime mortgages did not cause the crash. They were just the tipping of a series of shitty monetary policies. The majority of mortgage defaults came from investors and the upper middle class [0][1]. People with really good jobs, lots of credit, and every resource to walk away from a sinking ship.
The bubble was caused by lawyers, doctors, Wall Street, and people just like you or I. The ones who could talk their way into taking out $200k-1mm loans from a bank based on having good enough credit.
> The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take
I think the take outlined later in the post is the privileged take. Sure those who are lucky enough to be accepted into a school with an alumni network, name recognition, can leverage those connections. But at what cost? Paying off debts until mid to late 40s? It's certainly life changing as you say, but more of an "out of the frying pan and into the fire" type of change. Worse still is many of these students have no warning of this (legalese in promissory notes isn't a fair warning) and once they sign the dotted line, no recourse. They won't be buying home, won't be starting families, and will be restricted in any type of career growth that doesn't translate into higher incomes. But yes, they will enjoy great informational interviews.
Finally this post completely leaves out those who attended for-profit schools who provide none of the benefits listed and really have no business signing their students up for a lifetime of debt peonage.
That would set you back to where you were before the related law was enacted, though: droves of kids going to school with public money, then declaring bankruptcy. Public finances were getting robbed and kids had their future compromised anyway (bankruptcy is no joke).
Maybe the schools should have to be partially on the hook, at best financially in some way, or indirectly by a score of failed/drop out/bankrupt students?
Student selection & preparation would get better. Maybe it would trickle down to High Schools.
Can you send me that study/article, would love to read it.
What I did come across a while back was a study done by the NY FED. On the effect of the amount of available credit and tuition rates, they found that increased loan availability did increase tuition costs, but they looked at subsidized and unsubsidized loans and how much they increased the tuition cost. They found:
"We estimate tuition effects of changes in
institution-specific program maximums of about 60 cents on the dollar for subsidized loans and
15 cents on the dollar for unsubsidized loans"
The federal loan influence is not large enough to cause the problem we're in. The real problem is the demand for college is enormous because it's the only way to a semi-decent living these days.
If you get rid of federal loans all it will mean is private loans fill in to take its place - people still want good paying jobs, so they'll still pay to go to school.
I think the new no-one-is-responsible approach is to let it all fail so interest groups like the low quality private schools won't exist to have an influence then revive state school funding..
A less drastic approach might be to give schools qualifications for seats in a department as graduates take jobs in their field with the overall lost capacity being redistributed evenly over participating schools. In such a system, the bad schools could finally drop out.
> The real problem is the demand for college is enormous because it's the only way to a semi-decent living these days.
There are well-paying jobs that don't require a university degree. Skilled trade jobs exist and are in high demand. Tech careers with IT, networking, software, and hardware exist for those that put in the time, whether that time is on school grounds or at home.
I've known (and currently work with) professional programmers, sysadmins, network engineers, designers, and hardware engineers who don't have formal credentials. All of these people are making six figures in US dollars outside the bay area. They've all put in the time in their domain and in speaking with any of them their expertise is evident.
A major factor in learning these skills is available dedicated time. Middle/Upper-Middle/Upper class kids who are interested in tech can often find available free time to read books, tinker, and acquire hardware/resources (whether through their parents buying it or by tracking down cheap/free hardware (more of a time cost)). The less financially stable a family is, the higher the likelihood that there won't be free time available for academic endeavors and will instead be filled with finding a job to help pay for food/shelter/clothes for themselves and their family. Going to college provides a structured place where dedicated study is expected (and paid for via scholarship or loans). This is an escape hatch for students who didn't have the same opportunities.
> There are well-paying jobs that don't require a university degree. Skilled trade jobs exist and are in high demand. Tech careers with IT, networking, software, and hardware exist for those that put in the time, whether that time is on school grounds or at home.
I knew someone would make this comment, they always do. The trades don't pay nearly as well as you think you do, put enormous strain on the body, have bad hours, etc. Most tradesmen that make big money either work insane overtime, or own their own business because they're the top 10% in their craft.
Also the idea that it's like what it was when you grew up, where you just work hard in your support job and then you magically become software engineer and make big bucks simply doesn't happen anymore. It's like winning the lottery.
My grandfather made a great living in the trades. That is until he got cancer from exposure doing it.
> Federally subsidized student loans need to GO AWAY.
There's a good argument that its the wrong method to acheive democratization/affordability (I personally prefer a very different approach), but…
> They’ve allowed students to enter into debt,
Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
> the only long term contracts kids under 18 can legally sign,
Again, no. Its true that federally subsidized student loans are not voidable under federal law even where due to the age of the borrower contracts generally might be under state law, but similar exclusions from the “defense of infancy” apply to student loan contracts, whether public or private, generally under many state laws, as well as sometimes for other contracts. So its not the only kind of contract which minors can enter into and not subsequently avoid. (And even without the exclusions minors can legally enter into the contracts and they are valid until and unless the defense is asserted, but counterparties will be unlikely to enter into the contracts because they know the defense is available to the minor.)
And even if this were a particular problem, it would be easily fixed without abandoning federally subsidized student loans, either by shifting eligibility for minor students from student loans to parent loans, or by simply limiting them to students 18+, which might force some younger students to delay college entry.
> for something they can never declare bankruptcy on.
That’s also not true; there is a fairly high threshold for discharge of student loans, but it is not impossible. Again, the problem suggested with this is easily curable (and arguably doesn’t even require removing the limitations on discharge) within the context of federal student loans. If the income contingent repayment plan with discharge of the balance after a set period were the only one available, discharge in bankruptcy would be largely a non-issue.
Now, since the discharge restrictions also apply to private student loans, you might still want to remove them to address that problem.
> Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
Source? I’m not aware of any non government lender that would or has underwritten an 18 year old with no collateral and no co-signer. At least not at any single digit interest rate, and definitely not for tens of thousands and maybe hundreds of thousands of dollars.
>Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
Yeah I'd also like a source for further reading on this. As far as I understood the number of lenders willing to underwrite a loan to an 18 year old with no collateral is virtually none compared to the ubiquitous availability of federally subsidized student loans, and the reason for this is empirically supported by how many student loans are non-performing.
I never went to school, but have found that many books I want to read (incl. texbooks) can be found easily as a pdf with a google search (although this is becoming less common for me, sadly). I once, suggested to a struggling friend that instead of paying for a textbook, they should see if they could find it in such a way. Turns out, many newer book require codes to unlock assignments that can only be had by purchasing the book.
I can only speak to my personal experience, but I've found most of the textbook requirements for my OMSCS classes to be available online if I want them, generally for free through the university itself. I've been buying them anyway, because I like to have a paper copy, and because my company is willing to pony up for them. But it's not really a requirement.
You might have to discourage professors from requiring specific textbooks to achieve this. To me this seems like a mostly US-specific phenomenon, while textbooks were somewhat expensive here in Germany, not to the same degree as in the US. I think my most expensive book was 80 EUR, most were cheaper than that. And almost no textbooks were actually required in the courses, most of the time you were free to choose between several options, and using older editions was not an issue.
If the courses require specific textbooks in specific editions, the students don't have a choice and have to accept excessive prices.
It’s a captive audience problem. Same reason why a bottle of water can cost $8 in an airport, students are required to buy specific textbooks, sold through limited outlets. Textbooks sometimes get wrapped in to the loans which is also why schools charge so much. What bothers me are the fees, from parking to wellness to lab fees, while administrators make six figure salaries. Universities are such a financial imbalance of corruption.
> Colleges grapple with a shrinking number of high school grads
This ^^^ is the key. These colleges aren't being nice. There is simply not enough demand for the amount of supply. That is, prices fall.
On the other hand, this was also the root of the student loan crisis. Supply is relatively fix. But cheap and easy to get loans drove up demand. Which further increased price. Which required bigger loans. You see where this is going :)
There are plenty of good reasons for the biz model shoe of higher edu to drop. It looks like that's finally starting to happen.
As a parent, I'm not-so-secretly hoping we will see some correction. Especially with the proliferation of online options. If I sent my kid to Oregon State to get an online CS degree, they'd pay the same tuition as if they were on-campus. If they went to somewhere like ASU for the online CS masters, it is similarly overpriced. Meanwhile, I'm just about to finish my Georgia Tech masters in CS for under 10K for the entire program. If other institutions follow their lead, it'll put a lot of downward price pressure on the rest.
Especially for online classes that can scale pretty inexpensively, the current tuition rate is absurd.
We need more than a price correction, we need a reckoning.
And as taxpayers who fund this education via loans we should have a lot of leverage, yet the only thing anyone talks about is loan forgiveness, as if we won’t end up in the same exact situation again in 10 years.
Though the online classes can be scaled fairly easily, administrators seem to follow a different rate. The growth rate of college students is slower than of administrators. Their pay is also up there so the total payout is also growing fast.
This is essentially Parkinson's Law. The common one you hear about Parkinson's law is about work filling up time but really if you read the original from 1955 it talks about "the increase in the number of employees at the Colonial Office while the British Empire declined". And causes for this being: "An official wants to multiply subordinates, not rivals," and "Officials make work for each other."
If you've ever worked at a large corporation you've seen this in action. Universities and government are no different. Bureaucracy keeps expanding, corporations address this problem by random acts of cancelling entire divisions/products and layoffs.
ASU had a lock step 1yr MS in DIS and then Information Systems for a very reasonable price. Finish in late 90s basically to get in front of quality recruiters. For the opportunity it provided me and other fellow graduates it was an excellent deal. Our counterparts who were doing MS in Accounting were being paid half the money at graduation for a very similar degree.
Is there a website that tracks tuition fee history for colleges ?
Don't know if I'm imagining this but it looks like in state tuition has doubled for my state school (virginia tech) compared to what I paid in 2011 for grad school.
I've looked at some degree programs recently, and while I'm mostly disappointed at online offerings, I'm now seriously beating a program from a flagship state school, that has an insanely affordable price for in-state students, that I could pay for out of pocket without worry. This is only due to the grace of how much in-state students are subsidized (at the cost of out of state students). I'm still unlikely to be admitted, due to the static, bureaucratic policies, but in my past research the past couple years, there's no way in hell I'd pay for what most colleges charge for online programs.
It’s interesting seeing how tuition costs influence students. I go to a school infamous for its high price. And truth be told, I don’t think I could advocate going here barring some serious prerequisites. One of which is having some idea of what to study. The classic idea of college being a place to mess around and figure out what to do with your life is absolutely delusional with tuition so high. Go figure out what to do with your life without it costing 40k+ a year.
That said, I have a feeling this isn’t a controversial point. A lot of my classmates come in seemingly focused on a particular career or field. The issue is that there’s no conceivable way they can be certain of their field this early. I’ve talked to far too many undergraduates who have decided on CS without knowing if they like programming. I have too many classmates who decided to major in chemistry or do pre-med because they liked their high school chemistry class. With these students, what happens if they discover they don’t like their major? For the undecided student, they’re unlikely to get far in a subject they don’t like. They’ll leave after a class because they’re not set on it. A decided student will likely feel that they’ve committed and realize too late that they do not want to work in their field. In my view the worst situation is to realize you hate your major junior or senior year.
I’m not sure about solutions. I took a gap year and worked as a programmer. The gap year had a lot of benefits but maybe the biggest one was knowing that I could actually see myself as a programmer and that I’m competent at it. A gap year is a privileged option though. In general cheaper tuition and more involved guidance could work. Most majors should have an initial class that outlines the potential career options and the less than pretty parts of the job. I suppose that pushes the school into a more vocational role, but alas if you’re paying so damn much, getting a career out of it is pretty necessary.
> I go to a school infamous for its high price. And truth be told, I don’t think I could advocate going here barring some serious prerequisites.
I went to a similar school. The benefits are not granted when you attend the school but afterward in the alumni network and the reputation of the school. I get in a lot more doors than I rightfully should given my qualifications because my school was more expensive (and thus prestigious) than most.
It shouldn't be the way it is but the benefits from getting a 'top-tier' education are more in signaling to people that they should consider you than actually giving you a better education. There's also the argument about the access you have as a student and alumni but I don't want to go on forever.
>my school was more expensive (and thus prestigious) than most.
Outside of the top 20 schools or so, I would not see the point of paying any extra for a private school, as the school's are willing to accept mostly anyone who can get a loan, which is basically everyone. The private schools that are prestigious (i.e. highly selective) have substantial aid making them very cheap for families who earn under a certain amount.
> The private schools that are prestigious (i.e. highly selective) have substantial aid making them very cheap for families who earn under a certain amount.
Have you attended all of the prestigious institutions while needing financial aid? I am familiar with a handful of the programs having been through one and worked with several people that were in others. Some schools are doing a great job enacting need blind admission, others are not.
We are not at a point where the most prestigious schools are "very cheap" to any families* except the wealthiest and the poorest (where it definitely isn't very cheap to afford plane tickets, food with the dining hall shut down, clothing so you don't stick out as being poor, etc.)
* The one exception I'm confident of is Princeton, I've heard their need blind approach is actually well implemented and I've known more than one person that graduated debt free.
The solution is easy, and it exists here and in other countries: attend a "college" -- not a university -- for the first two years. Here in the US they are community colleges. No reason to do your intro Sociology or Calculus for Business Majors general ed class at Harvard or Stanford; the content is exactly the same as at Podunk U.
Instead, students should go to community college for the first two years and transfer into University upper-division majors (or, just get a 2 year cert rather than "dropping out" if you decide you don't really like college after all!). You can spend two+ years mucking around in Community College for the tuition cost of half a single semester at a private university -- my local community college credit-hour cost is literally 10x less than out of state tuition at a private school: $41 vs $441. It might even allow for some sort of internship or apprenticeship program in the interim period to let kids have some experience before they settle in on a major program.
All of this sort of assumes though, that the system actually cares about student success, rather than laundering privilege, credentialism, and the student-loan fleecing described elsewhere in this thread.
The deal between the government and private colleges is that those private colleges are training our critical workforce and adding net value back into the system by increasing lifetime earnings and economic growth.
The government guarantee on debt dollars right now is absolute. Schools get paid no matter what, and have no liability for actually providing an ultimately valuable service.
Here’s an alternate arrangement. The school and government together co-guarantee the debt. Students’ monthly payments start 1 year after graduation or after the first year of less than 50% enrollment, payments are strictly calculated based as a percentage of income, and after 10 years of payments the government guarantee is retired. Any remaining balance on the loan then becomes dischargeable in bankruptcy and the school is liable for any unpaid balance.
Or something along that lines. The program should be structured in a way that the government is only guaranteeing debt that is in proportion to the earnings power actually achieved, and the school becomes liable for debt that is out of proportion with the actual earnings power achieved.
Of course it’s a law of averages. Certain students will fail due to no fault of the school but overall a private school should be responsible for providing measurable value in proportion to its tuition charges.
> The deal between the government and private colleges is that those private colleges are training our critical workforce and adding net value back into the system by increasing lifetime earnings and economic growth.
Source? As far as I can tell, some genius politicians figured out they can lower taxes or keep taxes low by removing and reducing taxpayer funding for colleges, and replacing it with free non dischargeable loans for anyone who can fill out the FAFSA.
There is no altruism in saddling kids with debt rather than paying for schooling with tax money.
I think the problem is not a lack of funding. Economically, the more you spend on a problem like this, the less you get back for every dollar spent. This isn’t a manufacturing problem where cost decreases with scale. Throwing more dollars at this will just decrease the average outcome per dollar.
A part of the problem is just the notion that everyone should even be going to two or four year university.
> In 2017, state and local governments spent $297 billion, or 10 percent of state and local direct general spending, on higher education. Higher education was the third-largest source of state and local direct general spending in 2017, roughly equal to spending on health and hospitals.
> At the post-secondary level, the United States spent more than the average (1.5%) for OECD countries on total government and private expenditures at 2.6%. Only three other countries spent 2% or more of GDP on post-secondary education. Those countries were Canada at 2.4%, Australia at 2%, and Chile at 2%.
>In 1977, state and local governments spent $105 billion on higher education (in 2017 inflation-adjusted dollars). In 2017, they spent $297 billion.
>Higher education spending has remained relatively constant as a share of total state and local spending over time. In both 1977 and 2017, 10 percent of direct state and local direct general expenditures went to higher education.
According to the source below, there are at least twice as many people attending higher education between 1977 and 2017, not including the ones who do not complete 4 or more years of college:
There's obviously a ton of waste in the system, such as the college sports business that has nothing to do with education and is clearly a taxpayer subsidy for private interests. But it seems like taxpayer spending per student is down quite a bit (can't include taxpayer backed loans, of course).
And I definitely agree, there is no need for everyone to go to a 4 year liberal arts school.
>A part of the problem is just the notion that everyone should even be going to two or four year university.
That would require structural reforms to fix the economy or to provide an alternative education path that is tied to economic productivity. In other words it is not going to happen.
You need to account for the "Mrs" degree. Someone goes to school to find a spouse, get married and has no income.
Although "Mrs" is specific to females, my personal experience includes more males that have done this than females. The sexism is used to make the point easier to understand, and but its reflection of reality died around 1950 if it ever was one.
Ok then you make the loan payback rate based on household income instead of personal income.
I mean it’s a full decade, or let’s say even 15 years. If it’s worth under-earning your degree just to avoid paying off the loan, then the degree was way over-priced.
Enrollment has been falling steadily since 2011 (or before). The number of US high school graduates will peak in 2025. I think the "college bubble" is starting to deflate.
I know of a number of first-year college students who are taking the next semester off. That's on top of many more already already taking a gap year. Dorms are like prisons, and virtual classes are not worth the money.
Now that they are in competition with online universities world-wide and more people are in trouble with just paying their rent, this is not a surprise at all. European and Australian universities should be jumping at this opportunity:
They need to organise themselves to use one platform for giving online lectures. Nearly a year after the start of COVID, universities are all over a place with their software. Some unis allow every lecturer to decide how to do the course forcing students to install sometimes 3! different applications for taking the lecture, sharing documents and taking the exam - per course! Sure, there's overlap, but it's a little crazy.
Then there's the problem of proctoring - the best way to sell your students data and invade their privacy. If for reasons beyond your power the internet flakes out or the software has a bug, it's either fail or simply resit. MOOCs seem to have already solved this problem, but many universities fail to do any kind of research on the subject.
What's pretty bad is that many universities don't record their lectures despite it being a wonderful tool for learning. You can pause, rewind, speed up, clip and discuss lectures after they happen and increase collaboration with students and the lecturers, but the opportunity seems to be willingly ignored. Even worse, some lecturers are staunchly against being recorded for fear of saying something wrong, but will gladly invite any proctoring company into the homes of their students.
We still have a long way to go.
Despite many people bemoaning the current pandemic, I think it is having a wonderful impact on the status quo. We had to be rocked out of our comfort zone to be force to innovate because we would've taken decades longer otherwise. This year was a good year.
Recently playing around with a 529 college saving plan calculator, it told me that for a 5 year old aiming to go to a 4 year private school, I need to save up $600k in the next 13 years. I thought the calculator was broken, but it was simply using the past decade's grow rate for tuition to model the next decade.
Do you mean the account should have 600k at the time of kid starting college? Does the 600k include gains from the investment in 529 or is it just the principal?
That figure includes the gains, and represents approximately how much college will cost in 13 years if trends continue. My point was that $600k for going to college sounds so ridiculous that the trend shouldn't be able to continue.
Why not simply make education free (or almost free)? Most of Europe has highly subsidized higher education and they manage to do it without falling apart.
Tuition at most privates is, on average, already significantly lower than the sticker price. Unless you are fairly wealthy, are really on the low end of the academic quality spectrum, you're going to get at least a modest "feel good" scholarship that lets you claim you went to college on a scholarship. It's referred to in the industry as the "discount rate", and the average for privates is about 50%. Public colleges and universities often clock in around 10% to 15%.
Perfect price discrimination. Colleges at the top are a near monopoly - Harvard is a good substitute for Yale, but very few people can be in position to buy either.
One level down, the colleges price it using yield management strategies that would make airlines blush.
Apart from reforming federal student loans, ensuring that at least 75% of students pay the same price would stop some of the crazy pricing strategies
159 comments
[ 2.9 ms ] story [ 213 ms ] threadMoreover a lot of college seems like activities the public shouldn’t be subsidizing. A jobs program for overpaid administrators. A portfolio of majors that are not rigorous and seem more like hobbies. Pet research projects for tenured professors that often has low return on investment. Local college town economies. And so on.
I think it is misconception that these schools are respected because they teach the subject matter better, or that they provide no value outside of the lecture hall. If anything, >50% of the value is outside of the lecture hall.
Also, I don’t think academic research shouldn’t be expected to have any return on investment. The job of a professor is to further academics, not profit.
This is ascribing four years of interacting with other people to colleges. Four years of work experience in a given job makes someone far more valuable than four years of college preparing to start the same job. College isn't the only place to learn. Art history can be studied as a hobby any time in life.
The idea that using four years to learn english 101 while accumulating massive debt instead of focusing on becoming valuable enough to start working in an industry you want is a destructive mentality. If typical college was much cheaper and more focused there might be more validity to it.
Four years of working earns money instead of bleeding it. You meet people that actually know how to do the things you want to learn instead of guessing at them.
It is certainly possible to learn broad range of subjects outside of a structured environment, but it is improbable, which is why we value structured educations.
I think it is a problem with expectations. Kids seem to take on massive debt, then wonder why the job they get after spending four years at a school taking lots of classes that have nothing to do with the skills they need doesn't pay well enough to make their debt seem worthwhile.
The truth is that lots of kids are pushed into a path that wastes a huge amount of their time, energy and money, because what they need to actually become valuable is going to happen after they graduate.
The trope that kids should "go to college so they can get a job" has elements of truth but is wildly misleading when most interpret it to be a causal relationship. I don't blame post-secondary academics for this -- this is mostly a cultural problem. The last couple generations have been raised with a cultural expectation that 'success' equals 'college-bound', and secondary school advisors are not willing to rock the boat by suggesting anything otherwise.
This suggests that people who don't go to college lack interpersonal skills, work ethic, ability to self care; Seems like all of these are important, especially for the other 34%.
But the other response is, this is a loud siren for nepotism -- and potentially other isms; as opposed to meritocracy, thanks for including "professional networking".
Or do plumbers, car mechanics, home builders, beauticians, and (in trade school, programmers) not have/need work ethic or self care ?
No I am not suggesting that. These skills are not boolean, they are all a varying continuum, and they can be learned in different ways.
Liberal arts schools don't teach these things because they cannot be learned in a different way, they simply teach them because they are important to their educational mission. Colleges don't need a monopoly on conveying these skills to have it as an important part of their value proposition.
But that's not what you're saying. Your comments suggests that a college education is necessary to learn these skills; That removing student loans would somehow decrease work ethic.
The irony of the West Point cheating scandal coming out that denies that even the most prestigious college that focuses on values fails to instill values disproves your suggestion very strongly.
Judging by the amount of screaming children we've seen exit these institutions, they're either not teaching those things, or are doing an extremely poor job at it.
The coddling companies have to do for new grads entering the workforce is a testament to the lack of interpersonal skills, social skills, work ethic, self care, etc. that they gained while away at these institutions of higher learning.
Not an opinion, it's a documented and studied phenomenon.
>an accurate measurement of success can only be made with the control group.
Luckily behavioral and social psychologist have been studying this phenomenon:
https://en.m.wikipedia.org/wiki/The_Coddling_of_the_American...
>There is definitely no shortage of bad employees in the non-college employment track... and oftentimes the behavior can far surpass a "screaming children" characterization.
No one said otherwise.
The problem is that we've also loaded in a "maturation/social growth" responsibility onto college. It's a place where teenagers can move out and meet people their age from different places and do dumb things with minimal consequences. Lots of people argue that this, and the networking opportunity, are the far greater part of the value of college, and nobody seems to have a good alternative for that.
I find it insane tuition is that high. I finished grad school before 2010, and at least with the smaller state schools I went to, total cost of tuition and books was in the $3k~$5k range. Boutique schools like Vanderbilt were like $25k+ (per semester). I had a friend who got a free ride there for graduate school, and he said it wasn't really that different than our state school. You get out of any education what you put into it.
All that being said, the Pandemic is not going to be enough to fix the tuition problems across the board. Federally subsidized student loans need to GO AWAY. They've allowed students to enter into debt, the only long term contracts kids under 18 can legally sign, for something they can never declare bankruptcy on.
Schools have soaked up that student loan money, increasing costs as the amount kids qualify for goes up. It all gets sucked into administrative costs. Very little of that money even get to professors, many who still depend on grant writing to fund their departments.
Schools will scream and moan if the federal government stops backing student loans, but it needs to happen. They've exploited a system to take more public funds without actually contributing significantly a better education for students.
which will result in more people going into degrees where people can be employed quickly at solid wages, which is good
which will result in a scarcity of people going into the fields you mentioned, which will increase the wages in those fields which will incentivize people to go into them
this, like most things, is a supply and demand problem, and we have created too much supply in certain areas
I want a populace educated in those fields, and there are much betters way to do it than robbing the citizenry. One way might be to agree to work for a company afterwards who might pay for it, another to join the army in exchange for paying for it. Another might be to stop ensuring loans so that prices fall and become attainable to someone working part-time and going to school. Loans become not such a burden then, if you even want them. Lots of ways.
"Tie student loan funding to the value of a degree" is a fantasy. In the real world, what would actually happen is that student loans would become limited to those who could put up some sort of collateral, which for the figures involved involved in a typical college education would largely limit it to the already-wealthy.
Giving out blank check loans with no underwriting standards does not help the non wealthy. It results in what has already happened in the US, schools collect as much tuition money as they can since why not, and the non wealthy end up indebted for the rest of their life.
The only real way to help is by giving out money that they don't have to pay back.
There is the disconnect, because both are true in different amounts for different people.
If it is just jobs training you are correct. We shouldn't have "under water basket weaving" type courses because there is no market for that. There is some need for art, but only in the context of art is useful to make better marketing materials, so the degree should be offered by the business school in context of marketing courses. History is useful to make you a well rounded critical thinker, but if you are going for a history degree it should be sponsored by the school that will eventually give you tenure as a professor.
If you just want to make yourself better: art is very interesting as a subject. Have fun learning it. Likewise history is interesting even if there are no job prospects. However because these are no job prospects (this generalization is of course false - but true enough for discussion) you shouldn't be getting such a degree if you cannot self finance it from your current job.
Both of the above arguments makes for a worse world in my opinion.
Or, is there a way to make oneself better without relying on tens of thousand of dollars of debt, which cannot even be waived via bankruptcy?
Not low cost. They tax the hell out of their citizens.
> affordable healthcare, education, and government-backed pensions
Affordable healthcare, education, and pensions are wonderful things and I want them as well. It's immoral to provide them through the federal government though, it should be done privately through the market.
Consider it from a different perspective: CEOs don't become billionaires because they are multiple times more productive or competent than other people but rather because there is no need for a second equally competent CEO. One CEO is enough to serve an entire market and so all the market power concentrates in the hand of the CEO who can then abuse it for his benefit.
The reason is clear: government regulation. Basically every. single. time. See Milton Friedman on this.
That is another myth that is floating around the US. CA actually has progressive tax brackets (i.e. the rate changes quite a bit from bracket to bracket) and only few get into the top state brackets, whereas most of the other states that have income tax, >90% of people are in the top bracket as the top bracket is around $10k (looking at https://tax.idaho.gov/i-1110.cfm).
At least in Idaho everyone is treated equally.
You still need to be upper-middle-class to rich to go to university in Germany. The difference is that you don't have to pay for it.
There is the other factor that a worker without a degree in the USA is partially redundant. A lot of jobs that do not require a degree can and have been moved to other countries. You are free to move there and work at your low skilled job there. There is a lot of demand there but not in the USA. You can chalk this up to an incompetent government or central bank but the reality is that as an individual you have no power over this and therefore an economic degree is your best bet.
The alternative to connecting college with the job market is to introduce a job training program inspired by Germany and let people enter a three year job training program in exchange for lower wages. That ship for this has sailed a long time ago. Now that college has been burned into the minds of everyone it will take decades to reverse the trend even if you start today with full force. Germany still has the lowest youth unemployment rate in the EU and is in the top 4 world wide.
[1] https://www.collegetuitioncompare.com/state/
I think that's something that many people would agree with, but how do we go forward with making that happen?
Only problem is you will lose to other politicians that are able to promise lower taxes because giving out federal loans to students is cheaper for taxpayers than giving money to schools directly. People will vote for the person “helping” students by lending them money, rather than the person that has to help students by giving schools money, and therefore raising taxes.
As for how you would do it, you'd have to convince your congressional representative that reform is worth doing, and is worth the inevitable political cost to them. Making loans somewhat harder to get will inevitably make universities upset with the politicians (as universities are the ones that actually receive the bulk of the financial benefit from these loans). For this reason, I see this reform as unlikely to happen, at least as I described it. You would have to pair it with more direct funding for universities.
The vast majority of students are only taking on these loans because they have been lead to believe that their income will increase, more than offsetting the cost of the loan. But we know very well now that it doesn't play out in practice. As we educate away those flawed ideas from history, those with profit motive will be scared away, leaving those who are there for education's sake. When only they are left, costs will start to align with what education is actually worth.
Then again, a diamond remains forever, so perhaps you cannot educate the educated.
There is no arms race, simply a misunderstanding of the data around the filtering that takes place with increasing levels of academic rigour. Those who fall down to that rigour also fall down to the rigours of the working world, statistically.
Yes, this will mean lenders will be much more reluctant to issue student loans. It will likely prompt lenders to offer loans contingent on certain majors. This is a big, big reason why universities are heavily opposed to student loan reforms. The uncomfortable reality is that many universities are funded through what essentially amounts to predatory loans, and halting the practice will cut into university funding.
Worse, lenders write, and universities accept applications for people they know statistically 99.999% they will not get past the first year.
Universities do this on purpose because between 500 student lectures and on-campus housing requirements undergrad freshmen and sophomores have a massive profit margin per body whereas juniors and seniors are in classes that have much more resources spent per student and often don't live on campus.
Sounds like the subprime mortgage scam by the banks, given that they know the US government is going to subsidize the 'losses' and they will have extracted their profit one way or another. Anyone who thinks Socialism is some de-facto virtuous ideal needs to see that collusion between State and X happens in just about every Industry already for private largess. And often is sanctioned, regulated or at least likely to have light to no punishment if caught: see banking fraud.
I honestly want COVID to make the University model obsolete, it will have been worth it if people see how nebulous and impractical the absurd expenses when in reality you can do 75% of courses online anyway; its entirely a predatory model. This is such a drag on young people's lives to have 50k+ in debt in your 20s and are some how sold the idea that you are 'making it' by working to pay that off just to get some entry level position you could have done with a 1-2 year apprenticeship by the time you were 16 like they do in many Germanic Countries.
It's absurd to think this model can go on, and as you mentioned the pernicious statistic rates they are worse because not only is it short sighted thinking that doesn't add value to Society, it can only extract it from those least likely to afford it.
I got honors and letters of recommendations while I was in my undergrad and the only time I ever too them out were to show employers when I applied/interviewed for jobs, and most didn't care either; otherwise they sat in a desk in an envelope as they're reminders of time poorly spent in something I had no interest in by the time I was a sophomore and would come to hate entirely but couldn't get out of until I was 26 due to the debt.
The other problem is that education can not be retroactively taken from them. But garnished wages can.
If a graduate doesn't have enough assets by 30 to make bankruptcy a bad option, then I think it's fair to tell the lender that they made a bad investment and that the loss is reasonable. If this is how it worked, student loans to good universities would still yield a good return. It'd probably incentivize universities to track students' earnings after graduation, and focus on improving that figure. Lenders would probably stop writing loans to degree mills, or non-rigorous universities that don't substantially improve the employment prospects of students.
It's not feasible to make student loans able to be eliminated via bankruptcy without restriction, since students could just go through bankruptcy right after graduation and plan around being unable to get a mortgage or car loan until they're 30. If you graduated with a degree in CS, and landed a six figure tech job it'd still make sense financially to go through bankruptcy and save potentially hundreds of thousands of dollars in student loans, even though you could easily pay it off over several years. This let's the student exploit the lender.
The status quo of making student loans not cancellable through bankruptcy makes it so that lenders can act in a predatory manner and issue loans to go to ineffective institutions that don't improve earning potential. They know students won't be able to pay for decades, but they don't care because the student is stuck with the debt and has no way of getting rid of it. This lets the lender exploit the student.
Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.
The easier it is to eliminate a student loan the easier it is for a student to exploit the lender, and take the loan intending to go through bankruptcy. The harder it is to eliminate a student loan, the easier it is for banks to write loans they know students can't pay off. The optimal spot is somewhere in the middle, where the student has an escape valve - but one that is only feasible to take if you have no significant assets by the time you're 30 or 35. If the lender is worried that a student debtor won't have enough assets by 30-35 to make bankruptcy a bad option, then they will think twice about issuing the loan.
The optimal spot is to not let 18 to 21 year olds borrow six figure sums without understanding the ramifications of it. There is no need for these loans to exist. The cost of higher education is high because the loans exist. The loans exist because exemptions to bankruptcy law were created specifically for those loans.
> Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.
So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again. So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.
This is precisely why it makes sense to restrict ability to default on student loans for a certain duration. Even if you have six figure salary as a new grad, it'd still make sense to default on your student loans immediately after graduation and plan your life around having a terrible credit score until your 30s. Pay for cars in cash, and don't plan on buying a house until one's 30s. Everyone would do this because it's basically getting money for free. And consequently nobody would issue student loans, even to students going to good schools and studying in demand majors, because students can effectively just walk away from the loans.
Yes, it's not doing anything for people 22-30. This is deliberate. The point is to make sure students who can pay off their loans do pay off their loans. We make recipients of student loans wait until 30-35 to be able to default on loans so that only the ones who are genuinely stuck with loans they can't pay off go through with the default. Yes, their credit score will tank. But that's the consequence of defaulting on a loan. If you could default on a loan without impacting your credit score, you'd be a fool not to default on every loan you have right now - but you wouldn't actually have any loans because nobody would lend money under sucha scenario.
> Are you joking? Do you not realize that any current problems were caused by the current system?
What's even more telling is how that all happened when I was in school, prior to my JR year defaulting on student debt was what most did when they got to the professional levels and secured a decent job--and this was back when university costs were much lower and more broadly available, too.
I've had several boomer aged physicians/surgeons/anesthesiologists/lawyers laugh about it when I was in motorsports and told us to explore it despite the stigma as it 'paid in the end.'
In many ways I think this predatory model of extracting wealth from the youth is not only short sighted its absurd; reducing the quality of life with underemployment/unemployment creates lost generations like they have in Japan, and unless the goal is to lower the population at all costs then not much 'good' comes out of it except Zombie banks, high national//coprprate debt ratios, mass impoverishment of Society as a whole and suicide as proved by the last 30 years of Japanese Sociological observations.
Then again, some study using Machine Learning was stated to have had 'break through' results identifying India was not in poverty, only to see that Apple factory workers were paid $7/month instead of the ~$100 and proceeded to smash the factory.
Are people still in doubt we live in a Dystopic Cyberpunk existence already? Its not just an overly hyped game, its clear to see we've been in one for over a decade now. Its just not all neon, robotic enhancements and flying cars; everything else seems to be lock step with the genre from an untouchable Corporate Class, decaying environment, to poor living standards, wide spread disease and poverty.
>So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again.
Seriously. The inability to discharge debt is the primary source of crushing debt. Predatory lenders can turn you into a debt slave through student loans and you have zero recourse. Since student loans are guaranteed by the government it doesn't matter to the lender whether you are able to pay the loan back or not. They can just give a $100k loan to someone who is 100% going to drop out. It doesn't even have to be your fault. Universities are incentivized to spend money on student retention and basically zero money on actual education.
>So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.
Except lenders are not going to hand out $100k loans willy nilly anymore. They will actually have to look at what and where you are studying. If students can discharge their debt then it's possible for lenders to make losses and do you know what businesses hate the most? Damn losses. Those losses will have to be covered higher interest rates and do you know what happens when people are faced with greater interest rates? The maximum principal they can borrow shrinks and there will be no more infinite flood of money that inflates tuition costs year by year. What about people that can't afford the loans? They can always choose a cheaper degree. If getting a CS, EE, civil engineering, law, medicine, whatever degree improves your employment chances so that you can pay off your loan without trouble the interest rates are going to be way down and thereby make it extremely obvious which degrees and schools are the most lucrative. You'll be able to measure the quality of a college and its degrees by the interest rates the lenders charge and even in the worst case you can get rid of the loan trivially. Collges will be able to make money off of good education instead of just admitting as many students as possible by luring them in with an expensive lifestyle.
It's funny how Americans keep telling me about the advantages of hire and fire and how it increases economic efficiency while simultaneously they have the most socialized private education industry on the entire planet which means they get none of the benefits of socialized education and none of the benefits of private education. Seriously your current system is so broken even abolishing it completely without a replacement would still lead to better outcomes than whatever crap you currently have.
You seem confident saying this, but countless youths have accumulated hundreds of thousands of dollars of debt they won't pay off until their mid 40s at no-name liberal arts schools and degree mills
There is no collateral for credit card loans either.
> Banks have to make up for that risk somewhere.
Private student loans have pretty much shriveled to a drop in the ocean of higher-ed financing since they were excluded from the federally-subsidized loan programs (for quite a long time the only “federally-subsidized” loans are direct federal loans), so banks don’t need to do anything; privately-originated loans are only a factor for unaccredited schools whose programs are not eligible for federal loans.
The only lender relevant for federal loans will do exactly whatever federal policymakers decide is desirable, so need to motivate lenders is not a constraint on policy choices.
Which is why credit card companies don't give you 100K in credit cards, but you can get that in student loans. Heck, they generally won't give you more than a few K in credit cards until you've demonstrated some credit trustworthiness.
And? So? Low balance credit cards don't have collateral. High balance ones require impressive proof of income,credit history, etc. This isn't an argument.
Your second point needs a HUGE citation. Please provide, thanks.
The problem isn't the banks. The problem is needing a college degree to have any semblance of a middle class life in America.
https://www.purdue.edu/dfa/types-of-aid/income-share-agreeme...
Then again, the Lambda school ISA selling issue demonstrates the potential to eliminate this alignment of incentives. In universities, there's also the issue that colleges might only accept ISAs with students interested in majors with good employment prospects. But if we view university as an investment where the return is better employment, then this is working as intended.
My thought is that in the future, privatizing higher education will seem like a quaint historical anomaly, like privatizing health care, both of which have made themselves at least twice as expensive as necessary.
If we can't force private colleges out of existence, we could concentrate on solving the education funding crisis starting at the level of state and regional colleges and trade schools. Preferentially direct research funding toward those schools, to build or expand on research institutes in areas where a few extra jobs would be welcome.
Ironically I believe we could destroy the private colleges by eliminating all government oversight of the admissions process, and letting them compete with one another with no restraint.
For example, BYU and BYU-Idaho provide affordable education for tens of thousands of students every year. Sure they're religious, but they serve as price competition to state schools in the area, keeping prices down across the state of Utah.
Secondly, the reason things are so expensive is because the federal government gives loans to everyone, driving up prices. Why would public colleges ever cease their continuous tuition increases if the government gives unlimited loans to anyone, regardless of the price? The federal government should just give a set amount per year to states that the states can allocate among their universities, so that they can continue operating, and then get rid of government funded loans.
With the government funding the schools directly, they will have enough to set up lower cost programs and then be forced to compete for the lower amount of dollars provided by students, driving down prices.
Also, the federal government should put a condition on this money that if a college takes it, they have to charge the same for in state and out of state tuition, creating a more national, competitive market for students in order to bring prices down.
Maybe we'd see more schools go to a partial or full online model, which could really drive prices down. Honestly part of the federal money could be conditioned on creating online programs which are even cheaper for students.
I'm paying tuition to two of those schools right now for my kids -- a state "flagship" university, and a regional campus of the state university system.
There are certainly tiers of private colleges, and I wouldn't want to mess with religious schools. I'm mainly thinking of letting maybe the top 20 private colleges in the country become the destination for the top 20000 kids based on whatever criteria they want. But don't let that system continue to distort educational policy and funding for the rest of us.
This ensures loans can never become a crushing burden. But more importantly, it incentivises the banks to provide very useful information to the potential students. Unlike colleges who, since they get paid up front, are strongly incentivised to let marginal students study expensive things.
Make it the 10% of discretionary (not gross), and up the limit to 25 years of any of the loans covered graduate or professional study, and you'd have an existing option for current federal student loans.
Make this the only option for federal loans, remove private loans from the protection against bankruptcy discharge, and you the job is done.
> But let the lenders see everything -- school, major, test scores.
Private lenders can, AFAIK, already put terms like this in contracts if they want.
That might include you taking a hit e.g higher taxes, but it's group think and individualism that brought the country to its current state.
So voting for:
- free public education
- higher teacher salaries
- higher taxes on the wealthy
- forgiving all student loans
The language I'm about to use pains me, but this is an extremely privileged take, or at least naive take, on what these loans do. Removing them will hurt about about a generation of students from the very low to the upper middle class set until the academic<>employment market adjusts. What do I mean?
A simple, pragmatic fact is degree from a name-school, vs. a no-name school, is a differentiator to a student who knows what they're doing. This is especially true with grad schools where it's professionally-focused on the outcome. NYU Law vs. CUNY Law. UMass Dartmouth CS vs. BU CS. You're buying a network and a door opener with the latter. One resume gets you an informational interview, a priv'd coop/internship, an alumni network and so on, and the other has an uphill battle. For many underpriv'd students, that network-buy is life changing. I wish it wasn't the case, but pretending that it isn't is damaging. This is just the way of things at the moment.
By getting rid of fed-sub'd loans, you: - take away motive-neutral funding route for your cheap but no-name undergrad -> good grad school -> good new career - open only profit-motive funding routes from private loan companies, which.... this never works out well for consumers. - open this priv'd route of good schools to increasingly only the elite.
I'd agree with the point that a cheap state school for undergrad, a "known" school for grad school funded by however one can get it funded makes more financial<>career sense, but that nuance didn't exist in your argument.
If they go away, the federally subsidized loan programs will likely be phased out over ~5 years or so. The private sector will replace them for students who are good bets, probably with income-share agreements or something similar and MUCH less predatory than the current federal loan programs.
[Citation needed]
We already know who the "good bets" are. They're the rich kids. And if you think "income sharing" and the private sector will drive rates down from a federally-subsidized ("predatory") rate, well, I don't know what to say.
I certainly don't think burying underprivileged students under a mountain of debt at graduation is a good thing. I'd very much like to see costs come way down, and I do agree that doing something about the loan system is a piece of the puzzle. But the reason the underprivileged are taking on this debt is that they're attempting to move up, in a way that avoiding debt by avoiding higher education will never achieve. Unfortunately, higher education has become the only way to hang on to an otherwise-falling standard of living; wage stagnation despite increasing education level.
The exams could then also show percentiles, so even if you were self taught you could be ranked against Ivy League students.
Cons to this approach would be the same issues that exist with standardized testing today. Emphasis on only learning to the test, high stress make or break testing (although this already exists with the SATs and other exams). I'm sure there are also a number of other cons.
Pretty much all private student loan borrowers pick off the "good bets". Because the government rate is the floor.
This was Sofi business model. I remember looking at their securitizations and most were graduate school loans for top schools( Wharton, Harvard, Columbia, etc). It wouldn't be rare for an entire securitization of thousands of loans to have no loans even 30 days delinquent. And they paid back quickly too.
> Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates
https://en.wikipedia.org/wiki/SoFi
Yeah people roll these dice and win, but plenty of people roll the same dice and lose.
It's no accident that those industries with the most anti-competitive regulations are those with the highest costs and poorest service (which ironically begets more anti-competitive regulation).
Tensions between supplier and consumer are profit opportunities for extant and would-be competitors. That no one is stepping in to reap those profits is a strong indicator of a (state-enforced) anti-competitive environment.
[1] https://theunbrokenwindow.com/2011/05/16/lodge-practice-evil...
[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1652413/?page=1 A doctor in 1908 complaining that fraternal lodge medical insurance was too cheap:
> the chief aim of many fraternal orders appears to be the exploitation and control of physicians in the interests of the numerical and financial growth of the lodges and mainly at the expense of physicians.
Maybe.
Or maybe the the costs and loans will remain huge - but now with parents as co-signers, and only available to people whose parents are homeowners with good credit.
> For many underpriv'd students, that network-buy is life changing.
I think that the belief that federally subsidized student loans need to /not/ go away is in and of itself a naive take -- about as naive as believing you can "buy" access to a network. These students you are talking about are not buying a network -- they are buying a signal and a brand. But the signal and the brand don't necessarily unlock access to the network, nor the presumed career opportunities that should unlock.
And why should it? After all, if universities wanted explicitly justify the expenditure in careerist terms, they'd offer the ISA-style funding arrangements that most reputable code academies offer. But they don't. You should ask yourself why that's the case, and why for many of these underpriv'd students you mention, this is a very expensive lesson they learn the hard way. You should ask yourself what happens when the student slips through the cracks and ends up with no job and a ton of debt. You should ask yourself if the whole thing is a scam -- because if this scenario doesn't make you imagine it might be one, I don't know what will.
While NINJAs certainly didn't help with the situation leading up to the GFC in 2008. Let's make one thing abundantly clear. Subprime mortgages did not cause the crash. They were just the tipping of a series of shitty monetary policies. The majority of mortgage defaults came from investors and the upper middle class [0][1]. People with really good jobs, lots of credit, and every resource to walk away from a sinking ship.
The bubble was caused by lawyers, doctors, Wall Street, and people just like you or I. The ones who could talk their way into taking out $200k-1mm loans from a bank based on having good enough credit.
[0] https://www.tuck.dartmouth.edu/news/articles/the-role-of-the... [1] https://www.nytimes.com/2010/07/09/business/economy/09rich.h...
I think the take outlined later in the post is the privileged take. Sure those who are lucky enough to be accepted into a school with an alumni network, name recognition, can leverage those connections. But at what cost? Paying off debts until mid to late 40s? It's certainly life changing as you say, but more of an "out of the frying pan and into the fire" type of change. Worse still is many of these students have no warning of this (legalese in promissory notes isn't a fair warning) and once they sign the dotted line, no recourse. They won't be buying home, won't be starting families, and will be restricted in any type of career growth that doesn't translate into higher incomes. But yes, they will enjoy great informational interviews.
Finally this post completely leaves out those who attended for-profit schools who provide none of the benefits listed and really have no business signing their students up for a lifetime of debt peonage.
It is the guarantee of payment, even on default by the student is the problem.
That is what must go away.
Student selection & preparation would get better. Maybe it would trickle down to High Schools.
What I did come across a while back was a study done by the NY FED. On the effect of the amount of available credit and tuition rates, they found that increased loan availability did increase tuition costs, but they looked at subsidized and unsubsidized loans and how much they increased the tuition cost. They found:
"We estimate tuition effects of changes in institution-specific program maximums of about 60 cents on the dollar for subsidized loans and 15 cents on the dollar for unsubsidized loans"
https://www.newyorkfed.org/medialibrary/media/research/staff...
(I have an excuse, as English not my first language, but not excusable. Sorry.)
If you get rid of federal loans all it will mean is private loans fill in to take its place - people still want good paying jobs, so they'll still pay to go to school.
A less drastic approach might be to give schools qualifications for seats in a department as graduates take jobs in their field with the overall lost capacity being redistributed evenly over participating schools. In such a system, the bad schools could finally drop out.
There are well-paying jobs that don't require a university degree. Skilled trade jobs exist and are in high demand. Tech careers with IT, networking, software, and hardware exist for those that put in the time, whether that time is on school grounds or at home.
I've known (and currently work with) professional programmers, sysadmins, network engineers, designers, and hardware engineers who don't have formal credentials. All of these people are making six figures in US dollars outside the bay area. They've all put in the time in their domain and in speaking with any of them their expertise is evident.
A major factor in learning these skills is available dedicated time. Middle/Upper-Middle/Upper class kids who are interested in tech can often find available free time to read books, tinker, and acquire hardware/resources (whether through their parents buying it or by tracking down cheap/free hardware (more of a time cost)). The less financially stable a family is, the higher the likelihood that there won't be free time available for academic endeavors and will instead be filled with finding a job to help pay for food/shelter/clothes for themselves and their family. Going to college provides a structured place where dedicated study is expected (and paid for via scholarship or loans). This is an escape hatch for students who didn't have the same opportunities.
I knew someone would make this comment, they always do. The trades don't pay nearly as well as you think you do, put enormous strain on the body, have bad hours, etc. Most tradesmen that make big money either work insane overtime, or own their own business because they're the top 10% in their craft.
Also the idea that it's like what it was when you grew up, where you just work hard in your support job and then you magically become software engineer and make big bucks simply doesn't happen anymore. It's like winning the lottery.
My grandfather made a great living in the trades. That is until he got cancer from exposure doing it.
There's a good argument that its the wrong method to acheive democratization/affordability (I personally prefer a very different approach), but…
> They’ve allowed students to enter into debt,
Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
> the only long term contracts kids under 18 can legally sign,
Again, no. Its true that federally subsidized student loans are not voidable under federal law even where due to the age of the borrower contracts generally might be under state law, but similar exclusions from the “defense of infancy” apply to student loan contracts, whether public or private, generally under many state laws, as well as sometimes for other contracts. So its not the only kind of contract which minors can enter into and not subsequently avoid. (And even without the exclusions minors can legally enter into the contracts and they are valid until and unless the defense is asserted, but counterparties will be unlikely to enter into the contracts because they know the defense is available to the minor.)
And even if this were a particular problem, it would be easily fixed without abandoning federally subsidized student loans, either by shifting eligibility for minor students from student loans to parent loans, or by simply limiting them to students 18+, which might force some younger students to delay college entry.
> for something they can never declare bankruptcy on.
That’s also not true; there is a fairly high threshold for discharge of student loans, but it is not impossible. Again, the problem suggested with this is easily curable (and arguably doesn’t even require removing the limitations on discharge) within the context of federal student loans. If the income contingent repayment plan with discharge of the balance after a set period were the only one available, discharge in bankruptcy would be largely a non-issue.
Now, since the discharge restrictions also apply to private student loans, you might still want to remove them to address that problem.
Source? I’m not aware of any non government lender that would or has underwritten an 18 year old with no collateral and no co-signer. At least not at any single digit interest rate, and definitely not for tens of thousands and maybe hundreds of thousands of dollars.
Yeah I'd also like a source for further reading on this. As far as I understood the number of lenders willing to underwrite a loan to an 18 year old with no collateral is virtually none compared to the ubiquitous availability of federally subsidized student loans, and the reason for this is empirically supported by how many student loans are non-performing.
If the courses require specific textbooks in specific editions, the students don't have a choice and have to accept excessive prices.
This ^^^ is the key. These colleges aren't being nice. There is simply not enough demand for the amount of supply. That is, prices fall.
On the other hand, this was also the root of the student loan crisis. Supply is relatively fix. But cheap and easy to get loans drove up demand. Which further increased price. Which required bigger loans. You see where this is going :)
There are plenty of good reasons for the biz model shoe of higher edu to drop. It looks like that's finally starting to happen.
Especially for online classes that can scale pretty inexpensively, the current tuition rate is absurd.
And as taxpayers who fund this education via loans we should have a lot of leverage, yet the only thing anyone talks about is loan forgiveness, as if we won’t end up in the same exact situation again in 10 years.
If you've ever worked at a large corporation you've seen this in action. Universities and government are no different. Bureaucracy keeps expanding, corporations address this problem by random acts of cancelling entire divisions/products and layoffs.
Don't know if I'm imagining this but it looks like in state tuition has doubled for my state school (virginia tech) compared to what I paid in 2011 for grad school.
If this is true, that is a pretty big increase.
https://www.collegetuitioncompare.com/trends/virginia-polyte...
That said, I have a feeling this isn’t a controversial point. A lot of my classmates come in seemingly focused on a particular career or field. The issue is that there’s no conceivable way they can be certain of their field this early. I’ve talked to far too many undergraduates who have decided on CS without knowing if they like programming. I have too many classmates who decided to major in chemistry or do pre-med because they liked their high school chemistry class. With these students, what happens if they discover they don’t like their major? For the undecided student, they’re unlikely to get far in a subject they don’t like. They’ll leave after a class because they’re not set on it. A decided student will likely feel that they’ve committed and realize too late that they do not want to work in their field. In my view the worst situation is to realize you hate your major junior or senior year.
I’m not sure about solutions. I took a gap year and worked as a programmer. The gap year had a lot of benefits but maybe the biggest one was knowing that I could actually see myself as a programmer and that I’m competent at it. A gap year is a privileged option though. In general cheaper tuition and more involved guidance could work. Most majors should have an initial class that outlines the potential career options and the less than pretty parts of the job. I suppose that pushes the school into a more vocational role, but alas if you’re paying so damn much, getting a career out of it is pretty necessary.
I went to a similar school. The benefits are not granted when you attend the school but afterward in the alumni network and the reputation of the school. I get in a lot more doors than I rightfully should given my qualifications because my school was more expensive (and thus prestigious) than most.
It shouldn't be the way it is but the benefits from getting a 'top-tier' education are more in signaling to people that they should consider you than actually giving you a better education. There's also the argument about the access you have as a student and alumni but I don't want to go on forever.
Outside of the top 20 schools or so, I would not see the point of paying any extra for a private school, as the school's are willing to accept mostly anyone who can get a loan, which is basically everyone. The private schools that are prestigious (i.e. highly selective) have substantial aid making them very cheap for families who earn under a certain amount.
Have you attended all of the prestigious institutions while needing financial aid? I am familiar with a handful of the programs having been through one and worked with several people that were in others. Some schools are doing a great job enacting need blind admission, others are not.
We are not at a point where the most prestigious schools are "very cheap" to any families* except the wealthiest and the poorest (where it definitely isn't very cheap to afford plane tickets, food with the dining hall shut down, clothing so you don't stick out as being poor, etc.)
* The one exception I'm confident of is Princeton, I've heard their need blind approach is actually well implemented and I've known more than one person that graduated debt free.
Instead, students should go to community college for the first two years and transfer into University upper-division majors (or, just get a 2 year cert rather than "dropping out" if you decide you don't really like college after all!). You can spend two+ years mucking around in Community College for the tuition cost of half a single semester at a private university -- my local community college credit-hour cost is literally 10x less than out of state tuition at a private school: $41 vs $441. It might even allow for some sort of internship or apprenticeship program in the interim period to let kids have some experience before they settle in on a major program.
All of this sort of assumes though, that the system actually cares about student success, rather than laundering privilege, credentialism, and the student-loan fleecing described elsewhere in this thread.
The government guarantee on debt dollars right now is absolute. Schools get paid no matter what, and have no liability for actually providing an ultimately valuable service.
Here’s an alternate arrangement. The school and government together co-guarantee the debt. Students’ monthly payments start 1 year after graduation or after the first year of less than 50% enrollment, payments are strictly calculated based as a percentage of income, and after 10 years of payments the government guarantee is retired. Any remaining balance on the loan then becomes dischargeable in bankruptcy and the school is liable for any unpaid balance.
Or something along that lines. The program should be structured in a way that the government is only guaranteeing debt that is in proportion to the earnings power actually achieved, and the school becomes liable for debt that is out of proportion with the actual earnings power achieved.
Of course it’s a law of averages. Certain students will fail due to no fault of the school but overall a private school should be responsible for providing measurable value in proportion to its tuition charges.
Source? As far as I can tell, some genius politicians figured out they can lower taxes or keep taxes low by removing and reducing taxpayer funding for colleges, and replacing it with free non dischargeable loans for anyone who can fill out the FAFSA.
There is no altruism in saddling kids with debt rather than paying for schooling with tax money.
A part of the problem is just the notion that everyone should even be going to two or four year university.
> In 2017, state and local governments spent $297 billion, or 10 percent of state and local direct general spending, on higher education. Higher education was the third-largest source of state and local direct general spending in 2017, roughly equal to spending on health and hospitals.
> At the post-secondary level, the United States spent more than the average (1.5%) for OECD countries on total government and private expenditures at 2.6%. Only three other countries spent 2% or more of GDP on post-secondary education. Those countries were Canada at 2.4%, Australia at 2%, and Chile at 2%.
https://www.urban.org/policy-centers/cross-center-initiative...
https://www.investopedia.com/ask/answers/020915/what-country...
>Higher education spending has remained relatively constant as a share of total state and local spending over time. In both 1977 and 2017, 10 percent of direct state and local direct general expenditures went to higher education.
According to the source below, there are at least twice as many people attending higher education between 1977 and 2017, not including the ones who do not complete 4 or more years of college:
https://www.statista.com/statistics/184272/educational-attai...
There's obviously a ton of waste in the system, such as the college sports business that has nothing to do with education and is clearly a taxpayer subsidy for private interests. But it seems like taxpayer spending per student is down quite a bit (can't include taxpayer backed loans, of course).
And I definitely agree, there is no need for everyone to go to a 4 year liberal arts school.
That would require structural reforms to fix the economy or to provide an alternative education path that is tied to economic productivity. In other words it is not going to happen.
Although "Mrs" is specific to females, my personal experience includes more males that have done this than females. The sexism is used to make the point easier to understand, and but its reflection of reality died around 1950 if it ever was one.
I mean it’s a full decade, or let’s say even 15 years. If it’s worth under-earning your degree just to avoid paying off the loan, then the degree was way over-priced.
https://www.npr.org/2020/12/17/925831720/losing-a-generation...
They need to organise themselves to use one platform for giving online lectures. Nearly a year after the start of COVID, universities are all over a place with their software. Some unis allow every lecturer to decide how to do the course forcing students to install sometimes 3! different applications for taking the lecture, sharing documents and taking the exam - per course! Sure, there's overlap, but it's a little crazy.
Then there's the problem of proctoring - the best way to sell your students data and invade their privacy. If for reasons beyond your power the internet flakes out or the software has a bug, it's either fail or simply resit. MOOCs seem to have already solved this problem, but many universities fail to do any kind of research on the subject.
What's pretty bad is that many universities don't record their lectures despite it being a wonderful tool for learning. You can pause, rewind, speed up, clip and discuss lectures after they happen and increase collaboration with students and the lecturers, but the opportunity seems to be willingly ignored. Even worse, some lecturers are staunchly against being recorded for fear of saying something wrong, but will gladly invite any proctoring company into the homes of their students.
We still have a long way to go.
Despite many people bemoaning the current pandemic, I think it is having a wonderful impact on the status quo. We had to be rocked out of our comfort zone to be force to innovate because we would've taken decades longer otherwise. This year was a good year.
One level down, the colleges price it using yield management strategies that would make airlines blush.
Apart from reforming federal student loans, ensuring that at least 75% of students pay the same price would stop some of the crazy pricing strategies