Right. It’s become a government backed bubble. Somehow we need to pop it softly. I’m sympathetic to all the current student debt holders and providing relief to them but if we do that without putting and end to these guaranteed loans we’re just perpetuating (and making worse) the problem.

Doing something like making community college and trade school level degrees free and leaving everything else to private loans sorta makes sense. (Arguably 80% of university graduates really didn’t need their degree for their job.)

There is a rather simple way of stopping the ever growing tuition bubble, one that is employed in the Netherland, but I feel like it won't be popular in the US: Cap the tuition a college is allowed to charge and restrict them from charging additional fees.

Actually, the simplest way to put downward pressure on tuition in the US is to allow the loans to be dischargeable in bankruptcy.

Maybe make them dischargeable 10 years after graduation/disbursement? This might help avoid people from planning to declare bankruptcy immediately out of college to get rid of the debt, and 10 years later most people would have some assets to go after during bankruptcy proceedings

The upside is that lenders would still have to consider whether the borrower is actually likely to be able to pay back their loan

Won't people then plan to go bankrupt? Although perhaps that will allow a better equilibrium.

Here's another idea for a better equilibrium: Cap non-dischargeable loan payments at (say) 15% of taxable income, written off after 20 years. Then they can never become an impossible burden, and lenders will become very picky about what kinds of study they wish to fund. Which will in turn provide more useful information to those applying, instead of just glossy brochures.

Yes, which is exactly the point; so banks/gov will lend less, to people they think will pay it back. Which means schools will have to charge less, particularly for non-profitable majors.

No, being bankrupt is definitely not an enjoyable state to be in, even is your debts are discharged, though.

What is does mean, however, is that no sane entity will then continue giving out loans for someone to go $75k in debt to go to cooking school.

You mean culinary science !

Like you mention it'd simply create an equilibrium. People would declare bankruptcy when the discomfort of repaying the loans exceeded the discomfort of declaring bankruptcy. If I lend you an unsecured $10 which you then expend on something personal and materially intangible (such as an education) you're not going to declare bankruptcy to get rid of that $10 debt. If I lend you an unsecured $1,000,000, you almost certainly would declare bankruptcy to get rid of that debt. So we can say that my risk (as a lender) in lending you $10 would be 0%, while my risk in lending you $1,000,000 would be 100%. There's some curve there where I maximize my profit:risk in the middle that depends on the specifics. Like any loan it now becomes the job of the lender to assess that risk, determine eligibility, and profit off sound financial decisions - or, themselves, go bankrupt with poor financial decisions.

I think this would be a vastly better scenario simply because all interests would be aligned. Universities would have an incentive to keep prices reasonable because lenders would want to keep the total amount lent per individual relatively low. Universities would also have an incentive to ensure students would be likely to be able to comfortably provide for themselves after graduation because, once again, lenders would have an incentive to ensure that the people they're lending to will be able to comfortably pay back their loan once they graduate. And so forth and so on. In the end, we'd likely reach a scenario where it'd be relatively easy to obtain loans for majors likely to improve your ability to comfortably provide for yourself, and relatively difficult to obtain loans for majors likely to leave you with difficulties providing for yourself.

A world where anyone could pursue education, on public dollar, on any topic they'd like, is an interesting idea. I look forward to seeing the outcomes now that such systems are truly starting to be put to the test. Many nations are facing substantial pressures on their social systems such as aging populations, increasing costs of medical care, reduced fertility rates, immigration of lower earning individuals, etc. At the same time, the face of the job market is constantly changing such that an ever larger share of all desirable careers require some degree of educational specialization to even get your foot in the door. These are relatively new problems and I'm not entirely convinced that utopic ideas of decades past will remain viable in the decades to come - though I certainly hope to be proven wrong!

The problem IMHO is that the "discomfort of declaring bankruptcy" is hard to predict. Right now it caries some social stigma I believe, but that could change. I don't think that's a great mechanism for deciding who pays back the loan and who doesn't... and my suggestion in all such threads is that this should be tied to future income, which the lender will then become very interested in predicting.

Does declaring bankruptcy increase interest rates for the debtor? That could be enough incentive for it to be discomfortable

That's a point. I bet it does right now.

But if it became commonly done after graduating, then I imagine it would not predict much about whether you will pay the mortgage on your house (which is anyway secured by the house) and so lenders would soon not care.

It works for our president, maybe the government will learn something when not only the wealthy can get away with it.

Probably - it would change the dynamics between pricing , companies providing the financing and universities.

How I’ve no idea. Right now it’s kinda risk free to give loans out so that would change. Maybe then less cash is made available and universities have extra capacity.

Yes, or, if you want to go even further, introduce a special bankruptcy after X years, just for tuition debts. Which is effectively the idea of the IBR (income-based repayment) scheme, as I understand it (I'm not US-American).

Why?

See the other comment:

Banks will lend less, to people they think will pay it back. Which means schools will have to charge less, particularly for non-profitable majors.

The govnement is the creditor, not the banks like they would be for a traditional loan.

Hmm, I didn't realize that federal loans were the overwhelming majority of the student loans (I guess the pseudo-governmental status of Sallie Mae and getting federal loans serviced by banks was a bit confusing). That does complicate matters, and suggests that universities are enjoying the government guarantee of funding to increase costs. Making them dischargeable in bankruptcy would mean the programs would have to change.

I agree, but I don't think it should be retroactive i.e. only new loans are covered. Banks will start pricing them like personal loans if they're dischargeable in bankruptcy, so it would not be fair that people with more favorable terms obtained earlier are able to take advantage.

I think part of the reason that the US is hesitant to take approaches that constrain universities' ability to operate based on other countries' actions is that no country has as many universities of as high quality as the US does, to the massive benefit of both the country and the world.

There's undoubtedly tons of waste in universities' functioning, but I don't blame policymakers for treading lightly when it comes to constraining their operations in any significant way for fear of killing the goose that lays the golden eggs, as opposed to simply the baseline ideological skew towards less direct regulation of businesses.

People may not have jobs that match their degrees, but in many cases you need a degree to get a job. It’s an HR hurdle you need to clear to prove you can manage your time and eventually reach a goal you set for yourself.

But this is a completely zero sum consideration, and as such from a policy point of view it makes no sense to make any allowances for this.

Here's an idea for 'slowly popping it':

Innovate in trade schools and start convincing high school students to take that path instead of University.

Somewhere in the early / mid 90's VO-TECH was changed to being a dirty word. I would even argue that some computer science related programs should take a vo-tech structure.

Why do you think community college and trade school level degrees should be free? It sounds like you think they're less wasteful somehow?

Community colleges have lower wages for their permanent faculty compared to universities and 4 year colleges. Community colleges usually have very little in terms of athletics. Athletics at most universities are a huge sink in terms of expenses. Very few universities generate enough money to pay for their athletic departments and none of them as far as I know generate enough money to pay for the buildings and stadiums they use. Community colleges mostly focus on teaching classes and lack the accoutrements that universities generally have.

On average, they must be less wasteful simply because their tuition is so much lower. There's lower margins so less room for waste. They are also not a luxury good (college is) so they are more subject to market pressures.

> making community college and trade school level degrees free

that's a tax on the non-attendees, why should they pay for your education when it significantly raises your earning potential?

potentially because the taxes tend to fall on those who benefit hugely from an educated workforce. Not sure I agree with this argument, but it's worth noting the justification so that it can be discussed seriously rather than more confusing arguments.

Universities in other first-world countries also have bloated administrations, libraries filled with journals/magazines that no one reads, and tenure. However, they do not have the affordability problem that universities have in the US, so those things must not be the cause.

The real difference is government funding for universities. No country in the world has made higher education affordable to the masses without high levels of government funding -- the US used to do this and stopped, with predictable results.

This is spot on. An anecdote from my undergrad studies and living in Madison, WI: the UW has a division of housing, which provides (shoddy) canvas carts to the students to use for moving in/out of the dorms. My student organization happened to "acquire" some of these carts, and when using one I was confronted by none other than the director of housing, who promptly called the police on me. In the end I was happy to return it and he asked the police not to press charges on the condition that I help him walk the cart back to the dorm where it belonged. He told me that people stealing the carts drives him crazy because they cost about $800 each because there's a complicated bidding process to even attempt to sell them to the school! I told him I'd be happy to go to the Home Depot and bang some together if he paid me half that for carts.

> there's a complicated bidding process to even attempt to sell them to the school!

Did he mean complicated process for the school to buy them, or was he making them and selling them to the school himself?

My understanding is that there was a bidding process wherein the school would publish a request for proposal and companies would win the contract through it. I'm sure such an approach would be valid in other contexts, but in this case it just speaks to the unnecessary bureaucracy surrounding the procurement of something that could realistically be bought off the shelf.

There is a reason those carts cost $800, and you definitely can’t make them from Home Depot materials for half that. Hotel owners don’t waste money on $2k and $3k luggage carts for no reason, google how much they cost.

Also, theft when you are an adult is not excused by claiming you were dumb kids in my opinion.

So your org stole carts from the university, then when you got caught, you proceeded to complain about how expensive they are?

We were dumb kids, and it's a story. The director was quite nice and we were making conversation on what would otherwise have been a boring walk across campus. He was clearly appalled at how expensive they are as well, but I got the impression even he didn't have much agency to change it.

Tenure does not prevent a department from being downsized. At least not any college I've worked at. The trend is to use untenured labor and I believe over half of all classes are taught using untenured labor.

> libraries filled with journals/magazines that no one reads

I appreciate both sides of this and I'm not sure where I currently am on the issue.

Libraries do purge from their shelves, and probably should as time progresses. It is interesting to me the figuring on what to purge, for obvious reasons. Likewise for what new material "should" be taken in to [re]fill the shelves.

Similarly, I once purchased a ~50-year-old book about "future" rocket science from a used book store. The clerk actually asked for clarification, "You understand this book is 50 years old, right?" ... yes I do, please take my money. This makes me wonder where libraries dispose of their discarded stock if not some gigantic shredder or similar.

Universities waste money in a lot of ways - library funding is not one of them.

Well, paying for journals more expensive than sci-hub is largely a waste. And I've seen lots of renovations of libraries which add a lot of pretty luxurious study space... although I'm not sure that was on the library budget.

Consider that if noone paid for their journals then Sci-Hub would not exist. Because noone would be able to share their accounts to log in to the content.

Sure, I don't mean that too literally. But the current system seems to syphon huge amounts of money to a few owners, and may well be replaced in the not-too-distant future. Websites do not cost $30/article to run.

> There is so much waste in universities

I agree, but you can hardly force low-performing students to quit and pursue apprenticeship instead?

As well as mandatory courses that have little to no practical value when you get a job..

Yet, at the same time, they also provide all those jobs. Is bloating and inefficiency all that bad if it provides good jobs and the jobs have a good work/life balance?

This is exactly the question that the parable of the broken window answers.

http://bastiat.org/en/twisatwins.html

I wouldn't say exactly because over-staffing does not entail destruction like window smashing does. Overstaffing entails significant training and break time while on duty. Time to train, break and help other departments is considered a premium quality of creative working environments. Factory style production environments that are goal focused are a special case of keeping workers running, best when its to finish early.

"Creating jobs" is a silly argument. Literally anyone can create jobs if they are useless. Here's a shovel, go dig a hole then fill it back in.

> Here's a shovel, go dig a hole then fill it back in.

That's ... actually how it's done, yes. Besides dam construction the https://en.wikipedia.org/wiki/Maschsee is a nice example of literal hole digging.