The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral? They only guarantee they get that it will be paid back is the fact that it can't be discharged.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
If it's a bad bet for the bank, it must be far worse of a bet for young adults. That's the point -- right now we're essentially suckering millions of naive young adults into a life of wage slavery by giving them a "bet" which they are completely unequipped to evaluate; and many of them are making a bet when they shouldn't.
What you're essentially arguing is, "We have to enslave these people or society wouldn't function". On the contrary: we must not enslave these people; if stop doing it, society will figure out some other way to get things done.
But I also don't think allowing these loans to be discharged in bankruptcy will solve anything (and will arguably make things worse) without systemic changes in the way college is paid for.
What do you think about Income Share Agreements?
https://www.thesimpledollar.com/loans/student/income-share-a...
Note that "projected lifetime income increase" is generally overestimated. What we do is compare average income of a college graduate with a high school graduate and attribute the difference to college. However people who could get through college likely would have made more than people who couldn't, even if they hadn't gone to college!
At this point the average IQ of a college grad is very close to 100. I guarantee that within the next 30 to 40 years someone will make the shocking discovery that the presence or absence of a degree has no influence on income, success, or happiness.
At that point the ponzi scheme of higher ed can collapse.
There's nothing wrong with designing and implementing an education system for the top 5% of society and the jobs that top 5% will likely have. There is a big problem with a marketing scam along the lines of every American is a temporarily inconvenienced millionaire.
Surely, my favorite waitress at Dennys is making more money as a waitress than she would as a K12 educator, if she could get hired, which she cannot. The degree does not make her a better person nor a better waitress. It does signal that she's in maybe the top 50% of humanity WRT the skills required to get a degree. She's a somewhat better than average person because of who she is, not a meaningless piece of paper for training she will never use. The point of discussing my favorite waitress is we need "something" to signal in the job market who is in the upper half of potential employees, and $100K of debt and four years of labor seem a huge waste on a civilizational level.
[1]https://en.m.wikipedia.org/wiki/The_Case_Against_Education
P.S. Signaling is very profitable for the individual benefitting from the signaling, it just isn't good for society.
I think the (optics) problem is that it's a "more obvious voluntary fractional slavery program". So it's easy to criticize. Of course, because it's a less obvious voluntary fractional slavery program, non-dischargeable loans are simultaneously harder to criticize and harder for people to see the trap they're walking in to.
I wonder how society would react by making student loans forgivable. Would banks stop giving out loans because there is no collateral? Or would they require a cosigner to rope in an adult with collateral to lose? Would schools get cheaper as a result of people not being able to afford the already high tuition, would they become a status symbol for the mid-upper class who can afford it? It is definitely an interesting thought experiment.
Right now, there are students who can come to Perdue who are looking for university as an "investment" in their own future: they want to spend $100k to get more than $100k back over their lifetime. But the fact is, some of those students are studying subjects which will never pay them back for their investment; and others will never make that money back no matter what subjects they study.
So the question is, what incentive does Perdue have with regard to these students, under the "unforgivable student loan" system?
1. From a pure short-term financial perspective, it has an incentive to get as many students in the program as possible.
2. From a reputational point of view, there may be some damage to having lots of students graduate without getting jobs
3. Perdue is made of human beings, many of whom actually have feelings and morals; those people feel much happier when their students' investment pays off, and feel much worse when their students' investments don't pay off.
And the point is, at the moment, for students in the category of people we're talking about, you have #1 fighting #2 and #3. That's always going to be an unstable system where things fluctuate between "terrible" and "not quite so terrible".
Consider the incentives in an ISA system. The incentives are now aligned: Perdue would have a vested interest in the success of their students after graduation: the more money their students make, the higher return they get (up to a point). If a student wants to come in and major in Underwater Basket Weaving, they can say, "Perhaps a degree in in Accounting or Education might be a better choice." And if they do offer Underwater Basket Weaving, they'll be sure to add in classes on the Economics of Underwater Basket Weaving, Advanced Basket Weaving Management, and so on, to make sure that those students are actually prepared to make money after they graduate.
I can‘t resist the feeling this sounds surprisingly related to the concept of free higher education and a higher, progressive income tax, a pretty revolutionary approach we‘ve been doing with limited success over here in Germany.
Then again, that might just be my naïve European perspective on things and since taxes are theft and free education is just for those commies wanting free things, it‘s surely inappropriate for a free country.
What makes you think that "profit motive" or "regulatory capture" will be kinder and more gentle with this approach?
For hundreds and thousands of years Indian farmers had a version of "income sharing". You should research how it went. And please don't respond with "Sure they fucked up but WE will build a better system this time around"
I've read this about socialist countries that have free education. You'll have folks with law degrees driving taxi cabs. It's a waste of resources.
This is really the most important issue. People are spending tons of money on worthless degrees. If they were getting degrees worth something, we wouldn't even be having these discussions.
Many lawyers need to drive taxis to get by. Being a lawyer doesn't mean instant riches unless you land at a high profile firm directly out of school.
Studying law isn't a finite resource either.
The problem with your view is you assume the only way to get educated is via academia. There is a lot of education when you become a mechanic, an electrician, a factory worker, a firefighter, etc. That is not academic. You learn on the job. There are also many certification courses for these fields that run outside of traditional college system.
I believe in free schooling to teach basic, essential skills like reading, computing, math, etc. I'd even argue for a greater emphasis on financial education in K-12. But college is different.
The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose. It costs people resources in the form of taxes.
In the meantime, we live in the information age. Teaching people to teach themselves is probably the most valuable skill we can teach.
Education allows one to lead a richer life regardless of ones circumstance. Consider the janitor who took 8 years to get a bachelors degree in classics (after learning English). He admits that now with a degree he’ll probably try to become a janitorial supervisor.
But two things stand out, first there is no shame in a job as a janitor, and second to him the education was an end in itself, not a means to an end.
https://nypost.com/2012/05/13/what-class-columbia-university...
The problem with your view is that it makes the assumption this was, and always has been, the purpose of college. That wasn’t the historical purpose, in particular before the Morrill Act during the Industrial Revolution
This is true for every profession. Is there any job where you pop out of school ready to perform like an expert? Lawyers, doctors, scientists, etc. — all these folks learn to do their jobs on the job, despite their years or decades of training in academia.
> The college system is very expensive, it's heavily subsidized by the state even in the U.S. If it is not teaching people valuable skills that they will be using in their profession, then it is not serving it's purpose.
There is more to life, and to work, than preparing for a profession by learning profession-specific skills.
Wait, what? Since when?
Was once driven by a chap who had a very in depth knowledge of Turkish literature; I spent a good 25min listening to him talk about Orhan Pamuk and Elif Shafak, two writers I had recently read (and liked). Turns out the guy had been a lit professor at tertiary level back in Turkey. And here he was, driving a taxi on a rainy evening in a godforsaken town in the Midlands (UK).
People are incentivized to act one way or the other. Less-wealthy people cannot afford college tuition, and the government cannot mandate that banks give away money to extremely risky but ambitious people.
This same problem exists with extending loans in general to risky, low-income individuals. Yes their rates are insanely high, bordering on predatory, but they also have sky high default rates so the alternative is they simply cannot get a loan at all.
This is essential economics.
https://www.governing.com/gov-data/education-data/state-educ...
That doesn't follow: you could graduate, get your degree, and declare bankruptcy. You're fine, your loan is gone, and the bank regrets their investment.
Since the bank is absolved from making that bet, it is now the young adult making the same bet that no sane bank would take.
A lot of people are now living with having lost that bet.
This of course will be to the spiral and collapse of the college loan system.
It is in fact bad.
You can’t just declare bankruptcy and get a high paying job a year later and have no student debt....
When I looked into personal bankruptcy I was told by my lawyer that it would only make financial sense if there was no way I could pay back the amount owed in the next 7-10 years.
Why? I rather consider this as a sign that the person will be rather loyal as employee because he needs the money ...
Trust is like glass - easy to break, very hard to put back together.
If bankruptcy laws were abusable by students in the present day, EVERYONE would know how to do it
It's a positive feedback loop
In my early days in Motorsports (late HS?) we had a anesthesiologist in our group, he was the wise elder who had accrued enough money and flexibility in his practice to play around with the young punks and 'show us how its done.'
One day after a tech day before a track event we working and wrenching in his garage and someone asked him how he got into the trade; turns out he was drafted in Vietnam and chose a medic role out of professional interest but also to ensure not being sent into the suicidal combat zones and come back home alive.
He said that it was incredibly typical to do what you just said in the 60-80s and declare bankruptcy like that when you got your MD, mind you this is at a time when it cost a fraction of what it costs today.
But you could also have your entire medical career subsidized by the State and expedited if you're sent on tour faster than anything offered in the civilian World and choose whatever medical school because of the GI bill and do your residency anywhere you wanted due to your status as a veteran.
And then stiff the Bank for any loans you may have accrued and it was accepted and common practice and save while your credit score was fixed.
He was one of the few boomers who openly spoke about how his generation wasn't anymore responsible then the 'entitled' millennial trope and tried to lecture us about it as that was becoming wide-spread by that time. He actually gave advice about the optics of this route that were being skewed to the detriment of his Industry and profession.
Now seeing the shortage of medical workers during COVID are being perilous overworked all over the World turns out he was, reluctantly, right.
Additionally, I wouldn't even expect a college bankruptcy to fully preclude getting a home mortgage. With a large down payment the bank isn't actually taking that much risk.
(Except that really I expect that if this law changed loans would require cosigners with good credit)
Contrary to popular perception, there's no robust private investor market for student loans. US Treasury is the predominant buyer.
https://www.advisorperspectives.com/dshort/commentaries/2020...
Unsecured personal loans (that are subject to bankruptcy) are a valid asset class, coveted by LendingClub and some banks, but they require solid credit history and carry a higher interest rate, more aggressive repayment schedule, or both.
That’s not a valid implication at all. 18 year olds change their mind all the time, base decisions on impulsive reasons, etc., that comes with immaturity, lack of experience and indecision.
The loan being a bad risk for the bank is a function of youthful impulsiveness and a person without the means to pay it back yet.
It’s not risky to the bank because college itself is risky or fails to deliver wage opportunities. Not saying college cost-benefit is always favorable, just that your implication is wrong.
The problem with the current system, is we don't force the students to understand the price of the risk. The problem with making them normal loans is that the bank is unable to accurately price the risk. There are middle grounds, but arguments from the extremes seem to carry better.
Maybe... but we could definitely alter the nature of risk involved.
Why not reduce cost of tuition (e.g. <$1K/semester), while raising the bar on academic rigor as a means of controlling demand?
I see a lot of parallels to medicine here. Both are highly regulated and seen as a "right" we ought to fund. Maybe, but until we achieve greater labor leverage (made even harder by professional credentialing in medicine), there just won't be a way to drive costs down much, so we're stuck with what we have.
Part of the problem with universities IMO is the accounting for revenue<->expenses isn't at all straightforward. Athletics generate a ton more money than they cost, most people seem fine with that. Research generates no revenue but costs a ton, for some hard-to-quantify but (hopefully?) real benefit to society at large. Tuition is nominally for teaching, which is a big cost center for a university. And, at least in the US, all the costs are split between the national government, the state government (who has the pleasure of educating people who may not live in that state long-term?) and tuition, and various donors and grants.
A system ripe for disruption, if ever there was one.
But most universities are more about property speculation and bequest farming than they are about education or R&D.
The system is entirely corporatised and often predatory. Professors are only as valuable as the grant income they generate, adjuncts are gig economy labour, students are a barely-tolerated annoyance, and property speculation and "administration" are considered the central mission.
I mean sure we could try to teach kids this stuff, and I certainly aim to tech my kids, but it's not what's been done in the past at secondary school.
Things people need to know to function in our society.
College loans have taken point on this for the aspiring middle classes. In a very literal sense this system is the exact opposite of genuine freedom and opportunity.
Long ago demolished and turned into a Mall during Urban Renewal.
Be careful, this is very dangerous informstion
And it gets worse
You forgot that these loans are subsidized, so when they Go sour (and they will) its the taxpayer holding the bag, not the banks
In other words, its 2008 all over
Not necessarily. Even if it's a good bet for the student, what's to stop them from declaring bankruptcy just after graduation, and before they start their lucrative career? They would then get all the upside, whilst the bank gets zero payments.
And if you have a job with decent money, obviously it wouldn't count as outright fraud at all.
But even that is missing the point. These loans are an economic time bomb. They rely entirely on a functioning economy with adequate middle class job opportunities.
If those disappear - if, for example, an unexpected black swan event happens to leaves a smoking crater where GDP growth used to be - banks lose a giant pile of money anyway.
The debt will be sold at cents to the dollar to collection agencies who will hound the victims, and anyone else who gets in the way by sharing an address, or having any form of financial connection - for the rest of their natural lives.
The reality is that the they should be out of reach to poor or middle class students TODAY. They are not serving those people and are actively making their lives worse by saddling them with outrageous debt and no prospect of meaningful employment.
If the US changed bankruptcy it would force the colleges to change as well. Lenders are not going to be sending children into the workforce with zero chance to recoup that loan, and they are not going to want to bloat the college stay to ridiculous proportions.
That varies so much by student and to bar a whole class of people out of these things is not going to improve their outcomes. While some students are not served with better employment opportunities by going to college and earning a degree - there are many others who are.
Outlawing things to a group of people isn't going to serve them better. It will mean that the entire middle class will be unable to educate into jobs. Educating them about the effort college requires to be successful once you leave would be better.
Making it harder to get a student loan is hardly "outlawing" anyone from going to college. Schools would still give scholarships. Plus, tuition would almost certainly go down. Right now they can charge as much as they want because banks are will to lend whatever colleges charge. If all of a sudden people stopped buying their product when they raised the price too high then tuition would come back down to what it was only a few decades ago.
Even if fewer people ended up going to college it wouldn't limit opportunity. If anything it would likely make it easier to get ahead. Fewer jobs would require a college degree - there wouldn't be enough applicants who have one - and we'd likely see alternatives to college become more popular and widely respected, which would give high school grads more options for how to get started with a career.
If you want to limit the cost of college then doing it by putting caps on how much a university can charge could be a more straight forward option than hoping costs come down by limiting loans to those who can't afford the cash option. (e.g. If a university wants state funding then they need to cap their student costs) Even then - loans would still need to happen for people who can't afford much more than their basic housing expenses (if even that - think about kids who get kicked out at 18).
You're speaking in a lot of "if market forces behave the way we all think they should thanks to basic econ like supply and demand" but that's not how things always work in the real world.
Considering ~50% families don't have any retirement savings and don't have an emergency fund, do you really their kids are gonna be able to afford all the expense things associated with college? (Remember - these people just got out of high school! They have likely never had a job and have no money at all)
Regardless if job requirements change (they only will for a subset that no one cares about and no one is trying to get), you're going to screw people over. The lag time between no-loans and job-requirements dropping is going to be too long. There will be a lot of people who fall into the cracks and will be stuck with the lowest tier jobs because they couldn't afford a cash-only education until it was much less expensive.
Regardless of this - I feel like this is the wrong approach to debate lower costs vs no loans vs whatever-where-a-student-pays-in-the-end. I think 4 year college should be free (no tuition, books paid, stipend or special housing, etc.) given how the world works. I went to college for free due to CH 35 of the VA and it was really the only reason I was able to do it and fully commit to it. I have no problem with having a more educated populace - regardless of what they study. I did study something that came with very gainful employment but that wasn't obvious in the beginning of my studies. I think 4 year college would be less necessary if we had better education from the start - but we're never going to get there in this country.
I think a lot of smaller college would fail, and the big colleges would keep their high prices, and only cater to the wealthy.
Take for example, cars. That's how cars started. Look where we are today.
If tuition stays sky high, it will be because of regulatory requirements (and enabling subsidies) to stay sky high, not because theres no market for education for working class folk
And yet somehow banks were happy to do so until 2005.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
Both of these statements I agree with. The larger the loan, the better the guarantee that banks want.
Every measure that we take to make it easier for students to pay tuition without imposing cost controls results in increases in tuition. The result is that tuition has been growing faster than inflation for many decades, and the trend is unsustainable.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
This I disagree with. Universities are businesses. The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules. Take away those loan guarantees and the universities will have to figure out how to live without customers, or without charging so much.
That said, you can't get there without creating a crisis that forces universities to make hard choices that they have been avoiding for decades.
Universities are not businesses. Students are not customers. Student tuition was much more heavily subsidized by states, but funding from states to universities has declined in the past few decades. This is the reason for tuition hikes.
In the past, there was an agreement between states and universities: The states will provide a certain level of funding for students, and in exchange the universities will be barred from raising tuition above a very small rate annually. Then some states decided that having a "balanced budget" during all years, including recessions, was better policy than keeping education well-funded. Now recessions cause huge drops in education funding, which are accompanied by removing the limits on yearly tuition hikes.
Because it's generally better to have a more educated population, the federal government picks up some of the slack with grant and loan aid, and banks pick up more slack with private loans to students who otherwise couldn't afford it. Then funding never returns to prior levels.
Stop blaming universities. The blame very clearly lies with states and their asinine balanced budget policies.
Tuition rises are a long-term trend. As https://www.usgovernmentspending.com/education_spending points out, from the 1950s to the present, the share of GDP spent by government on universities went from 0.4% to 1.7%. With sometimes progress, and sometimes a loss. But the long-term trend is that spending by states has gone up relative to both enrollment and inflation.
Yes, there are recession years where universities blame tuition hikes on cutbacks in state spending. But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
How bad is it? At present average college tuition at a private school is $45k/year. Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
Now why have caused risen? It turns out that a lot of causes have been proposed, from the cost of buildings going up to an increase in bureaucracy to deal with government regulation. But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
Exactly as I said.
I'm far from understanding the financials of running a school but something always seemed off to me there. I guess technically our grad student tuition was being paid too, but after the first year that basically amounted to a spot in a cubicle farm and a bi-weekly meeting with my advisor.
A four-fold increase in funding as a percentage of GDP isn't relevant to the more important metric, real funding per student.
https://www.cbpp.org/research/state-budget-and-tax/state-hig...
> But the long-term trend is that spending by states has gone up relative to both enrollment and inflation.
Real funding per university student has not increased, and this claim is not backed by your source. See my source above for rebuttal.
https://www.dallasnews.com/news/texas/2012/09/23/texas-colle...
"State officials used to brag about the affordability of college, but the costs have ballooned since 2003, even when inflation is factored in.
Less money from state
That year, to help close a budget cap without raising taxes, lawmakers cut the amount of taxpayer money the state sent to universities — an overall 11 percent decrease per student — but removed ceilings placed on tuition so campuses could make up for the lost revenue."
> But tuition has outpaced inflation in good years as well. Which suggests that the long-term trend has other causes.
Yes, that state funding doesn't return to prior levels (See my first source)
> Salaries for the people teaching vary from $40k for a postdoc to an average of $95k for a full professor. Which means that in an average classroom, a handful of students could hire the teacher as a private tutor, give the teacher a pay raise, and themselves save money! This basic fact suggests that it should be possible to teach students for a lot less than we consider normal today.
A university is more than its teaching staff. There's research, buildings to maintain, academic support staff and programs, and plenty of other things as well.
> But attempts to quantify all the different factors, such as https://www.nber.org/papers/w21967, find that the biggest single factor is the combination of restricted supply and artificially increased demand (thanks to the availability of loans and financial aid).
One source which happens to ignore many of the factors I mentioned above does not prove your point true. Most importantly, tuition ceilings imposed on universities by state governments. Luckily the paper discusses its shortcomings:
"Given that our model effectively lumps private and public colleges together, it appears that changes in state funding support and changes in other sources of non-tuition revenue largely offset each other. In future work, we plan to disaggregate the model along the public/private dimension."
The source groups private and public colleges together. Private colleges do not receive state funding and therefore would not have to hike tuition in response to lower stand funding. This noise averages out the effect that state funding cuts have on public school tuition rates.
Second, your argument is absurd on the absolute size of the numbers involved. For example from page 2 of https://www.mhec.org/sites/default/files/resources/mhec_affo... we see that per FTE enrollment from 1992 to 2017 that inflation adjusted state spending went from $8,301 to $7,642 and net tuition per FTE (tuition - financial aid etc) went from $3,361 to $6,572. The in real dollars decrease of $659 per FTE in state spending is only 20% of the real increase for students. Where is the other 80% coming from?
Even in the difficult 2008-2017 period, changes in state spending explains less than 50% of the change.
Furthermore the explanation that you are focused on explains changes in public university tuition only. It does not address why private universities have likewise seen skyrocketing tuition. Given that the trends in private and public tuition have been similar, it is more likely that they have a common explanation rather than unrelated ones.
Next, you're dismissing the source that I gave that looked at a variety of possible explanations and tried to quantify the relative impact at each. And yet you've failed to give sources that examine the possibility of any explanation other than your preferred one. (Which still only explains a small fraction of the rise in cost to students.)
And finally it is obvious that a university is more than just teaching staff. But when the fraction of revenues spent on what is supposed to be a core educational mission is so absurdly small, there is a problem. (In the meantime there are more bureaucrats per student, nicer dorms, and much nicer athletic facilities.)
Before 2005 most loans were already protected from bankruptcy, and for the others you generally needed your parents to co-sign.
Therefore before 2005, banks that lent money for student loans did so without that particular extraordinary protection.
Most of the pre-2005 loans required a parental co-signer. And I know that I wasn't able to take out non-federal loans all by myself.
In fact the fact that banks insisted on mitigating their risks with a co-signer is actually supporting evidence FOR what I said.
Is this true? It seems some tech companies disagree: CA Technologies [1], Y Combinator [2], Google [3]. Is it possible that you are not well versed in what philosophy majors actually study and how well that might translate to a working environment?
[1] https://www.cnbc.com/2017/11/16/tech-talent-gap-looks-to-phi... [2] https://www.fastcompany.com/40440952/why-this-tech-ceo-keeps... [3] https://www.washingtonpost.com/news/the-switch/wp/2015/08/26...
Sure, there are plenty of whack philosophy programs that lead nowhere. But if you go to a school with a rigorous philosophy program (which doesn't mean only Ivies/Stanford/etc.), you can easily go for a law degree or a finance job afterwards. Rigorous philosophy programs usually involve tons of discrete math and logic classes, and mastering that opens a lot of doors. I only took up reading philosophy material after graduating, but it is very obvious to me that knowing that in school would have helped me with my more theoretical/math-y CompSci classes tremendously.
Not even talking about some other good applications of that degree that I might not be aware of due to not being a philosophy major myself.
Specifically, having a population lacking in critical reading skills makes everyone more susceptible to propaganda, and less able to critique and assess flawed arguments in writing.
If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
However attempts to measure critical reading skills, for example in standardized tests such as the GREs, consistently find that STEM majors are better at critical reading than humanities majors!
Secondly, critical reading is not the only required skill for critiquing and assessing potentially flawed arguments. Quantitative reasoning is also needed. For example you can't assess public policy questions about COVID-19 without quantitative reasoning. However STEM courses are far more likely to teach quantitative reasoning than humanities courses.
This critique of your argument is brought to you by someone with a STEM degree.
And the truth is, there's no effing reason for a humanities course to put you into that kind of debt. Cheap (often free!) books, a room to meet in, and some small groups for slightly-focused discussion among the students shouldn't be costing on the order of a thousand-dollars per credit hour (per student!) over the course of your compounding-interest loan. It's a terrible value for the money; if it wasn't for the credential nobody would be doing it because if you just want the knowledge/wisdom there are far cheaper ways to get it.
Quoting the whole thing:
""" CLARK: There's no problem. I was just hoping you could give me some insight into the evolution of the market economy in the southern colonies. My contention is that prior to the Revolutionary War, the economic modalities—especially in the southern colonies—could most aptly be characterized as agrarian pre-capital—
WILL: [interrupting] Of course that's your contention. You're a first year grad student. You just got finished reading some Marxian historian, Pete Garrison probably, you’re gonna be convinced of that until next month when you get to James Lemon, then you’re gonna be talking about how the economies of Virginia and Pennsylvania were entrepreneurial and capitalist way back in 1740. That's gonna last until next year, you’re gonna be in here regurgitating Gordon Wood, talkin’ about, you know, the Pre-revolutionary utopia and the capital-forming effects of military mobilization.
CLARK: [taken aback] Well as a matter of fact I won't, because Wood drastically underestimates the impact of —
WILL: "Wood drastically underestimates the impact of social distinctions predicated upon wealth, especially inherited wealth..." You got that from Vickers, Work in Essex County, Page 98, right? Yeah I read that too. Were you gonna plagiarize the whole thing for us—you have any thoughts of—of your own on this matter? Or do—is that your thing, you come into a bar, you read some obscure passage and then you pretend, you pawn it off as your own—your own idea just to impress some girls, embarrass my friend?
[Clark is stunned]
WILL: See the sad thing about a guy like you is in about 50 years you’re gonna start doing some thinking on your own and you’re gonna come up with the fact that there are two certainties in life. One, don't do that. And two, you dropped a hundred and fifty grand on a fuckin’ education you coulda got for a dollar fifty in late charges at the Public Library. """
https://genius.com/Good-will-hunting-good-will-hunting-bar-s...
Now in fact it is possible to learn from self-directed study. But your odds of learning are massively better when you get to ask questions, test your understanding by talking with others, and have your ability to explain your understanding graded.
Which means that, on average, people get more value out of going through a book in a classroom setting than they get by reading it on their own.
Whether that is enough value to justify tuition is another story entirely...
Few people would get to any sort of level of understanding of that sort of material just by reading it, and just because a movie genius can do it doesn't mean it's easy.
If we replaced all those examples with engineering textbooks, wouldn't it be the exact same, if it not, why? We learn he's an untrained math prodigy later on in the movie, so he doesn't need any education. It would appear a STEM education is a waste as well.
Again I ask, given that textbooks exist, can you make the argument that STEM is any different?
I assumed this was true for most people in STEM majors in college, no?
That's a skill that the liberal arts pick up as well.
> I do remember spending quite a lot of time in either a computer lab or in the library fighting my way through problems.
Will did that all on his own, without the need for a college. You're also describing a technical institute.
I don't see any skills there that really require a university either.
1. Humanities does not teach any sort of critical thinking more than other classes, and if anything I found my STEM classes to teach more critical thinking because of more formal systems of proof or statistics needed to back a point.
2. A very large percentage of the population doesn't go to college. If we wait to teach the basic skills in college, it is already too late. This type of thinking needs to be taught in grade school.
>If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
Why wouldn't this be a symptom of the market? There is money to be made in controversy and click bait, and that applies just as well in politics.
You didn't offer any support for your claim, though, which triggers an alert from my critical reading skills.
Did I pass the test? I did major in STEM.
why is a mathematican less likely to be able to critique and assess a flawed argument compared to an English major? why is an English major less likely to fall for propaganda compared to a computer science major?
> Specifically, having a population lacking in critical reading skills makes everyone more susceptible to propaganda, and less able to critique and assess flawed arguments in writing.
Do I need to point out all the flaws in this sentence or can you critically read your own writing?
> If you want to know why, for example, our political “debates” are shallow circuses of misdirection and name calling, look at the state of the humanities.
Would you agree that the majority of politicians are lawyers, or at the very least non-STEM majors? What you're claiming then, is that humanities majors create and participate in "shallow circuses of misdirection and name calling"
Was that the point you were hoping to make?
Political debates are a circus because the political system was designed in a different era that didn't have reality shows and endless mind melting entertainment.
The reality of the history of socialism is one of failure.
And yes, I do understand that everyone thinks that those who disagree with them are ill-informed and susceptible to propaganda, and those who prefer socialism will think that of me :-)
And yes these countries do use the market in a regulated fashion where it does a good job.
It depends on your point of view. Should college be a trade school or should it stick to it's roots of broadening one's horizons?
I found my philosophy classes quite enlightening. They were required for my degree in CogSci.
If my school didn't have a philosophy major, it wouldn't have a philosophy department, and I would never have had those classes.
Also, there are some majors that lead to professional school. English/Rhetoric are often majors of people going into law school for example.
The term "liberal arts" means "free arts". The root of this term is that Athenian society was composed of a small class of free families and everyone else was a slave owned by those families. The free families were wealthy enough to afford a liberal education for their free sons.
Everyone else had to work.
Those are the roots of the liberal arts.
If testing your skills was done outside of school GRE-style, would all these people who pay many thousands of dollars to get a diploma pay so much? I really doubt it.
What a sad state of affairs we find ourselves in that this attitude is common.
College is an investment that costs hundreds of thousands of dollars. When you invest that much money, you should expect a ROI. If you can't even put roof over your head or eat with that investment, then it is really hard to say it was a good idea.
I really don't know why there's this insistence that humanities has a monopoly on teaching critical thinking.
Someone that's good at critically analyzing software doesn't make them good at being able to understand why users might be drawn to a product. Nor does it make them able to design UI that won't frustrate the average user.
Humanities doesn't have a monopoly on critical thinking, but you'd be a fool to believe that it doesn't aid critical thinking. The best software engineers I've worked with were those that came from other professions whom could apply other ways of approaching a problem compared to others.
To put it bluntly, if you hire a bunch of engineers they will design a lightbulb that no one can figure out how to screw in.
-- Bruce Lee
I went to an engineering school, the only majors were X Engineering, Business, and Nursing. Somehow, we had professors for the humanities classes, so I don't think a major is a requirement.
Anything you learn in college can be learned from a book or YouTube. The value of college is the curation the professor provides and the people you are doing it with.
That which can be learned by one-way communication from a book or video are not all that can be learned. Through dialogue and practice one may learn techniques of proofs in math classes, lab techniques in science classes, how to write and edit papers in humanities classes. All the practice that drama, art, or music majors do amplifies what they learn from their books. And so on.
The NFL wouldn't hire college football players who got all their learning from books or YouTube.
They most definitely do:
https://www.thecrimson.com/article/2006/10/25/tuition-increa...
In truth, the costs of these schools results from a ratchet effect. Wealthy donors buy the fancy buildings which the schools are then stuck maintaining. It’s a classic case of a white elephant [1].
In fact, when people ask why colleges are paying administrators 6-7 figure salaries while classes are taught by lecturers making a fraction of that, they say they need to compete with private industry for top talent. I would hope that an administrator making $300,000+ can come up with a more creative plan for what to do with high maintenance buildings than just "let them deteriorate".
Why is that a bad thing? This pushes choosing a good degree from something entirely on the 18 year old to something the market is deciding, by calculating the risk of a default, and removes much of the penalty from making a bad call from the 18 year old. Yes, not everyone will qualify for a loan, but if the bank who is interested in making money off loans decides your plan isn't worth a loan (and this bank has plenty of money to loan, so it can invest in many and aim at averages) thinks you are too likely to not get a good job and will default... maybe you should consider what that means.
And it puts downward pressure on college prices, like you mention.
>they would just be completely out of reach of poor and middle class students.
There aren't enough colleges to survive on just upper class students. So either the colleges will go out of business or they will have to learn how to be in reach of the rest of the population.
https://www.forbes.com/sites/zackfriedman/2019/01/09/student...
The fact of the matter is that by making the loans non-dischargeable, lenders loosen their purse strings since risk of default is much lower. And colleges being on the receiving end of these loans are naturally going to move their prices upward to capture the increase.
Going back to the way things were in 1998 would go far in bringing down the astronomical tuition increases we see year after year.
For example, the loan could be split four ways. To qualify for discharging the remaining balance in bankruptcy, we could require that you've already paid at least 25%, the bank can eat 25%, the university can eat 25%, and Uncle Sam can cover the rest.
If we don't force all the parties to share some of the consequences, we're basically pushing universities to charge as much as possible, banks to lend as much as possible, and 18 year old kids to enter into lifetime contracts of potentially crippling debt.
If you let that run its course for a couple years then either the employers will have to relax their degree requirements or colleges will have to relax their price requirements. It'll be a game of chicken.
I've been waiting for someone with a bone to pick against higher education to file a lawsuit over this. It could devalue college degrees.
There were student loans before 1976, when they became non-dischargeable.
That change in 1976 was actually the cause of the steep rise in tuition. Can't really put the genie back in the bottle now.
Also think of all of those low and middle class students who we'll turn down since we're not willing to do wealth redistribution with our endowment (<scoff>, that's the government's job).
Changing the way colleges are paid for would make sense. Capping tuition would make sense. Making you pay a portion of your income back to the college for the rest of your life (or maybe just 20 years) would make sense.
But allowing student loans to be discharged in bankruptcy would do more harm than good without other systemic changes.
If the only value of the degree is it makes you well rounded, then universities should ensure that only enough people start down the path using loans as their are tenured positions expected to be open in 10 years. If there is industry demand elsewhere then meet it.
I don't know how to solve the problems of someone declaring bankruptcy as soon as they finish their degree though.
People should be able to get an education no matter their social standing. It shouldn't be tied to this idea of job prospects because commodification of education is a sham.
I did not not in any way say that some people shouldn't be able to get an education. I said if the education isn't valuable they shouldn't get one, but there are many valuable education paths to take.
And who defines whether or not an education is valuable? Teachers don't have very good job prospects (low pay means they're less valuable), do you think it would be a really good idea to restrict who can become a teacher to only the reasonably well off?
I have no problem with people wanting to be artists. The world needs art. However I have a problem with someone spending more than they can afford on anything. Want an art degree, first get a job and save up as art will never pay the bills (there are exceptions that prove this rule). Once you can afford to live (that is eat and a tiny home: the minimums) go ahead and get whatever luxury you can afford. Some get an art degree, some a nice car, some collect stamps, you can have a family. I don't care much what you choose so long as you are not beyond your means.
Why?
The REPAYE Plan already allows you to pay 10 percent of your discretionary income for 20 years and then the rest of your loans are forgiven [0].
[0]: https://studentaid.gov/manage-loans/repayment/plans/income-d...
Given that banks know their customers need employees they would get around to giving loans out to keep the supply of talent coming.
There would just be far less waste if student loans were dischargeable.
Banks generally don't give loans, the federal government does.
No, more likely they would be priced - both in amount lent and interest rate - according to the value of the "asset" they're purchasing. There's a reason why home mortgage and car loan rates are 3-4% while random credit card rate is 16-25%.
One is used to purchase something that has long term value and may be used to create value or enable you to make money while the other one is used for Netflix and Big Macs.
I'm waiting to see how things shake out in the next couple weeks. Many colleges require freshman deposits on May 1st. We don't know a) how many are coming back into physical session in the fall and b) how many parents will tolerate paying for an online degree. The next 12 months could crash the system.
So? That's the marketing evaluating what the loan is actually worth.
Bankruptcy isn't a magic "Get Out Of Jail Free" card.
Your credit is trashed at a point when you might want to get married, buy a house, start a family, etc.
Except that it is in this case. The order of operations is:
1. Take out student loan
2. Graduate
3. Get a job, spouse, mortgage, and new car
4. Declare bankruptcy to discharge student loans
5. Profit
The order of steps 3 and 4 are critical. Your car and house are collateral for their respective loans, so they don't go away when you declare bankruptcy. Since you have a house and new car, you typically don't need good credit for the 5-7 years it takes before people will start loaning you money at reasonable rates again.
This isn't some theoretical pattern. It's what people actually did. Especially doctors, because they could often qualify for nice mortgages while still in residency ("doctor loans").
That opened up a flood of money to 18 year olds going to college, which in turn led to the colleges massively expanding their offerings.
Colleges in the US don't just educate. They are also the minor league sports programs for most sports in the US, and they provide luxury benefits like gyms and movie theaters and so on.
They can't go back now. They can't just stop doing all the sports with all the fancy equipment they bought, they can't just get rid of all the luxury housing and movie theaters and so on.
So yes, the US is pretty unique in this respect.
In any case not-in-DC it's more focussed on the BA segment of the population, but artificial gatekeepering is a thing (even in tech! I know many candidates that I wanted to hire but were turned down because they didn't have a BA in CS)
Most school districts have what’s known as a “step and lane” salary schedule for teachers. These grids specify how much raises are worth. Teachers earn a “step” increase for each additional year of experience, with many teachers peaking with the highest “step” at around age 55.
Teachers can also earn more by having more education (those are the “lane” increases). Some districts pay teachers holding a master’s or doctoral degree a premium, while others move teachers into a higher pay column when they earn a certain number of credit hours of professional development.
Although of course there is no reason for college in general to be particularly expensive.
Except private student loans exist
That would eliminate the possibility of a quick "tactical bankruptcy" after college, while also allowing students who made an unwise financial deal when they were 18 not to spend their whole lives paying off debt.
Just like the whole american privatized healthcare; the sky is the limit... to what they'll charge you.
Works really well. Cheap to free education, better skills because you’re not just living the college life and professors have little incentive to make it easy. It’s great.
Hell you don’t even have to fully graduate to get most of the benefit.
Of course, knowing German fluently would be critical to be "on the same level" as German citizens.
So, most likely you are not going to be evading the taxes, at least in places like Germany. It is almost always better to get your first job post-graduation in Germany if you have a German diploma anyways.
Going there thinking everything will be provided is wrong and the COVID-19 crisis will get a lot of foreign students into deep trouble as they lose their jobs and can't support themselves.
> you will have to guarantee that you can support your life in Germany What's so special about that?
As far as I've heard, US colleges are on the order of $10000+ per semester.
https://www.slu.se/en/education/application-and-admission/tu...
That cost will go waaaaaaay down if the loan money dries up, potentially back to the point where it was when “working your way through college” was possible.
Former professor (community college), father of three, two still paying tuition.
Here's my take:
Students should be ineligible for loans until they complete one semester of college. Colleges should make that semester a "boot camp": Varied, challenging, intellectual curriculum, forced work-together times (a study-hall "lab"), and so on. The problem I have is that a helluva lot of students who go to college right out of high school are there for the wrong reasons. They aren't applying themselves intellectually- any growth they get will be, if not despite their behaviors, at least accidental.
I don't want free tuition/subsidized loans/etc. in the current situation. And I totally believe that society should make an investment- hell I've dedicated my life to it- but it's a careful investment. I want those young adults to come away from college with real intellectual growth. At least they should be able to read and think critically.
And making college free in the USofA will make college costs increase (unless you think the US military spending is under control).
Having an onboarding boot camp, where you have to learn to study and take it seriously or you don't get to stay, would help the First Year Experience folks (who would run it), the professors (yay!), the students, the parents who would otherwise be throwing their money away, even high school teachers. It might make enrollment drop-at least initially- but it seems like that's an issue now anyway so it might be a good time for it.
Now, get the hell off my lawn!
Over 90% of loans are owned by and issued by the federal government. It's not banks Congress was protecting.
Student loans only changed to be non-dischargable in the 70s and 80s, driven by certain professions (especially medical) and costs associated with them.
Owned and issued, not guaranteed.
I made it through relatively okay because STEM and some scholarships, but I'm not even sure I'll recommend my children go to college. Especially with online courses (not talking about college, just courses) becoming more viable and useful.
I definitely won't for some pursuits, like art. I'd rather they live at home with me for four years, doing self-study and putting their art out there online and developing a following rather than spend $200,000+ on college that will likely not result in anything afterwards (hell, as a semi-professional game designer myself, I'd happily work with them to get their art into published games).
That's already hitting - the incoming class of 2023 (matriculating 2019) is the first cohort born since 9/11, and is tiny. A number of colleges are facing bankruptcy because there just aren't enough students to go around. And it'll only get worse. Birth rates were depressed from 2001-2009, but they fell off a cliff after 2009.
The debt load on young people is greater than the cost of raising a child to adulthood. By the time it is paid off, the urge to procreate has gone.
And those who turned baby-raisin' into a soulless, for-profit industry can choke on their sins, too.
https://www.washingtonpost.com/magazine/2019/10/21/downfall-...
Fertility rates by year in U.S:
https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?location...
Births per year:
https://www.statista.com/statistics/195908/number-of-births-...
I was wrong about the start date, BTW. I'd thought that fertility started dropping after 9/11 (which also roughly coincides with the children of the 70s having kids instead of baby boomers, a smaller cohort), but it really didn't peak until 2007-2008. Then there's a double-whammy: there are fewer women of childbearing age (coinciding with Gen-Xers born in the 70s and early Millenials), and the fertility rate among women who are of childbearing age has fallen off a cliff. Births are down about 15% since 2007; when you think about what that means for a typical classroom (where you might've had 24 kids, now you might have 20), that's pretty huge.
Although that chart doesn't capture the ratio of women of fertile age in each year, so there may be an unforeseen cliff.
Side note: I remember being shocked the first time I found out that baby boomers and ‘the aging population issue’ weren’t actually global issues and only affected the counties who took the spoils post WW2 (aka western powerhouse countries).
Lots of other counties have very different population ages mixes for example Ireland and Turkey.
The only continent that still has fertility rates above replacement is Africa:
https://www.un.org/en/development/desa/population/publicatio...
There's a lot of parents whom children are in high school now that already went through the student loan debt cycle so we should start seeing the effects of that soon.
Perhaps we'll see a rise in trade/vocational school as a result.
I think the stigma of not going to college is changing a lot (for the better) or at least in the programming world it seems that way.
I suppose going the private route would just result in different contacts. I also benefit from colleagues from previous employment.
I thought so too. This always made me so angry. Last time I posted a rant about that here someone urged me to read the REPAYE Act, and it completely changed my mind.
Under REPAYE, students get income based repayment, even down to $0 payments if you're anywhere near poverty level. After a certain number of years of repayment, the government just pays off your entire balance.
This solves the same problems bankruptcy is designed to solve without ruining people's credit. It also prevents doctors from declaring bankruptcy right after medschool -- I'm honestly unsure whether that was a real or just anecdotal problem, but income based repayment for a fixed term seems like a better way to let people escape debt while still expecting them to pay what they can.
It’s a massive misallocation of societal resources.
And I suspect many people earning a mediocre wage are still stuck repaying, and would have been happier had loans not existed and college have been forced not to be bloated.
I would like someone to point out why a tuition cap would be a bad idea, since regulation often carries unintended consequences.
Of course, the numbers are already flatter than that at most public institutions but the general effect could still occur. Not saying tuition caps are necessarily a bad idea, but I can see potential downsides.
My opinion is that to be eligible for federal financial aid, there ought to be some cap on tuition+expenses at a level students can afford. Subsidizing $200k tuition makes no sense to me. Either students are already very rich, or they'll end up with a painful amount of debt.
I'd much rather have an MIT with old, rundown buildings, low-paid professors, few administrators, and a focus on science and learning (rather than a focus on $300 million buildings, yachts, fancy faculty dining clubs, and increasingly creative ways to funnel money into people's pockets).
However, seeing as that will never happen I would settle for no resale without a meeting of seller, buyer, and borrower, with right of refusal of transfer of service by the borrower. to ensure that any changes/terms associated with the initial debt contract are properly transferred and honored; and no resets of timers as long as your account is in good standing. I.e. your debt holder selling your balance should still qualify as the same fundamental debt you originally entered into.
I don't particularly give a damn if that ruins/misses the point of securitization.
It's because one generation ago, college was a great way to access a pretty good life for most people, and was affordable on an average person's income.
Depends on the degree, school, and student. Still true for STEM and medicine.
Why would anyone lend money to someone with zero credit history, zero income, zero collateral, zero prospects of repaying the loan for at least 4+ years, and has the ability to immediately declare bankruptcy as soon as it comes time to start paying you back? What would the free market interest rate be on that type of loan?
Allowing loans to discharged is nothing but a band-aid on a broken system. We need to work to make college cheaper. Building the entire system around loans is the problem, not one specific feature of those loans.
We subsidize the shit out of education, and yet it still manages to be such an awful investment people can't pay it off over 30 years with very low interest rates.
Yes. We should invest in public universities to have very low cost or free tuition, and stop pouring public money into private education institutions.
The offered loan amount would be much lower, too.
There would be nothing to distinguish a student loan from any other unsecured personal loan (like a credit card), so the credit line would be similar. For an 18 year-old, that means the total amount over 4 years would certainly be less than $10k at an APR in the 20's to 30's.
Which is fine, because tuition, textbooks, and housing would be, too.
This is a crystal-clear example of what happens when government subsidies distort a market.
Education is not an asset you can take away. Houses and cars can be foreclosed on; you can't take and resell education as a good.
It either needs to be kept as a pure luxury commodity, or it needs to be valued societally and not require an individual to pay for. Even if college is 'cheaper', if it prices some people out, it can't be viewed as a necessity to be able to get a good job (not saying it is, but society certainly tries to push that viewpoint).
If a student is going to get a loan, what I think the government and banks should do is require them to file a proposal explaining how they plan to recoup the cost of their education using real, hard market data. If you want to become a archaeological historian, you need to research what sorts archaeology jobs are in your neighborhood and what they will make.
The only bearing family income has is whether you get the lower subsidized rate or not. Anybody can get unsubsidized loans.
There's also the jubilee[1] concept when it comes to debt, property rights and slavery. It's interesting that even in ancient times, both debt and property were recognized as forms of power and control similar to slavery.
The Catholic Church condemns usury as intrinsically evil because, in the words of Aquinas, usury is to "sell what does not exist". [1]
Aquinas observed that some goods are consumed by their very use, such as food or drink. Allowing someone to use such a good is equivalent to transferring the ownership. You cannot "rent" a sandwich or allow someone to "borrow" a bottle of wine, at least not if they intend to eat or drink it. Once the ownership is transferred, you have no basis to charge for its use.
He argued that money was an example of such a good. The only way to use money is to spend it, and it is consumed by that use. Therefore, loaning money at interest is an attempt to "rent" money that you no longer own, which is unjust.
Today, there is much greater access to profitable investment opportunities. It is even possible to obtain a guaranteed rate of return on money through CDs and GICs. It is therefore licit to reflect this in the "price" of money that is lent, but this is not usury. The Church cannot change her definitive teachings of faith and morals; usury has always been and will always be a grave sin. [2]
When Aquinas was alive, there was nothing remotely similar to modern banking. Money was lent at punitive rates of interest (20% or more/year), with very little regulation concerning what rights creditors had if debtors couldn't pay. As an example, look at mortgages today; in many states, these are non-recourse, meaning the law limits the borrower's liability to the mortgaged property (the house), and nothing more. People aren't sold into slavery, there are no debtors prisons, and we have a sophisticated system of personal bankruptcy that lets people start over.
In short, if you can't pay a loan, you aren't getting your kneecaps broken or getting sold into slavery. In my view, that's a game-changer.
It's sad that most cultures understood the danger and fragility that debt brings, and yet we've all somehow how forgotten it. We even have terms like "good debt".
The reason people go into debt to buy houses is because everyone is using debt to buy houses, thus driving the prices up.
If mortgages were capped at 5-year terms, the price of houses would be a lot lower, which would be great for society - for the same reason that having cheaper electricity is great for society.
And even if you could lower prices, how would you compensate the current homeowners for destroying the value of their largest asset?
This won't happen - because:
1. Up until the 80s, houses used to cost closer to three years of wages, as opposed to ten. Yet, there was no shortage of people and pension funds in the 80s.
2. Individuals borrowing mountains of money for their first home get tax advantages, compared to institutional investors. It's individuals pulling the price of houses up, not institutions.
> And even if you could lower prices, how would you compensate the current homeowners for destroying the value of their largest asset?
The same way we compensate people who bought pets.com stock in 1999, the same way that we compensate 22 year olds who amassed $200,000 of debt, and an English Literary History degree, and the same way that we compensate someone who invested into a coal plant, when utility solar starts selling electricity for 2 cents/KWH.
Unfortunately our culture and multiple industries strongly push people towards bad debt.
Regardless of whether they're a 'golden ticket' or not (times are changing?), the student loan is something one doesn't have to worry about too much. Not only is/was a big part of it considered a 'gift' (up to half when I was studying, depending on my parents' income), but the entirety of the loan left over is low-interest and has no real demands.
Basically, you're asked to pay off x amount per month based on the total loan, but if x amount exceeds 10% percent of your income, you can ask to pay (potentially much) less. If you don't make any money, you pay off nothing.
My income is rather irregular, but for close to a decade I've been paying off the amount suggested. It's partly laziness, and partly a desire to be a good citizen that makes me not bother to ask to pay less based on my income. Anecdotally I know many people like myself who basically pay more back than they strictly have to.
All in all I suspect the system not only works well, but ultimately is a net benefit to the entire country. A well-educated individual over here makes 10x times that of a low-wage workers, and the taxes are significantly higher too. While it could take 20+ years to pay off the student debt, much of it is probably paid off in increased taxes in the interim.
Also I imagine the student debt not being a sword of damocles has a not insignificant effect on our general state of wellbeing and a reduced number of heart attacks, burnouts, and the like.
Good job, guys.
Well yeah, because us "adults" don't wanna pay the state and local taxes necessary to keep public universities affordable.
Our government spends more money on education in both a relative and an absolute sense than the European average.
Imagine I bake and give you a cake, it's still a "free cake" even though I've put the work into baking it and other people have put the work into harvesting the ingredients and bringing them to me.
Edit: I didn’t pickup in the sarcasm. Mea culpa.
I don't think the case has been made for this, unless the reason is "things started that way and developed from there", with "that way" and "there" referring to two different things in the two different examples.
Brotherhood of Kings has an interesting discussion of an ancient Mesopotamian moneylender, whose documents are preserved today. He became very rich by making loans without charging interest.
It worked because if you defaulted on a loan, the moneylender took title to everything you owned. This could be worth more than the value of the loan. (Indeed, for moneylending to be profitable on these terms, you must be able to recover more than the value of the loan.)
So the system at the time didn't charge interest, but it would have completely fallen apart if it had also allowed for bankruptcy.
That's because it is a ticket to the good life if you are of average intelligence, average ability, average connections, and average parents. Or, more specifically, it is a ticket to a less bad life.
Not everyone can go into trades. Not everyone should go into trades. If you are an average person, and you're not working trades, and you don't have a college degree, you're going to be capped out at waiting tables and flipping burgers.
At least these masters-degree holders can apply for crappy low-end office jobs. You actually get evenings and weekends off with most of those, and you're unlikely to get a chef screaming at you while you're holding a pot of hot oil.
But yeah, at that time though(in school) I was really scared because I was not doing well in school and I was like "how will I pay this back"...
We've lived large since WWII. Bought new cars every few years, built the suburbs, provided quality education to a lot of people, etc. Is it all that surprising that people want to "go back" to this? For many people in the US, it was GREAT.
But it's all been at great cost. The '60s through the '90s were a time of huge debt accumulation at every level of society, from the US Treasury borrowing, to state and local governments underfunding their pensions, even down to households, with ballooning credit card balances and ever-greater levels of mortgage debt.
Now we get to pay for it. Partly that means higher taxes, so we can finally properly fund social security and medicare, and repay the literal trillions of dollars we just borrowed in the past few weeks. Partly taking better care of the environment, which let's be honest, is going to cost a ton of money.
It also means some hard choices about what we aren't going to pay for anymore. An entitlement that one should be able to study pretty much anything, for four years, with world-class experts, as a national birthright -- maybe something we can't afford? In my view, we need to start being a bit -- not a lot, just a little more -- economic and practical in how we think about education. Maybe night school or Khan Academy is a better place to study medieval history, or divinity, or any number of wholesome, life-enhancing subjects, than a four-year liberal arts college. Maybe more people should think a little harder about how their investments -- let's face it, that's what they are -- into education, will transform into marketable skills. And maybe the government should stop subsidizing all this, so that colleges will trim down what it costs so that it's actually affordable.
We can fix this, it's just going to take a while, and a lot of long, slow, not particularly newsworthy or sexy, adjustments.
Sounds like a great deal for those who were alive then. I don't think it's as simple as you suggest.
We've made a lot of "promises" in this country in the past 50 years. Senior healthcare. Education. Old-age pensions. Government worker pensions. Being the world's police force. I'm only saying that if you take a hard look at all this, and we can't or won't continue to afford it, some things have to be cut. Will it be four-year college for everyone? Or will it be granny's healthcare? Anyone who says "we have to continue to do all if it" is just kidding themself. We just don't have the money.
I'm not long-term optimistic about what it means that the US isn't funding NATO as heavily as it used to be, but I do have to give Trump credit for making this a kitchen table issue. Being the world's police force is damned expensive and I wouldn't mind if we cut that back a bit if that's what it takes to balance, e.g. social security.
You'd go cheaper traveling to Europe, studying for three years at a German or Danish university, learning the language as a bonus, and come back afterwards with no debt. Some even have English courses.
If you pay (in the USA) you can get in somewhere, guaranteed. Because there's a spectrum of institutions, so you can find a place that will take you where you are educationwise, and pull you up from there. Some start at IT college, move to a Community College, then a State or private one, then graduate. Cost-effective and you ultimately get to advertise the place you ended at.
That's called "marketing".
It is still true, based on statistics of college graduate vs non-college graduates, that going to college brings much better odds in your favor to get a "good life". As usual, it's about odds, nothing is guaranteed in life.
If I pay $20k in taxes, then take that money to pay off the student loan first.
I don’t care about tax revenue to the government. And the federal government has the power to just print new money to pay off all their old debts anyways, like they are doing now, so they don’t really need my tax money.
Because if that was the case no one would lend them money, and there wouldn't be any student loans.
Also there is a repayment system where you only are required to pay a percentage of your income above the poverty line..
I think the shameful thing is how college is such a waste of time for most folks. I think the money would be better spent traveling and learning on your own for a small fraction of the cost.
That'll just make loans even more expensive for everyone else.
https://www.npr.org/2020/01/22/797330613/myth-busted-turns-o...
But as it turns out, an infinitesimal number of students even try to have these loans discharged.
This is the thing that is really the most shameful and outrageous thing about the US system. Our entire K-12 educational system and our culture is set up to paint a college degree as a ticket to "the good life". Then an 18-year-old, potentially with parents who aren't great at math but have great aspirations for their child, is sat down and asked to sign a load of papers, not realizing that this will lock them into decades of unforgiveable debt and wage slavery.
There's a reason many ancient religions forbid loaning money at interest entirely; and it's the same reason we have bankruptcy laws. None of those reasons somehow go away just because it's a student loan -- on the contrary, an 18-year-old thinking they're buying a ticket to a better life is far more vulnerable than the vast majority of people who will ever be seeking a loan.
All of us should be regularly lobbying our lawmakers to make student loans dischargeable by bankruptcy, just like any other loan.