I think that's something that many people would agree with, but how do we go forward with making that happen?
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.
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.
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
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.
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.
The other problem is that education can not be retroactively taken from them. But garnished wages can.
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.
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.
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.
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.
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.
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
Yeah people roll these dice and win, but plenty of people roll the same dice and lose.
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.
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.
> 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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
It is the guarantee of payment, even on default by the student is the problem.
That is what must go away.
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.)
Student selection & preparation would get better. Maybe it would trickle down to High Schools.
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.