I recall that in 2016 First Marblehead (now Cognition Financial) was offering interest rates of up to 13% (!) and averaging 11% (!!) on NYU tuition ($60k/yr for a 4 year degree). I recall during my application that they were very heavily pushing for me to finance my degree there. Thankfully, I went elsewhere.

The chair of NYU's Board of Trustees at the time was William Berkley. Perhaps coincidentally, he also headed the board of First Marblehead. I'm sure there was no conflict of interest, though.

> Any loan that is charging 6.28% interest and also cant be discharged by bankruptcy

The interest rates are high because so few loans can be discharged by bankruptcy. You can refinance your mortgage with anyone. Far few companies will refinance your student loans.

Meanwhile, it makes prefect sense that bankruptcy cannot discharge student loans. Otherwise, every single student would have crappy credit from 21-28 and no student loans ever.

If "makes perfect sense" solution to college is usury, we have serious problems with our higher education system.

It's time to start funding these schools adequately so that they do not immiserate everyone except those with wealthy parents. It's the opposite of a meritocracy.

Schools will increase their expenses and tuition to fill loan capacity plus public funding, as they've already been doing.

I'm not sure if the spending or funding side is bigger issue, and surely this depends somewhat on the school, but both must be brought in line rather than forcing it onto our future workers.

The one thing we can't do is stop funding because we have pre-decided that it won't lower tuition. It's easy to attach strings to money, let's do that.

> Schools will increase their expenses and tuition to fill loan capacity plus public funding, as they've already been doing.

I'm not sure there is evidence of that at all. Do you have some statistics?

I would start by looking at variance in state funding pre-covid. Reducing funding: increasing tuition to market limits, then cutting expenses. Increasing funding: increasing expenses and increasing tuition to market limits. Tuition has roughly on an 8% track and historical circumstances vary, so pricing and spending reactions aren't immediate.

Here's a high level report showing some of the state funding changes. https://www.cbpp.org/sites/default/files/atoms/files/10-24-1...

They should be dischargable after 8-10 years. If you are willing to declare 8 years after graduating, you should be able to get your debt restructured or forgiven.

They are currently discharged (without bankruptcy) at 20 years. Yes that's a big difference, but it is an important point.

This Happened to me on loans taken out between ‘07 and ‘10. The liquidity crises meant that banks stopped lending to students, and everyone assumed that interest rates would rise. I got locked into 7.25-8% fixed on roughly 80k in debt which I paid off over the next 10 years. Unfortunately a bout of unemployment in 2010 prevented me from refinancing.

Me too, I’m still stuck with 10k at (now 10.5%) taken out then

An interest rate on something that is entirely uncollateralized and granted to someone with no income and often no credit history nor assets is usurious at a rate of around 2x that of an owner-occupied house with 20% down, an income of >3x the monthly payments, and a 740+ credit score? That is quite far from obvious to me.

If they have to make it undischargable in bankruptcy, that is a pretty big clue that the loan is usurious, IMHO.

How much money would you personally be willing to lend to a high school senior with no collateral, no credit, and no job who plans to study for 4 years and then file for bankruptcy?

That’s why they’re not discharged in bankruptcy: to make them possible to be made en masse.

Bankruptcy isn't a get out of debt free card. You can only get debt that you can't realistically repay discharged. The new graduate with a job at Google making $150k isn't getting their student loans discharged.

So the answer to your question is as much as I think they could reasonably repay based on their earning potential after graduation. Which is a reasonable answer to the whole problem except that it hands a huge advantage to rich kids who's parents can write that tuition check.

I'm not disagreeing with that point, I'm disagreeing that these sorts of loans should be legal at all, much less that they should be a common method of funding the education necessary for the knowledge workers of the future.

If you’re going to have people study for 4 years past grade 12, someone’s got to pick up the tab for their rent, food, entertainment, and clothes/supplies at least.

If we disallow lending, that would tend to limit the attendance at “away from home” colleges and universities to the upper middle and upper classes. I don’t know that outcome is obviously “better”. It would be a massive boon to the wealthier families as compared to today.

I benefited massively from student loans and Army ROTC scholarship; I don’t want to see that taken away from future generations (even if removing that would benefit my family).

Rather than loans, we should reinvest in state universities, which in general have been massively defunded over the past decades, and also tie that additionally funding to reduced student costs so that the money goes where it should. The decision to attend university should be made more on the basis of student capabilities and available slots than on having big loans or ROTC access (and ROTC experience is a great thing, that has its own wonderful merits)

I had 11% interest rates my first two years, but I had to take out private loans.