The lenders are taking no risks since these loans cannot be discharged through bankruptcy. There are also very large late fees and penalties that can triple (or more) the amount owed.
Why do we take anti-individual stances, but pro-business stances? Is that a byproduct of capitalism, or am I misreading the world?
Actual business loans require assets/collateral, even those from the SBA. At least this has been my personal experience with my businesses. You can't get a loan with no credit or assets (like a student can).
And PPP really should not have been forgivable - if you run a business, then it’s your responsibility to have enough money in the coffers to survive any economic downturns. Individuals get punished way more harshly than businesses when things go south.
As far as interest rates, I had six figures of student loans and they were at 2.88%. Rates today are higher, but that's because they very loosely follow the federal funds rate. This is no different for business loans. But loosely speaking, interest rates on federal student loans are pretty low compared to other types of loans.
In fact, the reason the stock market reacts so badly to interest rate increases is precisely because it increases the cost of borrowing for business.
Yeah there were stimulus checks, and I saw a lot of people say something like “wow look at all these handouts people are getting, they don’t deserve it all!” but then they turn around and say the PPP was the greatest thing ever and businesses deserved them.
I think we are too critical of individual choices nowadays, but not critical enough of the terrible choices that businesses make. That’s probably the gist of my discontent.
If that business goes under, how many individuals are out of a job?
The PPP loans were intended to keep _individuals_ employed.
You're presuming a fact that's not in evidence. I know it's the flavor of the month whataboutism to point to PPP as an excuse to forgive student debt, but PPP was wildly unpopular amongst people who didn't directly benefit from it as well. I have full faith the SBA makes terrible loans as well.
Also, anti-student loan isn't exactly an anti-individual stance. It can also be interpreted as anti-University subsidy. And when you look at the absurd wages professors and administrators can command at these places, I wouldn't blame someone for thinking these loans are distorting the market so badly that it harms consumers/taxpayers while enriching professors and administrators.
> You're presuming a fact that's not in evidence. I’m not so sure about that. How many executives get paid remarkably well, even though they fail miserably? Sometimes even with tax payer money.
I claim that the blame here really rests on big government for creating this fucked up system, not the businesses that work within it. By the way, I blame the government for the PPP fiasco too.
None of this is particularly pro-business, but a lot of people are apologists for big government and need to be disabused of that notion.
I went to school from 87-91. I could already see the problem starting. I was hoping this bubble would burst before my own children went to school. Two of three have gone to public schools so far, and we've paid through the nose for it. We are pushing our third towards some sort of trade school.
The official term is SLABS: Student Loan Asset Backed Securities. Here's a recent paper on the subject.
But lenders aren’t going to suddenly go from approving 100 loans a month to just 10 a month. The incentive structures are designed to weasel and lie to pump out flattering bottomlines every quarter.
You can trot out the statistics but you can’t change human behavior without changing the incentives.
There’s been massive capital movement across the globe. Money moving out of China and Russia in particular. And the gulf countries with a surplus of cash thanks to multiple years of expensive oil.
But it’s really just speculation. I haven’t noticed an influx of ore Chinese buyers into my market.
Yes prices are crazy but if demand is still not being met, then prices are meant to be crazy.
Education doesn’t have this kind of contagion. If you stop paying your student loans it has very little impact on the value on my education.
It's never been more true that education is overpriced and underdelivers.
The contagion may not be "house goes bust and my house value goes down"... but there is a contagion: My degree is now no better than the degrees for the mills pumping out idiots while lowering standards and full of soft degrees filling the markets with "educated" people that aren't qualified to fill a coffee cup at starbucks.
If you don't see a market flooded with lower value results as devaluing the worth of higher education then you're not looking closely enough.
But, CDOs go a step further. You may have more or less risk tolerance. So we chop it up. You can buy something that gets paid back if 70% of the loans are good, or only if over 70% or over 80%, or even over 90%. The less likely you are to get paid back, the more you make.
So the person who absolutely wants to get paid back gets a small interest rate. The person who only gets paid back if literally every loan pays off gets a much higher rate.
In 2008, what happened is all those people buying the "very safe" 75-85% failure rate sections also were getting wiped out.
https://www.investopedia.com/terms/c/cdo.asp
Or if you prefer the Big Short explanation:
You take a bunch of loans and bundle them together and securitize the bundle to sell to the public. Mortgage CDOs crashed the global economy in 2007-8.
Interests are all well and good, but costs are real. Following passion is for rich people (or people who get unlimited student loans).
I think this is a truism that people want to be false.
But in any developed country, most poor people are pretty rich when compared to the world, and it offers them lots of freedom to choose what field they want to work in, where they want to work (both city and company), etc. There isn't the expectations that sons take their fathers' jobs and that daughters take their mothers' (often being a homemaker).
It still sucks to be relatively poor in a developed country, but most are rich enough that they can follow their passions in ways their grandparents never could and half the world can't today.
Many have drowned in student debt following their passions, but this wouldn't be so in many countries that have university education fully covered or significantly subsidized by taxes.
Once something is paid for with tax money, then the people paying the taxes want a say in how it's spent -- which is not just reasonable, it's a requirement of a liberal democracy.
It's fine to speak from one's experience, but to say that someone else should make the decision one thinks is wise based on a single comment is either ignorant, arrogant or both.
Edit: I replied to you @allenrb, but I'm not directing these thoughts toward you. I'm just pointing out a general behavior I see (but wish I didn't) on the internet and HN.
Personally, if you’re going to be miserable anyway (as most Americans are these days), it’s probably better to be miserable with money than without money, lol
And idk. My best friend from high school moved out here with me and he's a waiter making 40k a year and seems totally happy. Works like 30 hours a week, no mental stress, able to work out and work on himself. I think money is highly overrated.
But I think my main point is both of us have a way of becoming sustainable so you might as well do what makes you happy instead of working a job you hate for 8 years. Being a waiter making 40k isn't enough long term, but working your way into a higher end establishment or management is. A girl I dated started out as barista, became a store manager, and is now the regional manager and makes ~125k a year and more importantly she is a perfect fit for the job and enjoyed it the entire time.
All I'm trying to say is there are a lot of paths to a sustainable life even when following your natural inclinations.
But anyway OP responded his son's not super interested in college anyway so his plan sounds good to me anyway.
Seems to me like your hygiene factors are all taken care of, but the motivators are lacking. I hope I get to be in your situation soon, as I got laid off and trying to get back in.
I grew up having to do two part time jobs and go to school part time to put myself through college (late start too, only graduated at 25). I wasn’t financially prudent post-college either, took me a few years to get that taken care of as well. As far as I’m concerned, I don’t think I can have enough money - which I acknowledge can be a recipe for misery but I think I’m ok being miserable if I had loads of money.
> every day I wake up dreading going to work
This sounds terrible. But at least you have a job. Many people wake up with dread every day for whether they or their baby will starve to death.
Also, it’s never too late to change.
Academia should be a place for people who run away from money, because it's the last thing upon the list of interests for them. Academia should be a place for joy in learning concepts, and in some circumstances, which strive to be useless. Mathematics is one of the most exemplary fields for this, which is summed up quite nicely with the following quote:
"The mathematician does not study pure mathematics because it is useful. He studies it because he delights in it, and he delights in it because it is beautiful."
Never go to a university expecting to improve your wealth status, because it very likely won't happen. Turn elsewhere to find wealth.
If you don't do a modicum of Research before you take on tens or hundreds of thousands in debt to invest in something, that's on you and you alone.
If people were not bailed out and subsidized we would not have these issues of this magnitude.
Regardless of whether the parent can support that tuition cost or the kid has to take on loans themselves, it should be up to the individual whether they take on that risk irrespective of the parent's financial situation, which is I think where this heavily-downvoted reply was going.
As somebody who's education was way less supported than the rest of my family, who came out with a better job than all of those others in spite of that, there's a decent chance your kid will resent being "held back" by such a choice for a very long time if you give them trade school as their only option in life.
Lots of people find ways to be successful in the arts by eventually finding something cross-disciplinary, and with the direction most non-white-collar jobs in the US are heading I wouldn't bet my kid's life on trade school. What made sense as a sentiment on Mike Rowe's "Dirty Jobs" 10+ years ago doesn't quite hold up as well today, and those projects were funded by the Koch brothers and the whole "trade school is just as good" thing should be taken with a mountain of salt. I'd love to see more data proving trade school proves better today, especially for young adults with educational backgrounds and access to learning and job opportunities whose parents are in the economic class to be browsing HN
The mortgage CDO's where tranched in 2008 also.
I thought the government guarantees these loans, but maybe I mis-read that, mis-understood, or something changed. I think the borrower is still on the hook and accrues fees if they don't pay but I also thought the federal government literally paid to keep the bank whole.
Have to wonder how this interacts with the US healthcare system. As people get older they are more likely to have health problems that prevent them from working and cost a bunch of money.
The secret is to lend money and then make people spend it on something worthless. You know, the easiest way is to lend someone money so they can gamble the money away. You might now argue that this is terrible for the lender, but only if the lender doesn't own the casino. Then the gambler ends up in massive debt for no benefit. It doesn't matter if the borrower repays the loan or not because the lender didn't lose a single penny and every payment results in profit.
This is just a hypothesis because I am not aware of any banks or financial institutions operating an educational institution, except maybe lambda school which was heavily incentivized to get people to sign up for income sharing agreements but then only deliver some low quality MOOCs with the only source of support being TAs who themselves are former lambda school graduates.
> Two of three have gone to public schools so far, and we've paid through the nose for it. We are pushing our third towards some sort of trade school.
Jesus Christ. You're gonna give child one and two full opportunity to realize whatever potential they have, but steer child three?
US community (2-year) colleges tend to be very affordable.
US public universities may have lower fees for in-state students. UC Berkeley costs some $46K per year for CA residents - not particularly affordable to begin with - but charges an extortionate $33K "nonresident tuition fee" on top of that for non-resident students (including students under 24 with non-resident parents/guardians.)
Public Universities are ones funded by the state, to varying degrees.
Private Unis have their own funding, usually through a mix of tuition and large endowments.
- https://studentaid.gov/manage-loans/forgiveness-cancellation...
- https://www.consumerfinance.gov/about-us/blog/busting-myths-...
Somebody I know had a medical emergency while in their repayment period. They were unable to work and went on to disability insurance, and eventually had their loans forgiven. I think they had to be on disability for a certain period of time (measured in years, iirc) before they were discharged.
Eventually, they recovered sufficiently to be able to return to the work force debt-free. I'm not sure if the hurdle for loan forgiveness ought to be "you have to basically die", but it's at least that high for now.
There's also the well-known "public servant" path. I'm sure there's some ironic joke to be made comparing the two.
Doesn't it seem like a society shouldn't encourage people to financially self-immolate in order to start their adult life?
I mean, giving the self-immolators some tweaky hacks to prevent being lit on fire is not really the best solution.
It's a tricky problem. We want people to have equal opportunity to pursue college, even if their parents can't afford it. But at the same time, we don't want to subsidize cost creep.
Clearly the current solution doesn't work. Alas, we're deeply invested in it (literally), and each passing year the entanglement grows.
I think you can make a strong case for govt-funded tuition at public universities. But I don't know how to get to there from here without making a handful of people very unhappy.
In other words, basically borderline poverty for years before people realized it was never going to happen, and got lucky enough to get out of disability -- cuz a lot of people don't.
The bigger problem is that people _think_ it won't work and they don't bother trying. How many folks could have met the hardship burden but didn't apply?
We need to stop repeating the falsehood and instead be truthful: Student loans CAN be discharged via bankruptcy, if the applicant meets a hardship threshold.
I'm assuming it pays out at 100x lottery numbers. But, again, that is still basically zero. Is why I don't regularly buy 100 lottery tickets.
Every other debt having your bankruptcy approved is proof enough that you were under undue hardship and couldn't crawl your way back out. But student loans are special and need further proof, which means they are definitely not that easy to get out from.
Student loans not being dischargeable through bankruptcy creates a moral hazard, much like bailing out banks. Banks will lend an infinite amount of money for student loans, because there is no risk to them. Creating free money always devalues it; if you have to work for your money, an education is priced $X because that's the maximum people will pay. If everyone gets unearned money to pay for education, it becomes worth $X + $Y. This is just the SaaS model for people. (Consider AWS; "oh you want to make money selling a SaaS service? we'll take 10% of your revenue for servers." Student loans are the same thing, "oh, you want to go into a high-earning field? we'll take 30% of your income for the next 10 years.")
Compare this to things where banks could lose money, like mortgages. If you bid $1,000,000 on a property that's worth $200,000, the bank will simply require a down payment of $840,000. They have no interest in your starry-eyed games. If you walk away, they can close out your loan by selling the property at the appraised value, and they're happy. Banks have the right amount of paranoia about lending for this kind of purchase; their goal is to never lose money. Student loans should be no different; current grades and expected job prospects should play heavily into the decision as to whether or not to lend money. This will reduce the cost of education because selling a $600,000 art history degree to straight-C students won't be viable in the market anymore. (Universities will fight hard against this, because the degrees are cheap and everyone pretends they have some value. If people realize degrees don't have much value, the cash cow dries up. But we have to kind of look at the effect on society as a whole and realize that work experience is actually what we value. After the first 4 years of your career, nobody cares about your GPA or where you went to school anymore. And incidentally, 4 years is exactly how long college takes!)
> I went to a state school and tuition was $750/semester.
I paid about $800 per quarter in 1996. Even at tax subsidized state schools, tuition has gotten much more expensive since then.
There's inherent risk to everything, everywhere. Making the loans undischargable in bankruptcy doesn't negate the risk of non-repayment; it just hides it. Until, eventually, all the band-aids fall off, reality bares its ugly head, and we all wish we hadn't-a done that. Yet, in thirty years we'll forget about it and do it all over again, in some new, crazy, way.
It's designed by the US Government to bring in massive, on-going funding to help fill in the red ink in the entitlement programs now that those are no longer funding sources to steal from (entitlements used to produce persistent surplus funding the politicians used to steal from for decades). That's why they'll never allow it to be dischargeable. Their margin on the loans is de facto 100%: it's all magic printed dollars or otherwise taxpayer dollars (makes no difference to them).
Massive? Even before COVID and the lockdowns (and the pause on repayment), the student loan program was operating at a _loss_.
The Dept. of Education has presumed (because they're incompetent AND corrupt) the program would be net positive but only to $114B over 25 years -- that's an average $4.5B per year. In 2019, the federal government spent $4.4T, so the _expected_ return from student loans would have only been 0.1% of the federal budget.
That money couldn't fill squat.
----
"From 1997 to 2021, the Education Department estimated that payments from federal direct student loans would generate $114 billion for the government. But the GAO found that, as of 2021, the program has actually cost the government an estimated $197 billion.
"A percentage of that shortfall, $102 billion, stems from the unprecedented federal student loan payment pause that began under the CARES Act in 2020."
https://www.npr.org/2022/07/29/1114560119/student-loan-progr...
https://en.wikipedia.org/wiki/2019_United_States_federal_bud...
https://studentaid.gov/understand-aid/types/loans/subsidized...
You can only borrow $31k over 4 years. That isn't a lot at all.
People can get unsubsidized loans that still come with the same constraints around inability to discharge in bankruptcy for vastly more money.
It’s essentially all unsecured student loans (i.e. effectively the entire student loan market) that have this risk free model for lenders.
It would all be completely toxic trash otherwise that no lender would issue. A student with no assets, no income, and no credit history to preserve has no downside to just declare bankruptcy after school and get $200k or whatever essentially for free.
Literally says "Subsidized and Unsubsidized Aggregate Loan Limit $31,000-No more than $23,000 of this amount may be in subsidized loan"
Just confirms most people have no clue how small the limits actually are.
Graduate students are where it gets wild though.
> In January 2020, the U.S. Bankruptcy Court for the Southern District of New York discharged over $200,000 of student loan debt for one borrower. Then, in August 2020, a ruling by the 10th circuit federal appeals court based in Denver, Colorado eliminated $200,000 for a Colorado couple who held 11 private student loan accounts. And in September 2020, a judge for the U.S. Bankruptcy Court for the Southern District of New York ruled to enforce a prior bankruptcy discharge of a borrower’s $400,000 of federal student loans that a servicer had failed to carry out.
> These decisions could serve as a precedent for future bankruptcy cases involving student loans, says John Rao, an attorney with the National Consumer Law Center.
> "A lot of people, even some of the lawyers who represent consumers, thought for years that you really shouldn’t even try because there's not a chance you’ll win, but I think everyone is looking at it now with sort of a fresh look," Rao says.[0]
[0] https://www.nerdwallet.com/article/loans/student-loans/stude...
For instance, when I was in college (undergrad) I took the maximum, but it wasn’t enough for me to pay tuition, rent, etc. Also those loans don’t pay during the summer, so you’ve to budget for that as well. My part time job tended to cut hours because there’s a high influx of kids who also want summer jobs, which meant less money overall for me. I ended up taking some more loans from Wells Fargo to make ends meet.
In hindsight, I should have got a better job instead of retail - some sort of office job. But I didn’t have a car, so I was limited in how far I could go.
Looked up the prices just now. Undergrad + postgrad can come up to the price of small town houses.
But PLUS loans themselves have no cap, so the amount of potential federal impact on potential costs for this population—which, as you note, is most undergraduate students—is infinite, not $31K over four years.
And that is the principal. With a short limit on how much of that can be subsidized, meaning the rest is accruing interest from day 1. Such that they amount you would owe will be laughably higher than even that number after your school. And that is assuming you don't have to then delay repayment for financial hardships.
Because the limit cited only applies to students whose parents can get (federal, direct, and capped only by the school’s estimate of costs) PLUS loans, and yet is characteized as a limit of the impact of federal subsidies on school costs.
A cap that only applies where another unlimited federal loan stream is available to the same student is, well, not a limit at all, when discussing federal impact on prices.
The impact on prices is not just the direct, but the general understanding that private educational loans also could not be discharged in bankruptcy that was created by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Courts have started to push back against that but there are only a handful of precedents.
I'm interested in how many students aren't able to have their family go in on PLUS loans. As that is still a gaping hole to relying on the page and limits linked.
But the government has "protected" all loans - private education loans are also unable to be discharged by bankruptcy, for example.
the government is not on the hook if a student defaults on a private loan. the critique was that tax payers were somehow on the hook for most undergraduate costs when $31k over 4 years barely pays for rent at this point.
Regardless, I got them all payed off; and still have a massive distaste at how most discourse over this goes.
There essentially is no such thing as a “private” student loan anymore.
[0]: see sibling investopedia link
Private education loans are mostly an issue for non-accredited schools, since usually you can cover the full costs, with better terms, with federal loans at accredited schools. They are also less than 8% of the volume of student loans. They are basically a whole different (and much smaller) policy issue.
i think a lot of people seem to believe that the federal government is handing out $50k+ a school year when theres a very small limit. people who need to borrow likely have to tap private lenders.
tl;dr You’re full of shit.
Look at footnotes 1 and 3, which rely on the Department of Education’s and the Fed’s own numbers. $1.64 trillion/1.77 trillion = 92.6%.
Less money for borrowing means students can only afford lower tuitions and colleges are incentivized to efficiently use your money.
This was among a debate where people were asking for more federal and state funding.
Its crazy to see this point become so mainstream. I suppose it was inevitable if it was the truth.
"We want everyone to have a chance at school, but public schools are government indoctrination so we'll just make sure people are in un-releasable debt to private companies."
"We don't want to see people dying in the streets, but universal health care is "socialist", so we're create these convoluted insurance systems, but still require hospitals to provice free ER care (that has to be covered by everyone else in the end)."
"We're afraid of immigrants, but our agricultural industry is dependent on their cheap labor, so we'll make legal immigration difficult, and keep pretending that we're going to restrict illegal immigration, but never actually do anything effective to curb it."
(I also want to add that mentalities like this are not at all exclusive to the US - you can find similar inconsistencies in every countries self-image, the US just seems to have them in more fundamental issues that other countries made a decision on long ago)
The lenders? Risk? 93% of all student loan debt is owned by the US Government. What risk?
How is it everybody pretends it's the Big Evil Bankers making all the money on this racket? It's equivalent to the false narrative about private prisons driving the high US incarceration rate (when in fact it was over 95% government prisons across the decades that the rate was skyrocketing).
It's a government replacement funding system for the entitlement programs that are bleeding out. They had to find a new funding source as entitlements dipped red, so they're strapping young people with massive debt (forever rising interest payments) they can't discharge and that derives from magic fiat dollars the US Government 'prints' at will.
This is another case of the government abusing the population.
Anti abortion laws? Government.
Anti gay marriage laws? Government.
Anti trans laws? Government.
Segregation laws? Government.
The war on drugs? Government.
The war on terrorism? Government.
Foreign adventurism wars? Government.
Vast illegal domestic espionage? Government.
Non-existent social security 'lock box' (not filled with $10+ trillion like it should be; should be the world's largest sovereign wealth fund)? Government theft.
How many examples do you all need?
Eventually and hopefully people will wise up.
That is, no amount of lending is ever risk free. To pretend that you can hedge all risk out of a loan is the problem. It doesn't matter who issues it. It doesn't matter why they issued it.
So, to put the question back to you, why would you feel there is no risk in lending to students to go to college?
Whether they finish or not, it surges the demand for education and makes it more expensive for the people that did perform well in high school and achieved a minimum level of personal organization to succeed in an academic environment.
[0] https://www.wral.com/story/fact-check-how-many-student-loan-...
The way these loans are done, the "risk" is supposedly managed down to zero by some byzantine limits on how much people can take out. This is silly, at face value, as the limits on how much a family can take out are basically non-existent. Yes, we have limits on individuals, but those seem to be little more than token talking points.
That said, reading your post again, feels like we are in agreement?
But then, how do you secretly replace the billions in bribes to your friends in the universities?
It is really strange that government does not constrain tuitions of the colleges participating in the loan program. Currently, Universities have no incentives to control costs in any way.
(This message brought to you by people-with-thing-to-sell.)
Most universities are the supporters of the existing government structure, so it seems to be a mutually beneficial relationship.
Besides, nothing prevents one from pursuing a career in most liberal arts without a degree, assuming you don't want to be a researcher. You can always be a nurse or an engineer with arts related side-job, but doing it the other way around is hard.
If I were to make a list of the problems with the world, having too many people with liberal arts degrees would not be anywhere near that list.
Too few, yes. Too many business school graduates, yeah. Too many law school graduates, probably. Too many STEM field graduates, maybe. Too many graduates who look at people as a resource to be extracted, or an abstraction to be ignored. But damnit, we need more people who care about the quality of human experience.
The university were founded largely for the sake of teaching the liberal arts, that is, the free arts (as opposed to the servile arts). I am using the traditional meaning of "liberal arts", and not the tragedy we have now. The university was supposed to educate the man, to mature him intellectually, to free him to be able to pursue the truth and to do so effectively which meant also the ability to draw from and participate in the tradition.
The feverish mission to push everyone through college is a fool's errand. It is not for everyone. The result is that universities had to change to make this possible, thus failing their founding mission. But at the same time, they aren't good at vocational training. So for most people, it's a waste of time and money.
We would be much better off with a system of vocational schools and apprenticeships. This would unburden universities and free them to pursue their original mission, and it would enable vocational schools/apprenticeships to provide excellent training for workers.
Primary education is, frankly, in an awful state as well, as it, too, is supposed to educate the man, and it is here where the vocational stuff is still not necessary to learn even for those who will eventually enter the vocations.
We're seeing some interesting developments in both primary education (with the spread of classical education) and the founding of small colleges that aim to avoid the failure of the university. Some try to combine intellectual formation with an apprenticeship program to try to reconcile the desire to form the man with the need to find a job. Apprenticeship is also used to cover at least part of the costs of the education.
Ballooning costs are a symptom of corruption and bloat. The mission is lost, so it's a numbers game now. There's no reason a university education should cost anywhere near what it costs today, especially given the mediocrity of the education. I don't really see much will to change the status quo among those in power, so we'll probably see a combination of hamfisted maneuvers like debt cancellation to maintain the status quo, but ultimately, probably a collapse of the system.
Healthcare as a whole baffles me. They pay well enough, sometimes, but they also just treat their employees like absolute crap. Would it really break the bank to hire 25% more staff instead of having your entire workforce getting paid overtime week after week?
Them stocks gotta to up, mang.
Take a look at the Fortune 500, and look at how many healthcare companies are publicly traded and in the top 100.
That dog don't hunt when that 'well rounded education' costs tens or even hundreds of thousands of dollars and will burden the students for the rest of their lives. Once the student is on the hook for that debt, it becomes a strict return on investment calculation.
Want to study philosophy? By all means! It's among the most important subjects humanity can study, but you probably shouldn't be seeking a degree in it if you don't wish to teach it, and you damned sure shouldn't be condemned to serfdom because of it.
2. Even without graduate education requirements, other fields have loooong ramp-up times but eventually end up doing well.
3. There are also jobs that are extremely valuable to society despite the expense of education (nursing comes to mind, as does teaching).
4. We would end up with stupid boom-bust cycles in labor supply and demand, even worse than what we have now. Reducing labor supply by making loans unavailable increases labor prices eventually, which eventually results in loans becoming available, which saturates supply, and then repeat the cycle every couple decades. Constant idiotic predicable crises. Welcome to myopic financial capitalism, where trust fund kids who never needed to pass their delay differential equations unit have all the power.
So to make this work you need some form of central planning of supply and demand -- by DECADES at a time. Who knew we'd need so many Python programmers in 1980 or even 2000? Which, if that predictive function works, why the FUCK are we using markets anyway?! Cut out the middle man if central planning works. (It doesn't.)
How about we just lose the cold war brain-rot and stop trying to use markets -- a legal fiction and policy tool!!! -- where they make no fucking sense. Markets are an incoherent solution to allocation problems where price signals are EXTREMELY delayed (education) or EXTREMELY coercive (health). Just fund it with tax dollars instead.
The market religion zombie from the red scare era needs to die. The amount of absolute brain rot in the American public caused by the inability to understand that markets are just fucking tools that depend on government coercion anyways is sending our entire society into a death spiral.
It's somehow unsurprising that the one true American religion of the 21st century -- deference to The Troops -- is the place where we're completely okay with socialism in higher education (the military academies).
But then on the other hand I'm not really convinced that this would actually be worse than the model of betting (or worse: bidding, it's a market with limited supply of high-status slots) seemingly unbounded amounts of future income on flying really high. And if they do fly high, just not quite high enough, it's effectively indentured service. No limits gambling is never a good idea, even if the game is not entirely devoid of an element of skill.
Universities do that already. "Need-based" financial aid ensures that the parental contribution is near the hardship threshold for low-income parents - tipping the scale toward those with greater ability to pay. And external scholarships are simply deducted from "financial need" and largely pocketed by the university (which usually prohibits the funds from being used to reduce the parental contribution.)
Isn't it wonderful to be in a business that requires customers to turn over their financial records and charges based on "ability to pay?"
You price the customer, not the service.
I teach part time at a relatively affordable public university and the waste, inefficiency and bureaucracy takes my breath away.
Limit loans to 15k/60k lifetime and make them forgivable. You would be amazed at how focused, productive and inexpensive higher education could get.
It's either that or enrollment drops off a cliff because the college proposition is so off the rails. That appears to be the current trend, I believe.
This is essentially how the US works. We're built on debt. Sometimes I think our society would collapse without all the debt we create.
Note that universities also basically act as a cartel.
What I have never understood is why career counselors aren't advising students against the downside of getting into so much debt so early in life. Going to your dream school is nice but not if you have to pay for it the rest of your life. My counselor was all about applying to the best schools with little talk about costs.
Why aren't student suing the counselors for malpractice?
But as you point out, the lenders are not taking on risk. The only ones who are silly in the deal are the students.
The system is really messed up. But when it comes to your individual student making that deal, it's often a dumb idea.
AFAIK virtually every financial institution has been pulled from student loans.
The U.S. government is now the only major lender.
I went to a major private university, and several years after I graduated they raised the tuition 24% in one shot. When asked why, they basically answered, "Everyone else did it."
It's time to revoke universities' tax exemptions when they pull shit like this, or are rolling in massive endowments, windfalls from sports programs, whatever. The regression of education in the USA at all levels marks the continuing decline of our society. We've gone back to book-burning in some areas. Now college is unreachable or a crushing burden. WTF.
7% interest on a loan in a year with 3% inflation (the real cost of having money that year) that is guaranteed to be repaid seems like evidence of corruption to me. But maybe I think too simplistically.
It is frustrating to hear the discourse over the inappropriate students that are taking on too much debt, all the while ignoring the lenders that are taking on too much risk. At least, they would be taking on too much risk, if they hadn't captured the market so effectively.