Re:NYU Neatly Embodies Everything Wrong With Higher Educatio...
by rossjudson on Wednesday June 19, 2013 @11:54AM
(#5906250)
Good info. The problem I see with a cap is that it's one size fits all. I'd rather see a system where a school can charge higher rates if it is confident that its graduates will be able to repay those loans.
20 years just seems too long.
And the key point here is that when a balance is forgiven, the institution should bear the cost, not the government. Maybe that's already the case. Can you provide more detail?
Re:NYU Neatly Embodies Everything Wrong With Higher Educatio...
by danielweber on Wednesday June 19, 2013 @02:40PM
(#5907372)
the institution should bear the cost
That assumes they really feel it. If a school charges you $500,000 per year for tuition and then gives you financial aid of $480,000 per year, they aren't really giving you that money.
If a school extends you $150,000 in credit, and then in 20 years you've only paid $40,000 of it back, they haven't really lost $110,000. They are just practicing perfect price discrimination, getting the most money from the people most willing to pay, backed up by the government who is doing the work of auditing people's tax records to ensure compliance.
It's progressive, there's a safety net, and it is, for the time being, solvent (government makes 30-50% profit on each dollar lent). Yes, people with great credit who would end up paying less under a standard 10 year repayment at say 5% end up subsidizing those who graduate without getting a decent job, but I think that's uniquely justifiable in this context, because everyone involved is turning to the student loans as a way to better their economic situation (after all, nothing stops you from paying in cash or getting a private loan at 5% if you can qualify for one).
I think if you added a cap in there instead of going up to full cost of attendance, to force schools to moderate their tuitions, it would be nearly perfect.