> Maybe it's time to cap total outstanding student debt to some reasonable expectation of when they can be repaid.

I think that's a good start. Kind of resembling a loan-forgiveness mechanism (which there are already a few). It falls into the same trap most solutions do, though. What's "a reasonable expectation," and who decides it?

That's just blatantly wrong. The easy availability of student loans is what's driving education costs. The fact that lenders are willing to lend enormous amounts of money to people who may not be able to pay them back, tells you right there that there is quite a bit of market-distortion going on. Couple this with a natural tendency to not consider future-risk by an 18-year old, strongly implies that colleges would be incentivized to exploit this, and in fact they do! I've read countless articles on private colleges charging insane amounts for tuition whose middle-class graduates end up with thousands in debt and no reasonable chance of making a salary to pay off those loans.

Think about it this way, in a normal reality, there is no chance a responsible bank would lend a middle-class kid $100,000-$200,000+ to do a 4 year liberal arts degree.

Lots of sources down at the bottom.

EDIT: Also, I've yet to actually see any study that concludes direct causation between availability of loans and tuition prices. Yet somehow the burden of proof is on the naysayers?

Here's what paints a picture for me:

- Tuition since the 1980s has increased by an order of magnitude. Out pacing inflation, cost of living, and medical costs (http://en.wikipedia.org/wiki/College_tuition_in_the_United_S...)

- Federally backed student loans are non-dischargeable and are available to nearly all students (regardless of credit score or financial issues).

- Student loans total around $1.2 trillion dollars (50% increase from 2008!)

- US has the highest tuition costs in the developed world.

Whether or not you think tuition is too high or is correlated to federal aid is almost incidental to the issue. There's a big fuckin problem with the amount of student loan debt out there, and if the federal government isn't to blame for this with the way they structure student aid (i.e. guaranteed, non-discharable loans to anybody that wants one), who the hell is? It's also hard to imagine that this much available cash for post-secondary education wouldn't have an affect on demand.

I have no idea who's to blame. I think part of it is institutions adding several layers of bureaucracy is one part. Institutions expanding resources is another (justifiable) increase in cost. Most importantly, a simple increase in demand: Students need to do something to give them an edge in the job market. The safest way to do that is still, by far, to go to college. Just because it's less safe than it used to be doesn't mean it's more irresponsible than, say, dropping out and hoping you're Zuckerberg/Gates/Jobs 2.0

If you're fast and loose with stats and terms you can prove anything. As I read the post, I was struck by the way the writer weaved in disparate studies, terms, and references. I'm very sure there is quite a bit nuance in her claims and because this was written by someone with such a huge conflict of interest (her position literally exists to further private college interest and would she would never, ever argue something that would be counter to those interests), I have to ignore it. There's only 24 hours in a day, and because I don't have the energy to fact check her, I have to dismiss it.

>Most importantly, a simple increase in demand: Students need to do something to give them an edge in the job market. The safest way to do that is still, by far, to go to college.

That's your guess??!?!?! Of course kids want to go to college, just like all kids want a luxury car and fly first class everywhere, so no, demand isn't a great answer. If tuition is high, and you don't have money and you can't get a loan, you don't go to college. Responsible lenders certainly wouldn't lend to everybody, regardless of credi score or repayment ability, but they do. Does that not sound like it could be a problem?

What I don't understand from your perspective is how you can not even imagine that $1.2 trillion in outstanding federally back loans (with around half of it NOT being repaid) would not contribute to the increased tuition costs?!? That's over a trillion dollars that may otherwise have been available if the private lenders had to take on all the typical lending liabilities. That's over a trillion dollars to divvy up between all the colleges and universities (and lenders)! It's insane that tuition outpaced all other costs, including medical costs which are crazy. It looks clear as hell that there is a huge market distortion happening.

Okay, forget I linked to the blog post. Here are sources.

U.S. Department of Education National Center for Education Statistics, Dec. 2001, Study of College Costs and Prices 1988-89 to 1997-98, Vol. 1

National Commission on the Cost of Higher Education, February 1998, Straight Talk about College Costs & Prices

Government Accountability Office, May 2011, Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase

Sandy Baum, Policy Analyst for the College Board, New York Times, Feb. 3, 2010

Bridget Terry Long, Education Economist, Harvard University, Testimony, Senate Finance Committee hearing “College Tuition Pricing and Federal Financial Aid: Is There a Connection?” Dec. 5, 2006

What I don't understand is how you think it matters what I "can imagine." It doesn't. You're hounding me for an answer that I never said I have. You are way too eager to find conclusions which may not even exist. You don't have evidence to back those conclusions. You don't want to find evidence to back them up. You don't read evidence that conflicts with your conclusions. And then you act like I'm stupid for not arriving at a conclusion (because, spoiler alert: there isn't one, yet).

I never said it "doesn't sound like a problem." I said that there's no evidence that availability of funding increases tuition. Until you provide something beyond gut feeling, to combat the statistics that contradict you, it's not worth talking about.

That blog post, by the way, the source of the quote that Taibbi references in TFA. It's not even an op-ed, it's a guest post written on one individual WaPo blog.

I'm aware of what it is. That's why I didn't tell you to read the blog post. I told you to go to the sources.

Did you read the article? It provided a fairly sound argument supporting the conclusion that the availability of student loans and the price of tuition are quite related.

You're missing the point. The overspending is a direct result of the lending problem. Lending is the root cause of the overspending problem. Students choose schools with lots of amenities because it's so easy to get loans, so why not? Because of this, schools have to continue to build plush dorms and state of the art fitness centers in order to keep their enrollment up. This, of course, drives up costs, which is passed on to students via tuition, who just continue to pay for it all with more readily available loans.

A particular university can't just cut spending, because it would put them at a huge competitive disadvantage with everybody else. Only by reigning in lending will costs stabilize.

Sure. And the bubble in home prices was a purely secular affair, with no correlation to the introduction of option ARMs, low doc/no doc loans and subprime credit availability.

One simple change that would have drastic effects is modifying the forgiveness timeframe on income based repayment (IBR) for student loans. Right now, the expiration time is 25 years [1]. In other words, 99% of all kids going to college are on the hook for paying loans for longer than they have been alive.

I think the government should shorten that period down to fifteen or even ten years for any loan that is not dischargeable in bankruptcy. Correspondingly, it might be a wise idea to up the current reduced payment amount from 15% of AGI [2] to maybe 25-50%. I'm throwing out numbers here, clearly some careful study would be warranted if this idea was seriously considered.

This would probably mean a corresponding increase in loan forgiveness for public servents (teachers, firefighters, public defenders, etc). I'm not opposed to such an idea prima facie.

My expectation is this will drastically reduce the availability of certain types of degrees. The upside is we won't have a ton of young kids floating around with degrees they can't use and loan burdens they can't meet.

1. http://studentaid.ed.gov/repay-loans/understand/plans/income... 2. http://en.wikipedia.org/wiki/Student_loans_in_the_United_Sta...

EDIT: one more thing I forgot to mention: I think that, like many social systems with complex feedback, you cannot reduce this problem to "too much loans" or "too much spending". It's difficult to delineate cause from effect, but it's indisputable that the easy availability of credit has at least enabled recent skyrocketing tuition.

With IBR they can do even better. Instead of charging everyone the average, they can charge each and every person his/her exact wage premium.

And it's all backed up by the IRS enforcing collection, too.

I can see why schools would freaking love this. Why would any one else?

Secondly, there's a lot of sources at the bottom of this. http://www.washingtonpost.com/blogs/answer-sheet/post/the-ur...

If the government is giving out $800 billion/yr, there are MANY people with the incentive to see that continue and grow.